AMDOCS LTD, F-1, 1999-03-26

AMDOCS LTD
F-1, 1999-03-26
COMPUTER PROGRAMMING SERVICES

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 26, 1999.
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM F-1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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AMDOCS LIMITED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
ISLAND OF GUERNSEY 7371 NOT APPLICABLE
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>

TOWER HILL HOUSE LE BORDAGE GY1 3QT
ST. PETER PORT, ISLAND OF GUERNSEY, CHANNEL ISLANDS
011-44-1481-727272
(ADDRESS AND TELEPHONE NUMBER OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

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AMDOCS, INC.
1610 DES PERES ROAD, ST. LOUIS, MISSOURI 63131
ATTENTION: THOMAS G. O'BRIEN, TREASURER
314-821-3242
(NAME, ADDRESS, AND TELEPHONE NUMBER OF AGENT FOR SERVICE)

THE COMMISSION IS REQUESTED TO SEND COPIES OF ALL COMMUNICATIONS TO:

ROBERT A. SCHWED, ESQ.
REBOUL, MACMURRAY, HEWITT, MAYNARD & KRISTOL
45 ROCKEFELLER PLAZA
NEW YORK, NEW YORK 10111
(212) 841-5700

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. [X]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
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If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
- ---------------

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
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PROPOSED
MAXIMUM PROPOSED
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) ORDINARY SHARE (2) OFFERING PRICE REGISTRATION FEE
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<S> <C> <C> <C> <C>
Ordinary shares, par value L0.01
per share...................... 14,414,372 $19.31 $278,341,523 $77,379
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</TABLE>

(1) Based upon the sum of the number of common shares of Architel Systems
Corporation ("Architel Common Shares") expected to be outstanding as of June
30, 1999 (the anticipated closing date of the combination of Architel and
the Registrant (the "Arrangement")) multiplied by 0.95, the exchange ratio
in the Arrangement.

(2) Calculated pursuant to Rule 457(c), based upon the average of the high and
low prices of Architel Common Shares reported on the Nasdaq National Market
on March 22, 1999 ($18.34), divided by 0.95.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2

The information in this prospectus is not complete and may be changed. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. We may not sell these securities until the
registration statement becomes effective. This Prospectus is not an offer to
sell these securities and it is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.

Subject to Completion, Dated March 26, 1999

PROSPECTUS

14,414,372 SHARES

AMDOCS LIMITED

ORDINARY SHARES

(PAR VALUE L0.01 PER SHARE)

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We are offering our ordinary shares to the holders of exchangeable shares
of Architel Systems Corporation. Holders of exchangeable shares may exchange
their exchangeable shares for our ordinary shares at any time by requiring
Architel to redeem each exchangeable share tendered to Architel for one of our
ordinary shares. Architel may redeem all of the outstanding exchangeable shares
or our Nova Scotia subsidiary may exercise its option to purchase all of the
exchangeable shares in exchange for our ordinary shares at any time on or after
the fifth anniversary of our combination with Architel (the "Arrangement"), or
earlier in some cases. We describe the process by which exchangeable shares may
be exchanged for our ordinary shares beginning on page [ ] of this
prospectus under the heading "Plan of Distribution."

We are conducting this offer on a continuous basis pursuant to Rule 415
under the Securities Act of 1933 only during the period when the registration
statement relating to this prospectus is effective. We will bear the
registration costs incurred in connection with this offering.

Our ordinary shares are traded on the New York Stock Exchange under the
symbol "DOX." On March 22, 1999, the closing price of our ordinary shares, as
reported on the New York Stock Exchange, was $20.63 per share.

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

Investing in our ordinary shares involves a high degree of risk. See "Risk
Factors" beginning on page 5.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

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The date of this prospectus is , 1999.
<PAGE> 3

ENFORCEABILITY OF CIVIL LIBERTIES

We are incorporated under the laws of the Island of Guernsey ("Guernsey").
Certain of our directors and officers named herein are not residents of the
United States, and a significant portion of our assets and the assets of those
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 those 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. We have irrevocably appointed Amdocs,
Inc., one of our U.S. subsidiaries, as our agent to receive service of process
in any action against us in any Federal court or court of the State of New York
arising out of the exchange of securities in connection herewith.

We have been advised by Carey Langlois, our Guernsey counsel, that there is
doubt as to the enforceability against our directors and officers in Guernsey,
whether in original actions in a Guernsey court or in actions in a Guernsey
court for the enforcement of judgments of a U.S. court, of civil liabilities
predicated solely upon the laws of the United States, including the federal
securities laws. However, subject to certain time limitations, Guernsey courts
may base original actions in Guernsey on foreign final executory judgments,
including those of the United States, for liquidated amounts in civil matters,
obtained after completion of due process before a court of competent
jurisdiction (according to the rules of private international law currently
prevailing in Guernsey) which recognizes and enforces similar Guernsey
judgments, provided that (1) adequate service of process has been effected and
the defendant has had a reasonable opportunity to be heard, (2) such judgments
or the enforcement thereof are not contrary to the law, public policy, security
or sovereignty of Guernsey, (3) such judgments were not obtained by fraudulent
means and do not conflict with any other valid judgment in the same matter
between the same parties, and (4) an action between the same parties in the same
matter is not pending in any Guernsey court at the time the lawsuit is
instituted in the foreign court.

EXPLANATORY NOTE

Unless otherwise stated, all references in this prospectus to ordinary
shares are to both voting and nonvoting ordinary shares, all references to
percentage ownership of our ordinary shares give effect to the issuance of all
of the ordinary voting shares being offered hereby and all references to
ordinary voting and ordinary nonvoting share ownership, as expressed in
percentages, are as of March 24, 1999. Finally, unless otherwise stated, all
references to "dollars" or "$" refer to United States dollars.

EXCHANGE RATE OF CANADIAN AND U.S. DOLLARS

The following table sets forth, for each period indicated, the highest,
lowest and average rate for one Canadian dollar expressed in U.S. dollars on the
last day of each month during such period and the exchange rate at the end of
such period, based upon the noon buying rate in New York City for cable
transfers in Canadian dollars, as certified for customs purposes by the Federal
Reserve Bank of New York (the "Noon Buying Rate"):

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
QUARTER ENDED QUARTER ENDED ----------------------------------------------
12/31/1998 12/31/1997 1998 1997 1996 1995 1994
------------- ------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
High................. 0.6496 0.7218 0.7218 0.7472 0.7427 0.7407 0.7591
Low.................. 0.6472 0.7009 0.6513 0.7174 0.7267 0.7078 0.7227
Average.............. 0.6484 0.7101 0.6902 0.7301 0.7325 0.7272 0.7383
Period End........... 0.6484 0.7009 0.6573 0.7210 0.7303 0.7403 0.7387
</TABLE>

On March 24th, 1999 the Noon Buying Rate for one Canadian dollar expressed
in U.S. Dollars based on the Noon Buying Rate was 0.6585.

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<PAGE> 4

The following table sets forth, for each period indicated, the highest,
lowest and average exchange rate for one U.S. dollar expressed in Canadian
dollars on the last day of each month during such period and the exchange rate
at the end of such period, based upon the noon spot rate of the Bank of Canada
(the "Noon Spot Rate"):

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
QUARTER ENDED QUARTER ENDED ----------------------------------------------
12/31/1998 12/31/1997 1998 1997 1996 1995 1994
------------- ------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
High................. 1.5452 1.4267 1.5346 1.3942 1.3752 1.4132 1.3836
Low.................. 1.5404 1.3869 1.3869 1.3381 1.3458 1.3503 1.3173
Average.............. 1.5429 1.4088 1.4502 1.3702 1.3651 1.3756 1.3551
Period End........... 1.5433 1.4267 1.5218 1.3871 1.3694 1.3509 1.3540
</TABLE>

On March 24th, 1999 the Noon Spot Rate was one U.S. dollar equals 1.5189
Canadian dollars.

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<PAGE> 5

TABLE OF CONTENTS

<TABLE>
<S> <C>
Risk Factors........................... 5
Use of Proceeds........................ 14
Market Prices and Dividends............ 14
Selected Consolidated Historical
Financial Data of Amdocs............. 15
Selected Consolidated Historical
Financial Data of Architel........... 16
Selected Unaudited Pro Forma Combined
Consolidated Financial Data.......... 18
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 19
Business and Properties................ 33
Management............................. 45
Certain Transactions................... 51
Principal Shareholders................. 53
Description of Share Capital........... 55
Plan of Distribution................... 57
Canadian Federal Income Tax
Considerations....................... 61
United States Federal Income Tax
Considerations....................... 67
Certain Guernsey Tax Considerations.... 70
Legal Matters.......................... 71
Experts................................ 71
Where You Can Find More Information.... 71
Forward-Looking Statements............. 71
Index to Financial Statements.......... F-1
</TABLE>

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RISK FACTORS

Investing in our ordinary shares involves significant risks. Because you
could lose the entire value of your investment, you should carefully consider
the following risks before deciding to invest in our ordinary shares. We are
uncertain about the future of our business and, in preparing this document, have
made certain assumptions and projections. We generally use words like "expect,"
"believe" and "intend" to indicate these assumptions and projections. Our
assumptions and projections could be wrong for many reasons, including the
reasons discussed in this section. We do not promise to notify you if we learn
that our assumptions or projections in this prospectus are wrong. See
"Forward-Looking Statements" for more information.

RISKS APPLICABLE TO OUR BUSINESS

A DECLINE IN THE TELECOMMUNICATIONS MARKET WOULD REDUCE DEMAND FOR OUR SYSTEMS

We may be unable to effectively market and sell our information systems to
potential customers in the telecommunications industry. Developments in the
telecommunications industry, such as industry consolidation, the formation of
alliances among network operators and service providers and changes in the
regulatory environment, could adversely affect our existing or potential
customers and, in turn, could have a material adverse effect on our operating
results and financial condition.

OUR FAILURE TO COMPETE SUCCESSFULLY WITH ESTABLISHED OR NEW COMPETITORS COULD
JEOPARDIZE OUR BUSINESS

We may be unable to compete successfully with existing or new competitors
and our failure to adapt to changing market conditions and to compete
successfully with established or new competitors could have a material adverse
effect on our results of operations and financial condition.

The market for telecommunications information systems is highly competitive
and fragmented, and we expect this competition to increase. We compete with both
independent providers of information systems and services and with in-house
software departments of telecommunications companies. We anticipate continued
growth and competition in the telecommunications industry and, consequently, the
emergence of new software providers in the industry that will compete with us.

We also believe that our ability to compete depends in part on a number of
competitive factors, including:

- the development by others of software that is competitive with our
products and services,

- the price at which others offer competitive software and services, and

- the extent of competitors' responsiveness to customer needs and the
ability of our competitors to hire, retain and motivate key personnel.

We compete with a number of companies that have longer operating histories,
larger customer bases, substantially greater financial, technical, sales,
marketing and other resources, and greater name recognition than us. Current and
potential competitors have established, and may establish in the future,
cooperative relationships among themselves or with third parties to increase
their ability to address the needs of our prospective customers. Accordingly,
new competitors or alliances among competitors may emerge and rapidly acquire
significant market share. As a result, our competitors may be able to adapt more
quickly than us to new or emerging technologies and changes in customer
requirements, or to devote greater resources to the promotion and sale of their
products.

We derive a significant portion of our revenue from products and services
provided to directory publishers. We believe that the demand for such products
and services will be affected by the extent of increased competition among
international directory publishers, as well as a broader introduction of
electronic directories. Our new products for these markets may not be successful
or we may be unable to maintain our current level of revenue from directory
systems.

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WE MUST CONTINUALLY IMPROVE OUR TECHNOLOGY TO REMAIN COMPETITIVE

We believe that our future success will depend, to a significant extent,
upon our ability to enhance our existing products and to introduce new products
and features to meet the requirements of our customers in a rapidly developing
and evolving market. We are currently devoting significant resources to refining
and expanding our base software modules and to developing Business Support
System ("BSS") products that operate on state-of-the-art operating systems. Our
present or future products may not satisfy the evolving needs of the
telecommunications market. If we are unable, due to resource, technological or
other constraints, to anticipate or respond adequately to such demands, our
business and results of operations could be materially adversely affected.

WE DEPEND ON THE SBC COMMUNICATIONS INC. ("SBC") ACCOUNT FOR A SIGNIFICANT
PORTION OF OUR REVENUES

Our single largest group of customers are SBC and its operating
subsidiaries. SBC International Inc. ("SBCI"), a wholly owned subsidiary of SBC,
is also one of our significant shareholders, it holds approximately 21.2% of our
outstanding ordinary shares. A significant decrease in the sale of products and
services to SBC or its subsidiaries may materially adversely affect our results
of operations and financial condition.

Substantially all our work for SBC is conducted directly with SBC's
operating subsidiaries, such as Southwestern Bell Mobile Systems, Southwestern
Bell Yellow Pages, Southwestern Bell Communications Services (SBC's long
distance provider) and Southwestern Bell Telephone Company. These SBC
relationships accounted for in the aggregate 20.9%, 34.5% and 38.0% of our total
revenue in fiscal 1998, fiscal 1997 and fiscal 1996, respectively. The absolute
amount of revenue attributable to SBC and such subsidiaries amounted to $84.4
million in fiscal 1998, $99.9 million in fiscal 1997 and $80.5 million in fiscal
1996.

Although we have received a substantial portion of our revenue from
business with SBC and its operating subsidiaries, neither SBC nor any of its
operating subsidiaries has any long-term contractual obligation to purchase
additional products or services, and these customers generally have acquired
fully paid licenses to their installed systems. Additionally, all previous
agreements we have entered into with SBC or its subsidiaries were entered into
on an individual ad hoc basis and not as part of any overall long-term
commitment. Any future strategic agreements between ourselves and SBC or its
subsidiaries would be subject to negotiation between the parties.

WE HAVE A LIMITED NUMBER OF CUSTOMERS

Our business is highly dependent on a limited number of significant
customers. The loss of any significant customer or a significant decrease in
business from any of those customers could have a material adverse effect on our
results of operations and financial condition. We have approximately 70
customers, and revenue derived from our five largest customers, excluding SBC
and its operating subsidiaries, accounted for approximately 27.1%, 33.2% and
42.5% of total revenue in fiscal 1998, fiscal 1997 and fiscal 1996,
respectively.

Although we have received a substantial portion of our revenue from repeat
business with established customers, most of our major customers do not have any
obligation to purchase additional products or services and generally have
already acquired fully paid licenses to their installed systems. Therefore, our
customers may not continue to purchase new systems, system enhancements and
services in amounts similar to previous years.

OUR FAILURE TO ATTRACT NEW CUSTOMER RELATIONSHIPS OR THE FAILURE OF NEW
CUSTOMERS TO BE SUCCESSFUL COULD JEOPARDIZE OUR BUSINESS

We believe that our future success depends to a significant extent on our
ability to develop new customer relationships with successful network operators
and service providers. Many new entrants into the telecommunications market lack
significant financial and other resources. We may be unable to develop

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<PAGE> 8

new customer relationships and our new customers may be unsuccessful. Our
failure to attract new customer relationships or the failure of new customers to
be successful could have a material adverse effect on our business, results of
operations and financial condition.

OUR OPERATING RESULTS FLUCTUATE SIGNIFICANTLY

We have experienced fluctuations in our quarterly operating results and
anticipate that such fluctuations may continue and could intensify. Our
operating results may fluctuate as a result of many factors, including:

- the size and timing of significant customer projects and license fees,

- increased competition,

- cancellations of significant projects by customers,

- changes in operating expenses,

- changes in our strategy,

- personnel changes,

- foreign currency exchange rates, and

- general economic and political factors.

Generally our license fee revenue and our service fee revenue relating to
customization and implementation are recognized as work is performed, using
percentage of completion accounting. Given our reliance on a limited number of
significant customers, our quarterly results may be significantly affected by
the size and timing of customer projects and our progress in completing such
projects.

We believe that the placement of customer orders may be concentrated in
specific quarterly periods due to customers' buying patterns and budgeting
cycles in the telecommunications industry. Although we recognize revenue as
projects progress, which progress may vary significantly from project to
project, we believe that variations in quarterly revenue are sometimes
attributable to the timing of initial order placements. Due to the relatively
fixed nature of certain of our costs, a decline of revenue in any quarter would
result in lower profitability for that quarter and, in such event, the price of
our ordinary shares could be materially adversely affected.

As a result of these factors and the factors that follow, we believe that
period-to-period comparisons of our revenues and operating results are not
necessarily meaningful.

OUR LENGTHY SALES CYCLE MAKES IT DIFFICULT TO ANTICIPATE THE TIMING OF SALES

The sales cycle associated with the purchase of our information systems is
lengthy, with the time between the making of an initial proposal to a
prospective customer and the signing of a sales contract typically being between
six and twelve months. Information systems for telecommunications companies are
relatively complex and their purchase generally involves a significant
commitment of capital, with attendant delays frequently associated with large
capital expenditures and implementation procedures within an organization.
Moreover, the purchase of such products typically requires coordination and
agreement across a potential customer's entire organization. Delays associated
with such timing factors could have a material adverse effect on our results of
operations and financial condition.

OUR INTERNATIONAL PRESENCE CREATES SPECIAL RISKS

We are subject to certain risks inherent in doing business in international
markets, including:

- lack of acceptance of non-localized products,

- legal and cultural differences in the conduct of business,

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- difficulties in staffing and managing foreign operations,

- longer payment cycles,

- difficulties in collecting accounts receivable and withholding taxes that
limit the repatriation of earnings,

- trade barriers,

- immigration regulations that limit our ability to deploy our employees,

- political instability, and

- variations in effective income tax rates among countries where we conduct
business.

One or more of such factors could have a material adverse effect on our
international operations.

We maintain three development facilities located in Israel, the United
States and Cyprus, operate a support center located in Brazil and have
operations in Europe, North America, Latin America and the Asia-Pacific region.
Although a majority of our revenue in fiscal 1998 was derived from customers in
North America, we obtain significant revenue from customers in Europe,
Australia, and Latin America. Our strategy is to continue to broaden our North
American and European customer base and to expand into new international
markets, the most significant of which are located in Latin America and the
Asia-Pacific region.

FLUCTUATIONS IN FOREIGN CURRENCY EXCHANGE RATES COULD ADVERSELY AFFECT OUR
BUSINESS

A significant portion of our operating costs are incurred outside the
United States, and therefore fluctuations in exchange rates between the
currencies in which such costs are incurred and the dollar may have a material
adverse effect on our results of operations and financial condition. The cost of
our operations in Israel, as expressed in dollars, could be adversely affected
by the extent to which any increase in the rate of inflation in Israel is not
offset (or is offset on a lagging basis) by a devaluation of the Israeli
currency in relation to the dollar. As a result of this differential, from time
to time we experience increases in the costs of our operations in Israel, as
expressed in dollars, which could in the future have a material adverse effect
on our results of operations and financial condition.

Generally the effects of fluctuations in foreign currency exchange rates
are mitigated by the fact that a significant portion of our revenue is in
dollars and we generally hedge our currency exposure on both a short-term and
long-term basis with respect to the balance of our revenue.

The imposition of exchange or price controls or other restrictions on the
conversion of foreign currencies could also have a material adverse effect on
our business, results of operations and financial condition.

WE MAY BE UNABLE TO PROTECT OUR PROPRIETARY TECHNOLOGY

Any misappropriation of our technology or the development of competitive
technology could seriously harm our business. We regard a substantial portion of
our software products and systems as proprietary and rely on a combination of
statutory and common law copyright, trademark and trade secret laws, customer
licensing agreements, employee and third party non-disclosure agreements and
other methods to protect our proprietary rights. We do not include in our
software any mechanisms to prevent or inhibit unauthorized use, but we generally
enter into confidentiality agreements with our employees, consultants, customers
and potential customers and limit access to, and distribution of proprietary
information.

The steps we have taken to protect our proprietary rights may be
inadequate. If so, we might not be able to prevent others from using what we
regard as our technology to compete with us. Existing trade secret, copyright
and trademark laws offer only limited protection. In addition, the laws of some
foreign countries do not protect our proprietary technology to the same extent
as the laws of the United States.

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Other companies could independently develop similar or superior technology
without violating our proprietary rights.

If we have to resort to legal proceedings to enforce our intellectual
property rights, the proceedings could be burdensome and expensive and could
involve a high degree of risk.

CLAIMS BY OTHERS THAT WE INFRINGE THEIR PROPRIETARY TECHNOLOGY COULD HARM OUR
BUSINESS

Although we have not received any notices from third parties alleging
infringement claims, third parties could claim that our current or future
products or technology infringe their proprietary rights. We expect that
software developers will increasingly be subject to infringement claims as the
number of products and competitors providing software and services to the
telecommunications industry increase and overlaps occur. Any claim of
infringement by a third party could cause us to incur substantial costs
defending against the claim, even if the claim is invalid, and could distract
our management from our business. Furthermore, a party making such a claim could
secure a judgment that requires us to pay substantial damages. A judgment could
also include an injunction or other court order that could prevent us from
selling our products. Any of these events could seriously harm our business.

If anyone asserts a claim against us relating to proprietary technology or
information, we might seek to license their intellectual property or to develop
non-infringing technology. We might not be able to obtain a license on
commercially reasonable terms or on any terms. Alternatively, our efforts to
develop non-infringing technology could be unsuccessful. Our failure to obtain
the necessary licenses or other rights or to develop non-infringing technology
could prevent us from selling our products and could therefore seriously harm
our business.

THE EMPLOYEES THAT WE NEED MAY BE DIFFICULT TO HIRE AND RETAIN

Our success depends in large part on our ability to attract, train,
motivate and retain highly skilled information technology professionals,
software programmers and telecommunication engineers. These types of qualified
personnel are in great demand and are likely to remain a limited resource for
the foreseeable future. We may be unable to continue to attract and retain the
skilled employees we require and any inability to do so could adversely impact
our ability to manage and complete our existing projects and to compete for new
customer contracts. In addition, the resources required to attract and retain
such personnel may adversely affect our operating margins. The failure to
attract and retain qualified personnel may have a material adverse effect on our
business, results of operations and financial condition. Our success also
depends, to a certain extent, upon the continued active participation of a
relatively small group of senior management personnel who have been with us for
many years. The loss of the services of all or some of such employees could have
a material adverse effect on our business.

THE TERMINATION OR REDUCTION OF CERTAIN GOVERNMENT PROGRAMS AND TAX BENEFITS
COULD ADVERSELY AFFECT OUR OVERALL EFFECTIVE TAX RATE

We benefit from certain government programs and tax benefits, including
programs and benefits in Israel and Cyprus. To be eligible for these programs
and tax benefits, we must continue to meet certain conditions. If we fail to
meet such conditions in the future, we could be required to refund tax benefits
already received. Additionally, certain of these programs and the related tax
benefits are available to us for a limited number of years, and such benefits
expire from time to time.

Any of the following could have a material affect on our overall effective
tax rate:

- those programs may be discontinued,

- we may be unable to meet the requirements for continuing to qualify for
such programs,

- such programs and tax benefits may be unavailable at their current
levels, or

- upon expiration of a particular benefit, we may not be eligible to
participate in a new program or qualify for a new tax benefit that would
offset the loss of the expiring tax benefit or we may be
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required to refund previously accredited tax benefits if we are found to
be in violation of the stipulated conditions.

PRODUCT DEFECTS OR SOFTWARE ERRORS COULD ADVERSELY AFFECT OUR BUSINESS

Design defects or software errors may cause delays in product introductions
or damage customer satisfaction and may have a material adverse effect on our
business, results of operations and financial condition. Our software products
are highly complex and may, from time to time, contain design defects or
software errors that may be difficult to detect and correct.

Since our products are generally used by our customers to perform
mission-critical functions, design defects, software errors, misuse of our
products, incorrect data from external sources or other potential problems
within or out of our control may arise from the use of our products, and may
result in financial or other damages to our customers. Completion of the
development and implementation phases of a project requires between six and
twelve months of work. During this period, a customer's budgeting constraints
and internal reviews, over which we have little or no control, can impact
operating results. Our failure or inability to meet a customer's expectations in
providing products or performing services may result in the termination of our
relationship with that customer or could give rise to claims against us.
Although we have license agreements with our customers that contain provisions
designed to limit our exposure to potential claims and liabilities arising from
customer problems, these provisions may not effectively protect us against such
claims in all cases. Claims and liabilities arising from customer problems could
damage our reputation, adversely affecting our business, results of operations
and financial condition.

"YEAR 2000" PROBLEMS MAY DISRUPT OUR OPERATIONS

The term "year 2000 problems" is a general term used to describe the
various problems that may result from the improper processing of dates and
faulty date calculations by computers and other machinery in the upcoming
millennium. These problems generally arise from the fact that most of the
world's legacy computer hardware and software have historically used only two
digits to identify the year in a date, often meaning that the computer will fail
to distinguish dates in the "2000's" from dates in the "1900's". These problems
may also arise from other sources such as the use of special codes and
conventions in software that make use of the date field. This could result in a
system failure or miscalculation causing disruptions of operations, including,
among other things, total failure of mass systems that depend on computers such
as electricity, telephone networks, and banking systems.

We believe that a small number of computer products marketed by us or
currently used by our customers are not year 2000 compliant. In addition,
certain products and services provided to our customers by other software
vendors may not be year 2000 compliant, thereby disrupting the ability of our
customers to use our software. We have accrued $3.3 million at December 31,
1998, representing the estimated costs to modify our software products to
address year 2000 issues under existing agreements for previously sold products.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operation -- Year 2000 Issues". Our ultimate costs to address the year 2000
issues may significantly exceed our estimates, in which case those costs could
have a material adverse effect on our results of operations and business and
financial condition. Moreover, due to our dependence on a limited number of
significant customers, any material adverse impact on such customers due to year
2000 issues could also have a material adverse effect on our results of
operations, business and financial conditions.

OUR SOFTWARE PRODUCTS MAY NOT SUCCESSFULLY ACCEPT THE NEW EUROPEAN MONETARY
UNION CURRENCY (THE "EURO") OR CONVERT FROM LOCAL CURRENCIES TO THE EURO

The Euro is being phased in over a three-year period which commenced
January 1, 1999 when participating European countries began using the Euro
currency for non-cash transactions. Computer systems and software products will
need to be designed or modified to accept the Euro currency and, during a
transitional phase, will need to accept both the Euro and local currencies. The
conversion to the Euro currency will require restructuring of databases and
internal accounting systems and may require the

10
<PAGE> 12

conversion of historical data. We intend to offer software products that are
capable of accepting the Euro currency and converting from local currencies to
the Euro and vice versa. Our software or software provided to our customers by
other vendors may not ensure an errorless transition to the Euro currency. We
have accrued $2.3 million at December 31, 1998, representing the estimated cost
to modify our software products to accept the Euro currency under existing
agreements for previously sold products. Our ultimate costs may significantly
exceed our estimates, in which case those costs could have a material adverse
effect on our results of operations, business and financial condition.

OUR DEVELOPMENT FACILITY IN ISRAEL MAY BE ADVERSELY AFFECTED BY POLITICAL AND
ECONOMIC CONDITIONS IN THAT COUNTRY

Our largest development center is located in the State of Israel. Although
a substantial majority of our sales are made to customers outside Israel and we
maintain significant service teams on site with our customers, we are
nonetheless directly influenced by the political, economic and military
conditions affecting Israel. Any major hostilities involving Israel or the
interruption or curtailment of trade between Israel and its current trading
partners could have a material adverse effect on our business. We have developed
certain contingency plans to move certain development operations to various
sites both within and outside of Israel in the event political or military
conditions disrupt our normal operations.

Israel has entered into peace agreements with both Egypt and Jordan and is
in the process of conducting peace negotiations with the Palestinian Community.
Moreover, several other countries have announced their intentions to establish
trade and other relations with Israel. Israel, however, has not entered into any
peace arrangement with Syria or Lebanon. In addition, in recent months there has
been a deterioration in Israel's relationship with the Palestinian Community.

Consequently, we cannot predict how the peace process will develop or what
effect it may have on us or our business.

RISKS ASSOCIATED WITH THE INTEGRATION OF AMDOCS AND ARCHITEL

The consummation of the Arrangement will result in the integration of
Amdocs and Architel, which have previously operated independently. The
consolidation of functions, the integration of certain departments, systems and
procedures, and the relocation and potential loss of management and/or essential
employees present significant management challenges. Those actions may not be
successfully accomplished as rapidly as currently expected. In addition, the
effort to integrate the operations of Amdocs and Architel may divert
management's attention away from other business concerns. Failure to
successfully integrate the operations of Amdocs and Architel in a timely manner
could have a material adverse effect on our financial condition, business and
results of operations.

RISKS APPLICABLE TO OUR CAPITAL STRUCTURE

A FEW OF OUR SHAREHOLDERS MAY BE ABLE TO EXERCISE CONTROL OVER ALL MATTERS
REQUIRING SHAREHOLDER APPROVAL

As a result of the concentration of ownership of our ordinary voting
shares, certain shareholders may be able to exercise control over matters
requiring shareholder approval, including the election of directors and approval
of significant corporate transactions. Such control may have the effect of
delaying or preventing a change in control of Amdocs.

After giving effect to the issuance of all of the ordinary voting shares
offered hereby, our ordinary voting shares are owned as follows:

- 31.7% by Welsh, Carson, Anderson & Stowe ("WCAS"), a private investment
firm, and its affiliates,

- 8.0% by SBCI, and

- 25.4% by Amdocs International Limited ("AIL"), a private company
ultimately controlled by Morris S. Kahn.

11
<PAGE> 13

SBCI also owns ordinary nonvoting shares, which together with its ordinary
voting shares represent 21.2% of the ordinary shares outstanding. In addition,
WCAS and certain entities in which members of our management have a beneficial
interest have granted irrevocable proxies with respect to a portion of the
ordinary shares held by them to a company beneficially owned by Morris S. Kahn.
Giving effect to such proxies, the company beneficially owned by Morris S. Kahn
and AIL together have the right to vote 42.1% of our ordinary voting shares,
WCAS and its affiliates have the right to vote 18.7% of our ordinary voting
shares and SBCI has the right to vote 8.0% of our ordinary voting shares.

Affiliates of WCAS and certain other investors (the "WCAS Investors") have
granted a call option on some of the ordinary shares that they hold to SBCI, AIL
and other existing shareholders that may be exercised if we achieve specified
revenue and cash flow targets in fiscal 1998 and fiscal 1999, which targets were
achieved for fiscal 1998. If exercised, the option would increase the relative
ownership of SBCI, AIL and those other shareholders and decrease the relative
ownership of WCAS. If the targets are met in full, the WCAS Investors will hold
26.2% of our ordinary voting shares and AIL will hold 28.8% of our ordinary
voting shares.

OUR ORDINARY SHARES MAY TRADE AT DIFFERENT PRICES THAN THE EXCHANGEABLE SHARES

The market price for our ordinary shares may not be the same as, or even
similar to, the market price for the exchangeable shares. The exchangeable
shares are listed only on The Toronto Stock Exchange (the "TSE"), and our
ordinary shares are traded only on the New York Stock Exchange (the "NYSE"). We
do not intend to list either the exchangeable shares or our ordinary shares on
any other stock exchange or market in the United States or Canada. Accordingly,
the trading price of the exchangeable shares will be based only upon the market
for that stock on the TSE, and the trading price for our ordinary shares will be
based only upon the market for that stock on the NYSE.

THE MARKET PRICE OF OUR ORDINARY SHARES IS VOLATILE

The market price of our ordinary shares has fluctuated widely and may
continue to do so. For example, since our initial public offering in June of
1998 through March 22,1999 the closing price of our ordinary shares ranged from
a high of $25.81 per share to a low of $8.38 per share. Many factors could cause
the market price of our ordinary shares to rise and fall. Some of these factors
are:

- variations in our quarterly operating results,

- announcements of technological innovations,

- introduction of new products or new pricing policies by us or our
competitors,

- trends in the telecommunications industry,

- acquisitions or strategic alliances by us or others in our industry,

- changes in estimates of our performance or recommendations by financial
analysts, and

- market conditions in the industry and the economy as a whole.

In addition, the stock market experiences significant price and volume
fluctuations. These fluctuations particularly affect the market prices of the
securities of many high technology companies. These broad market fluctuations
could adversely affect the market price of our ordinary shares. Since only
approximately 16% of our outstanding ordinary shares are publicly held, the lack
of depth in the market for our ordinary shares may exacerbate these price
fluctuations. When the market price of a stock has been volatile, holders of
that stock have often instituted securities class action litigation against the
company that issued the stock. If any of our stockholders brought a securities
class action lawsuit against us, we could incur substantial costs defending the
lawsuit. The lawsuit could also divert the time and attention of our management.
Any of these events could seriously harm our business.

12
<PAGE> 14

FUTURE SALES BY EXISTING STOCKHOLDERS COULD DEPRESS THE MARKET PRICE OF OUR
ORDINARY SHARES

Sales of substantial amounts of ordinary shares in the public market
following the exchange, or the perception that such sales could occur, could
adversely affect prevailing market prices for the ordinary shares. We currently
have 211,214,396 ordinary shares and ordinary nonvoting shares issued and
outstanding. Currently, 114,876,200 shares are eligible for sale in the public
market pursuant to Rule 144 ("Rule 144") under the Securities Act of 1933 (the
"Securities Act") (subject to compliance with the volume and manner of sale
limitation of Rule 144) or pursuant to another exemption from the registration
requirements of the Securities Act.

Our principal shareholders have the right, in certain circumstances, to
require us to register their shares under the Securities Act for resale to the
public. In addition, we expect to register under the Securities Act up to a
total of 8,814,465 ordinary shares reserved for issuance upon the exercise of
options that have been or may be granted under our and Architel's stock option
plans. The right to exercise options outstanding under such plans is subject to
certain vesting requirements.

WE DO NOT ANTICIPATE PAYING DIVIDENDS ON OUR ORDINARY SHARES IN THE FORESEEABLE
FUTURE

We do not anticipate paying dividends on our ordinary shares in the
foreseeable future. In addition, the terms of senior bank debt incurred by our
subsidiaries effectively prevents us from paying cash dividends.

13
<PAGE> 15

USE OF PROCEEDS

Because we will issue all of the ordinary shares offered hereby upon
exchange or redemption of the exchangeable shares, we will receive no cash
proceeds upon the issuance of such shares.

MARKET PRICES AND DIVIDENDS

Our ordinary shares have been quoted on the NYSE since June 19, 1998, under
the symbol "DOX." Through March 22, 1999, the high and low reported closing
prices for the ordinary shares were as follows:

<TABLE>
<CAPTION>
HIGH LOW DIVIDENDS
---- --- ---------
<S> <C> <C> <C>
Fiscal Year 1998:
Third Quarter 1998 (Since June 19, 1998).................. $16.50 $14.00 --
Fourth Quarter 1998....................................... $15.50 $ 8.38 --
Fiscal Year 1999:
First Quarter 1999........................................ $17.25 $ 8.88 --
Second Quarter 1999 (through March 22, 1999).............. $25.81 $15.06
</TABLE>

As of March 22, 1999, the last reported closing price of the ordinary
shares on the New York Stock Exchange was $20.63 and ordinary voting shares were
held by approximately 133 recordholders (not including shares issued pursuant to
this prospectus). Based on a review of the addresses of such holders, 83
recordholders, holding approximately 63% of the outstanding ordinary shares,
were residents of the United States.

Shareholders are advised to obtain a current market quotation for our
ordinary shares.

Although in the past we have paid substantial cash dividends, we do not
anticipate paying cash dividends on our ordinary shares in the foreseeable
future. We declared dividends to our shareholders during fiscal 1996, 1997 and
1998 of $37.9 million, $19.3 million and $478.7 million, respectively. See
"Certain Transactions". We currently intend to retain our earnings to finance
the development of our business.

Any future dividend policy will be determined by our board of directors
based upon conditions then existing, including our earnings, financial condition
and capital requirements, as well as such economic and other conditions as the
board of directors may deem relevant. The terms of the revolving credit
agreement under which several of our subsidiaries are borrowers effectively
prevent us from paying cash dividends. In addition, future agreements under
which we or any of our subsidiaries may incur indebtedness may contain
limitations on our ability to pay cash dividends.

14
<PAGE> 16

SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF AMDOCS

Our financial statements are prepared in accordance with generally accepted
accounting principles in the United States ("U.S. GAAP") and presented in U.S.
dollars. The selected consolidated financial information set forth below has
been derived from the combined or consolidated financial statements of Amdocs
and its subsidiaries for the fiscal periods presented. During the year ended
September 30, 1994, Amdocs' operating subsidiaries were operated as a group of
companies owned by common shareholders and financial statements for such periods
were prepared on a combined basis and were not audited. Information as of and
for the four years ended September 30, 1998 is derived from our consolidated
financial statements which have been audited by Ernst & Young LLP, our
independent auditors. The selected financial information as of and for the three
months ended December 31, 1998 and 1997 is derived from our unaudited condensed
consolidated financial statements. The unaudited financial information reflects
all adjustments (consisting only of normal recurring adjustments) that we
consider necessary for a fair statement of our consolidated financial position
and the results of operations for such periods. The results of operations for
the three months ended December 31, 1998 are not necessarily indicative of
results to be expected for any future period.

The information presented below is qualified by the more detailed
consolidated financial statements included elsewhere in this prospectus and
should be read in conjunction with those consolidated financial statements and
the discussion under "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included elsewhere in this prospectus.

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
DECEMBER 31, YEAR ENDED SEPTEMBER 30,
------------------- ----------------------------------------------------
1998 1997 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue......................... $131,425 $ 86,558 $403,767 $290,102 $211,720 $167,312 $121,310
Operating income................ 30,161 16,845 84,895 26,969 35,490 15,377 22,047
Net income(1)................... 20,142 7,961 30,107 5,876 24,508 11,224 16,068
Basic earnings per share........ 0.10 0.06 0.19 0.05 0.23 0.11 0.17
Diluted earnings per share...... 0.10 0.06 0.19 0.05 0.22 0.11 0.17
Dividends declared per
share(3)...................... -- -- 3.76 0.18 0.35 0.17 0.15
BALANCE SHEET DATA (AT PERIOD
END):
Total assets.................... $282,510 $567,191 $239,966 $220,582 $104,531 $101,483 $ 77,106
Long-term obligations (net of
current portion).............. 11,217 231,487 9,215 7,370 1,663 -- --
Shareholders' equity
(deficit)(2)(3)............... (2,585) 102,214 (21,889) 94,253 15,988 29,429 21,872
</TABLE>

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

(1) In the fourth quarter of fiscal 1997, we recorded nonrecurring charges of
$27,563. Of such amount, $25,763 is attributable to the funding of a
contribution to an irrevocable secular trust and the balance, $1,800, is due
to the write-off of in-process technology related to certain software rights
acquired from several operating subsidiaries of SBC.

(2) In June 1998, we completed our initial public offering of 18,000 ordinary
shares. The net proceeds from the offering to us were $234,190.

(3) In January 1998, we paid dividends totaling $478,684.

15
<PAGE> 17

SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA
OF ARCHITEL
(CANADIAN DOLLARS)

Architel's financial statements are prepared in accordance with generally
accepted accounting principles in Canada ("Canadian GAAP") and presented in
Canadian dollars. The selected financial information set forth below has been
derived from the consolidated financial statements of Architel and its
subsidiaries for the fiscal periods presented. Information as of and for the
five years ended September 30, 1998 is derived from Architel's consolidated
financial statements which have been audited by Deloitte & Touche LLP,
Architel's independent auditors. The selected financial information as of and
for the three months ended December 31, 1998 and 1997 is derived from Architel's
unaudited consolidated financial statements. The unaudited financial information
reflects all adjustments (consisting only of normal recurring adjustments) that
Architel considers necessary for a fair statement of its consolidated financial
position and the results of operations for such periods. The results of
operations for the three months ended December 31, 1998 are not necessarily
indicative of results to be expected for any future period.

The information presented below is qualified by the more detailed
consolidated financial statements for the three months ended December 31, 1998
and 1997 and the years ended September 30, 1998, 1997 and 1996 included
elsewhere in this prospectus and should be read in conjunction with those
consolidated financial statements. The consolidated financial statements as of
and for the years ended September 30, 1995 and 1994 have not been included in
this prospectus.

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
DECEMBER 31, YEAR ENDED SEPTEMBER 30,
----------------- ----------------------------------------------
1998 1997 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
CANADIAN GAAP
Revenue......................... $23,043 $ 9,347 $50,775 $33,034 $17,976 $11,156 $4,362
Income before interest income,
amortization of intangibles
and income taxes.............. 4,671 2,091 11,306 5,365 2,857 3,672 45
Net income (loss)(1)............ (2,450) 1,547 2,321 4,226 2,192 2,138 29
Basic earnings (loss) per
share......................... (0.16) 0.12 0.17 0.34 0.21 0.34 0.01
Fully diluted earnings (loss)
per share..................... (0.16) 0.11 0.17 0.32 0.20 0.26 +
Dividends declared per share.... -- -- -- -- -- -- --
US GAAP
Revenue......................... $23,043 $ 9,347 $50,775 $33,034 $17,976 * *
Income before interest income,
amortization of intangibles
and income taxes.............. 4,596 1,900 10,005 4,336 1,486 * *
Net income (loss)(2)............ (580) 1,396 (7,973) 3,477 1,029 * *
Basic earnings (loss) per
share......................... (0.04) 0.11 (0.61) 0.28 0.11 * *
Diluted earnings (loss) per
share......................... (0.04) 0.11 (0.61) 0.28 0.10 * *
BALANCE SHEET DATA (AT PERIOD
END):
CANADIAN GAAP
Total assets.................... $92,770 $47,100 $95,714 $47,409 $40,140 $ 8,968 $1,690
Long-term obligations........... -- -- -- -- -- -- --
Shareholders' equity(3)(4)...... 76,736 42,345 78,648 40,541 36,245 2,350 182
</TABLE>

16
<PAGE> 18

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

+ Amount is less than $0.01

* The balance sheet data and statement of income data reconciled to a US GAAP
basis as of September 30, 1995 and 1994 and for the years then ended is not
readily available.

(1) Included in the three months ended December 31, 1998 and the year ended
September 30, 1998 is amortization expense of $5,398 and $5,620,
respectively, relating to intangible assets acquired in the Accugraph
Corporation ("Accugraph") transaction.

(2) Included in the three months ended December 31, 1998 and the year ended
September 30, 1998 is amortization expense of $4,539 and $4,640,
respectively, relating to intangible assets acquired in the Accugraph
transaction. Included in the year ended September 30, 1998 is the write-off
of purchased research and development in process of $11,335.

(3) In June 1998, Architel acquired Accugraph. As consideration, Architel issued
2,246 common shares.

(4) In March 1996, Architel completed its initial public offering of 3,384
shares of common stock. The net proceeds to Architel were $30,798.

17
<PAGE> 19

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL DATA

The following unaudited selected pro forma condensed combined consolidated
financial data have been prepared to illustrate the estimated effects of the
proposed combination of Amdocs and Architel, to be accounted for as a
pooling-of-interests under U.S. GAAP. Accordingly, such results were prepared as
if Amdocs and Architel were combined as of the beginning of the periods
presented. All amounts in the selected pro forma condensed combined consolidated
financial data are stated in dollars. For all years presented in the condensed
combined consolidated statements of operations, pro forma ordinary shares used
in computing earnings per share give effect to the exchange of 0.95 shares for
each outstanding Architel common share and the subsequent exchange of each
exchangeable share for one Amdocs ordinary share.

The information presented below is qualified by the more detailed unaudited
pro forma condensed combined consolidated financial statements included
elsewhere in this prospectus. The pro forma condensed combined consolidated
financial statements are presented for illustrative purposes only and are not
necessarily indicative of actual results of operations or financial position
that would have been achieved had the combination been consummated at the
beginning of the periods presented, nor are they necessarily indicative of
future results.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
DECEMBER 31, YEAR ENDED SEPTEMBER 30,
------------------- --------------------------------
1998 1997 1998 1997 1996
---- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue............................ $146,369 $93,195.. $438,547 $314,184 $224,914
Operating income................... 30,198 18,194.. 80,835 30,130 36,581
Net income before cumulative effect
of a change in accounting
principle........................ 19,737 8,952 24,939 8,412 25,262
Basic earnings per share........... 0.09 0.06... 0.14 0.07 0.21
Diluted earnings per share......... 0.09 0.06... 0.14 0.07 0.20
BALANCE SHEET DATA (AT PERIOD END):
Total assets....................... $342,021 $301,281
Long-term obligations.............. 11,217 9,215
Total shareholders' equity......... 42,502 23,552
</TABLE>

18
<PAGE> 20

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

INTRODUCTION

In Management's Discussion and Analysis we explain the general financial
condition and the results of operations for Amdocs and its subsidiaries
including:

- what factors affect our business,

- what our revenue and costs were in the first quarters of fiscal 1999 and
1998 and fiscal years 1998, 1997 and 1996,

- why those revenue and costs were different from period to period,

- where our revenue came from,

- how all of this affects our overall financial condition,

- what our expenditures were in the first quarters of fiscal 1999 and 1998
and fiscal years 1998, 1997 and 1996, and

- where cash will come from to pay for future capital expenditures.

As you read Management's Discussion and Analysis, it may be helpful to
refer to Amdocs' financial statements. In Management's Discussion and Analysis,
we analyze and explain the quarter to quarter and annual changes in the specific
line items in the consolidated statements of operations on pages F-5 and F-26 of
this prospectus. Our analysis may be important to you in making decisions about
your investment in Amdocs. Our analysis contains certain forward looking
statements that involve risk and uncertainties. Our actual results could differ
materially from the results reflected in these forward looking statements as
they are subject to a variety of risk factors. See "Risk Factors" for more
information. We disclaim any obligation to update our forward looking
statements.

GENERAL

We provide customized software products and services to the
telecommunications industry, primarily Customer Care and Billing Systems ("CC&B
Systems") for wireless, wireline and multiple-service network operators and
service providers. We also supply Directory Sales and Publishing Systems
("Directory Systems") to publishers of both traditional printed yellow page and
white page directories and electronic Internet directories. Our products are
mission-critical for a customer's operations. After our combination with
Architel we now develop, market and support advanced Operations Support Systems
used by telecommunications carriers. Due to the complexity of the process and
the expertise required for system support, we also provide extensive
customization, implementation, ongoing support, system enhancement and
maintenance services.

We derive our revenue principally from:

- the initial sale of our products and related services, including license
fees and customization and implementation services, and

- recurring revenue from ongoing maintenance, support and related services
provided to our customers and, to a lesser degree, from incremental
license fees resulting from increases in a customer's subscribers.

License revenue is recognized concurrently as work is performed, using
percentage of completion accounting. Service revenue that involves significant
ongoing obligations, including fees for customization, implementation and
support services, is also recognized as work is performed, under the percentage
of completion method. Revenue related to ongoing support is recognized as work
is performed. Revenue from third-party hardware and software sales is generally
recognized upon delivery. Maintenance revenue is recognized ratably over the
term of the maintenance agreement. As a result of our percentage of
19
<PAGE> 21

completion accounting policies, our annual and quarterly operating results may
be significantly affected by the size, timing, and changes in estimates of
customer projects and our progress in completing such projects.

Since 1992, we have invested substantial resources to develop our
information technology and to expand our range of products. As a result of
significant information technology expenditures, we were able to offer a full
range of integrated applications for our CC&B Systems, at the same time factors
such as increased demand for services, deregulation, privatization and
technological advancements began to transform the telecommunications industry.
License and service fees from the sale of CC&B Systems amounted to:

- $90.4 million in the first quarter of fiscal 1999 (68.8% of revenue for
such period),

- $46.8 million in the first quarter of fiscal 1998 (54.1% of revenue for
such period),

- $251.8 million in fiscal 1998 (62.4% of revenue for such period),

- $166.3 million in fiscal 1997 (57.3% of revenue for such period),

- $102.5 million in fiscal 1996 (48.4% of revenue for such period).

We believe that the demand for CC&B Systems will continue to increase as the
size and complexity of the telecommunications industry increases and that CC&B
Systems will account for a larger share of our total revenue in fiscal year 1999
than fiscal year 1998.

Although the business of publishing traditional yellow page and white page
directories is a mature business in the United States, it continues to be a
significant source of revenue for us worldwide. We believe that we are a leading
provider of Directory Systems in most of the markets we serve. License and
service fee revenue from the sale of Directory Systems totaled:

- $41.0 million in the first quarter of fiscal 1999 (31.2% of revenue for
such period),

- $39.8 million in the first quarter of fiscal 1998 (45.9% of revenue for
such period),

- $151.9 million in fiscal year 1998 (37.6% of revenue for such period),

- $123.8 million in fiscal year 1997 (42.7% of revenue for such period),

- $109.2 million in fiscal year 1996 (51.6% of revenue for such period).

We believe that the demand for Directory Systems will be favorably impacted by
increased competition among international directory publishers, as well as by a
broader introduction of electronic directories. However, we anticipate that the
relative contribution of license and service fees for Directory Systems to our
total revenue will decrease over time. We have also recently introduced a number
of new products for Directory-related Internet and electronic commerce
applications. We anticipate that over the next several years products developed
or to be developed for such applications will make a modest but increasing
contribution to revenue.

Our research and development activities have historically involved the
development of new software modules and product offerings in response to an
identified market demand, usually in conjunction with a customer project. We
also expend additional amounts on applied research and software development
activities to keep abreast of new technologies in the telecommunications market.
In the next several years, we intend to continue to make significant investments
in our research and development activities both for CC&B Systems and Directory
Systems.

CORPORATE REORGANIZATIONS AND INVESTMENTS

Our business was founded in 1982. In 1985, SBCI, a wholly-owned subsidiary
of SBC, acquired a 50% interest in the business. Prior to 1995, we and our
operating subsidiaries were operated as a group of companies owned by common
shareholders. In December 1995, the companies underwent a reorganization, as a
result of which Amdocs Limited became the holding company for all the affiliated
companies. At the
20
<PAGE> 22

same time, we issued shares for an aggregate $16.6 million to a group of
entities in some of which some of our officers and directors have a beneficial
interest. See "Certain Transactions."

In September 1997, Amdocs and investment partnerships affiliated with WCAS
and some other investors, including several entities in some of which some
directors and executive officers of our subsidiaries have a beneficial interest
(collectively, the "WCAS Investors"), entered into a Share Subscription
Agreement under which the WCAS Investors acquired from us on September 22, 1997,
$3.27 million principal amount of our junior promissory notes and shares
representing 8.7% of our then outstanding equity for $61.2 million. On that
date, Amdocs and the WCAS Investors also entered into a Conditional Investment
Agreement, under which the WCAS Investors agreed, subject to the satisfaction of
specific revenue and cash flow targets through November 30, 1997, to acquire
additional shares of Amdocs which, when added to the shares acquired under the
Share Subscription Agreement, would constitute 35.0% of our outstanding equity
as of September 22, 1997. Concurrently with the signing of the Conditional
Investment Agreement, one of our subsidiaries, European Software Marketing Ltd.
("ESM"), entered into a Note Purchase Agreement with WCAS Capital Partners III,
L.P., an investment partnership affiliated with WCAS, and several other
investors, providing for the issuance of up to $125.0 million principal amount
of 10% subordinated notes of ESM, subject to the satisfaction of the same
financial targets set forth in the Conditional Investment Agreement.

In January 1998, with the financial targets having been met, ESM sold
$123.5 million principal amount of subordinated notes under the Note Purchase
Agreement for a purchase price equal to their principal amount.

On March 30, 1998, we completed the transactions contemplated by the
Conditional Investment Agreement by issuing and selling to the WCAS Investors
51,507,716 ordinary shares for $95.83 million in cash and the surrender of the
$3.27 million principal amount of junior promissory notes issued by us in
September 1997.

The proceeds of the equity and subordinated debt investments made under the
Share Subscription Agreement, the Conditional Investment Agreement and the Note
Purchase Agreement were used, together with the proceeds of $315.0 million in
term loans made to ESM in December 1997 under a senior bank credit facility (of
which $90.0 million was prepaid with a portion of the equity investment) and
internally generated funds, to (1) acquire for $40.0 million specified
intellectual property rights from operating subsidiaries of SBC and (2) fund an
internal corporate reorganization. In the reorganization, ESM acquired from
Amdocs Limited the outstanding capital stock of Amdocs (UK) Limited, our
operating subsidiary in the United Kingdom. ESM applied the proceeds of the
senior and subordinated debt financings to pay Amdocs Limited a portion of the
purchase price of such acquisition. Following the reorganization, $478.7 million
in dividends were paid by us to our shareholders, including $39.9 million to the
WCAS Investors.

In September 1997, the WCAS Investors also granted a call option on some of
the ordinary shares acquired under the Share Subscription Agreement and the
Conditional Investment Agreement to our then existing shareholders, AIL, SBCI,
several entities in some of which some of our directors and executive officers
have a beneficial interest and an irrevocable securities trust for the benefit
of a group of employees (the "Trust"). The call option may be exercised, without
the payment of any consideration to the WCAS Investors, if specific revenue and
cash flow targets are met in fiscal years 1998 and 1999. The cash flow and
revenue targets in fiscal 1998 were satisfied in full. If the targets are met in
fiscal year 1999, the number of ordinary shares held by the WCAS Investors as a
result of their net $120.4 million investment in Amdocs will be reduced from
62,580,024 to 47,381,984 ordinary shares. See "Principal Shareholders -- Call
Option Agreement."

On June 19, 1998, we commenced an initial public offering of 18,000,000
ordinary shares at an offering price of $14 per share. Total net proceeds, after
deduction of offering expenses and underwriting commissions, amounted to $234.2
million. We used these funds to repay $183.8 million in outstanding term loans
and its related interest and $49.0 million out of the $123.5 million in
subordinated debt issued in January 1998.
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<PAGE> 23

On , 1999, we completed our combination with Architel in a
transaction that we accounted for as a pooling of interests.

YEAR 2000 ISSUES

OUR STATE OF READINESS. We have identified the information technology
("IT") and non-IT systems, software and products which could be affected by the
year 2000 problem, and have assessed the efforts required to remediate or
replace them. We have also identified versions of our products that were not
compliant and are assisting customers in upgrading or migrating to year 2000
compliant versions. By mid-1999, it is our intention that all of the major or
key systems, software and products will be remediated or replaced. See "Risk
Factors" for more information.

We began evaluating year 2000 compliancy issues in mid 1996. Since then,
the following functions have been performed: thorough examination and study of
year 2000 compliance status, process methodology adaptation, analysis of
solution alternatives and determination of our technical and business year 2000
policies. New systems, of recent years, have been developed as year 2000
compliant; older generations of applications are being converted to year 2000
compliance in cooperation with our customers (using Amdocs year 2000 methodology
and toolkit). None of these systems need mass data conversion, which is usually
the most sensitive portion of the year 2000 conversion. Recognizing the
importance of year 2000 support in the IT industry and to provide an additional
level of assurance to our customers, we have decided to conduct a thorough and
systematic verification process. This effort is based on the application of
industry-wide standards for year 2000 compliance. This verification process
utilizes a specialized tool kit developed by us including a powerful search
utility. We offer to conduct the verification process for our customers because
the ultimate verification for year 2000 compliance should be executed in their
own working environment. This subject is crucial in view of the technical and
functional interaction with third-party systems and those developed by the
customers locally.

We anticipate completing the majority of the testing, implementation of
changes and necessary refinements by mid 1999. Management expects that systems,
software and products for which we have responsibility currently are year 2000
compliant or will be compliant on a timely basis. We are currently not aware of
any year 2000 issues with our customers that cannot be remedied.

We have contacted all of our customers, and most of our vendors and other
third parties with whom we deal to identify potential issues we might encounter
concerning year 2000 compliancy. These communications are also used to elicit
the status of year 2000 readiness, and to clarify which year 2000 issues are our
responsibility and which are the responsibility of the third party. We do not
anticipate that the year 2000 issues we will encounter with third parties will
be different than those encountered by other providers of information services,
including our competitors. At this time, we are not aware of any year 2000
issues or problems relating to third parties with which we have a material
relationship.

With respect to our internal information technology systems (including
information technology-based office facilities, such as data and voice
communications, building management and security systems, human resources and
recruitment system, purchasing, invoicing, finance and budget systems, general
ledger and other administrative systems), both third party's software and
in-house developments, we have adopted standard industry practices, as published
by the British Standards Institute and methodologies suggested by the Gartner
Group (INSPCT), in preparing for the year 2000 date change. Our year 2000
internal readiness program primarily covers: taking inventory of hardware,
software and embedded systems, assessing business risks associated with those
systems, creating action plans to address known risks, executing and monitoring
action plans, and contingency planning. We have sent questionnaires to our
vendors and service providers to certify year 2000 readiness and have conducted
risk analysis and testing of the core components of our business, software and
hardware systems. We expect to substantially complete year 2000 readiness
preparations by mid-1999 but to continue extensive testing through calendar
1999.

Although we do not believe that we will incur any material cost or
experience material disruptions in our business associated with preparing our
internal systems for the year 2000, we could experience serious unanticipated
negative consequences and/or material costs caused by undetected errors or
defects in the
22
<PAGE> 24

technology used in our internal systems, which are composed of third party
software, third party hardware that contains embedded software and our own
software products. We are in the process of implementing action plans for the
remediation of high risk areas and we are scheduled to implement remediation
plans for medium to low risk areas during the remainder of calendar 1999. We
expect our contingency plans to include, among other things, manual
"work-arounds" for software and hardware failure, as well as substitution of
systems, if necessary.

COSTS TO ADDRESS OUR YEAR 2000 ISSUES. A significant portion of our year
2000 compliance efforts have occurred or are occurring in connection with system
upgrades or replacements that were otherwise planned (but perhaps accelerated
due to the year 2000 issue) or which have significant improvements and benefits
unrelated to year 2000 issues. We have accrued approximately $3.3 million at
December 31, 1998 representing the estimated amount of costs to modify
previously sold customized software products. The remainder of the costs that
are incremental and directly related to year 2000 issues are not expected to be
material to the financial position or results of operations. We do not
anticipate capitalizing any of these costs as they relate to warranties related
to products developed for customers.

We have not yet estimated year 2000 costs for periods after 1999. Some
post-1999 costs might be anticipated due to extra customer service efforts
created by the failure of third parties to be year 2000 compliant. Neither the
costs incurred for year 2000 compliance efforts, nor the delay or deferral of
certain development projects that might have otherwise been undertaken in the
absence of year 2000 compliance efforts, are expected to have a material effect
on our financial position or results of operations. Such costs generally have
been funded by the re-deployment of both IT and non-IT personnel resources. In
addition, our philosophy is to address many year 2000 issues as part of
re-engineering or replacement efforts. There were several situations in which
customers funded a special effort for the year 2000, but those projects were
usually treated by us as a part of ongoing support of the customer.

OUR CONTINGENCY PLANS. Detailed contingency plans are being prepared and
will be refined as appropriate. Those plans will focus on matters which appear
to be our most likely year 2000 risks, such as possible additional customer
support efforts by us that would be necessary if customers or vendors are not
year 2000 compliant, or if a year 2000 issue should not be timely detected in
our own compliance efforts.

RISKS OF OUR YEAR 2000 ISSUES. We do not anticipate that the year 2000
issues and risks, including the most reasonably likely worst case year 2000
scenario, we will encounter, will be significantly different than those
encountered by other providers of information services. Although we believe our
remediation, replacement and testing efforts will address all of the year 2000
issues for which we are responsible, to the extent these efforts are not
successful, additional compliance efforts would be necessary together with
additional customer service efforts and expenditures. If third parties fail in
their compliance efforts, we could also be impacted and required to provide
additional customer service efforts. In such an event, we could incur additional
costs and experience a negative impact on revenue and operating income.

Our cost and timetable estimates for our year 2000 efforts are subject to
potentially significant estimation uncertainties that could cause actual results
to differ materially. These estimates are based on management's current best
estimates and reflect certain assumptions. Factors which could impact these
estimates include:

- the availability of appropriate technology personnel,

- the rate and magnitude of related labor costs,

- the successful identification of all aspects of our systems,

- the success of third parties in their year 2000 compliance efforts;
software and products that require remediation or replacement,

- the extent of testing required; the costs of our efforts to assist
certain customers in the remediation of their customized code, and

- the amount of cost recoveries from those efforts.

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<PAGE> 25

Due to the complexity and pervasiveness of the year 2000 issue, and in
particular the uncertainty regarding the compliance efforts of third parties, no
assurance can be given that these estimates will be achieved, and actual results
could differ materially. See "Risk Factors" for more information.

ARCHITEL'S YEAR 2000 ISSUES

Architel has established a comprehensive project designed to identify and
assess the impact of the year 2000 issue on its products, information technology
systems, facilities and suppliers. Architel has targeted June 30, 1999 as the
target date for completion of these efforts, which includes (i) assessment, (ii)
remediation, (iii) testing and development of contingency plans, and (iv)
implementation. Architel has completed the first two stages and is now in the
testing phase. Based on the current assessment and representations from
suppliers of internal systems and programs, Architel believes that such systems
and programs either currently address the year 2000 issue, will be upgraded in
the normal course and within the scheduled time frame to address the year 2000
issue, or, if necessary, can be replaced at no material additional cost to
Architel. Other than seeking representations or assurances, Architel has not
made any independent assessment as to whether any of its service providers will
be affected by the year 2000 Issue.

Architel also has a program to make its commercially available software
products year 2000 ready. ASAP, Objectel and Accugraph legacy products have all
been tested for year 2000 compliance and are generally available to customers.
OMS and Architel's OSS Interconnection Gateway product, are scheduled to be
tested for year 2000 compliance and be generally available by June 1999. This
includes ensuring proper interoperability with related data base and operating
system software, as well as embedded third party software. The efforts to
address the year 2000 issue are being performed as part of normal development
activity and are not expected to result in any material incremental costs to
Architel. Further modifications and testing of these products may be necessary,
however, as a result of further changes to related third party products.
Architel believes that it has sufficient resources to provide timely support to
its customers implementing product upgrades. Architel's FAMIS product is not
designed to address the year 2000 issue. Architel believes that it has no
contractual or other obligation to modify the FAMIS product to address the year
2000 issue. Architel believes that all of its FAMIS customers will be replacing
their FAMIS installations prior to December 31, 1999. Accordingly, Architel
believes that it will incur no material cost or liability with respect to the
year 2000 issue as it relates to its FAMIS product.

Architel believes that it is taking the necessary steps to resolve year
2000 issues and that its year 2000 transition will be effected without material
adverse impact on its business, operations, products or financial prospects.
There can be no assurances, however, that despite Architel's efforts, it will
not experience serious unanticipated negative consequences and/or material costs
caused by undetected errors or defects in the technology used in its internal
systems or those of its suppliers, in embedded software or related data bases or
operating systems or in Architel's own products.

EUROPEAN MONETARY UNION CURRENCY

The Euro will be phased in over a three-year period which commenced January
1, 1999, when participating European countries began using the Euro currency for
non-cash transactions. We offer software products that are capable of handling
the Euro currency and converting from local currencies to the Euro and vice
versa. There can be no assurance that our software or software provided to our
customers by other vendors will ensure an errorless transition to the Euro
currency. We have accrued approximately $2.3 million at December 31, 1998,
representing the estimated cost to modify our software products to accept the
Euro currency under existing agreements with customers relating to previously
sold products. We do not currently anticipate recovering these expenditures from
the customers, as they relate to warranty agreements. Such costs may
significantly exceed such estimate, in which case such costs could have a
material adverse effect on our results of operations and financial condition.
See "Risk Factors" for more information.

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<PAGE> 26

EFFECTIVE TAX RATE

Our overall effective tax rate has historically been approximately 30% due
to the various corporate income tax rates of the countries in which we operate
and the relative magnitude of our activities in those countries. Our
consolidated effective tax rate for fiscal 1998 was 50%, due to significant
interest expense in a tax jurisdiction in which we are tax exempt, which
resulted in no tax benefit to offset the tax expense incurred in other
jurisdictions. In fiscal 1997 we sustained a loss in a tax jurisdiction in which
we are tax exempt, which resulted in no tax benefit to offset tax expense
incurred in other jurisdictions. As a result, our effective tax rate for fiscal
1997 was significantly higher than normal. Due to the repayment of the debt
which gave rise to the interest expense, the effective tax rate is expected to
be 30% for fiscal 1999. See "Risk Factors" for more information.

CURRENCY FLUCTUATIONS

We regard the dollar as our functional currency and measure ourselves
according to that currency. Without giving effect to the Arrangement
approximately 80% of our revenue and approximately 60% of our operating expenses
are paid in dollars or are paid in other currencies with the exchange rate
linked to dollars. Other significant currencies in which we receive revenue or
pay expenses are Australian dollars, the Euro, British pounds, Canadian dollars,
and Israeli shekels. Historically, the effect of fluctuations in currency
exchange rates has had a minimal impact on our operations. As we expand our
operations outside of the United States, our exposure to fluctuations in
currency exchange rates could increase. In order to manage our foreign exchange
risk we enter into various foreign exchange contracts. At December 31, 1998, we
had hedged all significant current exposures in currencies other than the
dollar. See "Risk Factors" for more information.

EMPLOYEE ARRANGEMENTS

In September 1997, we contributed $25.8 million to the Trust, in
recognition of past services rendered to us by a group of our employees. The
beneficiaries are primarily software and information technology specialists who
have played an important role in our success. The trust agreement provides that
the beneficiaries will be entitled to receive amounts contributed by us on their
behalf, subject to certain conditions, over the next five years. In September
1997, the Trust used the contribution from us and other resources to purchase
from us 5,720,000 ordinary shares for consideration of approximately $31.6
million. The Trust is required to liquidate any investments held in respect of
any beneficiary and distribute only cash payments.

We recorded the $25.8 million contribution as compensation expense in 1997,
the year in which such contribution was made. The Trust will distribute on
certain dates within the next five years cash amounts to those beneficiaries
employed by us on such dates. The amounts to be distributed to the beneficiaries
employed by us on the relevant dates will include an appreciation in the value
of the Trust's assets and are dependent upon several conditions, such as the
amount of cash available and the Trust's ability to realize the value of the
assets it holds. Termination of a beneficiary's employment with us will not
affect entitlement to a beneficiary's minimum interest in the Trust and any
terminated employee will receive such interest in September 2007. See
"Management -- Employee Trust Agreement".

As of March 22, 1999 we had granted options to purchase 4,054,000 of our
ordinary shares under our 1998 Stock Option and Incentive Plan (the "Amdocs
Plan"). See "Management -- Employee Stock Options" for more information.

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<PAGE> 27

RESULTS OF OPERATIONS

The following table sets forth specified items in our consolidated
statements of operations reflected as a percentage of total revenue for the
periods of:

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
DECEMBER 31, YEAR ENDED
1998 SEPTEMBER 30,
-------------- -----------------------
1998 1997 1998 1997 1996
---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue:
License.......................................... 11.4% 10.1% 10.6% 9.0% 7.7%
Service.......................................... 88.6 89.9 89.4 91.0 92.3
----- ----- ----- ----- -----
100.0 100.0 100.0 100.0 100.0
----- ----- ----- ----- -----
Cost of license.................................. 1.0 3.7 2.7 1.3 1.9
Cost of service.................................. 57.8 57.9 57.3 59.9 61.0
Research and development......................... 6.4 6.1 6.3 6.0 6.9
Selling, general and administrative.............. 11.9 12.8 12.7 14.0 13.4
Nonrecurring charges............................. -- -- -- 9.5 --
----- ----- ----- ----- -----
77.1 80.5 79.0 90.7 83.2
----- ----- ----- ----- -----
Operating income................................... 22.9 19.5 21.0 9.3 16.8
Other expenses, net.............................. 1.0 1.2 6.0 1.1 0.2
Income taxes..................................... 6.6 9.1 7.5 6.2 5.0
----- ----- ----- ----- -----
Income before cumulative effect, net............... 15.3 9.2 7.5 2.0 11.6
Cumulative effect of a change in accounting
principle, net................................... -- -- * -- --
----- ----- ----- ----- -----
Net income......................................... 15.3% 9.2% 7.5% 2.0% 11.6%
===== ===== ===== ===== =====
</TABLE>

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

* Less than 0.1%

THREE MONTHS ENDED DECEMBER 31, 1998 AND 1997

Our fiscal year ends on September 30. The information set forth below
compares first quarter fiscal year 1999 with first quarter fiscal year 1998.

REVENUE. Revenue for the quarter ended December 31, 1998 was $131.4
million, an increase of $44.9 million, or 51.8%, compared to the prior fiscal
year's first quarter. License revenue increased from $8.7 million in first
quarter fiscal year 1998 to $15.0 million in first quarter fiscal year 1999, an
increase of 72.5%, and service revenue increased 49.5% by $38.5 million in first
quarter fiscal year 1999. Total CC&B Systems revenue for the quarter ended
December 31, 1998 was $90.4 million, an increase of $43.6 million, or 93.2%,
compared to the prior fiscal year's first quarter. Revenue attributable to
Directory Systems was $41.0 million for the quarter ended December 31, 1998, an
increase of $1.3 million, or 3.2%, from first quarter fiscal year 1998. The
growth in revenue is attributable to sales to new customers as well as to sales
of additional products and services to existing customers.

In the three months ended December 31, 1998 and 1997, revenue from
customers in North America, Europe and the rest of the world accounted for
44.1%, 38.0% and 17.9%, respectively, compared to 59.1%, 17.6% and 23.3%,
respectively.

COST OF LICENSE. Cost of license for the quarter ended December 31, 1998
was $1.3 million, a decrease of $1.9 million, or 58.8%, from cost of license for
the quarter ended December 31, 1997. Cost of license in first quarter 1999
includes amortization of purchased computer software and intellectual property
rights, and in 1998 included a royalty expense paid to some subsidiaries of SBC
in connection with the grant to Amdocs of licenses to use certain software
jointly developed with those subsidiaries.
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<PAGE> 28

COST OF SERVICE. Cost of service for first quarter fiscal year 1999 was
$75.9 million, an increase of $25.8 million, or 51.4%, from cost of service of
$50.1 million for first quarter fiscal year 1998. As a percentage of revenue,
cost of service decreased to 57.8% in the quarter ended December 31, 1998 from
57.9% in first quarter fiscal year 1998. The absolute increase in cost of
service is consistent with the increase in revenue for the quarter, as these
costs are predominately compensation related and reflect increased employment
levels required to support the growth in revenue.

RESEARCH AND DEVELOPMENT. Research and development expense is primarily
comprised of compensation expense attributed to research and development
activities, usually in conjunction with customer contracts. In the quarter ended
December 31, 1998, research and development expense was $8.4 million, or 6.4% of
revenue, compared with $5.3 million, or 6.1% of revenue, in the quarter ended
December 31, 1997. The increase in research and development expense represents
ongoing expenditures for both CC&B Systems and Directory Systems.

SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expense is primarily comprised of compensation expense and increased by 41.6%,
to $15.6 million, or 11.9% of revenue, in the quarter ended December 31, 1998
from $11.0 million, or 12.8% of revenue, in the prior fiscal year's first
quarter.

OPERATING INCOME. Operating income in the quarter ended December 31, 1998
was $30.2 million, or 22.9% of revenue, as compared with $16.8 million, or 19.5%
of revenue, in the prior fiscal year's first quarter, an increase of 79.1%.

OTHER EXPENSE, NET. Other expense, net is primarily interest expense
incurred by us related to bank debt. In the quarter ended December 31, 1998,
other expense, net was an expense of $1.4 million, an increase of $0.4 million
from first quarter fiscal year 1998.

INCOME TAXES. Income taxes in the quarter ended December 31, 1998 were $8.6
million on income before taxes of $28.8 million. In the prior fiscal year's
first quarter, income taxes were $7.9 million on income before taxes of $15.8
million.

NET INCOME. Our net income was $20.1 million, or 15.3% of revenue, in the
quarter ended December 31, 1998 as compared with $8 million, or 9.2% of revenue
in the quarter ended December 31, 1997. The increase was primarily the result of
an increase in operating income.

BASIC AND DILUTED EARNINGS PER SHARE. Basic and diluted earnings per share
increased 67% from $0.06 in first quarter fiscal year 1998 to $0.10 in first
quarter fiscal year 1999. This was positively effected by the increase in net
revenue and partially offset by an increase in the weighted average number of
shares.

YEARS ENDED SEPTEMBER 30, 1998 AND 1997

REVENUE. Revenue for the year ended September 30, 1998 was $403.8 million,
an increase of $113.7 million, or 39.2%, compared to the prior year. License
revenue increased from $26.0 million in fiscal year 1997 to $42.9 million in
fiscal year 1998, an increase of 65.0%, and service revenue increased 36.6% or
$96.8 million in fiscal year 1998. Total CC&B Systems revenue for the year ended
September 30, 1998 was $251.8 million, an increase of $85.5 million, or 51.4%,
compared to the prior fiscal year. Revenue attributable to Directory Systems was
$151.9 million for the year ended September 30, 1998, an increase of $28.2
million, or 22.8%, from fiscal year 1997. The growth in revenue is attributable
to sales to new customers as well as to sales of additional products and
services to existing customers.

In the year ended September 30, 1998, revenue from customers in North
America, Europe and the rest of the world accounted for 52.2%, 27.2% and 20.6%,
respectively, compared to 63.8%, 11.3% and 24.9%, respectively, in fiscal 1997.

COST OF LICENSE. Cost of license for the year ended September 30, 1998 was
$10.7 million, an increase of $7.0 million, or 189.2%, from cost of license for
the year ended September 30, 1997. Cost of license in fiscal year 1998 includes
amortization of purchased computer software and intellectual property rights,
and

27
<PAGE> 29

in 1997 included royalty expense paid to some subsidiaries of SBC in connection
with the grant to us of licenses to use certain software jointly developed with
those subsidiaries.

COST OF SERVICE. Cost of service for fiscal year 1998 was $231.4 million,
an increase of $57.7 million, or 33.2%, from cost of service of $173.7 million
for fiscal year 1997. As a percentage of revenue, cost of service decreased to
57.3% in the year ended September 30, 1998 from 59.9% in fiscal year 1997. The
absolute increase in cost of service is consistent with the increase in revenue
for the period, as these costs are predominately for compensation and reflect
increased employment levels needed to support the growth in revenue.

RESEARCH AND DEVELOPMENT. Research and development expense is primarily
comprised of compensation expense for employees engaged in research and
development activities, usually in conjunction with customer contracts. In the
year ended September 30, 1998, research and development expense was $25.6
million, or 6.3% of revenue, compared with $17.4 million, or 6.0% of revenue, in
the year ended September 30, 1997. The increase in research and development
expense in fiscal year 1998 represents ongoing expenditures for both CC&B
Systems and Directory Systems.

SELLING, GENERAL AND ADMINISTRATIVE. Compensation is the largest component
of selling, general and administrative expense. Selling, general and
administrative expense increased by 25.5% to $51.2 million, in the year ended
September 30, 1998 from $40.8 million in the prior fiscal year. However,
selling, general and administrative expense as a percentage of revenue decreased
from 14.1% of revenue in the year ended September 30, 1997 to 12.7% of revenue
in the year ended September 30, 1998

OPERATING INCOME. Operating income in the year ended September 30, 1998 was
$84.9 million, as compared with $54.5 million in fiscal year 1997, excluding the
effect of the nonrecurring charges in that fiscal year, an increase of 55.8%. As
a percentage of revenue, operating income was 21.0% in fiscal year 1998 as
compared to 18.8% in fiscal year 1997 (excluding the effect of the nonrecurring
charges in fiscal year 1997).

OTHER EXPENSE, NET. Other expense, net is primarily interest expense
incurred by us related to senior bank debt and subordinated debt, which debt was
substantially repaid from the proceeds of our initial public offering. In the
year ended September 30, 1998, other expense, net was an expense of $24.1
million, an increase of $20.8 million from fiscal year 1997.

INCOME TAXES. Income taxes in the year ended September 30, 1998 were $30.4
million on income before taxes of $60.8 million. In the prior year, income taxes
were $17.8 million on income before taxes of $23.7 million. Our consolidated
effective tax rate for fiscal year 1998 was 50%, due to significant interest
expense in a tax jurisdiction in which we are tax exempt, which resulted in no
tax benefit to offset the tax expense incurred in other jurisdictions. In fiscal
1997 we sustained a loss in a tax jurisdiction in which we are tax exempt, which
resulted in no tax benefit to offset tax expense incurred in other
jurisdictions.

NET INCOME. Our net income was $30.1 million in the year ended September
30, 1998 compared with net income of $5.9 million in fiscal year 1997. The
increase was primarily the result of an increase in operating income. In
addition, in fiscal year 1998 we incurred $24.1 million in interest expense
related to its outstanding debt; while in fiscal year 1997 we had a nonrecurring
charge of $27.6 million.

YEARS ENDED SEPTEMBER 30, 1997 AND 1996

REVENUE. Revenue for fiscal year 1997 was $290.1 million, an increase of
$78.4 million, or 37.0%, from fiscal year 1996. License revenue increased from
$16.3 million in fiscal year 1996 to $26.0 million in fiscal year 1997, an
increase of 59.5%, and service revenue increased 35.1% or $68.7 million in
fiscal year 1997. The majority of the increase in total revenue was due to the
expansion of the CC&B Systems business. Total CC&B Systems revenue for fiscal
year 1997 was $166.3 million, an increase of $63.9 million, or 62.3%, from the
prior year. Revenue attributable to Directory Systems was $123.8 million for
fiscal year 1997, an increase of $14.5 million, or 13.3%, from fiscal year 1996.

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<PAGE> 30

In fiscal year 1997, revenue from customers in North America, Europe and
the rest of the world accounted for 63.8%, 11.3% and 24.9% respectively,
compared to 67.5%, 14.5% and 18.0%, respectively, in fiscal year 1996.

COST OF LICENSE. Cost of license for fiscal year 1997 was $3.7 million, a
decrease of $0.3 million, or 7.5%, from fiscal year 1996 cost of license of $4.0
million. The decrease was due to the acquisition of certain software rights from
several operating subsidiaries of SBC, which eliminated the requirement to pay
royalties.

COST OF SERVICE. Cost of service for the year ended September 30, 1997 was
$173.7 million, an increase of $44.5 million, or 34.4%, from fiscal year 1996
cost of service of $129.2 million. As a percentage of revenue, cost of service
decreased to 59.9% in fiscal year 1997 from 61.0% in fiscal year 1996. The
absolute increase in cost of service was consistent with the increase in revenue
for the period, and reflected increased compensation attributable to higher
employment levels needed to support the growth in revenue.

RESEARCH AND DEVELOPMENT. In fiscal year 1997, research and development
expense was $17.4 million, or 6.0% of revenue, compared with $14.7 million, or
6.9% of revenue, in fiscal year 1996. The absolute increase in research and
development expense in fiscal year 1997 represented ongoing expenditures for
both CC&B Systems and Directory Systems, while the decrease as a percentage of
revenue was attributable to the overall increase in revenue for the period.

SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expense increased to $40.8 million, or 14.1% of revenue, in fiscal year 1997
from $28.3 million, or 13.4% of revenue, in the prior year, an increase of
43.8%. The increase was primarily attributable to increased marketing efforts
for our CC&B Systems.

NONRECURRING CHARGES. In the fourth quarter of fiscal year 1997, we
recorded nonrecurring charges of $27.6 million. Of such amount, $1.8 million was
due to the write-off of in-process research and development for technology
related to certain software rights (which rights include the termination of
related future royalty payment obligations) acquired from several operating
subsidiaries of SBC and the balance, $25.8 million, was attributable to the
funding of a contribution to the Trust for the benefit of certain officers and
employees.

OPERATING INCOME. As a result of the $27.6 million of nonrecurring charges
recognized in fiscal year 1997, operating income in fiscal year 1997 was $27.0
million, as compared with $35.5 million in fiscal year 1996. As a percentage of
revenue, operating income was 9.3% in fiscal year 1997 as compared to 16.8% in
fiscal year 1996. Excluding the effect of the nonrecurring charges, operating
income would have been $54.5 million in fiscal year 1997, or 18.8% of revenue,
an increase of $19.0 million, or 53.4%, between fiscal years 1997 and 1996. The
increase in operating income as a percentage of revenue (excluding the effect of
the nonrecurring charges) was primarily attributable to increased license
revenue.

OTHER EXPENSE, NET. Other expense, net was an expense of $0.5 million in
fiscal year 1996 and an expense of $3.3 million in fiscal year 1997. The
increase in fiscal year 1997 was attributable to the settlement of the claims of
various taxing authorities for additional taxes for years prior to such fiscal
year. Approximately $3.0 million of expense was included in the 1997 period for
interest on the tax assessments.

INCOME TAXES. Income taxes in fiscal year 1997 were $17.8 million on income
before taxes of $23.7 million. In fiscal year 1996, income taxes were $10.5
million on income before taxes of $35.0 million. In fiscal year 1997, we paid
income taxes for the operations of our subsidiaries, principally in the United
States, the United Kingdom and Israel, and recorded a loss in Guernsey, a
jurisdiction in which we are tax-exempt.

NET INCOME. We had net income of $5.9 million in fiscal year 1997 compared
with net income of $24.5 million in fiscal year 1996, primarily as a result of
the $27.6 million for the nonrecurring charges incurred in 1997.

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UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED RESULTS

THREE MONTHS ENDED DECEMBER 31, 1998 AND 1997

Revenue. Pro forma revenue for the three months ended December 31, 1998
was $146.4 million, an increase of $53.2 million, or 57.1%, compared to the
prior year's first quarter. The growth in revenue is attributable to sales to
new customers as well as to sales of additional products and services to
existing customers. With the Architel combination, the percentage of license
revenue to total revenue is expected to increase in future periods, compared to
the Amdocs historical results.

Operating Income. Pro forma operating income for the three months ended
December 31, 1998 was $30.2 million, an increase of $12.0 million, or 66.0%,
compared to the prior year's first quarter. Included in pro forma operating
expense for the three months ended December 31, 1998 is amortization expense of
$2.9 million recorded by Architel in connection with intangibles acquired in the
Accugraph transaction.

Net Income. Pro forma net income for the three months ended December 31,
1998 was $19.7 million, an increase of $10.8 million, or 120%, compared to the
prior year's first quarter. As a percentage of revenue, pro forma net income was
13.5% for the three months ended December 31, 1998 as compared to 9.6% in the
prior year's first quarter, primarily due to the reduction in Amdocs' effective
tax rate for the three months ended December 31, 1998, compared to the prior
year's first quarter.

YEARS ENDED SEPTEMBER 30, 1998 AND 1997

Revenue. Pro forma revenue for the year ended September 30, 1998 was
$438.5 million, an increase of $124.4 million, or 39.6%, compared to the prior
year. The growth in revenue is attributable to sales to new customers as well as
to sales of additional products and services to existing customers. With the
Architel combination, the ratio of license revenue to total revenue is expected
to increase in future periods.

Operating Income. Pro forma operating income for the year ended September
30, 1998 was $80.8 million, an increase of $50.7 million, or 168%, compared to
the prior year. Included in pro forma fiscal 1998 operating expenses are (1)
nonrecurring charges of $7.8 million recorded by Architel representing the
write-off of in-process research and development for technology acquired in the
acquisition of Accugraph in June 1998 and (2) amortization expense of $3.1
million recorded by Architel in connection with intangibles acquired in the
Accugraph transaction. Included in pro forma fiscal 1997 operating expenses are
(a) nonrecurring charges of $27.6 million recorded by Amdocs representing (i)
the payment of a one-time special bonus of $25.8 million paid to a trust for the
benefit of certain officers and employees related to past services and (ii) the
write-off of $1.8 million in connection with the acquisition of certain software
rights related to in-process research and development and (b) amortization
expense of $2.9 million recorded by Architel. Excluding the above items, pro
forma operating income for the year ended September 30, 1998 increased by $31.1
million, or 51.3%, compared to the prior year primarily related to the growth in
revenue.

Net Income Before Cumulative Effect. Pro forma net income before
cumulative effect of a change in accounting principle for the year ended
September 30, 1998 was $24.9 million, an increase of $16.5 million, or 197%,
compared to the prior year. As a percentage of revenue, pro forma net income
before cumulative effect was 5.7% in fiscal 1998 as compared to 2.7% in the
previous year, primarily because of the items described in the previous
paragraph.

LIQUIDITY AND CAPITAL RESOURCES

FINANCING TRANSACTIONS

We have primarily financed our operations through cash generated from
operations, sales of equity securities and borrowing from banks and other
lenders. Cash and cash equivalents totaled $18.1 million at December 31, 1998
compared to $25.4 million at September 30, 1998. Net cash provided by operating
activities amounted to $17.9 million, and $14.6 million for the first quarters
of fiscal years 1999 and 1998, respectively.

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<PAGE> 32

We currently intend to retain our earnings to repay our outstanding loans
and to finance the developments of our business. The terms of the July 1998 bank
agreement effectively restrict our ability to pay cash dividends.

At December 31, 1998, we had a shareholders' deficit of $2.6 million as a
result of the $478.7 million in dividends distributed to shareholders in January
1998 and the net proceeds of $330.6 million from the WCAS investment and our
initial public offering during fiscal 1998. We believe that cash generated from
operations and our current lines of credit will provide sufficient resources to
meet our needs in the near future.

At December 31, 1998, we had short term lines of credit totaling $147.0
million from various banks or bank groups, of which $75.7 million was
outstanding. As of such date, we had also used approximately $2.8 million of our
revolving credit facility to support outstanding letters of credit.

As of December 31, 1998, we had negative working capital of $69.7 million
as compared to negative working capital of $84.3 million at September 30, 1998.
We do not believe this will have a negative impact on our liquidity as this
temporary situation is primarily a result of a three-year revolving credit line
which we intend to repay within the next twelve months with cash flows from
operations.

As of December 31, 1998, we had long-term obligations outstanding of $14.8
million in connection with vehicle leasing arrangements.

Currently, our capital expenditures are funded primarily by operating cash
flows and capital leasing arrangements. We do not anticipate a change to this
policy in the foreseeable future.

NET DEFERRED TAX ASSETS

Based on management's assessment, it is more likely than not that all the
net deferred tax assets at December 31, 1998 will be realized through future
taxable earnings. No significant increase in future taxable earnings would be
required to fully realize the net deferred tax assets.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Market risks relating to our operations result primarily from changes in
interest rates and exchange rates or weak economic conditions in the markets in
which we sell our products. To address these risks we enter into various hedging
transactions as described below. We do not use financial instruments for trading
purposes and are not a party to any leveraged derivatives.

FOREIGN CURRENCY RISK

We enter into foreign exchange forward contracts to hedge some of our
foreign currency exposure. We use such contracts to hedge exposure to changes in
foreign currency exchange rates associated with revenue denominated in a foreign
currency and anticipated costs to be incurred in a foreign currency. We seek to
minimize the risk that the fair value of sales of our products and services and
cash flow required for our expenses denominated in a currency other than their
functional currency, the U.S. dollar, will be affected by changes in exchange
rates. See Note 18 to our consolidated financial statements on page F-23.

The following table summarizes our foreign currency forward exchange
agreements as of December 31, 1998. The table presents the notional amounts
(dollars in millions), weighted average exchange rates by expected (contractual)
maturity dates, and fair value of the total derivative instruments.

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<PAGE> 33

Notional values and average contract rates are calculated based on forward rates
at December 31, 1998 U.S. dollar translated.

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-------------------------------------- FAIR VALUE
1999 2000 2001 2002 AFTER OF FORWARDS
---- ---- ---- ---- ----- -----------
<S> <C> <C> <C> <C> <C> <C>
FORWARD CONTRACTS TO SELL FOREIGN
CURRENCIES FOR U.S. DOLLARS:
Great Britain Pounds
Notional value................. $ 15.4 $ 1.0 -- -- -- $(0.9)
Average contract rate.......... 1.66 1.65 -- -- --
Austrian Schillings
Notional value................. $ 9.7 $ 0.3 -- -- -- $(0.2)
Average contract rate.......... 11.72 11.55 -- -- --
Canadian Dollars
Notional value................. $ 6.8 10.9 -- -- -- $(0.1)
Average contract rate.......... 1.53 1.53 -- -- --
Japanese Yen
Notional value................. $ 2.9 -- -- -- -- $(0.5)
Average contract rate.......... 112.6 -- -- -- --
Norwegian Kronor
Notional value................. $ 4.4 $ 0.9 -- -- -- $(0.1)
Average contract rate.......... 7.65 7.69 -- -- --
Deutsche Marks
Notional value................. $ 2.7 -- -- -- -- *
Average contract rate.......... 1.66 -- -- -- --
FORWARD CONTRACTS TO BUY FOREIGN
CURRENCIES FOR U.S. DOLLARS:
Australian Dollars
Notional value................. $ 15.9 $ 9.3 $5.6 $ 4.4 -- $(2.1)
Average contract rate.......... 0.61 0.61 0.61 0.61
Israeli Shekels
Notional value................. $ 91.4 -- -- -- -- $(3.6)
Average contract rate.......... 4.272 -- -- -- --
</TABLE>

- ---------------
* Less than $100,000.

INTEREST RATE RISK

Our interest expenses are most sensitive to changes in the London InterBank
Offered Rate ("LIBOR") as all of our short-term borrowings bear a LIBOR-based
interest rate. Excess liquidity invested in short-term investments bears minimal
interest rate risk.

At December 31, 1998, we had approximately $78.5 million outstanding on our
revolving line of credit and short-term credit agreements and $14.8 million
recorded as long-term lease obligations. The potential loss to us over one year
that would result from a hypothetical, instantaneous, and unfavorable change of
100 basis points in the interest rates of all applicable financial assets and
liabilities on December 31, 1998 would be approximately $0.9 million. The above
sensitivity analysis is based on the assumption of an unfavorable 100 basis
point movement of the interest rates applicable to each homogenous category of
financial assets and liabilities and sustained over a period of one year. A
homogenous category is defined according to the currency in which financial
assets and liabilities are denominated and assumes the same interest rate
movement within each homogenous category. As a result, our interest rate risk
sensitivity model may overstate the impact of interest rate fluctuations for
such financial instruments, as consistently unfavorable movements of all
interest rates are unlikely. See Notes 2 and 8 to the consolidated financial
statements.

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BUSINESS AND PROPERTIES

INTRODUCTION

Amdocs Limited is a holding company incorporated under the laws of
Guernsey. Our global business, conducted through subsidiaries, is to provide
product-driven information system solutions to major telecommunication companies
in the United States and around the world. Unless the context otherwise
requires, all references in this prospectus to Amdocs "we," "its," "our," and
words of similar meanings include Amdocs Limited and its subsidiaries and their
respective predecessors.

Our Business Support Systems ("BSS") consist of families of customized
software products and services designed to meet the mission-critical needs of
specific telecommunications market sectors. We provide primarily CC&B Systems
for wireless (cellular, personal communications services ("PCS") and paging),
wireline (local, long distance, international and Internet) network operators
and service providers, as well as for companies that offer multiple service
packages, commonly referred to as convergent services (combinations of local,
long distance, international, mobile, cable television ("CATV") and Internet
services). In addition, we provide a full range of Directory Systems to
publishers of both traditional printed yellow page and white page directories
and electronic Internet directories. Due to the complexity of the process and
the expertise required for system support, we also provide extensive
customization, implementation, ongoing support, system enhancement and
maintenance services.

Since the inception of our business in 1982, we have concentrated on
providing software products and services to major telecommunications companies.
By focusing on this market, we believe that we have been able to develop the
innovative products and the industry expertise, project management skills and
technological competencies required for the advanced, large-scale,
specifications-intensive system projects typical of the telecommunications
industry. Our customer base includes the largest local exchange service
providers in the United States (including all the regional Bell operating
companies), major foreign network operators and service providers (including
Deutsche Telekom (Germany) and Telstra Corporation Ltd. (Australia)) and
emerging market leaders.

Our BSS products and related services are designed to manage and improve
key aspects of the business operations of telecommunications companies, such as
customer care, call rating, invoice calculation, bill formatting, collections,
fraud management and directory publishing services. The BSS products are
tailored to address the unique needs of each telecommunications provider.

After our combination with Architel we now develop, market and support
advanced Operations Support Systems ("OSS") used by telecommunications carriers.
Architel's products complement Amdocs' product range, with minimal overlap, to
provide a comprehensive solution for customer care and billing, order and
transaction management, service and network provisioning, including service
activation and interconnection management.

The combined offering will address key business needs of service providers,
such as shortening time-to-market for rolling out new telecommunications
services, minimizing fulfillment time cycles for services ordered by customers,
and simplifying OSS implementation projects by creating a "one-stop-shop" for
system needs from billing through service fulfillment.

Our products are designed to support a variety of service offerings,
including wireline, wireless, data and convergent multi-service environments, in
a network-independent manner.

INDUSTRY BACKGROUND

TELECOMMUNICATIONS INDUSTRY

The global telecommunications industry is becoming increasingly more
competitive due to deregulation and the development of new service technologies.
Competition in the U.S. market began to increase in 1984 when AT&T was required
to divest its local telephone operations and many new entrants began to invade
the long distance market. The Telecommunications Act of 1996 has increased
competition

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in the United States even further by allowing new and existing local (e.g.,
competitive local exchange carriers), long distance and cable companies to offer
competing services. Many companies are beginning to compete by providing
multiple or convergent services, offering combinations of local exchange, long
distance, wireless and data communications services to customers in single
geographic markets. Deregulation is also creating opportunities for new ways of
doing business, such as wholesaling and reselling telecommunications services.
Internationally, privatization and deregulation are resulting in increased
international competition and the emergence of newly authorized
telecommunications network operators and service providers, especially in
Europe, Latin America and the Asia-Pacific region. As markets are opened to
competition, new competitors within these markets typically compete for market
share with more established carriers, initially by providing access to service
and then by providing competitive prices, by introducing new features and
services and by being more responsive to customer needs. In addition, global
expansion by multinational companies and concurrent technological advances are
opening markets in less developed countries to enhanced telecommunications
services and competition.

In recent years, there has also been an explosion of new communications
technologies, including the Internet, PCS, Direct Broadcast Satellites and
Enhanced Specialized Mobile Radio, and improvements to existing services such as
call-forwarding, caller ID and voice mail, as well as the introduction of
advanced intelligent networks that offer new services such as voice activated
dialing. Additionally, companies in the directory publishing industry, which is
currently dominated by telecommunications companies that are owned by or
affiliated with the public telecommunications carriers, generally employ a local
sales force numbering thousands of representatives, serve an advertiser customer
base of hundreds of thousands of businesses and publish hundreds of different
directories each year. With the introduction of new technologies and
distribution platforms, including Internet directories, the directory publishing
industry is also experiencing significant changes.

INFORMATION SYSTEMS

As a result of these developments, many telecommunications companies are
seeking a new generation of information systems to support their operations and
to be more competitive. Many are looking to offer single-contact, single-invoice
solutions with integrated pricing plans for all services ("one-stop shopping").
Traditional telecommunications information systems are generally not able to
support multiple services or convergent systems efficiently. In addition, these
legacy information systems generally utilize antiquated technology, are costly
to maintain, are oriented to supporting a single-service approach and require
significant time and effort to accommodate new products or features, such as
pricing changes. In this dynamic environment, integrated, flexible and scalable
information systems are increasingly a means of differentiating competitors.

Many new and existing telecommunications companies do not have the
financial or human resources or technological capability to internally develop
efficient, flexible, cost-effective information systems on a timely basis.
Moreover, as many telecommunications companies strive to become more
consumer-oriented, they are concentrating their efforts and resources on
marketing to consumers and expanding their service offerings, and many are
turning to third-party vendors for their information systems which creates
significant opportunities for us. Unlike us, however, many third-party vendors
generally provide only generic software packages and maintenance services, while
customization, implementation and other related and ongoing tasks are performed
by a separate systems integration company.

THE AMDOCS SOLUTION

We believe that our total solutions orientation, product-driven approach
and commitment to and support of quality personnel permit us to offer effective
solutions to our customers that are both highly innovative and reliable, thus
creating significant competitive advantages in the market for information
systems solutions. We believe that our success derives from a combination of the
following factors that differentiate us from most of our competitors.

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TOTAL SOLUTIONS ORIENTATION. We offer our customers total solutions that
include BSS product-driven software tailored to the customer's specific
requirements, implementation services, systems integration, maintenance and
ongoing support. By providing solutions support services directly to the
customer, rather than through intermediaries and system integrators, we are able
to utilize effectively our intensive technical knowledge of our BSS products in
the overall execution of the project, significantly reducing project risk. Our
product-driven software solutions approach is distinctly different from the
project-based strategy that has traditionally characterized many of the
telecommunications information systems providers over the past twenty years. Our
product-driven software solutions uses our BSS products as the starting point
for each project. This approach enhances our ability to provide our customers
with timely, cost-effective, low-risk solutions at a consistent level of
quality.

FUNCTIONAL AND FLEXIBLE BSS PRODUCTS. Our BSS products are based on an
open, multi-tier, client-server, rule-based architecture that provides the
functionality, scalability, modularity and adaptability required in today's
deregulated, highly competitive telecommunications industry. Through the
flexibility of our BSS products, our customers have achieved significant
time-to-market advantages and reduced their dependence on technical and other
staff.

HIGHLY SKILLED PERSONNEL. We are able to offer our customers superior
products and services on a worldwide basis in large part due to our highly
qualified and trained technical, sales, marketing and managerial personnel. We
invest significantly in the ongoing training of our personnel in key areas such
as industry knowledge, software technologies and management capabilities.
Primarily based on the skills and knowledge of our employees, we believe that we
have developed a reputation for the reliable delivery of quality solutions
within agreed time frames and budgets. We have global recruitment capabilities
and have development centers in Israel, the United States and Cyprus.

BUSINESS STRATEGY

Our goal is to provide advanced information technology software products
and related customer service and support to the world's leading
telecommunications companies. We seek to accomplish our goal by pursuing the
strategies described below.

- CONTINUED FOCUS ON THE TELECOMMUNICATIONS INDUSTRY. We intend to continue
to concentrate our resources and efforts on providing strategic
information systems to the growing number of telecommunications industry
participants. This strategy has enabled us to develop the specialized
industry know-how and capability necessary to deliver the technologically
advanced, large-scale, specifications-intensive information systems
solutions required by the leading telecommunications companies in the
wireless, wireline and convergent service sectors.

- TARGET INDUSTRY LEADERS AND PROMISING NEW ENTRANTS. We intend to continue
to direct our marketing efforts principally towards the major
telecommunications companies and new entrants that are believed to have
the potential to be market leaders. Our customer base includes the
largest local exchange service providers in the United States (including
all the regional Bell operating companies), major foreign network
operators and service providers (including Deutsche Telekom (Germany) and
Telstra Corporation Ltd. (Australia)) and emerging market leaders. We
believe that the development of this premier customer base has helped
position us as a market leader, while contributing to the stability of
our business. By targeting industry leaders and promising new entrants,
that require the most sophisticated information systems solutions, we
believe that we are best able to ensure that we remain at the forefront
of developments in the industry.

- DELIVER AND SUPPORT TOTAL SOLUTIONS. Our strategy is to use our BSS
products as the basis for providing customers with total systems
solutions. Using this product-driven solutions strategy, we strive to
tailor our core software modules to the specific, individualized
requirements of our customers. Working directly with the customer,
development personnel develop the detailed functional specifications of
the system required by the customer. In accordance with such
specifications, system modules are then adapted or customized to meet the
customer's specific business requirements. We believe that this approach
minimizes risks and increases efficiencies by
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drawing on field-proven BSS products and techniques, and also helps to
create for our customers significant time-to-market and other competitive
advantages. By leveraging our specialized product knowledge, we believe
that we can provide more effective system integration and implementation
support services to our customers.

- MAINTAIN AND DEVELOP LONG-TERM CUSTOMER RELATIONSHIPS. We seek to
maintain and develop long-term, mutually beneficial relationships with
our customers. As a result of this strategy, we have been able to
establish long-term working relationships with many of our customers. Of
our current base of over 70 customers, fifteen have been customers for
five years or more. These relationships have generally involved
additional product sales, as well as ongoing support, system enhancement
and maintenance services. We believe that such relationships are
facilitated in many cases by the mission-critical strategic nature of the
systems provided by us and by the customer's reliance on our specialized
skills and knowledge. In addition, our strategy is to solidify our
existing customer relationships by means of long-term support and
maintenance contracts.

- FURTHER ENHANCE GLOBAL CAPABILITIES. We intend to continue to develop and
enhance our global business strategy by targeting advanced
telecommunications markets around the world. The worldwide demand for
telecommunications services is increasing rapidly, due, in part, to the
needs of many underserved national markets and, in part, to increased
competition among established and new network operators and service
providers in more mature markets. We believe we have developed the human
and other resources required to conduct business on a global basis and we
are well positioned to respond to the demands of a worldwide industry,
including the increasing trend for the major telecommunications companies
to invest in new national markets, often in partnership with local
companies. We have also developed the capability for the rapid global
deployment of appropriately skilled personnel, when and where required,
to support customer projects.

TECHNOLOGY

We have developed core competencies in various advanced technologies that
are used in our BSS products. By utilizing technologies such as rule-based
techniques, intelligent agents, Internet technology, object-oriented design and
programming and data mining, we are able to provide telecommunication companies
with the flexibility required in a highly competitive, dynamic environment. For
example, the use of rule and table-based technologies allows telecommunications
companies to implement changes to the key elements of their marketing and
customer service activities simply and rapidly, such as the introduction of new
services, price plans, discount schemes and bill formats, eliminating the need
to modify system code. Similarly, by drawing on Web-enabled and Internet
technologies, we have been able to improve access to information for remote
users, both internally within a telecommunication company's organization and
between the organization and its subscribers.

These technologies are integrated in an open, multi-tier, client-server,
service-oriented architecture. In order to support the ability of its customers
to operate all of their distributed and mainframe applications, our BSS products
are designed to work in a number of network and operating system environments,
including UNIX, MVS and Windows NT.

The architecture of the BSS products includes the following key
characteristics:

- Scalability. The BSS products are designed to take full advantage of the
proven scalability of the UNIX platform, allowing progressive system
expansion, proportional with the customer's growth in business volumes.
Using the same software, our BSS products can support operations for
small as well as very large service providers.

- Modularity. The BSS products are comprised of sets of functional modules.
Each module can be installed on an individual standalone basis,
interfacing with the customer's existing systems, or as part of an
integrated BSS environment. This modularity provides our customers with a
highly flexible and cost-effective solution that is able to incrementally
expand with the customers' growing

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needs and capabilities. The modular approach also preserves the customers'
initial investments in BSS products, while minimizing future disruptions
and the overall cost of system implementation.

- Portability. The architecture of the BSS products, by utilizing a UNIX
platform, ensures that our customers are able to choose from a variety of
hardware vendors, including Compaq, Hewlett Packard, IBM and Sun
Microsystems. In implementing solutions for wireline companies, we are
also able to employ MVS and hybrid UNIX/MVS platforms. The BSS products
utilize, where applicable, Java-based design and programming to augment
cross-platform portability.

- Open Systems. The BSS products accommodate well-defined application
program interfaces with legacy systems and with other third-party modules
or packages. The systems are not dependent on any single hardware vendor
or specific relational database management system, enabling our customers
to select among multiple hardware platforms and a variety of network and
operating system environments. Similarly, BSS products utilize standard
programming languages, such as C++, to ensure compatibility with the
operating environments employed in most telecommunications companies. It
is also our general policy to deliver to our customers complete copies of
all source code, system documentation and other product information,
which permits the customer to maintain and further customize the BSS
products.

PRODUCTS

We have developed an extensive library of BSS software products, providing
comprehensive information systems functionality for wireless (cellular, PCS and
paging), wireline (local, long distance, international and Internet) and
directory publishing operations. Core elements include customer care, call
rating, invoice calculation, bill formatting, collections, fraud management and
directory publishing services.

Specialized modules are provided to support specific functionalities
required in the different network environments (roaming functionality for
wireless carriers, SIM card functionality for GSM networks, value added services
introduced by Advanced Intelligent Network (AIN) and preferred interexchange
carrier functionality for long distance carriers). In addition, we have
developed systems to support resellers and wholesalers of telecommunication
services. Our systems also support telecommunications providers that offer
multiple service packages, commonly referred to as convergent services
(combinations of local, long distance, international, mobile, cable television
and Internet services).

We configure individual BSS modules into families of products, which serve
as marketing packages oriented to the needs of specific customer segments. We
offer Ensemble, our Customer Care and Billing System, in a number of versions to
serve the different needs of telecommunications operators in the various network
and business segments, such as wholesale and retail operations, and local,
cellular, long distance, international and convergent operations. We also offer
our new generation ("NG") line of "ADSNG/Family of Products" which provides
comprehensive support for directory publishing operations. Each individual
module from the product families can be installed as an independent stand-alone
application, interfacing with the customer's legacy and third-party systems, or
as part of an integrated Amdocs Solution. We have also recently introduced a
number of new products for Internet and electronic commerce applications, such
as Internet-based bill viewing. We anticipate that over the next several years
products developed or to be developed for such applications will make a modest
but increasing contribution to revenue.

As a result of our recent acquisition of Architel we also develop, market
and support service provisioning systems, including order management, service
activation, network inventory management and OSS Interconnection Gateway.

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CUSTOMER CARE AND BILLING

The Ensemble suite of products we offer encompasses the following key
application areas:

- Customer Care -- provides customer account information management and
service support, including account initiation, order management, on-line
assistance in choosing a price plan, installation scheduling and
complaint handling.

- Message Processing -- calculates charges for usage (i.e., call rating) of
telecommunications services, such as telephone calls and data transfer.
Usage of the telecommunications network creates "messages" or call data
records, which contain information such as the origin and destination of
the call and its duration. In addition, this module provides for
acquisition and formatting of the raw message data received from a
switch, as well as calculates the charges for each call based on the
service packages and price plans applicable to each individual user.

- Invoicing -- provides comprehensive functionality for bill preparation
(totaling of usage and other charges, application of discounts, taxes and
credits) and bill production, as well as the ability to offer so-called
"hot billing" (or real-time billing).

- Flexible Bill Formatter -- enables the flexible definition and
modification of bill formats, according to user requests (e.g., to
combine charges from multiple services onto a single bill or to permit
certain types of charges to be highlighted).

- Revenue Management -- provides comprehensive functionality for accounts
receivable and collections, including invoice receipt, payment receipt,
payment posting, financial reporting and automated handling of customers
with outstanding debts.

- Network Resource Mediation -- manages the carrier's inventory of
telephone numbers and SIM cards. This module also manages the interface
between a wireless carrier's customer care and billing system and the
network, transferring instructions regarding the provision or
discontinuation of network services to specified users.

- Sales Channels -- manages the financial relationship between a wireless
carrier and its authorized dealers, including commission calculation,
chargebacks and residual compensation.

- Fraud Management -- employs sophisticated data analysis tools and makes
use of the integrated user database to detect the fraudulent use of
wireless phones and phone numbers.

- Internet-based Bill Viewing -- enables user interaction and bill view
capabilities over the Internet through www.self.service.

- Churn Management -- uses data mining techniques to identify customers
with a high probability of switching to another carrier or of
disconnecting service.

SERVICE PROVISIONING

With the recent acquisition of Architel, we now support service
provisioning systems including:

- Order Management Systems ("OMS") -- which permits service providers to
coordinate and manage the manual and automated tasks required to complete
the provisioning of a customer service order.

- Automatic Service Activation Program ("ASAP") -- which enables the rapid
activation of services ranging from basic telephony to enhanced services
in the local exchange, long distance and wireless markets.

- Objectel -- a network inventory management system, which enables service
providers to effectively manage their network infrastructure,
provisioning, capacity management, configuration management and circuit
engineering.

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<PAGE> 40

- OSS Interconnection Gateway -- currently under development, will enable a
service provider to electronically communicate with other service
providers to complete a service request, thereby significantly improving
service quality and reducing operating costs where carrier
interconnection is required.

DIRECTORY PUBLISHING

The "ADS(NG)/Family of Products," our main products in the Directory
Systems area, provides comprehensive support for yellow page and white page
directory sales and publishing operations, as well as for Internet directories
and catalogs, including fully integrated electronic commerce capabilities. The
directory line of products comprises a series of modules, including:

- Sales -- addresses all aspects of managing sales to advertisers,
including preparation and management of the overall sales campaign, which
encompasses selecting the advertisers to be targeted, allocating the
advertisers to various sales channels (such as field sales or
telemarketing sales), assigning the advertisers to sales representatives,
tracking advertising sales results and calculating sales commissions.
These modules also provide automated support for the advertising sales
representative, including laptop-based applications for use by members of
the sales force in the field.

- Publishing -- supports the process of entering, proofing and extracting
the telephone listing and advertising information that is to be published
in a directory. These modules encompass contract processing, service
order processing, listing information management and directory extract in
preparation for the actual production of the directory.

- Marketing and Information Analysis -- includes corporate data warehousing
techniques, online analytical processing and data mining capabilities,
oriented to the specific marketing needs of the directory publisher. For
example, these modules can be used to identify changed patterns of
advertisement buying behavior in certain groups of customers, or to
perform "what if" analyses on marketing policy parameters. These modules
are also used by management to analyze the directory market and customer
behavior, assisting in the planning of corporate strategy and marketing
tactics.

- Prepress -- manages the production of advertisements that are to be
published in a directory and also supports the fully automated pagination
of yellow page and white page directories, including the generation of
the final typesetting file so that printed copies of the documents can be
produced.

- Customer Service -- permits online support for handling customer
inquiries and resolving customer complaints, including online correction
of advertising data and billing adjustments.

- Financial Management -- specifically designed for the directory
publisher's billing, accounts receivable and collections functions.

SERVICES

We believe that the methodology we employ to deliver BSS products is one of
the key factors that enables us to achieve the time-frame, budget and quality
objectives of our customers' projects. Our methodology emphasizes rigorous
project management, software development, solutions implementation and
integration planning, as well as active customer participation at all stages to
help prioritize and implement time-critical information system solutions that
address the customer's individual needs.

This process of customizing a system involves creating a tailored BSS
product to address a customer's specific technical and business requirements.
Following detailed functional design sessions with the customer, we modify our
BSS software modules to provide the complete functionality needed by the
customer. The process permits both Amdocs and the customer to identify and
jointly plan for ongoing resource requirements, as well as jointly to create
specific guidelines for the types of organizational and other changes that may
be required for implementation and integration.

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<PAGE> 41

System implementation and integration activities are conducted by joint
teams from Amdocs and the customer in parallel with the customization effort.
Implementation and integration activities include, for example, project
management, development of training, methods and procedures, design of work
flows, hardware planning and installation, network and system design and
installation, system conversion and documentation. In most cases, the role of
Amdocs personnel is to provide support services to the customer's own
implementation and integration team which has primary responsibility for the
task. Customers sometimes require turn-key solutions, in which case we are able
to provide full system implementation and integration services.

Once the system becomes operational, we are generally retained by the
customer to provide ongoing services such as maintenance, enhancement design and
development, and operational support. For substantially all of our customers,
the implementation and integration of an initial BSS product has been followed
by the sale of additional systems and modules. In recent years, we have
established long-term maintenance and support contracts with a number of our
customers. These contracts have generally involved an expansion in the scope of
support provided, while also ensuring a recurring source of revenue to us.

Our business is conducted on a global basis. We maintain three development
facilities located in Israel, the United States and Cyprus, operate a support
center located in Brazil and have operations in Europe, North America, Latin
America and the Asia-Pacific region. Support for implementation and integration
activities is performed typically at the customer site. Once the system is
operational or in production, ongoing support and maintenance are provided by a
combination of remote support from the development centers with local support at
the customer site.

As part of our effort to provide comprehensive solutions to our customers,
we are actively considering entering into long-term agreements with certain of
our existing and potential customers to provide a full range of services in
connection with those operations of the customer that involve BSS products.
These functions would include full responsibility for the ongoing development
and enhancement of our BSS products, the purchase and management of all related
hardware assets and overall management of the customer's associated data
centers. We concluded our first major multi-year services agreement in May 1998,
entering into a six-year agreement with an affiliate of Telstra Corporation Ltd.
of Australia. Under the agreement we are responsible for software development,
maintenance, support and facility management for Telstra's directory publishing
activities.

SALES AND MARKETING

Our sales and marketing activities are primarily directed at major
telecommunications companies and at emerging network operators or services
providers that are potential market leaders. As a result of the strategic
importance of our information systems to the operations of such companies, a
number of constituencies within a customer's organization are typically involved
in purchase decisions, including senior management, information systems
personnel and user groups such as the finance and marketing departments. Due to
the comprehensiveness and large scale of our systems, the time between the
making of an initial proposal to a prospective customer and the signing of a
sales contract is typically between six and twelve months.

We employ a relatively small dedicated sales force and maintain sales
offices in the United States, the United Kingdom, and several other countries.
Our sales activities are supported by a marketing group, which is responsible
for advertising, preparation of sales proposals and market research and analysis
of industry trends and developments. Our sales efforts are dependent upon a
close cooperation between our sales representatives and development personnel.
Development personnel are intensively involved from the early stages of the
sales cycle. This approach enables us to demonstrate our technical and
professional skills to potential customers, while creating the opportunity to
discuss with the customer its system needs. To ensure that we have a clear
understanding of customer needs and expectations, it is our policy to have
development personnel involved in a particular sales proposal continue to work
with the customer. This

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<PAGE> 42

approach creates continuity from the initial sales proposal through project
development and beyond, into the ongoing production phase.

The management of our operating subsidiaries is closely involved in
establishing sales policies and overseeing sales activities. Management's role
includes the setting of priorities among the multiple sales opportunities
available at any point in time. Management is also responsible for allocating
sufficient resources to each project to meet our quality standards while also
adhering to the project's cost and schedule parameters.

We also interact with various third parties in our sales activities,
including independent sales agents, information systems consultants engaged by
our customers or prospective customers and systems integrators that provide
complementary products and services to such customers. We also have value-added
reseller agreements with certain hardware and database vendors.

CUSTOMERS

Our target market is comprised of telecommunications companies that require
information systems with advanced functionality and technology. The companies in
this market segment are typically industry leaders or innovative, well-backed
new entrants. By working with such companies, we help ensure that we remain at
the forefront of developments in the telecommunications industry and that our
product offerings continue to address the market's most sophisticated needs. We
have an international orientation, focusing on potential customers in the
developed, industrialized countries in North America, Europe, Latin America and
the Asia-Pacific region.

We have a world-class customer base comprising over 70 telecommunications
companies. Our customers include global telecommunications leaders, as well as
other leading network operators and service providers and directory publishers
in the United States and around the world. Our customers include SBC and a
number of its operating subsidiaries, such as Southwestern Bell Mobile Systems,
Southwestern Bell Yellow Pages, Southwestern Bell Communications Services (SBC's
long distance provider) and Southwestern Bell Telephone Company. Additional
customers include Bell Atlantic, BellSouth, U.S. West, GTE, Sprint, Deutsche
Telekom (Germany), SEAT (Italy), Telstra Corporation Ltd. (Australia), Telus
(Canada), Telecom Eireann (Ireland), Korean Telecom (South Korea), Vodac (United
Kingdom), Bezeq (Israel), BCP (Brazil) and Telecom New Zealand (New Zealand). We
have been able to establish long-term working relationships with many of our
customers. Of our total customer base, fifteen have been customers for five or
more years. These long-term relationships are due, in part, to our broad-based
expertise and our ability to address the evolving needs of a dynamic
telecommunications industry.

Our single largest group of customers is SBC and its operating subsidiaries
identified above, which accounted for in the aggregate 20.9%, 34.5% and 38.0% of
our revenue in fiscal 1998, fiscal 1997 and fiscal 1996, respectively. Our next
largest customer is BellSouth, which accounted for 15.8%, 4.5% and 1.5% of our
revenue in fiscal 1998, fiscal 1997 and fiscal 1996, respectively. Our third
largest customer is Telstra, which accounted for 8.2%, 13.0% and 16.0% of our
revenue in fiscal years 1998, 1997 and 1996, respectively.

Revenue derived from our five largest customers, excluding SBC and its
operating subsidiaries, accounted for approximately 27.1%, 33.2% and 42.5% of
our revenue in fiscal 1998, fiscal 1997 and fiscal 1996, respectively.

The following is a summary of revenue by geographic area. Revenue is
attributed to geographic region based on the location of the customers:

<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
North America............................................... 52.2% 63.8% 67.5%
Europe...................................................... 27.2% 11.3% 14.5%
Rest of the World........................................... 20.6% 24.9% 18.0%
</TABLE>

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<PAGE> 43

COMPETITION

The market for telecommunications information systems is highly competitive
and fragmented, and we expect competition to increase. We compete with many
independent providers of information systems and services, including Alltel
Corporation, American Management Systems, Convergys, IBM, Kenan Systems, LHS
Group Inc., Saville Systems and SEMA Group, with system integrators, such as
Andersen Consulting and EDS, and internal information systems departments of
larger telecommunications carriers. We expect continued growth and competition
in the telecommunications industry and the entrance of new competitors into the
software information systems market in the future.

We believe that the principal competitive factors in our market include
responsiveness to carrier needs, timeliness of implementation, quality and
reliability of products, price, project management capability and technical
expertise. We also believe that our ability to compete depends in part on a
number of competitive factors, including the development by others of software
that is competitive with our products and services, the price at which others
offer competitive software and services, the extent of competitors'
responsiveness to customer needs and the ability of our competitors to hire,
retain and motivate key personnel. We compete with a number of companies that
have longer operating histories, larger customer bases, substantially greater
financial, technical, sales, marketing and other resources, and greater name
recognition than us. Current and potential competitors have established, and may
establish in the future, cooperative relationships among themselves or with
third parties to increase their ability to address the needs of our prospective
customers. Accordingly, new competitors or alliances among competitors may
emerge and rapidly acquire significant market share. As a result, our
competitors may be able to adapt more quickly than we would to new or emerging
technologies and changes in customer requirements, or to devote greater
resources to the promotion and sale of their products. There can be no assurance
that we will be able to compete successfully with existing or new competitors.
Failure by us to adapt to changing market conditions and to compete successfully
with established or new competitors may have a material adverse effect on our
results of operations and financial condition.

PROPRIETARY RIGHTS

We regard significant portions of our software products and systems as
proprietary and rely 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 our
proprietary rights. We generally enter into confidentiality agreements with our
employees, consultants, customers and potential customers and limit access to,
and distribution of, our proprietary information. We believe that the
sophistication and complexity of our systems make it very difficult to copy such
information or to subject such information to unauthorized use.

We have developed a unique methodology for product development. Initially,
we develop a core idea and the initial modules in-house. Thereafter, we approach
a customer and introduce the initial developments to a customer and further
develop the product in conjunction with a project conducted for such a customer,
thus allowing us to resolve and develop specific, novel information technology
solutions addressing actual needs of the market. We maintain sole ownership of
our products.

As a result of certain strategic development projects conducted with SBC
and certain of its subsidiaries, some of our products were jointly developed and
owned in the past by us and SBC subsidiaries. In September 1997, we entered into
a series of agreements with such SBC subsidiaries pursuant to which we purchased
certain rights from these SBC subsidiaries and terminated related future royalty
payment obligations for a total consideration of $40.0 million.

EMPLOYEES

As of December 31, 1998, we employed on a full-time basis 3,245 software
and information technology specialists, engaged in research, development,
maintenance and support activities, and approximately 472 managers and
administrative professionals. We employ over 2,330 software and information
specialists in Israel, with the remaining 915 located in North America, Europe
and the Asia-
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<PAGE> 44

Pacific region. We often maintain teams of employees at a customer's premises to
work on specific projects.

We invest significant resources in recruitment, training and retention of
quality personnel. Training programs cover areas such as technology,
applications, development methodology, project methodology, programming
standards, industry background and management development. Our management
development scheme is reinforced by a divisional structure, which provides
opportunities for talented managers to gain experience in general management
roles at the division level. We also invest considerable resources in personnel
motivation, including providing various incentive plans for senior employees.
Our future success depends in large part upon our continuing ability to attract
and retain highly qualified managerial, technical, sales and marketing
personnel.

We have to comply with various labor and immigration laws throughout the
world, including laws and regulations in Australia, Brazil, Europe, Israel,
Japan and the United States. To date, compliance with such laws has not been a
material burden for us. As the number of our employees increases over time, our
compliance with such regulations could become more burdensome.

Our operating subsidiaries are not party to any collective bargaining
agreements. However, our Israeli subsidiary is subject to certain labor-related
statutes and to certain provisions of collective bargaining agreements between
the Histadrut (General Federation of Labor in Israel) and the Coordinating
Bureau of Economic Organizations (including the Industrialists' Association),
which are applicable to our Israeli employees by virtue of expansion orders of
the Israeli Ministry of Labor and Welfare. A significant provision applicable to
all employees in Israel under collective bargaining agreements and expansion
orders is the automatic adjustment of wages in relation to increases in the CPI.
The amount and frequency of these adjustments are modified from time to time. We
consider our relationship with our employees to be good and have never
experienced a labor dispute, strike or work stoppage.

As of February 15, 1999, Architel employed approximately 421 people with
approximately 162 in research and development, 123 in professional services, 33
in product support, 43 in sales and marketing, 19 in information technology,
seven in human resources and 34 in finance, administration and general
management.

RESEARCH AND DEVELOPMENT

The goals of our research and development staff are to be responsive to
customer needs, to keep abreast of industry developments, to apply technology
selectively to our systems, to build transition plans for adopting new
technologies and to build a system architecture that is capable of absorbing
such technologies. We have historically developed new modules and product
offerings in response to an identified market demand. Our product development
strategy is to fund the research and development of an advanced prototype,
typically based on our existing products or modules. Products are usually
developed in conjunction with a customer project. By adopting this strategy, we
seek to remain at the forefront of technological development by working on
technologically advanced solutions with our customers. Close cooperation with
customers helps to ensure the relevance and timeliness of the products
developed.

We believe that our ability to identify innovative applications for
emerging technologies has yielded us considerable competitive advantages.
Examples of such innovations include the application of rule and table-based
techniques to network mediation systems, intelligent agent systems in directory
pagination, Web-enabled technology for Internet-based customer care and data
mining technology for fraud management and churn control.

We spent $25.6, $17.4 and $14.7 million on research and development
activities in fiscal 1998, fiscal 1997 and fiscal 1996, respectively, or 6.3%,
6.0% and 6.9%, respectively, of total revenue in those years.

FACILITIES

We lease space in numerous facilities in Israel, aggregating approximately
550,000 square feet, pursuant to leases expiring on various dates between
December 1999 and December 2008, and have
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various options to extend the terms of such leases. Approximately 69,000 square
feet of such facilities are owned by related companies which lease such
facilities to us. In Israel, we currently pay total yearly rental fees of
approximately $9.5 million which are linked, in most cases, to the U.S. dollar.

In June 1998, our Israeli subsidiary entered into a ten-year lease for
297,000 square feet in Ra'anana, Israel. In June 1998, the Israeli subsidiary
relocated its main offices and most of its operations to this location. The
annual rent for the Ra'anana facility is approximately $5.4 million. Subject to
the modification of certain tax rules, the Israeli subsidiary will also have the
option to extend the lease term for an additional eight years. In addition, the
Israeli subsidiary holds, subject to certain terms and conditions, an option to
acquire certain parts of the Ra'anana facility. In November 1998, the Israeli
subsidiary rented an additional 18,950 square feet in Ra'anana.

In August 1998, we entered into a seven-year lease (commencing December
1998) for 90,600 square feet in Chesterfield, Missouri. We intend to relocate
our development center and all of our administrative personnel, now principally
centered around St. Louis, Missouri, to such location. The annual rent for the
facility will be approximately $2.0 million. In the beginning of June 1999, we
intend to terminate our current lease under which we pay approximately $300,000
annually in rent. We also hold a number of other leases in the United States,
with an aggregate annual rent of approximately $75,000.

We also lease 37,670 square feet for our development facility in Cyprus at
an annual rent of approximately $460,000.

We lease additional office space in the United Kingdom, Australia, Germany,
Japan, Korea and Brazil.

Architel has a lease for a 59,617 square foot facility in Toronto, Canada.
In addition, Architel's U.S. subsidiary leases a 9,357 square foot facility in
the Washington, D.C. area, a 2,900 square foot facility in Denver, Colorado, a
4,982 square foot facility in Huntsville, Alabama, a 13,485 square foot facility
in Dallas, Texas and a 3,900 square foot facility in London, England.

LEGAL PROCEEDINGS

We are not involved in any material legal proceedings.

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MANAGEMENT

GENERAL

Amdocs Limited is organized under the laws of Guernsey and, as set forth in
its Articles of Association, is a holding company for the various subsidiaries
that conduct our business on a worldwide basis. Our principal operating
subsidiaries are Amdocs (Israel) Limited (Israel), Amdocs, Inc. (the United
States), Amdocs (UK) Limited (the United Kingdom) and Architel (Canada). We rely
on the executive officers of our operating subsidiaries to manage our business.
In addition, Amdocs Management Limited, our management subsidiary, performs
certain executive coordination functions for all our operating subsidiaries.

EXECUTIVE OFFICERS AND DIRECTORS AND OTHER KEY EMPLOYEES

The board of directors and the executive officers of Amdocs and our
subsidiaries and their ages as of March 22, 1999, are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Bruce K. Anderson(2)(3)................... 58 Chairman of the Board and Chief Executive Officer,
Amdocs Limited
Robert A. Minicucci(2)(3)................. 46 Director and Chief Financial Officer, Amdocs
Limited
Avinoam Naor.............................. 50 Director of Amdocs Limited and Chief Executive
Officer of Amdocs Management Limited
Dov Baharav............................... 48 Senior Vice President and Chief Financial Officer,
Amdocs Management Limited
Thomas G. O'Brien......................... 38 Treasurer and Secretary, Amdocs Limited
Nehemia Lemelbaum......................... 56 Senior Vice President, Amdocs Management Limited
Mario Segal............................... 51 Senior Vice President, Amdocs Management Limited
Joshua Ehrlich............................ 49 Senior Vice President, Amdocs Management Limited
Simon Cassif.............................. 56 Senior Vice President, Amdocs (UK) Limited
James W. Andrews.......................... 34 General Manager, Amdocs (UK) Limited
Adrian Gardner(1)(2)(3)................... 36 Director
Stephen Hermer............................ 37 Director
James Kahan............................... 51 Director
Paz Littman(2)(3)......................... 42 Director
Shmuel Meitar............................. 55 Director
Revital Naveh(1).......................... 31 Director
Lawrence Perlman(1)....................... 60 Director
Michael J. Price.......................... 41 Director
</TABLE>

- ---------------
(1) Member of the Audit Committee

(2) Member of the Compensation Committee

(3) Member of the Executive Committee

Bruce K. Anderson has been Chief Executive Officer and Chairman of the
Board of Amdocs since September 1997. Since August 1978, he has been a general
partner of WCAS, an investment firm which specializes in the acquisition of
companies in the information services and health care industries. Investment
partnerships affiliated with WCAS are collectively our largest stockholder. Mr.
Anderson served for nine years with Automated Data Processing, Inc. ("ADP")
until his resignation as Executive Vice President and a director of ADP, and
President of ADP International, effective August 1978. Mr. Anderson serves on
the board of directors of Medquist, Inc. and several private companies.

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<PAGE> 47

Robert A. Minicucci has been Chief Financial Officer and a director of
Amdocs since September 1997. He has been a general partner of WCAS since 1993.
From 1992 to 1993, Mr. Minicucci served as Senior Vice President and Chief
Financial Officer of First Data Corporation, a provider of information
processing and related services for credit card and other payment transactions.
From 1991 to 1992, he served as Senior Vice President and Treasurer of the
American Express Company. Mr. Minicucci served for twelve years with Lehman
Brothers (and its predecessors) until his resignation as a Managing Director in
1991. He is also a director of several private companies.

Avinoam Naor has been a director of Amdocs Limited since January 1999 and
is Chief Executive Officer of Amdocs Management Limited having overall
coordination responsibility for the operations and activities of our operating
subsidiaries. Mr. Naor joined Amdocs in 1982 and initially served as a Senior
Vice President. He has been involved with software development for 27 years,
working on projects for the development of infrastructure software for
communications systems and developing and marketing directory assistance
systems. Mr. Naor was a member of the team that established the computerized
system for Golden Pages, the Israel Yellow Pages company.

Dov Baharav is a Senior Vice President and the Chief Financial Officer of
Amdocs Management Limited, and has overall coordination responsibility for the
financial reporting of our operating subsidiaries. Mr. Baharav joined Amdocs in
1991 in St. Louis, Missouri and until 1995 served as Vice President and
President of Amdocs, Inc., our principal U.S. subsidiary. Prior to joining
Amdocs, Mr. Baharav served as Chief Operating Officer of Oprotech Ltd., a
publicly held company that develops, manufactures and markets electro-optical
devices.

Thomas G. O'Brien is Treasurer and Secretary of Amdocs Limited and since
July 1995 has held other financial management positions within Amdocs. From July
1993 to July 1995, Mr. O'Brien was Controller of Big River Minerals Corporation,
a diversified natural resources company. From 1989 to 1993, Mr. O'Brien was the
Assistant Controller for Big River Minerals Corporation. From 1983 to 1989, Mr.
O'Brien was a certified public accountant with Arthur Young and Company (now
Ernst & Young LLP). Mr. O'Brien is a member of the American Institute of
Certified Public Accountants and the Missouri Society of Certified Public
Accountants.

Nehemia Lemelbaum is a Senior Vice President and the Chief Technology
Officer of Amdocs Management Limited. He joined Amdocs in 1985, with initial
responsibility for our U.S. operations. Mr. Lemelbaum led our development of
graphic products for the Yellow Pages industry and directed our development of
customer care and billing systems. He served for nine years with Contahal Ltd.,
a leading Israeli software house, first as a senior consultant, and later as
Managing Director. From 1967 to 1976, Mr. Lemelbaum was employed by the Ministry
of Communications of Israel (in effect the organization that is currently Bezeq,
the Israel Telecommunication Corp. Ltd.), with responsibility for computer
technology in the area of business data processing.

Mario Segal is a Senior Vice President and the Chief Operating Officer of
Amdocs Management Limited. He joined Amdocs in 1984 as Senior Vice President and
was a leading member of the team that developed the "ADS(NG)/Family of Products"
directory automation systems and the "Customer Care and Billing Platform." Mr.
Segal was also an account manager for a major North American Yellow Pages
publisher and prior thereto managed the computer department of a major Israeli
insurance company, leading large-scale software development projects and
strategic planning of automation systems.

Joshua Ehrlich is Senior Vice President, Business Development of Amdocs
Management Limited. Mr. Ehrlich has overall responsibility for coordinating new
business development. He joined Amdocs in 1985. Mr. Ehrlich served as the
account manager for one of our major North American installations, and
subsequently had responsibility for major product development efforts. Following
that, he assumed the responsibility for coordinating our sales support
activities. Prior to joining Amdocs, Mr. Ehrlich managed the industrial
application division of a leading Israeli software company, with responsibility
for business development, overall project control and coordination of sales
support.

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<PAGE> 48

Simon Cassif is a Senior Vice President of Amdocs (UK) Limited. In this
capacity, his principal responsibility is to develop our relationships with
strategic customers in Europe. Mr. Cassif joined Amdocs in January 1994 and has
since been devoting most of his efforts to business development in the area of
customer care and billing. Prior to joining Amdocs, Mr. Cassif was Chief
Information Officer and Vice President, Systems and Computers at Bezeq, the
Israel Telecommunication Corp. Ltd. Mr. Cassif held this position for twelve
years, with full responsibility for Bezeq Information Technology strategy,
systems development, maintenance and operations.

James W. Andrews is General Manager of Amdocs (UK) Limited, with
responsibility for supervising financial reporting and control, insurance,
administration and human resources. Mr. Andrews joined Amdocs in 1991 and has
served in a number of financial management positions, including Financial
Controller. Prior to joining Amdocs, Mr. Andrews was the Accounting Supervisor
at Arch Mineral Corporation. He also served at Arthur Andersen & Co. as a
certified public accountant. Mr. Andrews is a member of the American Institute
of Certified Public Accountants and the Missouri Society of Certified Public
Accountants.

Adrian Gardner has been a director of Amdocs since April 1998. Mr. Gardner
is an Executive Director of Lazard Brothers & Co., Limited, based in London and
working with technology and telecommunications-related companies. Prior to
joining Lazard Brothers in 1989, Mr. Gardner qualified as a chartered accountant
with Price Waterhouse. Mr. Gardner is a member of the Institute of Chartered
Accountants in England and Wales and a member of The Securities Institute.

Stephen Hermer has been a director of Amdocs since April 1998. In 1998, Mr.
Hermer joined the law firm of Olswang, based in London, where he practices
corporate and securities law. Prior to that, he was a partner with the London
law firm of Frere Cholmeley Bischoff.

James S. Kahan has been a director of Amdocs since April 1998. Mr. Kahan
has worked at SBC since 1983, and currently serves as its Senior Vice
President-Corporate Development, a position he has held since 1992. Prior to
joining SBC Mr. Kahan held various positions at several telecommunications
companies, including Western Electric, Bell Laboratories, South Central Bell and
AT&T.

Paz Littman has been a director of Amdocs since September 1997. Since
October 1996, he has served as President of Aurum Management and Consulting
Ltd., a privately held company, which makes and manages investments for
shareholders of the Aurec Group. From 1991 to 1996, Mr. Littman was an active
partner with the law firm of Meitar, Littman & Co. (now known as Meitar,
Liquornik, Geva & Co.)

Shmuel Meitar has been a director of Amdocs since 1989. Since 1991, he has
been Vice Chairman of Aurec Ltd., a leading provider of communications, media
and information services. Prior to 1991, Mr. Meitar served as President of the
Aurec Group, which includes Golden Channels, the largest cable television
franchise in Israel, and Golden Pages, the Israeli Yellow Pages. Mr. Meitar is
also a director of Hollinger International Inc.

Revital Naveh has been a director of Amdocs since April 1998. In July 1997,
Ms. Naveh joined Aurum Management and Consulting Ltd., a privately held company,
which makes and manages investments for shareholders of the Aurec Group. Prior
to that, Ms. Naveh was an associate at the New York law firm of Skadden, Arps,
Slate, Meagher & Flom LLP.

Lawrence Perlman has been a director of Amdocs since April 1998. He has
been Chairman of Ceridian Corporation since 1992, and its Chief Executive
Officer since 1990. Ceridian Corporation is a provider of information services
to employers to administer various human resource functions, as well as
information services for the transportation and electronic media markets. Mr.
Perlman is a director and Chairman of Seagate Technology, Inc., and a director
of The Valspar Corporation and Computer Network Technology Corporation. Mr.
Perlman has been a director of Ceridian since 1985.

Michael J. Price has been a director of Amdocs since January 1998. He is
co-Chief Executive Officer of FirstMark Communications LLC, a broadband wireless
telecommunications company. Prior to that, he

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<PAGE> 49

worked at Lazard Freres & Co. L.L.C., starting in 1987, serving first as a Vice
President and then as a Managing Director, where he led their technology and
telecommunications group.

DIRECTORS

All directors hold office until the next annual meeting of our shareholders
or until their respective successors are duly elected and qualified or their
positions are earlier vacated by resignation or otherwise.

EXECUTIVE OFFICERS

Executive officers of Amdocs are elected by the board of directors on an
annual basis and serve until the next annual meeting of the board of directors
or until their respective successors have been duly elected or qualified or
their positions are earlier vacated by resignation or otherwise. The executive
officers of each of the Amdocs subsidiaries are elected by the board of
directors of such subsidiary on an annual basis and serve until the next annual
meeting of such board of directors or until their respective successors have
been duly elected or qualified or their positions are earlier vacated by
resignation or otherwise.

BOARD COMMITTEES

The Audit Committee of the board of directors reviews, acts on and reports
to the board of directors with respect to various auditing and accounting
matters, including the selection of our auditors, the scope of the annual
audits, fees to be paid to the auditors, the performance of our independent
auditors and our accounting practices.

The Compensation Committee of the board of directors determines the
salaries and incentive compensation of the officers of Amdocs and our
subsidiaries and provides recommendations for the salaries and incentive
compensation of other employees and the consultants. The Compensation Committee
also administers various compensation, stock and benefit plans of Amdocs.

We have also established an Executive Committee which may act from time to
time instead of the full board of directors and has such responsibilities as may
be delegated to it by the Board.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Our Compensation Committee consists of Messrs. Anderson, Minicucci, Gardner
and Littman. None of the members of the Committee was an employee of ours at any
time during fiscal 1998 or the first quarter of fiscal 1999.

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

We pay our non-employee directors who are not associated with any of our
principal shareholders (1) $10,000 per annum and (2) $1,500 per meeting of the
board of directors and $500 per meeting of a committee of the Board. We
reimburse all of our directors for their reasonable travel expenses incurred in
connection with attending meetings of the board of directors or committees
thereof. Under certain circumstances, directors are also eligible to receive
stock options. During fiscal year 1998, we granted options to two directors to
purchase a total of 21,000 ordinary shares at a price of $14 per share, vesting
over three years.

A total of nine persons who served either as an executive officer or
director of Amdocs during fiscal year 1998 received remuneration from Amdocs.
The aggregate remuneration paid by us to such persons was approximately $4
million, which includes amounts set aside or accrued to provide pension,
retirement or similar benefits, but does not include amounts expended by us for
automobiles made available to our officers, expenses (including business travel,
professional and business association dues) or other fringe benefits.

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<PAGE> 50

During fiscal 1998, we granted options to six executive officers and
directors to purchase a total of 448,557 ordinary shares at an average exercise
price of $8.20 per share, with vesting over three to eight-year terms.

EMPLOYEE STOCK OPTIONS

From January, 1998 through March 24, 1999 we granted options to purchase
4,013,000 ordinary shares to our officers, employees and consultants, and
options to purchase 41,000 ordinary shares to our non-employee directors and
consultants, pursuant to the Amdocs Plan. The weighted average exercise price of
those options is $5.47. The options vest over a period of three to eight years
commencing from the date of grant. There are currently 6,600,000 ordinary shares
reserved for issuance under the Amdocs Plan. The purpose of the Amdocs Plan is
to enable us to attract and retain qualified personnel and to motivate such
persons by providing them with an equity participation in Amdocs. The Amdocs
Plan is administered by a committee appointed by the Board and expires ten years
after the date of its adoption.

The ordinary shares acquired upon exercise of an option and the restricted
shares that may be granted under the Amdocs Plan will be subject to certain
restrictions on transfer, sale or hypothecation. Options will be exercisable and
restrictions on disposition of shares will lapse pursuant to the terms of the
individual agreements under which such options were granted or shares issued.

Pursuant to our acquisition of Architel, we have adopted, or assumed, the
following stock incentive arrangements, under which options to purchase
1,862,418 common shares of Architel, have been granted to directors, officers,
employees and/or consultants (the following stock incentive arrangements,
collectively, the "Architel Plans"):

(1) the Architel 1994 Flexible Share Incentive Plan;

(2) the Architel 1996 Stock Option Plan;

(3) the Accugraph Corporation 1992 Directors and Officers Stock Option
Plan;

(4) the Accugraph Corporation Key Employee Stock Option Plan;

(5) the Accugraph Corporation 1996 Stock Option Plan.

Options outstanding under the Architel Plans, as of the effective date of
the Arrangement, were converted to equivalent options to purchase 1,769,297 of
our ordinary shares (using an exchange ratio of 0.95 of an Amdocs ordinary share
for every Architel common share), and the exercise price of those options was
divided by 0.95.

From and after the effective date of the Arrangement, no further options
will be issued under any of the Architel Plans.

Options under the Architel 1994 Flexible Share Incentive Plan, are fully
vested and can be exercised until January 1, 2005. Options under the Architel
1996 Stock Option Plan, generally vest over a three or four year period from the
date of grant and expire 10 years from the date or grant. Generally, options
under the Accugraph Corporation 1992 Directors and Officers Stock Option Plan
are fully vested and have a variety of expiry dates ending no later than May
2001. Options under the Accugraph Corporation Key Employee Option Plan have a
variety of vesting schedules and expiry dates ending no later than January 2005.
Options under the Accugraph Corporation 1996 Stock Option Plan have a variety of
vesting schedules and expiry dates ending no later than April 2005. The vesting
of the options and the expiry date did not change as a result of the
Arrangement.

EMPLOYEE TRUST AGREEMENT

In September 1997, we contributed $25.8 million to the Trust. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operation -- Employee Arrangements." The beneficiaries are primarily software
and information technology specialists who have played an important role in our
success. The Trust will distribute on certain dates within the next five years
cash amounts to those
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<PAGE> 51

beneficiaries employed by us on such dates. The amounts to be distributed to the
beneficiaries employed by us on the relevant dates will include any appreciation
in the value of the Trust's assets and are dependent upon certain conditions,
such as the amount of cash available and the Trust's ability to realize the
value of the assets it holds. Termination of a beneficiary's employment with
Amdocs will not affect entitlement to a beneficiary's minimum interest in the
Trust which was fixed at the time of our contribution to the Trust, and any
terminated employee will receive such interest in September 2007. In September
1997, the Trust used the contribution from Amdocs and other resources to
purchase 5,720,000 ordinary shares from us for an aggregate consideration of
approximately $31.6 million. The Trust is required to liquidate any investments
held in respect of any beneficiary and distribute only a cash payment.

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<PAGE> 52

CERTAIN TRANSACTIONS

INVESTMENT AGREEMENTS. In September 1997, Amdocs and the WCAS Investors
entered into a Share Subscription Agreement under which the WCAS Investors
acquired from us on September 22, 1997, $3.27 million principal amount of our
junior promissory notes and shares representing 8.7% of our then outstanding
equity for $61.2 million. On that date, Amdocs and the WCAS Investors also
entered into a Conditional Investment Agreement, under which the WCAS Investors
agreed, subject to the satisfaction of specific revenue and cash flow targets
through November 30, 1997, to acquire additional shares of Amdocs which, when
added to the shares acquired under the Share Subscription Agreement, would
constitute 35.0% of our outstanding equity as of September 22, 1997.
Concurrently with the signing of the Conditional Investment Agreement, a
subsidiary of Amdocs, ESM, entered into a Note Purchase Agreement with WCAS
Capital Partners III, L.P., an investment partnership affiliated with WCAS, and
several other investors, providing for the issuance of up to $125.0 million
principal amount of 10% subordinated notes of ESM, subject to the satisfaction
of the same financial targets set forth in the Conditional Investment Agreement.
In January 1998, with the financial targets having been met, ESM sold $123.5
million principal amount of subordinated notes under the Note Purchase Agreement
for a purchase price equal to their principal amount. On March 30, 1998, we
completed the transactions contemplated by the Conditional Investment Agreement
by issuing and selling to the WCAS Investors 51,507,716 ordinary shares for
$95.83 million in cash and the surrender of the $3.27 million principal amount
of junior promissory notes issued by us in September 1997.

Some entities in which several of our directors and executive officers and
our subsidiaries have a beneficial interest participated in the investments made
pursuant to the Share Subscription Agreement and the Conditional Investment
Agreement and acquired beneficial ownership of 2,078,336 ordinary shares for a
total investment of $4.0 million.

The proceeds of the equity and subordinated debt investments made under the
Share Subscription Agreement, the Conditional Investment Agreement and the Note
Purchase Agreement were used, together with the proceeds of a senior bank debt
financing and internally generated funds, (1) to acquire for $40.0 million
certain intellectual property rights from operating subsidiaries of SBC and (2)
to fund an internal corporate reorganization. Following the reorganization,
$478.7 million in dividends were paid to our shareholders, including a total of
$39.9 million to the WCAS Investors.

In September 1997, the WCAS Investors also granted a call option on some of
the ordinary shares acquired under the Share Subscription Agreement and the
Conditional Investment Agreement to our then existing shareholders, AIL, SBCI,
several entities in some of which some of our executive officers have a
beneficial interest and the Trust. The call option may be exercised, without the
payment of any consideration to the WCAS Investors, if specific revenue and cash
flow targets are met in fiscal 1998 and fiscal 1999. The targets in fiscal year
1998 have been satisfied in full. If the targets are met in full, the number of
ordinary shares held by the WCAS Investors as a result of their net $120.4
million investment in Amdocs will be reduced from 62,580,024 to 47,381,984
ordinary shares.

SHAREHOLDERS AGREEMENT. In connection with the Share Subscription Agreement
and Conditional Investment Agreement, SBCI, WCAS (on behalf of the WCAS
Investors), AIL (together with SBCI and the WCAS Investors, the "Significant
Shareholders") and Amdocs, entered into a shareholders agreement, under which
the Significant Shareholders have certain rights to have their shares registered
for sale to the public under the Securities Act of 1933.

RELATIONSHIP WITH SBC. Until September 1997, SBC and some of its operating
subsidiaries had specified ownership and marketing rights with respect to some
of our software products that were developed and owned jointly by us and such
SBC subsidiaries.

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On September 22, 1997, we entered into a series of agreements with some SBC
subsidiaries regarding the transfer of those ownership and marketing rights to
us. Under these agreements:

(1) Southwestern Bell Yellow Pages, Inc. transferred to us all right,
title and interest it held in specified modules of our directory publishing
system, in consideration for $2.0 million in cash and a royalty-free,
perpetual, irrevocable right to use such modules.

(2) Southwestern Bell Communication Services, Inc. ("SBCS") granted us
the ownership interest and the right to license specified long distance
systems under development and previously held by SBCS, in consideration for
$10.4 million in cash and a royalty-free, perpetual, irrevocable right to
use such systems.

(3) Southwestern Bell Mobile Systems transferred to us, in
consideration for $15.6 million in cash and a royalty-free, perpetual,
irrevocable right to use the system, any and all right, title and interest
it had in a mobile system which we developed as part of our customer care
and billing systems.

(4) Southwestern Bell Telephone Company ("SWBT") granted us an
exclusive, royalty-free, irrevocable, perpetual and worldwide right to
copy, distribute and sell licenses, display, present, modify, disseminate,
reverse engineer and create derivatives on some of the "Billing Products"
developed by us and SWBT, in consideration for the prepayment of royalties
of $12.0 million in cash.

SBC and some of its operating subsidiaries are also significant customers
of ours. During fiscal 1996, fiscal 1997 and fiscal 1998, SBC and those
subsidiaries accounted for approximately 38.0%, 34.5% and 20.9%, respectively,
of our revenue.

THE 1995 REORGANIZATION. Prior to 1995, Amdocs and our operating
subsidiaries were operated as a group of companies owned by common shareholders.
In 1995, the companies underwent a reorganization (the "1995 Reorganization"),
as a result of which Amdocs Limited became the holding company for all the
affiliated companies. Subsequent to the reorganization, we issued shares for a
total of $16.6 million to a group of entities in some of which some of our
officers, including one of our directors, have a beneficial interest. In
connection with the 1995 Reorganization, these entities entered into
shareholders agreements with SBCI and AIL (the "1995 Shareholders Agreements")
in March and September of 1995. Pursuant to the 1995 Shareholders Agreements,
the parties thereto have, subject to the occurrence of specified events, call
and put rights with respect to the shares issued in connection with the 1995
Reorganization, which may be exercised at a price less than the original
purchase price. These rights expire ratably over time and fully expire in 1999,
in the case of one such entity, and 2002, in all other cases. The exercise of
such rights will not affect the number of outstanding ordinary shares.

OTHER RELATIONSHIPS. Since fiscal 1997, we have provided a CC&B System and
related customization and implementation services to GoldenLines Limited, a
provider of international telephone service for calls to and from Israel. SBC
and a certain beneficial owner of AIL have a significant beneficial interest in
GoldenLines.

SBC and a beneficial owner of AIL also are the owners of a company that
leases office facilities and provide certain miscellaneous support services to
us in Israel.

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PRINCIPAL SHAREHOLDERS

The following table sets forth specified information with respect to the
beneficial ownership (after giving effect to the issuance of ordinary voting
shares pursuant to this prospectus) as of March 24, 1999 of (i) any person known
by us to be the beneficial owner of more than 10% of the outstanding ordinary
shares and (ii) all of our directors and executive officers as a group.

<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENTAGE
NAME AND ADDRESS OWNED(1) OWNERSHIP(2)
- ---------------- ------------ ------------
<S> <C> <C>
Welsh, Carson, Anderson & Stowe(3)(6)....................... 57,372,796 27.2%
320 Park Avenue, Suite 2500
New York, New York 10022
SBC International Inc.(4)................................... 44,734,700 21.2%
175 E. Houston Street
San Antonio, Texas 78205-2233
Amdocs International Limited(5)(6).......................... 45,693,500 21.6%
Suite 5, Tower Hill House
Le Bordage, St. Peter Port
Guernsey GY1 3QT
The Channel Islands
All directors and executive officers as a group (--
persons)(5)(6)............................................ -- --
</TABLE>

- ---------------
(1) Unless otherwise indicated, the entities and individuals identified in this
table have sole voting and investment power with respect to all ordinary
shares and sole investment power with respect to all ordinary nonvoting
shares shown as beneficially owned by them, subject to community property
laws, where applicable.

(2) The percentages shown are based on 166,565,324 ordinary voting shares and
30,234,700 ordinary nonvoting shares outstanding on March 24, 1999 and
14,414,372 ordinary voting shares issued under this prospectus.

(3) Includes 36,761,712 ordinary voting shares held by Welsh, Carson, Anderson &
Stowe VII, L.P., 10,542,844 ordinary voting shares held by Welsh, Carson,
Anderson & Stowe VI, L.P., 7,354,932 ordinary voting shares held by WCAS
Capital Partners III, L.P., 226,512 ordinary voting shares held by WCAS
Information Partners, L.P. and 2,486,796 ordinary voting shares held by
partners and others affiliated with WCAS. Those partners are also partners
of the sole general partner of each of the foregoing limited partnerships.
The partners of WCAS who are also directors of Amdocs are Bruce K. Anderson
(Chairman of the Board and Chief Executive Officer of Amdocs) and Robert A.
Minicucci (Chief Financial Officer of Amdocs), and each may be deemed to be
a beneficial owner of our ordinary voting shares held by WCAS.

(4) SBCI is a wholly-owned subsidiary of SBC, a company whose shares are
publicly traded on the New York Stock Exchange. The number of shares shown
as beneficially owned by SBCI is comprised of 14,500,000 ordinary voting
shares and 30,234,700 ordinary nonvoting shares. SBCI is the only
shareholder of Amdocs that holds ordinary nonvoting shares.

(5) In connection with our recapitalization effected as of May 20, 1998, in
advance of our initial public offering in June 1998, investment partnerships
affiliated with WCAS and several entities in which some members of
management have a beneficial interest granted irrevocable proxies with
respect to a total of 23,521,899 and 6,715,632 ordinary voting shares,
respectively, to a company which is the principal shareholder of AIL and
which is beneficially owned by Morris S. Kahn. The proxies granted by the
WCAS partnerships expire in ten years, or sooner if at any time the WCAS
entities collectively own less than 10.0% of our outstanding capital shares.
The proxies granted by several entities in which some members of management
have a beneficial interest expire ratably over the next one or two years.
After giving effect to those proxies, AIL and its principal shareholder will
together have the right to vote 42.1% of our ordinary shares and WCAS will
have the right to vote 18.7% of such shares.

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<PAGE> 55

(6) Affiliates of WCAS, SBCI and AIL serve on our board of directors and,
accordingly, those affiliates may be deemed to be the beneficial owners of
the shares held by such entities.

CALL OPTION AGREEMENT

In September 1997, in connection with the Share Subscription Agreement and
the Conditional Investment Agreement (described in "Certain
Transactions -- Investment Agreements"), the WCAS Investors, granted to our
existing shareholders, SBCI, AIL, several entities in some of which some of our
directors and executive officers have a beneficial interest and the Trust (such
entities and the Trust being referred to collectively as the "Other Investors"),
a call option on up to 15,198,040 ordinary voting shares. The call option may be
exercised, without the payment of any consideration to the WCAS Investors, if
specified revenue and cash flow targets are met in fiscal years 1998 and 1999.
The targets in fiscal year 1998 were satisfied in full. If exercised, the call
option would increase the relative ownership of SBCI, AIL and the Other
Investors and decrease the relative ownership of the WCAS Investors with no
change in the aggregate number of ordinary shares outstanding.

If the conditions of the call option agreement are satisfied in full, SBCI
and AIL each have the right to acquire 6,154,138 ordinary shares and the Other
Investors have the right to acquire 2,889,764 ordinary shares.

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<PAGE> 56

DESCRIPTION OF SHARE CAPITAL

Our authorized capital stock consists of 500,000,000 ordinary shares and
50,000,000 ordinary nonvoting shares, par value L 0.01, and 25,000,000 preferred
shares. We have designated one preferred share as a special voting preferred
share.

OUR ORDINARY SHARES AND ORDINARY NONVOTING SHARES

All of our issued and outstanding ordinary shares and ordinary nonvoting
shares are, and the ordinary shares offered by this prospectus when issued in
exchange for exchangeable shares will be, validly issued, fully paid and
non-assessable. Neither the ordinary shares nor the ordinary nonvoting shares
have pre-emptive, subscription or redemption rights. Neither our Memorandum of
Association or Articles of Association nor the laws of Guernsey restrict in any
way the ownership or voting of ordinary shares held by non-residents of
Guernsey.

Except as to voting rights, the rights of the holders of ordinary shares
and ordinary nonvoting shares are identical and such securities rank on a
parity.

Dividend and Liquidation Rights. Holders of ordinary shares and ordinary
nonvoting shares are entitled to receive equally, share for share, any dividends
that may be declared by the board of directors out of funds legally available
therefor. If, in the future, we declare cash dividends, such dividends will be
payable in U.S. dollars. In the event of our liquidation, after satisfaction of
liabilities to creditors, holders of ordinary shares and ordinary nonvoting
shares are entitled to share pro rata in the net assets of Amdocs. Such rights
may be affected by the grant of preferential dividend or distribution rights to
the holders of a class or series of preferred shares that may be authorized in
the future. Declaration of a final dividend (not exceeding the amounts proposed
by our board of directors) requires shareholder approval by adoption of an
ordinary resolution. Failure to obtain such shareholder approval does not affect
previously paid interim dividends.

Voting, Shareholder Meetings and Resolutions. Holders of ordinary shares
have one vote for each ordinary share held on all matters submitted to a vote of
shareholders. These voting rights may be affected by the grant of any special
voting rights to the holders of a class or series of preferred shares that may
be authorized in the future. An annual general meeting shall be held once every
calendar year at the time (within a period of not more than 15 months after the
last preceding annual general meeting) and at the place as may be determined by
the board of directors. The quorum required for an ordinary meeting of
shareholders consists of shareholders present in person or by attorney who hold
or represent between them a majority of the outstanding ordinary shares.

An ordinary resolution (such as a resolution for the approval of the
financial reports or the declaration of dividends) requires approval by the
holders of a majority of the voting rights represented at a meeting, in person
or by proxy, and voting thereon. A special or extraordinary resolution (such as,
for example, a resolution amending our Memorandum of Association or Articles of
Association or approving any change in capitalization, or a liquidation or
winding-up) requires approval of the holders of 75% of the voting rights
represented at the meeting, in person or by proxy, and voting thereon. A special
or extraordinary resolution can only be considered if shareholders receive at
least fourteen days' prior notice of the meeting at which such resolution will
be considered.

Except as described below, the ordinary nonvoting shares do not have any
voting rights. Each nonvoting ordinary share will be converted automatically
into one ordinary share at any time that it is transferred by SBCI, the sole
holder of the ordinary nonvoting shares.

Transfer of Shares and Notices. Fully paid ordinary shares and ordinary
nonvoting shares are issued in registered form and may be freely transferred
pursuant to the Articles of Association unless the transfer is restricted or
prohibited by another instrument. Each shareholder of record is entitled to
receive at least fourteen days' prior notice of an ordinary shareholders'
meeting and at least twenty-one days' prior notice of any shareholders' meeting
at which a special resolution is to be adopted. For the purposes of

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<PAGE> 57

determining the shareholders entitled to notice and to vote at the meeting, the
board of directors may fix a record date not more than 60 or less than ten days
prior to the date of the meeting.

Modification of Class Rights. The rights attached to any class (unless
otherwise provided by the terms of issue of that class), such as voting,
dividends and the like, may be varied with the consent in writing of the holders
of 75% of the outstanding shares of such class, or with the adoption of an
extraordinary resolution passed at a separate general meeting of the holders of
the shares of that class.

Election of Directors. The ordinary shares do not have cumulative voting
rights in the election of directors. As a result, the holders of ordinary shares
that represent more than 50% of the voting power have the power to elect all of
Amdocs' directors. See "Principal Shareholders."

OUR PREFERRED SHARES

Amdocs has 25,000,000 authorized preferred shares. The board of directors
has the authority to issue the preferred shares in one or more series and to fix
the rights, preferences, privileges and restrictions of such shares, including
dividend rights, dividend rates, conversion rights, voting rights, terms of
redemption, redemption prices, liquidation preferences and the number of shares
constituting any series, without further vote or action by the shareholders. We
currently do not have any plans to issue any preferred shares other than the
voting share described below.

The purpose of authorizing the board of directors to issue preferred shares
and to determine their rights and preferences is to eliminate delays associated
with a shareholder vote on specific issuances. The issuance of preferred shares,
while providing desirable flexibility in connection with possible equity
financings, acquisitions and other corporate purposes, could have the effect of
making it more difficult for a third party to acquire, or of discouraging a
third party from acquiring, a majority of our outstanding voting shares.

OUR SPECIAL VOTING SHARE

Pursuant to the Plan of Arrangement we issued one special voting share
which is being held pursuant to the voting and exchange trust agreement with
Architel, our Nova Scotia subsidiary, our Denmark subsidiary and CIBC Mellon
Trust Company, as trustee, by the trustee who is holding the special voting
share in trust for the benefit of the holders of exchangeable shares. The
special voting share entitles the trustee to receive notice of, to attend and to
vote at any and all meetings of the holders of our ordinary shares. For each
exchangeable share that is not held by us or our subsidiaries, the trustee has
the number of votes to which a holder of one share of our ordinary shares is
entitled with respect to any vote. Unless our Memorandum of Association or
applicable law requires otherwise, the trustee and the holders of our ordinary
shares will vote together as a single class in the election of directors and in
all matters which are submitted to a vote of our shareholders. The trustee will
exercise the voting rights only on the basis of instructions received from the
holders of the exchangeable shares. To the extent no instructions are received,
votes will not be cast.

The special voting share does not entitle the trustee to receive dividends.
If we dissolve, liquidate or wind up our affairs, the trustee will not receive
any of our assets available for distribution to our shareholders. When there are
no longer any outstanding exchangeable shares other than exchangeable shares
that are held by us or our subsidiaries, the special voting share will be
canceled.

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PLAN OF DISTRIBUTION

You should consult your own tax advisors with respect to the United States,
Canadian and other tax consequences of exchanging your exchangeable shares for
our ordinary shares as described below. For more information, see "Canadian
Federal Income Tax Considerations" and "United States Federal Income Tax
Considerations".

We have filed with the SEC a registration statement on Form F-1 with
respect to our ordinary shares being offered under this prospectus. This
prospectus forms a part of the registration statement. We have agreed to use our
reasonable best efforts to keep the registration statement effective until there
are no exchangeable shares outstanding. We have not engaged a broker, dealer or
underwriter in connection with the offering of our ordinary shares described in
this prospectus.

EXCHANGING YOUR EXCHANGEABLE SHARES FOR OUR ORDINARY SHARES

You may obtain our ordinary shares in exchange for your exchangeable shares
in the following ways:

- you may, at any time, require Architel to redeem your exchangeable shares
for an equivalent number of our ordinary shares. For more information,
see "-- How You May Redeem Your Exchangeable Shares."

- Architel may redeem your exchangeable shares for our ordinary shares upon
the occurrence of certain events. For more information, see "-- Automatic
Redemption of Your Exchangeable Shares."

- upon our liquidation or the liquidation of Architel, you may be required
to, or may choose to, exchange your exchangeable shares for our ordinary
shares. For more information, see "-- Exchange of Your Exchangeable
Shares Upon Our Liquidation or the Liquidation of Architel."

- We will bear all of the expenses of this distribution. We estimate that
these expenses will total approximately $________.

HOW YOU MAY REDEEM YOUR EXCHANGEABLE SHARES

You may, at any time, exercise your retraction right to require Architel to
redeem (or retract) all or any of your exchangeable shares in exchange for an
equivalent number of our ordinary shares, plus any dividends due on the
exchangeable shares that you elect to redeem. This retraction right will be
subject to the exercise by our Nova Scotia subsidiary of its overriding right in
such circumstances to purchase all of the exchangeable shares you wish to
exchange. For more information, see "The Overriding Call Rights of Our Nova
Scotia Subsidiary -- Retraction Call Right." To exercise your retraction right,
you must complete the retraction request on the reverse side of the certificates
of the exchangeable shares you wish to redeem or provide such other form of
notice acceptable to Architel and deliver the exchangeable share certificates to
Architel or our transfer agent. In the request or notice, you will be required
to specify the amount of exchangeable shares you wish Architel to redeem and the
date upon which you wish to receive our ordinary shares, plus any dividends due
to you in exchange for your exchangeable shares, and acknowledge the overriding
right of our Nova Scotia subsidiary to purchase the exchangeable shares you wish
to redeem. The date you request for delivery must be a business day not less
than ten nor more than fifteen business days after the date on which Architel
receives your retraction request and any other documents that may be required to
effect the redemption under the Canada Business Corporations Act, Architel's
by-laws and by our transfer agent.

Upon receiving the completed retraction request or notice, exchangeable
share certificates and any other required documents, Architel will immediately
notify our Nova Scotia subsidiary of your request. Our Nova Scotia subsidiary
will thereafter have five business days in which to exercise its overriding
right in such circumstances to purchase the exchangeable shares you wish to
redeem. If it determines not to exercise this right and you do not revoke your
request for Architel to redeem your exchangeable shares in accordance with the
terms of your exchangeable shares, Architel will deliver to you the number of
our

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ordinary shares equal to the number of exchangeable shares you have delivered
for redemption, plus any dividends due on the exchangeable shares.

AUTOMATIC REDEMPTION OF YOUR EXCHANGEABLE SHARES

Subject to compliance with applicable law, Architel may redeem your
exchangeable shares in exchange for an equivalent number of our ordinary shares,
plus any dividends due on your exchangeable shares, on or after the fifth
anniversary of the closing of our Arrangement with Architel.

The Architel board may also elect to accelerate the date for redemption if:

- there are outstanding at any time less than 1,500,000 exchangeable shares
(other than shares held by us and our subsidiaries). The Architel board
may adjust this threshold as it deems appropriate in order to give effect
to:

- any subdivision or consolidation of or stock dividend on the
exchangeable shares;

- any issuance or distribution of rights to acquire exchangeable shares
or securities exchangeable for or convertible into exchangeable
shares;

- any issuance or distribution of other securities or rights or
evidences of indebtedness or assets; or

- any other capital reorganization or other transaction affecting the
exchangeable shares;

- we are involved in any merger or amalgamation, tender offer for us or any
material sale of shares or rights or interests in or to such shares or
any similar transaction, or any proposal to do so, and the Architel board
determines, in good faith and in its sole discretion, that it is not
reasonably practicable to substantially replicate the terms and
conditions of the exchangeable share provisions in connection with such
transaction and that the redemption of all outstanding exchangeable
shares is necessary to complete such transaction;

- we, our Nova Scotia subsidiary or any of our other affiliates undertake a
transaction, the result of which is that we cease to control Architel,
and the Architel board determines, in good faith and in its sole
discretion, that it is not reasonably practicable to substantially
replicate the terms and conditions of the exchangeable shares in
connection with such transaction and that the redemption of all
outstanding exchangeable shares is necessary to complete such
transaction;

- an event occurs in connection with which holders of exchangeable shares
would be entitled to vote as Architel shareholders at any meeting or vote
of Architel shareholders, other than any meeting or vote to approve or
disapprove any change in the rights to, or in the rights of the holders
of, the exchangeable shares to maintain the equivalence of our ordinary
shares and the exchangeable shares; or

- an event or issue occurs in connection with which holders of exchangeable
shares would be entitled to vote as Architel shareholders in order to
approve or disapprove any change to, or in the rights of the holders of,
the exchangeable shares to maintain the equivalence of our ordinary
shares and the exchangeable shares, and the holders of exchangeable
shares fail to approve the necessary change.

Architel will notify you in writing of the proposed redemption of your
exchangeable shares at least 60 days before the date of redemption, in the case
of a redemption on or after the fifth anniversary of the closing of our
Arrangement with Architel or a redemption if there are outstanding less than
1,500,000 exchangeable shares (other than shares held by us and our
subsidiaries), or such number of days before the date of redemption that the
Architel board determines to be reasonably practicable under the circumstances,
in the case of other redemptions. The redemption by Architel of your
exchangeable shares will be subject to the overriding right of our Nova Scotia
subsidiary to purchase your exchangeable shares on the occurrence of the
circumstances triggering the redemption. For more information, see "The
Overriding Call Rights of Our Nova Scotia Subsidiary -- Redemption Call Right."

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EXCHANGE OF YOUR EXCHANGEABLE SHARES UPON OUR LIQUIDATION OR THE LIQUIDATION OF
ARCHITEL

Your right to redeem your exchangeable shares upon the liquidation of
Architel. Subject to any restrictions imposed by applicable law, if Architel
dissolves, liquidates or otherwise distributes its assets among its shareholders
to wind-up its affairs, the holders of exchangeable shares will have the right
to receive from Architel, prior to any distribution to holders of Architel
common shares or any other Architel shares ranking junior to the exchangeable
shares, one of our ordinary shares for each exchangeable share held, plus any
dividends due on the exchangeable shares. This right will be subject to the
overriding right of our Nova Scotia subsidiary in these circumstances to
purchase all of your exchangeable shares. For more information, see "The
Overriding Call Rights of Our Nova Scotia Subsidiary -- Liquidation Call Right."

In addition, you will be entitled to require our Nova Scotia subsidiary to
purchase all or any of your exchangeable shares if:

- Architel institutes any proceeding to be adjudicated bankrupt or
insolvent or to be dissolved or wound-up;

- Architel consents to the institution of bankruptcy, insolvency,
dissolution or winding-up proceedings against it;

- Architel fails to contest in good faith any petition, answer or consent
seeking its dissolution or winding-up under any bankruptcy, insolvency or
similar laws within 30 days of becoming aware of such proceedings;

- Architel consents to the filing of any petition, answer or consent
seeking its dissolution or winding-up or the appointment of a receiver;

- Architel makes a general assignment for the benefit of its creditors;

- Architel admits in writing its inability to pay its debts generally as
they become due; or

- Architel is not permitted, pursuant to solvency requirements of
applicable law, to redeem any retracted exchangeable shares in accordance
with the terms of your retraction rights.

We and Architel will notify the trustee in writing immediately upon the
occurrence of any of these events (or the occurrence of any event which with the
giving of notice or the passage of time or both would be such an event). As soon
as practicable after receiving such written notice, the trustee will then notify
you of such event and will advise you of your right to require Architel to
purchase all or any of your exchangeable shares in such circumstances. Should
you choose to exercise this right, you will receive in consideration for your
exchangeable shares an equivalent number of ordinary shares, plus any dividends
due on the exchangeable shares exchanged.

If as a result of liquidity or solvency requirements of applicable law
Architel is unable to redeem all of your exchangeable shares which you have
delivered to Architel for redemption, you will be deemed to have instructed the
trustee to exercise, on your behalf, the right to require our Nova Scotia
subsidiary to purchase the exchangeable shares not redeemed by Architel.

Your right to redeem your exchangeable shares upon our liquidation. In
order for you to participate on a pro rata basis with the holders of our
ordinary shares, prior to our liquidation, your exchangeable shares will be
automatically exchanged for our ordinary shares which automatic exchange shall
be affected by our Nova Scotia subsidiary's automatic purchase of your
exchangeable shares for an equivalent number of our ordinary shares, plus any
dividends due to you on your exchangeable shares. We will be deemed to have
liquidated when either of the following occur:

- our board of directors decides to institute voluntary proceedings to
liquidate or dissolve us or wind-up our affairs or to effect any other
distribution of our assets among our shareholders for the purpose of
winding-up our affairs; or

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- we receive notice of or otherwise become aware of any threatened or
instituted claim, suit, petition or other proceedings with respect to our
involuntary liquidation, dissolution or winding-up or to effect any other
distribution of our assets among our shareholders for the purposes of
winding-up our affairs, and we fail to contest in good faith any such
proceeding within 30 days.

The automatic exchange will be deemed to occur on the fifth business day
prior to the liquidation event, at which time all certificates representing the
exchangeable shares will be deemed to represent an equivalent number of our
ordinary shares. At your request and upon receipt of your existing exchangeable
share certificates, duly endorsed in blank and accompanied by any instruments of
transfer that we or Architel may reasonably request, Architel will deliver to
you replacement certificates representing the equivalent number of our ordinary
shares.

THE OVERRIDING CALL RIGHTS OF OUR NOVA SCOTIA SUBSIDIARY

In the circumstances described below, our Nova Scotia subsidiary will have
certain overriding rights to acquire your exchangeable shares by delivering to
you in exchange for your exchangeable shares an equivalent number of our
ordinary shares, plus any dividends due on the exchangeable shares (which would
be the same consideration that you would receive if your exchangeable shares
were redeemed by Architel). Our Nova Scotia subsidiary may exercise these rights
even though you have requested Architel to redeem your exchangeable shares.

Retraction Call Right. If you request Architel to redeem your exchangeable
shares, you will be deemed to offer such shares to our Nova Scotia subsidiary.
Our Nova Scotia subsidiary will have an overriding right in these circumstances
to acquire all of the exchangeable shares which you wish Architel to redeem. If
our Nova Scotia subsidiary elects to exercise this right, you will be required
to sell these exchangeable shares to our Nova Scotia subsidiary.

Liquidation Call Right. Our Nova Scotia subsidiary will have an overriding
right to acquire all of your exchangeable shares upon the liquidation,
dissolution or winding-up of Architel or any other distribution of the assets of
Architel among its shareholders for the purpose of winding-up its affairs. If
our Nova Scotia subsidiary elects to exercise this right, you will be required
to sell your exchangeable shares to our Nova Scotia subsidiary. The transfer of
your exchangeable shares will occur on the effective date of the liquidation,
dissolution or winding-up of Architel.

Redemption Call Right. Our Nova Scotia subsidiary will have the overriding
right to acquire all of your exchangeable shares on the proposed date for their
automatic redemption. If our Nova Scotia subsidiary elects to exercise this
right, you will be required to sell your exchangeable shares to our Nova Scotia
subsidiary.

Effect of Call Right Exercise. If our Nova Scotia subsidiary exercises one
or more of its call rights described above and acquires exchangeable shares, it
will not be entitled to exercise any voting rights attaching to those
exchangeable shares. We anticipate that our Nova Scotia subsidiary will exercise
its call rights when they are available, and we currently foresee no
circumstances under which our Nova Scotia subsidiary would not exercise these
rights. In addition, we do not anticipate any restriction or limitation on the
number of exchangeable shares our Nova Scotia subsidiary would acquire upon
exercise of these rights.

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CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

You should consider the following discussion of Canadian federal income
taxes before you acquire exchangeable shares or exchange exchangeable shares for
our ordinary shares. In the opinion of Goodman Phillips & Vineberg, Toronto, who
acted as our counsel in connection with the Arrangement, the following
accurately summarizes the principal Canadian federal income tax considerations
under the Income Tax Act (Canada) that generally apply to you if, under Canadian
federal income tax law, you are considered to:

- hold as capital property:

- your exchangeable shares and your Amdocs ordinary shares;

- the voting rights associated with the exchangeable shares; and

- the other ancillary rights associated with the exchangeable shares;

- deal at arm's length with Amdocs, Architel, and Amdocs' Denmark and Nova
Scotia subsidiaries; and

- not be affiliated with Amdocs, Architel, or either of Amdocs' Denmark or
Nova Scotia subsidiaries.

If Amdocs is or will be a foreign affiliate of you under the Canadian federal
income tax laws, this summary will not apply to you. If you are a "financial
institution" under the Canadian federal income tax laws applicable to securities
held by financial institutions, the summary does not apply to you; instead, you
should consult your own advisors regarding the application to you of the
"mark-to-market" rules.

This summary assumes that at all times the exchangeable shares will be
listed on the TSE or another prescribed stock exchange. This summary does not
address the tax consequences of the transactions, including the Arrangement, in
which you acquire the exchangeable shares.

Under Canadian federal income tax laws, your exchangeable shares will
generally be considered to be capital property to you unless you are considered
to hold your exchangeable shares

- in the course of carrying on a business,

- in an adventure in the nature of trade, or

- as "mark-to-market property."

If you are resident in Canada but your shares might not otherwise qualify as
capital property, you may be entitled to make an irrevocable election to qualify
those shares as capital property. If you do not hold your exchangeable shares as
capital property, you should consult your own advisors regarding your particular
circumstances.

The current provisions of the Income Tax Act (Canada) and regulations, the
current provisions of the income tax treaty between Canada and the United States
and counsel's understanding of the current administrative practices of Revenue
Canada form the basis of this summary. This summary takes into account the
proposed amendments to the Income Tax Act (Canada) and regulations that the
Minister of Finance has publicly announced prior to the date of this
registration statement and assumes that those proposed amendments will be
enacted in their present form. Counsel can give no assurances, however, that the
proposed amendments will be enacted in the form proposed, or at all.

Except for the proposed amendments, this summary does not take into account
or anticipate any changes in law, whether by legislative, administrative or
judicial decision or action, nor does it take into account provincial,
territorial or foreign income tax legislation or considerations, which may
differ from the Canadian federal income tax considerations described herein. We
have neither sought nor obtained an advance tax ruling from Revenue Canada to
confirm the tax consequences of any of the transactions we describe.

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While This Summary Addresses The Material Canadian Federal Income Tax
Considerations Generally Applicable To You, It Is Not Intended To Be, Nor Should
It Be Construed To Be, Legal, Business Or Tax Advice To You. Furthermore, As
Required By The "Plain English" Requirements Of The SEC, This Summary Makes
Minimal Use Of Defined Terms. You Should Know That Many Of The Words And Phrases
Used In This Summary Have Very Specific Meanings Under Canadian Income Tax Law.
Therefore, You Should Consult Your Own Tax Advisors With Respect To The Tax
Consequences Applicable To You In Your Particular Circumstances.

For Canadian tax purposes, you must express all amounts, including
dividends, adjusted cost base and proceeds of disposition, in Canadian dollars,
and you must convert amounts denominated in United States dollars into Canadian
dollars based on the United States dollar exchange rate generally prevailing
when those amounts arise.

SHAREHOLDERS RESIDENT IN CANADA

If you are resident or deemed to be resident in Canada under Canadian
federal income tax laws, the following portion of the summary applies to you.

TAXATION OF EXCHANGEABLE SHARES

Dividends. If you are an individual, the dividends that you receive or are
deemed to receive on your exchangeable shares will be included in computing your
income. Generally, they will be subject to the gross-up and dividend tax credit
rules that normally apply to taxable dividends received from taxable Canadian
corporations. If you are a corporation, the dividends that you receive or are
deemed to receive on your exchangeable shares will be included in computing your
income.

Subject to the discussion set out below as to the denial of the dividend
deduction, if you are a corporation, other than a "specified financial
institution," you must include dividends that you receive or are deemed to
receive on the exchangeable shares in your income and these dividends will
normally be deductible in computing your taxable income. As discussed below, you
may not be permitted to make this deduction (but will still be required to
include the dividend in income) if you are a "specified financial institution"
or if Amdocs, or any person with whom Amdocs does not deal at arm's length is a
"specified financial institution."

A corporation is a "specified financial institution" if it is, or is
related to, a bank, a trust company, a credit union, an insurance corporation or
one of the corporations prescribed in the regulations to the Income Tax Act
(Canada). A corporation will also be a "specified financial institution" if its
principal business, or the principal business of a related person, is

- the lending of money to persons with whom the corporation does not deal
at arm's length

- the purchasing of debt obligations issued by persons with whom the
corporation does not deal at arm's length, or

- a combination of both of the above.

If you are a specified financial institution, you will only be able to
deduct from your taxable income a dividend that is otherwise deductible if
either:

- you did not acquire your exchangeable shares in the ordinary course of
your business; or

- at the time you receive the dividend, the exchangeable shares are listed
on a prescribed stock exchange in Canada (which currently includes the
TSE) and you, either alone or together with persons not dealing at arm's
length with you for purposes of the Income Tax Act (Canada), do not
receive (and are not deemed to receive) dividends in respect of more than
10 percent of the issued and outstanding exchangeable shares.

If Amdocs or any person with whom Amdocs does not deal at arm's length for
purposes of the Income Tax Act (Canada) is a "specified financial institution"
at the time a dividend is paid on an
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exchangeable share and you are a corporation, then, subject to the exemption
described below, the dividends that you receive or are deemed to receive will
not be deductible in computing your taxable income. However, as discussed above,
you will be required to include those dividends in computing your income. Amdocs
has represented in the Combination Agreement relating to the Arrangement that it
is not a specified financial institution, but this status could change prior to
any dividend being received or deemed received by a corporate holder of
exchangeable shares.

Nonetheless, if you are a corporation, you will not be denied the dividend
deduction if at the time you receive a dividend or are deemed to receive a
dividend

- the exchangeable shares are listed on a prescribed stock exchange (which
currently includes the TSE),

- Amdocs and its Denmark and Nova Scotia subsidiaries are related to
Architel, and

- you (together with any person with whom you do not deal at arm's length,
with any partnership of which you or that person is a member, and with
any trust of which you or that person is a beneficiary) do not receive
dividends on more than 10 percent of the issued and outstanding
exchangeable shares.

If you are a private corporation or any other corporation resident in
Canada controlled or deemed to be controlled by or for the benefit of an
individual (other than a trust) or a related group of individuals (other than
trusts), you may be liable to pay a refundable tax of 33 1/3 percent on
dividends that you receive or are deemed to receive on the exchangeable shares
that are deductible in computing your taxable income. If you are a
"Canadian-controlled private corporation," you may be liable to pay an
additional refundable tax of 6 2/3 percent on dividends you receive or are
deemed to receive that are not deductible in computing your taxable income.

Under Canadian federal income tax laws, the exchangeable shares will be
taxable preferred shares and short-term preferred shares. Accordingly, Architel
will be subject to a 66 2/3 percent tax on dividends (other than excluded
dividends) that it pays or is deemed to pay on the exchangeable shares. In
certain circumstances, Architel may be entitled to deductions that will
substantially offset the impact of this tax. Dividends that you receive or are
deemed to receive on the exchangeable shares will not be subject to the 10
percent tax under Part IV.1 of the Income Tax Act (Canada).

Redemption Or Exchange Of Exchangeable Shares. If Architel redeems (or you
retract) your exchangeable shares, you will generally be deemed to have received
a dividend equal to the amount, if any, by which

(a) the fair market value of the consideration you receive as part of
the redemption or retraction exceeds

(b) the aggregate of

- the paid-up capital (as determined under Canadian federal income
tax laws) of your exchangeable shares at the time Architel redeems
or you retract your exchangeable shares and

- any amount allocated to the cancellation of the voting rights and
other ancillary rights associated with those shares.

The amount of any deemed dividend will generally be subject to the tax
treatment described above under "Taxation of Exchangeable Shares -- Dividends."

On the redemption of your exchangeable shares, you will also be considered
to have disposed of your exchangeable shares for proceeds of disposition equal
to (a) the redemption proceeds less (b) the amount of the deemed dividend. You
will also be considered to have disposed of the ancillary rights associated with
your exchangeable shares in exchange for the amount allocated to the
cancellation of those rights. Amdocs is of the view that the fair market value
of those rights is nominal. Counsel, however, can provide

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no opinion on this factual matter. In general, you will realize a capital gain
(or a capital loss) equal to the amount by which (a) the proceeds of disposition
of the exchangeable shares (net of reasonable costs of disposition) exceed (b)
the adjusted cost base of such shares (see "-- Taxation of Capital Gain or
Capital Loss" below). If you are a corporation, in some circumstances, the
amount of any dividend you are deemed to have received may be treated as
proceeds of disposition and not as a dividend.

If you exchange exchangeable shares (including any ancillary rights) for
our ordinary shares, other than on the redemption or retraction of exchangeable
shares with Architel, for example, if our Nova Scotia subsidiary exercises its
overriding call rights and acquires your exchangeable shares, in general, you
will realize a capital gain (or a capital loss) to the extent (a) the proceeds
of disposition of the exchangeable shares, net of any reasonable costs of
disposition, exceed (or are less than) (b) the adjusted cost base of such shares
to you. For these purposes, the proceeds of disposition will be the aggregate
fair market value, at the time of the exchange, of the consideration you receive
(less any amount allocated to the cancellation of the ancillary rights) (see
"Taxation of Capital Gain or Capital Loss" below).

Because of our Nova Scotia subsidiary's overriding call rights and certain
of the ancillary rights, you cannot control whether you will receive ordinary
shares upon the redemption of your exchangeable shares by Architel or upon the
purchase of your exchangeable shares by our Nova Scotia subsidiary. As described
above, the tax consequences to you of a redemption by Architel differ from those
of an exchange of exchangeable shares with our Nova Scotia subsidiary.

Taxation Of Capital Gain Or Capital Loss. You must include in your income
for the year of disposition the taxable portion of any capital gain you realize.
The taxable portion of any capital gain you realize (the "taxable capital gain")
will be three-quarters of that amount. Three-quarters of any capital loss you
realize in that year is deductible against taxable capital gains realized in
that year. If three-quarters of any capital loss you realize in a taxation year
exceeds your taxable capital gains in that year, you may carry back the excess
up to three taxation years or forward indefinitely and deduct those excess
amounts against net taxable capital gains in those other years, subject to
certain limitations and in certain circumstances.

If you are an individual or trust, other than certain trusts, capital gains
that you realize may give rise to alternative minimum tax. If you are a
Canadian-controlled private corporation, you may be liable to pay an additional
refundable tax of 6 2/3 percent on taxable capital gains.

If you are a corporation, subject to certain limitations and under certain
circumstances, you may be required to reduce the amount of any capital loss
arising when you dispose or are deemed to dispose of any exchangeable shares by
the amount of dividends you received or are deemed to have received on those
shares. Similar rules may apply to you if you are a corporation that is a member
of a partnership or beneficiary of a trust that owns exchangeable shares or that
is in turn a member of a partnership or beneficiary of a trust that owns
exchangeable shares.

TAXATION OF AMDOCS ORDINARY SHARES

Acquisition And Disposition Of Ordinary Shares Of Amdocs. The cost amount
of ordinary shares that you receive on the retraction, redemption or exchange of
exchangeable shares will in general be equal to the fair market value of those
shares at that time.

If you dispose or are deemed to have disposed of ordinary shares,
generally, you will realize a capital gain (or capital loss) to the extent that
(a) the proceeds of disposition, net of any reasonable costs of disposition,
exceed (or are less than) (b) the adjusted cost base to you of such shares
immediately before the disposition. In computing the adjusted cost base of an
ordinary share, you must average the cost of the share with the adjusted cost
base of any other ordinary shares that you hold as capital property at that
time.

In computing your income, you must include the taxable portion of the
capital gains realized on a disposition of your Amdocs ordinary shares. See
"Taxation of Capital Gain or Capital Loss" above.

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Dividends. In computing your income, you must include dividends that you
receive or are deemed to receive on ordinary shares. If you are an individual,
these dividends will not be subject to the gross-up and the dividend tax credit
rules that normally apply to taxable dividends received from taxable Canadian
corporations. If you are a corporation, these dividends will not be deductible
in computing your taxable income. If you are a Canadian-controlled private
corporation, you may be liable to pay an additional refundable tax of 6 2/3
percent on dividends received on Amdocs ordinary shares. In certain
circumstances, you may be entitled to a foreign tax credit in respect of any
foreign withholding tax payable in connection with these dividends. Our Guernsey
and U.S. counsel have advised us that there are currently no such withholding
taxes applicable to dividends on our ordinary shares, provided that, you are not
a resident (for tax purposes) on the Islands of Guernsey, Alderney, Herm or
Jethou and do not carry on a business on such Islands through a permanent
establishment situated on those islands.

Foreign Property Information Reporting. If you are a "specified Canadian
entity" for a taxation year or a fiscal period and your total cost amounts of
"specified foreign property," including exchangeable shares and the ordinary
shares, at any time in the year or fiscal period exceed Cdn. $100,000, you must
file an information return for the year or period disclosing prescribed
information.

With some exceptions, generally, if you are a taxpayer resident in Canada
in the year, you will be a specified Canadian entity. You should consult your
own advisors about whether you must comply with these rules.

ELIGIBILITY FOR INVESTMENT IN CANADA

Qualified Investments. In the opinion of counsel, the exchangeable shares,
if issued on the date of this prospectus, and the ordinary shares, if issued on
the date of this prospectus and if listed on a prescribed stock exchange (which
currently includes the TSE and the New York Stock Exchange), would be qualified
investments for trusts governed by registered retirement savings plans,
registered retirement income funds and deferred profit sharing plans. The
ancillary rights associated with the exchangeable shares will generally not be
qualified investments. As indicated above, Architel has advised us that it is of
the view that the fair market value of these rights is nominal. However, counsel
can express no opinion on matters of factual determination such as this.

Foreign Property. If you hold exchangeable shares through a trust governed
by a registered pension plan, a registered retirement savings plan, a registered
retirement income fund or a deferred profit sharing plan or one of certain other
tax-exempt funds or entities or you are a person subject to the foreign property
rules in the opinion of counsel, based in part on a certificate of an officer of
Architel, the exchangeable shares, if issued on the date of this prospectus and
listed on a prescribed stock exchange in Canada (which currently includes the
TSE) would not on such date be foreign property for such trust or other entity
or person. The ordinary shares and the ancillary rights associated with the
exchangeable shares will be foreign property. Tax exempt trusts and other
entities or persons of the type referred to are subject to taxes where their
holdings of foreign property exceed the statutory limit.

SHAREHOLDERS NOT RESIDENT IN CANADA.

The following portion of this summary applies to you if you have not been
and will not be a resident or deemed resident in Canada at any time while you
held Architel common shares or will hold exchangeable shares or our ordinary
shares, and those shares are not "taxable Canadian property." This portion of
the summary does not apply to a non-resident that carries on an insurance
business in Canada and elsewhere. Special rules may apply to those holders.

The exchangeable shares will generally not be taxable Canadian property to
you provided that

- those shares are listed on a prescribed stock exchange (which currently
includes the TSE);

- you do not use or hold, and are not deemed to use or hold, the
exchangeable shares, in carrying on a business in Canada;

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- you (alone or together with persons with whom you do not deal at arm's
length under the Income Tax Act (Canada) have not owned (or had rights to
acquire) 25 percent or more of the issued shares of any class or series
of the capital stock of Architel at any time within the five years
preceding the date you dispose of the exchangeable shares; and

- you did not acquire the exchangeable shares in a transaction where the
exchangeable shares were deemed to be taxable Canadian property, such as
where you disposed of taxable Canadian property and deferred the
resulting gain.

Even if an exchangeable share is considered to be taxable Canadian
property, you may be entitled to relief under an applicable tax convention. You
should consult your own tax advisors to determine the tax consequences in your
own situation.

In general, you will not be subject to any tax on a capital gain you
realize or are deemed to have realized when you dispose of an exchangeable
share.

When you exchange an exchangeable share for an ordinary share, you may be
deemed to have received a dividend subject to withholding tax (discussed below)
and realized a capital gain or loss (generally tax-free as discussed above).

You will be subject to non-resident withholding tax at the rate of 25
percent on the gross amount of any dividends paid to you on the exchangeable
shares. An applicable income tax treaty, however, may reduce that rate. For
example, if you are a resident of the United States for purposes of the Canada-
United States tax treaty, the rate is generally reduced to 15 percent.

If your exchangeable shares are redeemed (either under Architel's
redemption right or pursuant to your retraction rights), you will be deemed to
receive a dividend as and to the extent described above under the heading
"Shareholders Resident in Canada." That deemed dividend will be subject to
withholding tax as described in the preceding paragraph. However, the
acquisition of an exchangeable share by our Nova Scotia subsidiary should not
result in a deemed dividend to you.

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UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

You should review the following discussion of certain United States federal
income tax considerations before you exchange exchangeable shares for ordinary
shares. This discussion does not address all of the United States federal income
tax considerations that may be relevant to you and is not directed to holders of
exchangeable shares subject to special treatment under the United States federal
income tax laws, such as dealers in securities, tax-exempt entities, insurance
companies or persons owning directly, indirectly or by attribution at least 5%
of the total voting power and value of our shares. In addition, this discussion
does not address the tax consequences of transactions in which you acquired your
exchangeable shares, including our acquisition of Architel. Furthermore, this
discussion does not address any state, local or non-U.S. tax considerations and
assumes that you hold your exchangeable shares as capital assets.

This discussion is based upon the United States Internal Revenue Code of
1986, as amended (the "Code"), applicable Treasury Regulations, administrative
rulings and judicial decisions, all as in effect on the date hereof and which
are subject to change, possibly with retroactive effect.

No statutory, judicial or administrative authority exists which directly
addresses certain of the tax consequences of the ownership of instruments and
rights comparable to the exchangeable shares and the rights associated with
those shares. Consequently, some aspects of the tax treatment of the
Arrangement, including the exchange of exchangeable shares for ordinary shares,
are uncertain. We have neither sought nor obtained any advance tax ruling
regarding the tax consequences of any of the transactions we describe.

We Strongly Urge You to Consult Your Own Tax Advisors Regarding the
Specific Tax Considerations that Apply to You.

U.S. FEDERAL INCOME TAX CONSIDERATIONS THAT APPLY TO U.S. HOLDERS

If you are

- an individual citizen or resident of the United States,

- a corporation or partnership created in the United States or under the
laws of the United States or of any state,

- an estate, the income of which is subject to United States federal income
taxation regardless of its source, or

- a trust (a) the administration over which a United States court can
exercise primary supervision and (b) all of the substantial decisions of
which one or more United States persons have the authority to control,

the following tax considerations will generally apply to you.

Exchange of Exchangeable Shares. Except as we describe below, when you
exchange your exchangeable shares for ordinary shares, you will generally
recognize gain or loss. Your gain or loss will equal the difference between (a)
the fair market value of the ordinary shares at the time you exchange your
exchangeable shares and (b) your adjusted tax basis in the exchangeable shares
you exchange. Your gain or loss will generally be a capital gain or loss. You
may, however, recognize ordinary income with respect to any declared but unpaid
dividends on the exchangeable shares. Any capital gain or loss will be long-term
capital gain or loss if your holding period for the exchangeable shares is more
than one year at the time of the exchange. Your adjusted tax basis in the
ordinary shares will be their fair market value at the time of the exchange.
Your holding period for the ordinary shares that you receive will begin on the
day after the exchange.

In view of the possibility that you will recognize gain or loss when you
exchange the exchangeable shares for ordinary shares, you may wish to consider
delaying the exchange until either

- you intend to dispose of the ordinary shares that you receive in exchange
for your exchangeable shares, or

67
<PAGE> 69

- the exchange may be characterized as tax-free (as discussed below).

Your exchange of exchangeable shares for ordinary shares may be
characterized as a tax-free exchange if at the time of the exchange either:

- our Nova Scotia subsidiary holds at least 80 percent of the then
outstanding exchangeable shares and in the exchange, our Nova Scotia
subsidiary, rather than Architel, acquires the exchangeable shares in
exchange for ordinary shares; or

- you receive ordinary shares from our Nova Scotia subsidiary when it
automatically redeems the exchangeable shares or exercises its rights to
acquire the exchangeable shares on the proposed liquidation, dissolution
or winding-up of Architel.

In either case, the exchange will be tax-free only if certain other requirements
are satisfied. Because satisfaction of these other requirements will depend upon
the facts and circumstances that exist at the time of your exchange, we do not
know at this time whether those requirements will be satisfied.

The exchange may also be tax-free if the exchangeable shares (together with
the associated exchange and voting rights) are treated for United States federal
income tax purposes as voting shares of Amdocs from the time of their issuance,
rather than as Architel shares. Under such recharacterization, Amdocs (or its
directly owned subsidiary) would be deemed to have acquired Architel by using
the exchangeable shares (together with the associated exchange and voting
rights) as the sole consideration for the acquisition of all of the Architel
ordinary shares from the former Architel shareholders. If such
recharacterization were sustained, the subsequent exchange of the exchangeable
shares for the ordinary shares would be tax-free regardless of the percentage
ownership of Amdocs' Nova Scotia subsidiary of the outstanding exchangeable
shares at the time of such exchange. However, since such recharacterization is
uncertain and contrary to the form of our acquisition of Architel, the exchange
of exchangeable shares for Amdocs ordinary shares is more likely to be tax-free
if the standards set forth in the preceding paragraph are satisfied.

If your exchange of exchangeable shares for Amdocs ordinary shares did
qualify as tax-free, you would recognize no gain or loss on such exchange. Your
adjusted tax basis in your ordinary shares would equal your adjusted tax basis
in the exchangeable shares that you exchange. Your holding period for the
ordinary shares that you receive would include your holding period for your
exchangeable shares, if you held the exchangeable shares as a capital asset
immediately prior to the exchange.

In the event that your exchange of exchangeable shares for ordinary shares
is taxable, the gain you realize when you exchange your exchangeable shares for
ordinary shares generally will be treated as United States source gain. Under
the terms of the United States-Canada income tax treaty, however, your gain may
be treated as sourced in Canada. Subject to certain limitations, you may be
entitled to credit your United States taxes for any Canadian tax imposed on the
exchange. If you are ineligible for a credit for any Canadian tax that you pay,
you may be entitled to deduct that tax in computing your United States taxable
income.

Distributions on Ordinary Shares. If we make any distributions in respect
of the ordinary shares, such distributions generally will be includible in your
gross income for United States federal income tax purposes as foreign source
dividend income to the extent such distributions are paid out of Amdocs' current
or accumulated earnings and profits, as determined under United States federal
income tax principles. To the extent, if any, that the amount of any such
distribution exceeds such current or accumulated earnings and profits as so
computed, it will first reduce your adjusted tax basis in your ordinary shares,
and to the extent such distribution exceeds your adjusted tax basis, it will be
treated as capital gain. You will not be entitled to claim a dividends received
deduction with respect to any dividends distributed by Amdocs. Distributions
generally will constitute "passive income" for United States foreign tax credit
limitation purposes.

Sale or Exchange of Ordinary Shares. You will be required to include in
your gross income for United States federal income tax purposes any gain or loss
realized on the sale or exchange of ordinary

68
<PAGE> 70

shares in an amount equal to the difference between the amount realized on such
sale or exchange and your adjusted tax basis in your ordinary shares at the time
of the sale or exchange. Such gain or loss generally will be capital gain or
loss, and will be long-term capital gain if your holding period for the ordinary
shares at the time of the disposition exceeds one year. Gain, if any, generally
will be United States source gain and generally will constitute "passive income"
for United States foreign tax credit limitation purposes.

U.S. FEDERAL INCOME TAX CONSIDERATIONS THAT APPLY TO NON-U.S. HOLDERS

If you are not

- an individual citizen or resident of the United States,

- a corporation or partnership created in the United States or under the
laws of the United States or of any state,

- an estate, the income of which is subject to United States federal income
taxation regardless of its source, or

the following summary applies to you.

Distributions on Ordinary Shares. Generally, you will not be subject to
United States federal income or withholding tax on dividends that you receive on
the ordinary shares.

Exchange of Exchangeable Shares or Sale or Exchange of Ordinary Shares.
Generally, you will not be subject to United States federal income or
withholding tax when you (i) exchange your exchangeable shares for ordinary
shares or (ii) sell or exchange your ordinary shares, unless either

- your exchangeable shares or ordinary shares, as the case may be, were an
asset of your United States trade or business; or

- you are an individual, you are present in the United States for 183 days
or more, and you satisfy certain other conditions.

69
<PAGE> 71

CERTAIN GUERNSEY TAX CONSIDERATIONS

As indicated above, Amdocs is incorporated under the laws of Guernsey.
Amdocs has been granted an exemption from income tax in Guernsey in respect of
non-Guernsey source income for 1999 in accordance with the Income Tax (Exempt
Bodies) Ordinance, 1989. Exemption must be applied for annually and is subject
to the payment of an annual fee. Under the laws of Guernsey as currently in
effect, a holder of ordinary shares who is not a resident of the Islands of
Guernsey Alderney, Jethou or Herm and who does not carry on business in Guernsey
through a permanent establishment situated there is (i) exempt from Guernsey
income tax on dividends paid with respect to the ordinary shares and (ii) is not
liable for Guernsey income tax on gains realized on sale or disposition of such
ordinary shares. In addition, Guernsey does not impose a withholding tax on
dividends paid by Amdocs to those holders of ordinary shares. Holders who are
resident of, or carry on business through a relevant establishment in, those
islands will be liable for a 20 percent withholding tax on dividends received on
the ordinary shares.

There are no capital gains, gift or inheritance taxes levied by Guernsey,
and the ordinary shares generally are not subject to any transfer taxes, stamp
duties or similar charges on issuance or transfer.

70
<PAGE> 72

LEGAL MATTERS

The validity of the ordinary shares offered hereby will be passed upon for
us by Carey Langlois, Guernsey. Certain legal matters will be passed upon for us
by Goodman Phillips & Vineberg, Toronto and Reboul, MacMurray, Hewitt, Maynard &
Kristol, New York.

EXPERTS

The financial statements of Amdocs Limited as of September 30, 1998 and
1997 and for the three year period ended September 30, 1998 audited by Ernst &
Young LLP have been included in reliance on their report given on their
authority as experts in accounting and auditing.

The financial statements of Architel Systems Corporation as of September
30, 1998 and 1997 and for the three year period ended September 30, 1998 audited
by Deloitte & Touche LLP have been included in reliance on their report given on
their authority as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We file annual reports, quarterly reports, current reports, proxy
statements and other information with the Securities and Exchange Commission.
You may read and copy any of our SEC filings at the SEC's Public Reference Room
at 450 Fifth Street, N.W., Washington, D.C. 20549. You may call the SEC at
1-800-SEC-0330 for further information about the Public Reference Room. Our SEC
filings are also available to the public on the SEC's website at
http://www.sec.gov.

You may request copies of the filings, at no cost, by writing to or
telephoning us as follows:

Amdocs Inc.
1610 Des Peres Road
St. Louis, Missouri 63131
Telephone: (314) 821-3242

This prospectus is part of a registration statement on Form F-1 that we
filed with the SEC under the Securities Act. This prospectus does not contain
all of the information contained in the registration statement. For further
information about us and our ordinary shares, you should read the registration
statement and the exhibits filed with the registration statement.

FORWARD-LOOKING STATEMENTS

Some of the information in this prospectus and in the documents that we
incorporate by reference into this prospectus contains forward-looking
statements that involve substantial risks and uncertainties. You can identify
these statements by forward-looking words such as "expect," "anticipate,"
"plan," "believe," "seek," "estimate," "internal," "backlog" and similar words.
Statements that we make in this prospectus and in the documents that we
incorporate by reference into this prospectus that are not statements of
historical fact may also be forward-looking statements. In particular,
statements that we make in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" may be forward-looking statements.
Forward-looking statements are not guarantees of our future performance, and
involve risks, uncertainties and assumptions that may cause our actual results
to differ materially from the expectations we describe in our forward-looking
statements. There may be events in the future that we are not accurately able to
predict, or over which we have no control. You should not place undue reliance
on forward-looking statements. We do not promise to notify you if we learn that
our assumptions or projections are wrong for any reason. Before you invest in
our ordinary shares, you should be aware that the factors we discuss in "Risk
Factors" and elsewhere in this prospectus could cause our actual results to
differ from any forward-looking statements.

71
<PAGE> 73

<TABLE>
<S> <C>
INDEX TO FINANCIAL STATEMENTS

AMDOCS LIMITED
(in U.S. dollars, unless otherwise stated)

Audited Consolidated Financial Statements
Report of Independent Auditors.............................. F-3
Consolidated Balance Sheets as of September 30, 1998 and
1997...................................................... F-4
Consolidated Statements of Operations for the years ended
September 30, 1998, 1997, and 1996........................ F-5
Consolidated Statements of Changes in Shareholders' Equity
(Deficit) for the years ended September 30, 1998, 1997,
and 1996.................................................. F-6
Consolidated Statements of Cash Flows for the years ended
September 30, 1998, 1997, and 1996........................ F-7
Notes to Consolidated Financial Statements.................. F-9
Unaudited Consolidated Financial Statements
Consolidated Balance Sheet as of December 31, 1998.......... F-25
Consolidated Statements of Operations for the three months
ended December 31, 1998 and 1997.......................... F-26
Consolidated Statements of Cash Flows for the three months
ended December 31, 1998 and 1997.......................... F-27
Notes to Unaudited Consolidated Financial Statements........ F-28
ARCHITEL SYSTEMS CORPORATION
(in Canadian dollars, unless otherwise stated)

Auditors' Report............................................ F-31
Consolidated Balance Sheets as of September 30, 1998 and
1997 and December 31, 1998 (unaudited).................... F-32
Consolidated Statements of Income and Retained Earnings for
the years ended September 30, 1998, 1997, and 1996 and for
the three months ended December 31, 1998 (unaudited) and
1997 (unaudited).......................................... F-33
Consolidated Statements of Changes in Financial Position for
the years ended September 30, 1998, 1997, and 1996 and for
the three months ended December 31, 1998 (unaudited) and
1997 (unaudited).......................................... F-34
Notes to Consolidated Financial Statements.................. F-35
</TABLE>

F-1
<PAGE> 74
<TABLE>
<S> <C>
UNAUDITED PRO FORMA COMBINED CONSOLIDATED FINANCIAL
STATEMENTS
(in U.S. dollars, unless otherwise stated)

Unaudited Pro Forma Condensed Combined Consolidated Balance
Sheet as of December 31, 1998............................. F-50
Unaudited Pro Forma Condensed Combined Consolidated Balance
Sheet as of September 30, 1998............................ F-51
Unaudited Pro Forma Condensed Combined Consolidated
Statements of Operations for the three months ended
December 31, 1998......................................... F-52
Unaudited Pro Forma Condensed Combined Consolidated
Statements of Operations for the three months ended
December 31, 1997......................................... F-53
Unaudited Pro Forma Condensed Combined Consolidated
Statements of Operations for the year ended September 30,
1998...................................................... F-54
Unaudited Pro Forma Condensed Combined Consolidated
Statements of Operations for the year ended September 30,
1997...................................................... F-55
Unaudited Pro Forma Condensed Combined Consolidated
Statements of Operations for the year ended September 30,
1996...................................................... F-56
Notes to Unaudited Pro Forma Condensed Combined Consolidated
Financial Statements...................................... F-57
</TABLE>

F-2
<PAGE> 75

REPORT OF INDEPENDENT AUDITORS

THE BOARD OF DIRECTORS AND SHAREHOLDERS

AMDOCS LIMITED

We have audited the accompanying consolidated balance sheets of Amdocs
Limited as of September 30, 1998 and 1997, and the related statements of
operations, changes in shareholders' equity (deficit) and cash flows for each of
the three years in the period ended September 30, 1998. 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 financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Amdocs Limited
at September 30, 1998 and 1997, and the consolidated results of its operations
and its cash flows for each of the three years in the period ended September 30,
1998, in conformity with accounting principles generally accepted in the United
States.

/s/ ERNST & YOUNG LLP

St. Louis, Missouri
November 8, 1998

F-3
<PAGE> 76

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
--------------------
1998 1997
---- ----
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................. $ 25,389 $ 53,732
Accounts receivable, including unbilled of $10,331 in 1998
and $2,031 in 1997..................................... 79,723 48,565
Accounts receivable from related parties, including
unbilled of $537 in 1998 and $0 in 1997................ 10,235 15,393
Deferred income taxes..................................... 14,534 12,532
Prepaid expenses and other current assets................. 11,991 6,161
-------- --------
Total current assets.............................. 141,872 136,383
Equipment, vehicles and leasehold improvements, net......... 46,404 28,287
Deferred income taxes....................................... 7,773 4,587
Intellectual property rights................................ 23,362 25,982
Other noncurrent assets..................................... 20,555 25,343
-------- --------
$239,966 $220,582
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts payable and accrued expenses..................... $ 47,599 $ 30,543
Accrued personnel costs................................... 29,948 23,098
Short-term financing arrangements......................... 91,565 1,998
Unearned revenue.......................................... 29,241 17,440
Notes payable to related parties.......................... -- 3,268
Short-term portion of capital lease obligations........... 2,952 1,954
Forward exchange contracts................................ 2,926 --
Income taxes payable and deferred income taxes............ 21,919 20,151
-------- --------
Total current liabilities......................... 226,150 98,452
Long-term forward exchange contracts........................ 2,222 --
Long-term portion of capital lease obligations.............. 9,215 7,370
Other noncurrent liabilities................................ 24,268 20,507
Shareholders' equity (deficit):
Preferred Shares -- Authorized 25,000 shares; pound
sterling 0.01 par value; 0 shares issued and
outstanding............................................ -- --
Ordinary Shares -- Authorized 550,000 shares; pound sterling
0.01 par value; 196,800 and 124,708 outstanding,
respectively (1998 -- 30,235 Non Voting Ordinary Shares
and 166,565 Voting Ordinary Shares)....................... 3,149 1,996
Additional paid-in capital.................................. 447,503 105,779
Unrealized loss on derivative instruments................... (1,495) --
Unearned compensation....................................... (8,947) --
Accumulated deficit......................................... (462,099) (13,522)
-------- --------
Total shareholders' equity (deficit).............. (21,889) 94,253
-------- --------
$239,966 $220,582
======== ========
</TABLE>

See accompanying notes
F-4
<PAGE> 77

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Revenue:
License(*)............................................... $ 42,891 $ 25,995 $ 16,298
Service(*)............................................... 360,876 264,107 195,422
-------- -------- --------
403,767 290,102 211,720
-------- -------- --------
Operating expenses:
Cost of license(*)....................................... 10,732 3,711 4,011
Cost of service(*)....................................... 231,360 173,704 129,177
Research and development................................. 25,612 17,386 14,695
Selling, general and administrative(*)................... 51,168 40,769 28,347
Nonrecurring charges (*)................................. -- 27,563 --
-------- -------- --------
318,872 263,133 176,230
-------- -------- --------
Operating income........................................... 84,895 26,969 35,490
Other expense, net(*)...................................... 24,126 3,266 476
-------- -------- --------
Income before income taxes and cumulative effect........... 60,769 23,703 35,014
Income taxes............................................... 30,385 17,827 10,506
-------- -------- --------
Income before cumulative effect............................ 30,384 5,876 24,508
Cumulative effect of change in accounting principle, net of
$277 tax................................................. 277 -- --
-------- -------- --------
Net income................................................. $ 30,107 $ 5,876 $ 24,508
======== ======== ========
Basic earnings per share
Income before cumulative effect.......................... $ 0.19 $ 0.05 $ 0.23
Cumulative effect of a change in accounting principle
(less than $0.01)..................................... -- -- --
-------- -------- --------
Net income............................................... $ 0.19 $ 0.05 $ 0.23
======== ======== ========
Diluted earnings per share Income before
cumulative effect........................................ $ 0.19 $ 0.05 $ 0.22
Cumulative effect of a change in accounting principle
(less than $0.01)..................................... -- -- --
-------- -------- --------
Net income............................................... $ 0.19 $ 0.05 $ 0.22
======== ======== ========
</TABLE>

- ---------------
(*) Includes the following income (expense) resulting from transactions with
related parties for the year ended September 30, 1998, 1997 and 1996,
respectively: License revenue -- $2,300, $0, and $2,000; service
revenue -- $82,100, $100,500 and $76,500; cost of license -- $0, $(3,382)
and $(4,011); cost of service -- $(2,325), $(2,523) and $(1,966); selling,
general and administrative -- $(510), $(377) and $(294); other expense,
net -- $(6,268), $0 and $0 (Note 3); nonrecurring charges -- $0, $(1,800)
and $0 (Note 3).

See accompanying notes
F-5
<PAGE> 78

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
UNREALIZED RETAINED TOTAL
ORDINARY SHARES ADDITIONAL LOSS ON EARNINGS SHAREHOLDERS'
---------------- PAID-IN DERIVATIVE UNEARNED (ACCUMULATED EQUITY
SHARES AMOUNT CAPITAL INSTRUMENTS COMPENSATION DEFICIT) (DEFICIT)
------ ------ ---------- ----------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at September 30, 1995......... 107,934 $1,727 $ 14,348 $ -- $ -- $ 13,354 $ 29,429
Conversion to Voting Shares........... (18) -- -- -- -- -- --
Net income -- -- -- -- -- 24,508 24,508
Dividends declared, $0.35 per share... -- -- -- -- -- (37,949) (37,949)
------- ------ -------- ------- -------- --------- ---------
Balance at September 30, 1996......... 107,916 1,727 14,348 -- -- (87) 15,988
Net income............................ -- -- -- -- -- 5,876 5,876
Dividends declared, $0.18 per share... -- -- -- -- -- (19,311) (19,311)
Issuance of Ordinary Shares, net...... 16,792 269 91,431 -- -- -- 91,700
------- ------ -------- ------- -------- --------- ---------
Balance at September 30, 1997......... 124,708 1,996 105,779 -- -- (13,522) 94,253
Net income............................ -- -- -- -- -- 30,107 30,107
Unrealized loss on derivative
instruments, net of $640 tax........ -- -- -- (1,495) -- -- (1,495)
Dividends declared, $3.76 per share... -- -- -- -- -- (478,684) (478,684)
Issuance of Ordinary Shares, net...... 54,092 865 97,583 -- -- -- 98,448
Initial public offering of Ordinary
Shares, net......................... 18,000 288 233,902 -- -- -- 234,190
Stock options granted to employees,
net of forfeitures.................. -- -- 10,239 -- (10,239) -- --
Amortization of unearned
compensation........................ -- -- -- -- 1,292 -- 1,292
------- ------ -------- ------- -------- --------- ---------
Balance at September 30, 1998......... 196,800 $3,149 $447,503 $(1,495) $ (8,947) $(462,099) $ (21,889)
======= ====== ======== ======= ======== ========= =========
</TABLE>

See accompanying notes
F-6
<PAGE> 79

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-----------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Cash Flow From Operating Activities:
Net Income.............................................. $ 30,107 $ 5,876 $ 24,508
Reconciliation of net income to net cash provided by
operating activities:
Depreciation....................................... 12,611 8,066 5,223
Amortization....................................... 16,485 328 --
Loss on sale of equipment.......................... 149 137 11
Deferred income taxes.............................. (1,991) (11,868) 4,861
Write-off of purchased computer software........... -- 1,800 --
Net changes in operating assets and liabilities:
Accounts receivable................................ (26,000) (19,357) (8,211)
Prepaid expenses and other current assets.......... (5,244) 1,258 (681)
Other noncurrent assets............................ (3,324) (3,958) (3,181)
Accounts payable and accrued expenses.............. 23,906 20,971 (1,896)
Forward exchange contracts......................... 5,148 -- --
Unearned revenue................................... 11,800 6,730 5,697
Income taxes payable............................... (1,429) 11,225 3,979
Other noncurrent liabilities....................... 5,760 4,843 3,598
Unrealized loss on derivative instruments.......... (1,495) -- --
--------- --------- ---------
9,122 21,712 (695)
--------- --------- ---------
Net cash provided by operating activities............... 66,483 26,051 33,908
Cash Flow from Investing Activities:
Proceeds from sale of equipment, vehicles and leasehold
improvements.......................................... 889 959 253
Payments for purchase of equipment, vehicles and
leasehold improvements................................ (26,566) (10,213) (5,526)
Purchase of computer software and intellectual property
rights................................................ -- (40,000) --
--------- --------- ---------
Net cash used in investing activities................... (25,677) (49,254) (5,273)
Cash Flow from Financing Activities:
Dividends paid.......................................... (478,684) (18,000) (40,013)
Net proceeds from issuance of Ordinary Shares........... 330,638 91,700 --
Payments under short-term finance arrangements.......... (269,946) (155,190) (130,358)
Borrowings under short-term finance arrangements........ 358,862 140,360 137,872
Net proceeds from issuance of long term debt............ 364,127 -- --
Principal payments on long term debt.................... (368,521) -- --
Principal payments on capital lease obligations......... (2,357) (1,286) (267)
Proceeds from (payments on) issuance of notes payable... (3,268) 3,268 --
--------- --------- ---------
Net cash provided by (used in) financing activities..... (69,149) 60,852 (32,766)
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents.... (28,343) 37,649 (4,131)
Cash and cash equivalents at beginning of year.......... 53,732 16,083 20,214
--------- --------- ---------
Cash and cash equivalents at end of year................ $ 25,389 $ 53,732 $ 16,083
========= ========= =========
</TABLE>

See accompanying notes
F-7
<PAGE> 80

CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED)
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
----------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Supplementary Cash Flow Information
Interest and Income Taxes Paid
Cash paid for:
Income taxes, net of refunds.............................. $32,472 $18,352 $1,475
Interest.................................................. 25,150 1,036 1,199
</TABLE>

NON CASH INVESTING AND FINANCING ACTIVITIES

Capital lease obligations of $5,200, $8,516 and $2,361 were incurred during
the years ended September 30, 1998, 1997 and 1996 respectively, when the Company
entered into lease agreements for vehicles.

The Company declared a dividend to its shareholders as of June 30, 1997 of
certain assets, consisting principally of the net assets and liabilities of a
dormant entity, totaling approximately $1,311. The estimated value of the net
assets distributed, based on internally prepared estimates, approximates the net
book value at the date of distribution. The dividend is aggregated in the
Statement of Changes in Shareholders' Equity (Deficit) with cash dividends paid
of $18,000.

See accompanying notes
F-8
<PAGE> 81

AMDOCS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

SEPTEMBER 30, 1998

NOTE 1 NATURE OF ENTITY

Amdocs Limited (the "Company") is a leading provider of product-driven
information system solutions to the telecommunications industry. The Company and
its subsidiaries operate in one business segment, providing computer systems
integration and related services for the telecommunications industry. The
Company designs, develops, markets, and supports computer software products and
related services to telecommunications companies throughout the world.

The Company is a Guernsey corporation, which holds directly or indirectly
several wholly owned subsidiaries in the United States, Europe, Canada, Israel,
Japan, Cyprus and Australia. The Company's customers are mainly in the North
America, Europe, South America, Australia, and the Asia-Pacific region. The
Company derives approximately 55 percent of its revenue from outside the United
States. The majority of the Company's production facilities are located in the
State of Israel. Additional development and support centers are located in the
U.S., Brazil and Cyprus.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The consolidated financial statements of the Company have been prepared in
accordance with accounting principles generally accepted in the U.S.

CONSOLIDATION

The financial statements include the accounts of the Company and all its
subsidiaries, which are wholly owned. All significant intercompany transactions
and balances have been eliminated in consolidation.

FUNCTIONAL CURRENCY

The U.S. dollar is the functional currency for the Company and its
subsidiaries, as the U.S. dollar is the predominant currency of the Company's
revenue.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of cash and short-term investments with
insignificant interest rate risk and original maturities of 90 days or less.

EQUIPMENT AND LEASEHOLD IMPROVEMENTS

Computers, office furniture and equipment, vehicles and leasehold
improvements are stated at cost. Assets under capital leases are recorded at the
present value of the future minimum lease payments at the date of acquisition.
Depreciation is computed using the straight-line method over the estimated
useful life of the asset, which ranges from two to twelve years and includes the
amortization of assets under capitalized leases. Leasehold improvements are
amortized over the shorter of the estimated useful lives or the term of the
lease. Management reviews property and equipment and other long-lived assets on
a periodic basis to determine whether the events or changes in circumstances
indicate that the carrying amount of such assets may not be recoverable.

F-9
<PAGE> 82
AMDOCS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

RESEARCH AND DEVELOPMENT AND COMPUTER SOFTWARE

Research and development expenditures consist of costs incurred during the
development of new software modules and product offerings, usually in
conjunction with a customer project. Such costs are charged to operations as
incurred. Certain computer software costs are capitalized in accordance with
Statement of Financial Accounting Standards (SFAS) No. 86, "Accounting for the
Costs of Computer Software to be Sold, Leased or Otherwise Marketed," which
requires capitalization of software development costs subsequent to the
establishment of technological feasibility.

Based on the Company's product development process, technological
feasibility is established upon completion of a detailed program design or, in
the absence thereof, completion of a working model. Costs incurred by the
Company after achieving technological feasibility and before the product is
ready for customer release have been insignificant.

Purchased computer software, which is reported at the lower of amortized
cost or net realizable value, is amortized over its estimated useful life of
three years based on the ratio of the current gross revenue for each product to
the total current and anticipated future gross revenue for each product. This
accounting policy results in amortization of purchased computer software on a
basis faster than the straight-line method.

Periodically, the Company considers whether there are indicators of
impairment that would require the evaluation of the net realizable value of the
capitalized computer software in comparison to its carrying value.

In September 1997 the Company acquired certain intellectual properties
rights. These rights are amortized over their estimated useful life of 10 years,
on a straight line basis.

Accumulated amortization of intellectual properties rights and computer
software is $11,060 and $328 at September 30, 1998 and 1997.

STOCK SPLIT

In September 1997 and May 1998, the Board of Directors of the Company
authorized stock splits effected as dividends of Ordinary Shares. All references
in the consolidated financial statements referring to shares, per share amounts,
and contingently issuable shares have been adjusted retroactively for the stock
splits.

INCOME TAXES

The Company records deferred income taxes to reflect the net tax effects of
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and for tax purposes. Deferred taxes are computed
based on tax rates anticipated to be in effect (under applicable law at the time
the financial statements are prepared) when the deferred taxes are expected to
be paid or realized.

Deferred tax liabilities and assets are classified as current or noncurrent
based on the classification of the related asset or liability for financial
reporting, or according to the expected reversal dates of the specific temporary
differences, if not related to an asset or liability for financial reporting,
and also include anticipated withholding taxes due on subsidiaries' earnings
when paid as dividends to their parents.

REVENUE RECOGNITION

The Company's software products require significant customization and
therefore the development projects are recognized as long term contracts in
conformity with Accounting Research Bulletin (ARB)

F-10
<PAGE> 83
AMDOCS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

No. 45 "Long Term Construction Type Contracts" and Statement of Position (SOP)
81-1 "Accounting for Performance of Construction Type and Certain Production
Type Contracts" and SOP 97-2 "Software Revenue Recognition". License revenue is
recognized as work is performed, using percentage of completion accounting.
Service revenue that involves significant ongoing obligations, including fees
for customization, implementation and support services, is recognized as work is
performed, under the percentage of completion method. Revenue related to ongoing
support is recognized as work is performed. Revenue from third party hardware
and software sales is recognized when products are delivered. Maintenance
revenue is recognized ratably over the term of the maintenance agreement, which
in most cases is one year or less. As a result of its percentage of completion
accounting policies, the Company's annual and quarterly operating results may be
significantly affected by the size and timing of customer projects and the
Company's progress in completing such projects.

Losses are recognized on contracts in the period in which the liability is
identified. Unearned revenue represents advance billings to customers for
services and third-party products and generally is recognized within one year of
receipt.

Included in service revenue are sales of third-party products totaling
$27,016 in 1996. Revenue from sales of such products in 1998 and 1997 are less
than 10 percent of total revenue and are expected to continue to be below 10
percent in the future. Such products include third-party computer hardware and
computer software products.

COST OF LICENSE AND COST OF SERVICE

Cost of license and service consists of all costs associated with providing
services to customers, including warranty expense. Estimated costs related to
warranty obligations are initially provided at the time the product is delivered
and are revised to reflect subsequent changes in circumstances and estimates.
Cost of license includes amortization of purchased computer software and
intellectual property rights and, in 1997 and 1996 royalty expense.

Included in cost of service are costs of third-party products associated
with reselling third-party computer hardware and computer software products to
customers. In 1996, such costs totaled $22,124. Customers purchasing third-party
products from the Company generally do so in conjunction with the purchase of
services.

NONRECURRING CHARGES

Amounts reflected as nonrecurring charges in the consolidated statements of
operations of the year ended September 30, 1997 represent two items: (a) the
payment of a one-time special bonus of $25,763 paid to a trust for the benefit
of certain officers and employees related to past services and (b) a write-off
of $1,800 in connection with the acquisition of certain software rights related
to in-process research and development.

MODIFICATION OF ACCOUNTING FOR INTELLECTUAL PROPERTY RIGHTS

In 1998, the Company revised its accounting for certain intellectual
property rights acquired in 1997. The cost of such rights, $26,200, was
previously reported as a nonrecurring charge in 1997. Effective September 30,
1997, the rights were capitalized and are amortized over their estimated useful
life of 10 years.

F-11
<PAGE> 84
AMDOCS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

STOCK-BASED COMPENSATION

The Company accounts for stock-based compensation in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees." Pursuant to this accounting standard, the Company records deferred
compensation for share options granted to employees at the date of grant based
on the difference between the exercise price of the options and the market value
of the underlying shares at that date. Deferred compensation is amortized to
compensation expense over the vesting period of the underlying options. See Note
14 for pro forma disclosures required in accordance with Statement No. 123,
"Accounting for Stock-Based Compensation," ("SFAS 123") of the Financial
Accounting Standards Board.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The financial instruments of the Company consist mainly of cash and cash
equivalents, accounts receivable, short-term financing arrangements, forward
exchange contracts, and lease obligations. In view of their nature, the fair
value of the financial instruments included in the accounts of the Company does
not significantly vary from their carrying amount.

CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Company to concentration
of credit risk consist principally of trade receivables. The Company invests its
excess cash primarily in highly liquid U.S. dollar-denominated deposits with
major U.S. and U.K. banks. The Company does not expect any credit losses in
respect of these items. The Company's revenue is generated primarily in North
America, Europe, Australia, Brazil and the Asia-Pacific region, and most of its
customers are among the largest telecommunications and directory publishing
companies in the world (or owned by them). The Company performs ongoing analysis
of its customer base and generally does not require collateral.

RECLASSIFICATIONS

Certain amounts in the 1997 and 1996 financial information have been
reclassified to conform to the current year presentation.

ADOPTION OF NEW ACCOUNTING STANDARDS

In February 1997, the Financial Accounting Standards Board (FASB) issued
SFAS No. 128, "Earnings per Share" which was adopted on December 31, 1997. SFAS
No. 128 replaced previously reported primary and fully diluted earnings per
share with basic and diluted earnings per share. Unlike primary earnings per
share, basic earnings per share exclude the dilutive effects of options,
warrants and convertible securities. Diluted earnings per share are very similar
to previously reported fully diluted earnings per share. All earnings per share
amounts for all periods have been presented, and where necessary restated to
conform to the SFAS No. 128 requirements.

In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income" which was adopted on October 1, 1997. This new Statement establishes
standards for reporting and displaying comprehensive income exclusive of net
income and its components in a company's financial statements. At the present
time, the only component of comprehensive income which must be included in the
Company's financial statements is unrealized gains and losses on derivative
instruments designated as cash flow hedges.

In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information" which was adopted on December 31, 1997.
SFAS No. 131 requires companies to
F-12
<PAGE> 85
AMDOCS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

provide financial and descriptive information about their operating segments.
All operating segment information for all periods has been presented.

In October 1997, the AICPA issued SOP 97-2, "Software Revenue Recognition,"
which updates the requirements of revenue recognition effective for transactions
that the Company has entered into beginning January 1, 1998. The adoption of SOP
97-2 did not have a material impact on the Company's financial position or
results of operations.

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which is required to be adopted in years
beginning after June 15, 1999. The Statement permits early adoption as of the
beginning of any fiscal quarter after its issuance. The Company adopted the new
Statement effective July 1, 1998. The Statement requires the Company to
recognize all derivatives on the balance sheet at fair value. If the derivative
meets the definition of a hedge and is so designated, depending on the nature of
the hedge, changes in the fair value of derivatives will either be offset
against the change in fair value of the hedged assets, liabilities, or firm
commitments through earnings or recognized in other comprehensive income until
the hedged item is recognized in earnings. The ineffective portion of a
derivative's change in fair value will be immediately recognized in earnings.

In March 1998, the AICPA issued SOP 98-1, "Accounting For the Costs of
Computer Software Developed For or Obtained For Internal-Use". The provisions of
the SOP must be applied in financial statements for fiscal years beginning after
December 15, 1998. The SOP will require the capitalization of certain costs
incurred after the date of adoption in connection with developing or obtaining
software for internal-use. The company currently expenses such costs as
incurred. The Company has not yet assessed what the impact of the SOP will be on
the Company's future earnings or financial position.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. The Company's most significant estimates are related to contract
accounting estimates used to recognize revenue under percentage of completion
contracts. Actual results could differ from those estimates.

NOTE 3 RELATED-PARTY TRANSACTIONS

The Company licenses software and provides computer systems integration and
related services to several affiliates of a significant shareholder of the
Company (the "affiliates"). Revenue from the affiliates totaled approximately
$84,400, $100,500 and $78,500 in 1998, 1997 and 1996, respectively. Through
September 1997 the Company also paid royalties to the affiliates for the
licensing of computer software. Royalty expense totaled approximately $3,400 and
$4,000 in 1997 and 1996, respectively. Amounts due to the affiliates related to
these royalties were $0 and $436 at September 30, 1998 and 1997, respectively,
and were included in accounts payable and accrued expenses.

On September 22, 1997, the Company purchased certain computer software and
intellectual property rights from the affiliates for an aggregate amount of
$40,000. As a result, the Company no longer pays royalties to the affiliates
related to the purchased computer software. In process research and development,
related to this transaction resulted in a nonrecurring charge of $1,800. The
remainder has been capitalized as computer software and intellectual property
rights.

On September 22, 1997, the Company issued junior subordinated notes payable
in the aggregate amount of $3,268 to certain persons affiliated with the
investors party to the Share Subscription
F-13
<PAGE> 86
AMDOCS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Agreement referred to in Note 13. The notes bore an interest rate of 5.75
percent per annum and were originally due September 22, 1998. The notes were
paid in March 1998.

In January 1998, the Company issued $123,500 in principal amount of 10
percent subordinated notes to affiliates of certain shareholders which were
party to the Conditional Investment Agreement referred to in Note 13. This
amount was paid as described in Note 8.

The Company leases office space in Israel on a month-to-month basis and
purchases other miscellaneous support services from affiliates of certain
shareholders. Amounts paid for rent and related maintenance and other
miscellaneous support services were approximately $2,835, $2,900 and $2,260 for
1998, 1997 and 1996, respectively.

NOTE 4 COMPENSATING BALANCES

The Company was required to maintain compensating cash balances of $574 at
September 30, 1998 and 1997, relating to foreign currency contracts.

NOTE 5 EQUIPMENT, VEHICLES AND LEASEHOLD IMPROVEMENTS

Components of equipment, vehicles and leasehold improvements, net are as
follows:

<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Furniture and fixtures........................... $ 6,852 $ 2,900
Computer equipment............................... 37,534 24,688
Vehicles furnished to employees.................. 20,500 16,708
Leasehold improvements........................... 12,353 3,481
------- -------
77,239 47,777
Less accumulated depreciation.................... 30,835 19,490
------- -------
$46,404 $28,287
======= =======
</TABLE>

A subsidiary of the Company has entered into various leasing arrangements
with a commercial bank of vehicles for periods of five years, carrying interest
rates of LIBOR plus a varying interest rate of 0.7 percent to 1 percent (6.5
percent at September 30, 1998). The Company has accounted for these as capital
leases. Capital lease payments, excluding interest, due over the next five years
are as follows: $2,952 in 1999, $3,148 in 2000, $3,005 in 2001, $2,200 in 2002
and $862 in 2003.

NOTE 6 OTHER NONCURRENT ASSETS

Other noncurrent assets consist of the following:

<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Funded personnel benefit costs................... $13,622 $10,660
Computer software, net of amortization of $8,222
in 1998, and $110 in 1997...................... 3,778 11,890
Other............................................ 3,155 2,793
------- -------
$20,555 $25,343
======= =======
</TABLE>

F-14
<PAGE> 87
AMDOCS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 7 INCOME TAXES

The provision for income taxes consists of the following:

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Current...................... $32,376 $ 29,695 $ 5,645
Deferred..................... (1,991) (11,868) 4,861
------- -------- -------
$30,385 $ 17,827 $10,506
======= ======== =======
</TABLE>

All income taxes are from continuing operations reported by the Company in
the applicable taxing jurisdiction. Income taxes also include anticipated
withholding taxes due on subsidiaries' earnings when paid as dividends to their
parent company.

Deferred income taxes are comprised of the following components:

<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
DEFERRED ASSETS:
Unearned revenue......................................... $ 5,849 $ 5,900
Accrued personnel costs.................................. 7,027 6,621
Computer software and intellectual property.............. 1,735 3,339
Warranty and maintenance accruals........................ 2,184 --
Other.................................................... 5,512 1,259
------- -------
Total deferred assets.................................... 22,307 17,119
------- -------
DEFERRED LIABILITIES:
Anticipated withholdings on subsidiaries' earnings....... (7,945) (4,748)
------- -------
Total deferred liabilities............................... (7,945) (4,748)
------- -------
Net deferred assets...................................... $14,362 $12,371
======= =======
</TABLE>

The effective income tax rate varied from the statutory Guernsey tax rate
as follows:

<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Statutory Guernsey tax rate............. 20% 20% 20%
Guernsey tax-exempt status.............. (20) (20) (20)
Foreign taxes........................... 50* 75* 30
--- --- ---
Effective income tax rate............... 50% 75% 30%
=== === ===
</TABLE>

- ---------------
* In 1998 and 1997 the Company incurred tax expense on the income of its
operations in various countries and sustained a loss in a tax jurisdiction in
which the Company is tax exempt, which resulted in no tax benefit to offset
the expense incurred. As a result, the Company's effective income tax rate is
significantly greater than the 1996 effective rate.

The Company's Israeli subsidiary, which accounts for approximately 31 percent
of the Company's income before income taxes, enjoys tax benefits from Approved
Enterprise status, as established under Israeli law. The benefits from this
status begin phasing out in 1999.

During 1997, the Company settled claims from various taxing authorities
resulting in an increase in taxes paid and deferred tax assets. Included in
other income (expense), net for the year ended

F-15
<PAGE> 88
AMDOCS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

September 30, 1997 is approximately $3,000, representing interest on tax
assessments relating to years prior to fiscal 1997.

The Company's assumption is that it is more likely than not that all the
net deferred tax assets will be realized through future taxable earnings.

NOTE 8 SHORT-TERM FINANCING ARRANGEMENTS

Pursuant to a July 1998 agreement (which is an amendment to the December
1997 agreement discussed below) with a syndicate of banks, the Company may
borrow up to $100,000 under a revolving line of credit. This agreement expires
in June 2001. The Company borrowed $66,000 under the line of credit to refinance
a facility from a commercial bank, and to repay $46,000 of the subordinated debt
to affiliates of the shareholders as described below. The revolving line of
credit bears a variable interest rate (6.5 percent at September 30, 1998). The
credit agreement has various covenants which limit the Company's ability to make
investments, incur debt, pay dividends and dispose of property. The Company is
also required to maintain certain financial ratios as defined in the agreement.
Except for vehicles, substantially all of the Company's assets have been pledged
as security under the terms of the agreement. At September 30, 1998, the
outstanding balance under this credit facility was $59,000.

Under a credit agreement with the First International Bank of Israel, the
Company's subsidiary in the State of Israel may borrow up to $40,000 under a
short term credit line. At September 30, 1998, the outstanding balance was
$32,565. The short term credit line bears a variable interest rate (6.7 percent
at September 30, 1998).

In addition, the Company has short term revolving credit line totaling
$7,000 from the FIBI BANK (UK) plc. As of September 30, 1998, the Company used
approximately $4,500 of this revolving credit facility to support outstanding
letters of credit.

The Company's financing transactions for the year are described below:

On September 22, 1997, the Company issued junior subordinated notes payable
in the aggregate amount of $3,268 to certain entities affiliated with the
investors party to the Share Subscription Agreement referred to in Note 13. The
notes bore an interest rate of 5.75 percent per annum, and were due September
22, 1998. The notes were paid in March 1998.

In December 1997, certain direct and indirect subsidiaries entered into a
credit agreement (the 1997 Credit Agreement) with several commercial banks,
which provided for three separate term loans and a revolving credit facility.
Term loans of $125,000 and $100,000 with variable interest rates and quarterly
principal payments due through December 2002 and June 2004, respectively, and a
$90,000 term loan with a variable interest rate and principal due in May 1998.
In December 1997, the Company borrowed $315,000 under the term loans and placed
such proceeds in a cash collateral account maintained by one of the commercial
banks subject to the 1997 Credit Agreement. The release of the cash held in the
cash collateral account was subject to the occurrence of certain events, as
defined. The events were met in January 1998, and the cash held in the cash
collateral account was released to the Company.

In March 1998, the Company received the proceeds of the additional equity
investment discussed in Note 13 totaling approximately $99,000 and used the
proceeds to repay the term loan maturing in May 1998 and the short-term notes
payable to related parties.

In January 1998, the Company borrowed $20,000 under the revolving credit
portion of the 1997 Credit Agreement and used the proceeds to prepay certain of
the term loans. Amounts borrowed under the revolving credit facility bore a
variable interest rate and were due December 5, 2002. This amount was repaid in
July 1998 with the proceeds of the Company's $100,000 revolving credit facility.
F-16
<PAGE> 89
AMDOCS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The occurrence of certain qualifying events, as defined in the Conditional
Investment Agreement as discussed in Note 13, also resulted in the issuance of
unsecured long-term notes to affiliates of certain shareholders of the Company
totaling $123,500, and a requirement for affiliates of certain shareholders to
make an equity investment in the Company of approximately $99,000, subject to
possible adjustment, as provided in the Conditional Investment Agreement. The
long-term subordinated notes to affiliates carried an interest rate of 10
percent, payable quarterly with principal due September 2004. The proceeds of
the long-term subordinated notes to affiliates were received in January 1998.

On June 24, 1998 the Company used the proceeds from the initial public
offering that was conducted on June 19, 1998 to repay $183,750 in outstanding
term loans made in December 1997 and $49,000 out of the $123,500, 10 percent
subordinated debt issued in January 1998.

Subordinated debt to affiliates of the shareholders in the amount of
$46,000 was repaid in July 1998 from the proceeds of the Company's revolving
credit facility.

Effective July 31, 1998, the Company extinguished the subordinated debt
with cash flows from operations.

NOTE 9 OTHER NONCURRENT LIABILITIES

Other noncurrent liabilities consist of the following:

<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Accrued personnel costs.................. $24,268 $18,507
Ordinary Shares subscription deposit..... -- 2,000
------- -------
$24,268 $20,507
======= =======
</TABLE>

NOTE 10 OTHER EXPENSE, NET

Other expense, net consists of the following:

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Interest income...................... $ 3,445 $ 873 $ 964
Interest expense..................... (24,947) (981) (1,291)
Interest expense related to
settlement of tax claims........... -- (3,000) --
Other, net........................... (2,624) (158) (149)
-------- ------- -------
$(24,126) $(3,266) $ (476)
======== ======= =======
</TABLE>

F-17
<PAGE> 90
AMDOCS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 11 COMMITMENTS

The Company leases office space in various countries in which it does
business under non-cancelable operating leases. Future minimum lease payments
required for the five-year period beginning October 1, 1998 are as follows:

<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
--------------------------------
<S> <C>
1999............................................... $ 9,700
2000............................................... 10,600
2001............................................... 10,300
2002............................................... 8,400
2003............................................... 7,400
-------
$46,400
=======
</TABLE>

Rent expense was approximately $8,000, $5,400 and $4,900 for 1998, 1997 and
1996, respectively. The lease agreement related to the Company's principal
facilities in Israel, for which the Company has provided a $2,000 guarantee,
includes a purchase option.

NOTE 12 EMPLOYEE BENEFITS

The Company accrues severance pay for the employees of its Israeli
operations in accordance with Israeli law and certain employment procedures on
the basis of the latest monthly salary paid to these employees and the length of
time that they have worked for the Israeli subsidiary. The severance pay
liability, which is included in other noncurrent liabilities, is partially
funded by amounts on deposit with insurance companies, which are included in
other noncurrent assets. Most of the deposits were funded by the Israeli
subsidiary. Severance pay expenses were approximately $7,100, $5,500 and $4,200
for 1998, 1997 and 1996, respectively.

The Company sponsors a defined contribution benefit plan covering
substantially all employees in the U.S., U.K., and Canada. The plan provides for
Company matching contributions based upon a percentage of the employees'
voluntary contributions. The Company's 1998, 1997 and 1996 plan contributions
were not significant.

NOTE 13 CAPITAL TRANSACTIONS

On June 19, 1998, the Company commenced an initial public offering of
18,000 Ordinary Shares at an offering price of $14 per share. Total net
proceeds, after deduction of offering expenses and underwriting commissions,
amounted to $234,190. The Company used these funds to repay interest and
principal relating to $183,750 outstanding term loans made in December 1997 and
$49,000 out of the $123,500 10 percent subordinated debt issued in January 1998.

On July 17, 1998, pursuant to an over-allotment option granted by an
existing shareholder of the Company to the underwriters involved with the
Company's initial public offering, the underwriters elected to exercise their
over-allotment option with respect to 1,344 nonvoting Ordinary Shares held by
this shareholder. In accordance with the Company's Articles of Association, such
nonvoting Ordinary Shares converted automatically into voting Ordinary Shares,
upon their transfer.

In May 1998, in contemplation of the Company's initial public offering, the
Board of Directors took the following actions: (i) redeemed the outstanding
Voting Shares at the par value thereof, (ii) amended the terms of the Ordinary
Shares to create two classes: voting and non-voting; (iii) authorized 25,000
Preferred Shares, 500,000 Ordinary Shares and 50,000 non-voting Ordinary Shares;
and (iv) declared a

F-18
<PAGE> 91
AMDOCS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

stock split of 52-for-1 for each Ordinary Share outstanding. The rights of the
two classes of Ordinary Shares are identical except as to voting rights and all
of the outstanding non-voting Ordinary Shares are held by a principal
shareholder of the Company. All references to the number of shares and earnings
per share have been restated to reflect the stock split and the redemption of
Voting Shares has been given retroactive effect.

In March 1998, the Company issued 51,508 Ordinary Shares according to the
September 1997 Conditional Investment Agreement discussed below. Total proceeds
(net of $2,600 fees) amounted to approximately $96,448.

In January 1998, the Company's Board of Directors declared dividends of
$478,684 which were paid at that time. The dividends were financed by the
proceeds of the long term loans, long term notes of affiliates of certain
shareholders, and surplus working capital.

In January 1998, the Company issued 36 additional Voting Shares at par
value which were redeemed in May 1998 as discussed above and issued the
contingently issuable 2,584 Ordinary Shares which were paid in advance in the
amount of $2,000 in the 1995 Stock Subscription Agreements.

On September 22, 1997, the Company entered into a Share Subscription
Agreement, under which 11,072 Ordinary Shares and 990 Voting Shares and $3,268
principal amount of junior promissory notes were issued to certain investors.
Also, on September 22, 1997, the Company entered into a Conditional Investment
Agreement whereby such investors were obligated to purchase 51,508 Ordinary
Shares of the Company in the second quarter 1998 for approximately $99,000, if
the Company achieved certain financial performance targets. In addition, the
Company entered into a note purchase agreement with certain affiliates of the
investors to issue, at its election, up to $125,000 of long-term notes, with
interest at 10 percent and payable in 2004 subject to the same financial targets
in the Conditional Investment Agreement. In addition, the ownership percentages
between shareholders will change if the Company attains certain financial
performance targets through September 30, 1999.

NOTE 14 STOCK OPTION AND INCENTIVE PLAN

In January 1998, the Company adopted the Amdocs Limited 1998 Stock Option
and Incentive Plan ("the Plan"). Under the provisions of the Plan, 4,100
Ordinary Shares are available to be granted to officers, directors, employees
and consultants. Subsequent to year end, the Company increased the number of
Ordinary Shares available to be granted to 6,600 Ordinary Shares. Under the
Plan, in January 1998, 1,651 options were granted to purchase Ordinary Shares at
an exercise price of $1.92 per share, with vesting over four years and a term of
10 years. No compensation expense is recorded for these stock options as they
were granted at an exercise price equal to the fair market value of the Ordinary
Shares at the time of the grant.

On June 19, 1998, under the plan, the Company granted an additional 855.4
options with the same exercise price, expiration date and vesting dates as the
options granted in January 1998. The Company recorded unearned compensation
expense totaling $10,333 as a separate component of shareholders' equity for the
difference between the fair market value per share at the date of grant and the
exercise price of $1.92. Additional Paid in Capital was increased by the same
amount. The unearned compensation expense will be amortized ratably over the
vesting period of 3.5 years.

On June 19, 1998, options for 21 shares were granted to two non-employee
directors at an exercise price equal to the market price of the Ordinary Shares
on the grant date, with vesting over three years and a term of 10 years.

F-19
<PAGE> 92
AMDOCS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

On September 14, 1998, options for 1,000 shares were granted to employees
at an exercise price of $8.75 which was equal to the market price of the
Ordinary Shares on the grant date, with vesting over four and eight years and a
term of 10 years.

A summary of the Plan as of September 30, 1998, as well as changes during
the year then ended, is presented below:

<TABLE>
<CAPTION>
WEIGHTED
NUMBER OF AVERAGE
SHARE EXERCISE
OPTIONS PRICE
--------- --------
<S> <C> <C>
Outstanding as of beginning of year............. -- $ --
Granted......................................... 3,527.4 3.93
Exercised....................................... -- --
Forfeited....................................... (7.8) 1.92
------- -----
Outstanding as of end of year................... 3,519.6 $3.93
======= =====
</TABLE>

The following table summarizes information about share options outstanding
as of September 30, 1998:

<TABLE>
<CAPTION>
EXERCISABLE AS OF
OUTSTANDING AS OF SEPTEMBER 30, 1998 SEPTEMBER 30, 1998
- ---------------------------------------------- -------------------------
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
REMAINING AVERAGE AVERAGE
EXERCISE NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
PRICES OUTSTANDING LIFE PRICE EXERCISABLE PRICE
- -------- ----------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
$1.92 2,498.6 9.25 $ 1.92 -- $ --
14.00 21.0 9.75 14.00 5.3 14.00
8.75 1,000.0 10 8.75 -- --
</TABLE>

The weighted average grant-date fair value of the 3,527.4 options granted
during the year amounted to $6.12 per option. The Company utilized the
Black-Scholes option pricing model to estimate fair value, utilizing the
following assumptions for the year (all in weighted averages):

<TABLE>
<S> <C>
Risk-free interest rate..................................... 5.24%
Expected life of options (in years)......................... 7.1
Expected annual volatility.................................. 0.945
Expected dividend yield..................................... None
</TABLE>

Had compensation cost for the Company's share option plans been determined
based on fair value at the grant dates for awards made in 1998 under such plans
in accordance with SFAS No. 123, the Company's pro forma net income and earnings
per share for the year ended September 30, 1998 would have been as follows:

<TABLE>
<S> <C>
Pro forma net income....................................... $29,455
Pro forma basic earnings per share......................... 0.19
Pro forma diluted earnings per share....................... 0.18
</TABLE>

All of the Company's stock options were granted during the year ended
September 30, 1998. Accordingly, the impact of the stock options on pro forma
net income and earnings per share does not reflect the annualized impact of such
option grants.

F-20
<PAGE> 93
AMDOCS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 15 EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted
earnings per share:

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Numerator:
Income before cumulative effect............................. $30,384 $ 5,876 $24,508
======= ======== =======
Denominator:
Denominator for basic earnings per share weighted average
number of shares outstanding........................... 158,528 108,330 107,920
Effect of dilutive contingently issuable shares........... -- 2,585 2,585
Effect of dilutive stock options granted.................. 914 -- --
------- -------- -------
Denominator for dilutive earnings per share -- adjusted
weighted average shares and assumed conversions........... 159,442 110,915 110,505
======= ======== =======
Basic earnings per share.................................... $ 0.19 $ 0.05 $ 0.23
======= ======== =======
Diluted earnings per share.................................. $ 0.19 $ 0.05 $ 0.22
======= ======== =======
</TABLE>

NOTE 16 SEGMENT INFORMATION AND SALES TO SIGNIFICANT CUSTOMERS

GEOGRAPHIC INFORMATION

The following is a summary of revenue and long-lived assets by geographic
area. Revenue is attributed to geographic region based on the location of the
customers.

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
REVENUE
North America.............................................. $210,867 $185,119 $142,921
Australia.................................................. 33,215 37,362 36,553
Europe..................................................... 109,752 32,642 30,763
Other...................................................... 49,933 34,979 1,483
-------- -------- --------
Total...................................................... $403,767 $290,102 $211,720
======== ======== ========
LONG-LIVED ASSETS
Israel*.................................................... $ 38,917 $ 26,779 $ 18,346
North America**............................................ 30,441 39,771 ***
Other...................................................... 7,378 2,402 1,794
-------- -------- --------
$ 76,736 $ 68,952 $ 20,140
======== ======== ========
</TABLE>

- ---------------
* Primarily computers and vehicles.

** Primarily computer software and intellectual property rights.

*** Less than 10 percent of total long-lived assets.

F-21
<PAGE> 94
AMDOCS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

REVENUE AND CUSTOMER INFORMATION

Customer care and billing systems (CC&B) include systems for wireless,
wireline and multiple-service or convergent network operators and service
providers. Directory includes directory sales and publishing systems for
publishers of both traditional printed yellow pages and white pages directories
and electronic directories, such as Internet, kiosk and CD-ROM directories.

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
CC&B............................... $251,829 $166,335 $102,481
Directory.......................... 151,938 123,767 109,239
-------- -------- --------
Total.............................. $403,767 $290,102 $211,720
======== ======== ========
</TABLE>

SALES TO SIGNIFICANT CUSTOMERS

The following table summarizes the percentage of sales to significant
customers (when they exceed 10 percent of total revenue for the year).

<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30,
--------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Southwestern Bell Communications Services Inc. and
affiliates............................................ 21% 35% 38%
BellSouth Telecommunications, Inc., and affiliates...... 16 * *
Telstra Corporation Ltd................................. * 13 16
</TABLE>

- ---------------
* less than 10 percent of total revenue

NOTE 17 SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
QUARTER ENDED
--------------------------------------------
SEPT 30, JUNE 30, MARCH 31, DEC 31,
-------- -------- --------- -------
<S> <C> <C> <C> <C>
1998
Revenue.................................. $116,704 $106,497 $94,008 $86,558
Operating income......................... 26,104 22,821 19,125 16,845
Net income............................... 11,598 6,443 4,105 7,961
Basic earnings per share................. 0.06 0.04 0.03 0.06
Diluted earnings per share............... 0.06 0.04 0.03 0.06
1997
Revenue.................................. $ 87,987 $ 77,089 $62,489 $62,537
Operating income (loss).................. (10,586) 13,363 12,179 12,013
Net income (loss)........................ (18,307) 7,378 8,236 8,569
Basic earnings (loss) per share.......... (0.17) 0.07 0.08 0.08
Diluted earnings (loss) per share........ (0.17) 0.07 0.07 0.08
</TABLE>

The fiscal quarter ended September 30, 1997 includes nonrecurring charges
of $27,563.

F-22
<PAGE> 95
AMDOCS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 18 FINANCIAL INSTRUMENTS

Most of the Company's revenue and expenses are denominated in U.S. dollars.
However, as the Company does business world-wide, the Company enters into
various foreign exchange contracts in managing its foreign exchange risks. The
derivative financial instruments are afforded hedge accounting treatment because
they are effective in managing foreign exchange risks and are appropriately
designated to the underlying exposures. The Company does not enter into
derivative contracts for speculative purposes, nor is it a party to any
leveraged derivative instrument. Through its foreign currency hedging
activities, the Company seeks to minimize the risk that fair value of the sales
of products and services and cash flow required for the Company's expenses
denominated in a currency different from the functional currency will be
affected by changes in exchange rates. Cash flow hedges protect the Company from
fluctuations in expenses expected to be incurred in subsidiaries that operate in
non U.S. dollar-based environments. Fair value hedges protect cash flows
generated by firm commitments from customers who purchase services in non U.S.
dollar-based currencies.

For its qualifying fair value hedges, the fair value of the derivative
instrument and firm commitment are recorded as assets and liabilities on the
balance sheet. The change in the fair value of the forward contract related to
the ineffective portion of the hedging contracts is recorded in Other expense,
net. For the year ended September 30, 1998, this amounted to an expense of $98.

For its qualifying cash flow hedges, the fair value of the derivative
instrument is recorded as an asset or liability on the balance sheet. The change
in fair value of the derivative instrument related to the ineffective portion of
the hedging contracts is recorded in Other expense, net. For the year ended
September 30, 1998, this amounted to income of $300. The remaining change in
fair value is reported in Other comprehensive income and will be recorded into
earnings, as a component of the line item which contains the hedged item in the
same period the forecasted transactions affect earnings. It is expected that
$634 of net unrealized losses included in Other comprehensive income at
September 30, 1998 will be recognized during the period ended September 30,
1999. At September 30, 1998 the maximum length of time over which the Company is
hedging its exposure to the variability of future cash flows is 4 years.

At September 30, 1998, the Company had forward exchange contracts to
exchange various foreign currencies for U.S. dollars. The value of New Israeli
shekels and Australian dollars to be purchased was $121,868 and the value of
Great Britain pounds, Austrian shillings, Japanese yen, and Canadian dollars to
be sold is $60,599. The fair value of forward derivatives as of September 30,
1998 is $(4,671).

F-23
<PAGE> 96
AMDOCS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 19 SUBSEQUENT EVENT (UNAUDITED)

On March 2, 1999, the Company entered into a combination agreement with
Architel Systems Corporation (Architel). The Combination Agreement provides for
a business combination in which holders of common shares of Architel will be
entitled to receive 0.95 exchangeable shares of Architel for each common share
of Architel held by them, and the Company would become the beneficial owner of
all of Architel's common shares. Each exchangeable share of Architel will (1) be
exchangeable for one ordinary voting share of the Company; (2) entitle its
holder to receive dividends economically equivalent to dividends paid on
ordinary voting shares of the Company; and (3) pursuant to a voting trust and
exchange agreement in which a special voting share of the Company will be
deposited, carry the right to vote at meetings of the shareholders of the
Company and be entitled to participate in any liquidation of the Company on the
same basis as holders of the Company's ordinary voting shares.

The transaction contemplated by the Combination Agreement is intended to
constitute a pooling of interests under U.S. GAAP and to be treated generally as
a reorganization of capital for Canadian federal income tax purposes for those
Architel shareholders who hold their Architel common shares as capital property
to the extent exchangeable shares are received in exchange for Architel's common
shares, and as a tax free reorganization for U.S. federal income tax purposes.

F-24
<PAGE> 97

AMDOCS LIMITED
CONSOLIDATED BALANCE SHEET (UNAUDITED)
DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 18,129
Accounts receivable, including unbilled of $14,030........ 109,063
Accounts receivable from related parties.................. 19,530
Deferred income taxes..................................... 16,026
Prepaid expenses and other current assets................. 14,600
--------
Total current assets.............................. 177,348
Equipment, vehicles and leasehold improvements, net......... 54,305
Deferred income taxes....................................... 7,224
Intellectual property rights................................ 22,707
Other noncurrent assets..................................... 20,926
--------
$282,510
========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses..................... $ 54,136
Accrued personnel costs................................... 32,454
Short-term financing arrangements......................... 75,708
Unearned revenue.......................................... 52,121
Short-term portion of capital lease obligations........... 3,597
Forward exchange contracts................................ 5,782
Income taxes payable and deferred income taxes............ 23,253
--------
Total current liabilities......................... 247,051
Long-term forward exchange contracts........................ 2,094
Long-term portion of capital lease obligations.............. 11,217
Other noncurrent liabilities................................ 24,733
Shareholders' equity (deficit):
Preferred shares -- authorized 25,000 shares; L0.01 par
value; 0 shares issued and outstanding................. --
Ordinary shares -- authorized 550,000 shares; L0.01 par
value; 196,800 shares outstanding...................... 3,149
Additional paid-in capital................................ 447,745
Unrealized loss on derivative instruments................. (3,626)
Unearned compensation..................................... (7,896)
Accumulated deficit....................................... (441,957)
--------
Total shareholders' deficit....................... (2,585)
--------
$282,510
========
</TABLE>

See accompanying notes.
F-25
<PAGE> 98

AMDOCS LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
DECEMBER 31,
-------------------
1998 1997
---- ----
<S> <C> <C>
Revenue:
License*.................................................. $ 15,040 $ 8,721
Service*.................................................. 116,385 77,837
-------- -------
131,425 86,558
-------- -------
Operating expenses:
Cost of license........................................... 1,323 3,212
Cost of service*.......................................... 75,915 50,133
Research and development.................................. 8,379 5,321
Selling, general and administrative*...................... 15,647 11,047
-------- -------
101,264 69,713
-------- -------
Operating income............................................ 30,161 16,845
-------- -------
Interest expense, net*...................................... 1,315 2,323
Other expense (income), net................................. 72 (1,325)
-------- -------
1,387 998
-------- -------
Income before income taxes.................................. 28,774 15,847
Income taxes................................................ 8,632 7,886
-------- -------
Net income.................................................. $ 20,142 $ 7,961
======== =======
Basic earnings per share.................................... $ 0.10 $ 0.06
======== =======
Diluted earnings per share.................................. $ 0.10 $ 0.06
======== =======
</TABLE>

- ---------------
* Includes the following income (expense) resulting from transactions with
related parties for the three months ended December 31, 1998 and 1997,
respectively: License revenue -- $100 and $210; service revenue -- $21,398 and
$23,241; cost of service -- $500 and $709; selling, general and
administrative -- $112 and $106; interest expense -- $0 and $51.

See accompanying notes.
F-26
<PAGE> 99

AMDOCS LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
DECEMBER 31,
---------------------
1998 1997
---- ----
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income.................................................. $ 20,142 $ 7,961
Reconciliation of net income to net cash provided by
operating activities:
Depreciation.............................................. 3,842 2,308
Amortization.............................................. 2,678 3,892
Loss on sale of equipment................................. 179 60
Deferred income taxes..................................... 1,438 (967)
Net changes in operating assets and liabilities:
Accounts receivable....................................... (38,635) (13,074)
Prepaid expenses and other current assets................. (2,673) (2,308)
Other noncurrent assets................................... (1,038) (1,172)
Accounts payable and accrued expenses..................... 9,043 5,342
Forward exchange contracts................................ 2,728 --
Unearned revenue.......................................... 22,880 6,536
Income taxes payable...................................... (132) 4,563
Other noncurrent liabilities.............................. 465 1,416
Unrealized loss on derivative instruments................. (3,046) --
-------- ---------
(10,408) 1,303
-------- ---------
Net cash provided by operating activities................... 17,871 14,557
-------- ---------
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from sale of equipment, vehicles, and leasehold
improvements.............................................. 463 350
Payments for purchase of equipment, vehicles, and leasehold
improvements.............................................. (8,893) (2,332)
-------- ---------
Net cash used in investing activities....................... (8,430) (1,982)
-------- ---------
CASH FLOW FROM FINANCING ACTIVITIES
Payments under short-term finance arrangements.............. (95,650) (27,483)
Borrowings under short-term finance arrangements............ 79,793 122,925
Net proceeds from issuance of long-term debt................ -- 220,606
Principal payments under capital lease obligations.......... (844) (606)
Cash held in escrow......................................... -- (315,000)
-------- ---------
Net cash (used in) provided by financing activities......... (16,701) 442
-------- ---------
Net (decrease) increase in cash and cash equivalents........ (7,260) 13,017
Cash and cash equivalents at beginning of period............ 25,389 53,732
-------- ---------
Cash and cash equivalents at end of period.................. $ 18,129 $ 66,749
======== =========
Supplementary Cash Flow Information Interest and income
taxes paid Cash paid for:
Income taxes, net of refunds................................ $ 7,368 $ 4,445
Interest.................................................... 1,435 207
</TABLE>

NONCASH INVESTING AND FINANCING ACTIVITIES

Capital lease obligations of $3,491 and $793 were incurred during the three
months ended December 31, 1998 and 1997, respectively, when the Company entered
into lease agreements for vehicles.

See accompanying notes.
F-27
<PAGE> 100

AMDOCS LIMITED
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 1 BASIS OF PRESENTATION

Amdocs Limited (the "Company") is a leading provider of product-driven
information system solutions to the telecommunications industry. The Company and
its subsidiaries operate in one business segment, providing computer systems
integration and related services for the telecommunications industry. The
Company designs, develops, markets and supports computer software products and
related services to telecommunications companies throughout the world.

The unaudited consolidated financial statements of the Company have been
prepared in accordance with accounting principles generally accepted in the
United States. In the opinion of management, all adjustments considered
necessary for a fair presentation of the unaudited interim consolidated
financial statements have been included therein and are of a normal recurring
nature. The results of operations for the interim periods presented herein are
not necessarily indicative of the results to be expected for the full year.
These statements, however, do not include all information and footnotes
necessary for a complete presentation of financial position, results of
operations and cash flows in conformity with generally accepted accounting
principles. These statements should be read in conjunction with the Company's
consolidated financial statements for the year ended September 30, 1998.

NOTE 2 ADOPTION OF NEW ACCOUNTING STANDARDS

Effective October 1, 1998, the Company adopted the provisions of Statement
of Position (SOP) 98-1, "Accounting For the Costs of Computer Software Developed
or Obtained For Internal-Use". The SOP requires the capitalization of certain
costs incurred after the date of adoption in connection with developing or
obtaining software for internal use. In accordance with the SOP, the Company
capitalized approximately $700 of internally developed software costs in the
three-month period ended December 31, 1998.

NOTE 3 COMPREHENSIVE INCOME

Effective October 1, 1998, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 130, "Reporting Comprehensive Income"
(Statement 130), which established standards for the reporting and display of
comprehensive income and its components. Comprehensive income represents the
change in shareholders' equity during a period from transactions and other
events and circumstances from nonowner sources. It includes all changes in
equity except those resulting from investments by owners and distributions to
owners.

The following table sets forth the reconciliation from net income to
comprehensive income for the periods of:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
DECEMBER 31,
-------------------
1998 1997
---- ----
<S> <C> <C>
Net income.................................................. $20,142 $7,961
Change in unrealized loss on derivative instruments, net of
tax....................................................... (2,131) --
------- ------
Comprehensive Income........................................ $18,011 $7,961
======= ======
</TABLE>

F-28
<PAGE> 101
AMDOCS LIMITED
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 4 INCOME TAXES

The provision for income taxes for the periods of:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
DECEMBER 31,
------------------
1998 1997
---- ----
<S> <C> <C>
Current..................................................... $7,194 $8,853
Deferred.................................................... 1,438 (967)
------ ------
$8,632 $7,886
====== ======
</TABLE>

The effective income tax rate varied from the statutory Guernsey tax rate
as follows for the periods of:

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
DECEMBER 31,
------------
1998 1997
---- ----
<S> <C> <C>
Statutory Guernsey tax rate................................. 20% 20%
Guernsey tax-exempt status.................................. (20) (20)
Foreign taxes............................................... 30 50*
--- ---
Effective income tax rate................................... 30% 50%
=== ===
</TABLE>

- ---------------
* In fiscal 1998, the Company incurred tax expense on the income of its
operations in various countries and sustained a loss in a tax jurisdiction in
which the Company is tax-exempt, which resulted in no tax benefit to offset
the expense incurred. As a result, the Company's effective income tax rate is
significantly greater than the estimated fiscal 1999 effective tax rate.

NOTE 5 STOCK OPTION PLAN

In November 1998, options to purchase 20 Ordinary Shares were granted to
employees at an exercise price equal to the June 1998 grants ($1.92). In
connection with this grant the Company recorded unearned compensation expense
totaling $242 as a separate component of shareholders' equity for the difference
between the fair market value per share at the date of grant and the exercise
price of $1.92 per share. Additional paid-in capital was increased by the same
amount. The unearned compensation will be amortized ratably over the vesting
period of three years.

In November 1998, options to purchase 70 Ordinary Shares were granted to
employees at an exercise price of $13.69, which was equal to the fair market
value per share at the date of grant, with vesting over four years and a term of
ten years.

F-29
<PAGE> 102
AMDOCS LIMITED
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 6 EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted
earnings per share:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
DECEMBER 31,
--------------------
1998 1997
---- ----
<S> <C> <C>
Numerator:
Net income.................................................. $ 20,142 $ 7,961
======== ========
Denominator:
Denominator for basic earnings per share -- weighted average
shares.................................................... 196,800 124,708
Effect of dilutive contingently issuable shares............. -- 2,584
Effect of dilutive stock options granted.................... 2,105 --
-------- --------
Denominator for dilutive earnings per share -- adjusted
average shares and assumed conversions.................... $198,905 $127,292
======== ========
Basic earnings per share.................................... $ 0.10 $ 0.06
======== ========
Diluted earnings per share.................................. $ 0.10 $ 0.06
======== ========
</TABLE>

F-30
<PAGE> 103

AUDITORS' REPORT

To the Directors of
ARCHITEL SYSTEMS CORPORATION

We have audited the consolidated balance sheets of Architel Systems
Corporation as at September 30, 1998 and 1997 and the consolidated statements of
income and retained earnings and changes in financial position for each of the
years in the three year period then ended. These consolidated financial
statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted
auditing standards. Those standards require that we plan and perform an audit to
obtain reasonable assurance 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.

In our opinion, these consolidated financial statements present fairly, in
all material respects, the financial position of the Corporation as at September
30, 1998 and 1997 and the results of its operations and the changes in its
financial position for each of the years in the three year period then ended in
accordance with Canadian generally accepted accounting principles.

Canadian generally accepted accounting principles differ in some respects
from those applicable in the United States of America (Note 14).

/s/ DELOITTE & TOUCHE LLP
Chartered Accountants
Toronto, Ontario
November 9, 1998, (except Note 14(j), which is as of January 22, 1999).

F-31
<PAGE> 104

ARCHITEL SYSTEMS CORPORATION

CONSOLIDATED BALANCE SHEETS
(CANADIAN DOLLARS)

<TABLE>
<CAPTION>
AS AT AS AT SEPTEMBER 30,
DECEMBER 31, --------------------------
1998 1998 1997
------------ ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT
Cash and short-term investments................... $32,315,106 $30,981,935 $34,186,808
Accounts receivable (Note 2)...................... 24,387,687 23,970,610 8,269,941
Investment tax credit recoverable (Note 3)........ 1,018,544 1,369,924 599,846
Prepaid expenses.................................. 805,686 599,307 262,198
----------- ----------- -----------
58,527,023 56,921,776 43,318,793
CAPITAL ASSETS (NOTE 4)............................. 6,518,635 5,701,595 3,562,392
DEFERRED INCOME TAXES............................... 762,105 731,120 528,180
INTANGIBLES (NOTE 12)............................... 26,961,859 32,359,664 --
----------- ----------- -----------
$92,769,622 $95,714,155 $47,409,365
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT
Accounts payable and accrued liabilities.......... $10,491,040 $12,951,833 $ 2,793,779
Income taxes payable.............................. 2,909,965 2,193,123 2,264,727
Deferred revenue.................................. 2,632,398 1,921,376 1,809,431
----------- ----------- -----------
16,033,403 17,066,332 6,867,937
----------- ----------- -----------
SHAREHOLDERS' EQUITY
Share capital (Note 5)............................ 39,998,266 39,459,747 32,329,872
Contributed surplus (Note 5)...................... 28,655,744 28,655,744 --
Retained earnings................................. 8,082,209 10,532,332 8,211,556
----------- ----------- -----------
76,736,219 78,647,823 40,541,428
----------- ----------- -----------
$92,769,622 $95,714,155 $47,409,365
=========== =========== ===========
</TABLE>

Approved by the Board:

<TABLE>
<S> <C>
/s/ ANTHONY P. VAN MARKEN /s/ DAVID E. CURRY
- ------------------------------------------ ------------------------------------------
Anthony P. Van Marken David E. Curry
Director Director
</TABLE>

The accompanying notes are an integral part of these financial statements
F-32
<PAGE> 105

ARCHITEL SYSTEMS CORPORATION

CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(CANADIAN DOLLARS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31, FOR THE YEARS ENDED SEPTEMBER 30,
------------------------------- -----------------------------------------
1998 1997 1998 1997 1996
------------- ------------ ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUE
License fees......... $12,639,942 $4,229,500 $26,407,285 $20,890,284 $12,455,239
Services and other... 10,403,403 5,117,145 24,367,897 12,144,152 5,520,929
----------- ---------- ----------- ----------- -----------
23,043,345 9,346,645 50,775,182 33,034,436 17,976,168
----------- ---------- ----------- ----------- -----------
COST OF SALES
License fees......... 565,515 -- 574,790 -- --
Services and other... 7,288,245 2,502,561 14,650,385 8,471,955 4,236,723
----------- ---------- ----------- ----------- -----------
7,853,760 2,502,561 15,225,175 8,471,955 4,236,723
----------- ---------- ----------- ----------- -----------
GROSS PROFIT........... 15,189,585 6,844,084 35,550,007 24,562,481 13,739,445
----------- ---------- ----------- ----------- -----------
OPERATING EXPENSES
General and
administrative.... 2,676,548 1,221,604 5,708,263 4,732,439 3,570,276
Research and
development (Note
3)................ 4,688,669 1,795,388 9,823,167 6,988,545 3,875,811
Sales and
marketing......... 3,153,386 1,736,433 8,713,131 5,488,040 2,208,526
Royalties............ -- -- -- 1,987,700 1,227,600
----------- ---------- ----------- ----------- -----------
10,518,603 4,753,425 24,244,561 19,196,724 10,882,213
----------- ---------- ----------- ----------- -----------
INCOME BEFORE INTEREST
INCOME, AMORTIZATION
OF INTANGIBLES AND
INCOME TAXES......... 4,670,982 2,090,659 11,305,446 5,365,757 2,857,232
INTEREST INCOME........ 426,700 487,358 1,958,699 1,773,090 984,990
AMORTIZATION OF
INTANGIBLES.......... (5,397,805) -- (5,620,369) -- --
----------- ---------- ----------- ----------- -----------
INCOME (LOSS) BEFORE
INCOME TAXES......... (300,123) 2,578,017 7,643,776 7,138,847 3,842,222
INCOME TAXES (NOTE
6)................... 2,150,000 1,031,000 5,323,000 2,913,000 1,650,000
----------- ---------- ----------- ----------- -----------
NET INCOME (LOSS) FOR
THE PERIOD........... (2,450,123) 1,547,017 2,320,776 4,225,847 2,192,222
RETAINED EARNINGS,
BEGINNING OF
PERIOD............... 10,532,332 8,211,556 8,211,556 3,985,709 1,793,487
----------- ---------- ----------- ----------- -----------
RETAINED EARNINGS, END
OF PERIOD............ $ 8,082,209 $9,758,573 $10,532,332 $ 8,211,556 $ 3,985,709
=========== ========== =========== =========== ===========
EARNINGS (LOSS) PER
SHARE (NOTE 7)
BASIC.................. $ (0.16) $ 0.12 $ 0.17 $ 0.34 $ 0.21
=========== ========== =========== =========== ===========
FULLY DILUTED.......... $ (0.16) $ 0.11 $ 0.17 $ 0.32 $ 0.20
=========== ========== =========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these financial statements
F-33
<PAGE> 106

ARCHITEL SYSTEMS CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
(CANADIAN DOLLARS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31, FOR THE YEARS ENDED SEPTEMBER 30,
-------------------------------- ----------------------------------------
1998 1997 1998 1997 1996
-------------- -------------- ------------ ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET INFLOW (OUTFLOW) OF CASH
RELATED
TO THE FOLLOWING ACTIVITIES:
OPERATING
Net income (loss) for the
period........................ $(2,450,123) $ 1,547,017 $ 2,320,776 $ 4,225,847 $ 2,192,222
Add back: items not affecting
cash
Amortization -- capital
assets..................... 581,493 382,143 2,147,113 1,548,515 924,581
-- intangibles... 5,397,805 -- 5,620,369 -- --
-- royalty..... -- -- -- 1,912,700 997,300
Deferred income taxes......... (30,985) 54,015 (202,940) 166,060 210,060
----------- ----------- ------------ ----------- -----------
3,498,190 1,983,175 9,885,318 7,853,122 4,324,163
Change in non-cash working
capital items................. (1,305,005) (430,057) (11,086,706) 448,684 (2,161,143)
----------- ----------- ------------ ----------- -----------
2,193,185 1,553,118 (1,201,388) 8,301,806 2,163,020
----------- ----------- ------------ ----------- -----------
INVESTING
Purchase of capital assets...... (1,398,533) (351,785) (3,439,574) (1,902,365) (3,069,305)
Acquisition of Accugraph
Corporation (Note 12)......... -- -- (34,349,530) -- --
----------- ----------- ------------ ----------- -----------
(1,398,533) (351,785) (37,789,104) (1,902,365) (3,069,305)
----------- ----------- ------------ ----------- -----------
FINANCING
Issuance of common shares....... 538,519 257,075 35,785,619 70,770 30,621,924
Royalty payment................. -- -- -- -- (3,000,000)
Repayment of principal portion
of obligations under capital
leases........................ -- -- -- -- (6,871)
----------- ----------- ------------ ----------- -----------
538,519 257,075 35,785,619 70,770 27,615,053
----------- ----------- ------------ ----------- -----------
NET CASH INFLOW (OUTFLOW)....... 1,333,171 1,458,408 (3,204,873) 6,470,211 26,708,768
CASH AND SHORT-TERM INVESTMENTS,
BEGINNING OF PERIOD........... 30,981,935 34,186,808 34,186,808 27,716,597 1,007,829
----------- ----------- ------------ ----------- -----------
CASH AND SHORT-TERM INVESTMENTS,
END OF PERIOD................. $32,315,106 $35,645,216 $ 30,981,935 $34,186,808 $27,716,597
=========== =========== ============ =========== ===========
</TABLE>

The accompanying notes are an integral part of these financial statements
F-34
<PAGE> 107

ARCHITEL SYSTEMS CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
INFORMATION AS AT DECEMBER 31, 1998 AND FOR THE THREE MONTH PERIODS ENDED
DECEMBER 31, 1998 AND 1997 IS UNAUDITED
(CANADIAN DOLLARS)

1. ACCOUNTING POLICIES

These consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in Canada and include the accounts
of the Company and its wholly-owned subsidiaries. Amounts are expressed in
Canadian dollars. These principles conform with accounting principles in the
United States, except as described in Note 14.

CASH AND SHORT-TERM INVESTMENTS

Cash and short-term investments consist of cash and fixed income
investments. Short-term investments are carried at the lower of amortized cost
and market.

CAPITAL ASSETS

Capital assets are stated at cost less accumulated amortization.

Amortization is recorded using the following rates and methods:

<TABLE>
<S> <C>
Computer equipment.......................................... 2 years straight-line
Computer software........................................... 2 years straight-line
Furniture and equipment..................................... 20% per annum declining balance
Leasehold improvements...................................... Over term of lease
</TABLE>

INTANGIBLES

Intangible assets include amounts allocated to the fair value of customer
lists, research and development in process, acquired technology, and goodwill on
acquisition. These intangibles are being amortized on a straight-line basis over
their estimated useful lives as follows:

<TABLE>
<S> <C>
Customer lists.............................................. 9 months
Research and development in process......................... 18 months
Acquired technology......................................... 24 months
Goodwill.................................................... 24 months
</TABLE>

The Company regularly reviews the carrying values of intangibles to assess
their recoverability from future earnings. If recoverability is not assured, the
intangibles are written down to their net recoverable value.

INCOME TAXES

The Company provides for income taxes based on accounting income using the
deferral method. Deferred income taxes primarily comprise the difference between
the accounting and tax value of capital assets, and the tax benefits arising
from the Company's initial public offering. Under this method, taxes are
computed using current tax rates regardless of when such income is subject to
taxes under tax laws. The resulting deferred tax balances, are not adjusted for
any subsequent changes in tax rates.

F-35
<PAGE> 108
ARCHITEL SYSTEMS CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INFORMATION AS AT DECEMBER 31, 1998 AND FOR THE THREE MONTH PERIODS ENDED
DECEMBER 31, 1998 AND 1997 IS UNAUDITED
(CANADIAN DOLLARS)

RECOGNITION OF REVENUE

License fees are generally recognized using either the percentage of
completion method or on a contract milestone basis. The percentage of completion
method is generally used where significant development of the licensed software
product is required, or when acceptance of the licensed software product is
dependent upon acceptance of related services. Recognition on contract
milestones generally applies where minimal or no development of the licensed
software product is required. Where the percentage of completion method is used,
revisions to cost and profit estimates made during the course of work are
reflected in the period in which the change is known. Provision is made in full
for any anticipated loss when the estimate of total costs on a contract
indicates a loss.

Services and other revenue, which consists of professional services
revenue, product support revenue, and commissions earned from a third party
software vendor, is recognized in the period in which the work is performed or
commission earned. Certain contracts contain incentive provisions based on
achieving performance milestones. These awards are included in income when
realized.

Deferred revenue represents billings in advance of the services provided.

Accrued revenue for contracts in progress, included under accounts
receivable, represents goods and services delivered or performed but not billed.

RESEARCH AND DEVELOPMENT COSTS AND INVESTMENT TAX CREDITS

Research costs are expensed as incurred.

Development costs are expensed as incurred unless they meet the generally
accepted accounting criteria for deferral and there is reasonable assurance they
will be recovered. In the periods disclosed, all development costs have been
expensed as incurred.

Investment tax credits are recognized as a reduction of research and
development costs when there is reasonable assurance that they will be realized.

USE OF ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires the Company's management to make
estimates that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities as at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods presented. In particular, revenue recognition using the
percentage of completion method requires the use of estimates of costs to
complete projects. Actual results could differ from the estimates made by
management.

FOREIGN CURRENCY TRANSLATION

The financial statements of the Company's foreign subsidiaries, all of
which are considered to be operationally dependent upon the Company, are
translated using the temporal method. Under this method, revenues and expenses
are translated at rates in effect on the transaction date. Monetary assets and
liabilities are translated at the rate of exchange at the balance sheet date.
Non-monetary assets and liabilities are translated at historical exchange rates.
Exchange gains and losses on translation are included in the Consolidated
Statements of Income under General and Administrative expenses.

F-36
<PAGE> 109
ARCHITEL SYSTEMS CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INFORMATION AS AT DECEMBER 31, 1998 AND FOR THE THREE MONTH PERIODS ENDED
DECEMBER 31, 1998 AND 1997 IS UNAUDITED
(CANADIAN DOLLARS)

2. ACCOUNTS RECEIVABLE

<TABLE>
<CAPTION>
AS AT AS AT SEPTEMBER 30,
DECEMBER 31, -------------------------
1998 1998 1997
------------ ---- ----
(UNAUDITED)
<S> <C> <C> <C>
Billed receivables................................. $ 9,485,772 $14,002,101 $3,566,859
Accrued revenue for contracts in progress.......... 14,901,915 9,968,509 4,703,082
----------- ----------- ----------
$24,387,687 $23,970,610 $8,269,941
=========== =========== ==========
</TABLE>

3. INVESTMENT TAX CREDIT RECOVERABLE

For the years ended September 30, 1998, 1997, and 1996 investment tax
credits in the amount of $585,000, $283,000 and $209,000 respectively have been
recognized as a reduction of research and development expenses. For the three
month periods ended December 31, 1998 and 1997, $75,000 and $40,000
respectively, have been recognized as a reduction of research and development
expenses.

4. CAPITAL ASSETS

<TABLE>
<CAPTION>
AS AT DECEMBER 31, 1998
-----------------------------------------
ACCUMULATED NET BOOK
COST AMORTIZATION VALUE
---- ------------ --------
(UNAUDITED)
<S> <C> <C> <C>
Computer equipment.................................. $ 4,501,396 $3,046,395 $1,455,001
Computer software................................... 3,388,775 1,893,426 1,495,349
Furniture and equipment............................. 3,168,948 1,000,085 2,168,863
Leasehold improvements.............................. 1,826,060 426,638 1,399,422
----------- ---------- ----------
$12,885,179 $6,366,544 $6,518,635
=========== ========== ==========
</TABLE>

<TABLE>
<CAPTION>
AS AT SEPTEMBER 30, 1998
-----------------------------------------
ACCUMULATED NET BOOK
COST AMORTIZATION VALUE
---- ------------ --------
<S> <C> <C> <C>
Computer equipment.................................. $ 3,803,010 $2,819,926 $ 983,084
Computer software................................... 2,948,307 1,701,196 1,247,111
Furniture and equipment............................. 2,913,250 893,078 2,020,172
Leasehold improvements.............................. 1,822,080 370,852 1,451,228
----------- ---------- ----------
$11,486,647 $5,785,052 $5,701,595
=========== ========== ==========
</TABLE>

F-37
<PAGE> 110
ARCHITEL SYSTEMS CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INFORMATION AS AT DECEMBER 31, 1998 AND FOR THE THREE MONTH PERIODS ENDED
DECEMBER 31, 1998 AND 1997 IS UNAUDITED
(CANADIAN DOLLARS)

<TABLE>
<CAPTION>
AS AT SEPTEMBER 30, 1997
----------------------------------------
ACCUMULATED NET BOOK
COST AMORTIZATION VALUE
---- ------------ --------
<S> <C> <C> <C>
Computer equipment................................... $2,734,355 $1,890,430 $ 843,925
Computer software.................................... 1,600,580 998,295 602,285
Furniture and equipment.............................. 1,753,310 554,307 1,199,003
Leasehold improvements............................... 1,112,085 194,906 917,179
---------- ---------- ----------
$7,200,330 $3,637,938 $3,562,392
========== ========== ==========
</TABLE>

5. SHARE CAPITAL

<TABLE>
<S> <C> <C>
Authorized
Unlimited number of common shares.........................
Unlimited number of preferred shares, issuable in
series.................................................
</TABLE>

Changes to issued share capital are as follows:

<TABLE>
<CAPTION>
NUMBER OF
COMMON
SHARES AMOUNT
--------- ------
<S> <C> <C>
Issued and outstanding at September 30, 1996................ 12,340,144 $32,259,102
Issue of shares for cash under the Flexible Share Incentive
Plan, net of repurchases.................................. 215,400 64,620
Issue of shares for cash under the 1996 Stock Option Plan... 750 6,150
----------- -----------
Issued and outstanding at September 30, 1997................ 12,556,294 32,329,872
----------- -----------
Issue of shares for cash under the Flexible Share Incentive
Plan, net of repurchases.................................. 54,800 16,440
Issue of shares for cash under the 1996 Stock Option Plan... 212,844 1,916,859
Issue of shares on acquisition of Accugraph Corporation..... 2,246,040 5,011,840
Issue of shares for cash under the Accugraph 1996 Stock
Option Plan............................................... 10,832 159,335
Issue of shares for cash under the Accugraph Key Employee
Stock Option Plan......................................... 1,803 25,401
----------- -----------
Issued and outstanding at September 30, 1998................ 15,082,613 39,459,747
----------- -----------
(UNAUDITED)
Issue of shares for cash under the 1996 Stock Option Plan... 69,649 529,145
Issue of shares for cash under the Accugraph 1996 Stock
Option Plan............................................... 555 9,374
----------- -----------
Issued and outstanding at December 31, 1998................. 15,152,817 $39,998,266
=========== ===========
</TABLE>

a) Contributed surplus of $28,655,744 includes the excess of the share
consideration over the stated share capital on the acquisition of Accugraph
Corporation (Note 12) in the amount of $27,555,744, and the tax benefit
from US employees exercising stock options in the amount of $1,100,000.

F-38
<PAGE> 111
ARCHITEL SYSTEMS CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INFORMATION AS AT DECEMBER 31, 1998 AND FOR THE THREE MONTH PERIODS ENDED
DECEMBER 31, 1998 AND 1997 IS UNAUDITED
(CANADIAN DOLLARS)

b) The Company has adopted, or assumed in the Accugraph acquisition,
the following stock incentive arrangements, under which options to purchase
shares have been granted to directors, officers, employees and/or
consultants:

(i) the Flexible Share Incentive Plan;

(ii) the 1996 Stock Option Plan;

(iii) the Accugraph Corporation 1992 Directors and Officers Stock
Option Plan;

(iv) the Accugraph Corporation Key Employee Stock Option Plan; and

(v) the Accugraph Corporation 1996 Stock Option Plan.

Options outstanding under the Accugraph plans, as at the acquisition date,
were converted to equivalent options to purchase Architel shares using an
exchange ratio of 0.0833 of an Architel share for every Accugraph share,
with an equivalent adjustment to the exercise price.

The following options are outstanding as at September 30, 1998:

<TABLE>
<CAPTION>
OPTIONS WEIGHTED AVERAGE
OUTSTANDING EXERCISE PRICE
----------- ----------------
<S> <C> <C>
Flexible Share Incentive Plan............................. 64,400 $ 0.30
1996 Stock Option Plan.................................... 1,519,002 11.85
Accugraph Corporation 1992 Directors and Officers Stock
Option Plan............................................. 5,831 35.99
Accugraph Corporation Key Employee Stock Option Plan...... 23,548 31.78
Accugraph Corporation 1996 Stock Option Plan.............. 79,874 14.76
---------- ------
1,692,655 $11.91
========== ======
</TABLE>

Subsequent to September 30, 1998, the Company issued additional options to
purchase common shares under the 1996 Stock Option Plan as follows:

<TABLE>
<CAPTION>
NUMBER OF EXERCISE
DATE OF GRANT OPTIONS PRICE
------------- --------- --------
<S> <C> <C>
October 1, 1998............................................. 193,103 $ 9.70
November 1, 1998............................................ 34,250 14.75
December 1, 1998............................................ 43,650 17.50
January 4, 1999............................................. 26,650 20.00
February 1, 1999............................................ 18,350 23.95
March 1, 1999............................................... 43,450 22.75
--------
Total....................................................... 359,453
========
</TABLE>

In addition to the number of options outstanding at September 30, 1998 and
granted subsequent to year end, 468,598 options are available for future
issuance under the 1996 Stock Option Plan. No further options will be issued
under any of the other plans.

Options under the Flexible Share Incentive Plan were granted in January
1995, are fully vested as at September 30, 1998 and can be exercised until
January 1, 2005. Options under the 1996 Stock Option

F-39
<PAGE> 112
ARCHITEL SYSTEMS CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INFORMATION AS AT DECEMBER 31, 1998 AND FOR THE THREE MONTH PERIODS ENDED
DECEMBER 31, 1998 AND 1997 IS UNAUDITED
(CANADIAN DOLLARS)

Plan are granted with an exercise price not less than the market price of the
common shares at the date of grant, generally vest over a three or four year
period from the date of grant and expire 10 years from the date of grant.
Options under the Accugraph Corporation 1992 Directors and Officers Stock Option
Plan are fully vested as at September 30, 1998 and have a variety of expiry
dates ending no later than May 2001. Options under the Accugraph Corporation Key
Employee Stock Option Plan have a variety of vesting schedules and expiry dates
ending no later than January 2002. Options under the Accugraph Corporation 1996
Stock Option Plan have a variety of vesting schedules and expiry dates ending no
later than April 2005.

6. INCOME TAXES

<TABLE>
<CAPTION>
THREE MONTHS ENDED
DECEMBER 31,
------------------------
1998 1997
---- ----
(UNAUDITED)
<S> <C> <C>
Current..................................................... $2,235,000 $1,031,000
Deferred.................................................... (85,000) --
---------- ----------
$2,150,000 $1,031,000
========== ==========
</TABLE>

<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
--------------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Current.......................................... $5,742,000 $2,963,000 $1,517,000
Deferred......................................... (419,000) (50,000) 133,000
---------- ---------- ----------
$5,323,000 $2,913,000 $1,650,000
========== ========== ==========
</TABLE>

Income tax expense, including both the current and deferred portions,
varies from amounts which would be computed by applying the Company's combined
statutory income tax rate as follows:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
DECEMBER 31,
------------------------
1998 1997
---- ----
(UNAUDITED)
<S> <C> <C>
Combined rate of income taxes at 44.62% (1997 -- 44.62%).... $ (134,000) $1,150,000
Increase (decrease) resulting from:
Amortization of intangibles............................... 2,408,000 --
Other permanent differences............................... 51,000 11,000
Effect of lower tax rate on foreign income................ (92,000) (81,000)
Other..................................................... (83,000) (49,000)
---------- ----------
$2,150,000 $1,031,000
========== ==========
</TABLE>

F-40
<PAGE> 113
ARCHITEL SYSTEMS CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INFORMATION AS AT DECEMBER 31, 1998 AND FOR THE THREE MONTH PERIODS ENDED
DECEMBER 31, 1998 AND 1997 IS UNAUDITED
(CANADIAN DOLLARS)

<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
--------------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Combined rate of income taxes at 44.62%
(1997 -- 44.62%, 1996 -- 44.62%)................... $3,411,000 $3,185,000 $1,714,000
Increase (decrease) resulting from:
Amortization of intangibles........................ 2,506,000 -- --
Other permanent differences........................ 85,000 52,000 33,000
Effect of lower tax rate on foreign income......... (310,000) (200,000) (24,000)
Benefit of loss carry forward...................... (257,000) -- --
Other.............................................. (112,000) (124,000) (73,000)
---------- ---------- ----------
$5,323,000 $2,913,000 $1,650,000
========== ========== ==========
</TABLE>

At September 30, 1998, the Company had accumulated losses and timing
differences for tax purposes of approximately $800,000 which have not been
recognized in these financial statements, and are available to be applied
against future taxable income until 2004.

7. EARNINGS PER SHARE

Basic earnings per share are calculated using the weighted monthly average
number of common shares outstanding during the periods.

Fully diluted earnings per share are calculated under the assumption that
all dilutive share options outstanding at the end of the period had been
exercised at the later of the beginning of the period and the date of grant.

8. COMMITMENTS AND CONTINGENCIES

a) The Company and its subsidiaries have obligations under long-term leases
for office facilities and equipment. The future minimum lease payments under
these operating leases at September 30, 1998 and at December 31, 1998, for the
fiscal years ending September 30, are as follows:

<TABLE>
<CAPTION>
AS AT AS AT
DECEMBER 31, SEPTEMBER 30,
1998 1998
------------ -------------
(UNAUDITED)
<S> <C> <C>
1999........................................................ $2,909,918 $3,315,259
2000........................................................ 3,221,782 2,658,433
2001........................................................ 2,704,265 2,238,327
2002........................................................ 2,347,122 1,934,342
2003........................................................ 2,213,537 1,819,473
Thereafter.................................................. 2,874,160 2,092,377
</TABLE>

b) The Company and its subsidiaries face the possibility of routine
litigation incidental to its business, and to assessment and reassessment of
income and other taxes by various taxing authorities. The Company believes it
has provided adequately for these matters and accordingly their ultimate
disposition will not have a material affect on its consolidated earnings or
financial position.

F-41
<PAGE> 114
ARCHITEL SYSTEMS CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INFORMATION AS AT DECEMBER 31, 1998 AND FOR THE THREE MONTH PERIODS ENDED
DECEMBER 31, 1998 AND 1997 IS UNAUDITED
(CANADIAN DOLLARS)

9. LINE OF CREDIT

The Company has an available line of credit of $1,000,000 with its bankers
that is secured by accounts receivable, a general security agreement and a
specific first charge over intellectual property.

10. SEGMENTED INFORMATION

The Company operates principally in the design, development and support of
advanced operations support systems for the global telecommunications industry.
The results of the Company's operations are not measured by country or region,
accordingly geographic segments have not been provided. The distribution of
sales by ultimate customer is as follows:

<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31,
--------------------------------
1998 1997
---- ----
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Canada......................................... $ 1,284,000 5.6% $1,620,000 17.3%
US, Carribean and Mexico....................... 13,741,000 59.6% 6,993,000 74.8%
Europe......................................... 7,719,000 33.5% 229,000 2.5%
Asia Pacific................................... 299,000 1.3% 504,000 5.4%
----------- ----------
$23,043,000 100% $9,346,000 100%
=========== ==========
</TABLE>

<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
-------------------------------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Canada................... $ 6,330,000 12.5% $ 2,233,000 6.8% $ 2,737,000 15.2%
US and Carribean......... 28,604,000 56.3% 29,333,000 88.8% 11,919,000 66.4%
Europe................... 14,929,000 29.4% 877,000 2.7% 256,000 1.4%
Asia Pacific............. 912,000 1.8% 591,000 1.8% 3,064,000 17.0%
----------- ----------- -----------
$50,775,000 100% $33,034,000 100% $17,976,000 100%
=========== =========== ===========
</TABLE>

11. FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK

The carrying value for all financial instruments approximate fair value
with the following exception:

<TABLE>
<CAPTION>
AS AT DECEMBER 31, 1998
-----------------------------
CARRYING VALUE FAIR VALUE
-------------- ----------
(UNAUDITED)
<S> <C> <C>
Financial Assets
Cash and short-term investments............................ $32,315,106 $33,006,687
=========== ===========
</TABLE>

<TABLE>
<CAPTION>
AS AT SEPTEMBER 30, 1998 AS AT SEPTEMBER 30, 1997
---------------------------- ----------------------------
CARRYING VALUE FAIR VALUE CARRYING VALUE FAIR VALUE
-------------- ---------- -------------- ----------
<S> <C> <C> <C> <C>
Financial Assets
Cash and short-term investments.... $30,981,935 $31,705,363 $34,186,808 $35,177,937
=========== =========== =========== ===========
</TABLE>

F-42
<PAGE> 115
ARCHITEL SYSTEMS CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INFORMATION AS AT DECEMBER 31, 1998 AND FOR THE THREE MONTH PERIODS ENDED
DECEMBER 31, 1998 AND 1997 IS UNAUDITED
(CANADIAN DOLLARS)

The estimated fair values of cash and short-term investments include the
unrealized gains on investments held. The estimates are not necessarily
indicative of the amounts the Company could potentially realize in a current
market exchange.

FOREIGN EXCHANGE RISK

The Company maintains its accounts in Canadian dollars. However a portion
of its operations are located in other foreign jurisdictions, and its products
are priced in foreign currencies. Therefore, the Company is subject to foreign
currency fluctuations which may, from time to time, affect its profitability and
cash flow.

INTEREST RISK

Surplus cash is invested according to the Company's investment policy,
which states the primary objective as the preservation of capital. Investment
credit risk is managed by limitations on the grade of securities,
diversification of issuers and limitations on terms to maturity. The Company is
subject to interest rate risk in the form of varying rates of return on its
investment portfolio.

CREDIT RISK

Accounts receivable from four customers represents 59% of total accounts
receivable at September 30, 1998, two customers represented 65% of total
accounts receivable at September 30, 1997, and five customers represented 62% of
total accounts receivable at December 31, 1998. The Company believes that there
is minimal risk associated with the collection of these amounts, as such amounts
are receivable from large established telecommunication companies. The balance
of accounts receivable is widely distributed among other customers.

12. ACQUISITION

On June 29, 1998 the Company acquired all of the issued and outstanding
shares of Accugraph Corporation (a Canadian Corporation), pursuant to a plan of
arrangement between the Company and the holders of the aforementioned shares.
The acquisition is being accounted for under the purchase method of accounting,
and as such the consolidated statements of income include the results of
operations from the date of acquisition. Accugraph Corporation's business
included the development, sale and support of operations support systems used in
the global telecommunications industry.

As consideration, the Company issued 2,246,040 common shares valued at
$14.50 per share, being an average of the market value of the Company's common
shares over the period immediately prior to June 29, 1998.

The purchase price was determined as follows:

<TABLE>
<S> <C>
Share consideration given................................... $32,567,584
Transaction and integration costs........................... 1,781,946
-----------
$34,349,530
===========
</TABLE>

F-43
<PAGE> 116
ARCHITEL SYSTEMS CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INFORMATION AS AT DECEMBER 31, 1998 AND FOR THE THREE MONTH PERIODS ENDED
DECEMBER 31, 1998 AND 1997 IS UNAUDITED
(CANADIAN DOLLARS)

The purchase price was allocated as follows:

<TABLE>
<S> <C>
Current assets.............................................. $ 6,705,674
Non-current assets.......................................... 627,742
Liabilities................................................. (10,963,919)
Customer lists.............................................. 1,097,920
Research and development in process......................... 11,335,440
Acquired technology......................................... 18,166,780
Goodwill.................................................... 7,379,893
-----------
$34,349,530
===========
</TABLE>

As at December 31, 1998 and September 30, 1998, there was accumulated
amortization of intangibles totaling $11,018,174 and $5,620,369 respectively.

13. YEAR 2000

The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
year 2000 dates is processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something other than a
date. The effects of the Year 2000 Issue may be experienced before, on, or after
January 1, 2000, and, if not addressed, the impact on operations and financial
reporting may range from minor errors to significant systems failure which could
affect an entity's ability to conduct normal business operations. It is not
possible to be certain that all aspects of the Year 2000 Issue affecting the
Company, including those related to the efforts of customers, suppliers, or
other third parties, will be fully resolved.

14. UNITED STATES ACCOUNTING PRINCIPLES

These financial statements have been prepared in accordance with Canadian
generally accepted accounting principles ("Canadian GAAP"), which conform in all
material respects, with those in the United States ("U.S. GAAP") during the
periods presented except with respect to the following:

(a) The definition of cash used in the accompanying statements of
changes in financial position includes cash and short-term deposits. Under
U.S. GAAP, cash would exclude short-term deposits with original maturities
in excess of 90 days. Changes in short-term deposits with original
maturities in excess of 90 days would be presented as investing activities.
Under U.S. GAAP, for the years ended September 30, 1998, 1997 and 1996, and
the three month periods ended December 31, 1998 and 1997 cash as defined
above would be $3,666,926, $7,634,295, $2,729,733, $8,568,434, and
$6,697,449 respectively. Cash used in investing activities would increase
(decrease) by $762,496, $1,565,649, $24,986,864, $(3,568,337) and
$2,395,254 respectively.

(b) Under Canadian GAAP, there is no requirement to record
compensation on the issue of stock options to employees, consultants or
directors. Under U.S. GAAP APB No. 25, compensation equal to the difference
between the market price of the stock and the exercise price of the option
is recorded as an expense over the period of vesting of the option, with a
corresponding increase to additional paid in capital, a component of
shareholders' equity. Accordingly, for U.S. GAAP purposes, for the years
ended September 30, 1998, 1997 and 1996, and for the three month periods
ended December 31, 1998 and 1997, net income would be decreased by
$715,648, $749,257, $1,162,726,

F-44
<PAGE> 117
ARCHITEL SYSTEMS CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INFORMATION AS AT DECEMBER 31, 1998 AND FOR THE THREE MONTH PERIODS ENDED
DECEMBER 31, 1998 AND 1997 IS UNAUDITED
(CANADIAN DOLLARS)

$nil, and $151,089 respectively. The compensation effect on fiscal years
prior to 1996 would result in a decrease in retained earnings of $902,844
and an increase in additional paid in capital of $902,844. Additional paid
in capital would be increased at September 30, 1998, 1997 and 1996, and for
the three month periods ended December 31, 1998 and 1997 by $3,530,475,
$2,814,827, $2,065,570, $3,530,475 and $2,965,916 respectively.

(c) In accordance with Canadian GAAP, it is the Company's policy to
capitalize and amortize acquired in process research and development. Under
U.S. GAAP, acquired in process research and development is expensed.
Therefore, for U.S. GAAP purposes, for the years ended September 30, 1998,
1997 and 1996, and for the three month periods ended December 31, 1998 and
1997 amortization of intangibles would increase by and net income would
decrease by $9,321,474, $nil, $nil, $nil and $nil respectively.

(d) The following additional disclosures are required in the financial
statements under U.S. GAAP:

(i) Interest paid during the years ended September 30, 1998, 1997,
and 1996, and for the three month periods ended December 31, 1998 and
1997 was $38,658, $nil, $69,437, $nil, and $nil respectively.

(ii) Allowances for doubtful accounts on accounts receivable as at
September 30, 1998 and 1997 and as at December 31, 1998 are $1,622,591,
$22,255, and $1,203,423 respectively.

(iii) Accrued liabilities and other non-trade payables included in
accounts payable as at September 30, 1998 and 1997, and as at December
31, 1998 were $10,504,262, $2,319,147 and $8,333,736 respectively.

(iv) Foreign exchange gains for the years ended September 30, 1998,
1997, and 1996, and for the three month periods ended December 31, 1998
and 1997 are $1,071,751, $116,590, $11,881, $175,073, $217,890
respectively.

(v) Investment tax credits which were credited to research and
development expenses under Canadian GAAP would instead be credited to
the income tax provision under U.S. GAAP. For the years ended September
30, 1998, 1997 and 1996, and for the three month periods ended December
31, 1998 and 1997, $585,000, $283,000, $209,000, $75,000 and $40,000
respectively would be credited to the income tax provision.

(e) Under U.S. GAAP, the Company would have adopted the SFAS No. 109,
Accounting for Income Taxes. In accordance with SFAS No. 109, income taxes
reflect the impact of net operating loss carry forwards, general business
credit carry forwards, and temporary differences between values recorded
for assets and liabilities for financial reporting purposes and values
utilized for measurement in accordance with income tax laws. Under Canadian
GAAP, tax benefits would arise from US employees exercising stock options
for the years ended September 30, 1998, 1997 and 1996, and for the three
month periods ended December 31, 1998 and 1997. For the year ended
September 30, 1998, $1,100,000, and $nil for all other periods
respectively, has been included in contributed surplus. Under U.S. GAAP, as
at September 30, 1998, and 1997, and as at December 31, 1998 $nil,
$205,000, and $nil respectively, would have been recorded as adjustments to
additional paid in capital. Under U.S. GAAP, the purchase price allocated
to customer lists and acquired technology, on the acquisition of Accugraph
Corporation, would be tax effected. This would result in deferred tax
liabilities with an offset to goodwill in the amount of $8,100,000 at June
29, 1998. In addition, under U.S. GAAP, the benefit of loss carry forwards
not previously recognized on acquisition would result in
F-45
<PAGE> 118
ARCHITEL SYSTEMS CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INFORMATION AS AT DECEMBER 31, 1998 AND FOR THE THREE MONTH PERIODS ENDED
DECEMBER 31, 1998 AND 1997 IS UNAUDITED
(CANADIAN DOLLARS)

an adjustment to goodwill. During the year ended September 30, 1998, tax
benefits of $257,000 in excess of those recorded at the acquisition date
were realized.

(f) In June 1997, the Financial Accounting Standards Board issued SFAS
No. 130, Reporting Comprehensive Income. Implementation of SFAS 130 is
required for the Company's 1999 fiscal year. SFAS No. 130 establishes
standards for the reporting of all components of comprehensive income. The
Company will adopt the provisions of SFAS No. 130 on a comparative basis.

In June 1997, the Financial Accounting Standards Board issued SFAS No.
131, Disclosures about Segments of an Enterprise and Related Information.
Implementation of SFAS 131 is required for the Company's 1999 fiscal year.
SFAS 131 redefines how operating segments are determined and requires
disclosure of certain financial and descriptive information regarding those
segments. The Company continues to evaluate the impact of the new
requirement.

(g) The following table reconciles net income for the years in accordance
with U.S. GAAP:

<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31,
--------------------------------
1998 1997
---- ----
(UNAUDITED)
<S> <C> <C>
Net income in conformity with Canadian GAAP................. $(2,450,123) $ 1,547,017
Adjustments:
Additional compensation re stock options.................... -- (151,089)
Tax benefit of loss carry forward........................... -- --
Amortization of intangibles................................. 1,870,497 --
----------- -----------
Net income (loss) in conformity with U.S. GAAP.............. $ (579,626) $ 1,395,928
=========== ===========
Basic earnings (loss) per common share -- U.S. GAAP......... $ (0.04) $ 0.11
=========== ===========
Diluted earnings (loss) per common share -- U.S. GAAP....... $ (0.04) $ 0.11
=========== ===========
</TABLE>

<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
---------------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Net income in conformity with Canadian GAAP......... $ 2,320,776 $4,225,847 $2,192,222
Adjustments:
Additional compensation re stock options............ (715,648) (749,257) (1,162,726)
Tax benefit of loss carry forward................... (257,000) -- --
Acquired research and development in process........ (9,321,474) -- --
----------- ---------- ----------
Net income (loss) in conformity with U.S. GAAP...... $(7,973,346) $3,476,590 $1,029,496
=========== ========== ==========
Basic earnings (loss) per common share -- U.S.
GAAP.............................................. $ (0.61) $ 0.28 $ 0.11
=========== ========== ==========
Diluted earnings (loss) per common share -- U.S.
GAAP.............................................. $ (0.61) $ 0.28 $ 0.10
=========== ========== ==========
</TABLE>

Earnings per common share is determined using the weighted average number
of shares outstanding during the period. Diluted earnings per common share
reflect the dilutive effects of the common share options outstanding at the end
of the period.

F-46
<PAGE> 119
ARCHITEL SYSTEMS CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INFORMATION AS AT DECEMBER 31, 1998 AND FOR THE THREE MONTH PERIODS ENDED
DECEMBER 31, 1998 AND 1997 IS UNAUDITED
(CANADIAN DOLLARS)

h) The following table indicates the items in the balance sheet that
would be affected had the financial statements been prepared in accordance
with U.S. GAAP:

<TABLE>
<CAPTION>
AS AT AS AT SEPTEMBER 30,
DECEMBER 31, --------------------------
1998 1998 1997
------------ ---- ----
(UNAUDITED)
<S> <C> <C> <C>
Cash.......................................... $ 8,568,434 $ 3,666,926 $ 7,634,295
Short-term investments........................ 23,746,672 27,315,009 26,552,513
Intangibles................................... 25,304,067 29,843,875 --
Deferred income tax assets.................... 762,105 731,120 1,570,180
Accounts payable.............................. 2,157,304 2,447,571 474,632
Accrued liabilities........................... 8,333,736 10,504,262 2,319,147
Deferred income tax liabilities............... 6,050,185 7,062,685 --
Retained earnings (deficit)................... (3,156,243) (2,576,617) 5,396,729
Contributed surplus........................... 27,555,744 27,555,744 --
Additional paid in capital.................... 4,630,475 4,630,475 3,856,827
</TABLE>

i) Supplementary Income Statement Information

<TABLE>
<CAPTION>
THREE MONTHS ENDED
DECEMBER 31,
------------------------
1998 1997
---- ----
(UNAUDITED)
<S> <C> <C>
Advertising and marketing costs............................. $3,153,386 $1,736,433
Taxes, other than payroll and income taxes.................. 10,000 7,000
Income taxes paid........................................... 1,600,000 2,200,000
</TABLE>

<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
------------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Advertising and marketing costs................... $2,969,988 $759,784 $ 452,742
Taxes, other than payroll and income taxes........ 24,500 100,810 53,622
Income taxes paid................................. 3,500,000 800,000 1,823,599
</TABLE>

j) Subsequent to September 30, 1998, the Company's management revised
its allocation of value to assets acquired from Accugraph. Specifically,
the Company changed the methodology used to value the technologies
acquired, to adopt a methodology which it understands is consistent with
recent regulatory guidelines. As a result of this change in methodology,
the amounts allocated to research and development in process, acquired
technology and goodwill have been revised. These consolidated financial
statements and related notes reflect these revised valuations.

F-47
<PAGE> 120
ARCHITEL SYSTEMS CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INFORMATION AS AT DECEMBER 31, 1998 AND FOR THE THREE MONTH PERIODS ENDED
DECEMBER 31, 1998 AND 1997 IS UNAUDITED
(CANADIAN DOLLARS)

15. SUBSEQUENT EVENT (UNAUDITED)

On March 2, 1999, the Company entered into a combination agreement with
Amdocs Limited (Amdocs). The combination agreement provides for a business
combination in which holders of common shares of the Company will be entitled to
receive 0.95 exchangeable shares of the Company for each common share of the
Company held by them, and Amdocs would become the beneficial owner of all of the
Company's common shares. Each exchangeable share of the Company will (1) be
exchangeable for one ordinary voting share of Amdocs; (2) entitle its holder to
receive dividends economically equivalent to dividends paid on ordinary voting
shares of Amdocs; and (3) pursuant to a voting trust and exchange agreement in
which a special voting share of Amdocs will be deposited, carry the right to
vote at meetings of the shareholders of Amdocs and be entitled to participate in
any liquidation of Amdocs on the same basis as holders of Amdoc's ordinary
voting shares.

F-48
<PAGE> 121

UNAUDITED PRO FORMA CONDENSED COMBINED
CONSOLIDATED FINANCIAL STATEMENTS

The following unaudited pro forma condensed combined consolidated balance
sheet and condensed combined consolidated statement of operations (collectively,
the "Pro Forma Condensed Combined Consolidated Financial Statements") have been
prepared to illustrate the estimated effects of the proposed combination of
Amdocs and Architel, to be accounted for as a pooling-of-interests under U.S.
GAAP. Accordingly, such financial results were prepared as if Amdocs and
Architel were combined as of the beginning of the periods presented. All amounts
in the Pro Forma Condensed Combined Consolidated Financial Statements are stated
in U.S. dollars unless otherwise stated. For all years presented in the
condensed combined consolidated statements of operations, pro forma shares used
in computing earnings per share give effect to an exchange ratio of 0.95 shares
of Amdocs ordinary shares in exchange for each outstanding share of Architel's
exchangeable share.

The following unaudited pro forma condensed combined consolidated balance
sheet as of December 31, 1998 and the related condensed combined consolidated
statements of operations for the three years ended September 30, 1998 and the
three months ended December 31, 1998 and 1997 are based on the consolidated
financial statements of Amdocs and Architel and include, in the opinion of
management of both companies, all adjustments necessary to present fairly the
results as of and for such periods. The Pro Forma Condensed Combined
Consolidated Financial Statements have been derived from, and should be read in
conjunction with, the audited Consolidated Financial Statements of Amdocs and
Architel and related notes thereto. The Consolidated Financial Statements of
Architel have been prepared in accordance with Canadian GAAP and have been
adjusted in the Pro Forma Condensed Combined Consolidated Financial Statements
to conform with U.S. GAAP and translated into U.S. dollars.

The Architel historical U.S. GAAP statements of operations have been
translated to U.S. dollars using the average exchange rate for the period. The
Architel historical U.S. GAAP balance sheet has been converted to U.S. dollars
using the period end exchange rate for assets and liabilities and the actual
exchange rate for capital transactions with the difference accumulated in the
cumulative translation account as comprehensive income as a separate component
of shareholders' equity.

The unaudited pro forma condensed combined financial statements include all
known significant adjustments and reclassifications to conform the accounting
policies and reporting presentation of Architel to those followed by Amdocs. The
nature and extent of adjustments in addition to those discussed herein, if any,
will be based upon further study and analysis and are not expected to be
significant in relation to the unaudited pro forma combined consolidated
financial statements.

The Pro Forma Condensed Combined Consolidated Financial Statements are
presented for illustrative purposes only and are not necessarily indicative of
actual results of operations or financial position that would have been achieved
had the combination been consummated at the beginning of the periods presented,
nor are they necessarily indicative of future results.

F-49
<PAGE> 122

UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1998
(IN THOUSANDS)

<TABLE>
<CAPTION>
AMDOCS ARCHITEL PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and short term investments............. $ 18,129 $21,108 $ -- $ 39,237
Accounts receivable......................... 128,593 15,929 -- 144,522
Deferred income taxes....................... 16,026 -- -- 16,026
Other current assets........................ 14,600 1,191 -- 15,791
-------- ------- --------- --------
Total current assets................ 177,348 38,228 -- 215,576
Equipment, vehicles, and leasehold
improvements, net........................... 54,305 4,258 -- 58,563
Deferred income taxes......................... 7,224 497 -- 7,721
Intangible assets............................. 22,707 16,528 -- 39,235
Other noncurrent assets....................... 20,926 -- -- 20,926
-------- ------- --------- --------
$282,510 $59,511 $ -- $342,021
======== ======= ========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses....... $ 86,590 $ 6,853 $ -- $ 93,443
Short-term financing arrangements........... 75,708 -- -- 75,708
Unearned revenue............................ 52,121 1,719 -- 53,840
Income taxes payable and deferred income
taxes.................................... 23,253 1,900 -- 25,153
Other current liabilities................... 9,379 -- -- 9,379
-------- ------- --------- --------
Total current liabilities........... 247,051 10,472 -- 257,523
Long-term portion of capital lease
obligations................................. 11,217 -- -- 11,217
Other noncurrent liabilities.................. 26,827 3,952 -- 30,779
Shareholders' equity (deficit):
Preferred shares............................ -- -- -- --
Ordinary shares............................. 3,149 28,953 (28,723)(a) 3,379
Additional paid-in capital.................. 447,745 22,151 28,723(a) 498,619
Comprehensive income........................ (3,626) (4,094) -- (7,720)
Unearned compensation....................... (7,896) -- -- (7,896)
Accumulated deficit......................... (441,957) (1,923) -- (443,880)
-------- ------- --------- --------
Total shareholders' equity
(deficit)......................... (2,585) 45,087 -- 42,502
-------- ------- --------- --------
$282,510 $59,511 $ -- $342,021
======== ======= ========= ========
</TABLE>

See accompanying notes to unaudited pro forma condensed combined consolidated
financial statements.
F-50
<PAGE> 123

UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1998
(IN THOUSANDS)

<TABLE>
<CAPTION>
AMDOCS ARCHITEL PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and short term investments.......... $ 25,389 $20,383 $ -- $ 45,772
Accounts receivable...................... 89,958 15,770 -- 105,728
Deferred income taxes.................... 14,534 -- -- 14,534
Other current assets..................... 11,991 1,296 -- 13,287
--------- ------- -------- ---------
Total current assets............. 141,872 37,449 -- 179,321
Equipment, vehicles, and leasehold
improvements, net........................ 46,404 3,751 -- 50,155
Deferred income taxes...................... 7,773 481 -- 8,254
Intangible assets.......................... 23,362 19,634 -- 42,996
Other noncurrent assets.................... 20,555 -- -- 20,555
--------- ------- -------- ---------
$ 239,966 $61,315 $ -- $ 301,281
========= ======= ======== =========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses.... $ 77,547 $ 8,521 $ -- $ 86,068
Short-term financing arrangements........ 91,565 -- -- 91,565
Unearned revenue......................... 29,241 1,264 -- 30,505
Income taxes payable and deferred income
taxes................................. 21,919 1,443 -- 23,362
Other current liabilities................ 5,878 -- -- 5,878
--------- ------- -------- ---------
Total current liabilities........ 226,150 11,228 -- 237,378
Long-term portion of capital lease
obligations.............................. 9,215 -- -- 9,215
Other noncurrent liabilities............... 26,490 4,646 -- 31,136
Shareholders' equity (deficit):
Preferred shares......................... -- -- -- --
Ordinary shares.......................... 3,149 28,604 (28,374)(a) 3,379
Additional paid-in capital............... 447,503 22,151 28,374(a) 498,028
Comprehensive income..................... (1,495) (3,796) -- (5,291)
Unearned compensation.................... (8,947) -- -- (8,947)
Accumulated deficit...................... (462,099) (1,518) -- (463,617)
--------- ------- -------- ---------
Total shareholders' equity (deficit)....... (21,889) 45,441 -- 23,552
--------- ------- -------- ---------
$ 239,966 $61,315 $ -- $ 301,281
========= ======= ======== =========
</TABLE>

See accompanying notes to unaudited pro forma condensed combined consolidated
financial statements.
F-51
<PAGE> 124

UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
AMDOCS ARCHITEL PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Revenue......................................... $131,425 $14,944 $ -- $146,369
Operating expenses:
Cost of license............................... 1,323 367 1,472(b) 3,162
Cost of service............................... 75,915 4,726 -- 80,641
Research and development...................... 8,379 3,090 -- 11,469
Selling, general, and administrative.......... 15,647 3,781 1,471(b) 20,899
-------- ------- ------- --------
101,264 11,964 2,943 116,171
-------- ------- ------- --------
Operating income................................ 30,161 2,980 (2,943) 30,198
Other expense (income), net..................... 1,387 2,696 (2,943)(b) 1,140
-------- ------- ------- --------
Income before income taxes...................... 28,774 284 -- 29,058
Income taxes.................................... 8,632 689 -- 9,321
-------- ------- ------- --------
Net income (loss)............................... $ 20,142 $ (405) $ -- $ 19,737
======== ======= ======= ========
Earnings per share:
Basic......................................... $ 0.10 $ 0.09
======== ========
Diluted....................................... $ 0.10 $ 0.09
======== ========
Weighted average number of shares outstanding:
Basic......................................... 196,800 211,195
======== ========
Diluted....................................... 198,905 213,782
======== ========
</TABLE>

See accompanying notes to unaudited pro forma condensed combined consolidated
financial statements.
F-52
<PAGE> 125

UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
AMDOCS ARCHITEL PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Revenue............................................ $86,558 $6,634 $ -- $93,192
Operating expenses:
Cost of license.................................. 3,212 -- -- 3,212
Cost of service.................................. 50,133 1,776 -- 51,909
Research and development......................... 5,321 1,302 -- 6,623
Selling, general, and administrative............. 11,047 2,207 -- 13,254
------- ------ -------- -------
69,713 5,285 -- 74,998
------- ------ -------- -------
Operating income................................... 16,845 1,349 -- 18,194
Other expense (income), net........................ 998 (346) -- 652
------- ------ -------- -------
Income before taxes................................ 15,847 1,695 -- 17,542
Income taxes....................................... 7,886 704 -- 8,590
------- ------ -------- -------
Net income......................................... $ 7,961 $ 991 $ -- $ 8,952
======= ====== ======== =======
Earnings per share:
Basic............................................ $ 0.06 $ 0.06
======= =======
Diluted.......................................... $ 0.06 $ 0.06
======= =======
Weighted average number of shares outstanding:
Basic............................................ 124,708 139,103
======= =======
Diluted.......................................... 127,292 142,169
======= =======
</TABLE>

See accompanying notes to unaudited pro forma condensed combined consolidated
financial statements.
F-53
<PAGE> 126

UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
AMDOCS ARCHITEL PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Revenue....................................... $403,767 $34,780 $ -- $438,547
Operating expenses:
Cost of license............................. 10,732 379 1,533(b) 12,644
Cost of service............................. 231,360 10,017 -- 241,377
Research and development.................... 25,612 7,138 -- 32,750
Selling, general, and administrative........ 51,168 10,400 1,535(b) 63,103
Nonrecurring charges........................ -- -- 7,838(c) 7,838
-------- ------- -------- --------
318,872 27,934 10,906 357,712
-------- ------- -------- --------
Operating income (loss)....................... 84,895 6,846 (10,906) 80,835
Other expense (income), net................... 24,126 9,554 (10,906)(b,c) 22,774
-------- ------- -------- --------
Income (loss) before taxes and cumulative
effect...................................... 60,769 (2,708) -- 58,061
Income taxes.................................. 30,385 2,737 -- 33,122
-------- ------- -------- --------
Net income (loss) before cumulative effect.... $ 30,384 $(5,445) $ -- $ 24,939
======== ======= ======== ========
Earnings per share:
Basic....................................... $ 0.19 $ 0.14
======== ========
Diluted..................................... $ 0.19 $ 0.14
======== ========
Weighted average number of shares outstanding:
Basic....................................... 158,528 172,923
======== ========
Diluted..................................... 159,442 174,319
======== ========
</TABLE>

See accompanying notes to unaudited pro forma condensed combined consolidated
financial statements.
F-54
<PAGE> 127

UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
AMDOCS ARCHITEL PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Revenue.......................................... $290,102 $24,082 $ -- $314,184
Operating expenses:
Cost of license................................ 3,711 -- 1,450(d) 5,161
Cost of service................................ 173,704 6,178 -- 179,882
Research and development....................... 17,386 5,302 -- 22,688
Selling, general, and administrative........... 40,769 7,991 -- 48,760
Royalties...................................... 1,450 (1,450)(d)
Nonrecurring charges........................... 27,563 -- -- 27,563
-------- ------- -------- --------
263,133 20,921 -- 284,054
-------- ------- -------- --------
Operating income................................. 26,969 3,161 -- 30,130
Other expense (income), net...................... 3,266 (1,294) -- 1,972
-------- ------- -------- --------
Income before income taxes....................... 23,703 4,455 -- 28,158
Income taxes..................................... 17,827 1,919 -- 19,746
-------- ------- -------- --------
Net income....................................... $ 5,876 $ 2,536 $ -- $ 8,412
======== ======= ======== ========
Earnings per share:
Basic.......................................... $ 0.05 $ 0.07
======== ========
Diluted........................................ $ 0.05 $ 0.07
======== ========
Weighted average number of shares outstanding:
Basic.......................................... 108,330 122,725
======== ========
Diluted........................................ 110,915 125,792
======== ========
</TABLE>

See accompanying notes to pro forma condensed combined consolidated financial
statements.
F-55
<PAGE> 128

UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
AMDOCS ARCHITEL PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Revenue.......................................... $211,720 $13,194 $ -- $224,914
Operating expenses:
Cost of license................................ 4,011 -- 901(d) 4,912
Cost of service................................ 129,177 3,108 -- 132,285
Research and development....................... 14,695 2,997 -- 17,692
Selling, general, and administrative........... 28,347 5,097 -- 33,444
Royalties...................................... 901 (901)(d)
-------- ------- ------- --------
176,230 12,103 -- 188,333
-------- ------- ------- --------
Operating income................................. 35,490 1,091 -- 36,581
Other expense (income), net...................... 476 (722) -- (246)
-------- ------- ------- --------
Income before income taxes....................... 35,014 1,813 -- 36,827
Income taxes..................................... 10,506 1,059 -- 11,565
-------- ------- ------- --------
Net income....................................... $ 24,508 $ 754 $ -- $ 25,262
======== ======= ======= ========
Earnings per share:
Basic.......................................... $ 0.23 $ 0.21
======== ========
Diluted........................................ $ 0.22 $ 0.20
======== ========
Weighted average number of shares outstanding:
Basic.......................................... 107,920 122,315
======== ========
Diluted........................................ 110,505 125,382
======== ========
</TABLE>

See accompanying notes to unaudited pro forma condensed combined consolidated
financial statements.
F-56
<PAGE> 129

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

PRO FORMA ADJUSTMENTS COLUMN

(a) Reflects the reclassification of the share capital attributed to
the 14,414 exchangeable shares in excess of the par value of the Amdocs
ordinary shares.

(b) Reflects the reclassification of amortization expense from other
expense (income), net to cost of license, and selling, general and
administrative to be consistent with the Amdocs historical presentation.

(c) Reflects the reclassification of the write off of purchased
research and development in process from other expense (income) to
nonrecurring charges to be consistent with the Amdocs historical
presentation.

(d) Reflects the reclassification of royalties expense to cost of
license to be consistent with the Amdocs historical presentation.

OTHER NOTES

(e) On June 29, 1998 Architel acquired all of the issued and
outstanding shares of Accugraph (a Canadian Corporation), pursuant to a
plan of arrangement between the Company and the holders of the
aforementioned shares. The acquisition was accounted for under the purchase
method of accounting, and as such the consolidated statements of income
include the results of operations from the date of acquisition. Accugraph
Corporation's business included the development, sale and support of
operations support systems used in the global telecommunications industry.

As consideration, the Company issued 2,246 common shares valued at
$9.93 per share, being an average of the market value of the Company's
common shares over the period immediately prior to June 29, 1998.

The purchase price was determined as follows:

<TABLE>
<S> <C>
Share consideration given......................... $22,307
-------
Transaction and integration costs................. 1,220
$23,527
=======
</TABLE>

The purchase price was allocated as follows:

<TABLE>
<S> <C>
Current assets.................................... $ 4,593
Non-current assets................................ 430
Liabilities....................................... (7,510)
Customer lists.................................... 752
Research and development in process............... 7,764
Acquired technology............................... 12,443
Goodwill.......................................... 5,055
-------
$23,527
=======
</TABLE>

In accordance with U.S. GAAP, the acquired research and development in
process is expensed following the consummation of the transaction.

F-57
<PAGE> 130
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The pro forma combined consolidated revenue and net loss of Architel
for the three months ended December 31, 1998 and the year ended September
30, 1998, as if the Accugraph acquisition had occurred on October 1, 1997
would be as follows:

<TABLE>
<CAPTION>
THREE MONTHS YEAR
ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
1998 1998
------------ -------------
<S> <C> <C>
Revenue........................................... $14,944 $ 44,847
Net loss.......................................... (405) (17,900)
</TABLE>

(f) The Unaudited Pro Forma Condensed Combined Financial Statements do
not reflect the estimated costs of completing the business combination
between Amdocs and Architel of approximately $15 million which will be
expensed as incurred. Such costs primarily consist of professional and
advisory fees and are expected to be recognized following the consummation
of the Combination Agreement.

F-58
<PAGE> 131

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the various expenses to be paid by Amdocs in
connection with the issuance and distribution of the securities being
registered. All amounts shown are estimates except for amounts of filing and
listing fees.

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 77,379
New York Stock Exchange listing fee......................... 1,500
Legal fees and expenses..................................... 100,000
Accounting fees and expenses................................ *
Printing, EDGAR formatting and mailing expenses............. *
Miscellaneous............................................... *
--------
Total............................................. $ *
</TABLE>

- ---------------
* To be filed by amendment

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Under our Articles of Association, we are obligated to indemnify any person
who is made or threatened to be made a party to a legal or administrative
proceeding by virtue of being a director, officer or agent of Amdocs, provided
that we have no such obligation to indemnify any such persons for any claims
they incur or sustain by or through their own willful act or default.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Set forth in reverse chronological order below is certain information
regarding the number of ordinary shares or other securities issued, or options
granted, by the Registrant, since March 26, 1996 that have not been registered
under the Securities Act.

(a) Issuances of Share Capital

On March 30, 1998, Welsh, Carson, Anderson & Stowe VII, L.P., Welsh,
Carson, Anderson & Stowe VI. L.P., WCAS Information Partners, L.P. and certain
other investors purchased a total of 51,507,716 ordinary shares for an aggregate
purchase price of $99.1 million. Such number of ordinary shares and all other
share figures set forth in this Item give effect to a recapitalization of
Amdocs' share capital which was effected prior to the June 19, 1998 public
offering.

On September 28, 1997, a trust for the benefit of certain employees of
Amdocs purchased 5,720,000 ordinary shares for an aggregate purchase price of
$31.6 million.

On September 22, 1997, Welsh, Carson, Anderson & Stowe VII, L.P., Welsh,
Carson, Anderson & Stowe VI. L.P., and certain other investors purchased
11,072,308 ordinary shares for an aggregate purchase price of $61.2 million and
$3.27 million in principal amount of Amdocs' junior promissory notes.

(b) Option Grants

From January 1998 through March 24, 1999, Amdocs granted options to
directors, employees and consultants to purchase an aggregate of 4,054,000
ordinary shares at a weighted average exercise price of $5.47 per share. The
options vest ratably over a period of three to eight years commencing from the
date of grant. As of March 24, 1999 none of those options were exercisable.

No underwriters were engaged in connection with any of the foregoing sales
of securities. The securities issued in the above transactions were offered and
sold in reliance upon the exemption from

II-1
<PAGE> 132

registration under Section 4(2) of the Securities Act or Regulation D or
Regulation S promulgated under the Securities Act, relative to sales by an
issuer not involving any public offering.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
2.1 Combination Agreement dated as of March 2, 1999 among Amdocs
Limited, Amdocs (Denmark) ApS, 3026191 Nova Scotia ULC and
Architel Systems Corporation (Exhibit 2.1 to Amdocs' Current
Report on Form 6-K, filed March 9, 1999; File No. 001-14840)
2.2 Share Option Agreement dated as of March 2, 1999, by and
between Architel Systems Corporation and Amdocs (Denmark)
ApS (Exhibit 2.5 to Amdocs' Current report on Form 6-K,
filed March 9, 1999; File No. 001-14840)
2.3 Voting and Option Agreement dated as of March 2, 1999, among
Amdocs (Denmark) ApS. and Anthony P. van Marken and David E.
Curry (Exhibit 2.3 to Amdocs' Current report on Form 6-K,
filed March 9, 1999; File No. 001-14840)
3.1 Amended and Restated Articles of Association of Amdocs
Limited (Exhibit 3.1 to Amdocs' Registration Statement on
Form F-1 dated June 19, 1998; Registration No. 333-8826)
3.2 Memorandum of Association of Amdocs Limited (Exhibit 3.2 to
Amdocs' Registration Statement on Form F-1 dated June 19,
1998; Registration No. 333-8826)
*4.1 Certificate of Designation of Series A Participating
Cumulative Preferred Stock.
4.2 Stock Option and Incentive Plan, as amended, of Amdocs
(Exhibit 4.2 to Amdocs' Registration Statement on Form F-1
dated June 19, 1998; Registration No. 333-8826)
4.3 Note Purchase Agreement, dated as of September 22, 1997,
among European Software Marketing Ltd., WCAS Capital
Partners III, L.P., as Agent, and the several Purchasers
named in Schedule 1 thereto (Exhibit 4.3 to Amdocs'
Registration Statement on Form F-1 dated June 19, 1998;
Registration No. 333-8826)
4.4 Credit Agreement, dated as of December 5, 1997, among
European Software Marketing Limited, the other subsidiaries
of Amdocs named therein and Nationsbanc of Texas, N.A., as
Administrative Agent, the Bank of Nova Scotia, as
Syndication Agent, and The Bank of Japan, Limited as
Documentation Agent (Exhibit 4.4 to Amdocs' Registration
Statement on Form F-1 dated June 19, 1998; Registration No.
333-8826)
4.5 Share Subscription Agreement, dated as of September 22,
1997, among the several Investors named therein and Amdocs
(Exhibit 4.5 to Amdocs' Registration Statement on Form F-1
dated June 19, 1998; Registration No. 333-8826)
4.6 Conditional Investment Agreement, dated as of September 22,
1997, among the several Investors named therein and Amdocs
(Exhibit 4.6 to Amdocs' Registration Statement on Form F-1
dated June 19, 1998; Registration No. 333-8826)
4.7 Letter Agreement, dated September 22, 1997, as amended as of
May 20, 1998, between Amdocs and Welsh, Carson, Anderson and
Stowe, on behalf of the Investors named therein (Exhibit 4.7
to Amdocs' Registration Statement on Form F-1 dated June 19,
1998; Registration No. 333-8826)
4.8 Letter of Understanding, dated September 22, 1997, between
Amdocs and Welsh, Carson, Anderson and Stowe, on behalf of
the Investors named therein (Exhibit 4.8 to Amdocs'
Registration Statement on Form F-1 dated June 19, 1998;
Registration No. 333-8826)
4.9 Shareholders Agreement, Summary of Terms, dated September
22, (Exhibit 4.9 to Amdocs' Registration Statement on Form
F-1 dated June 19, 1998; Registration No. 333-8826)
</TABLE>

II-2
<PAGE> 133

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
4.10 Certain proxies executed by investment partnerships
affiliated with Welsh, Carson, Anderson and Stowe and
certain other entities in favor of Conbond Holding Company
Ltd. (Exhibit 4.10 to Amdocs' Registration Statement on Form
F-1 dated June 19, 1998; Registration No. 333-8826)
*5.1 Opinion of Carey Langlois
*8.1 Opinion of Reboul MacMurray, Hewitt, Maynard & Kristol,
regarding tax matters.
*8.2 Opinion of Goodman Phillips & Vineberg, Toronto regarding
tax matters.
10.1 Agreement No. C303410 for Joint Development and Marketing
between Southwestern Bell Telephone Company and Amdocs, Inc.
dated as of June 19, 1991, as amended(exhibit 10.1 to
Amdocs' Registration Statement on Form F-1 dated June 19,
1998; Registration No. 333-8826).
10.2 General Agreement No. CGA0450 for Support Services effective
as of January 1, 1994 Southwestern Bell Telephone Company
and Amdocs, Inc.(exhibit 10.2 to Amdocs' Registration
Statement on Form F-1 dated June 19, 1998; Registration No.
333-8826).
10.3 Marketing and License Agreement between Southwestern Bell
Yellow Pages, Inc. and Amdocs, Inc. dated as of May 18,
1990, as amended(exhibit 10.3 to Amdocs' Registration
Statement on Form F-1 dated June 19, 1998; Registration No.
333-8826).
10.4 Joint Development Agreement between Southwestern Bell Mobile
Systems, Inc. and Amdocs, Inc., signed by the parties on
March 15, 1994 and March 31, 1994, respectively(exhibit 10.4
to Amdocs' Registration Statement on Form F-1 dated June 19,
1998; Registration No. 333-8826).
10.5 Marketing Rights Agreement between Southwestern Bell Mobile
Systems, Inc. and Canadian Directory Technology Limited,
signed by the parties on March 14, 1994 and April 5, 1994,
respectively, as amended(exhibit 10.5 to Amdocs'
Registration Statement on Form F-1 dated June 19, 1998;
Registration No. 333-8826).
10.6 Letter of Agreement between Southwestern Bell Mobile
Systems, Inc. and Canadian Directory Technology Limited
dated July 22, 1996 and signed on July 25, 1995(exhibit 10.3
to Amdocs' Registration Statement on Form F-1 dated June 19,
1998; Registration No. 333-8826).
10.7 Development Agreement between Southwestern Bell
Communications Services, Inc. and Amdocs, Inc. dated as of
February 15, 1996(exhibit 10.7 to Amdocs' Registration
Statement on Form F-1 dated June 19, 1998; Registration No.
333-8826).
10.8 Marketing Rights Agreement between Southwestern Bell
Communications Services, Inc. and Canadian Directory
Technology Limited effective as of February 15, 1996, as
amended(exhibit 10.8 to Amdocs' Registration Statement on
Form F-1 dated June 19, 1998; Registration No. 333-8826).
10.9 License and Maintenance Services Agreement between
GoldenLines Limited and Amdocs (UK) Limited, dated as of
November 15, 1996(exhibit 10.9 to Amdocs' Registration
Statement on Form F-1 dated June 19, 1998; Registration No.
333-8826).
10.10 Customization and Support Services Agreement between
GoldenLines Limited and P.S. Publishing System Limited,
dated as of November 15, 1996(exhibit 10.10 to Amdocs'
Registration Statement on Form F-1 dated June 19, 1998;
Registration No. 333-8826).
10.11 IT Services Provision Agreement between Pacific Access & Pty
Ltd., as agent for Telstra Corporation Limited, and Amdocs
(USA), Inc., dated as of May 7, 1998(exhibit 10.11 to
Amdocs' Registration Statement on Form F-1 dated June 19,
1998; Registration No. 333-8826).
10.12 Guarantee and Indemnity between Amdocs Limited, as
Guarantor, and Pacific Access Pty Ltd., as Beneficiary,
dated as of May 7, 1995(exhibit 10.12 to Amdocs'
Registration Statement on Form F-1 dated June 19, 1998;
Registration No. 333-8826).
*21.1 Subsidiaries of the Registrant
23.1 Consent of Ernst & Young LLP, independent auditors.
</TABLE>

II-3
<PAGE> 134

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
23.2 Consent of Deloitte & Touche LLP, independent auditors.
*23.3 Consent of Carey Langlois (included in Exhibit 5.1).
*23.4 Consent of Reboul, MacMurray, Hewitt, Maynard & Kristol
(included in Exhibit 8.1).
*23.5 Consent of Goodman Phillips & Vineberg, Toronto (included in
Exhibit 8.2).
24.1 Powers of Attorney (contained on the signature pages
hereof).
*99.2 Form of Plan of Arrangement under Section 192 of the Canada
Business Corporations Act of Architel Systems Corporation.
*99.3 Form of Voting and Exchange Trust Agreement among Amdocs,
3026191 Nova Scotia ULC, Architel Systems Corporation and
CIBC Mellon Trust Company as trustee.
*99.4 Form of Support Agreement among Amdocs Limited, 3026191 Nova
Scotia ULC, and Architel Systems Corporation.
</TABLE>

ITEM 17. UNDERTAKINGS

(a) The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in the volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of a prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a 20 percent
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement;

(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;

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

(3) To remove from registration, by means of a post-effective
amendment, any of the securities being registered which remain unsold at
the termination of the offering.

(4) To file a post-effective amendment to the registration statement
to include any financial statements required by Rule 3-19 of this chapter
at the start of any delayed offering or throughout a continuous offering.

(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the

II-4
<PAGE> 135

payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

II-5
<PAGE> 136

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form F-1 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of New York, State of New York, on this 26th day of
March, 1999.

AMDOCS LIMITED

By: /s/ BRUCE K. ANDERSON
------------------------------------
Bruce K. Anderson
Chief Executive Officer
and Chairman of the Board

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS that each individual whose signature appears
below hereby constitutes and appoints Bruce K. Anderson, as his true and lawful
attorney-in-fact and agent with full power of substitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing which said attorney-in-fact and agent may deem necessary or
advisable to be done in connection with this Registration Statement, as fully to
all intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or any substitute or
substitutes for said attorney-in-fact and agent, may lawfully do or cause to be
done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<C> <S> <C>
/s/ BRUCE K. ANDERSON Chairman of the Board and Chief Executive March 26, 1999
- --------------------------------------- Officer
Bruce K. Anderson (Principal Executive Officer)

/s/ ROBERT A. MINICUCCI Director and Chief March 26, 1999
- --------------------------------------- Financial Officer (Principal Financial
Robert A. Minicucci and Accounting Officer)

Director of Amdocs Limited and Chief March 26, 1999
- --------------------------------------- Executive Officer of Amdocs Management
Avinoam Naor Limited

/s/ ADRIAN GARDNER Director March 26, 1999
- ---------------------------------------
Adrian Gardner

/s/ STEPHEN HERMER Director March 26, 1999
- ---------------------------------------
Stephen Hermer
</TABLE>
<PAGE> 137

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<C> <S> <C>
/s/ JAMES KAHAN Director March 26, 1999
- ---------------------------------------
James Kahan

/s/ PAZ LITTMAN Director March 26, 1999
- ---------------------------------------
Paz Littman

/s/ SHMUEL MEITAR Director March 26, 1999
- ---------------------------------------
Shmuel Meitar

/s/ REVITAL NAVEH Director March 26, 1999
- ---------------------------------------
Revital Naveh

/s/ LAWRENCE PERLMAN Director March 26, 1999
- ---------------------------------------
Lawrence Perlman

Director March 26, 1999
- ---------------------------------------
Michael J. Price

/s/ THOMAS G. O'BRIEN Amdocs Limited's Authorized March 26, 1999
- --------------------------------------- Representative in the United States
Thomas G. O'Brien
</TABLE>
<PAGE> 138

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
*8.1 Opinion of Reboul MacMurray, Hewitt, Maynard & Kristol,
regarding tax matters.
*8.2 Opinion of Goodman Phillips & Vineberg, Toronto regarding
tax matters.
10.1 Agreement No. C303410 for Joint Development and Marketing
between Southwestern Bell Telephone Company and Amdocs, Inc.
dated as of June 19, 1991, as amended(exhibit 10.1 to
Amdocs' Registration Statement on Form F-1 dated June 19,
1998; Registration No. 333-8826).
10.2 General Agreement No. CGA0450 for Support Services effective
as of January 1, 1994 Southwestern Bell Telephone Company
and Amdocs, Inc.(exhibit 10.2 to Amdocs' Registration
Statement on Form F-1 dated June 19, 1998; Registration No.
333-8826).
10.3 Marketing and License Agreement between Southwestern Bell
Yellow Pages, Inc. and Amdocs, Inc. dated as of May 18,
1990, as amended(exhibit 10.3 to Amdocs' Registration
Statement on Form F-1 dated June 19, 1998; Registration No.
333-8826).
10.4 Joint Development Agreement between Southwestern Bell Mobile
Systems, Inc. and Amdocs, Inc., signed by the parties on
March 15, 1994 and March 31, 1994, respectively(exhibit 10.4
to Amdocs' Registration Statement on Form F-1 dated June 19,
1998; Registration No. 333-8826).
10.5 Marketing Rights Agreement between Southwestern Bell Mobile
Systems, Inc. and Canadian Directory Technology Limited,
signed by the parties on March 14, 1994 and April 5, 1994,
respectively, as amended(exhibit 10.5 to Amdocs'
Registration Statement on Form F-1 dated June 19, 1998;
Registration No. 333-8826).
10.6 Letter of Agreement between Southwestern Bell Mobile
Systems, Inc. and Canadian Directory Technology Limited
dated July 22, 1996 and signed on July 25, 1995(exhibit 10.3
to Amdocs' Registration Statement on Form F-1 dated June 19,
1998; Registration No. 333-8826).
10.7 Development Agreement between Southwestern Bell
Communications Services, Inc. and Amdocs, Inc. dated as of
February 15, 1996(exhibit 10.7 to Amdocs' Registration
Statement on Form F-1 dated June 19, 1998; Registration No.
333-8826).
10.8 Marketing Rights Agreement between Southwestern Bell
Communications Services, Inc. and Canadian Directory
Technology Limited effective as of February 15, 1996, as
amended(exhibit 10.8 to Amdocs' Registration Statement on
Form F-1 dated June 19, 1998; Registration No. 333-8826).
10.9 License and Maintenance Services Agreement between
GoldenLines Limited and Amdocs (UK) Limited, dated as of
November 15, 1996(exhibit 10.9 to Amdocs' Registration
Statement on Form F-1 dated June 19, 1998; Registration No.
333-8826).
10.10 Customization and Support Services Agreement between
GoldenLines Limited and P.S. Publishing System Limited,
dated as of November 15, 1996(exhibit 10.10 to Amdocs'
Registration Statement on Form F-1 dated June 19, 1998;
Registration No. 333-8826).
10.11 IT Services Provision Agreement between Pacific Access & Pty
Ltd., as agent for Telstra Corporation Limited, and Amdocs
(USA), Inc., dated as of May 7, 1998(exhibit 10.11 to
Amdocs' Registration Statement on Form F-1 dated June 19,
1998; Registration No. 333-8826).
10.12 Guarantee and Indemnity between Amdocs Limited, as
Guarantor, and Pacific Access Pty Ltd., as Beneficiary,
dated as of May 7, 1995(exhibit 10.12 to Amdocs'
Registration Statement on Form F-1 dated June 19, 1998;
Registration No. 333-8826).
*21.1 Subsidiaries of the Registrant
23.1 Consent of Ernst & Young LLP, independent auditors.
23.2 Consent of Deloitte & Touche LLP, independent auditors.
*23.3 Consent of Carey Langlois (included in Exhibit 5.1).
*23.4 Consent of Reboul MacMurray, Hewitt, Maynard & Kristol
(included in Exhibit 8.1).
</TABLE>
<PAGE> 140

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
*23.5 Consent of Goodman Phillips & Vineberg, Toronto (included in
Exhibit 8.2).
24.1 Powers of Attorney (contained on the signature pages
hereof).
*99.2 Form of Plan of Arrangement under Section 192 of the Canada
Business Corporations Act of Architel Systems Corporation.
*99.3 Form of Voting and Exchange Trust Agreement among Amdocs,
3026191 Nova Scotia ULC, Architel Systems Corporation and
CIBC Mellon Trust Company as trustee.
*99.4 Form of Support Agreement among Amdocs Limited, 3026191 Nova
Scotia ULC, and Architel Systems Corporation.
</TABLE>

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

* To be filed by amendment.

<PAGE> 1

EXHIBIT 23.1

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the reference to our firm under the captions "Selected
Consolidated Historical Financial Data of Amdocs" and "Experts" and to the use
of our report dated November 8, 1998, in the Registration Statement (Form F-1
No. 333- ) and related Prospectus of Amdocs Limited for the
registration of 14,414,372 shares of its ordinary shares.

/s/ ERNST & YOUNG LLP

St. Louis, Missouri
March , 1999

<PAGE> 1

EXHIBIT 23.2

CONSENT OF DELOITTE & TOUCHE LLP, INDEPENDENT AUDITORS

We consent to the use of our report dated November 9, 1998 (except for Note
14(j), which is as of January 22, 1999), relating to the financial statements of
Architel Systems Corporation and to the reference to our firm under the captions
"Selected Consolidated Historical Financial Data of Architel" and "Experts" and
included in the Registration Statement (Form F-1 No. 333- ) and
related Prospectus of Amdocs Limited for the registration of 14,414,372 shares
of its ordinary shares.

/s/ DELOITTE & TOUCHE LLP

Toronto, Canada
March 26, 1999