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Third Quarter Results for Fiscal 2008

Amdocs Reports Record Quarterly Revenue of $820 Million, Exceeding Guidance

Key highlights:

  • Third quarter revenue increased to $820 million, exceeding guidance of $790-$805 million
  • Third quarter diluted non-GAAP EPS, excluding acquisition-related costs and equity-based compensation expense, net of related tax effects, increased to $0.61, in line with guidance of $0.59-$0.61 diluted non-GAAP EPS
  • Diluted GAAP EPS of $0.46 for the quarter
  • Free cash flow of $83 million for the quarter
  • Fourth quarter fiscal 2008 guidance: Expected revenue of approximately $825-$835 million and diluted non-GAAP EPS of $0.61-$0.63, excluding acquisition-related costs and approximately $0.06-$0.07 per share of equity-based compensation expense, net of related tax effects. Diluted GAAP EPS is expected to be approximately $0.47-$0.50

St. Louis, MO - July 23, 2008 - Amdocs Limited (NYSE: DOX) today reported that for its fiscal third quarter ended June 30, 2008, revenue was $820.3 million, an increase of 15.2% from last year's third quarter. Net income on a non-GAAP basis was $132.5 million, or $0.61 per diluted share (excluding acquisition-related costs, which include amortization of purchased intangible assets and in-process research and development write-off, and excluding equity-based compensation expense, net of related tax effects, of $31.8 million), compared to non-GAAP net income of $120.6 million, or $0.54 per diluted share, in the third quarter of fiscal 2007 (excluding acquisition-related costs, which include amortization of purchased intangible assets and equity-based compensation expense, net of related tax effects, of $32.4 million). The Company's GAAP net income was $100.7 million, or $0.46 per diluted share, compared to GAAP net income of $88.2 million, or $0.40 per diluted share, in the third quarter of fiscal 2007. Free cash flow for the quarter was $83.2 million, comprised of cash flow from operations of $115.1 million less $31.9 million in net capital expenditures and other.

"Our role as a strategic partner with our customers is translating into excellent business results for Amdocs," said Dov Baharav, chief executive officer of Amdocs Management Limited. "We continue to provide innovative solutions to solve real-world business needs for the leading service providers around the world. Our unique combination of industry-leading integrated products, services and domain expertise provides us with growth opportunities in areas such as managed services and transformational projects in developed markets and in emerging markets around the world. We continue to see strong demand at this time but there are macro-economic uncertainties which may have an impact on our results in the future. We believe that we are well-positioned for future growth."

In the third quarter Amdocs had numerous wins across lines of business and geographies. The Company had a win in North America with the Amdocs CES - Qpass 7.5 offering and continues to show momentum in broadband cable and satellite with wins for operational support systems (OSS) and mediation solutions. Amdocs had additional OSS success including a win in Asia Pacific, which builds on a strong existing relationship, and in Europe with Slovak Telecom. Amdocs enjoyed success in emerging markets as Bakcell in Azerbaijan selected Amdocs Compact Convergence Suite and another service provider chose Amdocs CRM.

Financial Outlook

Amdocs expects that revenue for the fourth quarter of fiscal 2008 will be approximately $825-$835 million. Amdocs expects diluted earnings per share on a non-GAAP basis for the fourth quarter to be $0.61-$0.63, excluding acquisition-related costs and approximately $0.06-$0.07 per share of equity-based compensation expense, net of related tax effects. Diluted GAAP EPS is expected to be approximately $0.47-$0.50.

Amdocs will host a conference call on July 23, 2008 at 5 p.m. Eastern Time to discuss the Company's third quarter results. The call will be carried live on the Internet via www.InvestorCalendar.com and the Amdocs website, www.amdocs.com.

Non-GAAP Financial Measures

This release includes non-GAAP diluted earnings per share and other non-GAAP financial measures, including free cash flow, non-GAAP cost of service, non-GAAP research and development, non-GAAP selling, general and administrative, non-GAAP operating income, non-GAAP income taxes and non-GAAP net income. These non-GAAP measures exclude the following items:

  • amortization of purchased intangible assets;
  • in-process research and development write-off and other;
  • restructuring charges;
  • equity-based compensation expense; and
  • tax effects related to the above.

These non-GAAP financial measures are not in accordance with, or an alternative for, generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles. Amdocs believes that non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with Amdocs' results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Amdocs' results of operations in conjunction with the corresponding GAAP measures.

Amdocs believes that the presentation of non-GAAP diluted earnings per share and other financial measures, including free cash flow, non-GAAP cost of service, non-GAAP research and development, non-GAAP selling, general and administrative, non-GAAP operating income, non-GAAP income taxes and non-GAAP net income, when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to its financial condition and results of operations as well as the net amount of cash generated by its business operations after taking into account capital spending required to maintain or expand the business.

For its internal budgeting process and in monitoring the results of the business, Amdocs' management uses financial statements that do not include amortization of purchased intangible assets, in-process research and development write-off and other, restructuring charges, equity-based compensation expense, and related tax effects. Amdocs' management also uses the foregoing non-GAAP financial measures, in addition to the corresponding GAAP measures, in reviewing the financial results of Amdocs. In addition, Amdocs believes that significant groups of investors exclude these non-cash expenses in reviewing its results and those of its competitors, because the amounts of the expenses between companies can vary greatly depending on the assumptions used by an individual company in determining the amounts of the expenses.

Amdocs further believes that, where the adjustments used in calculating non-GAAP diluted earnings per share are based on specific, identified amounts that impact different line items in the Consolidated Statements of Income (including cost of service, research and development, selling, general and administrative, operating income, income taxes and net income), it is useful to investors to understand how these specific line items in the Consolidated Statements of Income are affected by these adjustments.

Please refer to the Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP tables below.

About Amdocs
Amdocs is the market leader in customer experience systems innovation, enabling world-leading service providers to deliver an integrated, innovative and the intentional customer experienceTM - at every point of service. Amdocs provides solutions that deliver customer experience excellence, combining the software, service and expertise to help its customers execute their strategies and achieve service, operational and financial excellence. A global company with revenue of $2.84 billion in fiscal 2007, Amdocs has more than 17,000 employees and serves customers in more than 50 countries around the world. For more information, visit Amdocs at www.amdocs.com.

This press release includes information that constitutes forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995, including statements about Amdocs growth and business results in future quarters. Although we believe the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be obtained or that any deviations will not be material. 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 effects of general economic conditions, Amdocs ability to grow in the business markets that it serves, Amdocs ability to successfully integrate acquired businesses, adverse effects of market competition, rapid technological shifts that may render the Company's products and services obsolete, potential loss of a major customer, our ability to develop long-term relationships with our customers, and risks associated with operating businesses in the international market. Amdocs may elect to update these forward-looking statements at some point in the future; however, the Company specifically disclaims any obligation to do so. These and other risks are discussed at greater length in the Company's filings with the Securities and Exchange Commission, including in our Annual Report on Form 20-F for the fiscal year ended September 30, 2007 filed on December 3, 2007 and on Form 6-K furnished on February 11 and May 6, 2008.

Contact:
Thomas G. O'Brien
Treasurer and Vice President of Investor Relations
Amdocs Limited
314-212-8328
E-mail: dox_info@amdocs.com



                                AMDOCS LIMITED

                      Consolidated Statements of Income

                    (in thousands, except per share data)

                                 Three months ended        Nine months ended
                                      June 30,                  June 30,
                               ---------------------    ----------------------
                                 2008          2007        2008         2007
                               --------      -------    ---------    ---------
    Revenue:
      License                  $ 35,244      $43,821     $ 93,570     $113,091
      Service                   785,044      668,270    2,243,249    1,996,393
                               --------      -------    ---------    ---------
                                820,288      712,091    2,336,819    2,109,484
    Operating expenses:
      Cost of license               555          960        2,267        3,045
      Cost of service           528,437      448,795    1,493,134    1,330,776
      Research and development   56,137       56,727      168,240      174,929
      Selling, general and
       administrative           104,632       94,445      300,963      274,895
      Amortization of purchased
       intangible assets         22,796       19,175       66,302       55,785
      Restructuring charges,
       in-process research and
       development and other      1,780            -        1,780        6,761
                               --------      -------    ---------    ---------
                                714,337      620,102    2,032,686    1,846,191
                               --------      -------    ---------    ---------
    Operating income            105,951       91,989      304,133      263,293

    Interest income and
     other, net                   6,159       14,290       23,797       36,928
                               --------      -------    ---------    ---------
    Income before income taxes  112,110      106,279      327,930      300,221

    Income taxes                 11,438       18,098       31,735       31,527
                               --------      -------    ---------    ---------
    Net income                 $100,672      $88,181     $296,195     $268,694
                               ========      =======    =========    =========
    Basic earnings per share   $   0.49      $  0.42     $   1.43     $   1.30
                               ========      =======    =========    =========
    Diluted earnings
     per share (1)             $   0.46      $  0.40     $   1.36     $   1.22
                               ========      =======    =========    =========
    Basic weighted average
     number of shares
     outstanding                206,329      208,262      207,069      207,332
                               ========      =======    =========    =========
    Diluted weighted average
     number of shares
     outstanding                219,120      223,775      220,315      222,997
                               ========      =======    =========    =========


    (1) To reflect the impact of assumed conversion of the convertible notes,
        $985 and $2,955, representing interest expense and amortization of
        issuance costs, were added back to net income for the three and nine
        months ended June 30, 2008 and 2007, for the purpose of computing
        diluted earnings per share.



                                AMDOCS LIMITED
                          Selected Financial Metrics
                    (in thousands, except per share data)

                              Three months ended        Nine months ended
                                    June 30,                 June 30,
                             ---------------------  ------------------------
                               2008         2007        2008          2007
                             --------     --------  ----------    ----------
    Revenue                  $820,288     $712,091  $2,336,819    $2,109,484

    Non-GAAP operating
     income                   146,608      123,843     415,925       365,809

    Non-GAAP net income       132,463      120,576     382,400       353,163

    Non-GAAP diluted
     earnings per
     share (1)               $   0.61     $   0.54  $     1.75    $     1.60

    Diluted weighted
     average number of
     shares outstanding       219,120      223,775     220,315       222,997


    (1) To reflect the impact of assumed conversion of the convertible notes,
        $985 and $2,955, representing interest expense and amortization of
        issuance costs, were added back to net income for the three and nine
        months ended June 30, 2008 and 2007, for the purpose of computing
        diluted earnings per share.



                                AMDOCS LIMITED
      Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP
                                (in thousands)

                                       Three months ended
                                          June 30, 2008
                  ------------------------------------------------------------
                                       Reconciliation items
                            -------------------------------------------
                                      Restructuring
                          Amortization   charges,
                               of      in-process    Equity
                            purchased  research and   based
                            intangible development  compensation  Tax     Non-
                     GAAP     assets    and other     expense    effect   GAAP
                  ------------------------------------------------------------

    Operating
     expenses:
      Cost of
       license    $    555   $     -   $    -     $     -    $     -  $    555
      Cost of
       service     528,437         -        -      (5,998)         -   522,439
      Research and
       development  56,137         -        -      (1,104)         -    55,033
      Selling,
       general and
       admini-
       strative    104,632         -        -      (8,979)         -    95,653
      Amortization
       of purchased
       intangible
       assets       22,796   (22,796)       -           -          -         -
      Restructuring
       charges,
       in-process
       research and
       development
       and other     1,780         -   (1,780)          -          -         -
                  ------------------------------------------------------------
    Total
     operating
     expenses      714,337   (22,796)  (1,780)    (16,081)         -   673,680
                  ------------------------------------------------------------
                  ------------------------------------------------------------
    Operating
     income        105,951    22,796    1,780      16,081          -   146,608
                  ------------------------------------------------------------
                  ------------------------------------------------------------
    Income taxes    11,438         -        -           -      8,866    20,304
                  ------------------------------------------------------------
                  ------------------------------------------------------------
    Net income    $100,672   $22,796   $1,780     $16,081    $(8,866) $132,463
                  ------------------------------------------------------------



                                    Three months ended
                                      June 30, 2007
                   ---------------------------------------------------------
                                        Reconciliation items
                               -------------------------------------
                               Amortization
                               of purchased  Equity based
                                intangible   compensation
                      GAAP        assets       expense    Tax effect  Non-GAAP
                   -----------------------------------------------------------
    Operating
     expenses:
      Cost of
       license     $   960      $     -       $     -       $  -      $    960
      Cost of
       service     448,795            -        (6,587)         -       442,208
      Research and
       development  56,727            -        (1,734)         -        54,993
      Selling,
       general and
       admini-
       strative     94,445            -        (4,358)         -        90,087
      Amortization
       of purchased
       intangible
       assets       19,175      (19,175)            -          -             -
                   -----------------------------------------------------------
    Total operating
     expenses      620,102      (19,175)      (12,679)         -       588,248
                   -----------------------------------------------------------
                   -----------------------------------------------------------
    Operating
     income         91,989       19,175        12,679          -       123,843
                   -----------------------------------------------------------
                   -----------------------------------------------------------
    Income taxes    18,098            -             -       (541)       17,557
                   -----------------------------------------------------------
                   -----------------------------------------------------------
    Net income     $88,181      $19,175       $12,679       $541      $120,576
                   -----------------------------------------------------------



                                AMDOCS LIMITED
      Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP
                                (in thousands)

                                       Nine months ended
                                         June 30, 2008
                 -------------------------------------------------------------
                                      Reconciliation items
                          --------------------------------------------
                                      Restructuring
                          Amortization   charges,
                               of      in-process    Equity
                           purchased  research and    based
                           intangible  development compensation  Tax    Non-
                      GAAP   assets     and other    expense   effect   GAAP
                 -------------------------------------------------------------
    Operating
     expenses:
      Cost of
       license   $    2,267 $     -     $   -     $     -     $  -   $   2,267
      Cost of
       service    1,493,134       -         -      (17,711)      -   1,475,423
      Research and
       development  168,240       -         -       (3,626)      -     164,614
      Selling,
       general and
       admini-
       strative     300,963       -         -      (22,373)      -     278,590
      Amortization
       of purchased
       intangible
       assets        66,302  (66,302)       -          -         -          -
      Restructuring
       charges,
       in-process
       research and
       development
       and other      1,780       -     (1,780)        -         -          -
                 -------------------------------------------------------------
    Total
     operating
     expenses     2,032,686  (66,302)   (1,780)   (43,710)       -   1,920,894
                 -------------------------------------------------------------
                 -------------------------------------------------------------
    Operating
     income         304,133   66,302     1,780     43,710        -     415,925
                 -------------------------------------------------------------
                 -------------------------------------------------------------
    Income taxes     31,735       -         -          -     25,587     57,322
                 -------------------------------------------------------------
                 -------------------------------------------------------------
    Net income   $  296,195  $66,302    $1,780    $43,710  $(25,587) $ 382,400
                 -------------------------------------------------------------



                                AMDOCS LIMITED
      Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP
                                (in thousands)

                                    Nine months ended
                                      June 30, 2007
                --------------------------------------------------------------
                                   Reconciliation items
                         --------------------------------------------
                                     Restructuring
                         Amortization   charges,
                              of      in-process    Equity
                          purchased  research and    based
                          intangible  development compensation  Tax     Non-
                     GAAP   assets     and other    expense    effect   GAAP
                --------------------------------------------------------------
    Operating
     expenses:
      Cost of
       license  $    3,045 $    -      $   -      $    -    $    -  $    3,045
      Cost of
       service   1,330,776      -          -       (18,914)      -   1,311,862
      Research
       and
       development 174,929      -          -        (5,099)      -     169,830
      Selling,
       general and
       admini-
       strative    274,895      -          -       (15,957)      -     258,938
      Amortization
       of purchased
       intangible
       assets       55,785 (55,785)        -            -        -          -
      Restructuring
       charges,
       in-process
       research and
       development
       and other     6,761      -     (6,761)          -         -          -
                --------------------------------------------------------------
    Total
     operating
     expenses    1,846,191 (55,785)   (6,761)     (39,970)       -   1,743,675
                --------------------------------------------------------------
                --------------------------------------------------------------
    Operating
     income        263,293  55,785     6,761       39,970        -     365,809
                --------------------------------------------------------------
                --------------------------------------------------------------
    Income taxes    31,527      -         -            -     18,047     49,574
                --------------------------------------------------------------
                --------------------------------------------------------------
    Net income  $  268,694 $55,785    $6,761      $39,970  $(18,047) $ 353,163
                --------------------------------------------------------------



                                AMDOCS LIMITED
                    Condensed Consolidated Balance Sheets
                                (in thousands)

                                                             As of
                                                     -----------------------
                                                      June 30,   September 30,
                                                        2008         2007
                                                     ----------   ----------
    ASSETS

    Current assets
    Cash, cash equivalents and short-term
     interest-bearing investments                    $1,180,405   $1,179,280
    Accounts receivable, net, including unbilled
     of $35,744 and $43,870 respectively(*)             588,667      473,847
    Deferred income taxes and taxes receivable           98,605      117,623
    Prepaid expenses and other current assets           104,050       98,746
                                                     ----------   ----------
        Total current assets                          1,971,727    1,869,496

    Equipment, vehicles and leasehold
     improvements, net                                  304,146      283,839
    Goodwill and other intangible assets, net         1,794,893    1,792,588
    Other noncurrent assets(*)                          493,225      399,427
                                                     ----------   ----------
    Total assets                                     $4,563,991   $4,345,350
                                                     ==========   ==========
    LIABILITIES AND SHAREHOLDERS' EQUITY

    Current Liabilities
    Accounts payable and accruals                    $  584,424   $  592,937
    Short-term portion of capital lease
     obligations and other financing arrangements         2,033        2,055
    Deferred revenue(*)                                 188,336      174,526
    Deferred income taxes and taxes payable              39,591      205,960
                                                     ----------   ----------
        Total current liabilities                       814,384      975,478
    0.50% Convertible notes                             450,000      450,000
    Noncurrent liabilities and other                    500,238      319,629
    Shareholders' equity                              2,799,369    2,600,243
                                                     ----------   ----------
    Total liabilities and shareholders' equity       $4,563,991   $4,345,350
                                                     ==========   ==========


    (*) Certain amounts in prior period financial statements have been
        reclassified to conform to the current period presentation.