<PAGE>   1

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                          ---------------------------

                                   FORM 20-F

[ ]  REGISTRATION STATEMENT PURSUANT TO SECTION 12(B) OR (G) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                                       OR

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                  FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1999

                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
    ACT OF 1934

              FOR THE TRANSITION PERIOD FROM ________ TO ________.

                         COMMISSION FILE NUMBER 1-14840

                                 AMDOCS LIMITED
        ---------------------------------------------------------------
    (Exact name of registrant as specified in its charter and translation of
                        Registrant's name into English)

                               ISLAND OF GUERNSEY
        ---------------------------------------------------------------
                (Jurisdiction of incorporation or organization)

                      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)

     Securities registered or to be registered pursuant to Section 12(b) of the
act.

<TABLE>
<CAPTION>
      TITLE OF EACH CLASS              NAME OF EXCHANGE ON WHICH REGISTERED
      -------------------              ------------------------------------
<S>                                    <C>
Ordinary Shares, par value L0.01             New York Stock Exchange
</TABLE>

     Securities registered or to be registered pursuant to section 12(g) of the
act.

                                      NONE
        ---------------------------------------------------------------
                                (Title of class)

     Securities for which there is a reporting obligation pursuant to section
15(d) of the act.

                                      NONE
        ---------------------------------------------------------------
                                (Title of class)

     Indicate the number of outstanding shares of each of the issuer's classes
of capital or common stock as of the close of the period covered by the Annual
Report.

<TABLE>
<S>                                                           <C>
Voting Ordinary Shares, par value L0.01                              174,589,951(1)
Nonvoting Ordinary Shares, par value L0.01                            24,210,073
(Title of class)                                              (Number of shares)
</TABLE>

---------------
(1) Not including 6,600,000 ordinary shares available for grant under our stock
    option plan. As of September 30, 1999, options to purchase an aggregate of
    6,237,000 ordinary shares had been granted and 363,000 ordinary shares
    remained available for future grants.

Indicate by check mark whether the registrant has (1) filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
  the preceding 12 months (or for such shorter period that the registrant was
    required to file such reports), and (2) has been subject to such filing
        requirements for the past 90 days. Yes [X]               No [ ]

     Indicate by check mark which financial statement item the registrant has
elected to follow.
                     Item 17 [ ]               Item 18 [X]
<PAGE>   2

                                 AMDOCS LIMITED
                            ------------------------

                                   FORM 20-F

           ANNUAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1999
                            ------------------------

                                     INDEX

<TABLE>
<S>       <C>                                                           <C>
                                     PART I
Item 1.   Description of Business.....................................      3
Item 2.   Description of Property.....................................     20
Item 3.   Legal Proceedings...........................................     20
Item 4.   Control of the Registrant...................................     20
Item 5.   Nature of Trading Market....................................     22
Item 6.   Exchange Controls and Other Limitations Affecting Security
          Holders -- Not applicable...................................     22
Item 7.   Taxation....................................................     22
Item 8.   Selected Financial Data.....................................     26
Item 9.   Management's Discussion and Analysis of Results of
          Operations and Financial Condition..........................     27
Item 9A.  Quantitative and Qualitative Disclosure about Market Risk...     35
Item 10.  Directors and Officers of Registrant........................     36
Item 11.  Compensation of Directors and Officers......................     40
Item 12.  Options to Purchase Securities from Registrant or
          Subsidiaries................................................     40
Item 13.  Interest of Management in Certain Transactions..............     41

                                    PART II
Item 14.  Description of Securities to be Registered -- Not
          applicable..................................................     43

                                    PART III
Item 15.  Defaults Upon Senior Securities -- Not applicable...........     43
Item 16.  Changes in Securities and Changes in Security for Registered
          Securities -- Not applicable................................     43

                                    PART IV
Item 17.  Financial Statements -- Not applicable......................     43
Item 18.  Financial Statements........................................     43
Item 19.  Financial Statements and Exhibits...........................     43
SIGNATURE
FINANCIAL STATEMENTS
EXHIBIT INDEX
21.1      Subsidiaries of Amdocs Limited
23.1      Consent of Ernst & Young LLP
99.1      Amdocs Limited Press Release dated November 9, 1999
</TABLE>

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                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

     Unless the context otherwise requires, all references in this annual report
to "Amdocs," "we", "our", "us" and the "Company" refer to Amdocs Limited and its
consolidated subsidiaries and their respective predecessors. References to
"dollars" or $ are to United States dollars. Unless otherwise stated, all
references to ordinary shares are to both voting and nonvoting ordinary shares.

GENERAL

     We are a holding company incorporated under the laws of the Island of
Guernsey. Our global business, conducted through subsidiaries, is to provide
information system solutions to major telecommunications companies in Europe,
North America and the rest of the world.

     Our ordinary shares are publicly traded on the New York Stock Exchange
under the symbol "DOX".

     In the United States, our main sales and development center is located in
St. Louis, Missouri. The executive offices of our principal subsidiary in the
United States are located at 1390 Timberlake Manor Parkway, Chesterfield,
Missouri 63017, and the telephone number at that location is (314) 212-8328.

OVERVIEW

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

     Our Business Support Systems ("BSS") consist of families of customized
software products and services designed to meet the mission-critical needs of
specific telecommunications market sectors. We provide primarily Customer Care,
Billing and Order Management Systems ("CC&B Systems") for network operators and
service providers. Our systems support a wide range of telecommunications
services including local, long distance, international, mobile, cable
television, data, electronic commerce and Internet services. We support
companies that offer multiple service packages, commonly referred to as
convergent services. In addition, we provide a full range of Directory 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 the process and the expertise required for
system support, we also provide extensive customization, implementation, system
integration, ongoing support, system enhancement, maintenance and outsourcing
services.

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

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

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

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<PAGE>   4

INDUSTRY BACKGROUND

  Telecommunications Industry

     The global telecommunications industry is becoming increasingly more
competitive due to deregulation and the development of new service technologies.
Competition in the U.S. market began to increase in 1984 when AT&T was required
to divest its local telephone operations and many new operators began to enter
the long distance market. The Telecommunications Act of 1996 increased
competition in the United States even further by allowing new and existing local
(e.g., competitive local exchange carriers), long distance and cable companies
to offer competing services. Many companies are beginning to compete by
providing multiple or convergent services, offering combinations of local
exchange, long distance, wireless, data and electronic commerce services.
Deregulation is also creating opportunities for new ways of doing business, such
as wholesaling and reselling telecommunications services. Internationally,
privatization and deregulation are resulting in increased international
competition and the emergence of newly authorized telecommunications network
operators and service providers, especially in Europe, Latin America and the
Asia-Pacific region. As markets are opened to competition, new competitors
within these markets typically compete for market share with more established
carriers, initially by providing access to service and then by providing
competitive prices, by introducing new features and services and by being more
responsive to customer needs. In parallel, the telecommunications industry is
undergoing consolidation as companies seek to broaden their global reach and
expand service offerings. In addition, global expansion by multinational
companies and concurrent technological advances are opening markets in less
developed countries to enhanced telecommunications services and competition.

     In recent years, there has also been an explosion of new communications
technologies, including ATM, Internet Protocol (IP), xDSL, utilization of cable
television infrastructure to provide rapid Internet, PCS, GPRS, WAP for wireless
Internet, and intelligent networks. Additionally, the directory publishing
industry, which is currently dominated by telecommunications companies that are
owned by or affiliated with the public telecommunications carriers, is also
experiencing significant changes due to the introduction of new technologies and
distribution platforms, especially Internet directories.

  Information Systems

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

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

THE AMDOCS SOLUTION

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

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<PAGE>   5

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

          Functional and Flexible BSS Products.  Our BSS products are based on
     an open, multi-tier, client-server, rule-based architecture that provides
     the functionality, scalability, modularity and adaptability required by
     today's deregulated, highly competitive telecommunications industry.
     Through the flexibility of our BSS products, our customers are able to
     achieve significant time-to-market advantages and reduce their dependence
     on technical and other staff.

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

BUSINESS STRATEGY

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

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

          - Target Industry Leaders and Promising New Entrants.  We intend to
            continue to direct our marketing efforts principally towards the
            major telecommunications companies and new entrants that are
            believed to have the potential to be market leaders. Our customer
            base includes major telecommunications companies in North America
            (including all the regional Bell operating companies, Sprint and
            GTE), major foreign network operators and service providers
            (including Deutsche Telekom (Germany), Mannesmann Mobilfunk
            (Germany), Telstra (Australia) and Vodafone Group (United Kingdom))
            and emerging market leaders. We believe that the development of this
            premier customer base has helped position us as a market leader,
            while contributing to the stability of our business. By targeting
            industry leaders and promising new entrants that require the most
            sophisticated information systems solutions, we believe that we are
            best able to ensure that we remain at the forefront of developments
            in the industry.

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

        - Maintain and Develop Long-Term Customer Relationships.  We seek to
          maintain and develop long-term, mutually beneficial relationships with
          our customers. As a result of this strategy, we have been able to
          establish long-term working relationships with many of our customers.
          Of our current base of over 75 customers, 22 have been customers for
          five years or more. These relationships have generally involved
          additional product sales, as well as ongoing support, system
          enhancement and maintenance services. We believe that such
          relationships are facilitated in many cases by the mission-critical
          strategic nature of the systems provided by us and by the customer's
          reliance on our specialized skills and knowledge. In addition, our
          strategy is to solidify our existing customer relationships by means
          of long-term support and maintenance contracts.

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

TECHNOLOGY

     We have developed core competencies in various advanced technologies that
are used in our BSS products. By utilizing technologies such as rule-based
design, multi-tier architecture, object-oriented techniques and data mining, we
are able to provide telecommunications companies with the flexibility required
in a highly competitive, dynamic environment. For example, the use of rule and
table-based technologies allows telecommunications companies to rapidly
implement changes to their marketing and customer service activities, such as
new services, price plans, discount schemes and bill formats, without the need
to modify system code. Similarly, by drawing on Web-enabled and Internet
technologies, we have been able to improve access to information for remote
users, both internally within a telecommunications company's organization and
between the organization and its subscribers.

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

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

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

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

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

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

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

PRODUCTS

     We have developed an extensive library of BSS software products, providing
comprehensive information systems functionality for local, long distance,
international, mobile, cable television, data, electronic commerce and Internet
services. Core elements include customer care, order management, call rating,
invoice calculation, bill formatting, collections, fraud management and
directory publishing services.

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

     We configure individual BSS modules into families of products, which serve
as marketing packages oriented to the needs of specific customer segments. We
offer Ensemble software, our Customer Care, Billing and Order Management System,
in a number of versions to serve the different needs of telecommunications
operators in the various network and business segments, such as wholesale and
retail operations, and local, long distance, international, mobile, cable
television, data, electronic commerce and Internet services. We also offer our
new generation, or NG, line of "ADS (NG)/Family of Products" which provides
comprehensive support for directory publishing operations. Each individual
module from the product families can be installed as an independent stand-alone
application, interfacing with the customer's legacy and third-party systems, or
as part of an integrated Amdocs solution. We have also recently introduced a
number of new products for Internet and electronic commerce applications, such
as Internet-based bill viewing.

  Customer Care, Billing and Order Management

     The Ensemble suite of products offered by Amdocs encompasses the following
key application areas:

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

     - Order Management -- supports the ordering of products and services for
       all lines of business. This module assists customer service
       representatives in capturing the customer's order, negotiating with the
       customer and monitoring service delivery.
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     - Event Processing -- calculates charges for usage (i.e., call rating) of
       telecommunications services, such as telephone calls and data transfer.
       Usage of the telecommunications network creates "messages" or call data
       records, which contain information such as the origin and destination of
       the call and its duration. In addition, this module provides for
       acquisition and formatting of the raw message data received from a
       telecommunications switch, as well as calculates the charges for each
       call based on the service packages and price plans applicable to each
       individual user.

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

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

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

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

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

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

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

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

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

  Directory Publishing

     The "ADS(NG)/Family of Products," our main offering in the Directory
Systems area, provides comprehensive support for yellow page and white page
directory sales and publishing operations, as well as for Internet directories
and catalogs, including fully integrated electronic commerce capabilities. These
systems support large directory publishing operations that employ a local sales
force numbering thousands of representatives, serve an adviser customer base of
hundreds of thousands of businesses and publish hundreds of different
directories each year. The directory line of products comprises a series of
modules, including:

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

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

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

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

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

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

SERVICES

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

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

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

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

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

     As part of our effort to provide comprehensive solutions to our customers,
we also offer outsourcing services to support the operation of the customer's
BSS products. These functions would include full

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responsibility for the ongoing development and enhancement of our BSS products,
the purchase and management of all related hardware assets and overall
management of the customer's associated data centers.

SALES AND MARKETING

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

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

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

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

CUSTOMERS

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

     We have a world-class customer base comprising over 75 telecommunications
companies. Our customers include global telecommunications leaders, as well as
other leading network operators and service providers and directory publishers
in the United States and around the world. Our customers include SBC
Communications Inc. ("SBC") and a number of its operating subsidiaries, such as
Southwestern Bell Mobile Systems, Southwestern Bell Yellow Pages, Southwestern
Bell Communications Services (SBC's long distance provider) and Southwestern
Bell Telephone Company. Additional customers include:

Bell Atlantic
BellSouth
U.S. West
GTE
Sprint
Western Wireless
Belgacom (Belgium)
BCP (Brazil)
                                       10
<PAGE>   11

Deutsche Telekom (Germany)
Eircom PLC (Ireland)
Korean Telecom (South Korea)
Mannesmann Mobilfunk (Germany)
Netcom (Norway)
SEAT (Italy)
Telstra (Australia)
Telus (Canada)
Telecom New Zealand (New Zealand)
Vodafone Group (United Kingdom)

     We have been able to establish long-term working relationships with many of
our customers. Of our total customer base, 22 have been customers for five or
more years. These long-term relationships are due, in part, to our broad-based
expertise and our ability to address the evolving needs of a dynamic
telecommunications industry.

     Our single largest group of customers is SBC and its operating subsidiaries
identified above, which accounted for in the aggregate 15.9%, 20.8% and 34.5% of
our revenue in fiscal 1999, 1998 and 1997, respectively. Our next largest
customer is Telstra, which accounted for 7.8%, 8.2% and 13.0% of our revenue in
fiscal 1999, 1998 and 1997, respectively. The third largest customer is
BellSouth, which accounted for 5.1%, 15.8% and 4.5% of our revenue in fiscal
1999, 1998 and 1997, respectively.

     Revenue derived from our five largest customers, excluding SBC and its
operating subsidiaries, accounted for approximately 27.3%, 27.1% and 33.2% of
our revenue in fiscal 1999, 1998 and 1997, respectively.

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

<TABLE>
<CAPTION>
                                                       1999    1998    1997
                                                       -----   -----   -----
<S>                                                    <C>     <C>     <C>
Europe...............................................  41.8%   27.2%   11.3%
North America........................................  36.1%   52.2%   63.8%
Rest of the World....................................  22.1%   20.6%   24.9%
</TABLE>

COMPETITION

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

     We believe that we are able to differentiate ourselves from the competition
by, among other things:

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

     - providing high quality reliable, scalable products,

     - managing effectively the timely implementation of products,

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

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

     We compete with a number of companies that have longer operating histories,
larger customer bases, substantially greater financial, technical, sales,
marketing and other resources, and greater name recognition than we do. Current
and potential competitors have established, and may establish in the future,
cooperative relationships among themselves or with third parties to increase
their ability to address the needs of our prospective customers. Accordingly,
new competitors or alliances among competitors may emerge and rapidly

                                       11
<PAGE>   12

acquire significant market share. As a result, our competitors may be able to
adapt more quickly than we would to new or emerging technologies and changes in
customer requirements, or to devote greater resources to the promotion and sale
of their products. There can be no assurance that we will be able to compete
successfully with existing or new competitors. Failure by us to adapt to
changing market conditions and to compete successfully with established or new
competitors may have a material adverse effect on our results of operations and
financial condition.

PROPRIETARY RIGHTS

     We regard significant portions of our software products and systems as
proprietary and rely on a combination of statutory and common law copyright,
trademark and trade secret laws, customer licensing agreements, employee and
third-party nondisclosure agreements and other methods to protect our
proprietary rights. We generally enter into confidentiality agreements with our
employees, consultants, customers and potential customers and limit access to,
and distribution of, our proprietary information. We believe that the
sophistication and complexity of our systems make it very difficult to copy such
information or to subject such information to unauthorized use.

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

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

EMPLOYEES

     As of September 30, 1999, we employed on a full-time basis approximately
4,400 software and information technology specialists, engaged in research,
development, maintenance and support activities, and approximately 600 managers
and administrative professionals. We employ over 3,000 software and information
technology specialists in Israel, with the remaining located in North America,
Europe and the Asia-Pacific region. We often maintain teams of employees at a
customer's premises to work on specific projects.

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

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

     Our operating subsidiaries are not party to any collective bargaining
agreements. However, our Israeli subsidiary is subject to certain labor-related
statutes and to certain provisions of collective bargaining agreements between
the Histadrut (General Federation of Labor in Israel) and the Coordinating
Bureau of Economic Organizations (including the Industrialists' Association),
which are applicable to our Israeli employees by virtue of expansion orders of
the Israeli Ministry of Labor and Welfare. A significant provision

                                       12
<PAGE>   13

applicable to all employees in Israel under collective bargaining agreements and
expansion orders is the automatic adjustment of wages in relation to increases
in the CPI. The amount and frequency of these adjustments are modified from time
to time. We consider our relationship with our employees to be good and have
never experienced a labor dispute, strike or work stoppage.

RESEARCH AND DEVELOPMENT

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

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

     We spent $40.9 million, $25.6 million and $17.4 million on research and
development activities in fiscal 1999, 1998 and 1997, respectively, or 6.5%,
6.3% and 6.0%, respectively, of total revenue in those periods. For fiscal 2000,
we expect to spend approximately $58.0 million on research and development
activities.

RISK FACTORS

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

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

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

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

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

     The market for telecommunications information systems is highly competitive
and fragmented, and we expect competition to increase. We compete with
independent providers of information systems and services and with in-house
software departments of telecommunications companies. Our competitors include
firms that provide comprehensive information systems, software vendors that sell
products for particular aspects of a total information system, software vendors
that specialize in systems for particular telecommunications services such as
Internet services, systems integrators, service bureaus and companies that offer
software systems in combination with the sale of network equipment. We
anticipate continued growth and competition in the

                                       13
<PAGE>   14

telecommunications industry and, consequently, the emergence of new software
providers in the industry that will compete with us.

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

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

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

     - the responsiveness of our competitors to customer needs, and

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

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

 WE MUST CONTINUALLY ENHANCE OUR PRODUCTS TO REMAIN COMPETITIVE

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

     On November 30, 1999, we completed our acquisition 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 telecommunications service providers. See "Management's Discussion
and Analysis of Results of Operations and Financial Condition -- Recent
Developments" for more information. We also may acquire other companies where we
believe we can acquire new products or services or otherwise enhance our market
position or strategic strengths. There can be no assurance that suitable
acquisition candidates can be found, that acquisitions can be consummated on
favorable terms or that the ITDS acquisition will enhance our products or
strengthen our competitive position.

 WE DEPEND ON SBC FOR A SIGNIFICANT PORTION OF OUR REVENUES

     Our single largest group of customers are SBC and its operating
subsidiaries. SBC International Inc., or SBCI, a wholly owned subsidiary of SBC,
is also one of our significant shareholders. As of November 19, 1999, it
currently holds approximately 22.6% of our outstanding ordinary shares. A
significant decrease in the sale of products and services to SBC or its
subsidiaries may materially adversely affect our results of operations and
financial condition.

     Substantially all of our work for SBC is conducted directly with SBC's
operating subsidiaries, such as Southwestern Bell Mobile Systems, Southwestern
Bell Yellow Pages, Southwestern Bell Communications Services (SBC's long
distance provider) and Southwestern Bell Telephone Company. These SBC
relationships accounted for in the aggregate 15.9%, 20.8% and 34.5% of our total
revenue in fiscal 1999, 1998 and 1997, respectively. The absolute amount of
revenue attributable to SBC and such subsidiaries amounted to $99.5 million,
$84.4 million and $99.9 million in fiscal 1999, 1998 and 1997, respectively.

                                       14
<PAGE>   15

 OUR BUSINESS IS HIGHLY DEPENDENT ON A LIMITED NUMBER OF SIGNIFICANT CUSTOMERS

     Our business is highly dependent on a limited number of significant
customers. The loss of any significant customer or a significant decrease in
business from any of those customers could have a material adverse effect on our
results of operations and financial condition. We currently have approximately
75 customers, and revenue derived from our five largest customers, excluding SBC
and its operating subsidiaries, accounted for approximately 27.3%, 27.1% and
33.2% of revenue in fiscal 1999, 1998 and 1997, respectively.

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

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

     We believe that our future success depends to a significant extent on our
ability to develop long-term relationships with successful network operators and
service providers. Many new entrants into the telecommunications market lack
significant financial and other resources. We may be unable to develop new
customer relationships and our new customers may be unsuccessful. Our failure to
maintain customer relationships or the failure of new customers to be successful
could have a material adverse effect on our business, results of operations and
financial condition.

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

     Our success depends in large part on our ability to attract, train,
motivate and retain highly skilled information technology professionals,
software programmers and telecommunications engineers. These types of qualified
personnel are in great demand and are likely to remain a limited resource for
the foreseeable future. We currently employ approximately 4,400 software and
information technology specialists, of which over 3,000 are located in Israel.
We intensively recruit technical personnel for our principal development centers
in Israel, the United States, Cyprus and Ireland. Our ability to expand our
business is highly dependent upon our success in recruiting such personnel and
our ability to manage and coordinate our worldwide development efforts. We may
be unable to continue to attract and retain the skilled employees we require and
any inability to do so could adversely impact our ability to manage and complete
our existing projects and to compete for new customer contracts. In addition,
the resources required to attract and retain such personnel may adversely affect
our operating margins. The failure to attract and retain qualified personnel may
have a material adverse effect on our business, results of operations and
financial condition. Our success also depends, to a certain extent, upon the
continued active participation of a relatively small group of senior management
personnel who have been with us for many years. The loss of the services of all
or some of these employees could have a material adverse effect on our business.

  OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE

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

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

     - increased competition,

     - cancellations of significant projects by customers,

     - changes in operating expenses,

     - changes in our strategy,

     - personnel changes,

                                       15
<PAGE>   16

     - foreign currency exchange rates, and

     - general economic and political factors.

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

     We believe that the placement of customer orders may be concentrated in
specific quarterly periods due to the time requirements and budgetary
constraints of our customers. Although we recognize revenue as projects
progress, progress may vary significantly from project to project, and we
believe that variations in quarterly revenue are sometimes attributable to the
timing of initial order placements. Due to the relatively fixed nature of
certain of our costs, a decline of revenue in any quarter would result in lower
profitability for that quarter.

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

     The sales cycle associated with the purchase of our information systems is
lengthy, with the time between the making of an initial proposal to a
prospective customer and the signing of a sales contract typically being between
six and twelve months. Information systems for telecommunications companies are
relatively complex and their purchase generally involves a significant
commitment of capital, with attendant delays frequently associated with large
capital expenditures and implementation procedures within an organization.
Moreover, the purchase of such products typically requires coordination and
agreement across a potential customer's entire organization. Delays associated
with such timing factors may reduce our revenue in a particular period without a
corresponding reduction in our costs, which could have a material adverse effect
on our results of operations and financial condition.

  OUR INTERNATIONAL PRESENCE CREATES SPECIAL RISKS

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

     - lack of acceptance of non-localized products,

     - legal and cultural differences in the conduct of business,

     - difficulties in staffing and managing foreign operations,

     - longer payment cycles,

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

     - trade barriers,

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

     - political instability, and

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

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

     We maintain four development facilities located in Israel, the United
States, Cyprus and Ireland, operate a support center located in Brazil and have
operations in North America, Europe, Latin America and the Asia-Pacific region.
Although a majority of our revenue in fiscal 1999 was derived from customers in
Europe, we obtain significant revenue from customers in North America, the
Asia-Pacific region and Latin America. Our strategy is to continue to broaden
our European and North American customer base and to expand into new
international markets, the most significant of which are located in Latin
America and the Asia-Pacific region.

                                       16
<PAGE>   17

 FLUCTUATIONS IN FOREIGN CURRENCY EXCHANGE RATES COULD ADVERSELY AFFECT OUR
 BUSINESS

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

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

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

 WE MAY BE UNABLE TO PROTECT OUR PROPRIETARY TECHNOLOGY

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

     The steps we have taken to protect our proprietary rights may be
inadequate. If so, we might not be able to prevent others from using what we
regard as our technology to compete with us. Existing trade secret, copyright
and trademark laws offer only limited protection. In addition, the laws of some
foreign countries do not protect our proprietary technology to the same extent
as the laws of the United States. Other companies could independently develop
similar or superior technology without violating our proprietary rights.

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

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

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

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

                                       17
<PAGE>   18

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

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

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

     - some programs may be discontinued,

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

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

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

 PRODUCT DEFECTS OR SOFTWARE ERRORS COULD ADVERSELY AFFECT OUR BUSINESS

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

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

  "YEAR 2000 ISSUES" MAY DISRUPT OUR OPERATIONS

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

     We assume that a small number of computer products marketed by us or
currently used by our customers might not be year 2000 compliant. In addition,
some products and services provided to our customers by other software vendors
may not be year 2000 compliant, thereby disrupting the ability of our customers
to use our software. We had accrued $0.5 million as of September 30, 1999,
representing the estimated remaining costs to modify our software products to
address year 2000 issues under existing agreements for previously sold
                                       18
<PAGE>   19

products. See "Management's Discussion and Analysis of Results of Operation and
Financial Condition -- Year 2000 Issues". Our ultimate costs to address year
2000 issues may significantly exceed our estimates, in which case those costs
could have a material adverse effect on our results of operations and business
and financial condition. Moreover, due to our dependence on a limited number of
significant customers, any material adverse impact on such customers due to year
2000 issues could also have a material adverse effect on our business, results
of operations and financial conditions.

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

     The euro is being phased in over a three-year period which commenced
January 1, 1999 when participating European countries began using the euro
currency for non-cash transactions. Computer systems and software products now
need to be designed or modified to accept the euro currency and, during a
transitional phase, will need to accept both the euro and local currencies. The
conversion to the euro currency requires restructuring of databases and internal
accounting systems and, in some cases, requires the conversion of historical
data. We have begun to offer software products that are capable of accepting the
euro currency and converting from local currencies to the euro and vice versa.
Our software or software provided to our customers by other vendors may not
ensure an errorless transition to the euro currency. We had accrued $0.6 million
as of September 30, 1999, representing the estimated remaining costs to modify
our software products to accept the euro currency under existing agreements for
previously sold products. Our ultimate costs may significantly exceed our
estimates, in which case those costs could have a material adverse effect on our
business, results of operations and financial condition.

 OUR DEVELOPMENT FACILITIES IN ISRAEL AND CYPRUS MAY BE ADVERSELY AFFECTED BY
 POLITICAL AND ECONOMIC CONDITIONS IN THOSE COUNTRIES

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

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

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

     In addition, our development facility in Cyprus may be adversely affected
by political conditions in that country. As a result of intercommunal strife
between the Greek and Turkish communities, Turkish troops invaded Cyprus in 1974
and continue to occupy approximately 40% of the island. Efforts to resolve the
problem have not yet resulted in an agreeable solution. During the last year,
tensions between the parties involved increased significantly over certain
military defense issues. Recently, however, the parties have agreed to enter
into negotiations to be facilitated by the United Nations and the United States.
Any major hostilities between Cyprus and Turkey or any failure of the parties to
reach a peaceful resolution may have a material adverse effect on our
development facility in Cyprus.

FORWARD LOOKING STATEMENTS

     Some of the information in this report contains forward looking statements
that involve substantial risks and uncertainties. You can identify these
statements by forward looking words such as "expect," "anticipate,"
                                       19
<PAGE>   20

"plan," "believe," "seek," "estimate" and similar words. Statements that we make
in this report that are not statements of historical fact may also be forward
looking statements. In particular, statements that we make in "Management's
Discussion and Analysis of Results of Operations and Financial Condition" may be
forward looking statements. Forward looking statements are not guarantees of our
future performance, and involve risks, uncertainties and assumptions that may
cause our actual results to differ materially from the expectations we describe
in our forward looking statements. There may be events in the future that we are
not accurately able to predict, or over which we have no control. You should not
place undue reliance on forward looking statements. We do not promise to notify
you if we learn that our assumptions or projections are wrong for any reason.
The factors we discuss in "Risk Factors" and elsewhere in this report could
cause our actual results to differ from any forward looking statements.

ITEM 2.  DESCRIPTION OF PROPERTY

     We lease space in various facilities in Israel, aggregating approximately
690,000 square feet, pursuant to leases expiring on various dates between July
2000 and October 2008, and we have various options to extend the terms of such
leases. In Israel, we currently pay total yearly rental fees of approximately
$12.4 million which are linked, in most cases, to the U.S. dollar. Included in
these facilities are the following:

     - Our Israeli subsidiary rents approximately 300,000 square feet in
       Ra'anana, Israel under a ten-year lease (commencing June 1998). The
       annual rent for the Ra'anana facility is approximately $5.6 million.
       Subject to the modification of certain tax rules, the Israeli subsidiary
       will also have the option to extend the lease term for an additional
       eight years. In addition, the Israeli subsidiary holds, subject to
       certain terms and conditions, an option to acquire certain parts of the
       Ra'anana facility.

     - In addition, our Israeli subsidiary rents facilities in Ramat-Gan and
       Jerusalem. The annual rent for these facilities is approximately $3.9
       million and $1.7 million, respectively. Approximately 73,000 square feet
       of the facilities in Ramat-Gan are owned by related companies which lease
       these facilities to us.

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

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

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

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

ITEM 3.  LEGAL PROCEEDINGS

     We are not involved in any material legal proceedings.

ITEM 4.  CONTROL OF THE REGISTRANT

     Our voting ordinary shares are owned 25.3% by Welsh, Carson, Anderson &
Stowe ("WCAS"), a private investment firm, and its affiliates, 11.8% by SBCI,
and 11.5 % by Amdocs International Limited ("AIL"), a private company
beneficially owned by Morris S. Kahn. SBCI also owns nonvoting ordinary shares,
which together with its voting ordinary shares, represent 22.6% of the voting
ordinary shares and nonvoting ordinary shares outstanding as of November 19,
1999.

                                       20
<PAGE>   21

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

     The following table sets forth specified information with respect to the
beneficial ownership as of November 19, 1999 of (i) any person known by us to be
the beneficial owner of more than 10% of the outstanding ordinary shares and
(ii) all of our directors and executive officers as a group.

<TABLE>
<CAPTION>
                                                                 SHARES
                                                              BENEFICIALLY    PERCENTAGE
                      NAME AND ADDRESS                         OWNED (1)     OWNERSHIP (2)
                      ----------------                        ------------   -------------
<S>                                                           <C>            <C>
Welsh, Carson, Anderson & Stowe (3)(5)......................   40,511,803        20.4%
  320 Park Avenue, Suite 2500
  New York, New York 10022
SBC International Inc. (4)..................................   44,864,211        22.6%
  175 E. Houston Street
  San Antonio, Texas 78205-2233
Amdocs International Limited (5)(6).........................   20,022,750        10.1%
  Suite 5, Tower Hill House
  Le Bordage, St. Peter Port
  Guernsey GY1 3QT
  The Channel Islands
All directors and executive officers as a group (18 persons)
  (3)(4)(7)(8)..............................................  124,539,359        62.7%
</TABLE>

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

(2) The percentages shown are based on 174,589,951 ordinary voting shares and
    24,210,073 ordinary nonvoting shares outstanding on November 19, 1999.

(3) Includes 25,864,877 ordinary voting shares held by Welsh, Carson, Anderson &
    Stowe VII, L.P., 7,417,770 ordinary voting shares held by Welsh, Carson,
    Anderson & Stowe VI, L.P., 5,174,797 ordinary voting shares held by WCAS
    Capital Partners III, L.P., 171,502 ordinary voting shares held by WCAS
    Information Partners, L.P. and 1,882,857 ordinary voting shares held by
    partners and others affiliated with WCAS. Those partners are also partners
    of the sole general partner of each of the foregoing limited partnerships.
    The partners of WCAS who are also directors of Amdocs are Bruce K. Anderson
    (Chairman of the Board and Chief Executive Officer of Amdocs) and Robert A.
    Minicucci (Chief Financial Officer of Amdocs), and each may be deemed to be
    beneficial owners of the ordinary voting shares held by WCAS. As a result of
    certain revenue and cash flow targets for fiscal 1998 and fiscal 1999 having
    been met by us in full, pursuant to an arrangement entered into in 1997,
    WCAS and certain of our other shareholders transferred an aggregate of
    15,198,040 shares to AIL, SBCI and certain of our other shareholders with no
    change in the aggregate number of ordinary shares outstanding. AIL and SBCI
    each received 6,154,138 ordinary shares and the other shareholders received
    2,889,764 ordinary shares.

(4) SBCI is a wholly-owned subsidiary of SBC, a company whose shares are
    publicly traded on the New York Stock Exchange. The number of shares shown
    as beneficially owned by SBCI is comprised of 20,654,138 ordinary voting
    shares and 24,210,073 ordinary nonvoting shares. SBCI is the only
    shareholder of Amdocs that holds ordinary nonvoting shares.

(5) In connection with our recapitalization effected as of May 20, 1998, in
    advance of our initial public offering in June 1998, investment partnerships
    affiliated with WCAS granted irrevocable proxies with respect to a total of
    23,521,899 ordinary voting shares to a company which is the sole shareholder
    of AIL and which is beneficially owned by Morris S. Kahn. The proxies
    granted by the WCAS partnerships expire in May 2008, or sooner if at any
    time the WCAS entities collectively own less than 10.0% of our

                                       21
<PAGE>   22

outstanding capital shares. After giving effect to such proxies, AIL and its
beneficial shareholder will together have the right to vote 24.9% of our
ordinary voting shares, and WCAS will have the right to vote 11.9% of such
     shares.

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

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

(8) All of our key executive officers hold, directly and indirectly, economic
    interest in approximately 28.7% of our outstanding shares (20.4% of which
    are beneficially held by WCAS).

ITEM 5.  NATURE OF TRADING MARKET

     Our ordinary shares have been quoted on the New York Stock Exchange since
June 19, 1998, under the symbol "DOX". Through September 30, 1999, the high and
low reported sale prices for the ordinary shares were as follows:

<TABLE>
<CAPTION>
                                                               HIGH     LOW
                                                              ------   ------
<S>                                                           <C>      <C>
Fiscal Year ending September 30, 1998:
     Third Quarter (since June 19, 1998)....................  $16.50   $14.00
     Fourth Quarter.........................................  $16.38   $ 8.19
Fiscal Year ending September 30, 1999:
     First Quarter..........................................  $17.50   $ 8.75
     Second Quarter.........................................  $26.38   $13.50
     Third Quarter..........................................  $29.69   $18.38
     Fourth Quarter.........................................  $30.25   $20.00
</TABLE>

ITEM 6.  EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS

     Not applicable.

ITEM 7.  TAXATION

TAXATION OF THE COMPANY

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

  General

     Our overall effective tax rate has historically been approximately 30% due
to the various corporate income tax rates of the countries in which we operate
and the magnitude of our activities in those countries. Our effective tax rate
for fiscal 1999 was 30%. There can be no assurance that our effective tax rate
will not change over time as a result of a change in corporate income tax rates
or other changes in the tax laws of the various countries in which we operate.
Moreover, our effective tax rate in future years may be adversely affected in
the event that a tax authority challenged the manner in which items of income
and expense are allocated among us and our subsidiaries. In addition, we and
certain of our subsidiaries have been granted

                                       22
<PAGE>   23

certain special tax benefits, discussed below, in Cyprus and Israel. The loss of
any such tax benefits could have an adverse effect on our effective tax rate.

  Certain Guernsey Tax Considerations

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

  Certain Cyprus Tax Considerations

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

  Certain Israeli Tax Considerations

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

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

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

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

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

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

     - twelve years from the year of commencement of production, or

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

     Such income is eligible for further reductions in tax rates if we qualify
as a Foreign Investors' Company ("FIC") depending on the percentage of the
foreign ownership. Subject to certain conditions, an FIC is a company more than
25% of whose share capital (in terms of shares, rights of profits, voting and
appointment of directors) and more than 25% of whose combined share and loan
capital is owned by non-Israeli residents. The tax rate is 20% if the foreign
investment is 49% or more but less than 74%; 15% if the foreign investment is
74% or more but less than 90%; and 10% if the foreign investment is 90% or more.
The determination of foreign ownership is made on the basis of the lowest level
of foreign ownership during the tax year. A company

                                       23
<PAGE>   24

that owns an Approved Enterprise, approved after April 1, 1986, may elect to
forego the entitlement to grants and apply for an alternative package of tax
benefits. In addition, a company (like our Israeli subsidiary) with an
enterprise outside the National Priority Regions (which is not entitled to
grants) may also apply for the alternative benefits. Under the alternative
benefits, undistributed income from the Approved Enterprise operations is fully
tax exempt (a tax holiday) for a defined period. The tax holiday ranges between
two to ten years from the first year of taxable income subject to the
limitations as described above, depending principally upon the geographic
location within Israel. On expiration of the tax holiday, the Approved
Enterprise is eligible for a beneficial tax rate (25% or lower in the case of an
FIC, as described above) for the remainder of the otherwise applicable period of
benefits.

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

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

  Dividends

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

TAXATION OF HOLDERS OF ORDINARY SHARES

  Certain United States Federal Income Tax Considerations

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

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

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

                                       24
<PAGE>   25

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

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

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

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

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

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

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

     Information Reporting and Backup Withholding.  Dividend payments with
respect to the ordinary shares and proceeds from the sale, exchange or
redemption of ordinary shares may be subject to information reporting to the
Internal Revenue Service ("IRS") and possible U.S. backup withholding at a 31%
rate. Backup withholding will not apply, however, to a U.S. holder who furnishes
a correct taxpayer identification number and makes any other required
certification or who is otherwise exempt from backup withholding.

                                       25
<PAGE>   26

Generally a U.S. holder will provide such certification on IRS Form W-9 (Request
for Taxpayer Identification Number and Certification).

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

  Certain Guernsey Tax Considerations

     Under the laws of Guernsey as currently in effect, a holder of our ordinary
shares who is not a resident of Guernsey and who does not carry on business in
Guernsey through a permanent establishment situated there is (1) exempt from
Guernsey income tax on dividends paid with respect to the ordinary shares and
(2) not liable for Guernsey income tax on gains realized on sale or disposition
of such ordinary shares. In addition, Guernsey does not impose a withholding tax
on dividends paid by us to the holders of our ordinary shares.

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

ITEM 8.  SELECTED FINANCIAL DATA

     Our historical consolidated financial statements are prepared in accordance
with U.S. GAAP and presented in dollars. The selected historical consolidated
financial information set forth below has been derived from the historical
consolidated financial statements of Amdocs and its subsidiaries for the years
presented. Historical information as of and for the five years ended September
30, 1999 is derived from our consolidated financial statements which have been
audited by Ernst & Young LLP, our independent auditors.

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

<TABLE>
<CAPTION>
                                                          YEAR ENDED SEPTEMBER 30,
                                            ----------------------------------------------------
                                              1999       1998       1997       1996       1995
                                            --------   --------   --------   --------   --------
                                                   (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                         <C>        <C>        <C>        <C>        <C>
STATEMENT OF OPERATIONS DATA:
Revenue...................................  $626,855   $403,767   $290,102   $211,720   $167,312
Operating Income..........................   146,998     84,895     26,969     35,490     15,377
Net Income (1)............................    98,543     30,107      5,876     24,508     11,224
Basic earnings per share..................      0.50       0.19       0.05       0.23       0.11
Diluted earnings per share................      0.49       0.19       0.05       0.22       0.11
Dividends declared per share (2)..........        --       3.76       0.18       0.35       0.17
</TABLE>

<TABLE>
<CAPTION>
                                                            AS OF SEPTEMBER 30,
                                            ----------------------------------------------------
                                              1999       1998       1997       1996       1995
                                            --------   --------   --------   --------   --------
                                                               (IN THOUSANDS)
<S>                                         <C>        <C>        <C>        <C>        <C>
BALANCE SHEET DATA:
Total assets..............................  $430,011   $239,966   $220,582   $104,531   $101,483
Long-term obligations (net of current
  portion)................................    17,148      9,215      7,370      1,663         --
Shareholders' equity (deficit) (2)(3).....   123,737    (21,889)    94,253     15,988     29,429
</TABLE>

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

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

                                       26
<PAGE>   27

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

ITEM 9.  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 years ended September 30, 1999,
       1998 and 1997,

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

     - the sources of our revenue,

     - how all of this affects our overall financial condition,

     - what our expenditures were in the years ended September 30, 1999, 1998
       and 1997, 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 annual 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. See "Risk
Factors" for more information. We disclaim any obligation to update our forward
looking statements.

OVERVIEW

     We are a leading provider of software products and services to the
telecommunications industry, primarily Customer Care, Billing and Order
Management Systems, or CC&B Systems, for wireline, wireless, 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. 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

                                       27
<PAGE>   28

completion accounting method, the size and timing of customer projects and our
progress in completing such projects may significantly affect our quarterly
operating results.

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

     - License and service fee revenue from the sale of CC&B Systems amounted to
       $468.2 million in the year ended September 30, 1999, representing 74.7%
       of our revenue for such period, as compared to $251.8 million in fiscal
       1998 and $166.3 million in fiscal 1997, where license and service fee
       revenue from the sale of CC&B Systems represented 62.4% and 57.3%,
       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 telecommunications market,

     - intensifying competition among telecommunications carriers,

     - rapid technological changes,

     - the proliferation of new telecommunications 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, data, electronic
commerce and Internet services).

     As a result of these developments, we believe that CC&B Systems will
continue to account for the largest share of our total revenue.

     During fiscal 1999, we entered into an agreement to acquire International
Telecommunication Data Systems, Inc. ("ITDS"), a leading provider of outsourcing
for billing operations. See discussion below "-- Recent Developments". 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
telecommunications industry.

     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 $158.6 million in the year ended September 30, 1999, accounting
       for 25.3% of our revenue for such period, as compared to $151.9 million
       in fiscal 1998 and $123.8 million in fiscal 1997, where license and
       service fee revenue from the sale of Directory Systems represented 37.6%
       and 42.7%, respectively, of our revenue for such periods.

     We believe that the demand for Directory Systems will be favorably impacted
by a broader introduction of electronic directories. We anticipate that over the
next several years revenue will continue to grow from our Directory Systems
offerings. However, we anticipate that the relative contribution to our total
revenue of license and service fees from Directory Systems will 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
telecommunications market. Research and

                                       28
<PAGE>   29

development expenditures amounted to $40.9 million, $25.6 million and $17.4
million in fiscal 1999, 1998 and 1997, respectively, representing 6.5%, 6.3% and
6.0%, respectively, of our revenue in these fiscal years. In the next several
years, we intend to continue to make significant investments in our research and
development activities.

     On June 7, 1999, we sold 2,000,000 ordinary shares and certain of our
shareholders sold 18,426,000 ordinary shares in a public offering at a price of
$22.4375 per share. The total net proceeds to us, after deduction of issuance
costs, amounted to $41.4 million. In addition, on October 6, 1999, certain of
our shareholders sold 20,700,000 ordinary shares in a secondary public offering
at a price of $24.25 per share.

RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
                                                              YEAR ENDED
                                                             SEPTEMBER 30,
                                                         ---------------------
                                                         1999    1998    1997
                                                         -----   -----   -----
<S>                                                      <C>     <C>     <C>
Revenue:
  License..............................................   11.9%   10.6%    9.0%
  Service..............................................   88.1    89.4    91.0
                                                         -----   -----   -----
                                                         100.0   100.0   100.0
                                                         -----   -----   -----
Operating expenses:
  Cost of license......................................    0.9     2.7     1.3
  Cost of service......................................   57.1    57.3    59.9
  Research and development.............................    6.5     6.3     6.0
  Selling, general and administrative..................   12.1    12.7    14.0
  Nonrecurring charges.................................     --      --     9.5
                                                         -----   -----   -----
                                                          76.6    79.0    90.7
                                                         -----   -----   -----
Operating income.......................................   23.4    21.0     9.3
Other expense, net.....................................    1.0     6.0     1.1
                                                         -----   -----   -----
Income before income taxes.............................   22.4    15.0     8.2
Income taxes...........................................    6.7     7.5     6.2
Cumulative effect of change in accounting principle,
  net..................................................     --       *      --
                                                         -----   -----   -----
Net income.............................................   15.7%    7.5%    2.0%
                                                         =====   =====   =====
</TABLE>

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

  YEARS ENDED SEPTEMBER 30, 1999 AND 1998

     Revenue.  Revenue for the year ended September 30, 1999 was $626.9 million,
an increase of $223.1 million, or 55.3%, compared to fiscal 1998. The increase
in revenue was primarily due to the continuance of the growth in the demand for
our CC&B Systems solutions in our traditional target market of high-end and
mid-tier telecommunications companies. Demand for customer care, billing and
order management systems is diverse, as reflected by the broad cross section of
new projects we were awarded in fiscal 1999. These projects covered customers
in, among other locations, Europe, North America and Latin America, working
within a wide range of operating environments, including wireline, wireless and
data communications. In many cases, we expanded our ongoing relationships with
existing customers, such as Deutsche Telekom (Germany) and Vodafone Group
(United Kingdom). We also acquired many new customers, including GTE-TSI and
Western Wireless in the United States, and Mannesmann Mobilfunk (Germany),
Netcom (Norway) and Belgacom (Belgium) in Europe. In fiscal 1999, the demand for
our CC&B Systems was primarily driven by the need for telecommunications
companies to upgrade their customer care, billing and

                                       29
<PAGE>   30

order management systems in response to growth in their subscriber base,
increased competition in the subscriber market, and the need to offer convergent
services.

     License revenue increased from $42.9 million in fiscal 1998 to $74.4
million in the year ended September 30, 1999, an increase of 73.4%. Service
revenue increased by $191.6 million, or 53.1%, this fiscal year, from $360.9
million in fiscal 1998 to $552.5 million in fiscal 1999.

     Total CC&B Systems revenue for the year ended September 30, 1999 was $468.2
million, an increase of $216.4 million, or 85.9%, compared to fiscal 1998.

     Revenue from Directory Systems grew to $158.6 million for the year ended
September 30, 1999, from $151.9 million for the previous fiscal year.

     In the year ended September 30, 1999, revenue from customers in Europe,
North America and the rest of the world accounted for 41.8%, 36.1% and 22.1%,
respectively, compared to 27.2%, 52.2% and 20.6%, respectively, in the year
ended September 30, 1998. The growth in revenue from customers in Europe was
primarily attributable to increased competition among telecommunications
companies within and continued deregulation of the European market.

     Cost of License.  Cost of license for fiscal 1999 was $5.5 million, a
decrease of $5.2 million from cost of license for the prior fiscal year. Cost of
license includes amortization of purchased computer software and intellectual
property rights. The decrease in cost of license for fiscal 1999 was
attributable primarily to reductions in the required amortization of purchased
computer software.

     Cost of Service.  Cost of service for fiscal 1999 was $357.8 million, an
increase of $126.4 million, or 54.7%, compared to cost of service of $231.4
million for the year ended September 30, 1998. Cost of service is predominantly
related to salary and employee related expenses. The absolute increase in cost
of service is consistent with the increase in revenue for the year ended
September 30, 1999, and reflects increased employment levels required to support
our continuing growth in revenue.

     Research and Development.  Research and development expense is 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 fiscal 1999, research and development expense
was $40.9 million, or 6.5% of revenue, compared with $25.6 million, or 6.3% of
revenue, in the previous fiscal year. The increase in research and development
expense represents ongoing expenditures primarily for CC&B Systems and also for
Directory Systems.

     Selling, General and Administrative.  Selling, general and administrative
expense is primarily comprised of compensation expense and increased by 47.9% to
$75.7 million, or 12.1% of revenue, in fiscal 1999, from $51.2 million, or 12.7%
of revenue, in the year ended September 30, 1998. The absolute increase in
selling, general and administrative expense is in line with the increase in our
revenue for fiscal 1999.

     Operating Income.  Operating income in the year ended September 30, 1999
was $147.0 million, as compared with $84.9 million in the previous fiscal year,
an increase of 73.2%. Operating income was 23.4% of revenue for fiscal 1999, as
compared to 21.0 % for fiscal 1998, primarily due to an increase in profit
margin on license revenue.

     Other Expense, Net.  Other expense, net consists primarily of interest
expense. In the year ended September 30, 1999, other expense, net was $6.2
million, a decrease of $17.9 million from the prior fiscal year. The decrease is
primarily attributed to reductions in our bank debt through the use of cash from
operations and proceeds from our initial public offering in June 1998. Interest
expense in fiscal 1998 related primarily to senior bank debt and subordinated
debt.

     Income Taxes.  Income taxes in fiscal 1999 were $42.2 million on income
before taxes of $140.8 million, an overall effective tax rate of 30%. In fiscal
1998, income taxes were $30.4 million on income before taxes of $60.8 million,
an overall effective tax rate of 50%, resulting from significant interest
expense in a tax jurisdiction in which we are tax exempt, which resulted in no
tax benefit to offset the tax incurred by us in other jurisdictions. See
discussion below "-- Effective Tax Rate".

                                       30
<PAGE>   31

     Net Income.  Net income was $98.5 million in the year ended September 30,
1999 compared to $30.1 million for the previous fiscal year. Net income was
15.7% of revenue for fiscal 1999, as compared to 7.5% for fiscal 1998.

     Diluted earnings per share increased from $0.19 in the year ended September
30, 1998 to $0.49 in fiscal 1999.

  YEARS ENDED SEPTEMBER 30, 1998 AND 1997

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

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

     Cost of License.  Cost of license for fiscal 1998 was $10.7 million, an
increase of $7.0 million, or 189.2%, from cost of license for fiscal 1997. Cost
of license in fiscal 1998 included amortization of purchased computer software
and intellectual property rights, and in fiscal 1997 included royalty expense
paid to certain subsidiaries of SBC in connection with the grant to us of
licenses to use certain software jointly developed with those subsidiaries.

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

     Research and Development.  In fiscal 1998, research and development expense
was $25.6 million, or 6.3% of revenue, compared with $17.4 million, or 6.0% of
revenue, in fiscal 1997. The increase in research and development expense in
fiscal 1998 represented ongoing expenditures for both CC&B Systems and Directory
Systems.

     Selling, General and Administrative.  Selling, general and administrative
expense increased by 25.5%, to $51.2 million, in fiscal 1998, from $40.8 million
in the prior fiscal year. As a percentage of revenue, selling, general and
administrative expense decreased from 14.0% of revenue in fiscal 1997 to 12.7%
of revenue in fiscal 1998.

     Nonrecurring Charges.  In the fourth quarter of fiscal 1997, we recorded
nonrecurring charges of $27.6 million. Of this amount, $1.8 million was due to
the write-off of in-process research and development for technology related to
certain software rights (which rights included the termination of related future
royalty payment obligations) acquired from several operating subsidiaries of SBC
and the balance, $25.8 million, was attributable to the funding of a
contribution to a trust for the benefit of certain officers and employees. See
"Interest of Management in Certain Transactions -- Employee Trust Agreement" for
more information.

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

     Other Expense, Net.  Other expense, net was an expense of $24.1 million in
fiscal 1998 and an expense of $3.3 million in fiscal 1997. The increase was
primarily related to senior bank debt and subordinated debt, which debt was
substantially repaid from the proceeds of our initial public offering.
                                       31
<PAGE>   32

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

     Net Income.  Our net income was $30.1 million in fiscal 1998 compared to
net income of $5.9 million in fiscal 1997. Net income was 7.5% of revenue for
fiscal 1998, as compared to 2.0% for fiscal 1997.

     Diluted earnings per share increased from $0.05 in the year ended September
30, 1997 to $0.19 in fiscal 1998.

LIQUIDITY AND CAPITAL RESOURCES

  Financing Transactions

     We have primarily financed our operations through cash generated from
operations, borrowings from banks and other lenders and two public offerings of
our ordinary shares. Cash and cash equivalents totaled $85.2 million as of
September 30, 1999 compared to $25.4 million as of September 30, 1998. The
increase in cash and cash equivalents as of September 30, 1999 is attributable
primarily to cash flows from operations and the $41.4 million in net proceeds
from an offering of our ordinary shares completed in June 1999. Net cash
provided by operating activities amounted to $152.3 million and $66.5 million
for the years ended September 30, 1999 and 1998, respectively. A significant
portion of our cash flow from operations during the year ended September 30,
1999 was used to repay bank debt and to invest in short term cash equivalents.
We currently intend to retain our future earnings to support the further
expansion of our business.

     As of September 30, 1999, we had short-term lines of credit totaling $152.0
million from various banks or bank groups, of which $2.4 million was
outstanding. As of that date, we also had utilized approximately $16.2 million
of a revolving credit facility to support outstanding bank guarantees.

     As of September 30, 1999, we had positive working capital of $35.9 million
as compared to negative working capital of $84.3 million as of September 30,
1998. The increase in working capital is primarily attributed to cash generated
from operating activities and to the proceeds of our offering in June 1999. We
believe that current cash balances, cash generated from operations and our
current lines of credit will provide sufficient resources to meet our needs in
the near future.

     As of September 30, 1999, we had long-term obligations outstanding of $22.9
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 September 30, 1999 will be realized through future
taxable earnings. No significant increase in future taxable earnings would be
required to fully realize the net deferred tax assets.

YEAR 2000 ISSUES

  Our State of Readiness

     We have identified the information technology, or IT, and non-IT systems,
software and products involved in our business that we believe could be affected
by year 2000 issues, and have assessed the efforts required to remediate or
replace them. We also have identified versions of our products that we believe
will not be made compliant and are assisting customers in upgrading or migrating
to year 2000 compliant versions. As of September 30, 1999, substantially all of
our major or key systems, software and products had already been, or, during the
final quarter of calendar year 1999 will be in the final stages of being,
remediated or replaced.

                                       32
<PAGE>   33

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

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

     - adoption of a work plan,

     - analysis of solution alternatives, and

     - determination of our technical and business year 2000 policies.

     In recent years, new systems have been developed as year 2000 compliant and
many of the older generations of our applications were made year 2000 compliant
in cooperation with our customers (using our year 2000 methodology and tool
kit). None of these systems have required mass data conversion, which is usually
the most sensitive portion of the year 2000 migration. Recognizing the
importance of year 2000 support in the IT industry and to provide an additional
level of assurance to our customers, we have been conducting a thorough and
systematic verification process. This effort is based on the application of
industry-wide standards for year 2000 compliance. This verification process
utilizes a specialized tool kit developed by us which includes a powerful search
utility. For many customers we have conducted the verification process, because
the ultimate verification for year 2000 compliance is best executed in their own
working environment.

     As of September 30, 1999, we had completed the majority of the testing,
implementation of changes and necessary refinements, but we will continue our
extensive testing through the end of calendar year 1999. We expect that systems,
software and products for which we have contractual responsibility currently are
year 2000 compliant or will be compliant on a timely basis. We are not aware of
any year 2000 issues with our customers that cannot be remedied.

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

     With respect to our internal IT systems (including IT-based office
facilities such as data and voice communications, building management and
security systems, human resources and recruitment systems, purchasing,
invoicing, finance and budget systems, general ledger and other administrative
systems), both third party software and in-house developments, we have adopted
standard industry practices, as published by the British Standards Institute,
and methodologies suggested by the Gartner Group (INSPCT), in preparing for the
year 2000 date change. Our year 2000 internal readiness program primarily
covers:

     - taking inventory of hardware, software and embedded systems,

     - assessing business risks associated with such systems,

     - creating action plans to address known risks,

     - executing and monitoring action plans, and

     - contingency planning.

     Although we have not incurred any material cost or experienced material
disruptions in our business associated with preparing our internal systems for
the year 2000, there can be no assurance that we will not experience serious
unanticipated negative consequences and/or material costs caused by undetected
errors or defects in the technology used in our internal systems, which are
composed of third party software, third party hardware that contains embedded
software and our own software products. We are currently in the final stages of
the process of implementing action plans for the remediation of risk areas. Our
contingency plans include, among other things, manual "work-arounds" for
software and hardware failure, as well as substitution of systems, if necessary.

                                       33
<PAGE>   34

  Costs To Address Our Year 2000 Issues

     Substantially all of our year 2000 compliance efforts occurred in
connection with system upgrades or replacements that were otherwise planned (but
perhaps accelerated due to the year 2000 issue) or which had significant
improvements and benefits unrelated to year 2000 issues. The remainder of the
costs that are incremental and directly related to year 2000 issues are not
expected to be material to our financial position or results of operations.

     As of September 30, 1999, we had accrued approximately $0.5 million
representing the estimated remaining costs to modify previously sold customized
software products. We do not anticipate capitalizing any of these costs as they
are attributable to warranties related to products developed for customers.

  Our Contingency Plans

     We have developed detailed contingency plans that we are continuing to
modify and refine as appropriate in the fourth quarter of calendar year 1999.
Those plans focus on matters which appear to be our most likely year 2000 risks,
such as possible additional customer support efforts by us that would be
necessary if customers or vendors are not year 2000 compliant.

EUROPEAN MONETARY UNION CURRENCY

     The euro will be phased in over the three-year period that commenced on
January 1, 1999, when participating European countries began using the euro
currency for non-cash transactions. We have begun to offer software products
that are capable of handling the euro currency and converting from local
currencies to the euro. There can be no assurance that our software or software
provided to our customers by other vendors will ensure an errorless transition
to the euro currency. As of September 30, 1999, we had accrued approximately
$0.6 million representing estimated remaining costs to modify our software
products to accept the euro currency under existing agreements with customers
relating to previously sold products. We do not currently anticipate recovering
these expenditures from our customers, as they relate to warranty agreements.
There can be no assurance that such costs will not significantly exceed such
estimate, in which case such costs could have a material effect on our results
of operations and financial condition.

EFFECTIVE TAX RATE

     Our overall effective tax rate has historically been approximately 30% due
to the various corporate income tax rates in the countries in which we operate
and the relative magnitude of our business in those countries. Our consolidated
effective tax rate for the year ended September 30, 1999 was 30% compared to 50%
in the prior fiscal year. The consolidated effective tax rate of 50% for fiscal
1998 was due to significant interest expense in a tax jurisdiction in which we
are tax exempt, which resulted in no tax benefit to offset the tax expense
incurred by us in other jurisdictions.

RECENT DEVELOPMENTS

     On November 30, 1999, we completed our acquisition of ITDS, in a
stock-for-stock transaction, which was accounted for under the purchase method
of accounting. We issued 6,516,474 ordinary shares and options to acquire
1,107,621 ordinary shares in connection with the consummation of the
transaction. ITDS is a leading provider of billing and customer care service
bureau solutions to wireless telecommunication service providers. ITDS' revenue
and net loss for its fiscal year ended December 31, 1998 were $115.5 million and
$3.9 million, respectively. For the nine months ended September 30, 1999, ITDS
had revenue and net income of $105.9 million and $12.7 million, respectively.
ITDS had total assets of $173.4 million as of September 30, 1999.

                                       34
<PAGE>   35

ITEM 9A.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

CURRENCY FLUCTUATIONS

     Approximately 85% of our revenue is in dollars or linked to the dollar and
therefore the dollar is our functional currency. Approximately 55% 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 September 30, 1999, we had hedged most
of our significant exposures in currencies other than the dollar.

FOREIGN CURRENCY RISK

     We enter into foreign exchange forward contracts to hedge some of our
foreign currency exposure. We use such contracts to hedge exposure to changes in
foreign currency exchange rates associated with revenue denominated in a foreign
currency and anticipated costs to be incurred in a foreign currency. We seek to
minimize the risk that the fair value of sales of our products and services and
cash flow required for our expenses denominated in a currency other than our
functional currency, the dollar, will be affected by changes in exchange rates.
See Note 18 to our consolidated financial statements. The following table
summarizes our foreign currency forward exchange agreements as of September 30,
1999. The table (all dollar amounts in millions) presents the notional amounts,
weighted average exchange rates by expected (contractual) maturity dates, and
fair value of the total derivative instruments as of September 30, 1999.
Notional values and average contract rates are calculated based on forward rates
as of September 30, 1999 dollar translated.

<TABLE>
<CAPTION>
                                            FOR THE YEAR ENDED SEPTEMBER 30,
                                            --------------------------------    FAIR VALUE
                                             2000      2001    2002    2003    OF DERIVATIVE
                                            -------   ------   -----   -----   -------------
<S>                                         <C>       <C>      <C>     <C>     <C>
Forward contracts to sell foreign currency in dollars:
British Pounds
  Notional value..........................  $ 11.70   $13.40      --      --       $(0.5)
  Average contract rate...................     1.65     1.64      --      --          --
Austrian Shillings
  Notional value..........................  $ 10.90       --      --      --       $(0.1)
  Average contract rate...................    12.70       --      --      --          --
Canadian Dollars
  Notional value..........................  $ 12.00       --      --      --       $(0.6)
  Average contract rate...................     1.46       --      --      --          --
Japanese Yen
  Notional value..........................  $  1.00       --      --      --           *
  Average contract rate...................   105.85       --      --      --          --
Other Currencies
  Notional value..........................  $  4.70       --      --      --           *
</TABLE>

                                       35
<PAGE>   36

<TABLE>
<CAPTION>
                                            FOR THE YEAR ENDED SEPTEMBER 30,
                                            --------------------------------    FAIR VALUE
                                             2000      2001    2002    2003    OF DERIVATIVE
                                            -------   ------   -----   -----   -------------
<S>                                         <C>       <C>      <C>     <C>     <C>
Forward contracts to buy foreign currency for dollars:
Australian Dollars
  Notional value..........................  $ 15.90   $ 5.40   $6.00   $4.70       $ 0.4
  Average contract rate...................     0.65     0.65    0.65    0.65          --
Israeli Shekels
  Notional value..........................  $142.50       --      --      --       $(2.5)
  Average contract rate...................     4.38       --      --      --          --
</TABLE>

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

INTEREST RATE RISK

     Our interest expenses and income are sensitive to changes in interest
rates, as all of our borrowings and cash reserves are subject to interest rate
changes. Excess liquidity invested in short-term investments currently bears
minimal interest rate risk. As of September 30, 1999, we had approximately $2.4
million outstanding on our revolving line of credit and short-term credit
agreements and $22.9 million recorded as long-term lease obligations, which in
the aggregate bear minimal interest rate risk.

ITEM 10.  DIRECTORS AND OFFICERS OF REGISTRANT

GENERAL

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

                                       36
<PAGE>   37

EXECUTIVE OFFICERS AND DIRECTORS AND OTHER KEY EMPLOYEES

     The board of directors and the executive officers of Amdocs and our
subsidiaries and their ages as of November 19, 1999, are as follows:

<TABLE>
<CAPTION>
                      NAME                        AGE   POSITION
                      ----                        ---   --------
<S>                                               <C>   <C>
Bruce K. Anderson (2)(3)........................  59    Chairman of the Board and Chief
                                                          Executive Officer, Amdocs Limited
Robert A. Minicucci (2)(3)......................  47    Director and Chief Financial Officer,
                                                          Amdocs Limited
Avinoam Naor (3)................................  51    Director of Amdocs Limited and Chief
                                                          Executive Officer of Amdocs
                                                          Management Limited
Dov Baharav.....................................  49    Senior Vice President and Chief
                                                        Financial Officer, Amdocs Management
                                                          Limited
Thomas G. O'Brien...............................  38    Treasurer and Secretary, Amdocs
                                                        Limited
Nehemia Lemelbaum...............................  56    Senior Vice President, Amdocs
                                                          Management Limited
Mario Segal.....................................  52    Senior Vice President and Chief
                                                        Operating Officer, Amdocs Management
                                                          Limited
Joshua Ehrlich..................................  50    Senior Vice President, Amdocs
                                                          Management Limited
Simon Cassif....................................  57    Senior Vice President, Amdocs (UK)
                                                          Limited
Melinos Pissourios..............................  31    General Manager, Amdocs Development
                                                          Limited
Adrian Gardner (1)(2)(3)........................  37    Director
Stephen Hermer..................................  38    Director
James S. Kahan..................................  52    Director
Paz Littman (2)(3)..............................  43    Director
John T. McLennan................................  54    Director
Lawrence Perlman (1)............................  61    Director
Michael J. Price................................  42    Director
Urs Suter.......................................  41    Director
</TABLE>

---------------
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
(3) Member of Executive Committee

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

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

                                       37
<PAGE>   38

     Avinoam Naor has been a director of Amdocs Limited since January 1999 and
is Chief Executive Officer of Amdocs Management Limited, having overall
coordination responsibility for the operations and activities of our operating
subsidiaries. Mr. Naor was a member of the team that founded Amdocs in 1982 and
initially served as a Senior Vice President. He has been involved with software
development for 28 years, working on projects for the development of application
and infrastructure software for communications systems and developing and
marketing directory assistance systems. Mr. Naor was also a member of the team
that established the computerized system for Golden Pages, the Israeli Yellow
Pages company.

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

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

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

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

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

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

                                       38
<PAGE>   39

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

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

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

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

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

     John T. McLennan has been a director of Amdocs since November 1999. Mr.
McLennan founded and has been the President of Jenmark Consulting Inc. since
1997. From 1994 to 1997 Mr. McLennan served as the President and Chief Executive
Officer of Bell Canada. Prior to that, he held various positions at several
telecommunications companies, including BCE Mobile Communications and Cantel
Inc. Mr. McLennan currently serves on the board of directors of Architel Systems
Corporation and several other software/communication companies.

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

     Michael J. Price has been a director of Amdocs since January 1998. He is
co-Chief Executive Officer of FirstMark Communications International LLC, a
broadband communications company in Europe. Prior to that, he worked at Lazard
Freres & Co. L.L.C., starting in 1987, serving first as a Vice President and
then as a Managing Director, where he led its technology and telecommunications
group. He is also a director of SpectraSite, a leading tower management company.

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

DIRECTORS

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

                                       39
<PAGE>   40

EXECUTIVE OFFICERS

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

BOARD COMMITTEES

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

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

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

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

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

ITEM 11.  COMPENSATION OF DIRECTORS AND OFFICERS

     As of September 30, 1999, we pay our non-employee directors who are not
associated with any of our principal shareholders (i) $10,000 per annum and (ii)
$1,500 per meeting of the board of directors and $500 per meeting of a committee
of the Board. We reimburse all of our directors for their reasonable travel
expenses incurred in connection with attending meetings of the board of
directors or committees thereof. Under certain circumstances, directors are also
eligible to receive stock options.

     A total of eleven persons who served either as an executive officer or
director of Amdocs during fiscal 1999 received remuneration from Amdocs. The
aggregate remuneration paid by us to such persons was approximately $4.5
million, which includes amounts set aside or accrued to provide pension,
retirement or similar benefits, but does not include amounts expended by us for
automobiles made available to our officers, expenses (including business travel,
professional and business association dues) or other fringe benefits.

     During fiscal year 1999, we granted options to four executive officers and
directors to purchase a total of 1,008,700 ordinary shares at an average price
of $23.57 per share, with vesting over three to nine year terms.

ITEM 12.  OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT OR SUBSIDIARIES

EMPLOYEE STOCK OPTIONS

     From January, 1998 through September 30, 1999 we granted options, net of
forfeitures, to purchase approximately 6,196,000 ordinary shares to our officers
and employees, and options to purchase 41,000 ordinary shares to our
non-employee directors and consultants, pursuant to a stock option and incentive
plan (the "Option Plan") adopted in January 1998. The weighted average exercise
price of those options is $11.75. The options vest over a period of three to
nine years commencing from the date of the grant. The purpose of the Option Plan
is to enable us to attract and retain qualified personnel and to motivate such
persons by providing them with an equity participation in Amdocs. The Option
Plan is administered by a committee appointed by the Board and expires ten years
after the date of its adoption.
                                       40
<PAGE>   41

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

     In connection with our acquisition of ITDS, we issued options to acquire
1,107,621 of our ordinary shares. See "Management's Discussion and Analysis of
Results of Operations and Financial Condition -- Recent Developments".

ITEM 13.  INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS

EMPLOYEE TRUST AGREEMENT

     In September 1997, we contributed $25.8 million to an irrevocable secular
trust (the "Trust"), the beneficiaries of which are primarily software and
information technology specialists who have played an important role in our
success. The Trust will distribute on specified dates within the next five years
cash amounts to those beneficiaries employed by us on those dates. The amounts
to be distributed to the beneficiaries employed by us on the relevant dates will
include any appreciation in the value of the Trust's assets and are dependent
upon certain conditions, such as the amount of cash available and the Trust's
ability to realize the value of the assets it holds. Termination of a
beneficiary's employment with Amdocs will not affect entitlement to a
beneficiary's minimum interest in the Trust which was fixed at the time of our
contribution to the Trust, and any terminated employee will receive such
interest in September 2007. In September 1997, the Trust used the contribution
from Amdocs and other resources to purchase 5,720,000 ordinary shares from us
for an aggregate consideration of approximately $31.6 million. The Trust is
required to liquidate any investments held in respect of any beneficiary and
distribute only a cash payment.

INVESTMENT AGREEMENTS

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

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

     The proceeds of the equity and subordinated debt investments made under the
Share Subscription Agreement, the Conditional Investment Agreement and the Note
Purchase Agreement were used, together with the proceeds of a senior bank debt
financing and internally generated funds, (1) to acquire for $40.0 million
certain intellectual property rights from operating subsidiaries of SBC and (2)
to fund an
                                       41
<PAGE>   42

internal corporate reorganization. Following the reorganization, $478.7 million
in dividends were paid to our shareholders, including a total of $39.9 million
to the WCAS Investors.

SHAREHOLDERS AGREEMENTS

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

     Pursuant to separate Shareholders Agreements entered into in 1995 among
various of our shareholders as of that date, the parties thereto have, subject
to the occurrence of specified events, call and put rights with respect to
certain shares held by the parties. These rights expire ratably over time and
fully expire in 2002. The exercise of such rights will not affect the number of
ordinary shares.

RELATIONSHIP WITH SBC

     Until September 1997, SBC and some of its operating subsidiaries had
specified ownership and marketing rights with respect to some of our software
products that were developed and owned jointly by us and such SBC subsidiaries.
In September 1997, we entered into a series of agreements with these SBC
subsidiaries pursuant to which we purchased certain rights from them and
terminated related future royalty payment obligations for a total consideration
of $40.0 million.

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

     SBC and some of its operating subsidiaries are also significant customers
of ours. During fiscal 1999, 1998 and 1997, SBC and those subsidiaries accounted
for approximately 15.9%, 20.8% and 34.5%, respectively, of our revenue.

OTHER RELATIONSHIPS

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

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

                                       42
<PAGE>   43

                                    PART II

ITEM 14.  DESCRIPTION OF SECURITIES TO BE REGISTERED

     Not applicable.

                                    PART III

ITEM 15.  DEFAULTS UPON SENIOR SECURITIES

     Not applicable.

ITEM 16.  CHANGES IN SECURITIES AND CHANGES IN SECURITY FOR REGISTERED
          SECURITIES

     Not applicable.

                                    PART IV

ITEM 17.  FINANCIAL STATEMENTS

     Not applicable.

ITEM 18.  FINANCIAL STATEMENTS

     See item 19.

ITEM 19.  FINANCIAL STATEMENTS AND EXHIBITS

     Item 19A  Audited Consolidated Financial Statements

        1.  Report of Independent Auditors

        2.  Consolidated Balance Sheets as of September 30, 1999 and 1998

        3.  Consolidated Statements of Operations for the years ended September
            30, 1999, 1998 and 1997

        4.  Consolidated Statements of Changes in Shareholders' Equity (Deficit)
            for the years ended September 30, 1999, 1998 and 1997

        5.  Consolidated Statements of Cash Flows for the years ended September
            30, 1999, 1998 and 1997

        6.  Notes to Consolidated Financial Statements

     Item 19B  Exhibits

        21.1  Subsidiaries of Amdocs Limited

        23.1  Consent of Ernst & Young LLP

        99.1  Amdocs Limited Press Release dated November 9, 1999

                                       43
<PAGE>   44

                                   SIGNATURE

     Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant certifies that it meets all of the requirements for
filing on Form 20-F and has duly caused this annual 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: December 6, 1999
<PAGE>   45

               INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S>                                                           <C>
Report of Independent Auditors..............................  F-2
Consolidated Balance Sheets as of September 30, 1999 and
  1998......................................................  F-3
Consolidated Statements of Operations for the years ended
  September 30, 1999, 1998 and 1997.........................  F-4
Consolidated Statements of Changes in Shareholders' Equity
  (Deficit) for the years ended September 30, 1999, 1998 and
  1997......................................................  F-5
Consolidated Statements of Cash Flows for the years ended
  September 30, 1999, 1998 and 1997.........................  F-6
Notes to Consolidated Financial Statements..................  F-8
</TABLE>

                                       F-1
<PAGE>   46

                         REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholders Amdocs Limited

     We have audited the accompanying consolidated balance sheets of Amdocs
Limited as of September 30, 1999 and 1998, and the related statements of
operations, changes in shareholders' equity (deficit) and cash flows for each of
the three years in the period ended September 30, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Amdocs Limited
as of September 30, 1999 and 1998, and the consolidated results of its
operations and its cash flows for each of the three years in the periods ended
September 30, 1999, in conformity with accounting principles generally accepted
in the United States.

/s/ ERNST & YOUNG LLP

St. Louis, Missouri
November 4, 1999

                                       F-2
<PAGE>   47

                                 AMDOCS LIMITED

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

<TABLE>
<CAPTION>
                                                                  AS OF SEPTEMBER 30,
                                                              ---------------------------
                                                                1999              1998
                                                              ---------         ---------
<S>                                                           <C>               <C>
                                         ASSETS
Current Assets:
  Cash and cash equivalents.................................  $  85,174         $  25,389
  Accounts receivable, including unbilled of $3,415 in 1999
     and $10,331 in 1998....................................    145,184            79,723
  Accounts receivable from related parties, including
     unbilled of $828 in 1999 and $537 in 1998..............     14,128            10,235
  Deferred income taxes and taxes receivable................     29,899            14,534
  Prepaid expenses and other current assets.................     16,390            11,991
                                                              ---------         ---------
          Total current assets..............................    290,775           141,872
Equipment, vehicles and leasehold improvements, net.........     83,997            46,404
Deferred income taxes.......................................      5,605             7,773
Intellectual property, net..................................     20,742            23,362
Other noncurrent assets.....................................     28,892            20,555
                                                              ---------         ---------
          Total assets......................................  $ 430,011         $ 239,966
                                                              =========         =========
                     LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
  Accounts payable and accrued expenses.....................  $  64,802         $  47,599
  Accrued personnel costs...................................     40,092            29,948
  Short-term financing arrangements.........................      2,381            91,565
  Deferred revenue..........................................    104,688            29,241
  Short-term portion of capital lease obligations...........      5,722             2,952
  Forward exchange obligations..............................      3,792             2,926
  Income taxes payable and deferred income taxes............     33,412            21,919
                                                              ---------         ---------
          Total current liabilities.........................    254,889           226,150
Long-term portion of capital lease obligations..............     17,148             9,215
Other noncurrent liabilities................................     34,237            26,490
                                                              ---------         ---------
          Total liabilities.................................    306,274           261,855
                                                              ---------         ---------
Shareholders' equity (deficit):
  Preferred Shares -- Authorized 25,000 shares; L0.01 par
     value; 0 shares issued and outstanding.................         --                --
  Ordinary Shares -- Authorized 550,000 shares; L0.01 par
     value; 198,800 and 196,800 outstanding in 1999 and
     1998, respectively.....................................      3,181             3,149
  Additional paid-in capital................................    489,099           447,503
  Unrealized loss on derivative instruments.................     (1,157)           (1,495)
  Unearned compensation.....................................     (3,830)           (8,947)
  Accumulated deficit.......................................   (363,556)         (462,099)
                                                              ---------         ---------
          Total shareholders' equity (deficit)..............    123,737           (21,889)
                                                              ---------         ---------
          Total liabilities and shareholders' equity
            (deficit).......................................  $ 430,011         $ 239,966
                                                              =========         =========
</TABLE>

                            See accompanying notes.
                                       F-3
<PAGE>   48

                                 AMDOCS LIMITED

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

<TABLE>
<CAPTION>
                                                                 YEAR ENDED SEPTEMBER 30,
                                                              ------------------------------
                                                                1999       1998       1997
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Revenue:
     License (*)............................................  $ 74,387   $ 42,891   $ 25,995
     Service (*)............................................   552,468    360,876    264,107
                                                              --------   --------   --------
                                                               626,855    403,767    290,102
                                                              --------   --------   --------
Operating expenses:
     Cost of license (*)....................................     5,515     10,732      3,711
     Cost of service (*)....................................   357,809    231,360    173,704
     Research and development...............................    40,874     25,612     17,386
     Selling, general and administrative....................    75,659     51,168     40,769
     Nonrecurring charges (*)...............................        --         --     27,563
                                                              --------   --------   --------
                                                               479,857    318,872    263,133
                                                              --------   --------   --------
Operating income............................................   146,998     84,895     26,969
Other expense, net (*)......................................     6,223     24,126      3,266
                                                              --------   --------   --------
Income before income taxes and cumulative effect............   140,775     60,769     23,703
Income taxes................................................    42,232     30,385     17,827
                                                              --------   --------   --------
Income before cumulative effect.............................    98,543     30,384      5,876
Cumulative effect of change in accounting principle, net of
  $277 tax..................................................        --        277         --
                                                              --------   --------   --------
          Net income........................................  $ 98,543   $ 30,107   $  5,876
                                                              ========   ========   ========
Basic earnings per share
  Income before cumulative effect...........................  $   0.50   $   0.19   $   0.05
  Cumulative effect of change in accounting principle (less
     than $0.01)............................................        --         --         --
                                                              --------   --------   --------
          Net income........................................  $   0.50   $   0.19   $   0.05
                                                              ========   ========   ========
Diluted earnings per share Income before cumulative
  effect....................................................  $   0.49   $   0.19   $   0.05
  Cumulative effect of change in accounting principle (less
     than $0.01)............................................        --         --         --
                                                              --------   --------   --------
          Net income........................................  $   0.49   $   0.19   $   0.05
                                                              ========   ========   ========
Basic weighted average number of shares outstanding.........   197,436    158,528    108,330
                                                              ========   ========   ========
Diluted weighted average number of shares outstanding.......   200,262    159,442    110,915
                                                              ========   ========   ========
</TABLE>

---------------
(*) See Note 3.

                            See accompanying notes.
                                       F-4
<PAGE>   49

                                 AMDOCS LIMITED

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

<TABLE>
<CAPTION>
                                                                  UNREALIZED                                       TOTAL
                                ORDINARY SHARES    ADDITIONAL       LOSS ON                                    SHAREHOLDERS'
                                ----------------    PAID-IN       DERIVATIVE        UNEARNED     ACCUMULATED      EQUITY
                                SHARES    AMOUNT    CAPITAL       INSTRUMENTS     COMPENSATION     DEFICIT       (DEFICIT)
                                -------   ------   ----------   ---------------   ------------   -----------   -------------
<S>                             <C>       <C>      <C>          <C>               <C>            <C>           <C>
BALANCE AS OF OCTOBER 1,
1996..........................  107,916   $1,727    $ 14,348        $    --         $     --      $     (87)     $  15,988
Net income....................       --      --           --             --               --          5,876          5,876
Dividends declared, $0.18 per
  share.......................       --      --           --             --               --        (19,311)       (19,311)
Issuance of Ordinary Shares,
  net.........................   16,792     269       91,431             --               --             --         91,700
                                -------   ------    --------        -------         --------      ---------      ---------
BALANCE AS OF SEPTEMBER 30,
  1997........................  124,708   1,996      105,779             --               --        (13,522)        94,253
Net income....................       --      --           --             --               --         30,107         30,107
Unrealized loss on derivative
  instruments, net of $640
  tax.........................       --      --           --         (1,495)              --             --         (1,495)
Dividends declared, $3.76 per
  share.......................       --      --           --             --               --       (478,684)      (478,684)
Issuance of Ordinary Shares,
  net.........................   54,092     865       97,583             --               --             --         98,448
Initial public offering of
  Ordinary Shares, net........   18,000     288      233,902             --               --             --        234,190
Stock options granted, net of
  forfeitures.................       --      --       10,239             --          (10,239)            --             --
Amortization of unearned
  compensation................       --      --           --             --            1,292             --          1,292
                                -------   ------    --------        -------         --------      ---------      ---------
BALANCE AS OF SEPTEMBER 30,
  1998........................  196,800   3,149      447,503         (1,495)          (8,947)      (462,099)       (21,889)
Net income....................       --      --           --             --               --         98,543         98,543
Unrealized income on
  derivative instruments, net
  of $145 tax.................       --      --           --            338               --             --            338
Issuance of Ordinary Shares,
  net.........................    2,000      32       41,352             --               --             --         41,384
Stock options granted, net of
  forfeitures.................       --      --          244             --             (163)            --             81
Amortization of unearned
  compensation................       --      --           --             --            5,280             --          5,280
                                -------   ------    --------        -------         --------      ---------      ---------
BALANCE AS OF SEPTEMBER 30,
  1999........................  198,800   $3,181    $489,099        $(1,157)        $ (3,830)     $(363,556)     $ 123,737
                                =======   ======    ========        =======         ========      =========      =========
</TABLE>

                            See accompanying notes.
                                       F-5
<PAGE>   50

                                 AMDOCS LIMITED

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                 YEAR ENDED SEPTEMBER 30,
                                                             ---------------------------------
                                                               1999        1998        1997
                                                             ---------   ---------   ---------
<S>                                                          <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income.................................................  $  98,543   $  30,107   $   5,876
Reconciliation of net income to net cash provided by
  operating activities:
     Depreciation..........................................     19,610      12,611       8,066
     Amortization..........................................     10,991      16,485         328
     Loss on sale of equipment.............................        549         149         137
     Deferred income taxes.................................     (4,026)     (1,351)    (11,868)
     Write-off of purchased computer software..............         --          --       1,800
     Unrealized income (loss) on derivative Instruments....        483      (2,135)         --
Net changes in operating assets and liabilities:
  Accounts receivable......................................    (69,354)    (26,000)    (19,357)
  Prepaid expenses and other current assets................     (4,400)     (5,244)      1,258
  Other noncurrent assets..................................    (10,350)     (3,324)     (3,958)
  Accounts payable and accrued expenses....................     24,018      23,906      20,971
  Forward exchange obligations.............................     (1,125)      5,148          --
  Deferred revenue.........................................     75,448      11,800       6,730
  Income taxes payable.....................................      2,177      (1,429)     11,225
  Other noncurrent liabilities.............................      9,739       5,760       4,843
                                                             ---------   ---------   ---------
Net cash provided by operating activities..................    152,303      66,483      26,051
                                                             ---------   ---------   ---------
CASH FLOW FROM INVESTING ACTIVITIES:
Proceeds from sale of equipment, vehicles and leasehold
  improvements.............................................      1,461         889         959
Payments for purchase of equipment, vehicles and leasehold
  improvements.............................................    (42,180)    (26,566)    (10,213)
Purchase of computer software and intellectual property....     (1,000)         --     (40,000)
                                                             ---------   ---------   ---------
Net cash used in investing activities......................    (41,719)    (25,677)    (49,254)
                                                             ---------   ---------   ---------
CASH FLOW FROM FINANCING ACTIVITIES:
Dividends paid.............................................         --    (478,684)    (18,000)
Net proceeds from issuance of Ordinary Shares..............     42,535     330,638      91,700
Payments under short-term finance arrangements.............   (395,345)   (269,946)   (155,190)
Borrowings under short-term finance arrangements...........    306,161     358,862     140,360
Net proceeds from issuance of long term debt...............         --     364,127          --
Principal payments on long term debt.......................         --    (368,521)         --
Principal payments on capital lease obligations............     (4,150)     (2,357)     (1,286)
Proceeds from (payments on) issuance of notes payable......         --      (3,268)      3,268
                                                             ---------   ---------   ---------
Net cash provided by (used in) financing activities........    (50,799)    (69,149)     60,852
                                                             ---------   ---------   ---------
Net increase (decrease) in cash and cash equivalents.......     59,785     (28,343)     37,649
Cash and cash equivalents at beginning of year.............     25,389      53,732      16,083
                                                             ---------   ---------   ---------
Cash and cash equivalents at end of year...................  $  85,174   $  25,389   $  53,732
                                                             =========   =========   =========
</TABLE>

                            See accompanying notes.
                                       F-6
<PAGE>   51
                                 AMDOCS LIMITED

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

<TABLE>
<CAPTION>
                                                               YEAR ENDED SEPTEMBER 30,
                                                              ---------------------------
                                                               1999      1998      1997
                                                              -------   -------   -------
<S>                                                           <C>       <C>       <C>
SUPPLEMENTARY CASH FLOW INFORMATION
Interest and Income Taxes Paid
  Cash paid for:
     Income taxes, net of refunds...........................  $38,369   $32,472   $18,352
     Interest...............................................    6,393    25,150     1,036
</TABLE>

NON CASH INVESTING AND FINANCING ACTIVITIES

     Capital lease obligations of $14,853, $5,200 and $8,516 were incurred
during the years ended September 30, 1999, 1998 and 1997, respectively, when the
Company (as hereinafter defined) entered into lease agreements for vehicles.

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

     As of September 30, 1999, the Company incurred stock issuance costs of
$1,153 which had not been paid as of that date.

                            See accompanying notes.
                                       F-7
<PAGE>   52

                                 AMDOCS LIMITED

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
                               SEPTEMBER 30, 1999

1.  NATURE OF ENTITY

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

     The Company is a Guernsey corporation, which holds directly or indirectly
several wholly owned subsidiaries in Australia, Brazil, Europe, Israel, Japan,
and North America. The Company's customers are mainly in North America, Europe,
South America, Australia and the Asia-Pacific region. During 1999 the Company
derived approximately 30 percent of its revenue from the United States. The
majority of the Company's production facilities are located in the State of
Israel. Additional development and support centers are located in the United
States, Brazil and Cyprus.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  BASIS OF PRESENTATION

     The consolidated financial statements are prepared in accordance with
accounting principles generally accepted in the U.S.

  CONSOLIDATION

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

  FUNCTIONAL CURRENCY

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

  CASH AND CASH EQUIVALENTS

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

  EQUIPMENT AND LEASEHOLD IMPROVEMENTS

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

  RESEARCH AND DEVELOPMENT, COMPUTER SOFTWARE AND INTELLECTUAL PROPERTY

     Research and development expenditures consist of costs incurred during the
development of new software modules and product offerings, either in conjunction
with customer projects or as part of the Company's

                                       F-8
<PAGE>   53
                                 AMDOCS LIMITED

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

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

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

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

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

     Certain intellectual property rights acquired by the Company in September
1997 are amortized over their estimated useful life of 10 years, on a
straight-line basis. Accumulated amortization is $16,402 and $11,060 as of
September 30, 1999 and 1998, respectively.

  STOCK SPLIT

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

  INCOME TAXES

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

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

  REVENUE RECOGNITION

     The Company's software products require significant customization and
therefore the development projects are recognized as long term contracts in
conformity with Accounting Research Bulletin (ARB) No. 45 "Long Term
Construction Type Contracts" and Statement of Position (SOP) 81-1 "Accounting
for Performance of Construction Type and Certain Production Type Contracts" and
SOP 97-2 "Software Revenue Recognition". License revenue is recognized as work
is performed, under the percentage of completion method. Service revenue that
involves significant ongoing obligations, including fees for customization,
implementation and initial support services, is recognized as work is performed,
under the

                                       F-9
<PAGE>   54
                                 AMDOCS LIMITED

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

percentage of completion method. Revenue related to ongoing support is
recognized as work is performed. Revenue from third party hardware and software
sales is recognized when products are delivered. Maintenance revenue is
recognized ratably over the term of the maintenance agreement, which in most
cases is one year or less. As a result of its percentage of completion
accounting policies, the Company's annual and quarterly operating results may be
significantly affected by the size and timing of customer projects and the
Company's progress in completing such projects. Losses are recognized on
contracts in the period in which the liability is identified.

     Deferred revenue represents billings to customers for licenses, services
and third-party products for which revenue has not been recognized.

     Included in service revenue are sales of third-party products. Revenue from
sales of such products includes third-party computer hardware and computer
software products and is less than 10 percent of total revenue in fiscal 1999,
1998 and 1997.

  COST OF LICENSE AND COST OF SERVICE

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

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

  STOCK-BASED COMPENSATION

     The Company accounts for stock-based compensation in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees". Pursuant to this accounting standard, the Company records deferred
compensation for share options granted to employees at the date of grant based
on the difference between the exercise price of the options and the market value
of the underlying shares at that date. Deferred compensation is amortized to
compensation expense over the vesting period of the underlying options. No
compensation expense is recorded for stock options that are granted to employees
and directors at an exercise price equal to the fair market value of the
Ordinary Shares at the time of the grant. See Note 15 for pro forma disclosures
required in accordance with SFAS No. 123, "Accounting for Stock-Based
Compensation".

  FAIR VALUE OF FINANCIAL INSTRUMENTS

     The financial instruments of the Company consist mainly of cash and cash
equivalents, accounts receivable, short-term financing arrangements, forward
exchange contracts and lease obligations. In view of their nature, the fair
value of the financial instruments included in the accounts of the Company does
not significantly vary from their carrying amount. The fair values of the
Company's foreign currency exchange contracts are estimated based on quoted
market prices of comparable contracts.

  CONCENTRATION OF CREDIT RISK

     Financial instruments that potentially subject the Company to concentration
of credit risk consist principally of trade receivables. The Company invests its
excess cash primarily in highly liquid U.S. dollar-denominated deposits with
major U.S. and U.K. banks. The Company does not expect any credit losses in
                                      F-10
<PAGE>   55
                                 AMDOCS LIMITED

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

respect of these items. The Company's revenue is generated primarily in Europe
and North America and to a lesser extent in the Asia-Pacific region, Australia
and Brazil. Most customers are among the largest telecommunications and
directory publishing companies in the world (or owned by them). The Company
performs ongoing analysis of its customer base and generally does not require
collateral.

  RECLASSIFICATIONS

     Certain amounts in prior years' financial statements have been reclassified
to conform to the current year's presentation.

  EARNINGS PER SHARE

     The Company accounts for earnings per share based on SFAS No. 128 "Earnings
per Share". SFAS No. 128 requires companies to compute earnings per share under
two different methods, basic and diluted earnings per share, and to disclose the
methodology used for the calculations. Basic earnings per share is calculated
using the weighted average number of shares outstanding during the period.
Diluted earnings per share is computed on the basis of the weighted average
number of shares outstanding and the effect of the dilutive outstanding stock
options using the treasury stock method.

  DERIVATIVES AND HEDGING

     Effective July 1, 1998, the Company adopted SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities". SFAS No. 133 requires the
Company to recognize all derivatives on the balance sheet at fair value. If the
derivative meets the definition of a hedge and is so designated, depending on
the nature of the hedge, changes in the fair value of derivatives will either be
offset against the change in fair value of the hedged assets, liabilities, or
firm commitments through earnings or recognized in other comprehensive income
until the hedged item is recognized in earnings. The ineffective portion of a
derivative's change in fair value is recognized in earnings. The adoption of
SFAS No. 133 on July 1, 1998 did not have a material impact on results of
operations but resulted in the cumulative effect of change in accounting
principle of $277, net of tax in 1998.

  ADOPTION OF NEW ACCOUNTING STANDARDS

     Effective October 1, 1998, the Company adopted the provisions of SOP 98-1,
"Accounting for the Costs of Computer Software Developed for or Obtained for
Internal-Use". SOP 98-1 requires the capitalization of certain costs incurred
after the date of adoption in connection with developing or obtaining software
for internal use. In accordance with SOP 98-1, the Company capitalized
approximately $2,000 of internally developed software costs in the year ended
September 30, 1999.

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

                                      F-11
<PAGE>   56
                                 AMDOCS LIMITED

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

     The following table sets forth the reconciliation from net income to
comprehensive income for the years ended:

<TABLE>
<CAPTION>
                                                     1999      1998      1997
                                                    -------   -------   ------
<S>                                                 <C>       <C>       <C>
Net income........................................  $98,543   $30,107   $5,876
Change in unrealized income (loss) on derivative
  instruments, net of tax.........................      338    (1,495)      --
                                                    -------   -------   ------
Comprehensive income..............................  $98,881   $28,612   $5,876
                                                    =======   =======   ======
</TABLE>

  USE OF ESTIMATES

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

3.  RELATED-PARTY TRANSACTIONS

     The following related party transactions are included in the statement of
operations for the years ended September 30:

<TABLE>
<CAPTION>
                                                            1999      1998      1997
                                                           -------   ------   --------
<S>                                                        <C>       <C>      <C>
Revenue:
  License(1).............................................  $   743   $2,300   $     --
  Service................................................   98,761   82,100    100,500
Operating expenses:
  Cost of license(2).....................................       --       --      3,382
  Cost of service........................................    2,656    2,325      2,523
  Selling, general and administrative(3).................      570      510        377
  Nonrecurring charges(4)................................       --       --      1,800
Other expense, net(5)....................................       --    6,268         --
</TABLE>

---------------
(1) The Company licenses software and provides computer systems integration and
    related services to several affiliates of a significant shareholder of the
    Company (the "Affiliates").

(2) Through September 1997 the Company paid royalties to the Affiliates for the
    licensing of computer software. Royalty expense totaled approximately $3,400
    in 1997.

(3) The Company leases office space in Israel on a month-to-month basis and
    purchases other miscellaneous support services from affiliates of certain
    shareholders.

(4) On September 22, 1997, the Company purchased certain computer software
    programs and intellectual property rights from the Affiliates for an
    aggregate amount of $40,000. The effect of these transactions is that the
    Company no longer pays royalties to the Affiliates related to the purchased
    computer software. In-process research and development related to this
    transaction resulted in a nonrecurring charge of $1,800. The remainder has
    been capitalized as computer software and intellectual property rights.

(5) On September 22, 1997, the Company issued junior subordinated notes payable
    in the aggregate amount of $3,268 to certain persons affiliated with the
    investors party to the Share Subscription Agreement referred to in Note 14.
    The notes bore an interest rate of 5.75 percent per annum and were
    originally due

                                      F-12
<PAGE>   57
                                 AMDOCS LIMITED

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

    September 22, 1998. The notes were paid in March 1998. In January 1998, the
    Company issued $123,500 in principal amount of 10 percent subordinated notes
    to affiliates of certain shareholders which were party to the Conditional
    Investment Agreement referred to in Note 14. The subordinated notes were
    repaid in 1998.

4.  COMPENSATING BALANCES

     The Company was required to maintain compensating cash balances of $2,791
and $574 as of September 30, 1999 and 1998, respectively, primarily relating to
foreign currency contracts and bank guarantees.

5.  EQUIPMENT, VEHICLES AND LEASEHOLD IMPROVEMENTS, NET

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

<TABLE>
<CAPTION>
                                                             1999      1998
                                                            -------   -------
<S>                                                         <C>       <C>
Furniture and fixtures....................................  $14,009   $ 7,148
Computer equipment........................................   67,416    37,238
Vehicles furnished to employees...........................   31,541    20,500
Leasehold improvements....................................   19,315    12,353
                                                            -------   -------
                                                            132,281    77,239
Less accumulated depreciation.............................   48,284    30,835
                                                            -------   -------
                                                            $83,997   $46,404
                                                            =======   =======
</TABLE>

     The Company has entered into various arrangements for the leasing of
vehicles for periods of five years, carrying interest rates of LIBOR plus a
varying interest rate of 0.7 percent to 1.0 percent (6.2 percent as of September
30, 1999). The Company has accounted for these as capital leases and
amortization costs have been included in depreciation expense. Capital lease
payments, excluding interest, due over the next five years are as follows:

<TABLE>
<S>                                           <C>
2000........................................  $5,722
2001........................................   5,758
2002........................................   5,157
2003........................................   4,092
2004........................................   2,141
</TABLE>

6.  OTHER NONCURRENT ASSETS

     Other noncurrent assets consist of the following:

<TABLE>
<CAPTION>
                                                             1999      1998
                                                            -------   -------
<S>                                                         <C>       <C>
Funded personnel benefit costs............................  $18,264   $13,622
Computer software, net of amortization of $10,944 in 1999
  and $8,222 in 1998......................................    2,056     3,778
Other.....................................................    8,572     3,155
                                                            -------   -------
                                                            $28,892   $20,555
                                                            =======   =======
</TABLE>

                                      F-13
<PAGE>   58
                                 AMDOCS LIMITED

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

7.  INCOME TAXES

     The provision for income taxes consists of the following for the years
ended:

<TABLE>
<CAPTION>
                                                    1999      1998      1997
                                                   -------   -------   -------
<S>                                                <C>       <C>       <C>
Current..........................................  $46,258   $31,736   $29,695
Deferred.........................................   (4,026)   (1,351)  (11,868)
                                                   -------   -------   -------
                                                   $42,232   $30,385   $17,827
                                                   =======   =======   =======
</TABLE>

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

     Deferred income taxes are comprised of the following components:

<TABLE>
<CAPTION>
                                                             1999      1998
                                                            -------   -------
<S>                                                         <C>       <C>
Deferred tax assets:
Deferred revenue..........................................  $21,021   $ 5,849
Accrued personnel costs...................................    8,184     7,027
Computer software and intellectual property...............       --     1,735
Warranty and maintenance accruals.........................      195     2,184
Other.....................................................    4,947     5,512
                                                            -------   -------
          Total deferred tax assets.......................   34,347    22,307
                                                            -------   -------
Deferred tax liabilities:
Anticipated withholdings on subsidiaries' earnings........  (14,033)   (7,945)
Computer software and intellectual property...............   (2,071)       --
                                                            -------   -------
Total deferred tax liabilities............................  (16,104)   (7,945)
                                                            -------   -------
Net deferred tax assets...................................  $18,243   $14,362
                                                            =======   =======
</TABLE>

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

<TABLE>
<CAPTION>
                                                             1999   1998   1997
                                                             ----   ----   ----
<S>                                                          <C>    <C>    <C>
Statutory Guernsey tax rate................................   20%    20%    20%
Guernsey tax-exempt status.................................  (20)   (20)   (20)
Foreign taxes..............................................   30     50     75
                                                             ---    ---    ---
Effective income tax rate..................................   30%    50%    75%
                                                             ===    ===    ===
</TABLE>

     In 1998 and 1997 the Company incurred tax expense on the income of its
operations in various countries and sustained a loss in a tax jurisdiction in
which the Company is tax exempt. This resulted in no tax benefit to offset the
expense incurred. No such loss occurred in 1999 and, as a result, the Company's
effective income tax rate in 1998 and 1997 was significantly higher than the
1999 effective income tax rate.

     The Company's Israeli subsidiary, which accounted for approximately 36%,
34% and 39% for 1999, 1998 and 1997, respectively, of the Company's income
before income taxes and non recurring charges, enjoys tax benefits from Approved
Enterprise status, as established under Israeli law. The benefits from this
status will begin phasing out in 1999. However, the effect on the 1999 effective
income tax rate of the Company is not significant.

                                      F-14
<PAGE>   59
                                 AMDOCS LIMITED

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

     During 1997, the Company settled claims from various taxing authorities
resulting in an increase in taxes paid and deferred tax assets. Included in
other expense, net for the year ended September 30, 1997 is approximately
$3,000, representing interest on tax assessments relating to periods prior to
fiscal 1997.

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

8.  SHORT-TERM FINANCING ARRANGEMENTS

     The Company's financing transactions with related and other parties are
described below:

     In December 1997, the Company entered into various credit agreements (the
"Credit Agreements") with several commercial banks for loans totaling $315,000,
with variable interest rates and periodic payments due through June 2004. All
amounts initially borrowed under the Credit Agreements were repaid in 1998.

     According to an amendment to the Credit Agreements (the "Revolving Credit
Agreement") entered into in July 1998, the Company may borrow up to $100,000
under a revolving line of credit. This agreement expires in June 2001. The
revolving line of credit bears a variable interest rate (5.9 percent as of
September 30, 1999). The Revolving Credit Agreement has various covenants, which
limit the Company's ability to make investments, incur debt, pay dividends and
dispose of property. The Company is also required to maintain certain financial
ratios as defined in the Revolving Credit Agreement. Except for vehicles,
substantially all of the Company's assets have been pledged as security under
the terms of the Revolving Credit Agreement. As of September 30, 1999, the
Company utilized approximately $7,000 of the Revolving Credit Agreement to
support bank guarantees.

     Effective January 1998, the Company issued unsecured long-term subordinated
notes to affiliates of certain shareholders of the Company totaling $123,500,
and exercised a requirement for affiliates of certain shareholders to make an
equity investment in the Company of approximately $99,000. The long-term
subordinated notes to affiliates carried an interest rate of 10 percent, payable
quarterly with principal due September 2004. The subordinated notes were repaid
in 1998.

     According to an agreement with a bank in the State of Israel, the Company's
Israeli subsidiary may borrow up to $40,000 under a short-term credit line. As
of September 30, 1999, the outstanding balance under this arrangement was
$2,381. The short-term credit line bears a variable interest rate (6.2 percent
as of September 30, 1999).

     In addition, the Company has a short term revolving credit line totalling
$12,000 from a bank in the United Kingdom. As of September 30, 1999, the Company
had utilized approximately $9,200 of this revolving credit facility to support
bank guarantees.

     The maximum amount of short-term borrowings under the revolving bank credit
arrangements at the end of any month was approximately $97,300 in 1999 and
$91,600 in 1998. The average short-term borrowings during the year were $63,500
in 1999 and $30,200 in 1998. The weighted average interest rates approximated
6.0 percent in 1999 and 6.4 percent in 1998.

                                      F-15
<PAGE>   60
                                 AMDOCS LIMITED

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

9.  OTHER NONCURRENT LIABILITIES

     Other noncurrent liabilities consist of the following:

<TABLE>
<CAPTION>
                                                             1999      1998
                                                            -------   -------
<S>                                                         <C>       <C>
Accrued personnel costs...................................  $32,441   $24,268
Long term forward exchange obligations....................      231     2,222
Other.....................................................    1,565        --
                                                            -------   -------
                                                            $34,237   $26,490
                                                            =======   =======
</TABLE>

10.  NONRECURRING CHARGES

     Amounts reflected as nonrecurring charges in the consolidated statement of
operations for the year ended September 30, 1997 represent:

          (1) the payment of a one-time special bonus of $25,763 paid to a trust
     for the benefit of certain officers and employees related to past services,
     and

          (2) a write-off of $1,800 in connection with the acquisition of
     certain software rights related to in-process research and development.

11.  OTHER EXPENSE, NET

     Other expense, net consists of the following:

<TABLE>
<CAPTION>
                                                     1999      1998      1997
                                                    -------   -------   ------
<S>                                                 <C>       <C>       <C>
Interest income...................................  $(1,680)  $(3,445)  $ (873)
Interest expense..................................    5,654    24,267      981
Interest expense relating to settlement of tax
  claims..........................................       --       680    3,000
Other, net........................................    2,249     2,624      158
                                                    -------   -------   ------
                                                    $ 6,223   $24,126   $3,266
                                                    =======   =======   ======
</TABLE>

12.  COMMITMENTS

     The Company leases office space in various countries in which it does
business under non-cancelable operating leases. Future minimum lease payments
required for the five-year period beginning October 1, 1999 are as follows:

<TABLE>
<CAPTION>
     FOR THE YEARS ENDED SEPTEMBER 30,
     ---------------------------------
<S>                                          <C>
2000.......................................  $13,700
2001.......................................   10,700
2002.......................................    8,600
2003.......................................    7,800
2004.......................................    7,000
                                             -------
                                             $47,800
                                             =======
</TABLE>

     Rent expense was approximately $12,600, $8,000 and $5,400 for 1999, 1998
and 1997, respectively. The lease agreement related to the Company's principal
facilities in Israel includes a purchase option.

                                      F-16
<PAGE>   61
                                 AMDOCS LIMITED

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

13.  EMPLOYEE BENEFITS

     The Company accrues severance pay for the employees of its Israeli
operations in accordance with Israeli law and certain employment procedures on
the basis of the latest monthly salary paid to these employees and the length of
time that they have worked for the Israeli subsidiary. The severance pay
liability, which is included in other noncurrent liabilities, is partially
funded by amounts on deposit with insurance companies, which are included in
other noncurrent assets. Severance pay expenses were approximately $9,200,
$7,100 and $5,500 for 1999, 1998 and 1997, respectively.

     The Company sponsors a defined contribution plan covering substantially all
employees in the U.S., U.K. and Canada. The plan provides for Company matching
contributions based upon a percentage of the employees' voluntary contributions.
The Company's 1999, 1998 and 1997 plan contributions were not significant.

14.  CAPITAL TRANSACTIONS

     The following are details of the Ordinary Shares outstanding on September
30:

<TABLE>
<CAPTION>
                                                             1999      1998
                                                            -------   -------
<S>                                                         <C>       <C>
Voting Ordinary Shares....................................  174,590   166,565
Non-Voting Ordinary Shares................................   24,210    30,235
                                                            -------   -------
                                                            198,800   196,800
                                                            =======   =======
</TABLE>

     All the Non-Voting Ordinary Shares are held by a single shareholder. Under
the Company's Articles of Association, upon the transfer or sale of such shares
to another party, the shares automatically convert to Voting Ordinary Shares.

     The Company's capital transactions are described below:

     On September 22, 1997, the Company entered into a Share Subscription
Agreement, under which 11,072 Ordinary Shares and 990 Voting Shares and $3,268
principal amount of junior promissory notes were issued to certain investors.
These notes were repaid in March 1998. Also, on September 22, 1997, the Company
entered into a Conditional Investment Agreement whereby such investors were to
be obligated to purchase 51,508 Ordinary Shares of the Company in second quarter
1998 for approximately $99,000, if the Company achieved certain financial
performance targets. In addition, the Company entered into a note purchase
agreement with certain affiliates of the investors to issue, at its election, up
to $125,000 of subordinated notes.

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

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

     In March 1998, the Company issued 51,508 Ordinary Shares according to the
Conditional Investment Agreement discussed above. The net proceeds to the
Company after the deduction of transaction costs amounted to $96,448.

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

                                      F-17
<PAGE>   62
                                 AMDOCS LIMITED

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

Shares, 500,000 Ordinary Shares and 50,000 non-voting Ordinary Shares; and (iv)
declared a stock split of 52-for-1 for each Ordinary Share outstanding. The
rights of the two classes of Ordinary Shares are identical except as to voting
rights. After the initial public offering, all of the outstanding non-voting
Ordinary Shares have been held by an existing shareholder of the Company. All
references to the number of shares and earnings per share have been restated to
reflect the stock split and the redemption of Voting Shares has been given
retroactive effect.

     On June 19, 1998, the Company conducted an initial public offering on the
New York Stock Exchange of 18,000 Ordinary Shares. Total net proceeds, after
deduction of offering expenses and underwriting commissions, amounted to
$234,190.

     On June 7, 1999, the Company and certain shareholders of the Company
completed a public offering pursuant to which the Company sold 2,000 Ordinary
Shares. The net proceeds to the Company, after deduction of underwriting
discounts and offering expenses, amounted to $41,384.

15.  STOCK OPTION AND INCENTIVE PLAN

     In January 1998, the Company adopted, and in January 1999 the Company
amended, the Amdocs Limited 1998 Stock Option and Incentive Plan, as amended
("the Plan"). Under the provisions of the Plan, 6,600 Ordinary Shares are
available to be granted to officers, directors, employees and consultants fully
vested over three to nine years and with a term of ten years.

     A summary of the Plan as of September 30, 1999 and 1998, as well as changes
during the years then ended, is presented below:

<TABLE>
<CAPTION>
                                                                       WEIGHTED
                                                           NUMBER OF   AVERAGE
                                                             SHARE     EXERCISE
                                                            OPTIONS     PRICE
                                                           ---------   --------
<S>                                                        <C>         <C>
Outstanding as of October 1, 1997........................        --     $   --
Granted..................................................   3,527.4       3.93
Exercised................................................        --         --
Forfeited................................................      (7.8)      1.92
                                                            -------
Outstanding as of September 30, 1998.....................   3,519.6       3.93
Granted..................................................   2,752.6      21.67
Exercised................................................        --         --
Forfeited................................................     (35.3)      6.23
                                                            -------
Outstanding as of September 30, 1999.....................   6,236.9     $11.75
                                                            =======     ======
</TABLE>

     The following table summarizes information about share options outstanding
as of September 30, 1999:

<TABLE>
<CAPTION>
         OUTSTANDING AS OF SEPTEMBER 30, 1999            EXERCISABLE AS OF SEPTEMBER 30, 1999
------------------------------------------------------   ------------------------------------
                               WEIGHTED
                                AVERAGE
                               REMAINING      WEIGHTED
                              CONTRACTUAL     AVERAGE
 EXERCISE       NUMBER           LIFE         EXERCISE       NUMBER        WEIGHTED AVERAGE
  PRICES      OUTSTANDING     (IN YEARS)       PRICE      EXERCISABLE       EXERCISE PRICE
-----------   -----------   ---------------   --------   --------------   -------------------
<S>           <C>           <C>               <C>        <C>              <C>
$1.92          2,492.6            8.27         $ 1.92            --              $  --
 8.75 - 16.75  1,613.4            6.38          11.62        166.75               9.08
21.90 - 23.63  2,130.9            9.82          23.34            --                 --
</TABLE>

                                      F-18
<PAGE>   63
                                 AMDOCS LIMITED

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

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

<TABLE>
<CAPTION>
         OUTSTANDING AS OF SEPTEMBER 30, 1998            EXERCISABLE AS OF SEPTEMBER 30, 1998
------------------------------------------------------   ------------------------------------
                               WEIGHTED
                                AVERAGE
                               REMAINING      WEIGHTED
                              CONTRACTUAL     AVERAGE
 EXERCISE       NUMBER           LIFE         EXERCISE       NUMBER        WEIGHTED AVERAGE
  PRICES      OUTSTANDING     (IN YEARS)       PRICE      EXERCISABLE       EXERCISE PRICE
-----------   -----------   ---------------   --------   --------------   -------------------
<S>           <C>           <C>               <C>        <C>              <C>
   $1.92       2,498.6            9.25         $1.92             --             $   --
8.75 - 14.00   1,021.0           10.75          8.86            5.3              14.00
</TABLE>

     The weighted average grant-date fair value of the 2,752.6 and 3,527.4
options granted amounted to $13.92 and $6.12 for 1999 and 1998, respectively,
per option. The Company utilized the Black-Scholes option pricing model to
estimate fair value, utilizing the following assumptions for the year (all in
weighted averages):

<TABLE>
<CAPTION>
                                                              1999    1998
                                                              -----   -----
<S>                                                           <C>     <C>
Risk-free interest rate.....................................   5.31%   5.24%
Expected life of options....................................    7.3     7.1
Expected annual volatility..................................  0.550   0.945
Expected dividend yield.....................................   None    None
</TABLE>

     Had compensation cost for the Company's share option plan been determined
based on fair value at the grant dates for awards made in 1999 and 1998 under
such plan in accordance with SFAS 123, the Company's pro forma net income and
earnings per share for the year ended September 30, 1999 and 1998 would have
been as follows:

<TABLE>
<CAPTION>
                                                             1999      1998
                                                            -------   -------
<S>                                                         <C>       <C>
Pro forma net income......................................  $92,624   $29,463
Pro forma diluted earnings per share......................     0.46      0.18
</TABLE>

16.  EARNINGS PER SHARE

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

<TABLE>
<CAPTION>
                                                    YEAR ENDED SEPTEMBER 30,
                                                  ----------------------------
                                                   1999      1998       1997
                                                  -------   -------   --------
<S>                                               <C>       <C>       <C>
Numerator:
  Income before cumulative effect...............  $98,543   $30,384   $  5,876
                                                  =======   =======   ========
Denominator:
  Denominator for basic earnings per
     share -- weighted average number of shares
     outstanding................................  197,436   158,528    108,330
  Effect of dilutive contingently issuable
     shares.....................................       --        --      2,585
  Effect of dilutive stock options granted......    2,826       914         --
                                                  -------   -------   --------
Denominator for dilutive earnings per
  share -- adjusted weighted average shares and
  assumed conversions...........................  200,262   159,442    110,915
                                                  =======   =======   ========
Basic earnings per share........................  $  0.50   $  0.19   $   0.05
                                                  =======   =======   ========
Diluted earnings per share......................  $  0.49   $  0.19   $   0.05
                                                  =======   =======   ========
</TABLE>

                                      F-19
<PAGE>   64
                                 AMDOCS LIMITED

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

17.  SEGMENT INFORMATION AND SALES TO SIGNIFICANT CUSTOMERS

  GEOGRAPHIC INFORMATION

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

<TABLE>
<CAPTION>
                                                   YEAR ENDED SEPTEMBER 30,
                                                ------------------------------
                                                  1999       1998       1997
                                                --------   --------   --------
<S>                                             <C>        <C>        <C>
REVENUE
Europe........................................  $261,726   $109,752   $ 32,642
North America.................................   226,387    210,867    185,119
Australia.....................................    61,237     33,215     37,362
Other.........................................    77,505     49,933     34,979
                                                --------   --------   --------
     Total....................................  $626,855   $403,767   $290,102
                                                ========   ========   ========
LONG-LIVED ASSETS
Israel*.......................................  $ 61,472   $ 38,917   $ 26,779
North America**...............................    35,228     30,441     39,771
Other.........................................    18,772      7,378      2,402
                                                --------   --------   --------
                                                $115,472   $ 76,736   $ 68,952
                                                ========   ========   ========
</TABLE>

---------------
 * Primarily computers and vehicles.
** Primarily computer software and intellectual property rights.

  REVENUE AND CUSTOMER INFORMATION

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

<TABLE>
<CAPTION>
                                                   YEAR ENDED SEPTEMBER 30,
                                                ------------------------------
                                                  1999       1998       1997
                                                --------   --------   --------
<S>                                             <C>        <C>        <C>
CC&B..........................................  $468,216   $251,829   $166,335
Directory.....................................   158,639    151,938    123,767
                                                --------   --------   --------
     Total....................................  $626,855   $403,767   $290,102
                                                ========   ========   ========
</TABLE>

                                      F-20
<PAGE>   65
                                 AMDOCS LIMITED

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

  SALES TO SIGNIFICANT CUSTOMERS

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

<TABLE>
<CAPTION>
                                                        YEAR ENDED SEPTEMBER 30,
                                                        ------------------------
                                                         1999     1998     1997
                                                        ------   ------   ------
<S>                                                     <C>      <C>      <C>
Customer 1............................................    16%      21%      35%
Customer 2............................................     *       16        *
Customer 3............................................     *        *       13
</TABLE>

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

18.  FINANCIAL INSTRUMENTS

     The Company enters into forward contracts to sell foreign currency in order
to hedge its exposure associated with most firm commitments from customers in
non-U.S. dollar-based currencies and treats these for accounting purposes as
fair value hedges. The Company also enters into forward contracts in foreign
currency to reduce the exposure associated with estimated receipts from
customers and with liabilities (primarily personnel costs), in non-U.S.
dollar-based currencies and treats these as cash flow hedges. The derivative
financial instruments are afforded hedge accounting because they are effective
in managing foreign exchange risks and are appropriately assigned to the
underlying exposures. The Company does not engage in currency speculation.
Generally, the Company measures the differential between forward rates and spot
rates on forward exchange contracts as the inherent ineffectiveness of a hedging
arrangement. Accordingly, changes in the fair value of forward exchange
contracts, which are classified as fair value hedges, offset the change in the
fair value of the hedged item to the extent of the arrangement's effectiveness.
The effective portion of the change in the fair value of forward exchange
contracts, which are classified as cash flow hedges, is recorded as
comprehensive income until the underlying transaction is recognized in earnings.

     The following table describes forward contracts outstanding as of September
30:

<TABLE>
<CAPTION>
                                                            1999       1998
                                                          --------   --------
<S>                                                       <C>        <C>
Contracts treated as fair value hedges for the sale of:
     British pounds.....................................  $ 24,567   $ 31,361
     Canadian dollars...................................    11,394     10,000
     Austrian shillings.................................    10,779     15,372
     Japanese yen.......................................       770      3,866
     Other currencies...................................     4,658         --
                                                          --------   --------
                                                          $ 52,168   $ 60,599
                                                          ========   ========
Contracts treated as cash flow hedges for the purchase
     of:
     Israeli shekels....................................  $145,000   $ 80,000
     Australian dollars.................................    31,655     41,868
                                                          --------   --------
                                                          $176,655   $121,868
                                                          ========   ========
</TABLE>

     The fair values of the forward derivatives were ($3,412) and ($4,671) on
September 30, 1999 and 1998, respectively. The Company currently enters into
forward exchange contracts exclusively with major financial institutions.

                                      F-21
<PAGE>   66
                                 AMDOCS LIMITED

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

19.  PENDING BUSINESS COMBINATION

     On September 3, 1999, the Company signed an agreement to acquire
International Telecommunication Data Systems, Inc. ("ITDS") in a stock-for-stock
transaction, which will be accounted for under the purchase method of
accounting. The Company expects to issue between approximately 6,400 and 8,000
ordinary shares and between approximately 1,100 and 1,400 options for ordinary
shares in connection with the consummation of the transaction. Closing of the
transaction is subject to the approval of ITDS' shareholders, as well as certain
other customary closing conditions. ITDS is a leading provider of billing and
customer care service bureau solutions to wireless telecommunication service
providers. ITDS revenue and net loss for its fiscal year ended December 31, 1998
were $115,460 and $3,926, respectively. For the nine months ended September 30,
1999, ITDS had revenue and net income of $105,889 and $12,706, respectively.
ITDS had total assets of $173,396 as of September 30, 1999.

20.  SELECTED QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

     The following are details of the unaudited quarterly results of operations
for the three months ended:

<TABLE>
<CAPTION>
                                                  SEPTEMBER 30,   JUNE 30,   MARCH 31,   DECEMBER 31,
                                                  -------------   --------   ---------   ------------
<S>                                               <C>             <C>        <C>         <C>
1999
  Revenue.......................................    $182,716      $164,884   $147,830      $131,425
  Operating income..............................      43,430        37,782     35,625        30,161
  Net income....................................      29,839        25,421     23,141        20,142
  Basic and diluted earnings per share..........        0.15          0.13       0.12          0.10
1998
  Revenue.......................................    $116,704      $106,497   $ 94,008      $ 86,558
  Operating income..............................      26,104        22,821     19,125        16,845
  Net income....................................      11,598         6,443      4,105         7,961
  Basic and diluted earnings per share..........        0.06          0.04       0.03          0.06
1997
  Revenue.......................................    $ 87,987      $ 77,089   $ 62,489      $ 62,537
  Operating income (loss).......................     (10,586)       13,363     12,179        12,013
  Net income (loss).............................     (18,307)        7,378      8,236         8,569
  Basic earnings (loss) per share...............       (0.17)         0.07       0.08          0.08
  Diluted earnings (loss) per share.............       (0.17)         0.07       0.07          0.08
</TABLE>

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

                                      F-22
<PAGE>   67

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
  NO.                             DESCRIPTION
-------                           -----------
<C>       <S>
 21.1     Subsidiaries of Amdocs Limited
 23.1     Consent of Ernst & Young LLP
 99.1     Amdocs Limited Press Release Dated November 9, 1999
</TABLE>