<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED MARCH 31, 2000
AMDOCS LIMITED
Tower Hill House Le Bordage GY1 3QT
St. Peter Port, Island of Guernsey, Channel Islands
--------------
Amdocs, Inc.
1390 Timberlake Manor Parkway, Chesterfield, Missouri 63017
(Address of principal executive offices)
(Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F)
Form 20 F [X] FORM 40 F [_]
(Indicate by check mark whether the registrant by furnishing the information
contained in this form is also thereby furnishing the information to the
Commission pursuant to rule 12g3-2(b) under the Securities Exchange Act of
1934.)
YES [_] NO [X]
<PAGE> 2
AMDOCS LIMITED
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
FOR THE QUARTER ENDED MARCH 31, 2000
INDEX
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Consolidated Financial Statements
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statement of Changes in Shareholders'
Equity
Consolidated Statements of Cash Flows
Notes to Unaudited Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 6-K
SIGNATURES
EXHIBIT INDEX
<PAGE> 3
Part I Financial Information
Item 1. Financial Statements
AMDOCS LIMITED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in U.S. dollars, unless otherwise stated)
(in thousands, except per share data)
<TABLE>
<CAPTION>
As of
--------------------------------
March 31, 2000 September 30,
(unaudited) 1999
--------- ---------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 221,939 $ 85,174
Short-term interest-bearing investments 20,612 --
Accounts receivable, including unbilled of $9,764 and $3,415, less allowances
of $5,128 and $0, respectively 194,796 145,184
Accounts receivable from related parties, including unbilled of $0 and $828,
respectively 31,743 14,128
Deferred income taxes and taxes receivable 28,570 29,899
Prepaid expenses and other current assets 30,351 16,390
--------- ---------
Total current assets 528,011 290,775
Equipment, vehicles and leasehold improvements, net 99,204 83,997
Deferred income taxes 12,360 5,605
Goodwill and other intangible assets, net 110,858 20,742
Other noncurrent assets 32,411 28,892
--------- ---------
Total assets $ 782,844 $ 430,011
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 87,860 $ 68,594
Accrued personnel costs 48,149 40,092
Short-term financing arrangements 17,023 2,381
Deferred revenue 114,682 104,688
Short-term portion of capital lease obligations 6,131 5,722
Deferred income taxes and taxes payable 53,184 33,412
--------- ---------
Total current liabilities 327,029 254,889
Long-term portion of capital lease obligations 15,293 17,148
Other noncurrent liabilities 48,559 34,237
--------- ---------
Total liabilities 390,881 306,274
--------- ---------
Shareholders' equity:
Preferred Shares - Authorized 25,000 shares;
pound sterling 0.01 par value; 0 issued and outstanding -- --
Ordinary Shares - Authorized 550,000 shares;
pound sterling 0.01 par value; 206,500 and 198,800 outstanding, respectively 3,304 3,181
Additional paid-in capital 688,943 489,099
Accumulated other comprehensive income (loss) 5,213 (1,157)
Unearned
compensation (2,085) (3,830)
Accumulated deficit (303,412) (363,556)
--------- ---------
Total shareholders' equity 391,963 123,737
--------- ---------
Total liabilities and shareholders' equity $ 782,844 $ 430,011
========= =========
</TABLE>
The accompanying Notes are an integral part of these Unaudited Consolidated
Financial Statements.
<PAGE> 4
AMDOCS LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in U.S. dollars)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended Six months ended
March 31, March 31,
-------------------------- --------------------------
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenue:
License (*) $ 30,441 $ 17,308 $ 56,943 $ 32,348
Service (*) 240,304 130,522 449,308 246,907
--------- --------- --------- ---------
270,745 147,830 506,251 279,255
--------- --------- --------- ---------
Operating expenses:
Cost of license 1,458 1,370 2,631 2,693
Cost of service (*) 156,889 84,280 295,923 160,195
Research and development 17,713 9,140 32,683 17,519
Selling, general and administrative (*) 34,570 17,415 62,163 33,062
In-process research and development expenses
-- -- 19,876 --
--------- --------- --------- ---------
210,630 112,205 413,276 213,469
--------- --------- --------- ---------
Operating income 60,115 35,625 92,975 65,786
Other income (expense), net 2,318 (2,566) 2,663 (3,953)
--------- --------- --------- ---------
Income before income taxes 62,433 33,059 95,638 61,833
Income taxes 19,570 9,918 35,494 18,550
--------- --------- --------- ---------
Net income $ 42,863 $ 23,141 $ 60,144 $ 43,283
========= ========= ========= =========
Basic earnings per share $ 0.21 $ 0.12 $ 0.30 $ 0.22
========= ========= ========= =========
Diluted earnings per share $ 0.20 $ 0.12 $ 0.29 $ 0.22
========= ========= ========= =========
Basic weighted average number of shares
outstanding 205,985 196,800 203,465 196,800
========= ========= ========= =========
Diluted weighted average number of shares
outstanding 211,416 199,542 207,904 199,263
========= ========= ========= =========
</TABLE>
(*) See Note 3.
The accompanying Notes are an integral part of these Unaudited Consolidated
Financial Statements.
<PAGE> 5
AMDOCS LIMITED
CONSOLIDATED STATEMENT OF CHANGES
IN SHAREHOLDERS' EQUITY (UNAUDITED)
(in U.S. dollars)
(in thousands)
<TABLE>
<CAPTION>
Accumulated
other
Ordinary Shares Additional comprehensive Total
-------------------- Paid-in income Unearned Accumulated Shareholders'
Shares Amount Capital (loss) Compensation Deficit Equity
------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance as of September 30, 1999 198,800 $ 3,181 $ 489,099 $ (1,157) $ (3,830) $(363,556) $ 123,737
Net income -- -- -- -- -- 60,144 60,144
Issuance of Ordinary Shares
related to an acquisition, net 6,451 103 185,744 -- -- -- 185,847
Employees' stock options
exercised 1,249 20 13,975 -- -- -- 13,995
Unrealized gain on other
comprehensive income, net
of $2,730 tax -- -- -- 6,370 -- -- 6,370
Stock options granted, net of
forfeitures
-- -- 125 -- -- -- 125
Acquired unearned compensation
related to an acquisition -- -- -- -- (18) -- (18)
Amortization of unearned
compensation
-- -- -- -- 1,763 -- 1,763
------- --------- --------- --------- --------- --------- ---------
Balance as of March 31, 2000 206,500 $ 3,304 $ 688,943 $ 5,213 $ (2,085) $(303,412) $ 391,963
======= ========= ========= ========= ========= ========= =========
</TABLE>
The accompanying Notes are an integral part of these Unaudited Consolidated
Financial Statements.
<PAGE> 6
AMDOCS LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in U.S. dollars)
(in thousands)
<TABLE>
<CAPTION>
Six months ended March 31,
2000 1999
--------- ---------
<S> <C> <C>
Cash flow from Operating Activities
Net income $ 60,144 $ 43,283
Reconciliation of net income to net cash provided by operating
activities:
Depreciation 15,217 8,343
Amortization 7,352 5,425
In-process research and
development expenses 19,876 --
Loss on sale of equipment 74 394
Deferred income taxes 5,025 4,799
Unrealized income on other comprehensive income 9,100 2,457
Net changes in operating assets and liabilities:
Accounts receivable (14,509) (41,469)
Prepaid expenses and other current assets (8,830) (4,220)
Other noncurrent assets (5,111) (2,938)
Accounts payable and accrued expenses 4,803 (6,597)
Deferred revenue 9,567 31,830
Income taxes payable 11,453 (6,508)
Other noncurrent liabilities 13,799 3,537
--------- ---------
Net cash provided by operating activities 127,960 38,336
--------- ---------
Cash flow from Investing Activities
Proceeds from sale of equipment, vehicles and leasehold
improvements 760 1,006
Payments for purchase of equipment, vehicles, leasehold
improvements and other (28,542) (20,401)
Purchase of short-term interest-bearing investments (20,612) --
Acquisition, net of cash acquired 31,900 --
--------- ---------
Net cash used in investing activities (16,494) (19,395)
--------- ---------
Cash flow from Financing Activities
Net proceeds from employee stock options exercised 13,863 --
Payments under short-term finance arrangements (172,455) (179,274)
Borrowings under short-term finance arrangements 187,097 163,617
Principal payments under long-term capital lease obligations (3,206) (1,779)
--------- ---------
Net cash provided by (used in) financing activities 25,299 (17,436)
--------- ---------
Net increase in cash and cash equivalents 136,765 1,505
Cash and cash equivalents at beginning of period 85,174 25,389
--------- ---------
Cash and cash equivalents at end of period $ 221,939 $ 26,894
========= =========
Supplementary cash flow information
Cash paid for:
Income taxes, net of refunds $ 17,308 $ 20,953
Interest 760 3,012
</TABLE>
Non-cash investing and financing activities
Capital lease obligations of $1,733 and $6,472 were incurred during the six
months ended March 31, 2000 and 1999, respectively, when the Company (as
hereinafter defined) entered into lease agreements for the purchase of fixed
assets.
The Company issued 6,451 ordinary shares and 1,103 options in
connection with the acquisition of ITDS (as hereinafter defined). See
Note 2.
The accompanying Notes are an integral part of these Unaudited Consolidated
Financial Statements.
<PAGE> 7
AMDOCS LIMITED
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(in U.S. dollars)
(in thousands, except per share data)
1. Basis of Presentation
Amdocs Limited (the "Company") is a leading provider of product-driven
information system solutions to the communications industry. The Company
and its subsidiaries operate in one business segment, providing computer
systems integration and related services for the communications industry.
The Company designs, develops, markets and supports computer software
products and related services to communications 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 preparation of financial statements during interim periods requires
management to make numerous estimates and assumptions that impact the
reported amounts of assets, liabilities, revenue and expenses. Estimates
and assumptions are reviewed periodically and the effect of revisions is
reflected in the results of operations of the interim periods in which
changes are determined to be necessary.
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, 1999 set forth in the Company's Annual Report on Form 20-F filed with
the Securities and Exchange Commission.
The Company classifies all of its short-term interest-bearing investments
as available-for-sale securities. Such short-term interest-bearing
investments consist primarily of United States governmental securities
which are stated at market value, with unrealized gains and losses on such
securities reflected, net of tax, as other comprehensive income in
shareholders' equity. Realized gains and losses on short-term
interest-bearing investments are included in earnings and are derived
using the specific identification method for determining the cost of
securities. It is the Company's intent to maintain a liquid portfolio to
take advantage of investment opportunities; therefore, all securities are
considered to be available-for-sale and are classified as current assets.
2. Acquisition of ITDS
On November 30, 1999, the Company completed the purchase of International
Telecommunication Data Systems, Inc. (ITDS), in a stock-for-stock
transaction. The total purchase price of $188,733 included issuance of
ordinary shares, the grant of options and transaction costs. The
acquisition was accounted for using the purchase method of accounting. The
fair market value of ITDS' assets and liabilities has been included in the
balance sheet as of the acquisition date. The results of ITDS' operations
are included in the consolidated statement of operations, commencing
December 1, 1999. An acquired technology valuation, which was
independently determined, included both existing technology and in-process
research and development. The valuation of these technologies was made by
applying the income forecast method which considers the present value of
cash flows by product lines. The fair value of existing technology
products was valued at $12,342 and is being amortized by the Company over
five years. In-process research and development valued at $19,876 was
charged to expense immediately following the completion of the acquisition
(during the quarter ended December 31, 1999) as this technology had not
reached technological feasibility and has no alternative use. This
technology will require varying additional development, coding and testing
efforts before technological feasibility can be determined. The fair value
of customer lists was valued at $647 and the fair value of workforce was
valued at $5,407, each of which will be amortized over five years. The
<PAGE> 8
AMDOCS LIMITED
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(in U.S. dollars)
(in thousands, except per share data)
excess of the purchase price over the net assets acquired, or goodwill, of
$70,796 is being amortized over 15 years.
Set forth below is the pro forma revenue, operating income, net income and
earnings per share as if ITDS had been acquired as of the beginning of the
respective periods, excluding the write off of in-process research and
development, for the following periods:
<TABLE>
<CAPTION>
Three months ended Six months ended
March 31, March 31,
------------------------ ------------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue $270,745 $181,231 $529,540 $345,918
Operating income 60,115 42,471 113,724 78,920
Net income 42,863 27,343 80,013 51,395
Basic earnings per share 0.21 0.14 0.39 0.25
Diluted earnings per share 0.20 0.14 0.38 0.25
</TABLE>
3. Related-Party Transactions
The following related party transactions are included in the consolidated
statement of operations for the following periods:
<TABLE>
<CAPTION>
Three months ended Six months ended
March 31, March 31,
---------------------- ----------------------
2000 1999 2000 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenue:
License $ 2,938 $ 178 $ 7,030 $ 278
Service 32,137 24,551 65,461 45,949
Operating expenses:
Cost of service 500 557 1,419 1,057
Selling, general and administrative 110 120 332 232
</TABLE>
4. Comprehensive Income
Comprehensive income represents the change in shareholders' equity during
a period from transactions and other events and circumstances from
nonowner sources. It includes all changes in equity except those resulting
from investments by owners and distributions to owners.
The following table sets forth the reconciliation from net income to
comprehensive income for the following periods:
<TABLE>
<CAPTION>
Three months ended Six months ended
March 31, March 31,
---------------------- ----------------------
2000 1999 2000 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net income $42,863 $23,141 $60,144 $43,283
Other comprehensive income:
Unrealized income on derivative instruments,
net of tax 597 3,851 6,370 1,720
Unrealized income on short-term
interest-bearing investments, net of tax 17 -- -- --
------- ------- ------- -------
Comprehensive income $43,477 $26,992 $66,514 $45,003
======= ======= ======= =======
</TABLE>
5. Income Taxes
The provision for income taxes for the following periods consists of the
following:
<TABLE>
<CAPTION>
Three months ended Six months ended
March 31, March 31,
---------------------- ----------------------
2000 1999 2000 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Current $11,831 $ 6,557 $30,469 $13,751
Deferred 7,739 3,361 5,025 4,799
------- ------- ------- -------
$19,570 $ 9,918 $35,494 $18,550
======= ======= ======= =======
</TABLE>
<PAGE> 9
AMDOCS LIMITED
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(in U.S. dollars)
(in thousands, except per share data)
The effective income tax rate varied from the statutory Guernsey tax rate as
follows for the following periods:
<TABLE>
<CAPTION>
Three months ended Six months ended
March 31, March 31,
--------------------- ---------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Statutory Guernsey tax rate 20% 20% 20% 20%
Guernsey tax-exempt status (20)
(20) (20) (20)
Foreign taxes(*) 30 30 30 30
Effect of acquisition-related costs 1 -- 7 --
--- --- --- ---
Effective income tax rate 31% 30% 37% 30%
</TABLE>
(*)Excludes certain non-tax deductible purchased in-process research and
development and other amortization expenses related to the acquisition of
ITDS.
6. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per
share:
<TABLE>
<CAPTION>
Three months ended Six months ended
March 31, March 31,
------------------------ ------------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Numerator:
Net income $ 42,863 $ 23,141 $ 60,144 $ 43,283
======== ======== ======== ========
Denominator:
Denominator for basic earnings per share-
weighted average number of shares
outstanding 205,985 196,800 203,465 196,800
Effect of dilutive stock options granted 5,431 2,742 4,439 2,463
-------- -------- -------- --------
Denominator for dilutive earnings per share-
adjusted weighted average shares and
assumed conversions 211,416 199,542 207,904 199,263
======== ======== ======== ========
Basic earnings per share $ 0.21 $ 0.12 $ 0.30 $ 0.22
======== ======== ======== ========
Diluted earnings per share $ 0.20 $ 0.12 $ 0.29 $ 0.22
======== ======== ======== ========
</TABLE>
<PAGE> 10
AMDOCS LIMITED
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(in U.S. dollars)
(in thousands, except per share data)
7. Solect Transaction
On April 5, 2000, the Company completed the purchase of Solect Technology Group
Inc. ("Solect"), in a stock-for-stock transaction. Solect is a leading provider
of IP billing and customer care software to next generation service providers,
including wireless and application service providers, or ASP's. In connection
with the consummation of the transaction, the Company issued and/or granted
options to acquire a total of 15,500,000 of its ordinary shares. The total
purchase price of approximately $1,100,000, based on a per share price of
$69.875 for the Company's ordinary shares, included both the issuance of and
grant of options for ordinary shares, as well as transaction costs. The
acquisition will be accounted for by the Company under the purchase method of
accounting.
An independent appraiser currently is performing an acquired technology
valuation, which will include existing technology and in-process research and
development. The valuation of these technologies will be made by applying the
income forecast method, which considers the present value of cash flows by
product lines.
The purchase is expected to result in a one-time, non-cash charge to the
Company's earnings as certain of Solect's technologies have not reached
technological feasibility and have no alternative use. The Company believes that
these technologies will require varying additional development, coding and
testing efforts before technological feasibility can be determined. The
amortization by the Company of certain acquired technology will be over two to
three years. The Company believes that a significant portion of the purchase
price will be allocated to goodwill, which it expects to amortize over five to
seven years. These non-cash charges, which will not be tax deductible, are
expected to increase the Company's effective tax rate for fiscal 2000 to between
60% and 70% of reported pre-tax income. Excluding these non-cash charges, the
Company's effective tax rate would remain near its historic level of 30%.
<PAGE> 11
Item 2. 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 six months and three months
ended March 31, 2000 and 1999,
- 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 six months and three months ended
March 31, 2000 and 1999, and
- the sources of our cash to pay for future capital expenditures.
Management's Discussion and Analysis should be read in conjunction with Amdocs'
consolidated financial statements. In Management's Discussion and Analysis, we
analyze and explain the six months to six months and three months to three
months changes in the specific line items in the consolidated statements of
operations. 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. We disclaim any obligation to update our
forward-looking statements.
Overview
We are a leading provider of software products and services to the
communications industry, primarily Customer Care, Billing and Order Management
Systems, or CC&B Systems, for wireline, wireless, Internet Protocol ("IP") data
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, maintenance and outsourcing
services.
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
other 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 the
percentage of completion method of accounting. Service revenue that involves
significant ongoing obligations, including fees for customization,
implementation and initial support services, is also recognized as work is
performed, under the percentage of completion method of accounting. In
outsourcing contracts, where the CC&B Systems solution includes the operation
and maintenance of customers' billing systems, revenue is recognized in the
period in which the bills are produced. Revenue from ongoing support services is
recognized as work is performed. Revenue from third party hardware and software
sales is recognized upon delivery.
<PAGE> 12
Maintenance revenue is recognized ratably over the term of the maintenance
agreement. As a result of our percentage of completion accounting method, the
size and timing of customer projects and our progress in completing such
projects may significantly affect our quarterly operating results.
- License and service fee revenue from the sale of CC&B Systems
amounted to $438.7 million and $199.6 million in the six months
ended March 31, 2000 and 1999, respectively, representing 86.7% and
71.5%, respectively, of our total revenue for such periods. License
and service fee revenue from the sale of CC&B Systems amounted to
$233.9 million and $109.2 million in the three months ended March
31, 2000 and 1999, respectively, representing 86.4% and 73.9%,
respectively, of our total revenue for such periods.
We believe that the demand for CC&B Systems will continue to increase due to,
among other key factors:
- the growth and globalization of the communications market,
- intensifying competition among communications carriers,
- rapid technological changes, such as the introduction of wireless
Internet services via WAP (Wireless Application Protocol) and GPRS
(General Packet Radio Services) technology,
- the proliferation of new communications products and services, and
- a shift from in-house management to vendor solutions and
outsourcing.
We also believe that a key driver of demand is the continuing trend for network
operators and service providers to offer to their subscribers multiple service
packages, commonly referred to as convergent services (combinations of local,
long distance, international, mobile, cable television, IP, data and electronic
commerce).
As a result of these developments, we believe that CC&B Systems will continue to
account for the largest share of our total revenue.
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 that we serve.
- License and service fee revenue from the sale of Directory Systems
totaled $67.6 million and $79.7 million in the six months ended
March 31, 2000 and 1999, respectively, accounting for 13.3% and
28.5%, respectively, of our total revenue for such periods. License
and service fee revenue from the sale of Directory Systems totaled
$36.9 million and $38.6 million in the three months ended March 31,
2000 and 1999, respectively, accounting for 13.6% and 26.1%,
respectively, of our total revenue for such periods.
The decrease in revenue from Directory Systems reflects a lowering of the volume
of Directory Systems services required by our existing customers. We expect that
the demand for our Directory Systems will modestly decrease in future periods,
with the result that the contribution to total revenue of license and service
fees from Directory Systems services will also continue to decrease over time.
Our research and development activities involve the development of new software
modules and product offerings in response to an identified market demand, either
in conjunction with a customer project or as part of our product development
program. We also expend additional amounts on applied research and software
development activities to keep abreast of new technologies in the communications
market. Research and development expenditures amounted to $32.7 million and
$17.5 million in the six months ended March 31, 2000 and 1999, respectively,
representing 6.5% and 6.3% of our revenue in these periods, respectively.
Research and development expenditures amounted to $17.7 million and $9.1 million
in the three month ended March 31, 2000 and 1999, respectively, representing
6.5% and 6.2% of our revenue in
<PAGE> 13
these periods, respectively. In the next several years, we intend to continue to
make substantial investments in our research and development and anticipate a
significant increase in absolute dollar terms in research and development
expenditures for fiscal 2000. As a percentage of our expected revenue for this
period, we believe that our research and development expenditures will increase
only modestly. With our recent acquisition of Solect Technology Group Inc.
("Solect"), and the efficiencies expected to result from the integration of
Solect's IP solutions into our existing CC&B Systems, we believe our ongoing
investment in research and development for IP systems may be reduced. See
discussion below - "Recent Developments".
On November 30, 1999, we completed the purchase of International
Telecommunication Data Systems, Inc. ("ITDS"), in a stock-for-stock transaction.
ITDS is a leading provider of billing and customer care service bureau solutions
to wireless communication service providers. This acquisition is expected to
expand the scope of our CC&B Systems offering and further establish our
leadership in providing total solutions to the communications industry. We
issued 6,450,714 ordinary shares and granted 1,102,955 options for ordinary
shares in connection with the consummation of the transaction. The total
purchase price of $188.7 million, based on a per share price of $28.25 for our
ordinary shares, includes issuance of ordinary shares, the grant of options and
transaction costs. The acquisition was accounted for using the purchase method
of accounting. The fair market value of ITDS' assets and liabilities has been
included in our balance sheet as of the acquisition date. An acquired technology
valuation, which was determined by an independent appraiser, included both
existing technology and in-process research and development. The valuation of
these items was made by applying the income forecast method which considers the
present value of cash flows by product lines. The fair value of existing
technology products was valued at $12.3 million and is being amortized over five
years. In-process research and development, valued at $19.9 million, was charged
to expense immediately following the completion of the acquisition (in the
quarter ended December 31, 1999) as this technology had not reached
technological feasibility and has no alternative use. Additional development,
coding and testing efforts will be required before technological feasibility can
be determined. The fair value of customer lists was valued at $0.6 million and
the fair value of workforce in place was valued at $5.4 million, both of which
are being amortized over five years. The excess of the purchase price over the
net assets acquired, or goodwill, of $70.8 million is being amortized over 15
years.
<PAGE> 14
Results of Operations
The following table sets forth for the six and three months ended March 31, 2000
and 1999, respectively, certain items in our consolidated statements of
operations reflected as a percentage of total revenue:
<TABLE>
<CAPTION>
Three months ended Six months ended
March 31, March 31,
2000 1999 2000 1999
Pro forma As Pro forma As
(*) reported (*) reported
<S> <C> <C> <C> <C> <C> <C>
Revenue:
License 11.2% 11.2% 11.7% 11.2% 11.2% 11.6%
Service 88.8 88.8 88.3 88.8 88.8 88.4
----- ----- ----- ----- ----- -----
100.0 100.0 100.0 100.0 100.0 100.0
----- ----- ----- ----- ----- -----
Operating expenses:
Cost of license 0.5 0.5 0.9 0.5 0.5 1.0
Cost of service 57.8 57.9 57.0 58.3 58.4 57.4
Research and development 6.5 6.5 6.2 6.5 6.5 6.3
Selling, general and administrative 12.3 12.8 11.8 11.8 12.3 11.8
In-process research and development -- -- -- -- 3.9 --
expenses ----- ----- ----- ----- ----- -----
77.1 77.7 75.9 77.1 81.6 76.5
----- ----- ----- ----- ----- -----
Operating income 22.9 22.3 24.1 22.9 18.4 23.5
Other income (expense), net 0.9 0.9 (1.7) 0.5 0.5 (1.4)
----- ----- ----- ----- ----- -----
Income before income taxes 23.8 23.2 22.4 23.4 18.9 22.1
Income taxes 7.1 7.2 6.7 7.0 7.0 6.6
----- ----- ----- ----- ----- -----
Net income 16.7% 16.0% 15.7% 16.4% 11.9% 15.5%
===== ===== ===== ===== ===== =====
</TABLE>
(*) The pro forma financial information excludes the impact of the
write-off of in-process research and development and non-cash
amortization related to the ITDS transaction.
Six Months Ended March 31, 2000 and 1999
Revenue. Revenue for the six months ended March 31, 2000 was $506.3
million, an increase of $227.0 million, or 81.3%, compared to the six months
ended March 31, 1999, substantially due to the continuance of the growth in the
demand for our CC&B Systems solutions. License revenue increased from $32.3
million in the six months ended March 31, 1999 to $56.9 million during the six
months ended March 31, 2000, an increase of 76.0%, and service revenue increased
82.0% in the six months ended March 31, 2000 from $246.9 million in the six
months ended March 31, 1999 to $449.3 million in the six months ended March 31,
2000. Total CC&B Systems revenue for the six months ended March 31, 2000 was
$438.7 million, an increase of $239.1 million, or 120%, compared to the six
months ended March 31, 1999. Revenue from Directory Systems was $67.6 million
for the six months ended March 31, 2000, a decrease of $12.1 million, or 15.2%,
from the six months ended March 31, 1999. The decrease in revenue from Directory
Systems reflects a decrease in the number of new Directory Systems development
contracts.
In the six months ended March 31, 2000, revenue from customers in North
America, Europe, and the rest of the world accounted for 46%, 41% and 13%,
respectively, compared to 44%, 36% and 20%, respectively, for the six months
ended March 31, 1999. The growth in revenue from customers in Europe was
primarily attributable to increased competition among communications companies
within and continued deregulation of the European market.
<PAGE> 15
Cost of License. Cost of license for the six months ended March 31, 2000
was $2.6 million, a decrease of $0.1 million, or 2.3%, from cost of license for
the six months ended March 31, 1999. Cost of license includes amortization of
purchased computer software and intellectual property rights. The decrease in
cost of license for the six months ended March 31, 2000 was attributable
primarily to reductions in the required amortization of purchased computer
software.
Cost of Service. Cost of service increased from $160.2 million for the six
months ended March 31, 1999 to $295.9 million for the six months ended March 31,
2000. Excluding the non-cash charges relating to the acquisition of ITDS, the
pro forma cost of service for the six months ended March 31, 2000 was $295.1
million, an increase of $134.9 million. As a percentage of revenue, cost of
service increased from 57.4% for the six months ended March 31, 1999 to 58.4%
for the six months ended March 31, 2000. Excluding the non-cash charges relating
to the acquisition of ITDS, the pro forma cost of service for the six months
ended March 31, 2000 was 58.3% of total revenue. The increase in cost of service
is consistent with the increase in revenue for the period, and reflects
increased employment levels required to support the continuing growth in
revenue.
Research and Development. Research and development expense was primarily
comprised of compensation expense attributed to research and development
activities, either in conjunction with customer projects or as part of our
product development program. In the six months ended March 31, 2000, research
and development expense was $32.7 million, or 6.5% of revenue, compared with
$17.5 million, or 6.3% of revenue, in the six months ended March 31, 1999. 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, primarily comprised of compensation expense, increased from $33.1
million for the six months ended March 31, 1999 to $62.2 million for the six
months ended March 31, 2000. Excluding the non-cash charges related to the
acquisition of ITDS, the pro forma selling, general and administrative expense
for the six months ended March 31, 2000 was $60.2 million, an increase of $27.1
million. As a percentage of revenue, selling, general and administrative expense
increased from 11.8% for the six months ended March 31, 1999 to 12.3% for the
six months ended March 31, 2000. Excluding the non-cash charges relating to the
acquisition of ITDS, the pro forma selling, general and administrative expense
for the six months ended March 31, 2000 was 11.8% of total revenue. The increase
in selling, general and administrative expense is in line with the increase in
our revenue for the six months ended March 31, 2000.
In-process Research and Development Expenses. In-process research and
development expenses in the six months ended March 31, 2000 consisted of a
one-time, non-cash charge of $19.9 million for write-off of in-process research
and development resulting from our acquisition of ITDS.
Operating Income. Operating income decreased to 18.4% of revenue for the
six months ended March 31, 2000, as compared to 23.5% for the six months ended
March 31, 1999, primarily due to the one-time charge for in-process research and
development related to the acquisition of ITDS. Pro forma operating income in
the six months ended March 31, 2000, excluding the non-cash charges related to
the acquisition of ITDS, was $ 115.7 million, as compared with $65.8 million in
the six months ended March 31, 1999, an increase of 75.8%.
Other Income (Expense), Net. In the six months ended March 31, 2000, other
income, net was $2.7 million, an increase of $6.6 million from the six months
ended March 31, 1999. The increase in other income, net, is primarily attributed
to the reduction in debt through the use of cash from operations and interest
from accumulating cash equivalents and short-term interest-bearing investments.
Income Taxes. Income taxes in the six months ended March 31, 2000 were
$35.5 million on income before taxes of $95.6 million. Income taxes were $18.6
million on income before taxes of $61.8 million in the six months ended March
31, 1999. In the six months ended March 31, 2000, the effective tax rate was
37%, resulting from the one-time charge of in-process research and development,
and non-cash amortization related to the acquisition of ITDS, which are not tax
deductible. The pro forma effective tax rate for the six months ended March 31,
2000, excluding the non-cash charges related to the ITDS acquisition, is 30%.
See discussion below - "Effective Tax Rate".
<PAGE> 16
Net Income. Net income for the six months ended March 31, 2000 was $60.1
million, or $0.29 per diluted share, compared to $43.3 million, or $0.22 per
diluted share, in the six months ended March 31, 1999. Pro forma net income in
the six months ended March 31, 2000, excluding the one-time charge of in-process
research and development and non-cash amortization related to the acquisition of
ITDS, increased by 91.3% from the six months ended March 31, 1999, reaching
$82.8 million, or $0.40 per diluted share.
Three Months Ended March 31, 2000 and 1999
Revenue. Revenue for the three months ended March 31, 2000 was $270.7
million, an increase of $122.9 million, or 83.1%, compared to the quarter ended
March 31, 1999, primarily due to the continuance of the growth in the demand for
our CC&B Systems solutions and for a lesser degree from the acquisition of ITDS.
License revenue increased from $17.3 million in the three months ended March 31,
1999 to $30.4 million during the three months ended March 31, 2000, an increase
of 75.9%, and service revenue increased 84.1% in the three months ended March
31, 2000 from $130.5 million in the three months ended March 31, 1999 to $240.3
million in the three months ended March 31, 2000. Total CC&B Systems revenue for
the three month ended March 31, 2000 was $233.9 million, an increase of $124.7
million, or 114.2%, compared to the three months ended March 31, 1999. Revenue
from Directory Systems was $36.9 million for the three months ended March 31,
2000, a decrease of $1.7 million, or 4.5%, from the three months ended March 31,
1999.
In the three months ended March 31, 2000, revenue from customers in North
America, Europe, and the rest of the world accounted for 52%, 39% and 9%,
respectively, compared to 44%, 35% and 21%, respectively, for the quarter ended
March 31, 1999. The growth in revenue from customers in Europe was primarily
attributable to increased competition among communications companies within and
continued deregulation of the European market.
Cost of License. Cost of license for the three months ended March 31, 2000
was $1.5 million, an increase of $0.1 million, or 6.4%, from cost of license for
the three months ended March 31, 1999. Cost of license includes amortization of
purchased computer software and intellectual property rights. The increase in
cost of license for the three months ended March 31, 2000 was attributable
primarily to the increase in the required amortization of purchased computer
software.
Cost of Service. Cost of service increased from $84.3 million for the
three months ended March 31, 1999 to $156.9 million for the three months ended
March 31, 2000. Excluding the non-cash charges relating to the acquisition of
ITDS, the pro forma cost of service for the three months ended March 31, 2000
was $156.3 million, an increase of $72.0 million. As a percentage of revenue,
cost of service increased from 57.0% for the three months ended March 31, 1999
to 57.9% for the three months ended March 31, 2000. Excluding the non-cash
charges relating to the acquisition of ITDS, the pro forma cost of service for
the three months ended March 31, 2000 was 57.8% of total revenue. The increase
in cost of service is consistent with the increase in revenue for the quarter,
and reflects increased employment levels required to support the continuing
growth in revenue.
Research and Development. Research and development expense was primarily
comprised of compensation expense attributed to research and development
activities, either in conjunction with customer projects or as part of our
product development program. In the three months ended March 31, 2000, research
and development expense was $17.7 million, or 6.5% of revenue, compared with
$9.1 million, or 6.2% of revenue, in the three months ended March 31, 1999. 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, primarily comprised of compensation expense, increased from $17.4
million for the three months ended March 31, 1999 to $34.6 million for the three
months ended March 31, 2000. Excluding the non-cash charges related to the
acquisition of ITDS, the pro forma selling, general and administrative expense
for the three months ended March 31, 2000 was $33.1 million, an increase of
$15.7 million. As a percentage of revenue, selling, general and administrative
expense increased from 11.8% for the three months ended March 31, 1999 to 12.8%
for the three months ended March 31, 2000. Excluding the non-cash charges
relating to the acquisition of ITDS, the pro forma selling, general and
administrative expense for the three months ended
<PAGE> 17
March 31, 2000 was 12.3% of total revenue. The increase in selling,
general and administrative expense is in line with the increase in our revenue
for the quarter ended March 31, 2000.
Operating Income. Operating income in the three months ended March 31,
2000, was $ 60.1 million, as compared with $35.6 million in the three months
ended March 31, 1999, an increase of 68.7%. Operating income decreased to 22.3%
of revenue for the three months ended March 31, 2000 as compared to 24.1% for
the three months ended March 31, 1999, primarily due to the non-cash
amortization related to the acquisition of ITDS.
Other Income (Expense), Net. In the three months ended March 31, 2000,
other income, net was $2.3 million, an increase of $4.9 million from the three
months ended March 31, 1999. The increase in other income, net, is primarily
attributed to the reduction in debt through the use of cash from operations and
interest from accumulating cash equivalents and short-term interest-bearing
investments.
Income Taxes. Income taxes in the three months ended March 31, 2000 were
$19.6 million on income before taxes of $62.4 million. In the three months ended
March 31, 1999, income taxes were $9.9 million on income before taxes of $33.1
million. In the three months ended March 31, 2000, the effective tax rate was
31%. See discussion below - "Effective Tax Rate".
Net Income. Net income in the three months ended March 31, 2000 increased
by 85.2% from the quarter ended March 31, 1999, reaching $42.9 million, or $0.20
per diluted share, compared to $23.1 million, or $0.12 per diluted share, in the
three months ended March 31, 1999.
Liquidity and Capital Resources
Financing Transactions
We have primarily financed our operations through cash generated from operations
and borrowings from banks and other lenders. Cash and cash equivalents totaled
$221.9 million as of March 31, 2000 compared to $85.2 million as of September
30, 1999. The increase in cash and cash equivalents as of March 31, 2000 is
attributable primarily to cash flows from operations, a cash balance of $31.9
million we acquired as part of the acquisition of ITDS, and exercising of
employee's stock options. Net cash provided by operating activities amounted to
$128.0 million and $38.3 million for the six months ended March 31, 2000 and
1999, respectively. A significant portion of our cash flow from operations
during the six months ended March 31, 2000 was used to invest in cash
equivalents and short-term interest-bearing investments. We currently intend to
retain our future earnings to support the further expansion of our business.
As of March 31, 2000, we had short-term lines of credit totaling $152.0 million
from various banks or bank groups, of which only $17.0 million was outstanding.
As of that date, we also had utilized approximately $19.1 million of a revolving
credit facility to support outstanding bank guarantees.
As of March 31, 2000, we had positive working capital of $201.0 million as
compared to positive working capital of $35.9 million as of September 30, 1999,
and $145.7 million as of December 31, 1999. The increase in working capital is
primarily attributed to cash generated from operating activities and to the cash
obtained from our acquisition of ITDS. We believe that current cash balances,
cash generated from operations and our current lines of credit will provide
sufficient resources to meet our cash needs in the near future.
As of March 31, 2000, we had long-term obligations outstanding of $21.4 million
in connection with leasing arrangements. Currently, our capital expenditures,
consisting primarily of computer equipment and vehicles, are funded principally
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 as of March 31, 2000 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.
<PAGE> 18
Year 2000 Issues
In prior years, we discussed the nature and progress of our plans to
become Year 2000 ready. In late 1999, we completed our remediation and testing
of systems. As a result of our planning and implementation efforts, we
experienced no significant disruptions in mission-critical technology and
non-information technology systems and believe those systems successfully
responded to the Year 2000 date change. We are not aware of any material
problems resulting from Year 2000 issues, either with our products and internal
systems or the products and services of third parties. We will continue to
monitor our mission-critical computer and software applications and those of our
suppliers and vendors throughout the year 2000 to ensure than any latent Year
2000 matters that may arise are addressed promptly.
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 six months ended March 31, 2000 was 37% compared to
30% in the six months ended March 31, 1999. This higher effective tax rate was
attributable to a write-off of in-process research and development expenses and
amortization charges related to our acquisition of ITDS, much of which is not
tax deductible. Excluding the impact of these charges, the effective tax rate
for the six months ended March 31, 2000 was 30%. We anticipate that certain
additional non-cash and non-tax deductible charges related to our Solect
acquisition will further increase our effective tax rate for fiscal 2000 to
between 60% and 70% of reported pre-tax income. Excluding these additional
charges, our effective tax rate would remain near its historic level of 30%. See
discussion below -- "Recent Developments".
Currency Fluctuations
Approximately 85% of our revenue is in U.S. dollars or linked to the dollar and
therefore the dollar is our functional currency. Approximately 58% 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 March 31, 2000, we had hedged most of
our significant exposures in currencies other than the dollar.
Recent Developments
On April 5, 2000, we completed the purchase of Solect Technology Group Inc.
("Solect"), in a stock-for-stock transaction. Solect is a leading provider of IP
billing and customer care software to next generation service providers,
including wireless and application service providers, or ASP's. The Solect
acquisition is expected to expand the scope of our CC&B Systems offering and to
further establish our leadership role in providing total solutions to the
communications industry. In connection with the consummation of the transaction,
we issued and/or granted options to acquire a total of 15.5 million of our
ordinary shares. The total purchase price of approximately $1.1 billion, based
on a per share price of $69.875 for our ordinary shares, includes both the
issuance of and grant of options for our ordinary shares, as well as transaction
costs. The acquisition will be accounted for under the purchase method of
accounting.
An independent appraiser currently is performing an acquired technology
valuation, which will include existing technology and in-process research and
development. The valuation of these technologies will be made by applying the
income forecast method, which considers the present value of cash flows by
product lines.
The purchase is expected to result in a one-time, non-cash charge to our
earnings as certain of Solect's technologies have not reached technological
feasibility and have no alternative use. It is believed that these technologies
will require varying additional development, coding and testing efforts before
technological feasibility can be determined. The amortization by us of certain
acquired technology will be over two to three years. We believe that a
significant portion of the purchase price will be allocated to goodwill, which
we expect to amortize over five to seven years. These non-cash, non-tax
deductible charges will increase our estimated effective tax rater for fiscal
2000 to 60% to 70%. Excluding these
<PAGE> 19
charges, the effective tax rate would remain near its historic level of 30%. See
discussion above - "Effective Tax Rate."
<PAGE> 20
AMDOCS LIMITED
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders.
We held our 1999 Annual General Meeting of Shareholders on January 26, 2000. At
that meeting, shareholders elected eleven directors for terms to expire at the
next Annual General Meeting or until their positions are vacated by resignation
or otherwise. In addition, shareholders approved three Company proposals. The
persons elected and the results of the voting are as follows:
<TABLE>
<CAPTION>
Votes For Votes Against Withheld
--------- ------------- --------
<S> <C> <C> <C>
Bruce K. Anderson 135,791,635 0 18,681
Adrian Gardner 135,791,635 0 18,681
Stephen Hermer 135,791,635 0 18,681
James S. Kahan 135,791,635 0 18,681
Paz Littman 135,791,635 0 18,681
John T. McLennan 135,791,635 0 18,681
Robert A. Minicucci 135,791,635 0 18,681
Avinoam Naor 135,791,635 0 18,681
Lawrence Perlman 135,791,635 0 18,681
Michael J. Price 135,791,635 0 18,681
Urs Suter 135,791,635 0 18,681
</TABLE>
<TABLE>
<CAPTION>
Votes For Votes Against Abstain Broker Non-voters
--------- ------------- ------- -----------------
<S> <C> <C> <C> <C>
Company proposal number 1 -
Approval of Consolidated
Financial Statements for fiscal 135,782,167 3,813 24,336 0
year ended September 30, 1999
Company proposal number 2 -
Approval of Ernst & Young LLP
and authorization of Board to 135,793,007 8,069 9,240 0
fix remuneration
Company proposal number 3 -
Approval of amendment to Stock 124,838,171 10,907,194 64,451 0
Option and Incentive Plan
</TABLE>
22
<PAGE> 21
Item 6. Exhibits and Reports on Form 6-K.
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
99.1 Amdocs Limited Press Release dated April 18, 2000.
</TABLE>
(b) Reports on Form 6-K.
The Company filed the following reports on Form 6-K during the three
months ended March 31, 2000:
(1) Amendment No. 1 to Form 6-K dated January 5, 2000, relating to
the acquisition of International Telecommunication Data
Systems, Inc., a Delaware corporation;
(2) Form 6-K dated February 10, 2000, relating to the fiscal
quarter ended December 31, 1999; and
(3) Form 6-K dated March 3, 2000, relating to the acquisition of
Solect Technology Group Inc., a private company based in
Toronto, Canada.
23
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Amdocs Limited
/s/ Thomas G. O'Brien
----------------------
Thomas G. O'Brien
Treasurer and Secretary
Authorized U.S. Representative
Date: May 11, 2000
<PAGE> 23
EXHIBIT INDEX
<TABLE>
<CAPTION>
<S> <C>
Exhibit No. Description
99.1 Amdocs Limited Press Release dated April 18, 2000.
</TABLE>
24
<PAGE> 1
Exhibit 99.1
99.1. Press Release.
AMDOCS LIMITED CONTINUES STRONG, CONSISTENT GROWTH IN SECOND QUARTER
Revenue increases by 83.1% to $270.7 million and EPS by 84.2% to $0.21
St. Louis, MO - April 18, 2000, Amdocs Limited (NYSE: DOX) today
reported that for the second quarter ended March 31, 2000, revenue reached
$270.7 million, an increase of 83.1% over last year's second quarter. Excluding
non-cash acquisition-related amortization expenses, net income increased 95.2%
to $45.2 million, compared with $23.1 million in the second quarter of 1999,
while diluted earnings per share were $0.21 versus $0.12 in the same period in
the prior year. As-reported net income for the quarter, including these
amortization expenses, was $42.9 million, or $0.20 per diluted share, compared
to $23.1 million or $0.12 per diluted share in the second quarter of fiscal
1999. Cash balances continued to grow this quarter, reaching $242.6 million, an
increase of $56.3 million compared to the end of the first quarter of fiscal
2000.
Avi Naor, Chief Executive Officer of Amdocs Management Limited, noted,
"This was an outstanding quarter for Amdocs. We posted excellent business
results and strong growth, and we continued our proven strategy of developing
long-term, service-based relationships with leading communications companies."
Naor continued, "Tremendous opportunities in the communications markets
are driving global demand for advanced customer care and billing solutions.
Demand is strong in all segments, including wireline, wireless, IP and
convergence. Service providers are turning to Amdocs for solutions that are both
innovative and reliable, enabling them to transform market opportunities into
sustained business success. Amdocs, the world's leader in customer care and
billing systems, is uniquely positioned to excel in this arena."
Naor added, "Our merger with Solect, the Toronto-based IP customer care
and billing provider, initially announced on February 29 this year, was
completed on April 5. The integration of the organizations is moving forward
quickly, and there is an excellent fit in terms of corporate cultures. The
Solect acquisition has enhanced our product offering, enabling us to capitalize
on some important market opportunities. This is a clear vindication of our
approach, which uses mergers and acquisitions as an instrument to improve
product and service offerings to our customers."
Naor concluded, "Looking forward, our pipeline is strong. We continue
to foster ongoing business relationships with our existing and new customers,
and revenue visibility is at the same high level as in previous quarters. The
second quarter continues our record of faultless, consistent results and
sustained, solid growth. We are very confident regarding our future business
prospects."
Amdocs is a leading provider of customer care, billing and order
management systems for communications and Internet services. Amdocs has an
unparalleled success record in project delivery of its mission-critical
products. With human resources of over 5,900 information systems professionals,
Amdocs has an installed base of successful projects with more than 75 service
providers throughout the world. In April 2000, Amdocs completed the acquisition
of Solect Technology Group Inc., a leading provider of customer care and billing
systems for IP service providers. For more information visit our Web site at
www.amdocs.com.
This press release may contain forward-looking statements as defined
under the Securities Act of 1933, as amended. Such statements involve risks and
uncertainties that may cause future results to differ from those anticipated.
These risks include, but are not limited to, the adverse effects of market
competition, rapid changes in technology that may render the company's products
and services obsolete, potential loss of a major customer, and risks associated
with operating businesses in the international market. These and other risks are
discussed at greater length in the company's filings with the Securities and
Exchange Commission.
<PAGE> 2
AMDOCS LIMITED
Pro forma Consolidated Statements of Operations (Unaudited)
Excluding Impact of Charges for In-Process Research and Development and
Amortization Expenses Resulting from Acquisition and
Related Tax Effects (in thousands, except
per share data)
<TABLE>
<CAPTION>
Three months ended Six months ended
March 31, March 31,
--------- ---------
2000 (1) 1999 2000 (1) 1999
--------- --------- --------- ---------
Revenue:
<S> <C> <C> <C> <C>
License $ 30,441 $ 17,308 $ 56,943 $ 32,348
Service 240,304 130,522 449,308 246,907
--------- --------- --------- ---------
270,745 147,830 506,251 279,255
Operating expenses:
Cost of license 1,458 1,370 2,631 2,693
Cost of service 156,272 84,280 295,100 160,195
Research and development 17,713 9,140 32,683 17,519
Selling, general and administrative 33,087 17,415 60,186 33,062
--------- --------- --------- ---------
208,530 112,205 390,600 213,469
--------- --------- --------- ---------
Operating income 62,215 35,625 115,651 65,786
Other income (expense), net 2,318 (2,566) 2,663 (3,953)
--------- --------- --------- ---------
Income before income taxes 64,533 33,059 118,314 61,833
Income taxes 19,360 9,918 35,494 18,550
--------- --------- --------- ---------
Net income $ 45,173 $ 23,141 $ 82,820 $ 43,283
========= ========= ========= =========
Diluted earnings per share $ 0.21 $ 0.12 $ 0.40 $ 0.22
========= ========= ========= =========
Diluted weighted average number of shares 211,416 199,542 207,904 199,263
======= ======= ======= =======
outstanding
</TABLE>
(1) For the three and six months ended March 31, 2000, excludes $2,310 and
$2,800 related to non-cash amortization charges for goodwill and other
intangibles associated with the acquisition of ITDS, net of tax effects.
For the six months ended March 31, 2000, also excludes $19,876 non-cash
charge for in - process research and development related to the acquisition
of ITDS.
With these charges, income before taxes was $62,433 and $95,638 for the
three and six months ended March 31, 2000 and diluted earnings per share
were $0.20 and $0.29 for the three and six months ended March 31, 2000.
<PAGE> 3
AMDOCS LIMITED
Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended Six months ended
March 31, March 31,
-------- --------
2000 1999 2000 1999
--------- --------- --------- ---------
Revenue:
<S> <C> <C> <C> <C>
License $ 30,441 $ 17,308 $ 56,943 $ 32,348
Service 240,304 130,522 449,308 246,907
--------- --------- --------- ---------
270,745 147,830 506,251 279,255
Operating expenses:
Cost of license 1,458 1,370 2,631 2,693
Cost of service 156,889 84,280 295,923 160,195
Research and development 17,713 9,140 32,683 17,519
Selling, general and administrative 34,570 17,415 62,163 33,062
In process research and development expenses -- -- 19,876 --
--------- --------- --------- ---------
210,630 112,205 413,276 213,469
--------- --------- --------- ---------
Operating income 60,115 35,625 92,975 65,786
Other income (expense), net 2,318 (2,566) 2,663 (3,953)
--------- --------- --------- ---------
Income before income taxes 62,433 33,059 95,638 61,833
Income taxes 19,570 9,918 35,494 18,550
--------- --------- --------- ---------
Net income $ 42,863 $ 23,141 $ 60,144 $ 43,283
========= ========= ========= =========
Basic earnings per share $ 0.21 $ 0.12 $ 0.30 $ 0.22
========= ========= ========= =========
Diluted earnings per share $ 0.20 $ 0.12 $ 0.29 $ 0.22
========= ========= ========= =========
Basic weighted average number of shares outstanding 205,985 196,800 203,465 196,800
========= ========= ========= =========
Diluted weighted average number of shares 211,416 199,542 207,904 199,263
outstanding ========= ========= ========= =========
</TABLE>
<PAGE> 4
AMDOCS LIMITED
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands)
<TABLE>
<CAPTION>
As of
-----
March 31, September 30,
2000 1999
-------- --------
ASSETS
Current assets
<S> <C> <C>
Cash, cash equivalents and short term interest bearing investments $242,551 $ 85,174
Accounts receivable, including unbilled of $9,764 and $4,243, 226,539 159,312
respectively
Prepaid expenses and other current assets 58,921 46,289
-------- --------
Total current assets 528,011 290,775
Equipment, vehicles and leasehold improvements, net 99,204 83,997
Goodwill and other intangible assets, net 110,858 20,742
Other assets 44,771 34,497
-------- --------
Total assets $782,844 $430,011
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accruals $136,009 $108,686
Short-term financing arrangements 23,154 8,103
Deferred revenue 114,682 104,688
Deferred income taxes and income taxes payable 53,184 33,412
-------- --------
Total current liabilities 327,029 254,889
Noncurrent liabilities 63,852 51,385
Shareholders' equity 391,963 123,737
======== ========
Total liabilities and shareholders' equity $782,844 $430,011
======== ========
</TABLE>
CONTACT: Amdocs Limited
Thomas G. O'Brien
Treasurer and Director of Investor Relations
314/212-8328
E-mail: [email protected]
