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1 TYPE: 6-K SEQUENCE: 1 DESCRIPTION: AMDOCS LIMITED 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 December 31, 2000 AMDOCS LIMITED Suite 5, Tower Hill House Le Bordage St. Peter Port, Island of Guernsey, GY1 3QT 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 --

2 AMDOCS LIMITED FORM 6-K REPORT OF FOREIGN PRIVATE ISSUER FOR THE QUARTER ENDED DECEMBER 31, 2000 INDEX PART I FINANCIAL INFORMATION Item 1. Financial Statements Unaudited Consolidated Financial Statements Consolidated Balance Sheets Consolidated Statements of Income Consolidated Statement of Changes in Shareholders' Equity Consolidated Statements of Cash Flows Notes to Unaudited Consolidated Financial Statements Item 2. Operating and Financial Review and Prospects PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 6-K SIGNATURES EXHIBIT INDEX

3 AMDOCS LIMITED CONSOLIDATED BALANCE SHEETS (IN U.S. DOLLARS, UNLESS OTHERWISE STATED) (IN THOUSANDS, EXCEPT PER SHARE DATA) AS OF ------------------------------ DECEMBER 31, SEPTEMBER 30, 2000 2000 ------------ -------------- (UNAUDITED) ASSETS Current assets: Cash and cash equivalents $ 355,527 $ 402,300 Short-term interest-bearing investments 73,836 - Accounts receivable, including unbilled of $10,154 and $4,203, less allowances of $3,651 and $6,868, respectively (*) 297,225 263,100 Deferred income taxes and taxes receivable 41,987 35,179 Prepaid expenses and other current assets 38,217 34,327 ------------ ------------ Total current assets 806,792 734,906 Equipment, vehicles and leasehold improvements, net 133,889 128,081 Deferred income taxes 15,338 13,900 Goodwill and other intangible assets, net 955,658 1,011,053 Other noncurrent assets 48,132 47,145 ------------ ------------ Total assets $1,959,809 $1,935,085 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 119,845 $ 128,249 Accrued personnel costs 79,118 70,196 Short-term financing arrangements - 20,000 Deferred revenue 141,519 133,546 Short-term portion of capital lease obligations 9,355 8,713 Deferred income taxes and taxes payable 71,413 55,197 ------------ ------------ Total current liabilities 421,250 415,901 Long-term portion of capital lease obligations 25,941 23,417 Deferred income taxes 10,176 11,191 Other noncurrent liabilities 56,790 53,804 ------------ ------------ Total liabilities 514,157 504,313 ------------ ------------ Shareholders' equity: Preferred Shares - Authorized 25,000 shares; Pound Sterling 0.01 par value; 0 shares issued and outstanding - - Ordinary Shares - Authorized 550,000 shares; Pound Sterling 0.01 par value; 221,318 and 221,165 outstanding, respectively 3,542 3,539 Additional paid-in capital 1,786,492 1,784,816 Accumulated other comprehensive income 1,360 1,159 Unearned compensation (740) (1,164) Accumulated deficit (345,002) (357,578) ------------ ------------ Total shareholders' equity 1,445,652 1,430,772 ------------ ------------ Total liabilities and shareholders' equity $1,959,809 $1,935,085 ============ ============ (*) See Note 2. See accompanying notes

4 AMDOCS LIMITED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA) THREE MONTHS ENDED DECEMBER 31, ----------------------------- 2000 1999 ------------- ------------ Revenue: License (*) $ 38,076 $ 26,502 Service (*) 304,091 209,004 ------------- ------------ 342,167 235,506 ------------- ------------ Operating expenses: Cost of license 1,658 1,173 Cost of service (*) 191,788 138,467 Research and development 23,579 14,970 Selling, general and administrative (*) 43,450 27,460 Amortization of goodwill and purchased intangible assets 54,160 700 In-process research and development expenses and other indirect acquisition related costs - 19,876 ------------- ------------ 314,635 202,646 ------------- ------------ Operating income 27,532 32,860 Other income, net 5,562 345 ------------- ------------ Income before income taxes 33,094 33,205 Income taxes 20,518 15,924 ------------- ------------ Net income $ 12,576 $ 17,281 ============= ============ Basic earnings per share $ 0.06 $ 0.09 ============= ============ Diluted earnings per share $ 0.06 $ 0.08 ============= ============ Basic weighted average number of shares outstanding 221,217 201,020 ============= ============ Diluted weighted average number of shares outstanding 226,361 204,867 ============= ============ (*) See Note 2. See accompanying notes 2

5 AMDOCS LIMITED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) (IN THOUSANDS) Accumulated Ordinary Shares Additional Other Total ------------------- Paid-in Comprehensive Unearned Accumulated Shareholders' Shares Amount Capital Income Compensation Deficit Equity -------- --------- ---------- -------------- ------------- ----------- ------------ Balance as of September 30, 2000 221,165 $3,539 $1,784,816 $1,159 $(1,164) $(357,578) $1,430,772 Net income - - - - - 12,576 12,576 Employee stock options exercised 153 3 811 - - - 814 Tax benefit of stock options exercised - - 810 - - - 810 Unrealized other comprehensive income, net of $86 tax - - - 201 - - 201 Stock options granted - - 55 - - - 55 Amortization of unearned compensation - - - - 424 - 424 -------- --------- ---------- -------------- ------------- ----------- ------------ Balance as of December 31, 2000 221,318 $3,542 $1,786,492 $1,360 $(740) $(345,002) $1,445,652 ======== ========= ========== ============== ============= =========== =========== See accompanying notes 3

6 AMDOCS LIMITED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS) THREE MONTHS ENDED DECEMBER 31, 2000 1999 ---------------- --------------- CASH FLOW FROM OPERATING ACTIVITIES Net income $ 12,576 $ 17,281 Reconciliation of net income to net cash provided by operating activities: Depreciation and amortization 68,979 10,162 In-process research and development expenses - 19,876 Loss (income) on sale of equipment (16) 59 Deferred income taxes (7,012) (2,714) Tax benefit of stock options exercised 810 - Unrealized income on other comprehensive income 287 8,230 Net changes in operating assets and liabilities: Accounts receivable (34,125) 16,397 Prepaid expenses and other current assets (3,890) (18,469) Other noncurrent assets (43) (1,805) Accounts payable and accrued expenses 1,046 9,986 Deferred revenue 7,973 (55) Income taxes payable 13,884 7,343 Other noncurrent liabilities 2,986 7,939 ---------------- --------------- Net cash provided by operating activities 63,455 74,230 ---------------- --------------- CASH FLOW FROM INVESTING ACTIVITIES Proceeds from sale of equipment, vehicles and leasehold improvements 475 446 Payments for purchase of equipment, vehicles, leasehold improvements (14,028) (13,408) Purchase of short-term interest-bearing investments (73,836) (20,384) Investment in noncurrent assets (1,000) - Net cash acquired in acquisition - 31,900 ---------------- --------------- Net cash used in investing activities (88,389) (1,446) ================ =============== CASH FLOW FROM FINANCING ACTIVITIES Proceeds from employee stock options exercised 814 15 Payments under short-term finance arrangements (20,000) (83,282) Borrowings under short-term finance arrangements - 92,597 Principal payments on capital lease obligations (2,653) (1,469) ---------------- --------------- Net cash provided by (used in) financing activities (21,839) 7,861 ---------------- --------------- Net increase (decrease) in cash and cash equivalents (46,773) 80,645 Cash and cash equivalents at beginning of period 402,300 85,174 ---------------- --------------- Cash and cash equivalents at end of period $ 355,527 $ 165,819 ================ =============== SUPPLEMENTARY CASH FLOW INFORMATION Cash paid for: Income taxes, net of refunds $ 10,878 $ 8,498 Interest 813 543 NON CASH INVESTING AND FINANCING ACTIVITIES Capital lease obligations of $5,819 and $1,317 were incurred during the three months ended December 31, 2000 and 1999, respectively, when the Company (as hereinafter defined) entered into lease agreements for the purchase of fixed assets. See accompanying notes 4

7 AMDOCS LIMITED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (IN U.S. DOLLARS, UNLESS OTHERWISE STATED) (IN THOUSANDS, EXCEPT PER SHARE DATA) 1. BASIS OF PRESENTATION Amdocs Limited (the "Company") is a leading provider of software products and services to the communications industry. The Company and its subsidiaries operate in one business segment, providing business support systems and related services for the communications industry. The Company designs, develops, markets, supports and operates information system solutions to major wireless, wireline and Internet Protocol ("IP") 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 herein 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 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, 2000 set forth in the Company's Annual Report on Form 20-F filed with the Securities and Exchange Commission. Certain amounts in prior periods' financial statements have been reclassified to conform to the current period's presentation. 2. RELATED-PARTY TRANSACTIONS The following related party balances are included in the balance sheet: AS OF ----------------------------------- DECEMBER 31, SEPTEMBER 30, 2000 2000 ---------------- --------------- Accounts receivable $ 23,332 $ 27,116 The following related party transactions are included in the statement of operations for the following periods: THREE MONTHS ENDED DECEMBER 31, ----------------------------------- 2000 1999 ---------------- --------------- Revenue: License $ 3,583 $ 1,100 Service 42,667 23,596 Operating expenses: Cost of service 387 919 Selling, general and administrative 127 242 5

8 AMDOCS LIMITED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (IN U.S. DOLLARS, UNLESS OTHERWISE STATED) (IN THOUSANDS, EXCEPT PER SHARE DATA) 3. 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: THREE MONTHS ENDED DECEMBER 31, ----------------------------- 2000 1999 ------------- ------------- Net income $ 12,576 $ 17,281 Other comprehensive income: Unrealized income on derivative instruments, net of tax 41 5,773 Unrealized income (loss) on short-term interest-bearing investments, net of tax 160 (17) ------------- ------------- Comprehensive income $ 12,777 $ 23,037 ============= ============= 4. INCOME TAXES The provision for income taxes for the following periods consists of the following: THREE MONTHS ENDED DECEMBER 31, ----------------------------- 2000 1999 ------------- ------------- Current $ 27,530 $ 18,638 Deferred (7,012) (2,714) ------------- ------------- $ 20,518 $ 15,924 ============= ============= The effective income tax rate varied from the statutory Guernsey tax rate as follows for the following periods: THREE MONTHS ENDED DECEMBER 31, ----------------------------- 2000 1999 ------------- ------------- Statutory Guernsey tax rate 20% 20% Guernsey tax-exempt status (20) (20) Foreign taxes 30 30 Effect of acquisition-related costs 32 - ------------- ------------- Effective income tax rate 62% 30% ============= ============= The Company incurred non-deductible goodwill amortization primarily related to the acquisition of Solect Technology Group Inc. ("Solect"). As a result, the Company's effective income tax rate (calculated based on the income taxes out of the income before income taxes, excluding non-recurring charges for write-offs of purchased in-process research and development and other indirect acquisition related costs) in the three months ended December 31, 2000 is significantly higher than the effective income tax rate in the three months ended December 31, 1999. 6

9 AMDOCS LIMITED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (IN U.S. DOLLARS, UNLESS OTHERWISE STATED) (IN THOUSANDS, EXCEPT PER SHARE DATA) 5. EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share: THREE MONTHS ENDED DECEMBER 31, ----------------------- 2000 1999 ---------- --------- Numerator: Net income $ 12,576 $ 17,281 ========== ========= Denominator: Denominator for basic earnings per share - weighted average number of shares outstanding 221,217 201,020 Effect of dilutive stock options granted 5,144 3,847 ---------- --------- Denominator for dilutive earnings per share - adjusted weighted average shares and assumed conversions 226,361 204,867 ========== ========= Basic earnings per share $ 0.06 $ 0.09 ========== ========= Diluted earnings per share $ 0.06 $ 0.08 ========== ========= 6. RECENT DEVELOPMENTS The Company and Bell Canada have formed a joint venture company to provide customer care and billing solutions to Bell Canada and its affiliated companies. The joint venture company will be initially owned 90% by Bell Canada and 10% by the Company. A convertible note issued by the joint venture to the Company is convertible commencing July, 2003 into an additional 35% ownership interest in the joint venture. The relative ownership interests of the joint venture parties are subject to change through a series of put and call options, commencing July, 2003. The Company will provide the customer care and billing software required by the joint venture, including customization, installation and maintenance services. 7

10 ITEM 2. OPERATING AND FINANCIAL REVIEW AND PROSPECTS FORWARD LOOKING STATEMENTS Some of the information in this section contains forward looking statements that involve substantial risks and uncertainties. You can identify these statements by forward looking words such as "expect", "anticipate", "believe", "seek", "estimate" and similar words. Statements that we make in this section that are not statements of historical fact also may be forward looking statements. Forward looking statements are not guarantees of our future performance, and involve risks, uncertainties and assumptions that may cause our actual results to differ materially from the expectations we describe in our forward looking statements. There may be events in the future that we are not accurately able to predict, or over which we have no control. You should not place undue reliance on forward looking statements. We do not promise to notify you if we learn that our assumptions or projections are wrong for any reason. We disclaim any obligation to update our forward looking statements. INTRODUCTION In this section, we discuss 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 three months ended December 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 three months ended December 31, 2000 and 1999, and - the sources of our cash to pay for future capital expenditures. In this section, we also analyze and explain the three months to three months changes in the specific line items in the consolidated statements of operations. This section should be read in conjunction with our consolidated financial statements. OVERVIEW OF BUSINESS AND TREND INFORMATION We are a leading provider of software products and services to the communications industry. Our Business Support Systems ("BSS") consist of families of customized software products and services designed to meet the mission-critical needs of specific communications market sectors. We provide primarily Customer Care, Billing and Order Management Systems ("CC&B Systems") for communications and Internet Protocol ("IP") service providers. Our systems support a wide range of communications services, including wireline, wireless, broadband, electronic and mobile commerce and IP services. We also support companies that offer multiple service packages, commonly referred to as convergent services. In addition, we provide a full range of Directory 8

11 Sales and Publishing Systems ("Directory Systems") to publishers of both traditional printed yellow page and white page directories and electronic Internet directories. Due to the complexity of BSS projects and the expertise required for system support, we also provide extensive customization, implementation, system integration, ongoing support, system enhancement, maintenance and outsourcing services. In the future, we may consider development initiative and acquisitions in order to offer new products or services or otherwise enhance our market position or strategic strength. 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 primarily recognized 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, revenue from operation and maintenance of customers' billing systems 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. 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 annual and quarterly operating results. License and service fees from the sale of CC&B Systems amounted to $306.7 million and $204.8 million in the three months ended December 31, 2000 and 1999, respectively, representing 89.6% and 87.0%, respectively, of our 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 GPRS (General Packet Radio Services) and UMTS (Universal Mobile Telecommunications System) technology, - the proliferation of new communications products and services, especially IP and data 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 communications and IP service providers to offer to their subscribers multiple service packages, commonly referred to as convergent services (combinations of voice, broadband, electronic and mobile commerce and IP services). Another significant current market trend impacting our business is the growth of the IP services industry and market. The emergence and expansion of IP services creates significant opportunities for companies like us that offer CC&B Systems. 9

12 Specifically, the development of this market permits us to offer our CC&B Systems to a growing group of new market entrants and to enhance our offerings to existing customers to facilitate their entry into the IP services market. In addition, we believe that our CC&B solutions can enable communications and IP service providers to improve productivity and reduce costs. Although we believe that we are a leading provider of Directory Systems in most of the markets that we serve, revenue from this business is not expected to grow significantly. License and service fee revenue from the sale of Directory Systems totaled $35.5 million and $30.7 million in the three months ended December 31, 2000 and 1999, respectively, accounting for 10.4% and 13.0%, respectively, of our revenue for such periods. We expect that the demand for our Directory Systems will increase modestly in fiscal 2001 and that the contribution to total revenue, as a percentage of revenue, of license and service fees from Directory Systems services will continue to decrease over time. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES 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 and IP market. Research and development expenditures amounted to $23.6 million and $15.0 million in the three months ended December 31, 2000 and 1999, respectively, representing 6.9% and 6.4%, respectively, of our revenue in these periods. In the next several years, we intend to continue to make substantial investments in our research and development activities. We regard significant portions of our software products and systems as proprietary and rely on a combination of statutory and common law copyright, trademark and trade secret laws, customer licensing agreements, employee and third-party nondisclosure agreements and other methods to protect our proprietary rights. We generally enter into confidentiality agreements with our employees, consultants, customers and potential customers and limit access to, and distribution of, our proprietary information. We believe that the sophistication and complexity of our BSS offerings make it very difficult to copy such information or to subject such information to unauthorized use. We maintain sole ownership of our products. 10

13 RESULTS OF OPERATIONS The following table sets forth for the three months ended December 31, 2000 and 1999, certain items in our consolidated statements of income reflected as a percentage of total revenue: THREE MONTHS ENDED DECEMBER 31, ------------- PRO FORMA (*) AS REPORTED ------------- ----------- 2000 1999 2000 1999 ---- ---- ---- ---- Revenue: License 11.1% 11.3% 11.1% 11.3% Service 88.9 88.7 88.9 88.7 ---- ---- ---- ---- 100.0 100.0 100.0 100.0 ----- ----- ----- ----- Operating expenses: Cost of license 0.5 0.5 0.5 0.5 Cost of service 56.0 58.8 56.0 58.8 Research and development 6.9 6.4 6.9 6.4 Selling, general and administrative 12.7 11.6 12.7 11.6 Amortization of goodwill and purchased intangible assets - - 15.8 0.3 In-process research and development and other indirect acquisition related costs - - - 8.4 - - - --- 76.1 77.3 91.9 86.0 ---- ---- ---- ---- Operating income 23.9 22.7 8.1 14.0 Other income, net 1.6 0.1 1.6 0.1 --- --- --- --- Income before income taxes 25.5 22.8 9.7 14.1 Income taxes 7.7 6.8 6.0 6.8 --- --- --- --- Net income 17.8% 16.0% 3.7% 7.3% ==== ==== === === (*)The pro forma financial information excludes purchased in-process research and development charges and other indirect acquisition related costs, amortization of goodwill and purchased intangible assets (collectively, the "ITDS and Solect acquisition related charges") and related tax effects attributable to the International Telecommunication Data Systems, Inc. ("ITDS") and Solect Technology Group Inc. ("Solect") transactions. Three Months Ended December 31, 2000 and 1999 REVENUE. Revenue for the three months ended December 31, 2000 was $342.2 million, an increase of $106.7 million, or 45.3%, over the three months ended December 31, 1999. The increase in revenue was due to the continued growth in the demand for our CC&B Systems solutions in our traditional target markets of high-end and mid-tier communications companies. License revenue increased from $26.5 million in the three months ended December 31, 1999 to $38.1 million during the three months ended December 31, 2000, an increase of 43.7%, and service revenue increased 45.5% from $209.0 million in the three months ended December 31, 1999 to $304.1 million in the three months ended December 31, 2000. Total CC&B Systems revenue for the three months ended December 31, 2000 was $306.7 million, an increase of $101.8 million, or 49.7%, over the three months ended December 31, 1999. In the three months ended December 31, 2000, the demand for our CC&B Systems was primarily driven by the need for communications companies to upgrade their customer care, billing and order management systems in response to growth in their subscriber base, increased competition in the subscriber markets, and the need to offer convergent and IP services. Revenue from Directory Systems was $35.5 million for the three months ended December 31, 2000, an increase of $4.8 million, or 15.8%, over the three months ended 11

14 December 31, 1999. The increase is primarily attributable to agreement extensions and expansion of services rendered to existing customers. In the three months ended December 31, 2000, revenue from customers in North America, Europe and the rest of the world accounted for 54.0%, 36.4% and 9.6%, respectively, compared to 39.2%, 44.0% and 16.8%, respectively, for the three months ended December 31, 1999. The growth in North America was primarily attributable to revenue we gained from existing ITDS customers and to our forming or expanding relationships with new or existing customers in North America in the three months ended December 31, 2000. COST OF LICENSE. Cost of license for the three months ended December 31, 2000 was $1.7 million, an increase of $0.5 million, or 41.3%, over the cost of license for the three months ended December 31, 1999. Cost of license includes amortization of purchased computer software and intellectual property rights. The increase in cost of license was attributable primarily to new purchases of computer software and the related amortization. COST OF SERVICE. Cost of service for the three months ended December 31, 2000 was $191.8 million, an increase of $53.3 million, or 38.5%, over the cost of service of $138.5 million for the three months ended December 31, 1999. As a percentage of revenue, cost of service decreased to 56.0% in the three months ended December 31, 2000 from 58.8% in the three months ended December 31, 1999. The decrease in cost of service as a percentage of revenue is primarily due to integration costs of the ITDS operations in the three months ended December 31, 1999. 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 December 31, 2000, research and development expense was $23.6 million, or 6.9% of revenue, compared with $15.0 million, or 6.4% of revenue, in the three months ended December 31, 1999. The bulk of the increase represents ongoing expenditures primarily for CC&B Systems, with the balance attributable to Directory Systems. SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative expense was primarily comprised of compensation expense and increased by 58.2% to $43.5 million, or 12.7% of revenue, in the three months ended December 31, 2000 from $27.5 million, or 11.6% of revenue, in the three months ended December 31, 1999. The increase is attributable to the increase in our revenue for the three months ended December 31, 2000 and to our acquisitions of ITDS and Solect. AMORTIZATION OF GOODWILL AND PURCHASED INTANGIBLE ASSETS. Amortization of goodwill and purchased intangible assets for the three months ended December 31, 2000 was $54.2 million, compared to $0.7 million in the three months ended December 31, 1999. Amortization of goodwill and purchased intangible assets in the three months ended December 31, 2000 relates to the ITDS and Solect transactions, compared to one month of amortization related to the ITDS transaction in the three months ended December 31, 1999. IN-PROCESS RESEARCH AND DEVELOPMENT AND OTHER INDIRECT ACQUISITION RELATED COSTS. In-process research and development and other indirect acquisition related costs in the three months ended December 31, 1999 consisted of a one-time charge of $19.9 million related to the ITDS transaction for write-off of purchased in-process research and development. OPERATING INCOME. Operating income in the three months ended December 31, 2000, was $27.5 million, compared to $32.9 million in the three months ended December 31, 1999, a decrease of 16.2%, primarily due to Solect acquisition related charges. Pro forma operating income for the three months ended December 31, 2000, excluding the ITDS and Solect acquisition related charges, was $81.7 million, or 23.9% of revenue, compared to $53.4 million, or 22.7% of revenue, for the three months ended December 31, 1999, an increase of 52.9%. 12

15 OTHER INCOME, NET. In the three months ended December 31, 2000, other income, net, was $5.6 million, an increase of $5.2 million over the three months ended December 31, 1999. The increase in other income, net, is primarily attributed to increases in interest earned on cash equivalents and short-term interest-bearing investments. INCOME TAXES. Income taxes in the three months ended December 31, 2000 were $20.5 million on income before income taxes of $33.1 million. Our effective tax rate (calculated based on the income taxes out of the income before income taxes, excluding non recurring charges for write-offs of purchased in-process research and development and other indirect acquisition related costs) in the three months ended December 31, 2000 was 62%, resulting from the non-cash amortization of goodwill related to the acquisitions of Solect and ITDS, much of which is not tax deductible. The pro forma effective tax rate for the three months ended December 31, 2000, excluding the ITDS and Solect acquisition related charges, was 30%. In the three months ended December 31, 1999, income taxes were $15.9 million on income before taxes of $33.2 million. In the three months ended December 31, 1999, the effective tax rate was 30%. See discussion below - "Effective Tax Rate". NET INCOME. Net income was $12.6 million in the three months ended December 31, 2000, compared to $17.3 million in the three months ended December 31, 1999. Net income was 3.7% of revenue for the three months ended December 31, 2000, compared to 7.3% for the three months ended December 31, 1999. Pro forma net income in the three months ended December 31, 2000, excluding the ITDS and Solect acquisition related charges, increased by 61.3% over the three months ended December 31, 1999, reaching $61.1 million, representing 17.8% of revenue. DILUTED EARNINGS PER SHARE. Diluted earnings per share were $0.06 for the three months ended December 31, 2000, compared to $0.08 in the three months ended December 31, 1999. Pro forma diluted earnings per share in the three months ended December 31, 2000, excluding the ITDS and Solect acquisition related charges, increased by 50% from the three months ended December 31, 1999, reaching $0.27 per diluted share. LIQUIDITY AND CAPITAL RESOURCES Cash, cash equivalents and short-term interest-bearing investments totaled $429.4 million as of December 31, 2000, compared to $402.3 million as of September 30, 2000. The increase in cash, cash equivalents and short-term interest-bearing investments is primarily attributable to cash flows from operations. Net cash provided by operating activities amounted to $63.5 million and $74.2 million for the three months ended December 31, 2000 and 1999, respectively. A significant portion of our cash flow from operations during the three months ended December 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 December 31, 2000, we had positive working capital of $385.5 million, compared to positive working capital of $319.0 million as of September 30, 2000. The increase in working capital is primarily attributed to cash generated from operating activities. We believe that current cash balances, cash generated from operations and our current lines of credit will provide sufficient resources to meet our needs in the near future. As of December 31, 2000, we had short-term revolving lines of credit totaling $141.0 million from various banks or bank groups, none of which was outstanding. As of December 31, 2000, we also had utilized approximately $19.7 million of revolving credit facilities to support outstanding letters of credit or bank guarantees. As of December 31, 2000, we had outstanding long-term obligations of $35.3 million in connection with leasing arrangements. Currently, our capital expenditures consist primarily of computer equipment and vehicles and are funded principally by operating cash flows and capital leasing arrangements. We do not anticipate any change to this policy in the foreseeable future. 13

16 NET DEFERRED TAX ASSETS As of December 31, 2000, deferred tax assets of $18.4 million, derived primarily from carry-forward net operating losses relating to Solect pre-acquisition losses, were offset by valuation allowances due to the uncertainty of realizing any tax benefit for such losses. Upon the subsequent realization of any such net operating losses, the valuation allowance will be released, resulting primarily in an offsetting reduction of the goodwill recorded in the Solect acquisition. 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 (calculated based on the income taxes out of the income before income taxes, excluding non recurring charges for write-offs of purchased in-process research and development and other indirect acquisition related costs) for the three months ended December 31, 2000 was 62%, compared to 30% in the three months ended December 31, 1999. This higher effective tax rate was attributable to amortization of goodwill related to our acquisitions of Solect and ITDS, much of which is not tax deductible. Excluding the impact of the ITDS and Solect acquisition related charges, the effective tax rate for the three months ended December 31, 2000 was 30%. CURRENCY FLUCTUATIONS Approximately 90% of our revenue is in U.S. dollars or linked to the dollar and therefore the dollar is our functional currency. Approximately 60% of our operating expenses are paid in dollars or are linked to dollars. Other significant currencies in which we receive revenue or pay expenses are Australian dollars, British pounds, Canadian dollars, the European Monetary Union currency ("euro") and Israeli shekels. Historically, the effect of fluctuations in currency exchange rates has had a minimal impact on our operations. If 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 December 31, 2000, we had hedged most of our significant exposures in currencies other than the dollar. RECENT DEVELOPMENTS We have formed a joint venture company with Bell Canada to provide customer care and billing solutions to Bell Canada and its affiliated companies. The joint venture company will be initially owned 90% by Bell Canada and 10% by us. A note issued by the joint venture is convertible by us, commencing July, 2003, into an additional 35% ownership interest in the joint venture. The relative ownership interests of the joint venture parties are subject to change through a series of put and call options, commencing July, 2003. We will provide the customer care and billing software required by the joint venture, including customization, installation and maintenance services. 14

17 ITEM 6. EXHIBITS AND REPORTS ON FORM 6-K. (a) Exhibits EXHIBIT NO DESCRIPTION - ----------- ----------- 99.1 Amdocs Limited Press Release dated January 23, 2001. 99.2 Amdocs Limited and Bell Canada Joint Press Release dated January 31, 2001. (b) Reports on Form 6-K. The Company filed the following reports on Form 6-K during the three months ended December 31, 2000: (1) Form 6-K dated December 27, 2000. (2) Form 6-K dated December 29, 2000. 15

18 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: February 1, 2001 16

19 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION 99.1 Amdocs Limited Press Release dated January 23, 2001. 99.2 Amdocs Limited and Bell Canada Joint Press Release dated January 31, 2001. 17

1 AMDOCS LIMITED REPORTS 45.3% INCREASE IN FIRST QUARTER REVENUE TO $342.2M EPS, EXCLUDING ACQUISITION-RELATED CHARGES, INCREASES BY 50.0% TO $0.27 ST. LOUIS, MO - JANUARY 23, 2001 -- Amdocs Limited (NYSE: DOX) today reported that for the first quarter ended December 31, 2000, revenue reached $342.2 million, an increase of 45.3% over last year's first quarter. Excluding acquisition-related charges, net income increased 61.3% to $61.1 million, while earnings per share increased 50.0% to $0.27 per diluted share, compared to net income of $37.9 million, or $0.18 per diluted share, in the first quarter of fiscal 2000. The Company's as-reported net income, which includes acquisition-related charges of amortization of goodwill and purchased intangible assets, write-off of in-process R&D and related tax effects, was $12.6 million, or $0.06 per diluted share, compared to net income of $17.3 million, or $0.08 per diluted share, in the first quarter of fiscal 2000. Avi Naor, Chief Executive Officer of Amdocs Management Limited, noted, "Amdocs continues to demonstrate excellence in its growth, profitability and overall business performance. Our strong consistent results this quarter and over time reflect a robust, solutions-based business model and a well-balanced product/service portfolio with the breadth and depth needed to address ongoing market changes." Management believes that the changing needs of communications providers are creating additional demand for Amdocs' market-leading customer care and billing solutions. "This growing demand is manifest in all segments - mobile, wireline and IP - and in all regions. In an evolving communications environment, advanced customer care and billing solutions enable service providers to improve profitability and control costs while also dealing with IP transition, ongoing expansion, and mounting competition. With our broad set of offerings, encompassing voice and IP technologies, CRM and billing software, and complete service coverage from implementation through outsourcing, Amdocs is uniquely positioned to leverage the expanding opportunities that are being generated in the communications market," Naor added. Naor concluded, "As the market leader for customer care and billing systems for communications and IP service providers, our business prospects are outstanding. Based on our long-term customer relationships, strong pipeline and high visibility, we are very confident that our positive momentum will be maintained with continued growth and excellent business results in the coming quarters. " 18

2 Amdocs is the world's leader in customer care and billing systems for communications and IP service providers. Amdocs has an unparalleled success record in project delivery of its mission-critical products. With over 7,700 information systems professionals deployed worldwide, Amdocs supports a global customer base. For more information visit our Web site at www.amdocs.com. Amdocs will host a conference call on Tuesday, January 23 at 5:00 p.m. Eastern Standard Time to discuss the company's first quarter results. The call will be carried live on the Internet via www.vcall.com and the Amdocs website, www.amdocs.com. THIS PRESS RELEASE MAY CONTAIN FORWARD LOOKING STATEMENTS AS DEFINED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, INCLUDING STATEMENTS ABOUT AMDOCS' GROWTH AND BUSINESS RESULTS IN FUTURE QUARTERS. SUCH STATEMENTS INVOLVE RISKS AND UNCERTAINTIES THAT MAY CAUSE FUTURE RESULTS TO DIFFER FROM THOSE ANTICIPATED. THESE RISKS INCLUDE, BUT ARE NOT LIMITED TO, AMDOCS' ABILITY TO CONTINUE LEVERAGING ITS GROWTH IN EACH OF THE MOBILE, WIRELINE AND IP BUSINESS SEGMENTS, 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. CONTACT: Thomas G. O'Brien Treasurer and Director of Investor Relations Amdocs Limited 314/212-8328 E-mail: dox_info@amdocs.com - TABLES FOLLOW - 19

3 AMDOCS LIMITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) EXCLUDING PURCHASED IN-PROCESS RESEARCH AND DEVELOPMENT, ACQUISITION RELATED COSTS, AMORTIZATION OF GOODWILL AND PURCHASED INTANGIBLE ASSETS AND RELATED TAX EFFECTS (IN THOUSANDS, EXCEPT PER SHARE DATA) THREE MONTHS ENDED DECEMBER 31, --------------------------- 2000 (1) 1999 (1) ------------ ----------- Revenue: License $ 38,076 $ 26,502 Service 304,091 209,004 ------------ ----------- 342,167 235,506 Operating expenses: Cost of license 1,658 1,173 Cost of service 191,788 138,467 Research and development 23,579 14,970 Selling, general and administrative 43,450 27,460 ------------ ----------- 260,475 182,070 ------------ ----------- Operating income 81,692 53,436 Other income, net 5,562 345 ------------ ----------- Income before income taxes 87,254 53,781 Income taxes 26,176 15,924 ------------ ----------- Net income $ 61,078 $ 37,857 ============ =========== Diluted earnings per share $ 0.27 $ 0.18 ============ =========== Diluted weighted average number of shares outstanding 226,361 204,867 ============ =========== (1) Excludes $54,160 and $700 for amortization of goodwill and purchased intangible assets, $0 and $19,876 for write-off of purchased in-process research and development and other costs, and ($5,658) and $0 for related tax effects, in the three months ended December 31, 2000 and 1999, respectively. Including the above items, income before income taxes was $33,094 and $33,205, and diluted earnings per share were $0.06 and $0.08 for the three months ended December 31, 2000 and 1999, respectively. 20

4 AMDOCS LIMITED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA) THREE MONTHS ENDED DECEMBER 31, ---------------------------- 2000 1999 ------------- ------------ Revenue: License $ 38,076 $ 26,502 Service 304,091 209,004 ------------- ------------ 342,167 235,506 Operating expenses: Cost of license 1,658 1,173 Cost of service 191,788 138,467 Research and development 23,579 14,970 Selling, general and administrative 43,450 27,460 Amortization of goodwill and purchased intangible assets 54,160 700 In-process research and development and other costs - 19,876 ------------- ------------ 314,635 202,646 ------------- ------------ Operating income 27,532 32,860 Other income, net 5,562 345 ------------- ------------ Income before income taxes 33,094 33,205 Income taxes 20,518 15,924 ------------- ------------ Net income $ 12,576 $ 17,281 ============= ============ Basic earnings per share $ 0.06 $ 0.09 ============= ============ Diluted earnings per share $ 0.06 $ 0.08 ============= ============ Basic weighted average number of shares outstanding 221,217 201,020 ============= ============ Diluted weighted average number of shares outstanding 226,361 204,867 ============= ============ 21

5 AMDOCS LIMITED CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) AS OF --------------- -- --------------- DECEMBER 31, SEPTEMBER 30, 2000 2000 --------------- --------------- (UNAUDITED) ASSETS Current assets: Cash, cash equivalents and short-term interest-bearing investments $ 429,363 $ 402,300 Accounts receivable, net 297,225 263,100 Deferred income taxes and taxes receivable 41,987 35,179 Prepaid expenses and other current assets 38,217 34,327 --------------- --------------- Total current assets 806,792 734,906 Equipment, vehicles and leasehold improvements, net 133,889 128,081 Goodwill and other intangible assets, net 955,658 1,011,053 Other non-current assets 63,470 61,045 --------------- --------------- Total assets $ 1,959,809 $ 1,935,085 =============== =============== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable and accruals $ 198,963 $ 198,445 Short-term financing arrangements 9,355 28,713 Deferred revenue 141,519 133,546 Deferred income taxes and income taxes payable 71,413 55,197 --------------- --------------- Total current liabilities 421,250 415,901 Non-current liabilities 92,907 88,412 Shareholders' equity 1,445,652 1,430,772 --------------- --------------- Total liabilities and shareholders' equity $ 1,959,809 $ 1,935,085 =============== ================ # # # 22

1 THROUGH JOINT VENTURE WITH AMDOCS: BELL CANADA SET TO LEAD THE WAY WITH BEST-IN-CLASS BILLING SOLUTIONS - - New advanced billing platform will allow customers to fully benefit from Bell and BCE convergent communications solutions - - Customers will benefit from a breakthrough ability to deliver integrated billing, more products and more targeted offers - - Bell and Amdocs to invest $200M (CDN) to create a new Canadian company, Certen Inc. Montreal, QC and St. Louis, MO -- Wednesday, (January 31, 2001) -- Bell Canada, Canada's leading communications company and Amdocs, (NYSE: DOX), the world leader in telecommunications customer care and billing solutions, today announced they will be extending their existing business relationship through a joint venture to offer Bell's customers the most advanced billing solutions in the market. Using Amdocs' world-leading customer care and billing software, Bell will be able to offer customers - over time - the convenience of a single bill for all of their services, including local, long distance, wireless, broadband and Sympatico(TM) Internet service. A single bill will also enable Bell to offer other customer benefits, e.g., a bundle of multiple products from across Bell/BCE at a single price. Responding to our customers' requests, we will deliver segment-specific capabilities for paperless billing and payment, such as Internet-based and CD-ROM services. The deployment of an integrated billing platform will accelerate product and service speed to market, giving our customers greater access to new products, services and targeted offers than ever before. "Advanced billing is a key element of our plan to simplify our business so that we can better meet the needs of our customers. The ability to seamlessly build new products and services into one bill will also simplify the delivery of Bell and BCE's core strategy: bringing connectivity together with content and commerce," said Michael Sabia, Vice-Chair Bell Canada and President of BCE. "Over the years, we have developed billing platforms on a product-by-product basis. It is time for an integrated billing platform that will give us a competitive edge in the market place. Amdocs is the perfect partner to help us realize this vision." An Amdocs solution is already being implemented for Bell's Sympatico(TM) high speed and dial-up customers. Business customers will begin to see other benefits by the end of year, with the introduction of one of the most robust data and IP billing platforms in the market place, which Bell believes can only enhance the rapid growth in this sector of its business. Additionally, wireline and wireless integrated billing will be available for all residential customers by year-end 2001. "The implementation of Amdocs' world-leading customer care and billing solution supports Bell Canada's integrated strategy for all lines of business. This agreement illustrates Amdocs' ability to support voice, wireless and IP services with a comprehensive solution," said Avi Naor, Chief Executive Officer of Amdocs Management Limited. "We are very pleased to embark upon this joint venture with Bell Canada, which will enable Amdocs to demonstrate our extensive capabilities in the development and management of advanced billing operations for a tier-1 communications provider. Additionally, this agreement reinforces our strong commitment to our continued growth in the Canadian market." Certen, in which Bell will hold a majority stake, will initially be focussed on implementing a best-in-class billing platform to meet the needs of Bell Canada's customers. Certen will then broaden its scope to meet the billing needs of other companies inside and outside the Bell/BCE group. CGI, which is 41.8% owned by BCE, will play an important role in supporting this initiative. Under the existing Bell-CGI outsourcing agreement, CGI will work closely with Certen in the 23

2 integration of this new billing platform with Bell's existing information systems infrastructure, as well as its ongoing operation. Certen represents a total investment of more than $200 million (CDN) by both companies. Certen will be based in Montreal, with offices in Montreal, Ottawa and Toronto. Under the agreement, Bell Canada's current billing operations will be transferred to Certen over a three-month period. Bell Canada provides a full range of communications services to customers, including wired and wireless local and long distance telephone services, Internet access, high-speed data services and directories. Bell Canada, its telecom and subsidiaries provide services through 13.6 million access lines, including 11 million in Ontario and Quebec. Bell Canada also serves more than 3 million wireless customers through Bell Mobility. Bell Canada is 80% owned by BCE Inc. of Montreal and 20% owned by SBC Communications Inc. of San Antonio, Texas. Bell Canada's Internet Web site is located at http://www.bell.ca. News releases, speeches and background information are in the Newsroom. Our e-mail address is media.relations@bell.ca Amdocs is the world's leader in customer care and billing systems for communications and IP service providers. Amdocs has an unparalleled success record in project delivery of its mission-critical products. With over 7,700 information systems professionals deployed worldwide, Amdocs supports a global customer base. In April 2000, Amdocs made a significant investment in Canada through its acquisition of Toronto-based Solect Technology Group for more than $1 billion. Since the acquisition, Amdocs has more than doubled its number of employees in Canada, with substantial growth in marketing, as well as research and development areas. For more information, visit www.amdocs.com. Note: Amdocs will host a conference call on Wednesday, January 31 at 9:15 am Eastern Standard Time to discuss this announcement. This call will be carried live on the Internet via www.vcall.com and Amdocs website, www.amdocs.com. Contact: Bell Canada or Bell Canada Norm Berberich- Ontario France Poulin- Quebec 416/ 581-3311 514/ 391-2007 1-888-482-0809 1-877-391-2077 or Amdocs Dan Ginsburg 416/ 216-2741 # # # 24