AMDOCS LTD, F-3, 1999-09-07

AMDOCS LTD
F-3, 1999-09-07
COMPUTER PROGRAMMING SERVICES

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 7, 1999.

REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

FORM F-3

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

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

AMDOCS, INC.
1390 TIMBERLAKE MANOR PARKWAY, CHESTERFIELD, MISSOURI 63017
ATTENTION: THOMAS G. O'BRIEN, TREASURER
314-212-8328
(NAME, ADDRESS, AND TELEPHONE NUMBER OF AGENT FOR SERVICE)

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

<TABLE>
<S> <C>
ROBERT A. SCHWED, ESQ. PHYLLIS G. KORFF, ESQ.
REBOUL, MACMURRAY, HEWITT, MAYNARD & KRISTOL SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
45 ROCKEFELLER PLAZA 919 THIRD AVENUE
NEW YORK, NEW YORK 10111 NEW YORK, NEW YORK 10022
(212) 841-5700 (212) 735-3000
</TABLE>

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable 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. [ ] ----------

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. [ ] ----------

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. [ ]
------------------------

CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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- ----------------------------------------------------------------------------------------------------------
PROPOSED PROPOSED
TITLE OF EACH CLASS OF AMOUNT TO MAXIMUM OFFERING MAXIMUM AGGREGATE
SECURITIES TO BE REGISTERED BE REGISTERED PRICE PER UNIT(1) OFFERING PRICE(1)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Ordinary shares, par value
L0.01 per share........... 20,700,000 $26.35 $545,445,000
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- ----------------------------------------------------------------------------------------------------------

<CAPTION>
- ---------------------------- ------------------------
- ---------------------------- ------------------------

TITLE OF EACH CLASS OF AMOUNT OF
SECURITIES TO BE REGISTERED REGISTRATION FEE
- ---------------------------- ------------------------
<S> <C>
Ordinary shares, par value
L0.01 per share........... $151,634
- -------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>

(1) Estimated solely for the purpose of computing the registration fee pursuant
to Rule 457(c) under the Securities Act of 1933, as amended, based upon the
average of the high and low prices of shares as reported on the New York
Stock Exchange on September 1, 1999.
------------------------
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2

The information in this preliminary prospectus is not complete and may be
changed. These securities may not be sold until the registration statement filed
with the Securities and Exchange Commission is effective. This preliminary
prospectus is not an offer to sell nor does it seek an offer to buy these
securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion. Dated September 7, 1999.

18,000,000 Shares

AMDOCS LIMITED

Ordinary Shares
----------------------
All of the ordinary shares in the offering are being sold by the selling
shareholder identified in this prospectus. Amdocs will not receive any of the
proceeds from the sale of the ordinary shares by the selling shareholder.

The ordinary shares are listed on the New York Stock Exchange under the
symbol "DOX." The last reported sale price of the ordinary shares on September
3, 1999 was $27.50 per share.

See "Risk Factors" on page 8 to read about factors you should consider
before buying the ordinary shares.

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

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

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

<TABLE>
<CAPTION>
Per Share Total
--------- -----
<S> <C> <C>
Initial price to public..................................... $ $

Underwriting discount....................................... $ $

Proceeds, before expenses, to the selling shareholder....... $ $
</TABLE>

To the extent that the underwriters sell more than 18,000,000 ordinary
shares, the underwriters have the option to purchase up to an additional
2,700,000 shares from the selling shareholder at the initial price to public
less the underwriting discount.

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

The underwriters expect to deliver the shares against payment in New York,
New York on , 1999.

GOLDMAN, SACHS & CO.
BANC OF AMERICA SECURITIES LLC
DEUTSCHE BANC ALEX. BROWN
LEHMAN BROTHERS
PRUDENTIAL SECURITIES
----------------------
Prospectus dated , 1999.
<PAGE> 3

The inside front cover pages contain the following:

* Amdocs Logo with text and pictures of telecommunications users
superimposed upon a globe of the Earth. Text: Business Support Systems
Solutions for the Telecommunications Industry.

* Amdocs Logo with text and a graphical representation of the different
components that comprise Amdocs' customer care and billing platform.
Text: Customer Care and Billing Platform. Comprehensive Customer Care and
Billing Platform supporting wireline, wireless and multi-service
convergence telecom carriers.
<PAGE> 4

ENFORCEABILITY OF CIVIL LIABILITIES

We are incorporated under the laws of the Island of Guernsey ("Guernsey").
Several 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 offering and sale of securities in connection with this
prospectus.

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:

- adequate service of process has been effected and the defendant has had a
reasonable opportunity to be heard;

- such judgments or the enforcement thereof are not contrary to the law,
public policy, security or sovereignty of Guernsey;

- 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

- 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.

3
<PAGE> 5

PROSPECTUS SUMMARY

You should read the following summary together with the more detailed
information regarding our company and the ordinary shares being sold in this
offering and our financial statements and notes to those financial statements
appearing elsewhere in this prospectus. Unless otherwise indicated, all
information in this prospectus assumes the underwriters' option to purchase
additional shares in the offering will not be exercised. See "Description of
Share Capital" and "Underwriting". References in this prospectus to "Amdocs,"
"we," "our," "us" and the "Company" refer to Amdocs Limited and its consolidated
subsidiaries and their respective predecessors. References to "dollars" or $ are
to United States dollars.

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 exclude the effect of the ordinary
shares being offered by this prospectus and all references to ordinary voting
and nonvoting share ownership, as expressed in percentages, are as of August 24,
1999.

AMDOCS

We are a leading provider of product-driven information system solutions to
major telecommunications companies in North America, Europe and around the
world. Our Business Support Systems consist of families of products designed to
meet the mission-critical needs of specific market sectors. We provide
integrated, comprehensive customer care and billing systems for wireline and
wireless network operators and service providers. We also provide customer care
and billing systems to companies that offer multiple service packages, commonly
referred to as convergent services, such as local, long distance, international,
data, Internet, Voice Over Internet Protocol, cellular, personal communications
services and paging. In addition, we provide a full-range of directory sales and
publishing systems to publishers of both traditional printed yellow page and
white page directories and Internet directories.

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, major foreign network operators and service
providers such as Deutsche Telekom (Germany), Vodafone Group (United Kingdom),
Mannesmann (Germany) and Telstra (Australia) and emerging market leaders.

We believe that our total solutions orientation, product functionality and
quality personnel permit us to offer effective solutions to our customers that
are both highly innovative and reliable. Our software products are based on an
advanced multi-tier client-server architecture that provides the flexibility and
scalability needed by major companies in the highly competitive and rapidly
growing telecommunications industry. We have developed an extensive library of
Business Support System software products, providing comprehensive support for
the various types of telecommunications operations. Core elements include
customer care, order management, call rating, invoice calculation, bill
formatting, collections, fraud management and directory publishing. Our products
have also been configured to support the growing trend for communications
companies to provide convergent wireline and wireless services. We also offer
our customers a range of support services to provide a complete systems
solution. These services include software customization to address each
customer's specific requirements, as well as implementation support, system
integration, maintenance, ongoing support and outsourcing services.

4
<PAGE> 6

The telecommunications industry is undergoing rapid and fundamental changes
due to the increased demand for telecommunications services, deregulation,
privatization and technological advancements. These changes are creating
opportunities for new entrants to provide both traditional and new types of
services, including Internet, Voice over Internet Protocol telephony, Internet
directories, data and convergent services. In this environment,
telecommunications service providers increasingly need to compete for customers
by providing service and product offerings that are differentiated by factors
such as service quality, advanced features, rapid implementation of new
services, technological innovation and price.

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. In addition, many new and existing service providers 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. All of these
factors create significant opportunities for us to provide information system
solutions.

We derive our revenue principally from:

- the sale of our Business Support System products and related services,
including license fees and customization and implementation services, and

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

Customer care and billing systems and related services accounted for $325.4
million or 73.3% of our revenue for the nine months ended June 30, 1999 and
$251.8 million or 62.4% of our revenue for the year ended September 30, 1998.
Directory sales and publishing systems and related services and other activities
accounted for $118.8 million or 26.7% of our revenue for the nine months ended
June 30, 1999 and $151.9 million or 37.6% of our revenue for the year ended
September 30, 1998.

As of July 31, 1999, we had approximately 4,900 full-time equivalent
employees, of which approximately 4,300 were software and information technology
specialists engaged in research, development, maintenance and support
activities. Our Israeli subsidiary employs over 2,900 software and information
technology specialists and operates our largest development facility. In the
United States, our main sales and development center is located in St. Louis,
Missouri. The executive offices of our principal subsidiary in the United States
are located at 1390 Timberlake Manor Parkway, Chesterfield, Missouri 63017, and
the telephone number at that location is (314) 212-8328.

On September 3, 1999, we signed an agreement to acquire International
Telecommunication Data Systems, Inc., or ITDS, in a stock-for-stock merger
transaction. ITDS is a leading provider of billing and customer care service
bureau solutions to wireless telecommunication service providers. ITDS' revenue
and net loss for its fiscal year ended December 31, 1998 were $115.5 million and
$3.9 million, respectively. For the six months ended June 30, 1999, ITDS had
revenue of $68.6 million and net income of $8.7 million.

5
<PAGE> 7

THE OFFERING

Shares offered by the
selling shareholder........ 18,000,000 shares

Shares to be outstanding
after the offering......... 198,800,024(1)

Use of proceeds............ We will not receive any of the proceeds from the
sale of the shares.

NYSE symbol................ DOX
- ---------------
(1) Based on ordinary shares outstanding as of September 3, 1999. Does not
include (i) approximately 6,111,000 ordinary shares reserved for issuance
upon the exercise of stock options that have been granted through July 31,
1999 under our stock option plan and (ii) approximately 489,000 ordinary
shares to be reserved for future issuance of stock options under our stock
option plan.

6
<PAGE> 8

SUMMARY CONSOLIDATED FINANCIAL INFORMATION

Our consolidated financial statements are prepared in accordance with
generally accepted accounting principles in the United States ("U.S. GAAP") and
presented in dollars. The summary consolidated financial information set forth
below has been derived from the combined or consolidated financial statements of
Amdocs and its subsidiaries for the 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 summary consolidated financial information as of
and for the nine months ended June 30, 1999 and 1998 is derived from our
unaudited 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 nine months ended June 30, 1999 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 Results of
Operations and Financial Condition" included elsewhere in this prospectus.

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
JUNE 30, YEAR ENDED SEPTEMBER 30,
------------------- -------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue............................... $444,139 $287,063 $403,767 $290,102 $211,720 $167,312 $121,310
Operating income...................... 103,568 58,791 84,895 26,969 35,490 15,377 22,047
Net income(1)......................... 68,704 18,509 30,107 5,876 24,508 11,224 16,068
Basic earnings per share.............. 0.35 0.13 0.19 0.05 0.23 0.11 0.17
Diluted earnings per share............ 0.34 0.13 0.19 0.05 0.22 0.11 0.17
Dividends declared per share(2)....... -- 3.76 3.76 0.18 0.35 0.17 0.15
</TABLE>

<TABLE>
<CAPTION>
AS OF JUNE 30, AS OF SEPTEMBER 30,
---------------------- -------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets.......................... $386,782 $237,923 $239,966 $220,582 $104,531 $101,483 $ 77,106
Long-term obligations (net of current
portion)............................ 12,649 101,847 9,215 7,370 1,663 -- --
Shareholders' equity
(deficit)(2)(3)..................... 96,272 (33,284) (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 a contribution to a
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 Communications Inc.

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

(3) We completed an initial public offering of 18,000 ordinary shares in June
1998 and a public offering of an additional 2,000 ordinary shares in June
1999. The net proceeds from the offerings to us were $234,190 and $41,400,
respectively.

7
<PAGE> 9

RISK FACTORS

Investing in our ordinary shares involves significant risks. You should
carefully consider the following risks before deciding to invest in our ordinary
shares. In preparing this document, we 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

FUNDAMENTAL CHANGES IN THE TELECOMMUNICATIONS MARKET COULD REDUCE DEMAND
FOR OUR SYSTEMS

Future developments in the telecommunications industry, such as continued
industry consolidation, the formation of alliances among network operators and
service providers and changes in the regulatory environment, could materially
affect our existing or potential customers. This could reduce the demand for our
products and services. As a result, we may be unable to effectively market and
sell our information systems to potential customers in the telecommunications
industry.

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 between
directory publishers and other media channels, 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.

IF WE CANNOT COMPETE SUCCESSFULLY WITH EXISTING OR NEW COMPETITORS OUR
BUSINESS COULD BE MATERIALLY ADVERSELY AFFECTED

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
independent providers of information systems and services and with in-house
software departments of telecommunications companies. Our competitors include
firms that provide comprehensive information systems, software vendors that sell
products for particular aspects of a total information system, software vendors
that specialize in systems for particular telecommunications services such as
Internet services, systems integrators, service bureaus and companies that offer
software systems in combination with the sale of network equipment. 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;

- the responsiveness of our competitors to customer needs; and

- the ability of our competitors to hire, retain and motivate key
personnel.

8
<PAGE> 10

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 do we. 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, and may be able to devote greater resources to the promotion and
sale of their products.

WE MUST CONTINUALLY ENHANCE OUR PRODUCTS 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 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 to anticipate or respond adequately to such demands,
due to resource, technological or other constraints, our business and results of
operations could be materially adversely affected.

On September 3, 1999, we signed an agreement to acquire International
Telecommunication Data Systems, Inc., or ITDS, in a stock-for-stock merger
transaction. ITDS is a leading provider of billing and customer care service
bureau solutions to wireless telecommunications service providers. We also may
acquire other companies where we believe we can acquire new products or services
or otherwise enhance our market position or strategic strengths. We cannot
assure you that suitable acquisition candidates can be found or that
acquisitions can be consummated on favorable terms or that the ITDS acquisition,
if completed, will enhance our products or strengthen our competitive position.

WE DEPEND ON SBC COMMUNICATIONS INC. FOR A SIGNIFICANT PORTION OF OUR
REVENUES

Our single largest group of customers are SBC Communications Inc., or SBC,
and its operating subsidiaries. SBC International Inc., or SBCI, a wholly owned
subsidiary of SBC, is also one of our significant shareholders. It currently
holds approximately 19.5% 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 15.7% of our total revenue in the
nine months ended June 30, 1999 and 20.8%, 34.5% and 38.0% of revenue in fiscal
1998, 1997 and 1996, respectively. The absolute amount of revenue attributable
to SBC and such subsidiaries amounted to $69.6 million in the nine months ended
June 30, 1999 and $84.4 million, $99.9 million and $80.5 million in fiscal 1998,
1997 and 1996, respectively.

OUR BUSINESS IS HIGHLY DEPENDENT ON A LIMITED NUMBER OF SIGNIFICANT
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 27.6% of revenue in
the nine months ended June 30, 1999 and 27.1%, 33.2% and 42.7% of revenue in
fiscal 1998, 1997 and 1996, respectively.

9
<PAGE> 11

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 FUTURE SUCCESS DEPENDS ON OUR ABILITY TO DEVELOP LONG-TERM
RELATIONSHIPS WITH OUR CUSTOMERS

We believe that our future success depends to a significant extent on our
ability to develop long-term 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 new
customer relationships and our new customers may be unsuccessful. Our failure to
maintain 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.

THE SKILLED 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 telecommunications engineers. These types of qualified
personnel are in great demand and are likely to remain a limited resource for
the foreseeable future. We currently employ approximately 4,300 software and
information technology specialists, of which over 2,900 are located in Israel.
We intensively recruit technical personnel for our principal development centers
in Israel, the United States and Cyprus. Our ability to expand our business is
highly dependent upon our success in recruiting such personnel and our ability
to manage and coordinate our worldwide development efforts. 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 these employees could have a material adverse effect on our business.

OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE

We have experienced fluctuations in our quarterly operating results and
anticipate that such fluctuations may continue and could intensify. Our
quarterly 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.

10
<PAGE> 12

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 the time requirements and budgetary
constraints of our customers. Although we recognize revenue as projects
progress, progress may vary significantly from project to project, and 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 may reduce our revenue in a particular period without a
corresponding reduction in our costs, which 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,

- 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 these 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

11
<PAGE> 13

Europe, the Asia-Pacific region, 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. 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

12
<PAGE> 14

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 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 meet certain conditions. If we fail to meet these
conditions we could be required to refund tax benefits already received.
Additionally, some of these programs and the related tax benefits are available
to us for a limited number of years, and these benefits expire from time to
time.

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

- some programs may be discontinued,

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

- these 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 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 ISSUES" MAY DISRUPT OUR OPERATIONS

The term "year 2000 issues" 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
13
<PAGE> 15

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 "2000s" from dates in
the "1900s". 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 might not be year 2000 compliant. In addition,
some 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 $1.0 million at June 30, 1999, 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 Results of Operation and Financial Condition -- 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, OR 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 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 $1.6 million at
June 30, 1999, representing the estimated costs 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 FACILITIES IN ISRAEL AND CYPRUS MAY BE ADVERSELY AFFECTED
BY POLITICAL AND ECONOMIC CONDITIONS IN THOSE COUNTRIES

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,
14
<PAGE> 16

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.

In addition, our development facility in Cyprus may be adversely affected
by political conditions in that country. As a result of intercommunal strife
between the Greek and Turkish communities, Turkish troops invaded Cyprus in 1974
and continue to occupy approximately 40% of the island. Efforts to resolve the
problem have not yet resulted in an agreeable solution. Recently, tensions
between the parties involved have increased significantly over certain military
defense issues. Any major hostilities between Cyprus and Turkey may have a
material adverse effect on our development facility in Cyprus.

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, some shareholders may be able to exercise control over matters requiring
shareholder approval, including the election of directors and approval of
significant corporate transactions. This control may have the effect of delaying
or preventing a change in control of Amdocs.

After completion of the offering, our ordinary voting shares will be owned
as follows:

- 34.0% by Welsh, Carson, Anderson & Stowe, or WCAS, a private investment
firm, and its affiliates,

- 8.3% by SBCI, and

- 10.4% by Amdocs International Limited, or AIL, a private company
beneficially owned by Morris S. Kahn.

SBCI also owns ordinary nonvoting shares, which together with its ordinary
voting shares represent 19.5% of the ordinary shares outstanding. In addition,
WCAS and several entities in which some 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 and the sale of the ordinary shares in this
offering, the company beneficially owned by Morris S. Kahn and AIL together will
have the right to vote 28.3% of our ordinary voting shares, WCAS and its
affiliates will have the right to vote 20.6% of our ordinary voting shares and
SBCI will have the right to vote 8.3% of our ordinary voting shares. Following
the offering, it is intended that the proxies granted by WCAS to AIL, as well as
the proxies granted by several entities in which some members of our management
have a beneficial interest to AIL, will be transferred from AIL to SBCI.

Affiliates of WCAS and certain other investors, or the WCAS Investors, have
granted a call option on some of the ordinary shares that they hold to SBCI, AIL
and others who were shareholders of Amdocs prior to our initial public offering
in June 1998. The call option may be exercised if we achieve specified revenue
and cash flow targets in fiscal 1998 and 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
the WCAS Investors. If the targets are met in full, and after giving effect to
the sale of the ordinary shares in this offering, the WCAS Investors will hold
25.3% of our ordinary voting shares and AIL will hold 13.3% of our ordinary
voting shares.

15
<PAGE> 17

THE MARKET PRICE OF OUR ORDINARY SHARES HAS AND MAY CONTINUE TO FLUCTUATE
WIDELY

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 1998
through September 3, 1999 the closing price of our ordinary shares ranged from a
high of $29.69 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. 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 shareholders 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.

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

Sales of substantial amounts of ordinary shares in the public market, or
the perception that such sales could occur, could adversely affect prevailing
market prices for the ordinary shares. We currently have 198,800,024 ordinary
shares issued and outstanding, all of which are either freely tradeable on the
NYSE or currently eligible for sale pursuant to Rule 144, under the Securities
Act of 1933, or 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 6,600,000 ordinary shares reserved for issuance upon the exercise of
options that have been or may be granted under our stock option plans. The right
to exercise options outstanding under these 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 bank debt incurred by our
subsidiaries effectively prevent us from paying cash dividends.

16
<PAGE> 18

THE RIGHTS OF SHAREHOLDERS OF GUERNSEY CORPORATIONS DIFFER IN SOME RESPECTS
FROM THOSE OF
SHAREHOLDERS OF UNITED STATES CORPORATIONS

We are incorporated under the laws of Guernsey. The rights of holders of
ordinary shares are governed by Guernsey law, including the Companies Act of
Guernsey, and by our Articles of Association. These rights differ in some
respects from the rights of shareholders in corporations incorporated in the
United States. See "Description of Share Capital" and "Comparison of United
States and Guernsey Corporate Law" for a discussion of the material differences.

17
<PAGE> 19

USE OF PROCEEDS

We will not receive any of the proceeds from the sale of the ordinary
shares by the selling shareholder.

MARKET PRICES AND DIVIDEND POLICY

Our ordinary shares have been quoted on the NYSE since June 19, 1998 under
the symbol "DOX". Through September 3, 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....................................... $25.81 $15.06 --
Third Quarter 1999........................................ $28.88 $21.00 --
Fourth Quarter 1999 (through September 3, 1999)........... $29.69 $22.69 --
</TABLE>

As of September 3, 1999, the last reported closing price of the ordinary
shares on the New York Stock Exchange was $27.50. As of September 2, 1999 our
ordinary shares were held by approximately 135 recordholders. Based on a review
of the addresses of such holders, 102 recordholders, holding approximately 75.5%
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 1998, 1997 and
1996 of $478.7 million, $19.3 million and $37.9 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.

18
<PAGE> 20

SELECTED CONSOLIDATED FINANCIAL INFORMATION

Our consolidated financial statements are prepared in accordance with U.S.
GAAP and presented in 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 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 consolidated financial information as of
and for the nine months ended June 30, 1999 and 1998 is derived from our
unaudited 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 nine months ended June 30, 1999 are not necessarily
indicative of results to be expected for any future period.

<TABLE>
<CAPTION>
AS OF JUNE 30, AS OF SEPTEMBER 30,
------------------- -------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets.......................... $386,782 $237,923 $239,966 $220,582 $104,531 $101,483 $ 77,106
Long-term obligations (net of current
portion)............................ 12,649 101,847 9,215 7,370 1,663 -- --
Shareholders' equity
(deficit)(2)(3)..................... 96,272 (33,284) (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 a 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 Communications Inc.

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

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<PAGE> 21

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

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 nine months ended June 30, 1999
and 1998 and fiscal 1998, 1997 and 1996,

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

- the sources of our revenue,

- how all of this affects our overall financial condition,

- what our expenditures were in the nine months ended June 30, 1999 and
1998 and fiscal 1998, 1997 and 1996, and

- the sources of our cash 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 nine months to nine months and annual changes in the
specific line items in the consolidated statements of operations. 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.

OVERVIEW

We are a leading provider of customized software products and services to
the telecommunications industry, primarily Customer Care and Billing Systems, or
CC&B Systems, for wireline, wireless and multiple-service or convergent network
operators and service providers. We also supply Directory Sales and Publishing
Systems, or Directory Systems, to publishers of both traditional printed yellow
page and white page directories and Internet directories. Our products are
mission-critical for a customer's operations. Due to the complexity of the
process and the expertise required for system support, we also provide extensive
customization, implementation, integration, ongoing support, system enhancement
and maintenance, including an outsourcing offering.

We derive our revenue principally from:

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

- recurring revenue from ongoing maintenance, support, outsourcing 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 from ongoing support and outsourcing services is
recognized as work is performed. Revenue from third party hardware and software
sales is recognized upon delivery. Maintenance revenue is recognized ratably
over the
20
<PAGE> 22

term of the maintenance agreement. As a result of our percentage of completion
accounting policy, our quarterly operating results may be significantly affected
by the size and timing 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 $325.4
million in the nine months ended June 30, 1999, representing 73.3% of our
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 over time.

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 $118.8 million in the nine months ended June 30, 1999, accounting
for 26.7%, of our revenue for such period.

We believe that the demand for Directory Systems will be favorably impacted
by a broader introduction of electronic directories. However, we anticipate that
the relative contribution of license and service fees for Directory Systems to
total revenue will decrease over time. We have also recently introduced a number
of new products for 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 involve 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.

On June 7, 1999 we sold 2 million ordinary shares in a public offering at a
price of $22.4375 per share. The total net proceeds to us, after deduction of
issuance costs, amounted to $41.4 million. At the same time, certain of our
shareholders sold 18,426,000 ordinary shares, including an exercise of an
over-allotment of 426,000 ordinary shares.

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<PAGE> 23

RESULTS OF OPERATIONS

The following table sets forth, for the nine months ended June 30, 1999 and
1998 and for the years ended September 30, 1998, 1997 and 1996, certain items in
our consolidated statements of operations reflected as a percentage of total
revenue:

<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED
JUNE 30, SEPTEMBER 30,
-------------- -----------------------
1999 1998 1998 1997 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenue:
License....................................... 11.7% 10.4% 10.6% 9.0% 7.7%
Service....................................... 88.3 89.6 89.4 91.0 92.3
----- ----- ----- ----- -----
100.0 100.0 100.0 100.0 100.0
Operating expenses:
Cost of license............................... 0.9 3.0 2.7 1.3 1.9
Cost of service............................... 57.4 57.6 57.3 59.9 61.0
Research and development...................... 6.4 6.3 6.3 6.0 6.9
Selling, general and administrative........... 12.0 12.6 12.7 14.0 13.4
Nonrecurring charges.......................... -- -- -- 9.5 --
----- ----- ----- ----- -----
76.7 79.5 79.0 90.7 83.2
----- ----- ----- ----- -----
Operating income................................ 23.3 20.5 21.0 9.3 16.8
Other expense, net.............................. 1.2 7.7 6.0 1.1 0.2
----- ----- ----- ----- -----
Income before income taxes...................... 22.1 12.8 15.0 8.2 16.6
Income taxes.................................... 6.6 6.4 7.5 6.2 5.0
Cumulative effect of a change in accounting
principle, net................................ -- -- * -- --
----- ----- ----- ----- -----
Net income...................................... 15.5% 6.4% 7.5% 2.0% 11.6%
===== ===== ===== ===== =====
</TABLE>

- ---------------
* Less than 0.1%

NINE MONTHS ENDED JUNE 30, 1999 AND 1998

REVENUE. Revenue for the nine months ended June 30, 1999 was $444.1
million, an increase of $157.1 million, or 54.7%, compared to the nine months
ended June 30, 1998, primarily due to the continuance of the growth in the
demand for our CC&B Systems solutions. License revenue increased from $29.7
million in the nine months ended June 30, 1998 to $52.0 million in the nine
months ended June 30, 1999, an increase of 74.8%. Service revenue increased by
$134.8 million, or 52.4%, in the nine months ended June 30, 1999, from $257.3
million in the nine months ended June 30, 1998 to $392.2 million in the nine
months ended June 30, 1999. Total CC&B Systems revenue for the nine months ended
June 30, 1999 was $325.4 million, an increase of $153.4 million, or 89.2%,
compared to the nine months ended June 30, 1998. Revenue from Directory Systems
was $118.8 million for the nine months ended June 30, 1999, an increase of $3.7
million, or 3.2%, from the nine months ended June 30, 1998.

In the nine months ended June 30, 1999 and 1998, revenue from customers in
North America, Europe and the rest of the world accounted for 39.5%, 39.1% and
21.4% compared to 54.3%, 23.4% and 22.3%, respectively.

COST OF LICENSE. Cost of license for the nine months ended June 30, 1999
was $4.1 million, a decrease of $4.5 million, or 52.4%, from cost of license for
the nine months ended June 30, 1998. Cost of license includes amortization of
purchased computer software and intellectual property rights.

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<PAGE> 24

COST OF SERVICE. Cost of service for the nine months ended June 30, 1999
was $254.7 million, an increase of $89.4 million, or 54.1%, compared to the cost
of service of $165.3 million for the nine months ended June 30, 1998. As a
percentage of revenue, cost of service remained stable at 57.4% in the nine
months ended June 30, 1999 compared to 57.6% in the nine months ended June 30,
1998. The cost of service is predominantly related to salary and employee
related expenses. The absolute increase in cost of service is consistent with
the increase in revenue for the nine months ended June 30, 1999, and reflects
increased employment levels required to support the continuing 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 nine months
ended June 30, 1999, research and development expense was $28.5 million, or 6.4%
of revenue, compared with $18.1 million, or 6.3% of revenue, in the nine months
ended June 30, 1998. The increase in research and development expense represents
ongoing expenditures primarily for CC&B Systems and also for Directory Systems.

SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expense is primarily comprised of compensation expense and increased by 46.7% to
$53.3 million, or 12.0% of revenue, in the nine months ended June 30, 1999 from
$36.4 million, or 12.6% of revenue, in the corresponding period of fiscal 1998.

OPERATING INCOME. Operating income in the nine months ended June 30, 1999
was $103.6 million, as compared with $58.8 million in the nine months ended June
30, 1998, an increase of 76.2%. Operating income was 23.3% of revenue for the
nine months ended June 30, 1999 as compared to 20.5% for the nine months ended
June 30, 1998, primarily due to an increase in license revenue and a decrease in
cost of license.

OTHER EXPENSE, NET. Other expense, net consists primarily of interest
expense. Interest expense in 1998 related primarily to senior bank debt and
subordinated debt, which was substantially repaid from the proceeds of our
initial public offering completed in June 1998. In the nine months ended June
30, 1999, other expense, net was $5.4 million, a decrease of $16.4 million from
the nine months ended June 30, 1998. The decrease is primarily attributed to the
reduction in bank debt during 1999.

INCOME TAXES. Income taxes in the nine months ended June 30, 1999 were
$29.4 million on income before taxes of $98.1 million. In the nine months ended
June 30, 1998 income taxes were $18.5 million on income before taxes of $37.0
million. See discussion below "-- Effective Tax Rate."

NET INCOME. Net income was $68.7 million in the nine months ended June 30,
1999 compared to $18.5 million for the nine months ended June 30, 1998. The
increase was primarily the result of an increase in operating income and a
decrease in interest expense and income taxes which also resulted in an increase
in basic earnings per share from $0.13 in the nine months ended June 30, 1998 to
$0.35 in the nine months ended June 30, 1999. Diluted earnings per share
increased from $0.13 in the nine months ended June 30, 1998 to $0.34 in the nine
months ended June 30, 1999.

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 1997 to $42.9 million in fiscal
1998, an increase of 65.0%, and service revenue increased 36.6%, or $96.8
million, in fiscal 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 1997. The growth in

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<PAGE> 25

revenue is attributable to sales to new customers as well as sales of additional
products and services to existing customers.

In fiscal 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 fiscal 1998 was $10.7 million, an
increase of $7.0 million, or 189.2%, from cost of license for fiscal 1997. Cost
of license in fiscal 1998 includes amortization of purchased computer software
and intellectual property rights, and in fiscal 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 1998 was $231.4 million, an
increase of $57.7 million, or 33.2%, from cost of service of $173.7 million for
fiscal 1997. As a percentage of revenue, cost of service decreased to 57.3% in
fiscal 1998 from 59.9% in fiscal 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
fiscal 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 fiscal 1997. The
increase in research and development expense in fiscal 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 fiscal 1998 from
$40.8 million in the prior fiscal year. However, selling, general and
administrative expense as a percentage of revenue decreased from 14.0% of
revenue in fiscal 1997 to 12.7% of revenue in fiscal 1998.

OPERATING INCOME. Operating income in fiscal 1998 was $84.9 million, as
compared with $54.5 million in fiscal 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 1998 compared to 18.8% in
fiscal 1997, excluding the effect of the nonrecurring charges in fiscal 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 fiscal
1998, such interest expense was $24.1 million, an increase of $20.8 million from
fiscal 1997.

INCOME TAXES. Income taxes in fiscal 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 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 fiscal 1998 compared with
net income of $5.9 million in fiscal 1997. The increase was primarily the result
of an increase in operating income. In addition, in fiscal 1998 we incurred
$24.1 million in interest expense related to outstanding debt; while in fiscal
1997 we had a nonrecurring charge of $27.6 million.

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<PAGE> 26

YEARS ENDED SEPTEMBER 30, 1997 AND 1996

REVENUE. Revenue for fiscal 1997 was $290.1 million, an increase of $78.4
million, or 37.0%, from fiscal 1996. License revenue increased from $16.3
million in fiscal 1996 to $26.0 million in fiscal 1997, an increase of 59.5%,
and service revenue increased 35.1% or $68.7 million in fiscal 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 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 1997, an
increase of $14.5 million, or 13.3%, from fiscal 1996.

In fiscal 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 1996.

COST OF LICENSE. Cost of license for fiscal 1997 was $3.7 million, a
decrease of $0.3 million, or 7.5%, from fiscal 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 fiscal 1997 was $173.7 million, an
increase of $44.5 million, or 34.4%, from fiscal 1996 cost of service of $129.2
million. As a percentage of revenue, cost of service decreased to 59.9% in
fiscal 1997 from 61.0% in fiscal 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 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 1996. The absolute increase in research and development
expense in fiscal 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 14.0% of revenue, in fiscal 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 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 a trust for the benefit of certain officers and employees. See
"Management -- Employee Trust Agreement".

OPERATING INCOME. As a result of the $27.6 million of nonrecurring charges
recognized in fiscal 1997, operating income in fiscal 1997 was $27.0 million, as
compared with $35.5 million in fiscal 1996. As a percentage of revenue,
operating income was 9.3% in fiscal 1997 as compared to 16.8% in fiscal 1996.
Excluding the effect of the nonrecurring charges, operating income would have
been $54.5 million in fiscal 1997, or 18.8% of revenue, an increase of $19.0
million, or 53.4%, between fiscal 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 1996 and an expense of $3.3 million in fiscal 1997. The increase in
fiscal 1997 was attributable to the

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<PAGE> 27

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 fiscal 1997 for interest on the tax assessments.

INCOME TAXES. Income taxes in fiscal 1997 were $17.8 million on income
before taxes of $23.7 million. In fiscal 1996, income taxes were $10.5 million
on income before taxes of $35.0 million. In fiscal 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 1997 compared with
net income of $24.5 million in fiscal 1996, primarily as a result of the $27.6
million for the nonrecurring charges incurred in fiscal 1997.

LIQUIDITY AND CAPITAL RESOURCES

FINANCING TRANSACTIONS

We have primarily financed our operations through cash generated from
operations, borrowings from banks and other lenders and two public offerings of
our ordinary shares. Cash and cash equivalents totaled $71.1 million as of June
30, 1999 compared to $25.4 million as of September 30, 1998. Net cash provided
by operating activities amounted to $102.8 million and $51.4 million for the
nine months ended June 30, 1999 and 1998, respectively. The increase in cash and
cash equivalents at June 30, 1999 is attributed primarily to the proceeds of an
offering of our ordinary shares completed in June 1999. A significant portion of
our cash flow from operations during the nine months ended June 30, 1999 was
used to repay bank debt, which totalled $26.6 million as of June 30 1999.

We currently intend to retain our earnings to support the further expansion
of our business and to repay our outstanding loans. The terms of our bank
agreement effectively restrict our ability to pay cash dividends.

As of June 30, 1999, we had short-term lines of credit totaling $152.0
million from various banks or bank groups, of which $26.6 million was
outstanding. As of that date, we had also utilized approximately $13.1 million
of our revolving credit facility to support outstanding letters of credit. As of
June 30, 1999, we had positive working capital of $15.3 million as compared to
negative working capital of $84.3 million as of September 30, 1998. The increase
in working capital is attributed to cash generated from operating activities and
to the proceeds of our offering in June 1999. We believe that current cash
balances, cash generated from operations and our current lines of credit will
provide sufficient resources to meet our needs in the near future.

As of June 30, 1999, we had long-term obligations outstanding of $17.1
million in connection with leasing arrangements.

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

NET DEFERRED TAX ASSETS

Based on our assessment, it is more likely than not that all the net
deferred tax assets at June 30, 1999 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.

YEAR 2000 ISSUES

OUR STATE OF READINESS. We have identified the information technology, or
IT, and non-IT systems, software and products, which could be affected by year
2000 issues, and have
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<PAGE> 28

assessed the efforts required to remediate or replace them. We have also
identified versions of our products that will not be made compliant and are
assisting customers in upgrading or migrating to year 2000 compliant versions.
By the end of 1999, it is our intention that all of the major or key systems,
software and products will be remediated or replaced.

We began evaluating year 2000 compliance issues in mid-1996. Since then the
following functions have been performed:

- a thorough examination and study of year 2000 compliance status;

- adoption of a work plan;

- analysis of solution alternatives; and

- determination of our technical and business year 2000 policies.

In recent years, new systems have been developed as year 2000 compliant and
older generations of applications are being made year 2000 compliant in
cooperation with our customers (using Amdocs year 2000 methodology and tool
kit). None of these systems need mass data conversion, which is usually the most
sensitive portion of the year 2000 migration. 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. For
many customers we offer to conduct the verification process, since the ultimate
verification for year 2000 compliance should be executed in their own working
environment.

We anticipate completing the majority of the testing, implementation of
changes and necessary refinements by the fourth quarter of calendar year 1999
and to continue extensive testing through the end of calendar year 1999. We
expect 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
not aware of any year 2000 issues with our customers that cannot be remedied.

We have contacted all of our customers, and several of our vendors and
other third parties with which we have relationships to identify potential year
2000 issues. These communications are also used to clarify which year 2000
issues are our responsibility and which are the responsibility of the third
party. We do not anticipate that our third party year 2000 issues 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 IT systems (including IT-based office
facilities such as data and voice communications, building management and
security systems, human resources and recruitment systems, purchasing,
invoicing, finance and budget systems, general ledger and other administrative
systems), both third party 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 such systems;

- creating action plans to address known risks;

- executing and monitoring action plans; and

- contingency planning.
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<PAGE> 29

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, there can be no assurance that we will not
experience serious unanticipated negative consequences and/or material costs
caused by undetected errors or defects in the 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 fiscal 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. The remainder of the costs that are incremental
and directly related to year 2000 issues are not expected to be material to our
financial position or results of operations.

As of June 30, 1999, we have accrued approximately $1.0 million
representing the estimated remaining costs to modify previously sold customized
software products. We do not anticipate capitalizing any of these costs as they
relate to warranties related to products developed for customers.

OUR CONTINGENCY PLANS. Detailed contingency plans are nearly complete 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. See "Risk Factors" for more information.

EUROPEAN MONETARY UNION CURRENCY

The European Monetary Union currency, or the euro, will be phased in over
the three-year period that commenced on January 1, 1999, when participating
European countries began using the euro currency for non-cash transactions. We
intend to offer software products that are capable of handling the euro currency
and converting from local currencies to the euro. 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. At June 30, 1999, we have accrued
approximately $1.6 million representing estimated remaining costs 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 our customers, as they relate to warranty
agreements. There can be no assurance that such costs will not significantly
exceed such estimate, in which case such costs could have a material effect on
our results of operations and financial condition.

EFFECTIVE TAX RATE

Our overall effective tax rate has historically been approximately 30% due
to the various corporate income tax rates in the countries in which we operate
and the relative magnitude of our business in those countries. Our consolidated
effective tax rate for the nine months ended June 30, 1999 was 30% compared to
50% in the prior period. The consolidated effective tax rate of 50% for 1998 was
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.

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CURRENCY FLUCTUATIONS

Approximately 80% of our revenue is in dollars or linked to the dollar and
therefore the dollar is our functional currency. Approximately 60% of our
operating expenses are paid in dollars or are linked to dollars. Other
significant currencies in which we receive revenue or pay expenses are
Australian dollars, British pounds, Canadian dollars, the euro 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 managing our foreign exchange risk, we enter from time to time into
various foreign exchange contracts. As of June 30, 1999, we had hedged most of
our significant exposures in currencies other than the dollar.

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 our
functional currency, the dollar, will be affected by changes in exchange rates.
See Note 18 to our consolidated financial statements.

The following table summarizes our foreign currency forward exchange
agreements as of September 30, 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. Notional
values and average contract rates are calculated based on forward rates as of
September 30, 1998 dollar translated.

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
---------------------------------------- FV OF
1999 2000 2001 2002 AFTER FORWARDS
---- ---- ---- ---- ----- --------
<S> <C> <C> <C> <C> <C> <C>
Forward contracts to sell foreign
currencies for dollars:
British Pounds
Notional value................. $ 31.00 $ 1.70 -- -- -- $(1.60)
Average contract rate.......... 1.67 1.66 -- -- --
Austrian Schillings
Notional value................. $ 14.80 $ 0.90 -- -- -- $(0.50)
Average contract rate.......... 11.64 11.52 -- -- --
Canadian Dollars
Notional value................. $ 10.00 -- -- -- -- *
Average contract rate.......... 1.50 -- -- -- --
Japanese Yen
Notional value................. $ 3.20 -- -- -- -- *
Average contract rate.......... 133.80 -- -- -- --
Forward contracts to buy foreign
currencies for dollars:
Australian Dollars
Notional value................. $ 15.60 $ 9.10 $4.90 $5.50 $4.30 $(3.10)
Average contract rate.......... 0.60 0.60 0.59 0.59 0.59
Israeli Shekels
Notional value................. $ 80.40 -- -- -- -- $ 0.50
Average contract rate.......... 3.94 -- -- -- --
</TABLE>

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

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<PAGE> 31

INTEREST RATE RISK

Our interest expenses are most sensitive to changes in the London InterBank
Offered Rate, or 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.

As of September 30, 1998, we had approximately $91.6 million outstanding on
our revolving line of credit and short-term credit agreements and $12.2 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 September 30, 1998 would be approximately $1.0 million. This
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. As of June 30, 1999, our outstanding debt under our
lines of credit was reduced from $91.6 million to $26.6 million. See Note 8 to
our consolidated annual financial statements for additional discussion regarding
the Company's short-term financing arrangements.

RECENT DEVELOPMENTS

On September 3, 1999, we entered into an agreement with ITDS pursuant to
which we will acquire all of the outstanding shares of ITDS in a stock-for-stock
merger transaction which will be accounted for under the purchase method of
accounting. Based on the closing price of our ordinary shares on September 3,
1999 of $27.50, the exchange ratio in the agreement provides that we would issue
approximately 6.6 million ordinary shares and 1.2 million options for ordinary
shares in connection with the consummation of the transaction. Closing of the
transaction is subject to the approval of ITDS' shareholders and requires
regulatory approvals, as well as certain other customary closing conditions.

ITDS is a leading provider of billing and customer care service bureau
solutions to providers of wireless telecommunications services. ITDS' revenue
and net loss for its fiscal year ended December 31, 1998 were $115.5 million and
$3.9 million, respectively. For the six months ended June 30, 1999, ITDS had
revenue of $68.6 million and net income of $8.7 million. See "Unaudited Pro
Forma Condensed Combined Financials Statements" and ITDS' detailed consolidated
financial statements included elsewhere in this prospectus.

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

31
<PAGE> 33

BUSINESS

INTRODUCTION

We are a leading provider of product-driven information system solutions to
major telecommunications companies in North America, Europe and the rest of the
world.

Our Business Support Systems, or 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 network operators and service providers offering (local, long distance,
international, data, Internet and Voice Over Internet Protocol, or VOIP,
cellular, personal communications services, or PCS, and paging). We also support
companies that offer multiple service packages, commonly referred to as
convergent services (combinations of local, long distance, international,
mobile, cable television, data 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, system integration, ongoing
support, system enhancement, maintenance and outsourcing 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), Mannesmann (Germany), Telstra (Australia) and
Vodafone Group (United Kingdom) 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, order management, 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.

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 operators began to enter
the long distance market. The Telecommunications Act of 1996 has increased
competition 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

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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, Virtual Private Network (VPN) services,
Digital Subscriber Line (DSL) for fast Internet access and broadband, 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, 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. We
believe that our success derives from a combination of the following factors
that differentiate us from most of our competitors.

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 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

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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),
Vodafone Group (United Kingdom), Mannesmann (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 prepare 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 drawing on field-proven BSS
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<PAGE> 36

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, 18 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
design, multi-tier architecture, object-oriented techniques and data mining, we
are able to provide telecommunications 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
telecommunications 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 our 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 stand alone basis,
interfacing with the customer's existing

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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 needs and
capabilities. The modular approach also preserves the customer's initial
investment 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 local, long distance,
international, cellular, PCS, paging, data, Internet and VOIP and directory
publishing operations. Core elements include customer care, order management,
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 Networks (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,
data 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, data, Internet, VOIP and convergent
operations. We also offer our new generation, or NG, line of "ADS (NG)/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.

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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, on-line assistance in
choosing a price plan, installation scheduling and complaint handling.

- Order Management -- supports the ordering of products and services for
all lines of business. This module assists customer service
representatives in capturing the customer's order, negotiating with the
customer and monitoring service delivery.

- 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.

- Commission Management -- calculates and manages commissions to be paid by
the wireless carrier to its authorized dealers and sales representatives.

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

- Intercarrier Settlement -- calculates, manages and reconciles payments
for intercarrier network access.

DIRECTORY PUBLISHING

The "ADS(NG)/Family of Products," our main offering in the Directory
Systems area, provides comprehensive support for yellow page and white page
directory sales and publishing

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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.

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

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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 also offer outsourcing services to support the operation of the customer's
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 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 approach creates continuity from the initial sales
proposal through project development and beyond, into the ongoing production
phase.

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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)
Mannesmann (Germany)
SEAT (Italy)
Telstra (Australia)
Telus (Canada)
Telecom Eireann (Ireland)
Korean Telecom (South Korea)
Vodafone Group (United Kingdom)
Bezeq (Israel)
BCP (Brazil)
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, 18 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, which accounted for in the aggregate 15.7% of our revenue in the
nine months ended June 30, 1999 and for 20.8%, 34.5% and 38.0% of our revenue in
fiscal 1998, 1997 and 1996, respectively. Our next largest customer is Telstra,
which accounted for 7.8% of our revenue in the nine months ended June 30, 1999
and for 8.2%, 13.0% and 16.0% of our revenue in fiscal 1998, 1997 and 1996,
respectively. Our third largest customer is BellSouth, which accounted for 5.9%
of our revenue in the nine months ended June 30, 1999 and for 15.8%, 4.5% and
1.5% of our revenue in fiscal 1998, 1997 and 1996, respectively.

Revenue derived from our five largest customers, excluding SBC and its
operating subsidiaries, accounted for approximately 27.6% of total revenue for
the nine months ended

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June 30, 1999 and 27.1%, 33.2% and 42.7% of revenue in fiscal 1998, 1997 and
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>
YEAR ENDED
NINE MONTHS SEPTEMBER 30,
ENDED --------------------
JUNE 30, 1999 1998 1997 1996
------------- ---- ---- ----
<S> <C> <C> <C> <C>
North America.......................................... 39.5% 52.2% 63.8% 67.5%
Europe................................................. 39.1% 27.2% 11.3% 14.5%
Rest of the World...................................... 21.4% 20.6% 24.9% 18.0%
</TABLE>

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 (a
subsidiary of Lucent Technologies), 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 we are able to differentiate ourselves from the competition
by, among other things,

- offering customers a total information system from a single vendor,

- providing high quality reliable, scalable products,

- managing effectively the timely implementation of products,

- responding to customer service and support needs through a skilled
professional organization, and

- providing BSS solutions independent of any specific vendor of network
equipment, hardware or software.

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

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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 strategic development projects conducted with SBC and some
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 July 31, 1999, we employed on a full-time basis approximately 4,300
software and information technology specialists, engaged in research,
development, maintenance and support activities, and approximately 620 managers
and administrative professionals. We employ over 2,900 software and information
technology specialists in Israel, with the remaining located in North America,
Europe and the Asia-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.

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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 $28.5 million, $25.6 million, $17.4 million and $14.7 million on
research and development activities in the nine months ended June 30, 1999 and
in fiscal 1998, 1997 and 1996, respectively, or 6.4%, 6.3%, 6.0% and 6.9%,
respectively, of total revenue in those periods. For fiscal 1999, we expect to
spend approximately $40 million on research and development activities.

FACILITIES

We lease space in various facilities in Israel, aggregating approximately
650,000 square feet, pursuant to leases expiring on various dates between
December 1999 and December 2008, and have various options to extend the terms of
such leases. In Israel, we currently pay total yearly rental fees of
approximately $12.4 million which are linked, in most cases, to the U.S. dollar.
Included in these facilities are the following:

- Our Israeli subsidiary rents approximately 297,000 square feet in
Ra'anana, Israel under a ten-year lease (commencing June 1998). 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 $5.6 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 addition, our Israeli subsidiary rents facilities in Ramat-Gan and
Jerusalem. The annual rent for these facilities is approximately $2.9
million and $1.1 million, respectively.

- Approximately 69,000 square feet of the facilities in Ramat-Gan are owned
by related companies which lease these facilities to us.

In December 1998, the Israeli subsidiary entered into a ten-year lease for
an additional 55,000 square feet commencing July 2000. The annual rent is
approximately $1.0 million.

Our subsidiary in the United States rents approximately 95,000 square feet
in Chesterfield, Missouri under a seven-year lease (commencing December 1998).
In June 1999, we relocated our development center and all of our administrative
personnel, at the time principally centered around St. Louis, Missouri, to this
facility. The annual rent for the facility will be approximately $2.5 million.
We also hold a number of other leases in the United States, with an aggregate
annual rent of approximately $870,000.

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<PAGE> 45

We also lease approximately 45,000 square feet for our development facility
in Cyprus at an annual rent of approximately $550,000.

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

LEGAL PROCEEDINGS

We are not involved in any material legal proceedings.

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<PAGE> 46

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 Amdocs Development Limited
(Cyprus). 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 July 31, 1999, are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Bruce K. Anderson(2)(3)................... 59 Chairman of the Board and Chief Executive Officer,
Amdocs Limited
Robert A. Minicucci(2)(3)................. 47 Director and Chief Financial Officer, Amdocs
Limited
Avinoam Naor.............................. 51 Director of Amdocs Limited and Chief Executive
Officer of Amdocs Management Limited
Dov Baharav............................... 49 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............................... 52 Senior Vice President, Amdocs Management Limited
Joshua Ehrlich............................ 50 Senior Vice President, Amdocs Management Limited
Simon Cassif.............................. 57 Senior Vice President, Amdocs (UK) Limited
Melinos Pissourios........................ 31 General Manager, Amdocs Development Limited
Adrian Gardner(1)(2)(3)................... 37 Director
Stephen Hermer............................ 38 Director
James Kahan............................... 51 Director
Paz Littman(2)(3)......................... 43 Director
Revital Naveh(1).......................... 31 Director
Lawrence Perlman(1)....................... 61 Director
Michael J. Price.......................... 42 Director
Urs Suter................................. 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, communications 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., or 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.

45
<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 28 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 Senior Vice President, Strategy and Corporate
Development, 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 CC&B 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
46
<PAGE> 48

software company, with responsibility for business development, overall project
control and coordination of sales support.

Simon Cassif is a Senior Vice President of Amdocs (UK) Limited. He has
principal responsibility for developing 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.

Melinos Pissourios is General Manager of Amdocs Development Limited. Mr.
Pissourios, who joined Amdocs in April 1998, is also the Financial Controller of
Amdocs Development Limited in Cyprus. Prior to joining Amdocs, Mr. Pissourios
was the Group Financial Controller at AEC Holland Group. He also worked for KPMG
Peat Marwick for four years. Mr. Pissourios is a member of the Cyprus Institute
of Certified Public Accountants and he is a registered auditor in Cyprus.

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.

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 worked at Lazard Freres & Co.
L.L.C., starting in 1987, serving first as a Vice

47
<PAGE> 49

President and then as a Managing Director, where he led its technology and
telecommunications group. He is also a director of SpectraSite, a leading tower
management company.

Urs Suter has been a director of Amdocs since May 1999. Mr. Suter has been
the managing partner of the law firm Suter attorneys at law, in Zurich,
Switzerland, since 1995. Prior to that, he was a law partner with Price
Waterhouse. He is also a director of several private companies.

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 nine months ended June 30, 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 non-employee
directors to purchase a total of 21,000 ordinary shares at a price of $14 per
share, vesting over three years.

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<PAGE> 50

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.

During fiscal 1998, we granted options to six executive officers and
directors to purchase a total of 448,000 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 July 31, 1999 we granted options, net of
forfeitures, to purchase approximately 6,070,000 ordinary shares to our officers
and employees, and options to purchase 41,000 ordinary shares to our
non-employee directors and consultants, pursuant to a stock option and incentive
plan adopted in January 1998, or the Amdocs Plan. The weighted average exercise
price of those options is $11.52. 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.

EMPLOYEE TRUST AGREEMENT

In September 1997, we contributed $25.8 million to an irrevocable secular
trust, or the Trust, the beneficiaries of which are primarily software and
information technology specialists who have played an important role in our
success. The Trust will distribute on specified dates within the next five years
cash amounts to those beneficiaries employed by us on those 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> 51

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 (investment partnerships affiliated
with WCAS and some other investors, including certain entities in which some
directors and executive officers of our subsidiaries have a beneficial interest)
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 1998 were satisfied in full. If fully
exercised, the call option would decrease the ownership of the WCAS Investors
from 59,412,656 to 44,214,616 and increase the relative ownership of AIL, SBCI
and the other investors with no change in the aggregate number of ordinary
shares outstanding. If the conditions of the call option agreement are satisfied
in full, AIL and SBCI each have the right to receive 6,154,138 ordinary shares
and the other investors have the right to acquire 2,889,764 ordinary shares.

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

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<PAGE> 52

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. In September 1997, we entered into a series of agreements with
these SBC subsidiaries pursuant to which we purchased certain rights from them
and terminated related future royalty payment obligations for a total
consideration of $40.0 million.

In March 1999, we entered into an agreement with a subsidiary of SBC, under
which SBC has agreed that the level of support and development services that we
will provide to SBC and its subsidiaries over the next three years will be at
least equal to a substantial portion of the services we currently provide to
SBC.

SBC and some of its operating subsidiaries are also significant customers
of ours. During the first nine months of fiscal 1999 and fiscal 1998, 1997 and
1996, SBC and those subsidiaries accounted for approximately 15.7%, 20.8%, 34.5%
and 38.0%, 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, or 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 several 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, or 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 Morris S. Kahn have a significant beneficial interest in GoldenLines.

SBC and Mr. Kahn also are the beneficial owners of a company that leases
office facilities and provides certain miscellaneous support services to us in
Israel.

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<PAGE> 53

PRINCIPAL SHAREHOLDERS AND SELLING SHAREHOLDER

All of the shares that are offered in this offering will be sold by Amdocs
International Limited. In addition, Amdocs International Limited has granted to
the underwriters an option to purchase an aggregate of up to 2,700,000
additional ordinary shares solely to cover over-allotments.

The following table sets forth specified information with respect to the
beneficial ownership (before and after giving effect to the sale of ordinary
shares pursuant to this prospectus) as of September 2, 1999 of (i) any person
known by us to be the beneficial owner of more than 10% of the outstanding
ordinary shares, (ii) all of our directors and executive officers as a group and
(iii) the selling shareholder.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED SHARED BENEFICIALLY OWNED
PRIOR TO THE OFFERING SHARES AFTER THE OFFERING
-------------------------- BEING --------------------------
NAME AND ADDRESS NUMBER(1) PERCENT(2) OFFERED NUMBER(1) PERCENT(2)
- ---------------- ------------ ----------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Welsh, Carson, Anderson &
Stowe(3)(5)........................ 54,445,228 27.4% -- 54,445,228 27.4%
320 Park Avenue, Suite 2500
New York, New York 10022
SBC International, Inc.(4)........... 38,710,073 19.5% -- 38,710,073 19.5%
175 E. Houston Street
San Antonio, Texas 78205-2233
Amdocs International Limited(5)(6)... 36,170,051 18.2% 18,000,000 18,170,051 9.1%
Suite 5, Tower Hill House
Le Bordage, St. Peter Port
Guernsey GY1 3QT
The Channel Islands
All directors and executive officers
as a group (18
persons)(3)(4)(7)(8)............... 146,079,464 73.5% 18,000,000 128,079,464 64.4%
</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 174,589,951 ordinary voting shares and
24,210,073 ordinary nonvoting shares outstanding on August 24, 1999.

(3) Includes 34,792,740 ordinary voting shares held by Welsh, Carson, Anderson
& Stowe VII, L.P., 9,978,181 ordinary voting shares held by Welsh, Carson,
Anderson & Stowe VI, L.P., 6,960,999 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 the ordinary voting shares held by WCAS.

(4) SBCI is a wholly-owned subsidiary of SBC, a company whose shares are
publicly traded on the NYSE. The number of shares shown as beneficially
owned by SBCI is comprised of 14,500,000 ordinary voting shares and
24,210,073 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 6,203,236 ordinary voting
shares, respectively, to a company which is the sole shareholder of AIL and
which is beneficially owned by Morris S. Kahn. The proxies granted by the
WCAS partnerships

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<PAGE> 54

expire in May 2008, 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. Several entities in
which some members of management have beneficial interests granted
irrevocable proxies with respect to an additional 4,786,110 ordinary voting
shares to the sole shareholder of AIL. After giving effect to the offering,
the proxies with respect to the 4,786,110 ordinary shares shall no longer
be in effect. After giving effect to those proxies and the issuance and
sale of ordinary shares in this offering, AIL and its sole shareholder will
together have the right to vote 28.3% of our ordinary voting shares, and
WCAS will have the right to vote 20.6% of such shares.

(6) The number of shares shown as beneficially owned by AIL includes 10,000,000
ordinary shares that AIL may be required to deliver to the Amdocs Automatic
Common Exchange Security Trust, or the TRACES Trust, upon the exchange of
Automatic Common Exchange Securities that were issued and sold by the
TRACES Trust in June 1999. The Exchange Date for the Automatic Common
Exchange Securities will occur no earlier than June 11, 2002.

(7) 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.

(8) None of our key executive officers will receive any of the proceeds from
the sale of the ordinary shares in this offering. All of our key executive
officers hold and will continue to hold, directly and indirectly, economic
interests in approximately 34.0% of our outstanding shares (of which 27.4%
are held beneficially by WCAS).

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DESCRIPTION OF SHARE CAPITAL

Our authorized capital stock consists of 500,000,000 ordinary shares,
50,000,000 ordinary nonvoting shares and 25,000,000 preferred shares, in each
case, par value L 0.01.

OUR ORDINARY SHARES

All of our issued and outstanding ordinary shares and ordinary nonvoting
shares are, and the ordinary shares being offered by us hereunder when issued
and paid for 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
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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 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 and Selling Shareholder."

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.

REGISTRATION RIGHTS

AIL, SBCI and WCAS have demand and piggyback registration rights with
respect to their ordinary shares under the Securities Act. The ordinary shares
being offered by AIL in the offering have been registered upon the exercise of
one of these demand registration rights. If we propose to register any of our
ordinary shares under the Securities Act, AIL, SBCI and WCAS may require us to
include all or a portion of their shares in the registration, although the
managing underwriter of any offering has certain rights to limit the number of
shares in that registration. All expenses incurred in connection with these
registrations (other than underwriters' discounts and commissions and fees of
counsel retained by any selling shareholder) will be borne by us. These
shareholders have agreed that they will not exercise any right with respect to
any of these registrations for a period ending 90 days after the effective date
of the registration statement for the offering, without the prior written
consent of the underwriters.

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COMPARISON OF UNITED STATES AND GUERNSEY CORPORATE LAW

The following discussion is a summary of the material differences between
United States and Guernsey corporate law relevant to an investment in the
ordinary shares and is based on the advice of Reboul, MacMurray, Hewitt, Maynard
& Kristol, with respect to the corporate law of the United States, and Carey
Langlois, with respect to the corporate law of Guernsey. The following
discussion is based upon laws and relevant interpretations thereof in effect as
of the date of this prospectus, all of which are subject to change.

Under the laws of many jurisdictions in the United States, controlling
shareholders generally have certain "fiduciary" responsibilities to minority
shareholders. Shareholder action by controlling shareholders must be taken in
good faith and actions by such shareholders that are obviously unreasonable may
be declared null and void. Guernsey law protecting the interests of minority
shareholders may not be as protective in all circumstances as the law protecting
minority shareholders in United States jurisdictions.

Under Guernsey law, an individual shareholder cannot, without the authority
of the majority of the shareholders of the corporation, initiate litigation in
the corporation's name, but an individual shareholder may seek to enforce the
corporation's rights by suing in representative form on behalf of himself and
all of the other shareholders of the corporation (except the wrongdoers where
the complaint is against other shareholders) against the wrongdoers, who may
include directors. In these circumstances, the corporation itself may be joined
as a nominal defendant in order that it can be bound by the judgment and, if an
action results in any property or damages recovered, such recovery goes not to
the plaintiff, but to the corporation. Alternatively, Guernsey law makes
specific provision to enable a shareholder to apply to the court for relief on
the ground that the affairs of the corporation are being or have been conducted
in a manner that is unfairly prejudicial to the interests of certain
shareholders (including at least himself) or any actual or proposed act or
omission of the corporation is or would be so prejudicial. In such
circumstances, the court has wide discretion to make orders to regulate the
conduct of the corporation's affairs in the future, to require the corporation
to refrain from doing or continuing to do an act that the applicant has
complained it has omitted to do, to authorize civil proceedings to be brought in
the name and on behalf of the corporation and to provide for the purchase of
shares of any shareholder of the corporation by other members or by the
corporation itself.

As in most United States jurisdictions, unless approved by a special
resolution of our shareholders, our directors do not have the power to take
certain actions, including an amendment of our Memorandum of Association or
Articles of Association or an increase or reduction in our authorized capital.
Directors of a Guernsey corporation, without shareholder approval, in certain
instances may, among other things, implement a reorganization and effect certain
mergers or consolidations, certain sales, transfers, exchanges or dispositions
of assets, property, parts of the business or securities of the corporation; or
any combination thereof, if they determine any such action is in the best
interests of the corporation, its creditors or its shareholders.

As in most United States jurisdictions, the board of directors of a
Guernsey corporation is charged with the management of the affairs of the
corporation. In most United States jurisdictions, directors owe a fiduciary duty
to the corporation and its shareholders, including a duty of care, pursuant to
which directors must properly apprise themselves of all reasonably available
information, and a duty of loyalty, pursuant to which they must protect the
interests of the corporation and refrain from conduct that injures the
corporation or its shareholders or that deprives the corporation or its
shareholders of any profit or advantage. Many United States jurisdictions have
enacted various statutory provisions that permit the monetary liability of
directors to be eliminated or limited. Guernsey law protecting the interests of
shareholders may not be as protective in all circumstances as the law protecting
shareholders in United States

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jurisdictions. 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 obligation to indemnify any such persons for
any claims they incur or sustain by or through their own willful act of default.
See "Risk Factors -- The rights of shareholders of Guernsey corporations differ
in some respects from those of shareholders of United States corporations".

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SHARES ELIGIBLE FOR FUTURE SALE

We have 174,589,951 ordinary shares and 24,210,073 non-voting ordinary
shares issued and outstanding. Of these shares, the 18,000,000 ordinary shares
sold in the offering plus any shares sold upon exercise of the underwriters'
overallotment options will be freely tradeable without restriction. We,
substantially all of our principal shareholders and our officers and directors
have agreed not to offer, sell, contract to sell or otherwise dispose of any
ordinary shares or non-voting ordinary shares without the consent of the
representatives of the underwriters for a period of 90 days after the date of
this prospectus, except for the ordinary shares offered hereby and ordinary
shares issuable upon the exercise of options granted or to be granted under the
Amdocs Plan. These shareholders will, upon the consummation of the offering, own
an aggregate 128,161,825 shares or 64.5% of the then outstanding ordinary shares
and non-voting ordinary shares. After this 90-day period, all our ordinary
shares will be eligible for sale in the public market pursuant to Rule 144,
subject to compliance with the volume and manner of sale limitations of Rule
144, or under another exemption from the registration requirements of the
Securities Act. Our principal shareholders also have the right in certain
circumstances to require us to register their shares under the Securities Act
for resale to the public. See "Description of Share Capital -- Registration
Rights".

In general, under Rule 144, as currently in effect, if one year has elapsed
since the date of acquisition of shares that are "restricted securities" (as
defined in Rule 144) from us or any "affiliate" (as defined below) of ours, the
acquiror or subsequent holder of the shares (including an affiliate) is entitled
to sell, within any three-month period, that number of shares that does not
exceed the greater of 1% of our then outstanding ordinary shares and the average
weekly trading volume of the ordinary shares on all exchanges and/or reported
through the automated quotation system of a registered securities association
during the four calendar weeks preceding the date on which notice of the sale is
filed with the Securities and Exchange Commission. Sales under Rule 144 are also
subject to restrictions relating to manner of sale, notice requirements and the
availability of current public information about us. If two years have elapsed
since the later of the date of acquisition of restricted shares from us or from
any affiliate of ours, and the acquiror or subsequent holder thereof is deemed
not to have been an affiliate of ours at any time during the 90 days preceding a
sale, that person would be entitled to sell those shares in the public market
under Rule 144(k) without regard to volume limitations, manner of sale
provisions, public information requirements or notice requirements. As defined
in Rule 144, an "affiliate" of an issuer is a person that directly, or
indirectly through the use of one or more intermediaries, controls, or is
controlled by, or is under common control with, that issuer.

We intend to register the 6,600,000 ordinary shares reserved for issuance
pursuant to the Amdocs Plan following the date of this prospectus, on a Form S-8
registration statement under the Securities Act. This registration statement
would become effective immediately upon filing. Shares issued upon the exercise
of stock options after the effective date of the Form S-8 registration statement
would be eligible for resale in the public market without restriction, subject
to Rule 144 limitations applicable to affiliates. The right to exercise options
outstanding under the Amdocs Plan is subject to vesting requirements. See
"Management -- Employee Stock Options".

In June 1999, the selling shareholder entered into a forward purchase
contract with the TRACES Trust under which it may be required to deliver up to
10,000,000 ordinary shares on or before the Exchange Date. The TRACES Trust will
deliver these ordinary shares to the holders of its Automatic Common Exchange
Securities. These ordinary shares will be freely tradeable upon their delivery
to the TRACES Trust's security holders. The Exchange Date will occur no earlier
than June 11, 2002.

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We can make no prediction as to the effect, if any, that future sales of
shares or the availability of shares for sale will have on the market price of
the ordinary shares prevailing, from time to time. Nevertheless, sales of
substantial amounts of the ordinary shares in the public market could adversely
affect the prevailing market price of the ordinary shares and could impair our
ability to raise capital through the sale of equity securities.

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TAXATION OF THE COMPANY

The following is a summary of certain material tax considerations relating
to us and our subsidiaries. To the extent that the discussion is based on tax
legislation that has not been subject to judicial or administrative
interpretation, there can be no assurance that the views expressed in the
discussion will be accepted by the tax authorities in question. The discussion
is not intended, and should not be construed, as legal or professional tax
advice and is not exhaustive of all possible tax considerations.

GENERAL

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 magnitude of our activities in those countries. Our effective tax rate
for fiscal 1998 was 50% due to the incurrence of significant interest expense in
tax-exempt or low tax jurisdictions. There can be no assurance that our
effective tax rate will not change over time as a result of a change in
corporate income tax rates or other changes in the tax laws of the various
countries in which we operate. Moreover, our effective tax rate in future years
may be adversely affected in the event that a tax authority challenged the
manner in which items of income and expense are allocated among us and our
subsidiaries. In addition, we and certain of our subsidiaries have been granted
certain special tax benefits, discussed below, in Cyprus and Israel. The loss of
any such tax benefits could have an adverse effect on our effective tax rate.

CERTAIN GUERNSEY TAX CONSIDERATIONS

We qualify as an exempt company (i.e. our shareholders are not Guernsey
residents and we do not carry on business in Guernsey) so we generally are not
subject to taxation in Guernsey. We will retain such exempt status following the
offering.

CERTAIN CYPRUS TAX CONSIDERATIONS

Our Cyprus subsidiary, Amdocs Development Ltd., operates a development
center. Corporations resident in Cyprus currently are subject to a maximum 25%
income tax rate. The Government of Cyprus has issued a permit to our Cyprus
subsidiary pursuant to which the activities to be conducted by it will be deemed
to be offshore activities for the purpose of Cyprus taxation. As a result, our
Cyprus subsidiary is subject to an effective tax rate in Cyprus of 4.25%. In
order for our subsidiary to remain entitled to this reduced rate of taxation
pursuant to the permit, it must continue to satisfy certain requirements
concerning its operations in Cyprus and it must undertake certain information
reporting obligations to the Government of Cyprus.

CERTAIN UNITED KINGDOM TAX CONSIDERATIONS

Our United Kingdom subsidiary, Amdocs (UK) Limited, performs global
development, contracting and marketing functions for our business, and acts as a
holding company for certain of our subsidiaries, including our principal United
States operating subsidiary.

GENERAL CORPORATE TAXATION IN THE UNITED KINGDOM

Until March 31, 1999, the statutory United Kingdom corporation tax rate was
31%. Commencing on April 1, 1999, the statutory corporate tax rate decreased to
30%. Our United Kingdom subsidiary pays UK corporation tax on its worldwide
income, with a credit in certain cases for non-UK income taxes paid. Our United
Kingdom subsidiary pays tax on dividends received from its subsidiaries, with a
credit for underlying non-UK taxes paid by such subsidiaries and withholding
taxes paid on such dividends.

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CERTAIN ISRAELI TAX CONSIDERATIONS

Our Israeli subsidiary, Amdocs (Israel) Limited, operates our largest
development center. Discussed below are certain Israeli tax considerations
relating to our Israeli subsidiary:

GENERAL CORPORATE TAXATION IN ISRAEL

Effective January 1, 1996, and thereafter, in general, Israeli companies
are subject to "Company Tax" at the rate of 36% of taxable income. However, the
effective tax rate payable by an Israeli company that derives income from an
Approved Enterprise (as further discussed below) may be considerably less.

LAW FOR THE ENCOURAGEMENT OF CAPITAL INVESTMENTS, 1959

GENERAL. Certain production and development facilities of our Israeli
subsidiary have been granted "Approved Enterprise" status pursuant to the Law
for the Encouragement of Capital Investments, 1959, or the Investment Law, which
provides certain tax and financial benefits to investment programs that have
been granted such status.

The Investment Law provides that capital investments in production
facilities (or other eligible assets) may, upon application to the Israeli
Investment Center, be designated as an Approved Enterprise. Each instrument of
approval for an Approved Enterprise relates to a specific investment program
delineated both by the financial scope of the investment, including source of
funds, and by the physical characteristics of the facility or other assets. The
tax benefits available under any instrument of approval relate only to taxable
profits attributable to the specific investment program and are contingent upon
compliance with the conditions set out in the instrument of approval.

TAX BENEFITS. Taxable income derived from an Approved Enterprise is
subject to a reduced corporate tax rate of 25% until the earlier of

- seven consecutive years (or ten in the case of an FIC (as defined below))
commencing in the year in which the Approved Enterprise first generates
taxable income,

- twelve years from the year of commencement of production or

- fourteen years from the year of the approval of the Approved Enterprise
status.

Such income is eligible for further reductions in tax rates if the company
qualifies as a Foreign Investors' Company, or FIC, depending on the percentage
of the foreign ownership. Subject to certain conditions, an FIC is a company
more than 25% of whose share capital (in terms of shares, rights of profits,
voting and appointment of directors) and more than 25% of whose combined share
and loan capital is owned by non-Israeli residents. The tax rate is 20% if the
foreign investment is 49% or more but less than 74%; 15% if the foreign
investment is 74% or more but less than 90%; and 10% if the foreign investment
is 90% or more. The determination of foreign ownership is made on the basis of
the lowest level of foreign ownership during the tax year. A company that owns
an Approved Enterprise, approved after April 1, 1986 may elect to forego the
entitlement to grants and apply for an alternative package of tax benefits. In
addition, a company (like our Israeli subsidiary) with an enterprise outside the
National Priority Regions (which is not entitled to grants) may also apply for
the alternative benefits. Under the alternative benefits, undistributed income
from the Approved Enterprise operations is fully tax exempt (a tax holiday) for
a defined period. The tax holiday ranges between two to ten years from the first
year of taxable income subject to the limitations as described above, depending
principally upon the geographic location within Israel. On expiration of the tax
holiday, the Approved Enterprise is eligible for a beneficial tax rate (25% or
lower in the case of an FIC, as described above) for the remainder of the
otherwise applicable period of benefits.

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Our Israeli subsidiary has elected the alternative benefits with respect to
its current Approved Enterprise and its enlargements, pursuant to which the
Israeli subsidiary enjoys, in relation to its Approved Enterprise operations,
certain tax holidays for a period of two years (and in some cases for a period
of four years) and reduced tax rates for an additional period of up to eight
years. In case our Israeli subsidiary pays a dividend, at any time, out of
income earned during the tax holiday period in respect of its Approved
Enterprise, it will be subject, assuming that the current level of foreign
investment in Amdocs is not reduced, to corporate tax at the otherwise
applicable rate of 10% of the income from which such dividend has been paid and
up to 25% if such foreign investments are reduced (as detailed above). This tax
is in addition to the withholding tax on dividends as described below. Under a
new instrument of approval issued in December 1997 and relating to the current
investment program of our Israeli subsidiary and to the income derived
therefrom, our Israeli subsidiary is entitled to a reduced tax rate period of
thirteen years (instead of the eight year period referred to above.) The tax
benefits, available with respect to an Approved Enterprise only to taxable
income attributable to that specific enterprise, are given according to an
allocation formula provided for in the Investment Law or in the instrument of
approval, and are contingent upon the fulfillment of the conditions stipulated
by the Investment Law, the regulations published thereunder and the instruments
of approval for the specific investments in the Approved Enterprises. In the
event our Israeli subsidiary fails to comply with these conditions, the tax and
other benefits could be canceled, in whole or in part, and the subsidiary might
be required to refund the amount of the canceled benefits, with the addition of
CPI linkage differences and interest. We believe that the Approved Enterprise of
our Israeli subsidiary substantially complies with all such conditions
currently, but there can be no assurance that it will continue to do so.

From time to time, the Government of Israel has discussed reducing the
benefits available to companies under the Investment Law. The termination or
substantial reduction of any of the benefits available under the Investment Law
could have a material adverse effect on future investments by us in Israel
(although such termination or reduction would not affect our Israeli
subsidiary's existing Approved Enterprise or the related benefits).

DIVIDENDS

Dividends paid out of income derived by an Approved Enterprise during the
benefit periods (or out of dividends received from a company whose income is
derived by an Approved Enterprise) are subject to withholding tax at a reduced
rate of 15% (deductible at source). In the case of companies that do not qualify
as a FIC, the reduced rate of 15% is limited to dividends paid at any time up to
twelve years thereafter.

TAXATION OF HOLDERS OF ORDINARY SHARES

The following discussion is a summary of certain United States federal
income tax considerations and Guernsey tax considerations relating to an
investment in the ordinary shares.

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

The following discussion describes the material United States federal
income tax consequences to a holder of ordinary shares that is

(i) a citizen or resident of the United States,

(ii) a corporation created or organized in, or under the laws of, the United
States or of any state thereof,

(iii) an estate, the income of which is includable in gross income for United
States federal income tax purposes regardless of its source, or

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(iv) a trust, if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more U.S.
persons has the authority to control all substantial decisions of the
trust.

This summary generally considers only U.S. holders that will own ordinary
shares as capital assets. This summary does not discuss the United States
federal income tax consequences to a holder of ordinary shares that is not a
U.S. holder.

This discussion is based on current provisions of the Internal Revenue Code
of 1986, as amended, or the Code, current and proposed Treasury regulations
promulgated thereunder, and administrative and judicial decisions as of the date
hereof, all of which are subject to change, possibly on a retroactive basis.
This discussion does not address all aspects of United States federal income
taxation that may be relevant to a holder of ordinary shares based on such
holder's particular circumstances (including potential application of the
alternative minimum tax), United States federal income tax consequences to
certain holders that are subject to special treatment (such as taxpayers who are
broker-dealers, insurance companies, tax-exempt organizations, financial
institutions, holders of securities held as part of a "straddle", "hedge" or
"conversion transaction" with other investments, or holders owning directly,
indirectly or by attribution at least 10% of the ordinary shares), or any aspect
of state, local or non-United States tax laws. Additionally, the discussion does
not consider the tax treatment of persons who hold ordinary shares through a
partnership or other pass-through entity or the possible application of United
States federal gift or estate taxes.

EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN TAX ADVISOR WITH RESPECT
TO THE PARTICULAR UNITED STATES FEDERAL, STATE, LOCAL AND FOREIGN TAX
CONSEQUENCES TO SUCH PERSON OF PURCHASING, HOLDING OR DISPOSING OF THE ORDINARY
SHARES.

DIVIDENDS

In general, a U.S. holder receiving a distribution with respect to the
ordinary shares will be required to include such distribution (including the
amount of foreign taxes, if any, withheld therefrom) in gross income as a
taxable dividend to the extent such distribution is paid from our current or
accumulated earnings and profits as determined under United States federal
income tax principles. Any distributions in excess of such earnings and profits
will first be treated, for United States federal income tax purposes, as a
nontaxable return of capital to the extent of the U.S. holder's tax basis in the
ordinary shares, and then, to the extent in excess of such tax basis, as gain
from the sale or exchange of a capital asset. See "Disposition of Ordinary
Shares" below. United States corporate shareholders will not be entitled to any
deduction for distributions received as dividends on the ordinary shares.

The amount of foreign income taxes that may be claimed as a credit against
United States federal income tax in any year is subject to certain complex
limitations and restrictions, which must be determined on an individual basis by
each U.S. holder. The limitations set out in the Code include, among others,
rules that may limit foreign tax credits allowable with respect to specific
classes of income to the United States federal income taxes otherwise payable
with respect to each such class of income. Dividends paid by us generally will
be foreign source "passive income" for United States foreign tax credit
purposes.

DISPOSITION OF ORDINARY SHARES

Upon the sale, exchange or other disposition of ordinary shares, a U.S.
holder generally will recognize capital gain or loss in an amount equal to the
difference between the amount realized on the disposition by such U.S. holder
and its tax basis in the ordinary shares. Such capital gain or loss will be
long-term capital gain or loss if the U.S. holder has held the ordinary shares
for more than one year at the time of the disposition. In the case of a U.S.
holder that is an individual, trust or estate, long-term capital gains realized
upon a disposition of the ordinary
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shares generally will be subject to a maximum tax rate of 20%. Gains realized by
a U.S. holder on a sale, exchange or other disposition of ordinary shares
generally will be treated as United States source income for United States
foreign tax credit purposes.

INFORMATION REPORTING AND BACKUP WITHHOLDING

Dividend payments with respect to the ordinary shares and proceeds from the
sale, exchange or redemption of ordinary shares may be subject to information
reporting to the Internal Revenue Service and possible U.S. backup withholding
at a 31% rate. Backup withholding will not apply, however, to a U.S. holder who
furnishes a correct taxpayer identification number and makes any other required
certification or who is otherwise exempt from backup withholding. Generally a
U.S. holder will provide such certification on IRS Form W-9 (Request for
Taxpayer Identification Number and Certification).

Amounts withheld under the backup withholding rules may be credited against
a U.S. holder's tax liability, and a U.S. holder may obtain a refund of any
excess amounts withheld under the backup withholding rules by filing the
appropriate claim for a refund with the Internal Revenue Service.

CERTAIN GUERNSEY TAX CONSIDERATIONS

Under the laws of Guernsey as currently in effect, a holder of ordinary
shares who is not a resident of Guernsey and who does not carry on business in
Guernsey through a permanent establishment situated there is (1) exempt from
Guernsey income tax on dividends paid with respect to the ordinary shares and
(2) 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 us to holders of 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.

THE FOREGOING DISCUSSION DOES NOT ATTEMPT TO ADDRESS ALL OF THE POTENTIAL
TAX CONSEQUENCES RELATING TO THE ORDINARY SHARES. EACH PROSPECTIVE INVESTOR
SHOULD CONSULT ITS OWN TAX ADVISOR WITH RESPECT TO THE PARTICULAR TAX
CONSEQUENCES OF PURCHASING, HOLDING OR DISPOSING OF THE ORDINARY SHARES UNDER
THE LAWS OF ITS COUNTRY OF CITIZENSHIP, DOMICILE OR RESIDENCE.

64
<PAGE> 66

LEGAL MATTERS

The validity of the ordinary shares offered hereby will be passed upon for
us by Carey Langlois, Guernsey. Certain legal matters in connection with the
offering will be passed upon for us by Reboul, MacMurray, Hewitt, Maynard &
Kristol and for the underwriters by Skadden, Arps, Slate, Meagher & Flom LLP.

EXPERTS

Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements as of September 30, 1998 and 1997, and for each of the
three years in the period ended September 30, 1998, as set forth in their
report. We have included our financial statements in the prospectus and
elsewhere in the registration statement in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We file annual reports, quarterly reports and current reports 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.
1390 Timberlake Manor Parkway
Chesterfield, Missouri 63017
Telephone: (314) 212-8328

This prospectus is part of a registration statement on Form F-3 that we
filed with the SEC under the Securities Act. This prospectus does not contain
all 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.

INCORPORATION OF DOCUMENTS BY REFERENCE

The SEC allows us to "incorporate by reference" the information we file
with the SEC. This permits us to disclose important information to you by
referring to these filed documents. Any information incorporated by reference is
considered part of this prospectus, and any information filed by us with the SEC
after the date of this prospectus will automatically update and supersede this
information. We incorporate by reference the following documents filed with the
SEC:

- Our annual report on Form 20-F for the year ended September 30, 1998.

- Our quarterly reports on Form 6-K for the quarterly periods ended June
30, 1999, March 31, 1999 and December 31, 1998.

We also incorporate by reference documents filed with or furnished to the
SEC pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange
Act of 1934, as amended, subsequent to the date of this prospectus and prior to
the termination of the offering. These include:

- All subsequent annual reports filed on Form 20-F, Form 40-F or Form 10-K,
and all subsequent filings on Forms 10-Q and 8-K filed by us pursuant to
the Exchange Act.

65
<PAGE> 67

- All subsequent reports on Form 6-K furnished by us pursuant to the
Exchange Act that contain financial statements, and all of other
subsequent reports on Form 6-K unless we state in the report that it is
not being incorporated by reference into this prospectus.

We will provide without charge to each person to whom a prospectus is
delivered, on written or oral request, a copy of any or all of the documents
incorporated by reference other than exhibits to those documents. Requests
should be addressed to: Mr. Thomas G. O'Brien, Amdocs Inc., 1390 Timberlake
Manor Parkway, Chesterfield, Missouri 63017 (telephone: (314) 212-8328).

FORWARD-LOOKING STATEMENTS

Some of the information in 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" and similar words. Statements that we make
in 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 Results of Operations and Financial
Condition" 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.

66
<PAGE> 68

INDEX TO FINANCIAL STATEMENTS
(in U.S. dollars, unless otherwise stated)

AMDOCS LIMITED
Audited Consolidated Financial Statements
Report of Independent Auditors.............................. F-2
Consolidated Balance Sheets as of September 30, 1998 and
1997...................................................... F-3
Consolidated Statements of Operations for the years ended
September 30, 1998, 1997, and 1996........................ F-4
Consolidated Statements of Changes in Shareholders' Equity
(Deficit) for the years ended September 30, 1998, 1997,
and 1996.................................................. F-5
Consolidated Statements of Cash Flows for the years ended
September 30, 1998, 1997, and 1996........................ F-6
Notes to Consolidated Financial Statements.................. F-8
Unaudited Consolidated Financial Statements
Consolidated Balance Sheet as of June 30, 1999.............. F-24
Consolidated Statements of Operations for the nine months
ended June 30, 1999 and 1998.............................. F-25
Consolidated Statement of Changes in Shareholder's Equity
(Deficit) for the nine months ended June 30, 1999......... F-26
Consolidated Statements of Cash Flows for the nine months
ended June 30, 1999 and 1998.............................. F-27
Notes to Unaudited Consolidated Financial Statements........ F-28
</TABLE>

F-1
<PAGE> 69

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-2
<PAGE> 70

AMDOCS LIMITED

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-3
<PAGE> 71

AMDOCS LIMITED

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-4
<PAGE> 72

AMDOCS LIMITED

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-5
<PAGE> 73

AMDOCS LIMITED

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-6
<PAGE> 74

AMDOCS LIMITED

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-7
<PAGE> 75

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-8
<PAGE> 76
AMDOCS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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.

F-9
<PAGE> 77
AMDOCS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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) 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-10
<PAGE> 78
AMDOCS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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.

F-11
<PAGE> 79
AMDOCS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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 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

F-12
<PAGE> 80
AMDOCS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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 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.

F-13
<PAGE> 81
AMDOCS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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>

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>

F-14
<PAGE> 82
AMDOCS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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 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

F-15
<PAGE> 83
AMDOCS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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.

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>

F-16
<PAGE> 84
AMDOCS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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>

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

F-17
<PAGE> 85
AMDOCS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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 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
F-18
<PAGE> 86
AMDOCS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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.

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>

F-19
<PAGE> 87
AMDOCS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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.

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.

F-20
<PAGE> 88
AMDOCS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<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.

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

F-21
<PAGE> 89
AMDOCS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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.

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

F-22
<PAGE> 90
AMDOCS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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> 91

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

<TABLE>
<CAPTION>
JUNE 30,
1999
<S> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................. $ 71,078
Accounts receivable, including unbilled of $2,478......... 144,326
Accounts receivable from related parties, including
unbilled of $0......................................... 9,775
Deferred income taxes..................................... 16,894
Prepaid expenses and other current assets................. 20,613
---------
Total current assets.............................. 262,686
Equipment, vehicles and leasehold improvements, net......... 70,704
Deferred income taxes....................................... 5,614
Intellectual property rights................................ 21,397
Other noncurrent assets..................................... 26,381
---------
$ 386,782
=========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses..................... $ 64,446
Accrued personnel costs................................... 34,607
Short-term financing arrangements......................... 26,561
Deferred revenue.......................................... 92,744
Short-term portion of capital lease obligations........... 4,459
Forward exchange contracts................................ 1,488
Income taxes payable and deferred income taxes............ 23,077
---------
Total current liabilities......................... 247,382
Long-term forward exchange contracts........................ 507
Long-term portion of capital lease obligations.............. 12,649
Other noncurrent liabilities................................ 29,972
Shareholders' equity:
Preferred Shares -- Authorized 25,000 shares; L0.01 par
value; 0 issued and outstanding........................ --
Ordinary Shares -- Authorized 550,000 shares; L0.01 par
value; 198,800 outstanding............................. 3,181
Additional paid-in capital................................ 489,073
Unrealized gain on derivative instruments................. 2,558
Unearned compensation..................................... (5,145)
Accumulated deficit....................................... (393,395)
---------
Total shareholders' equity........................ 96,272
---------
$ 386,782
=========
</TABLE>

See accompanying notes.
F-24
<PAGE> 92

AMDOCS LIMITED

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

<TABLE>
<CAPTION>
NINE MONTHS ENDED
JUNE 30,
--------------------
1999 1998
---- ----
<S> <C> <C>
Revenue:
License (*)............................................... $ 51,987 $ 29,741
Service (*)............................................... 392,152 257,322
-------- --------
444,139 287,063
Operating expenses:
Cost of license........................................... 4,060 8,521
Cost of service (*)....................................... 254,651 165,268
Research and development.................................. 28,524 18,127
Selling, general and administrative (*)................... 53,336 36,356
-------- --------
340,571 228,272
-------- --------
Operating income............................................ 103,568 58,791
Other expense (income), net:
Interest expense, net (*)................................... 3,736 23,013
Other, net.................................................. 1,684 (1,241)
-------- --------
Income before income taxes.................................. 98,148 37,019
Income taxes................................................ 29,444 18,510
-------- --------
Net income.................................................. $ 68,704 $ 18,509
======== ========
Basic earnings per share.................................... $ 0.35 $ 0.13
======== ========
Diluted earnings per share.................................. $ 0.34 $ 0.13
======== ========
</TABLE>

- ---------------
(*) Includes the following income (expense) resulting from transactions with
related parties for the nine months ended June 30, 1999 and 1998,
respectively: license revenue -- $418 and $2,290; service revenue -- $68,422
and $62,680; cost of service -- $(2,044) and $(2,036); selling, general and
administrative -- $(428) and $(304); interest expense -- $(0) and $(4,150).

See accompanying notes.
F-25
<PAGE> 93

AMDOCS LIMITED

CONSOLIDATED STATEMENT OF CHANGES
IN SHAREHOLDERS' EQUITY (DEFICIT) (UNAUDITED)
(IN THOUSANDS)

<TABLE>
<CAPTION>
UNREALIZED
INCOME TOTAL
ORDINARY SHARES ADDITIONAL (LOSS) ON 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, 1998.......... 196,800 $3,149 $447,503 $(1,495) $ (8,947) $(462,099) $ (21,889)
Net income............................. -- -- -- -- -- 68,704 68,704
Issuance of Ordinary Shares, net....... 2,000 32 41,352 -- -- -- 41,384
Unrealized income on derivative
instruments, net of $1,737 tax....... -- -- -- 4,053 -- -- 4,053
Stock options granted, net of
forfeitures.......................... -- -- 218 -- (163) -- 55
Amortization of unearned compensation.. -- -- -- -- 3,965 -- 3,965
======= ====== ======== ======= ======== ========= =========
Balance at June 30, 1999 (unaudited)... 198,800 $3,181 $489,073 $ 2,558 $ (5,145) $(393,395) $ 96,272
======= ====== ======== ======= ======== ========= =========
</TABLE>

See accompanying notes.
F-26
<PAGE> 94

AMDOCS LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
JUNE 30,
------------------------
1999 1998
---- ----
<S> <C> <C>
Cash flow from Operating Activities
Net income.................................................. $ 68,704 $ 18,509
Reconciliation of net income to net cash provided by
operating activities:
Operating activities:.....................................
Depreciation.............................................. 13,763 8,659
Amortization.............................................. 8,211 12,916
Loss on sale of equipment................................. 518 99
Deferred income taxes..................................... 1,368 (1,750)
Net changes in operating assets and liabilities:
Accounts receivable....................................... (64,143) (19,656)
Prepaid expenses and other current assets................. (8,848) (594)
Other noncurrent assets................................... (6,827) (2,834)
Accounts payable and accrued expenses..................... 20,357 17,241
Forward exchange contracts................................ (3,153) --
Deferred revenue.......................................... 63,503 16,072
Income taxes payable...................................... (2,146) (1,464)
Other noncurrent liabilities.............................. 5,704 4,170
Unrealized loss on derivative instruments................. 5,789 --
--------- ---------
10,236 12,935
--------- ---------
Net cash provided by operating activities................... 102,800 51,368
--------- ---------
Cash flow from Investing Activities
Proceeds from sale of equipment, vehicles and leasehold
improvements.............................................. 1,212 721
Payments for purchase of equipment, vehicles and leasehold
improvements and other.................................... (32,913) (18,232)
--------- ---------
Net cash used in investing activities....................... (31,701) (17,511)
--------- ---------
Cash flow from Financing Activities
Net proceeds from issuance of Ordinary Shares............... 42,535 332,223
Dividends paid.............................................. -- (478,684)
Payments under short-term financing arrangements............ (293,012) (208,449)
Borrowings under short-term financing arrangements.......... 228,008 223,921
Payments under long-term financing arrangements............. -- (267,763)
Net proceeds from issuance of long-term debt................ -- 357,877
Payments on notes payable to related parties................ -- (3,268)
Principal payments under capital lease obligations.......... (2,941) (1,753)
--------- ---------
Net cash used in financing activities....................... (25,410) (45,896)
--------- ---------
Net increase (decrease) in cash and cash equivalents........ 45,689 (12,039)
Cash and cash equivalents at beginning of period............ 25,389 53,732
--------- ---------
Cash and cash equivalents at end of period.................. $ 71,078 $ 41,693
========= =========
Supplementary cash flow information Cash paid for:
Income taxes, net of refunds.............................. $ 26,710 $ 21,857
Interest.................................................. 4,582 20,891
</TABLE>

NONCASH INVESTING AND FINANCING ACTIVITIES

Capital lease obligations of $7,881 and $2,106 were incurred during the
nine months ended June 30, 1999 and 1998, respectively, when the Company entered
into lease agreements for the purchase of fixed assets.

As of June 30, 1999 and 1998, the Company incurred stock issuance costs of
$1,150 and $1,586 respectively, which had not been paid as of that date.

See accompanying notes.
F-27
<PAGE> 95

AMDOCS LIMITED

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

JUNE 30, 1999

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.

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
for 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 $1,700 of internally developed software costs in the
nine-month period ended June 30, 1999.

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:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
JUNE 30,
------------------
1999 1998
---- ----
<S> <C> <C>
Net income.................................................. $68,704 $18,509
Change in unrealized income on derivative instruments, net
of tax.................................................... 4,053 --
======= =======
Comprehensive income........................................ $72,757 $18,509
======= =======
</TABLE>

F-28
<PAGE> 96
AMDOCS LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. INCOME TAXES

The provision for income taxes for the following periods consists of the
following:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
JUNE 30,
------------------
1999 1998
---- ----
<S> <C> <C>
Current..................................................... $28,076 $20,260
Deferred.................................................... 1,368 (1,750)
======= =======
$29,444 $18,510
======= =======
</TABLE>

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

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
JUNE 30,
------------
1999 1998
---- ----
<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 in fiscal 1998 was significantly greater than the estimated fiscal 1999
effective tax rate.

5. EARNINGS PER SHARE

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

<TABLE>
<CAPTION>
NINE MONTHS ENDED
JUNE 30,
------------------
1999 1998
---- ----
<S> <C> <C>
Numerator:
Net income................................................ $68,704 $18,509
======= =======
Denominator:
Denominator for basic earnings per share -- weighted
average shares......................................... 196,976 145,630
Effect of dilutive stock options granted.................. 2,673 821
======= =======
Denominator for dilutive earnings per share -- adjusted
average shares and assumed conversions................. 199,649 146,451
======= =======
Basic earnings per share.................................. $ 0.35 $ 0.13
======= =======
Diluted earnings per share................................ $ 0.34 $ 0.13
======= =======
</TABLE>

F-29
<PAGE> 97
AMDOCS LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. CAPITAL TRANSACTION

On June 7, 1999 the Company and certain shareholders of the Company
completed a public offering by which the Company sold 2,000 Ordinary Shares and
the certain shareholders of the Company sold 18,426 Ordinary Shares, including
an exercise of an over-allotment of 426 Ordinary Shares that was completed in
July 1999, at an offering price of $22.44 per share. The total net proceeds to
the Company, after deduction of issuance costs, amounted to $41,384.

7. SUBSEQUENT EVENT

On September 3, 1999, the Company signed an agreement to acquire
International Telecommunication Data Systems, Inc. (ITDS), in a stock-for-stock
transaction, which will be accounted for under the purchase method of
accounting. The Company will issue approximately 6,600 ordinary shares and 1,200
options for ordinary shares in connection with the consummation of the
transaction. Closing of the transaction is subject to the approval of ITDS'
shareholders and requires regulatory approvals, as well as certain other
customary closing conditions.

ITDS is a leading provider of billing and customer care service bureau
solutions to wireless and satellite telecommunication service providers. ITDS
revenue and net loss for its fiscal year ended December 31, 1998 were $115,460
and $3,926, respectively. For the six months ended June 30, 1999, ITDS had
revenue and net income of $68,623 and $8,714 respectively. ITDS had total assets
of $164,541 at June 30, 1999.

F-30
<PAGE> 98

UNDERWRITING

The Company, the selling shareholder and the underwriters for the offering,
or the Underwriters, named below have entered into an underwriting agreement
with respect to the shares being offered. Subject to certain conditions, each
Underwriter has severally agreed to purchase the number of shares indicated in
the following table. Goldman, Sachs & Co., Banc of America Securities LLC,
Deutsche Bank Securities Inc., Lehman Brothers Inc. and Prudential Securities
Incorporated are the representatives of the Underwriters.

<TABLE>
<CAPTION>
Number
Underwriters of Shares
------------ ---------
<S> <C>
Goldman, Sachs & Co. .......................................
Banc of America Securities LLC..............................
Deutsche Bank Securities Inc................................
Lehman Brothers Inc. .......................................
Prudential Securities Incorporated..........................
----------
Total............................................. 18,000,000
==========
</TABLE>

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

If the Underwriters sell more shares than the total number set forth in the
table above, the Underwriters have an option to buy up to an additional
2,700,000 shares from the selling shareholder to cover such sales. They may
exercise that option for 30 days. If any shares are purchased pursuant to this
option, the Underwriters will severally purchase shares in approximately the
same proportion as set forth in the table above.

The following table shows the per share and total underwriting discounts
and commissions to be paid to the Underwriters by the selling shareholder. Such
amounts are shown assuming both no exercise and full exercise of the
Underwriters' option to purchase additional shares.

<TABLE>
<CAPTION>
Paid by the Selling
Shareholder
-----------
No Exercise Full Exercise
----------- -------------
<S> <C> <C>
Per Share.............................................. $ $
Total.................................................. $ $
</TABLE>

Shares sold by the Underwriters to the public will initially be offered at
the initial price to public set forth on the cover of this prospectus. Any
shares sold by the Underwriters to securities dealers may be sold at a discount
of up to $ per share from the initial price to public. Any such securities
dealers may resell any shares purchased from the Underwriters to certain other
brokers or dealers at a discount of up to $ per share from the initial price
to public. If all the shares are not sold at the initial price to public, the
representatives may change the offering price and the other selling terms.

The Company and the selling shareholder have agreed with the Underwriters
not to dispose of or hedge any of their ordinary shares or securities
convertible into or exchangeable for ordinary shares during the period from the
date of this prospectus continuing through the date 90 days after the date of
this prospectus, except with the prior written consent of the representatives.
This agreement does not apply to any existing employee benefit plans. See
"Shares Eligible for Future Sale" for a discussion of certain transfer
restrictions.

In connection with the offering, the Underwriters may purchase and sell
ordinary shares in the open market. These transactions may include short sales,
stabilizing transactions and purchases to cover positions created by short
sales. Short sales involve the sale by the Underwriters of a greater number of
shares than they are required to purchase in the offering.

U-1
<PAGE> 99

Stabilizing transactions consist of certain bids or purchases made for the
purpose of preventing or retarding a decline in the market price of the ordinary
shares while the offering is in progress.

The Underwriters also may impose a penalty bid. This occurs when a
particular Underwriter repays to the Underwriters a portion of the underwriting
discount received by it because the representatives have repurchased shares sold
by or for the account of such Underwriter in stabilizing or short covering
transactions.

These activities by the Underwriters may stabilize, maintain or otherwise
affect the market price of the ordinary shares. As a result, the price of the
ordinary shares may be higher than the price that otherwise might exist in the
open market. If these activities are commenced, they may be discontinued by the
Underwriters at any time. These transactions may be effected on the New York
Stock Exchange, in the over-the-counter market or otherwise.

The Company will pay the expenses of the offering on behalf of the selling
shareholder, excluding underwriting discounts and commissions. The expenses of
the offering are estimated to be approximately $ million.

The Company and the selling shareholder have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities under
the Securities Act.

U-2
<PAGE> 100

The inside back cover page contains the following:

* Amdocs Logo with text and a graphical representation of the components of
Amdocs' "ADS(NG)/Family of Products". Text: ADS(NG)/Family of Products.
End-to-end family of products for publishers of Yellow Pages, White Pages and
Internet directories.
<PAGE> 101

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

No dealer, salesperson or other person is authorized to give any
information or to represent anything not contained in this prospectus. You must
not rely on any unauthorized information or representations. This prospectus is
an offer to sell only the shares offered hereby, but only under circumstances
and in jurisdictions where it is lawful to do so. The information contained in
this prospectus is current only as of its date.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Enforceability of Civil
Liabilities........................ 3
Prospectus Summary................... 4
Risk Factors......................... 8
Use of Proceeds...................... 18
Market Prices and Dividend Policy.... 18
Selected Consolidated Financial
Information........................ 19
Management's Discussion and Analysis
of Results of Operations and
Financial Condition................ 20
Unaudited Pro Forma Condensed
Combined Financial Statements...... 31
Business............................. 32
Management........................... 45
Certain Transactions................. 50
Principal Shareholders and Selling
Shareholder........................ 52
Description of Share Capital......... 54
Comparison of United States and
Guernsey Corporate Law............. 56
Shares Eligible for Future Sale...... 58
Taxation of the Company.............. 60
Taxation of Holders of Ordinary
Shares............................. 62
Legal Matters........................ 65
Experts.............................. 65
Where You Can Find More
Information........................ 65
Incorporation of Documents by
Reference.......................... 65
Forward-Looking Statements........... 66
Index to Financial Statements........ F-1
Underwriting......................... U-1
</TABLE>

- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
18,000,000 Shares

AMDOCS LIMITED

Ordinary Shares
------------------------

[AMDOCS Logo]

------------------------
GOLDMAN, SACHS & CO.
BANC OF AMERICA SECURITIES LLC
DEUTSCHE BANC ALEX. BROWN
LEHMAN BROTHERS
PRUDENTIAL SECURITIES

Representatives of the Underwriters
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 102

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. 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......... $151,634
New York Stock Exchange listing fee......................... *
National Association of Securities Dealers fee.............. *
Legal fees and expenses..................................... *
Registrar and Transfer Agent fees and expenses.............. *
Accounting fees and expenses................................ *
Printing, EDGAR formatting and mailing expenses............. *
Miscellaneous............................................... *
--------
Total............................................. $ *
</TABLE>

- ---------------
* To be filed by amendment

ITEM 15. 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.

We have entered into an indemnity agreement with our directors and some of
our officers, under which we have agreed to pay the indemnified party the amount
of Loss (as defined therein) suffered by that party due to claims made against
that party for a Wrongful Act (as defined therein).

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

EXHIBIT INDEX

II-1
<PAGE> 103

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
4.4 Amended and Restated Credit Agreement, dated as of June 29,
1998, among European Software Marketing Limited, the other
subsidiaries of Amdocs named therein, the Initial Lenders,
Initial Issuing Bank and Swing Line Bank named therein, and
NationsBank, N.A., as Administrative Agent and the Bank of
Nova Scotia, as Syndication Agent (Exhibit 4.4 to Amdocs'
Registration Statement on Form F-1 dated June 7, 1999;
Registration No. 333-75151)
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, 1997 (Exhibit 4.9 to Amdocs' Registration Statement on
Form F-1 dated June 19, 1998; Registration No. 333-8826)
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
</TABLE>

<TABLE>
**23.1 Consent of Ernst & Young LLP, independent auditors.
<C> <S>
*23.2 Consent of Carey Langlois (included in Exhibit 5.1).
24.1 Powers of Attorney (contained on the signature pages
hereof).
</TABLE>

- ---------------
* To be filed by amendment.

** Filed herewith.

ITEM 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement, ordinary shares in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

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 provisions described in Item 15, 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 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

II-2
<PAGE> 104

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 of 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.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus 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.

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<PAGE> 105

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-3 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 7(th) day of
September, 1999.

AMDOS 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 and Robert A. Minicucci,
and each of them, 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 September 7, 1999
- --------------------------------------------------- Chief Executive Officer
Bruce K. Anderson (Principal Executive
Officer)

Director and Chief Financial September 7, 1999
- --------------------------------------------------- Officer (Principal
Robert A. Minicucci Financial and Accounting
Officer)

/s/ AVINOAM NAOR Director of Amdocs Limited September 7, 1999
- --------------------------------------------------- and Chief Executive Officer
Avinoam Naor of Amdocs Management
Limited

/s/ ADRIAN GARDNER Director September 7, 1999
- ---------------------------------------------------
Adrian Gardner
</TABLE>

II-4
<PAGE> 106

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ STEPHEN HERMER Director September 7, 1999
- ---------------------------------------------------
Stephen Hermer

/s/ JAMES KAHAN Director September 7, 1999
- ---------------------------------------------------
James Kahan

/s/ PAZ LITTMAN Director September 7, 1999
- ---------------------------------------------------
Paz Littman

/s/ REVITAL NAVEH Director September 7, 1999
- ---------------------------------------------------
Revital Naveh

/s/ LAWRENCE PERLMAN Director September 7, 1999
- ---------------------------------------------------
Lawrence Perlman

Director September 7, 1999
- ---------------------------------------------------
Michael J. Price

/s/ URS SUTER Director September 7, 1999
- ---------------------------------------------------
Urs Suter

/s/ THOMAS G. O'BRIEN Amdocs Limited's Authorized September 7, 1999
- --------------------------------------------------- Representative in the
Thomas G. O'Brien United States
</TABLE>

II-5
<PAGE> 107

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
*1.1 Form of Underwriting Agreement
4.1 Specimen certificate for the ordinary shares of the
Registrant (Exhibit 4.1 to Amdocs' Registration Statement on
Form F-1 dated June 19, 1998; Registration Number 333-8826)
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 Amended and Restated Credit Agreement, dated as of June 29,
1998, among European Software Marketing Limited, the other
subsidiaries of Amdocs named therein, the Initial Lenders,
Initial Issuing Bank and Swing Line Bank named therein, and
NationsBank, N.A., as Administrative Agent and the Bank of
Nova Scotia, as Syndication Agent (Exhibit 4.4 to Amdocs'
Registration Statement on Form F-1 dated June 7, 1999;
Registration No. 333-75151)
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, 1997 (Exhibit 4.9 to Amdocs' Registration Statement on
Form F-1 dated June 19, 1998; Registration No. 333-8826)
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
**23.1 Consent of Ernst & Young LLP, independent auditors.
*23.2 Consent of Carey Langlois (included in Exhibit 5.1).
24.1 Powers of Attorney (contained on the signature pages
hereof).
</TABLE>

- ---------------
* To be filed by amendment.

** Filed herewith.

<PAGE> 1

EXHIBIT 23.1

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the reference to our firm under the captions "Summary
Consolidated Financial Information," "Selected Consolidated Financial
Information" and "Experts" and to the use of our report dated November 8, 1998,
in the Registration Statement (Form F-3 No. 333- ) and related
Prospectus of Amdocs Limited for the registration of 20,700,000 shares of its
ordinary shares.

St. Louis, Missouri /s/ ERNST & YOUNG LLP
September 7, 1999