<PAGE>

                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, 2006

                                       OR

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

                                       OR

[ ]  SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
     Date of event requiring this shell company report............


             FOR THE TRANSITION PERIOD FROM _________ TO _________.

                            COMMISSION FILE NUMBER 1-14840

                                    AMDOCS LIMITED

                        -------------------------------------
                (Exact name of Registrant as specified in its charter)

                                  ISLAND OF GUERNSEY

                        -------------------------------------
                   (Jurisdiction of incorporation or organization)

                         SUITE 5, TOWER HILL HOUSE LE BORDAGE
             ST. PETER PORT, ISLAND OF GUERNSEY, GY1 3QT CHANNEL ISLANDS

                                     AMDOCS, INC.
             1390 TIMBERLAKE MANOR PARKWAY, CHESTERFIELD, MISSOURI 63017
                        -------------------------------------
                       (Address of principal executive offices)

     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

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

     Securities for which there is a reporting obligation pursuant to Section
15(d) of the Act:

                                      NONE

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

     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>

        Ordinary Shares, par value L0.01                           206,792,730(1)
                (Title of class)                                 (Number of shares)
</Table>


     Indicate by check mark if the registrant is a well-known seasoned issuer,
as defined in Rule 405 of the Securities Act.

                          Yes [X]               No [ ]

     If this report is an annual or transition report, indicate by check mark if
the registrant is not required to file reports pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934.

                               Yes [ ]     No [X]

     Indicate by check mark whether the registrant (1) has 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 whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.:

Large accelerated filer [X]     Accelerated filer [ ]     Non-accelerated
                                    filer [ ]

     Indicate by check mark which financial statement item the registrant has
elected to follow.

                           Item 17 [ ]     Item 18 [X]

     If this is an annual report, indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act).

                               Yes [ ]     No [X]

--------

(1) Net of 27,138,823 shares held in treasury. Does not include (a) 22,793,944
    ordinary shares reserved for issuance upon exercise of stock options granted
    under our stock option plan or by companies we have acquired, and (b)
    10,437,895 ordinary shares reserved for issuance upon conversion of
    outstanding convertible debt securities.

<PAGE>

                                 AMDOCS LIMITED

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

                                    FORM 20-F

           ANNUAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2006

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

                                      INDEX



<Table>
<S>         <C>                                                                 <C>

                                       PART I
Item 1.     Identity of Directors, Senior Management and Advisors............     3
Item 2.     Offer Statistics and Expected Timetable..........................     3
Item 3.     Key Information..................................................     3
Item 4.     Information on the Company.......................................    14
Item 5.     Operating and Financial Review and Prospects.....................    29
Item 6.     Directors, Senior Management and Employees.......................    46
Item 7.     Major Shareholders and Related Party Transactions................    54
Item 8.     Financial Information............................................    55
Item 9.     The Offer and Listing............................................    56
Item 10.    Additional Information...........................................    56
Item 11.    Quantitative and Qualitative Disclosure about Market Risk........    65
Item 12.    Description of Securities Other than Equity Securities...........    66

                                      PART II
Item 13.    Defaults, Dividend Arrearages and Delinquencies..................    66
            Material Modifications to the Rights of Security Holders and Use
Item 14.    of Proceeds......................................................    66
Item 15.    Controls and Procedures..........................................    66
Item 16A.   Audit Committee Financial Expert.................................    67
Item 16B.   Code of Ethics and Business Conduct..............................    67
Item 16C.   Principal Accountant Fees and Services...........................    67
Item 16D.   Exemption From the Listing Standards for Audit Committees........    68
            Purchases of Equity Securities by the Issuer and Affiliated
Item 16E.   Purchasers.......................................................    68

                                      PART III
Item 17.    Financial Statements.............................................    69
Item 18.    Financial Statements.............................................    69
Item 19.    Exhibits.........................................................    69
</Table>




                                        1

<PAGE>

     Unless the context otherwise requires, all references in this Annual Report
on Form 20-F to "Amdocs", "we", "our", "us" and the "Company" refer to Amdocs
Limited and its consolidated subsidiaries and their respective predecessors. Our
consolidated financial statements are prepared in accordance with U.S. GAAP and
are expressed in U.S. dollars. References to "dollars" or "$" are to U.S.
dollars. Our fiscal year ends on September 30 of each year. References to any
specific fiscal year refer to the year ended September 30 of the calendar year
specified.

     We own or have rights to trademarks or trade names that we use in
conjunction with the sale of our products and services, including, without
limitation, each of the following: Amdocs(TM), Ensemble(TM), AmdocsEnabler(TM)
and Clarify(TM).

                           FORWARD LOOKING STATEMENTS

     This Annual Report on Form 20-F contains forward-looking statements (within
the meaning of the U.S. federal securities laws) that involve substantial risks
and uncertainties. You can identify these forward-looking statements by words
such as "expect", "anticipate", "believe", "seek", "estimate", "project",
"forecast", "continue", "potential", "should", "would", "could", "intend" and
"may", and other words that convey uncertainty of future events or outcome.
Statements that we make in this Annual Report that are not statements of
historical fact also may be forward-looking statements. Forward-looking
statements are not guarantees of future performance, and involve risks,
uncertainties and assumptions that may cause our actual results to differ
materially from the expectations that we describe in our forward-looking
statements. There may be events in the future that we are not accurately able to
predict, or over which we have no control. You should not place undue reliance
on forward-looking statements. We do not promise to notify you if we learn that
our assumptions or projections are wrong for any reason. We disclaim any
obligation to update our forward-looking statements, except where applicable law
may otherwise require us to do so.

     Important factors that may affect these projections or expectations
include, but are not limited to: changes in the overall economy; changes in
competition in markets in which we operate; changes in the demand for our
products and services; consolidation within the industries in which our
customers operate; the loss of a significant customer; changes in the
telecommunications regulatory environment; changes in technology that impact
both the markets we serve and the types of products and services we offer;
financial difficulties of our customers; losses of key personnel; difficulties
in completing or integrating acquisitions; litigation and regulatory
proceedings; and acts of war or terrorism. For a discussion of these important
factors, please read the information set forth below under the caption "Risk
Factors".


                                        2

<PAGE>

                                     PART I

ITEM 1.  IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

     Not applicable.

ITEM 2.  OFFER STATISTICS AND EXPECTED TIMETABLE

     Not applicable.

ITEM 3.  KEY INFORMATION

SELECTED FINANCIAL DATA

     Our historical consolidated financial statements are prepared in accordance
with U.S. generally accepted accounting principles ("GAAP") and presented in
U.S. dollars. The selected historical consolidated financial information set
forth below has been derived from our historical consolidated financial
statements for the years presented. Historical information as of and for the
five years ended September 30, 2006 is derived from our consolidated financial
statements, which have been audited by Ernst & Young LLP, our independent
registered public accounting firm. You should read the information presented
below in conjunction with those statements.

     The information presented below is qualified by the more detailed
historical consolidated financial statements, the notes thereto and the
discussion under "Operating and Financial Review and Prospects" included
elsewhere in this Annual Report.


<Table>
<Caption>
                                     2006         2005         2004         2003         2002
                                  ----------   ----------   ----------   ----------   ----------
                                               (IN THOUSANDS, EXCEPT PER SHARE DATA)

<S>                               <C>          <C>          <C>          <C>          <C>

STATEMENT OF OPERATIONS DATA:
Revenue.........................  $2,480,050   $2,038,621   $1,773,732   $1,483,327   $1,613,565
Operating income................     332,132      338,492      296,200      210,418       49,161
Net income (loss)...............     318,636      288,636      234,860      168,883       (5,061)
Basic earnings (loss) per
  share.........................        1.57         1.44         1.13         0.78        (0.02)
Diluted earnings (loss) per
  share.........................        1.48         1.35         1.08         0.77        (0.02)
Dividends declared per share....          --           --           --           --           --
</Table>




<Table>
<Caption>
                                     2006         2005         2004         2003         2002
                                  ----------   ----------   ----------   ----------   ----------

<S>                               <C>          <C>          <C>          <C>          <C>

BALANCE SHEET DATA:
Total assets....................  $3,962,828   $3,202,468   $2,863,884   $2,877,517   $2,540,094
Long term obligations
  2% Convertible Notes due June
     1, 2008(1).................          --          272          272      400,454      445,054
  0.50% Convertible Senior Notes
     due 2024(2)................     450,000      450,000      450,000           --           --
  Long-term portion of capital
     lease obligations..........          --           --        4,112       23,825       15,138
Shareholders' equity(3).........   2,154,165    1,656,452    1,444,190    1,591,600    1,416,275
</Table>




                                        3

<PAGE>

<Table>
<Caption>
                                               ORDINARY SHARES   ADDITIONAL
                                              ----------------     PAID-IN
                                               SHARES   AMOUNT     CAPITAL    TREASURY STOCK
                                              -------   ------   ----------   --------------
                                                              (IN THOUSANDS)

<S>                                           <C>       <C>      <C>          <C>

STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
  DATA:
Balance as of September 30, 2002............  215,583   $3,572   $1,818,345      $(109,281)
  Employee stock options exercised..........      475        8        2,312             --
  Tax benefit of stock options exercised....       --       --          262             --
  Expense related to vesting of stock
     options................................       --       --           37             --
                                              -------   ------   ----------      ---------
Balance as of September 30, 2003............  216,058    3,580    1,820,956       (109,281)
  Issuance of ordinary shares related to
     acquisition, net(4)....................      561       --          747         14,392
  Employee stock options exercised..........    1,157       21       12,056             --
  Tax benefit of stock options exercised....       --       --        3,094             --
  Stock options granted, net of
     forfeitures............................       --       --          749             --
  Repurchase of shares(3)...................  (16,442)      --           --       (407,527)
  Expense related to vesting of stock
     options................................       --       --            6             --
                                              -------   ------   ----------      ---------
Balance as of September 30, 2004............  201,334    3,601    1,837,608       (502,416)
  Issuance of restricted stock and stock
     options related to acquisitions, net...      144        2        6,034             --
  Employee stock options exercised..........    2,229       41       23,983             --
  Tax benefit of stock options exercised....       --       --        3,147             --
  Repurchase of shares(3)...................   (3,525)      --           --        (99,976)
  Expense related to vesting of stock
     options................................       --       --          150             --
                                              -------   ------   ----------      ---------
Balance as of September 30, 2005............  200,182    3,644    1,870,922       (602,392)
  Employee stock options exercised..........    5,869      106      106,853             --
  Tax benefit of stock options exercised....       --       --        7,619             --
  Issuance of restricted stock, net of
     cancellations..........................      742       13           --             --
  Issuance of restricted stock and stock
     options related to acquisitions, net...       --       --        4,634             --
  Equity-based compensation expense related
     to employees...........................       --       --       46,178             --
  Reclassification of unearned compensation
     to additional paid in capital..........       --       --         (962)            --
  Equity-based compensation expense related
     to non employee stock options..........       --       --           65             --
Balance as of September 30, 2006............  206,793   $3,763   $2,035,309      $(602,392)
                                              =======   ======   ==========      =========

</Table>


--------

   (1) In fiscal 2001, we issued $500,000 aggregate principal amount of 2%
       Convertible Notes due June 1, 2008 (the "2% Notes"). During fiscal 2006,
       2004, 2003 and 2002, we repurchased $97, $400,182, $44,600 and $54,946
       aggregate principal amount of 2% Notes, respectively. The $175 balance
       remains as our outstanding obligations, under short term liabilities, in
       accordance with their terms.

   (2) In fiscal 2004, we issued $450,000 aggregate principal amount of 0.50%
       Convertible Senior Notes due March 15, 2024 (the "0.50% Notes").

   (3) From time to time, our Board of Directors has authorized us to repurchase
       ordinary shares in open market or privately negotiated transactions and
       at times and prices we deem appropriate. During fiscal 2002, we
       repurchased 7,732 ordinary shares at an average price of $14.09 per
       share. During fiscal 2004, we repurchased an aggregate of 16,442 ordinary
       shares at an average price of $24.77 per share in connection with open
       market repurchases, our February 2004 acquisition of XACCT Technologies
       Ltd. ("XACCT") and our March 2004 issuance of the 0.50% Notes. In fiscal
       2005, we repurchased 3,525 ordinary shares at an average price of $28.33
       per share.

   (4) In fiscal 2004, we acquired XACCT, a privately-held provider of mediation
       software to communications service providers. We acquired XACCT's
       outstanding shares for $28,425, of which $13,286 was paid in cash and the
       balance in 561 of our ordinary shares valued at $15,139.


                                        4

<PAGE>

RISK FACTORS

  WE ARE EXPOSED TO GENERAL GLOBAL ECONOMIC AND MARKET CONDITIONS, PARTICULARLY
  THOSE IMPACTING THE COMMUNICATIONS INDUSTRY.

     Developments in the communications industry, such as the impact of general
global economic conditions, industry consolidation, emergence of new
competitors, commoditization of voice services and changes in the regulatory
environment at times have had, and could continue to have, a material adverse
effect on our existing or potential customers. In the past, these conditions
reduced the high growth rates that the communications industry had previously
experienced, and caused the market value, financial results and prospects, and
capital spending levels of many communications companies to decline or degrade.
During previous economic downturns, the communications industry experienced
significant financial pressures that caused many in the industry to cut expenses
and limit investment in capital intensive projects and thus led to
restructurings and bankruptcies.

     Due to adverse conditions in the business environment for communications
companies, communications providers needed to control operating expenses and
capital investment budgets resulting in slowed customer buying decisions, as
well as price pressures, and as a result, our revenues declined in fiscal 2002.
Although conditions in the communications industry have improved since then,
adverse market conditions in the future could have a negative impact on our
business by reducing the number of new contracts we are able to sign and the
size of initial spending commitments, as well as decreasing the level of
discretionary spending under contracts with existing customers. In addition, a
reoccurrence of the slowdown in the buying decisions of communications providers
could extend our sales cycle period and limit our ability to forecast our flow
of new contracts.

  IF WE FAIL TO ADAPT TO CHANGING MARKET CONDITIONS AND CANNOT COMPETE
  SUCCESSFULLY WITH EXISTING OR NEW COMPETITORS, OUR BUSINESS COULD BE HARMED.

     We may be unable to compete successfully with existing or new competitors.
If we fail to adapt to changing market conditions and to compete successfully
with established or new competitors, it could have a material adverse effect on
our results of operations and financial condition. We face intense competition
for the software products and services that we sell, including competition for
Managed Services we provide to customers under long-term service agreements.
These Managed Services include services such as management of datacenter
operations and IT infrastructure, application management and ongoing support,
systems modernization and consolidation and management of end to end business
processes for billing and customer care operations.

     The market for communications information systems is highly competitive and
fragmented, and we expect competition to increase. We compete with independent
software and service providers and with the in-house IT and network departments
of communications companies. Our competitors include firms that provide IT
services, including consulting, systems integration and Managed Services,
software vendors that sell products for particular aspects of a total
information system, software vendors that specialize in systems for particular
communications services such as Internet, wireline and wireless services, cable,
satellite, service bureaus and companies that offer software systems in
combination with the sale of network equipment.

     We believe that our ability to compete depends on a number of 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 long operating histories,
large customer bases, substantial financial, technical, sales, marketing and
other resources, and strong name recognition. Current and potential competitors
have established, and may establish in the future, cooperative relationships
among

                                        5

<PAGE>

themselves or with third parties to increase their abilities to address the
needs of our prospective customers. In addition, our competitors have acquired,
and may continue to acquire in the future, companies that may enhance their
market offerings. 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 cannot assure
you that we will be able to compete successfully with existing or new
competitors. If we fail to adapt to changing market conditions and to compete
successfully with established or new competitors, our results of operations and
financial condition may be adversely affected.

  IF WE DO NOT CONTINUALLY ENHANCE OUR PRODUCTS AND SERVICE OFFERINGS, WE MAY
  HAVE DIFFICULTY RETAINING EXISTING CUSTOMERS AND ATTRACTING NEW CUSTOMERS.

     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 Integrated Customer
Management-enabling products. Our present or future products may not satisfy the
evolving needs of the communications industry or of other industries that we
serve. If we are unable to anticipate or respond adequately to such needs, due
to resource, technological or other constraints, our business and results of
operations could be harmed.

  WE MAY SEEK TO ACQUIRE COMPANIES OR TECHNOLOGIES THAT COULD DISRUPT OUR
  ONGOING BUSINESS, DISTRACT OUR MANAGEMENT AND EMPLOYEES AND ADVERSELY AFFECT
  OUR RESULTS OF OPERATIONS.

     In July 2005, we acquired from DST Systems, Inc., which we refer to as DST,
its DST Innovis, Inc. and DST Interactive, Inc. subsidiaries, which we refer to
collectively as DST Innovis, a leading provider of customer care and billing
solutions to broadband media cable and satellite companies. In August 2005, we
acquired Longshine Information Technology Company Ltd., or Longshine, a leading
vendor of customer care and billing software in China. In May 2006, we acquired
Qpass Inc., which we refer to as Qpass, a leading provider of digital commerce
software and solutions, and in August 2006, we acquired Cramer Systems Group
Ltd., or Cramer, a leading provider of operations support systems. In the
future, we may acquire other companies where we believe we can acquire new
products or services or otherwise enhance our market position or strategic
strengths. We cannot assure you that suitable future acquisition candidates can
be found, that acquisitions can be consummated on favorable terms or that we
will be able to complete otherwise favorable acquisitions because of antitrust
or other regulatory concerns.

     We cannot assure you that our acquisitions of DST Innovis, Longshine, Qpass
or Cramer, or any future acquisitions that we may make, will enhance our
products or strengthen our competitive position. We also cannot guarantee that
we have identified, or will be able to identify, all material adverse issues
related to the integration of our acquisitions, such as significant defects in
the internal control policies of companies that we have acquired. In addition,
our acquisitions of DST Innovis, Longshine, Qpass, or Cramer, and any future
acquisitions that we may make, could lead to difficulties in integrating
acquired personnel and operations and in retaining and motivating key personnel
from these businesses. Any failure to recognize significant defects in the
internal control policies of acquired companies or to properly integrate and
retain personnel may require a significant amount of time and resources to
address. Acquisitions may disrupt our ongoing operations, divert management from
day-to-day responsibilities, increase our expenses and harm our results of
operations or financial condition.

  OUR BUSINESS IS DEPENDENT ON A LIMITED NUMBER OF SIGNIFICANT CUSTOMERS, AND
  THE LOSS OF ANY ONE OF OUR SIGNIFICANT CUSTOMERS COULD HARM OUR RESULTS OF
  OPERATIONS.

     Our business is dependent on a limited number of significant customers. Our
four largest groups of customers are comprised of AT&T Inc., which was formerly
known as SBC Communications Inc. and which we refer to as AT&T, Bell Canada,
Cingular and Sprint Nextel Corporation, which we refer to as Sprint Nextel, and
certain of their subsidiaries, each of which accounted for approximately 10% or
more of our

                                        6

<PAGE>

revenue in fiscal 2006. Aggregate revenue derived from the multiple business
arrangements we have with our six largest customer groups accounted for
approximately 59% of our revenue in fiscal 2006. AT&T has historically been one
of our largest shareholders, and, as of November 30, 2006, it beneficially owned
approximately 5.2% of our outstanding ordinary shares. The loss of any
significant customer or a significant decrease in business from any such
customer could harm our results of operations and financial condition.

     Although we have received a substantial portion of our revenue from
recurring business with established customers, many of our major customers do
not have any obligation to purchase additional products or services from us and
generally have already acquired fully paid licenses to their installed systems.
Therefore, our customers may not continue to purchase new systems, system
enhancements or services in amounts similar to previous years or may delay
implementation of committed projects, each of which could reduce our revenues
and profits.

  OUR FUTURE SUCCESS WILL DEPEND ON OUR ABILITY TO DEVELOP LONG-TERM
  RELATIONSHIPS WITH OUR CUSTOMERS AND TO MEET THEIR EXPECTATIONS IN PROVIDING
  PRODUCTS AND PERFORMING SERVICES.

     We believe that our future success will depend to a significant extent on
our ability to develop long-term relationships with successful network operators
and service providers with the financial and other resources required to invest
in significant ongoing Integrated Customer Management-enabling systems. If we
are unable to develop new customer relationships, our business will be harmed.
In addition, our business and results of operations depend in part on our
ability to provide high quality services to customers that have already
implemented our products. If we are unable to meet customers' expectations in
providing products or performing services, our business and results of
operations could be harmed.

  THE SKILLED AND HIGHLY QUALIFIED WORKFORCE THAT WE NEED TO DEVELOP, IMPLEMENT
  AND MODIFY OUR SOLUTIONS MAY BE DIFFICULT TO HIRE AND RETAIN, AND WE COULD
  FACE INCREASED COSTS TO ATTRACT AND RETAIN OUR SKILLED WORKFORCE.

     Our business operations depend in large part on our ability to attract,
train, motivate and retain highly skilled information technology professionals,
software programmers and communications engineers on a worldwide basis. In
addition, our competitive success will depend on our ability to attract and
retain other outstanding, highly qualified personnel. Because our software
products are highly complex and are generally used by our customers to perform
critical business functions, we depend heavily on skilled technology
professionals. Skilled technology professionals are often in high demand and
short supply. If we are unable to hire or retain qualified technology
professionals to develop, implement and modify our solutions, we may be unable
to meet the needs of our customers. In addition, if we were to obtain several
new customers or implement several new large-scale projects in a short period of
time, we may need to attract and train additional IT professionals at a rapid
rate. We may face difficulties identifying and hiring qualified personnel. Our
inability to hire and retain the appropriate personnel could increase our costs
of retaining a skilled workforce and make it difficult for us to manage our
operations, to meet our commitments and to compete for new customer contracts.

     Our success will also depend, to a certain extent, upon the continued
active participation of a relatively small group of senior management personnel.
The loss of the services of all or some of these executives could harm our
operations and impair our efforts to expand our business.

  OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE, AND A DECLINE IN REVENUE IN ANY
  QUARTER COULD RESULT IN LOWER PROFITABILITY FOR THAT QUARTER AND FLUCTUATIONS
  IN THE MARKET PRICE OF OUR ORDINARY SHARES.

     We have experienced fluctuations in our quarterly operating results and
anticipate that such movement may continue and could intensify. Fluctuations may
result from many factors, including:

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

     - delays in or cancellations of significant projects by customers,

     - changes in operating expenses,


                                        7

<PAGE>

     - increased competition,

     - changes in our strategy,

     - personnel changes,

     - foreign currency exchange rate fluctuations, and

     - general economic and political conditions.

     Generally, our combined license fee revenue and service fee revenue
relating to customization, modification, implementation and integration are
recognized as work is performed, using the percentage of completion method of
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 could result in lower
profitability for that quarter. In addition, fluctuations in our quarterly
operating results could cause significant fluctuations in the market price of
our ordinary shares.

  OUR REVENUE, EARNINGS AND PROFITABILITY ARE IMPACTED BY THE LENGTH OF OUR
  SALES CYCLE, AND A LONGER SALES CYCLE COULD ADVERSELY AFFECT OUR RESULTS OF
  OPERATIONS AND FINANCIAL CONDITION.

     Our business is directly affected by the length of our sales cycle.
Information systems for communications companies are relatively complex and
their purchase generally involves a significant commitment of capital, with
attendant delays frequently associated with large capital expenditures and
procurement procedures within an organization. The purchase of these types of
products typically also requires coordination and agreement across many
departments within a potential customer's organization. Delays associated with
such timing factors could have a material adverse effect on our results of
operations and financial condition. In periods of economic slowdown in the
communications industry, our typical sales cycle lengthens, which means that the
average time between our initial contact with a prospective customer and the
signing of a sales contract increases. For example, in fiscal 2003, we believe
buying decisions of communications providers were often delayed due to adverse
conditions in the business environment, and our sales cycle period lengthened as
a result. Although this trend has improved since then, the lengthening of our
sales cycle could reduce growth in our revenue in the future. In addition, the
lengthening of our sales cycle contributes to an increased cost of sales,
thereby reducing our profitability.

  IF THE MARKET FOR OUR PRODUCTS DETERIORATES, WE MAY INCUR ADDITIONAL
  RESTRUCTURING CHARGES.

     In fiscal 2005, we commenced a series of measures designed to align our
operational structure to our expected future growth, to allow better integration
of our recent acquisitions and to improve efficiency, which included termination
of employment of software and IT specialists and administrative professionals at
various locations around the world. A reduction in personnel can result in
significant severance, administrative and legal expenses and may also adversely
affect or delay various sales, marketing and product development programs and
activities. Depending on market conditions in the communications industry and
our business and financial needs, we may be forced to implement additional
restructuring plans to further reduce our costs, which could result in
additional restructuring charges. Additional restructuring charges could have a
material adverse effect on our financial results.


                                        8

<PAGE>

  IF WE FAIL TO SUCCESSFULLY PLAN AND MANAGE CHANGES IN THE SIZE OF OUR
  OPERATIONS OUR BUSINESS WILL SUFFER.

     Over the last several years, we have both grown and contracted our
operations in order to profitably offer our products and services in a rapidly
changing market. If we are unable to manage these changes and plan and manage
any future changes in the size and scope of our operations, our business will
suffer.

     Restructurings and cost reduction measures that we have implemented from
time to time have reduced the size of our operations and headcount, and
acquisitions and organic growth have from time to time increased our headcount.
For example, in connection with implementation of personnel reductions in 2002,
we reduced our workforce from approximately 9,100 individuals to approximately
7,800, however, by September 30, 2006, as the result of acquisitions and organic
growth in the size of our operations, our workforce had increased to
approximately 16,000. During periods of contraction, we have disposed of office
space and related obligations in efforts to keep pace with the changing size of
our operations and we may do so in the future. These cost reduction measures
have included, and may in the future include, consolidating and/or relocating
certain of our operations to different geographic locations. These activities
could lead to difficulties and significant expenses related to subleasing or
assigning any surplus space. We have accrued the estimated expenses that will
result from our past restructuring efforts. However, if it is determined that
the amount accrued is insufficient, an additional charge could have an
unfavorable impact on our consolidated financial statements in the period this
was determined.

  OUR INTERNATIONAL PRESENCE EXPOSES US TO RISKS ASSOCIATED WITH VARIED AND
  CHANGING POLITICAL, CULTURAL, LEGAL AND ECONOMIC CONDITIONS WORLDWIDE.

     We are affected by risks associated with conducting business
internationally. We maintain development facilities in Canada, China, Cyprus,
India, Ireland, Israel and the United States, operate a support center in Brazil
and have operations in North America, Europe, Latin America and the Asia-Pacific
region. Although a majority of our revenue is derived from customers in North
America and Europe, we obtain significant revenue from customers in the Asia-
Pacific region and Latin America. Our strategy is to continue to broaden our
North American and European customer base and to expand into new international
markets. Conducting business internationally exposes us 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,

     - difficulties in complying with varied legal and regulatory requirements
       across jurisdictions,

     - 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, which could harm our results of operations and
financial condition.


                                        9

<PAGE>

  POLITICAL AND ECONOMIC CONDITIONS IN THE MIDDLE EAST, CYPRUS AND OTHER
  COUNTRIES MAY ADVERSELY AFFECT OUR BUSINESS.

     Of the development centers we maintain worldwide, our largest development
center is located in five different sites throughout Israel. Approximately 33%
of our workforce is located in Israel. As a result, we are directly influenced
by the political, economic and military conditions affecting Israel and its
neighboring regions. Any major hostilities involving Israel could have a
material adverse effect on our business. We have developed contingency plans to
provide ongoing services to our customers in the event that escalated political
or military conditions disrupt our normal operations. These plans include the
transfer of some development operations within Israel to various of our other
sites both within and outside of Israel. If we have to implement these plans,
our operations would be disrupted and we would incur significant additional
expenditures, which would adversely affect our business and results of
operations.

     While Israel has entered into peace agreements with both Egypt and Jordan,
Israel has not entered into peace arrangements with any other neighboring
countries. Over the past several years there has been a significant
deterioration in Israel's relationship with the Palestinian Authority and a
related increase in violence, including recent hostilities related to Lebanon
and the Gaza Strip. Efforts to resolve the problem have failed to result in an
agreeable solution. Continued violence between the Palestinian community and
Israel may have a material adverse effect on our business. Further deterioration
of relations with the Palestinian Authority might require more military reserve
service by some of our workforce, which may have a material adverse effect on
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. Although Cyprus has
joined the European Union, intensive discussions facilitated by the United
Nations, the European Union and the United States have not resulted in an
agreed-upon plan of reunification for Cyprus. Any major hostilities between
Cyprus and Turkey or the failure of the parties to finalize a peaceful
resolution may have a material adverse effect on our development facility in
Cyprus.

     In 2004, we established a development center in India, and since 2005, we
have expanded our operations in Russia and China. Conducting business in each of
these countries involves unique challenges, including political instability, the
transparency, consistency and effectiveness of business regulation, the
protection of intellectual property, and the availability of sufficient
qualified local personnel. Any of these or other challenges associated with
operating in these countries may adversely affect our business or operations.

  WE MAY BE EXPOSED TO THE CREDIT RISK OF CUSTOMERS THAT HAVE BEEN ADVERSELY
  AFFECTED BY WEAKENED MARKETS.

     We typically sell our software and related services as part of long-term
projects. During the life of a project, a customer's budgeting constraints can
impact the scope of a project and the customer's ability to make required
payments. In addition, the creditworthiness of our customers may deteriorate
over time, and we can be adversely affected by bankruptcies or other business
failures.

  OUR INTERNATIONAL OPERATIONS EXPOSE US TO RISKS ASSOCIATED WITH FLUCTUATIONS
  IN FOREIGN CURRENCY EXCHANGE RATES THAT COULD ADVERSELY AFFECT OUR BUSINESS.

     Although we have operations throughout the world, the majority of our
revenues and approximately 50% to 60% of our operating costs are denominated in,
or linked to, the U.S. dollar. Accordingly, we consider the U.S. dollar to be
our functional currency. However, approximately 40% to 50% of our operating
costs in fiscal 2006 were incurred outside the United States in other
currencies. 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
outside of the United States, as expressed in dollars, could be adversely
affected by the extent to which any increase in the rate of inflation in a
particular country is not offset (or is offset with a time delay) by a
devaluation of the local currency in relation to the dollar. As a result of this
differential, from time to time we may experience increases in the

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<PAGE>

costs of our operations outside the United States, as expressed in dollars,
which could have a material adverse effect on our results of operations and
financial condition.

     In addition, a portion of our revenue (approximately 20% to 30% in fiscal
2006) is not incurred in dollars or linked to the dollar, and, therefore,
fluctuations in exchange rates between the currencies in which such revenue is
incurred and the dollar may have a material effect on our results of operations
and financial condition. If more of our customers seek contracts that are
denominated in currencies such as the Euro and not the dollar, our exposure to
fluctuations in currency exchange rates could increase.

     Generally, the effects of fluctuations in foreign currency exchange rates
are mitigated by the fact that the majority of our revenue and approximately 50%
to 60% of our operating costs are in dollars or linked to the dollar. We do not
hedge all of our exposure in currencies other than the U.S. dollar, but rather
our policy is to hedge significant net exposures in the major foreign currencies
in which we operate, and we generally hedge our currency exposure on both a
short-term and long-term basis with respect to expected revenue and operating
costs. However, we cannot assure you that we will be able to effectively limit
all of our exposure to currency exchange rate fluctuations.

     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.

  IF WE ARE UNABLE TO PROTECT OUR PROPRIETARY TECHNOLOGY FROM MISAPPROPRIATION,
  OUR BUSINESS MAY BE HARMED.

     Any misappropriation of our technology or the development of competitive
technology could seriously harm our business. Our software and software systems
are largely comprised of software and systems we have developed or acquired and
that we regard as proprietary. We rely upon a combination of trademarks,
patents, contractual rights, trade secret law, copyrights, non-disclosure
agreements and other methods to protect our proprietary rights. We also enter
into non-disclosure and confidentiality agreements with our customers, workforce
and marketing representatives and with certain contractors with access to
sensitive information and we also limit our customer access to the source codes
of our software and our software systems. However, we do not include in our
software any mechanisms to prevent or inhibit unauthorized use.

     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 or allow enforcement
of confidentiality covenants to the same extent as the laws of the United
States.

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

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

     Our software and software systems are largely comprised of software and
systems that we have developed or acquired and that we regard as proprietary.
Our software and software systems are the results of long and complex
development processes, and although our technology is not significantly
dependent on patents or licenses from third parties, certain aspects of our
products make use of readily available software components that we license from
third parties, including our employees and contractors. As a developer of
complex software systems, third parties may claim that portions of our systems
violate their intellectual property rights. The ability to develop and use our
software and software systems requires knowledge and professional experience
that we believe is unique to us and would be very difficult for others to
independently obtain, however, our competitors may independently develop
technologies that are substantially equivalent or superior to ours.

     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 communications industry increases and overlaps occur. Any
claim of infringement by a third party could cause us to incur substantial costs
defending

                                       11

<PAGE>

against the claim, and could distract our management from our business.
Furthermore, a party making such a claim, if successful, 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
or offering our services, or prevent a customer from continuing to use our
products. Additionally, following our acquisition of Qpass, we support service
providers and media companies with respect to digital content services, and as a
result, we may be subject to claims related to such services. 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, we might not,
however, be able to obtain a license on commercially reasonable terms or on any
terms. In addition, any 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.

  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.

     Because our products are generally used by our customers to perform
critical business functions, design defects, software errors, misuse of our
products, incorrect data from external sources or other potential problems
within or outside of our control may arise from the use of our products, and may
result in financial or other damages to our customers, for which we may be held
responsible. 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 and in all jurisdictions. In addition, as a
result of business and other considerations, we may undertake to compensate our
customers for damages caused to them arising from the use of our products, even
if our liability is limited by a license or other agreement. Claims and
liabilities arising from customer problems could also damage our reputation,
adversely affecting our business, results of operations and financial condition
and the ability to obtain "Errors and Omissions" insurance.

  SYSTEM DISRUPTIONS AND FAILURES MAY RESULT IN CUSTOMER DISSATISFACTION,
  CUSTOMER LOSS OR BOTH, WHICH COULD MATERIALLY AND ADVERSELY AFFECT OUR
  REPUTATION AND BUSINESS.

     Our systems are an integral part of our customers' business operations. The
continued and uninterrupted performance of these systems by our customers is
critical to our success. Customers may become dissatisfied by any system failure
that interrupts our ability to provide services to them. Sustained or repeated
system failures would reduce the attractiveness of our services significantly,
and could result in decreased demand for our products and services.

     Our ability to perform Managed Services depends on our ability to protect
our computer systems against damage from fire, power loss, water damage,
telecommunications failures, earthquake, terrorism attack, vandalism and similar
unexpected adverse events. Despite our efforts to implement network security
measures, our systems are also vulnerable to computer viruses, break-ins and
similar disruptions from unauthorized tampering. We do not carry enough business
interruption insurance to compensate for any significant losses that may occur
as a result of any of these events.

     We have experienced systems outages and service interruptions in the past.
We expect to experience additional outages in the future. To date, these outages
have not had a material adverse effect on us. However, in the future, a
prolonged system-wide outage or frequent outages could cause harm to our
reputation and could cause our customers to make claims against us for damages
allegedly resulting from an outage or interruption. Any damage or failure that
interrupts or delays our operations could result in material harm to our
business and expose us to material liabilities.


                                       12

<PAGE>

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

     There can be no assurance that our effective tax rate of 14.8% for the year
ended September 30, 2006 will not change over time as a result of changes in
corporate income tax rates or other changes in the tax laws of the various
countries in which we operate. We have benefited or currently benefit from a
variety of government programs and tax benefits that generally carry conditions
that we must meet in order to be eligible to obtain any benefit.

     For example, the government of Cyprus has issued a permit to our Cypriot
subsidiary pursuant to which its activities are deemed to be offshore activities
for Cypriot tax purposes, resulting in an effective tax rate in Cyprus of 4.25%.
This tax rate was applicable to our Cypriot subsidiary until December 31, 2005.
As of January 1, 2006 our Cypriot subsidiary is subject to the generally
applicable 10% corporate tax rate. Pursuant to legislation in 2005, Israeli
companies are generally subject to a company tax rate on taxable income of 31%
for 2006, 29% for 2007, 27% for 2008, 26% for 2009 and 25% for 2010 and
thereafter. However, certain production and development facilities of our
Israeli subsidiary have been granted "Approved Enterprise" status that allows
for taxation at a rate of 25% or lower. The entitlement of these facilities to
reduced taxation is subject to certain time limitations. The Law for the
Encouragement of Capital Investments, 1959 ("Investment Law"), which allows the
benefits granted for Approved Enterprises, was amended in 2005 to impose
additional eligibility criteria for Approved Enterprise benefits. Our management
does not believe that the new Investment Law will have a material effect on the
Company in 2007.

     If we fail to meet the conditions upon which certain favorable tax
treatment is based, we would not be able to claim future tax benefits and 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. For example, our
favorable tax treatment in India expires in March 2009 and is limited to income
derived from specific pre-approved information technology activities.

     Any of the following could have a material effect 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,

     - 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 recognized tax benefits if we are
       found to be in violation of the stipulated conditions.

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

     The market price of our ordinary shares has fluctuated widely and may
continue to do so. During fiscal year 2006, our ordinary shares traded as high
as $41.01 per share and as low as $24.30 per share. As of December 8, 2006, the
closing price of our ordinary shares was $38.55 per share. Many factors could
cause the market price of our ordinary shares to rise and fall, including:

     - market conditions in the industry and the economy as a whole,

     - variations in our quarterly operating results,

     - announcements of technological innovations by us or our competitors,

     - introductions of new products or new pricing policies by us or our
       competitors,

     - trends in the communications or software industries, including industry
       consolidation,

     - acquisitions or strategic alliances by us or others in our industry,


                                       13

<PAGE>

     - changes in estimates of our performance or recommendations by financial
       analysts,

     - changes in our backlog levels, and

     - political developments in the Middle East.

     In addition, the stock market often experiences significant price and
volume fluctuations. These fluctuations particularly affect the market prices of
the securities of many high technology companies. These broad market
fluctuations could adversely affect the market price of our ordinary shares.

  IT MAY BE DIFFICULT FOR OUR SHAREHOLDERS TO ENFORCE ANY JUDGMENT OBTAINED IN
  THE UNITED STATES AGAINST US OR OUR AFFILIATES.

     We are incorporated under the laws of the Island of Guernsey and a majority
of our directors and executive officers are not citizens or residents of the
United States. A significant portion of our assets and the assets of those
persons are located outside the United States. As a result, it may not be
possible for investors to effect service of process upon us within the United
States or upon such persons outside their jurisdiction of residence. Also, we
have been advised that there is doubt as to the enforceability in Guernsey of
judgments of the U.S. courts of civil liabilities predicated solely upon the
laws of the United States, including the federal securities laws.

ITEM 4.  INFORMATION ON THE COMPANY

HISTORY, DEVELOPMENT AND ORGANIZATIONAL STRUCTURE OF AMDOCS

     Amdocs Limited was organized under the laws of the Island of Guernsey in
1988. Since 1995, Amdocs Limited has been a holding company for the various
subsidiaries that conduct our business on a worldwide basis. Our global business
is providing software and services solutions to enable major services providers
in North America, Europe and the rest of the world to move toward an integrated
approach to customer management, which we refer to as Integrated Customer
Management, or ICM. Our registered office is Suite 5, Tower Hill House Le
Bordage, St. Peter Port, Island of Guernsey, GY1 3QT Channel Islands, and the
telephone number at that location is +44-1481-728444.

     In the United States, our main sales and development center is 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 +1-314-212-8328.

     Our subsidiaries are organized under and subject to the laws of several
countries. Our principal operating subsidiaries are in Australia, Canada, China,
Cyprus, India, Ireland, Israel, the United Kingdom and the United States.

     We have pursued acquisitions in order to offer new products or services or
otherwise enhance our market position or strategic strengths. Our 1999
acquisition of ITDS enabled us to expand our service offerings and enhanced our
ability to provide Managed Services solutions to our customers. In 2000, we
acquired Solect, which enhanced our ability to serve the growing Internet
Protocol, or IP, needs of our customers. We believe our 2001 acquisition from
Nortel Networks Corporation of substantially all of the assets of its Clarify
business, which provided Customer Relationship Management, or CRM, software to
communications services companies and other enterprise sectors, positioned us as
a leading provider of CRM to the communications industry and, through our
addition of Clarify's CRM software to our product offerings, reinforced our
leadership in delivering a comprehensive portfolio of business software
applications. In 2003, we purchased Bell Canada's 90% ownership interest in
Certen, which we formed with Bell Canada in 2001. This acquisition expanded our
Managed Services offerings and positioned us as a leading provider of Managed
Services to the communications industry. As a result of the acquisition, Certen
is now our wholly owned subsidiary. In 2004, we acquired XACCT, a provider of
mediation software to communications service providers.

     In July 2005, we acquired from DST all of the capital stock of DST Innovis,
a leading provider of customer care and billing solutions to broadband media
cable and satellite companies, or the Broadband

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<PAGE>

Industry. We believe that this acquisition has positioned us to offer a
comprehensive set of solutions to companies in the Broadband Industry as they
transition to ICM.

     In August 2005, we acquired Longshine, a privately-held leading vendor of
customer care and billing software in China, which counts three of China's four
largest communications service providers among its customers. This acquisition
enables us to offer our products and services to Chinese service providers, and
we believe it will allow us to expand our presence in this large and fast
growing market.

     On May 31, 2006, we acquired all of the capital stock of Qpass Inc., or
Qpass, a leading provider of digital commerce software and solutions. We expect
that this acquisition will allow us to support service providers and media
companies seeking to launch and monetize digital content, and we believe that
this acquisition positions us as the leader in the emerging digital content
market.

     On August 14, 2006, we acquired all of the capital stock of Cramer Systems
Group Limited, or Cramer, a privately-held leading provider of operation support
systems, or OSS, solutions. We expect that our acquisition of Cramer will enable
us to leverage and greatly enhance our current assets in the business support
systems, or BSS, and OSS market.

     In the future, we may consider, as part of our strategy, additional
acquisitions and other initiatives in order to offer new products or services or
otherwise enhance our market position or strategic strengths.

     As of September 30, 2004, our software and information technology workforce
numbered approximately 9,600. During fiscal 2005, we commenced a series of
measures designed to align our operational structure to our expected future
growth, to allow better integration of our acquisitions of DST Innovis and
Longshine and to improve efficiency, which included termination of employment of
software and IT specialists and administrative professionals at various
locations around the world. As of September 30, 2006, our software and
information technology workforce had increased to approximately 15,000. The
increase in software and information technology workforce in fiscal 2006 was
attributable to our Qpass and Cramer acquisitions, as well to organic growth in
the size of our operations.

     Our principal capital expenditures for fiscal 2006, 2005 and 2004 have been
for computer equipment, for which we spent approximately $66.6 million, $57.6
million and $50.8 million, respectively. We anticipate our principal capital
expenditures in fiscal 2007 will consist of additional computer equipment, with
the bulk of these expenditures for computer equipment to be located at our
facilities in North America, India and Israel.

BUSINESS OVERVIEW

     Consolidation in the communications industry is continuing, and competition
among incumbent and new entrant service providers is intensifying. At the same
time, convergence is accelerating, with consumers expecting continuous access to
bundled voice, data and video services through any device. We believe service
providers are responding to this challenge by seeking to develop new revenue
streams that take advantage of ubiquitous connectivity and convergence. In this
changing environment, we believe service providers will succeed if they
differentiate their offerings by delivering a customer experience that is
simple, personal, and valuable at every point of service. We believe this will
require service providers to adopt the strategy of integrated customer
management, or ICM.

     We refer to Amdocs systems as ICM-enabling Systems because they enable many
of the world's leading service providers to deliver an intentional, integrated
and innovative customer experience:

     - an intentional experience by offering consistency and simplicity across
       any device, channel or network;

     - an integrated experience by providing integrated business and operational
       service support, maximizing operational excellence for a total cost of
       service advantage for service providers; and

     - innovative experience by supporting sophisticated multi-play, internet
       protocol (IP) and digital content services for a unique time-to-
       leadership advantage.

     We provide a platform that combines software, service and expertise to help
our customers execute ICM strategies and achieve service, operational and
financial excellence.


                                       15

<PAGE>

     Our market focus is primarily Tier 1 and Tier 2 companies in the
communications industry, including leading wireline and wireless
telecommunications, broadband cable and satellite companies. In fiscal 2006, we
acquired Qpass Inc. and Cramer Systems Group Limited -- which we refer to as
Qpass and Cramer -- to further enhance our portfolio of products offerings, meet
the growing demand for the delivery of next generation services and provide a
complete end-to-end offering (combined BSS and OSS).

     We believe that the digital content space promises to be a key growth area.
Our acquisition of Qpass allows us to offer a broader set of solutions to
service providers and media companies seeking to launch and monetize new IP-
based services and content. With this acquisition we believe that Amdocs is now
uniquely positioned to support and be the leader in this emerging market.

     We also have strengthened our presence in the OSS area by acquiring Cramer,
a leading provider of OSS solutions. It is critical for service providers to
automate and integrate the BSS and OSS business processes in order to offer
provisioning, immediate activation and service assurance. With this acquisition,
we believe we are uniquely positioned to enable service providers to integrate
those business processes and, as a result, rapidly introduce new offerings,
significantly reduce cost of operations and focus on customers.

     We believe the increasing need for our customers to achieve integrated
customer management, and our ability to address this demand, will continue to
drive our growth in fiscal year 2007.

     Our portfolio also includes a full range of directory sales and publishing
systems, which we refer to as Directory Systems, for publishers of both
traditional printed yellow page and white page directories and electronic
Internet directories.

     We have designed ICM-enabling Systems to meet the mission-critical needs of
leading communications service providers throughout the entire customer
lifecycle. We support different lines of business, including wireline, wireless,
cable and satellite, and a wide range of communications services, including
voice, video, data, Internet Protocol, or IP, broadband, content, electronic and
mobile commerce. We also support companies that offer multiple service packages
which are commonly referred to as bundled or convergent service packages.

     Due to the complexity of our customers' projects and the expertise required
for system support, we also provide information technology, or IT, services,
including extensive consulting, business strategy, systems implementation,
training, systems integration, modification, ongoing support, enhancement and
maintenance services. In addition, we offer Managed Services, which include
services such as systems modernization and consolidation, the operation of data
centers, ongoing support, maintenance services, systems modification, the
provision of rating and billing services and communications facility management
services, in all cases on either, or a combination of, a fixed or unit charge
basis to our customers.

     Since the inception of our business in 1982, we have concentrated on
providing software products and services to major communications 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 communications
providers. Our customer base includes major communications companies, including
major wireline and wireless companies, located around the world.

  INDUSTRY BACKGROUND

     Communications Industry

     It is our view that, for more than 20 years, competition in the global
communications industry has increased as a result of deregulation and the
development of new service technologies that allow introduction of new products
and services, including content and IP services, as well as bundling of wireline
and wireless voice, video and data services. The industry is continuing to
undergo transformation, mainly driven by the continued consolidation trend,
emergence of new competitors and the continuing increase in customer demands. We
believe that the telecommunications industry will continue to be driven by
consolidation, convergence, competition and the customer.


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<PAGE>

     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, long distance and cable companies to offer competing services. Many
companies now compete by providing bundled or convergent services, offering
combinations of local exchange, long distance, wireless, broadband access,
content and electronic and mobile commerce services. Deregulation is also
creating opportunities for new ways of doing business, such as wholesaling and
reselling communications services. Privatization and deregulation continue to
encourage increased competition worldwide. We believe that, as markets are
opened to competition, new competitors within these markets typically compete
for market share with more established carriers by operating at lower cost,
offering competitive prices, introducing new features and services and being
more responsive to customer needs. In parallel, the communications industry has
undergone consolidation, as companies seek to broaden their global reach and
expand service offerings and control costs. In addition, global expansion by
multinational companies and concurrent technological advances are opening
markets in less developed countries to enhanced communications services and
competition.

     In recent years, there has also been a large increase of new communications
technologies, including ATM (Asynchronous Transfer Mode), IP, xDSL (a type of
Digital Subscriber Line), utilization of cable television infrastructure to
provide Internet services, GPRS (General Packet Radio Services), UMTS (Universal
Mobile Telecommunications System), WiFi (Wireless Fidelity) and WAP (Wireless
Application Protocol) for wireless Internet, VoIP (Voice over Internet
Protocol), IPTV (Internet Protocol Television) and intelligent networks.
Additionally, the directory publishing industry, which we believe is currently
dominated by communications companies that are owned by or affiliated with
telecommunications carriers, continues to experience significant changes due to
the introduction of new technologies and distribution platforms, especially
Internet directories.

     Information Systems

     While the demand for our products and services was negatively affected by
the downturn in the communications industry during 2002 and 2003, many
communications companies are currently seeking to upgrade their systems and
install new systems that would enable them to move toward an Integrated Customer
Management strategy to attract and retain key customers, as well as to evolve to
next generation networks in order to offer new or bundled services. We believe
that these service providers are looking for systems that reduce IT and
operational costs, enhance customer management to increase average revenue and
profitability per user, support customer retention, and enable rapid rollout of
new marketing packages and advanced data services, as well as the ability to
provide customers with single-contact, single-invoice solutions for convergent
or bundled services. We believe this is in part driven by the move towards
convergence and the demand from consumers for ubiquitous connectivity: access to
any service anytime, anywhere, through any device.

     As a result, we believe service providers require best-of-suite information
systems that provide the level of integration, flexibility and scalability they
need to improve operational efficiency and to differentiate themselves from
their competitors in an increasingly competitive marketplace. To save scarce
capital and operating expenditure resources, some carriers are investing in pre-
configured open-architecture software products, which require limited
customization, rather than highly customized solutions.

     We believe that, in order to implement efficient, flexible, cost-effective
information systems on a timely basis, many new and existing communications
companies are looking to buy ICM-enabling Systems from external vendors, rather
than developing new systems with internal resources. Moreover, as many
communications companies strive to become more customer-oriented, they are
concentrating efforts and internal resources on servicing their customers and
expanding their service offerings, and many are turning to third-party vendors
for their information systems. These factors create significant opportunities
for vendors of information technology software products and providers of Managed
Services, such as Amdocs.


                                       17

<PAGE>

  THE AMDOCS OFFERINGS

     We believe that our product-driven approach, commitment to and support of
quality personnel and deep industry knowledge and expertise permit us to create
and deliver effective offerings that are both highly innovative and reliable. In
addition, we offer solutions that address specific business issues of service
providers. We believe that our success derives from a combination of the
following factors that differentiate us from most of our competitors.

     - Amdocs 7 Portfolio of Pre-Integrated, Modular Products.  In October 2006,
       we made available the billing and mediation components of Amdocs 7, and
       we expect to release the comprehensive Amdocs 7 portfolio in the first
       half of fiscal 2007. Building on Amdocs 6, Amdocs 7 will enable our
       customers to achieve Integrated Customer Management by providing a
       portfolio of pre-integrated software products that span the entire
       customer lifecycle across BSS/OSS. Our portfolio is designed to enable
       ICM across our customer's organization, and enable it to align its
       business processes around the subscriber, linking subscriber-facing
       business processes and touch points across back-office and front-office
       systems. Our products are designed to allow modular extension as a
       service provider moves toward achieving ICM and to ensure fast and
       reduced-cost implementations.

     - Solutions Combining Products, Services and Partner Technology, as
       needed.  We offer our customers solutions that address specific business
       issues, such as subscriber profitability and segmentation, or the
       identification of consumer segments to be targeted. Our solutions combine
       products with a broad range of services, including customization,
       implementation, integration, maintenance, ongoing support and Managed
       Services, as well as with technologies supplied by our partners. By
       providing services directly to the consumer, we are able to effectively
       utilize our intricate technical knowledge of our products in the overall
       execution of a project, helping to ensure delivery and significantly
       reducing project risk. Our solutions approach differs from the multi-
       party approach commonly used in the market, in which products developed
       by a software vendor are implemented by a third-party system integrator.
       We believe that our approach enhances our ability to provide our
       customers with timely, cost-effective, low-risk solutions at a consistent
       level of quality.

     - Functional and Flexible Portfolio.  Our Amdocs 7 product portfolio is
       based on an open architecture that provides the functionality,
       scalability, modularity and adaptability required by service providers in
       today's highly competitive market. The open, standard architecture allows
       products to operate as standalone applications within existing
       environments. The flexibility of our product portfolio enables our
       customers to achieve significant time-to-market advantages and reduce
       their dependence on technical and other staff.

     - Deep Industry Expertise and Highly Skilled Personnel.  We are able to
       offer our customers superior products and services on a worldwide basis
       in large part because of 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 workforce, we believe that we
       have developed a reputation for reliably delivering quality solutions
       within agreed time frames and budgets. We have a global presence and
       recruitment capabilities and have development centers in Canada, China,
       Cyprus, India, Ireland, Israel and the United States.

  BUSINESS STRATEGY

     Our goal is to provide ICM-enabling Systems information technology software
products and related service and support to the world's leading service
providers. We seek to accomplish our goal by pursuing the strategies described
below.

     - Continued Focus on the Communications and Broadband Industries.  We
       intend to continue to concentrate our main resources and efforts on
       providing ICM-enabling Systems to service providers in the communications
       and broadband industries. This strategy has enabled us to develop the
       specialized industry know-how and capability necessary to deliver the
       technologically advanced, large-scale,

                                       18

<PAGE>

       specifications-intensive information systems solutions required by the
       leading communications companies in the wireless, wireline, broadband
       cable and satellite service sectors. We are also expanding our experience
       by working with service providers in the financial services sector.

     - Target Industry Leaders.  We intend to continue to direct our marketing
       efforts principally toward the major communications companies. We derive
       a significant portion of our revenues from our customer base of major
       service providers in North America, Europe and the Asia-Pacific region.
       We believe that the development of this premier customer base has helped
       position us as a market leader, while contributing to the core strength
       of our business. By targeting industry leaders 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 Integrated Products and Services Solutions.  Our strategy is to
       provide customers with total systems solutions consisting of our product
       portfolio and our specialized services across BSS and OSS. By leveraging
       our product and industry knowledge, we believe that we can provide more
       effective system integration and implementation services, as well as
       Managed Services, to our customers.

     - Provide Customers with a Broad Portfolio of Integrated Products.  We seek
       to provide our customers with a broad portfolio of products, which we
       call Amdocs 7, to help them achieve Integrated Customer Management. For
       communications service providers, we seek to provide ICM-enabling Systems
       across all lines of their business, such as wireline, wireless, broadband
       cable and satellite. This approach also means that we can support global
       communications service providers throughout their various international
       operations. We believe that our ability to provide a broad suite of
       products helps establish us as a strategic partner for our customers, and
       also provides us with multiple avenues for strengthening and expanding
       our ongoing customer relationships.

     - Maintain and Develop Long-Term Customer Relationships.  We seek to
       maintain and develop long-term, mutually beneficial relationships with
       our customers. These relationships generally involve 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 added value we provide through 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.

  TECHNOLOGY

     Our portfolio architecture is designed to increase our customers' business
agility and lower their overall total cost of ownership. Our technology platform
allows our applications to work in multiple customer environments, including:

     - Hardware:  IBM, Hewlett-Packard, Sun Microsystems

     - Operating Systems:  IBM AIX, HP-UX, Solaris, Windows

     - Database Management Systems:  Oracle, SQL Server, IBM UDB

     - Middleware:  BEA WebLogic, IBM WebSphere

     We believe this ability affords our customers the freedom to choose a
preferred operating environment and to maximize return on existing
infrastructure investments. To help service providers respond more quickly to
changes in their market and lower their integration costs, we utilize service-
oriented architecture principles in our portfolio design. For example, Amdocs
Integration Framework includes a central service repository for defining
business services for both Amdocs and external applications allowing our
applications to seamlessly integrate with each other and with third party
Enterprise Server Bus or legacy applications.

     Our portfolio applications are based around consistent architectural
guidelines and software infrastructure, and they also leverage, where
appropriate, consistent foundation tools and services for areas such as
integration, process management, monitoring and control, security, and
information management. This allows

                                       19

<PAGE>

service providers to mitigate the many costs typically involved in deploying and
operating a new application, such as costs related to installation,
configuration, integration and monitoring.

     In addition to providing a common foundation and aligning to industry
standards, our product portfolio also includes the following key
characteristics:

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

     - Modularity.  Our product portfolio is comprised of sets of individual
       functional application products. Each of our applications can be
       installed on an individual standalone basis, interfacing with the
       customer's existing systems, or as part of an integrated Amdocs system
       environment. This modularity provides our customers with a highly
       flexible and cost-effective solution that is able to incrementally expand
       with the customer's growing needs and capabilities. The modular approach
       also preserves the customer's initial investment in products, while
       minimizing future disruptions and the overall cost of system
       implementation.

     - Portability.  Our applications support diverse hardware and operating
       systems to ensure that our customers can choose from a variety of
       vendors, including Hewlett-Packard, IBM and Sun Microsystems. Certain
       applications can also be deployed on the Windows NT platform. Our
       applications utilize, where applicable, Java-based design and programming
       to augment cross-platform portability.

  PRODUCTS

     Our product offerings include an extensive portfolio of ICM-enabling
software products that we have developed to provide comprehensive information
systems functionality for communications service providers. Our software systems
cover the full range of revenue management (including billing, mediation and
partner settlement), customer management (including ordering, customer
relationship management, or CRM, and self service), service and resource
management (fulfillment, activation, inventory management, network planning and
customer assurance) and digital commerce management (including content revenue
management).

     We configure individual ICM-enabling Systems into families of solutions,
which serve as marketing packages oriented to the needs of specific customer
segments. We provide our main ICM-enabling Systems in a number of versions to
serve the different needs of communications operators in the various network and
business segments, such as wireline, wireless, cable, broadband and electronic
and mobile commerce. Our products focus on the four main business challenges of
our customers:

     - Revenue Management:  Products that enable service providers to manage and
       track sources of revenue through any channel, from service consumption to
       cash in hand.

     - Customer Management:  End-to-end customer management products for all
       operators, providing support for managing customer relationships,
       including service and support, sales and ordering, and marketing and
       analytics.

     - Service and Resource Management:  Products that define, orchestrate and
       execute the complete lifecycle of ordering and service fulfillment
       processes.

     - Digital Commerce Management:  Products that helps service providers and
       media companies realize new revenue streams by managing the digital
       commerce lifecycle.

     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 platform.


                                       20

<PAGE>

     Revenue Management

     Our Revenue Management products include the following key application
modules:

     - Amdocs Charging -- provides flexible, real time rating and billing for
       all voice, data, content and commerce services, supporting any method of
       payment, including postpaid, prepaid or any converged combination.

     - Amdocs Document Designer -- creates flexible, personalized bills,
       letters, invoices and statements for mass production, providing an
       optimal bill architecture.

     - Amdocs Balance Manager -- performs real-time balance management for
       prepaid accounts, including balance updates and reservations.

     - Advanced Recurring Charge Manager -- specifically addresses the needs of
       cable and satellite providers, allowing flexible handling of recurring
       charges.

     - Amdocs Partner Manager -- manages inter-carrier and dealer partnerships,
       including recruitment and contract definition, partner authorization and
       approval processes, revenue-share calculation, invoicing and settlement.

     - Amdocs Service Mediation Manager -- removes barriers and ensures the
       accurate flow of information from the network to the billing system.

     Customer Management

     Our Customer Management products, substantially represented by the Amdocs
CRM portfolio, include the following main modules:

     - Amdocs Customer Interaction Manager -- provides customer service
       representatives with a comprehensive view of customer accounts and
       activity.

     - Amdocs Self Service -- enables residential and corporate customers to use
       the Internet to self-manage interactions with their communications
       service providers.

     - Amdocs Sales -- comprehensive sales force automation solution that
       automates the work of sales representatives while allowing them to offer
       the highest level of service to their customers.

     - Amdocs Support -- provides comprehensive, service request/case management
       for multi-level customer support, network management and support
       operations.

     - Amdocs Ordering -- automates the entire ordering and fulfillment process
       through to completion, for all services and lines of business.

     Service and Resource Management

     Our Service Management products include the following main modules:

     - Amdocs BSS/OSS Manager -- bridges the gap between BSS and OSS, service
       fulfillment and assurance, as well as next generation and legacy
       services.

     - Amdocs Activation Manager -- automates the activation of network services
       and individual subscribers.

     - Amdocs SLA Manager -- provides system for measuring, monitoring and
       managing quality-of-service goals.

     - Amdocs Change Manager -- enables providers to achieve better
       predictability and control risks associated with IT change, particularly
       as it impacts customers.

     - Amdocs Service Order Manager -- converts customer-facing orders into
       network-facing service requests, and sends notifications and status-
       tracking to the order-handling system to update progress of order
       fulfillment.


                                       21

<PAGE>

     - Amdocs Cramer Resource Manager -- provides field engineers with the
       information and tools to efficiently complete field service requests, as
       well as closed loop diagnosis-to-dispatch functionality from initial
       customer contact to onsite problem resolution.

     - Amdocs Cramer Service Catalog -- streamlines the creation of new services
       and management of service portfolios by enabling the operator to define
       the technical structure of new and existing products and to set reusable
       design patterns.

     Digital Commerce Management

     Our Digital Commerce Management products include the following key
application modules:

     - Amdocs Qpass Store Manager -- supports multiple content discovery
       channels, including Web, WAP, client-based technologies and IPTV to
       manage store presentation, create content and service promotions, and
       quickly publish updates.

     - Amdocs Qpass Content Catalog Manager -- allows content providers to
       describe, categorize and edit content, which can then be previewed,
       tested, approved and added to a centralized content pool available for
       sale to subscribers.

     - Amdocs Qpass Content Delivery Manager -- delivers a content item to an
       end device, automatically matching file format. It supports advanced
       media types and digital rights management across multiple delivery
       channels.

     - Amdocs Qpass Content Partner Manager -- automates the workflow for
       content-provider lifecycle management, enabling full provisioning of
       content providers within hours, sophisticated revenue-sharing contracts
       and settlements, and tools for the content partner to manage its account
       and offers, and to review reports.

     - Amdocs Qpass Merchandising Manager -- allows quick and simple creation,
       roll-out and update of product offers, promotions and campaigns across
       channels and platforms.

     - Amdocs Qpass Commerce Transaction Manager -- provides end-to-end
       transaction management for in-depth market and activity knowledge,
       revenue assurance and financial transparency. It supports multiple
       payment methods, real-time business policy enforcements, and financial
       reporting and tracking.

     Foundation

     Our foundation modules, used across out portfolio, includes:

     - Amdocs Product Catalog -- a single, central repository for all products
       and services across the operator's organization, speeding time-to-market
       and enabling innovative bundling. It supports simplified, efficient
       product lifecycle management and integration of company-wide product and
       service information.

     - Amdocs Error Manager -- organizes and solves high-volume record errors
       between any two transactional systems, minimizing revenue leakage and
       reducing time and effort required to fix errors.

     Directory Systems

     Our main Directory Systems product offering is the ADS (NG) family of
products. These products provide comprehensive support for yellow page and white
page directory sales and publishing operations, as well as for Internet
directories and catalogs. These systems support large directory publishing
operations that employ a local sales force numbering thousands of
representatives, serve customer bases of hundreds of

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<PAGE>

millions of businesses and publish thousands of different directories each year.
The directory line of products comprises a series of pre-integrated 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 the customer's yellow page or white page directory or electronic
       Internet directory. These modules encompass contract processing, service
       order processing, listing information management and directory extract in
       preparation for the actual production of the directory.

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

     - Production and Delivery -- 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. Our product and delivery services also support
       online Internet directories.

     - 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 enable Integrated Customer
Management and to deliver our products and services is one of the key factors
that allows us to achieve the time-frame, budget and quality objectives of our
customers' projects. Our methodology incorporates rigorous focus on the people,
processes and technology of an organization (program management, customer-
specific solution development, implementation and integration and operation), 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.

     As part of our effort to provide comprehensive solutions to our customers,
we offer a broad suite of consulting, integration and Managed Services to
support operation of our products. The Managed Services offered by Amdocs
include services such as system modernization and consolidation, operation of
data centers, ongoing support, maintenance, system modification, the provision
of rating and billing and communications facility management. We have expanded
our consulting capabilities and now offer the Amdocs ICM Blueprint Framework, a
comprehensive and growing portfolio of consulting services and business-process
support that enables our customers to achieve Integrated Customer Management. It
includes optimization and improvement services for customer contact centers and
other business processes, and implementation services for business support
systems and operation support systems.

     Our service offerings include:

     - Customer Management -- includes our new Customer Management Roadmap
       Service, as well as the Contact Center Optimization Service and Campaign
       Management Optimization Service.


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<PAGE>

     - Digital Commerce Management -- comprehensive set of services including
       Content Management Services, Managed Application Services, and
       Professional Services.

     - Service and Resource Management -- three core services supporting the
       Amdocs Service and Resource Management offerings: Order-to-Activation
       Service, Customer-Centric Service, Assurance Service and Network
       Lifecycle Management Service.

     - Revenue Management -- consists of three services supporting Amdocs
       solutions across Billing, Mediation and Partner Settlement. Includes our
       new Next Generation Revenue Realization Service which provides a holistic
       approach for planning and realizing revenues from next-generation
       services, including IPTV, VoIP, Mobile TV, IMS and WiMax, as well as the
       Next Generation Billing Operations Optimization Service and Revenue
       Assurance Service.

     - Strategy, Planning and Systems Integration -- a comprehensive set of
       services including our IT Strategy and Roadmap Service, Business Process
       Integration Service and Learning and Workforce Readiness Service.

     - Managed Services -- set of flexible service offerings to enable Service
       Providers to off-load management of support business functions or
       specific operations and infrastructure support.

     The extent of services provided varies from customer to customer. Some
communications service providers prefer a highly customized approach, with
extensive modifications to our products and a significant level of ongoing
support. We have invested considerable research and development efforts in
upgrading our applications suite to address this market requirement and to meet
our customers' unique needs.

     The process of customizing a system involves creating tailored products to
address a customer's specific technical and business requirements. 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 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
turnkey 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 system 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 development
facilities in Canada, China, Cyprus, India, Ireland, Israel and the United
States, operate a support center in Brazil and have operations in North America,
Europe, Latin America and the Asia-Pacific region. Support for implementation
and integration activities is typically performed at the customer site. Once the
system is operational or is in production, we provide ongoing support and
maintenance through a combination of remote support from the development centers
and local support at the customer site.

  SALES AND MARKETING

     Our sales and marketing activities are primarily directed at major
communications, broadband cable and satellite companies. 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 purchasing decisions, including senior management,
information systems personnel and user groups, such as the finance, customer
service and marketing departments.


                                       24

<PAGE>

     We maintain sales offices in the United States, the United Kingdom and
several other countries. Our sales activities are supported by marketing
efforts, including marketing communications, product management, market research
and strategic alliances. The management of our operating subsidiaries is closely
involved in establishing sales policies and overseeing sales activities.
Management's role includes setting 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 other 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 communications, broadband cable and
satellite companies that require information systems with advanced functionality
and technology. The companies in our target segment are typically market
leaders. By working with such companies, we help ensure that we remain at the
forefront of developments in the communications and broadband industries and
that our product offerings continue to address the market's most sophisticated
needs. We have an international orientation, focusing on potential customers in
the developed, industrialized countries in North America and Europe, as well as
customers in Latin America and the Asia-Pacific region. We are also expanding on
our experience by working with service providers in the financial services
sector, since the challenges faced by companies in this sector are similar to
those of the communications service providers.

     Our customers include global communications leaders and leading network
operators and service providers, as well as directory publishers in the United
States and around the world. Our customers include:


<Table>
<S>                                     <C>

ABN AMRO                                SEAT Pagine Gialle S.p.A.
AT&T (formerly SBC)                     SFR Group
Bell Canada                             Sprint Nextel
BT                                      Svyazinvest
China Mobile                            TDC
Cingular Wireless                       Telefonica de Espana
Comcast                                 Telkom South Africa
Deutsche Telekom                        Telstra
DIRECTV                                 TELUS
KPN Mobile                              T-Mobile
NetCom Norway, part of TeliaSonera      Verizon Communications
  Group
R.H. Donnelley                          Vodafone
Rogers
</Table>


     Our four largest groups of customers are comprised of AT&T (formerly SBC),
Bell Canada, Cingular and Sprint Nextel, and certain of their subsidiaries, each
of which accounted for approximately 10% or more of our revenue in fiscal 2006.
Aggregate revenue derived from the multiple business arrangements we have with
our six largest customer groups accounted for approximately 59% of our revenue
in fiscal 2006 and 63% in 2005.

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


<Table>
<Caption>
                                                          2006   2005   2004
                                                          ----   ----   ----

<S>                                                       <C>    <C>    <C>

North America...........................................  69.9%  68.3%  65.9%
Europe..................................................  21.8   24.0   27.1
Rest of the World.......................................   8.3    7.7    7.0
</Table>




                                       25

<PAGE>

  COMPETITION

     The market for information systems in the communications and broadband
media industries, is highly competitive and fragmented. We observe changes in
the competitive landscape that derive from the continued industry consolidation
trend. We compete with many independent providers of information systems and
services, including CGI Group, Comverse, Convergys, CSG Systems International,
Intec Telecom Systems and Oracle Corporation, with system integrators and
providers of IT services, such as Accenture, EDS and IBM Global Services, and
with internal information systems departments of large communication companies.
We also cooperate in certain opportunities and projects with some of the system
integrators above mentioned. We expect continued competition in the
communications 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:

     - focusing all efforts, from R&D to product delivery, on enabling our
       customers to achieve Integrated Customer Management,

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

     - providing high quality, reliable, scalable and modular products,

     - effectively managing the timely implementation of products, and

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

     We compete with a number of companies that have long operating histories,
large customer bases, substantial financial, technical, sales, marketing and
other resources, and strong name recognition. Current and potential competitors
have established, and may establish in the future, cooperative relationships
among themselves or with third parties to increase their ability to address the
needs of our prospective customers. Accordingly, new competitors or alliances
among competitors may emerge and rapidly acquire significant market share. As a
result, our competitors may be able to adapt more quickly than we can 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.

  EMPLOYEES

     We invest significant resources in training, retention and motivation of
high quality personnel. Training programs cover areas such as technology,
applications, development methodology, project methodology, programming
standards, industry background and management development. Our management
development efforts are reinforced by an organizational structure that 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 sales staff and high
quality employees. Our future success depends in large part upon our continuing
ability to attract and retain highly qualified managerial, technical, sales and
marketing personnel.

     See "Directors, Senior Management and Employees -- Employees" for further
details regarding our employees and our relationships with them.

  RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES

     Our research and development activities involve the development of new
software architecture, modules and product offerings in response to an
identified market demand, either as part of our internal product development
programs or in conjunction with a customer project . We also expend additional
amounts on applied research and software development activities to keep abreast
of new technologies in the communications markets and to provide new and
enhanced functionality to our existing product offerings.


                                       26

<PAGE>

     While we continued to upgrade our existing systems in fiscal 2006, we also
devoted significant research and development efforts to the integration between
our products and a unified user interface in order to enable our customers to
adopt an ICM approach. As part of these efforts, during fiscal 2006 we invested
in the next major release of our comprehensive portfolio, which we refer to as
Amdocs 7. In October 2006, we made available the billing and mediation
components of Amdocs 7, and we expect to release the comprehensive Amdocs 7
portfolio in the first half of fiscal 2007. Amdocs 7 will expand on the
capabilities of our previous Amdocs 6 release by integrating new products for
the cable broadband and satellite industry, by incorporating products recently
acquired as a result of the Cramer and Qpass acquisitions and through
operational and functional enhancements. Amdocs 7 will comprise an enhanced
portfolio of modular billing, CRM, self-service, order management, mediation,
OSS and content management software products.

     The majority of our research and development expenditures is directed at
our ICM-enabling Systems, and the remainder to directory solutions. We believe
that our research and development efforts are a key element of our strategy and
are essential to our success. However, an increase or a decrease in our total
revenue would not necessarily result in a proportional increase or decrease in
the levels of our research and development expenditures, which could affect our
operating margin. In the near-term, we intend to continue to make substantial
investments in our research and development activities. We believe that this
ongoing investment will position us to capitalize on future potential
opportunities in the communications industry.

     Our software and software systems are largely comprised of software and
systems that we have developed or acquired and that we regard as proprietary.
Our software and software systems are the results of long and complex
development processes, and although our technology is not significantly
dependent on patents or licenses from third parties, certain aspects of our
products make use of readily available software components licensed from third
parties. As a developer of complex software systems, third parties may claim
that portions of our systems infringe their intellectual property rights. The
ability to develop and use our software and software systems requires knowledge
and professional experience that we believe is unique to us and would be very
difficult for others to independently obtain, however, our competitors may
independently develop technologies that are substantially equivalent or superior
to ours. We have taken and intend to continue to take, several measures to
establish and protect our proprietary rights in our products and technologies
from third-party infringement. We rely upon a combination of trademarks,
patents, contractual rights, trade secret law, copyrights, nondisclosure
agreements, we enter into non-disclosure and confidentiality agreements with our
customers, employees and marketing representatives and with certain contractors
with access to sensitive information, and we also limit customer access to the
source code of our software and software systems.

     See the discussion under "Operating and Financial Review and
Prospects -- Research and Development, Patents and Licenses."

  PROPERTY, PLANTS AND EQUIPMENT

     Facilities

     We lease land and buildings for our executive offices, sales, marketing,
administrative, development and support centers. We lease an aggregate of
approximately 3,182,000 square feet worldwide, including significant leases in
the United States, Israel, Canada, China, Cyprus, India and the United Kingdom.
Our aggregate annual lease costs with respect to our properties as of November
30, 2006, including maintenance

                                       27

<PAGE>

and other related costs, are approximately $69.5 million. The following table
summarizes information with respect to the principal facilities leased by us and
our subsidiaries as of November 30, 2006:


<Table>
<Caption>
                                                                   AREA
LOCATION                                                        (SQ. FEET)
--------                                                        ----------

<S>                                                             <C>

United States:
  St. Louis, MO(*)............................................     154,000
  San Jose, CA................................................     112,000
  Champaign, IL...............................................     123,000
  Sacramento, CA..............................................     113,000
  Others(*)...................................................     368,000
                                                                 ---------
     Total....................................................     870,000
Israel:
  Ra'anana....................................................     637,000
  Hod-Hasharon................................................     217,000
  Haifa(*)....................................................     133,000
  Others......................................................      99,000
                                                                 ---------
     Total....................................................   1,086,000
Canada:
  Toronto(*)..................................................     243,000
  Montreal....................................................     107,000
  Others......................................................      68,000
                                                                 ---------
     Total....................................................     418,000
China.........................................................      81,000
Cyprus (Limassol).............................................     127,000
India (Pune)..................................................     298,000
United Kingdom(*).............................................     140,000
Rest of the world(**).........................................     162,000
</Table>


--------

    (*) Includes space sublet to third parties.

   (**) Includes Austria, Australia, Brazil, Czech Republic, Denmark, France,
        Germany, Greece, Hungary, Indonesia, Ireland, Italy, Japan, Mexico,
        Poland, Russia, South Africa, Spain, Sweden, Switzerland, Thailand and
        The Netherlands.

     Our leases expire on various dates between 2007 and 2015, not including
various options to extend lease terms.

     Equipment

     We develop our Integrated Customer Management products over a system of
UNIX, MVS, Linux and Windows 2000/2003 servers owned or leased by us. We use a
variety of software products in our development centers, including products by
Microsoft, Oracle, Synscsort, CA, Merant, IBM, HP, SUN and BEA. Our data storage
is based on equipment from EMC, SUN, NetApp and Hewlett-Packard. Our development
servers are connected to approximately 20,000 personal computers owned or leased
by us.

     Automatic tape libraries provide full and incremental backups of the data
used in and generated by our business. The backup tapes are kept on-site and
off-site, as appropriate, to ensure security and integrity, and are used as part
of our disaster recovery plan. The distributed development sites that we operate
worldwide are connected by a high-speed redundant wide area network, or WAN,
using telecommunication equipment manufactured by, among others, Cisco and
Nortel.


                                       28

<PAGE>

     The distributed development sites that we operate worldwide are also
connected by a high speed WAN.

ITEM 5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS

INTRODUCTION

     In this section, we discuss the general financial condition and the results
of operations for Amdocs Limited and its subsidiaries, including:

     - the factors that affect our business,

     - our revenue and costs for the fiscal years ended September 30, 2006, 2005
       and 2004,

     - the reasons why such revenue and costs were different from year to year,

     - the sources of our revenue,

     - how all of this affects our overall financial condition,

     - our capital expenditures for the fiscal years ended September 30, 2006,
       2005 and 2004,

     - the changes in our business, including those resulting from acquisitions
       of other businesses, and

     - the sources of our cash to pay for future capital expenditures and
       possible acquisitions.

     In this section, we also analyze and explain the annual changes in the
specific line items in our consolidated statements of income. You should read
this section in conjunction with our consolidated financial statements and the
notes thereto, which follow.

OVERVIEW OF BUSINESS AND TREND INFORMATION

     Consolidation in the communications industry is continuing, and competition
among incumbent and new entrant service providers is intensifying. At the same
time, convergence is accelerating, with consumers expecting continuous access to
bundled voice, data and video services through any device. We believe service
providers are responding to this challenge and are seeking to develop new
revenue streams that take advantage of ubiquitous connectivity and convergence.
In this changing environment, we believe service providers will succeed if they
differentiate their offerings by delivering a customer experience that is
simple, personal, and valuable at every point of service. We believe this will
require service providers to adopt the strategy of integrated customer
management, or ICM.

     We refer to Amdocs systems as ICM Enabling Systems because they enable many
of the world's leading service providers to deliver an intentional, integrated
and innovative customer experience:

     - an intentional experience by offering consistency and simplicity across
       any device, channel or network;

     - an integrated experience by providing integrated business and operational
       service support, maximizing operational excellence for a total cost of
       service advantage for service providers;

     - innovative experience by supporting sophisticated multi-play, internet
       protocol (IP) and digital content services for a unique time-to-
       leadership advantage.

     We provide a platform that combines software, service and expertise to help
our customers execute ICM strategies and achieve service, operational and
financial excellence.

     Our market focus is primarily Tier 1 and Tier 2 companies in the
communications industry, including leading wireline and wireless
telecommunications, broadband cable and satellite companies. In fiscal 2006, we
acquired Qpass Inc. and Cramer Systems Group Limited --  which we refer to as
Qpass and Cramer --  to further enhance our portfolio of products offerings,
meet the growing demand for the delivery of next-generation services and provide
a complete end-to-end offering (combined business support and operations support
systems, or BSS/OSS).


                                       29

<PAGE>

     We believe that the digital content space promises to be a key growth area.
Our acquisition of Qpass allows us to offer a broader set of solutions to
service providers and media companies seeking to launch and monetize new IP-
based services and content. With this acquisition we believe that Amdocs is now
uniquely positioned to support and be the leader in this emerging market.

     We also have strengthened our presence in the OSS area by acquiring Cramer,
a leading provider of OSS solutions. It is critical for service providers to
automate and integrate the BSS and OSS business processes in order to offer
provisioning, immediate activation and service assurance. With this acquisition,
we believe we are uniquely positioned to enable service providers to integrate
those business processes and, as a result, rapidly introduce new offerings,
significantly reduce cost of operations and focus on customers.

     We believe the increasing need for our customers to achieve integrated
customer management and our ability to address this demand, will continue to
drive our growth in fiscal year 2007.

OFFERINGS

     Amdocs provides a broad portfolio of integrated, modular software products,
with proven functionality and scalability, accompanied by a comprehensive range
of business consulting, system implementation and integration services. Our
portfolio of product offerings includes revenue management (including billing,
mediation and partner settlement), customer management (including ordering,
customer relationship management, or CRM and self-service), service and resource
management (including fulfillment, activation, inventory management, network
planning and customer assurance) and digital commerce management (including
content revenue management). We refer to these offerings collectively as ICM
Enabling Systems. In fiscal 2006, our total revenue was $2,480.0 million, of
which $2,201.2 million, or 88.8%, was attributable to the sale of ICM Enabling
Systems.

     Our portfolio also includes a full range of directory sales and publishing
systems, which we refer to as Directory Systems, for publishers of both
traditional printed yellow page and white page directories and electronic
Internet directories.

     We have designed the Amdocs ICM Enabling Systems to meet the mission-
critical needs of leading communications service providers throughout the entire
customer lifecycle. We support different lines of business, including wireline,
wireless, cable and satellite, and a wide range of communications services,
including voice, video, data, IP, broadband, content, electronic and mobile
commerce. We also support companies that offer multiple service packages,
commonly referred to as bundled or convergent service packages. Due to the
complexity of our customers' projects and the expertise required for systems
support, we also provide information technology, or IT, services, including
extensive consulting, business strategy, system implementation, training,
integration, modification, ongoing support, enhancement and maintenance
services. In addition, we offer Managed Services, which include services such as
system modernization and consolidation, the operation of data centers, ongoing
support, maintenance services, system modification, the provision of rating and
billing services and communications facility management services. All IT and
Managed Services are provided to our customers on a fixed or unit charge basis
or a combination of the two.

     Revenue from Managed Services arrangements (from the sale of ICM Enabling
Systems and Directory Systems) is included in both license and service revenue.
Managed Services projects are a significant part of our business, accounting for
approximately 35% and 40% of our fiscal 2006 and 2005 revenues, respectively,
and generating substantial, long-term revenue streams, cash flow and operating
income. In the initial period of our Managed Services projects, we generally
invest in modernization and consolidation of the customer's systems. Invoices
are usually structured on a periodic fixed or unit charge basis. As a result,
Managed Services projects can be less profitable in the initial period. Margins
tend to improve over time as we benefit from the operational efficiencies
provided by system modernization and consolidation.

     We are also leveraging our experience by working with service providers in
the financial services sector, because some of the challenges faced by companies
in this sector are similar to those encountered by communications service
providers.


                                       30

<PAGE>

     We conduct our business globally, and, as a result we are subject to the
effects of global economic conditions and, in particular, market conditions in
the communications industry. In fiscal 2006, customers in North America
accounted for 69.9% of our revenue, while customers in Europe and the rest of
the world accounted for 21.8% and 8.3%, respectively. We maintain development
facilities in Canada, China, Cyprus, India, Ireland, Israel and the United
States.

     We believe that demand for our ICM Enabling Systems is primarily driven by
the following key factors:

     - Industry transformation, including:

       - global use of communications and content services,

       - increase in digital and mobile commerce,

       - ongoing consolidation within the communications industry, and

       - continued convergence of communications, broadband cable and satellite
         industries.

     - Technology advances, such as:

       - emergence of new communications products and services, especially
         video, broadband, data and content services, including IP-based
         services, such as Internet Protocol Television (IPTV) and Voice over IP
         (VoIP),

       - evolution to next generation networks such as IP Multimedia Subsystem
         (IMS), that enable truly converged services offerings like fixed-mobile
         convergence, and

       - technological changes, such as the introduction of 3G wireless
         technology, next-generation content systems and WiFi- and WiMax- based
         access technologies.

     - Customer focus, such as:

       - the desire of service providers to focus on their customers in order to
         build profitable customer relationships,

       - the "authority shift" toward the consumer, with customers demanding
         new, innovative services that can be accessed anytime and anywhere, as
         well as higher levels of customer service, and

       - the need for service providers to differentiate themselves by creating
         a unique and mutually valuable customer experience.

     - The need for operational efficiency, including:

       - the shift from in-house management to vendor solutions,

       - business needs of service providers to reduce costs and lower total
         cost of ownership while retaining high value customers in a highly
         competitive environment,

       - automating and integrating business processes that span across business
         support systems (BSS) and operations support systems (OSS), and

       - OSS transformation projects, designed to transform fragmented legacy
         OSS systems that can make it difficult to introduce new services in a
         timely and cost-effective manner.

ACQUISITIONS

     As part of our strategy, we have pursued and may continue to pursue
acquisitions and other initiatives in order to offer new products or services or
otherwise enhance our market position or strategic strengths.

     On August 14, 2006, we acquired all of the capital stock of Cramer, a
privately-held leading provider of OSS solutions. The aggregate purchase price
for Cramer was $417.2 million, which consisted of $410.6 million in cash
(including cash on hand), $2.2 million related to the assumption of stock
options and restricted shares held by Cramer employees and $4.4 million of
transaction costs. The purchase price is subject to post closing

                                       31

<PAGE>

adjustments which we expect will not be material. We expect that our acquisition
of Cramer will enable us to leverage and greatly enhance our current assets in
the BSS and OSS market.

     On May 31, 2006, we acquired all of the capital stock of Qpass, a leading
provider of digital commerce software and solutions. The aggregate purchase
price for Qpass was $281.8 million, which consisted of $274.0 million in cash,
$2.4 million related to the assumption of stock options held by Qpass employees
and $5.4 million of transaction costs. We expect that this acquisition will
allow us to support service providers and media companies seeking to launch and
monetize digital content, and we believe that this acquisition positions us as
the leader in the emerging digital content market.

     In August 2005, we acquired Longshine, a privately-held leading vendor of
customer care and billing software in China, which counts three of China's four
largest communications service providers among its customers. This acquisition
enabled us to offer our products and services to Chinese service providers, and
we believe it will help us expand our presence in this large and expanding
market. The purchase price for Longshine was approximately $41.7 million, which
included $8.9 million of additional purchase price as a result of the
achievement of specified performance targets at the end of the first year from
acquisition, and $1.3 million of transaction costs. We may also be obligated to
pay up to approximately $8.0 million in additional purchase price over the next
year based on the achievement of specified performance targets.

     In July 2005, we acquired from DST Systems, Inc., which we refer to as DST,
all of the capital stock of DST's wholly owned subsidiaries, DST Innovis, Inc.
and DST Interactive, Inc. We refer to these acquired subsidiaries together as
DST Innovis, a leading provider of customer care and billing solutions to
broadband media cable and satellite companies. The purchase price for DST
Innovis was approximately $237.5 million, which included $3.2 million of
transaction costs. We believe that this acquisition has positioned us to offer a
comprehensive set of solutions to companies in the broadband industry as they
transition to ICM.

     In connection with the DST Innovis acquisition, we signed a long-term
agreement with DST, pursuant to which DST will continue to support the printing
and mailing of bills for the DST Innovis customer base. Under the terms of that
agreement, DST will be a preferred vendor of billing, printing, and mailing for
projects that combine those services with billing support for additional Amdocs
customers in the United States.

     Please see Note 3 to the consolidated financial statements included in this
Annual Report.

RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES

     Our research and development activities involve the development of new
software architecture, modules and product offerings in response to an
identified market demand, either as part of our internal product development
programs or in conjunction with a customer project. We also expend additional
amounts on applied research and software development activities to keep abreast
of new technologies in the communications markets and to provide new and
enhanced functionality to our existing product offerings. Research and
development expenditures were $186.8 million, $144.5 million and $126.4 million
in the fiscal years ended September 30, 2006, 2005 and 2004, respectively,
representing 7.5%, 7.1% and 7.1%, respectively, of our revenue in these fiscal
years.

     While we continued to upgrade our existing systems in fiscal 2006, we also
devoted significant research and development efforts to the integration between
our products and a unified user interface in order to enable our customers to
adopt an ICM approach. As part of these efforts, during fiscal 2006 we invested
in the next major release of our comprehensive portfolio, which we refer to as
Amdocs 7. In October 2006, we made available the billing and mediation
components of Amdocs 7, and we expect to release the comprehensive Amdocs 7
portfolio in the first half of fiscal 2007. Amdocs 7 will expand on the
capabilities of our previous Amdocs 6 release by integrating new products for
the cable broadband and satellite industry, by incorporating products recently
acquired as a result of the Cramer and Qpass acquisitions and through
operational and functional enhancements. Amdocs 7 will comprise an enhanced
portfolio of modular billing, CRM, self-service, order management, mediation,
OSS and content management software products.

     The majority of our research and development expenditures is directed at
our ICM Enabling Systems, and the remainder to directory solutions. We believe
that our research and development efforts are a key element

                                       32

<PAGE>

of our strategy and are essential to our success. However, an increase or a
decrease in our total revenue would not necessarily result in a proportional
increase or decrease in the levels of our research and development expenditures,
which could affect our operating margin. In the near-term, we intend to continue
to make substantial investments in our research and development activities. We
believe that this ongoing investment will position us to capitalize on future
potential opportunities in the communications industry.

     Our software and software systems are largely comprised of software and
systems that we have developed or acquired and that we regard as proprietary.
Our software and software systems are the results of long and complex
development processes, and although our technology is not significantly
dependent on patents or licenses from third parties, certain aspects of our
products make use of readily available software components licensed from third
parties. As a developer of complex software systems, third parties may claim
that portions of our systems infringe their intellectual property rights. The
ability to develop and use our software and software systems requires knowledge
and professional experience that we believe is unique to us and would be very
difficult for others to independently obtain, however, our competitors may
independently develop technologies that are substantially equivalent or superior
to ours. We have taken and intend to continue to take, several measures to
establish and protect our proprietary rights in our products and technologies
from third-party infringement. We rely upon a combination of trademarks,
patents, contractual rights, trade secret law, copyrights, nondisclosure
agreements, we enter into non-disclosure and confidentiality agreements with our
customers, employees and marketing representatives and with certain contractors
with access to sensitive information, and we also limit customer access to the
source code of our software and software systems.

OPERATING RESULTS

     The following table sets forth for the fiscal years ended September 30,
2006, 2005 and 2004, certain items in our consolidated statements of operations
reflected as a percentage of total revenue:


<Table>
<Caption>
                                                         YEAR ENDED SEPTEMBER
                                                                 30,
                                                        ---------------------
                                                         2006    2005    2004
                                                        -----   -----   -----

<S>                                                     <C>     <C>     <C>

Revenue:
  License.............................................    4.7%    4.9%    4.3%
  Service.............................................   95.3    95.1    95.7
                                                        -----   -----   -----
                                                        100.0   100.0   100.0
                                                        -----   -----   -----
Operating expenses:
  Cost of license.....................................    0.2     0.2     0.3
  Cost of service.....................................   63.7    63.4    63.0
  Research and development............................    7.5     7.1     7.1
  Selling, general and administrative.................   12.7    11.3    11.9
  Amortization of purchased intangible assets.........    1.5     0.8     1.0
  Restructuring charges, in-process research and
     development, and other acquisition related
     costs............................................    1.0     0.6      --
                                                        -----   -----   -----
                                                         86.6    83.4    83.3
                                                        -----   -----   -----
Operating income......................................   13.4    16.6    16.7
Interest income and other, net........................    1.7     1.1     0.3
                                                        -----   -----   -----
Income before income taxes............................   15.1    17.7    17.0
Income taxes..........................................    2.2     3.5     3.7
                                                        -----   -----   -----
Net income............................................   12.9%   14.2%   13.3%
                                                        =====   =====   =====

</Table>




                                       33

<PAGE>

  FISCAL YEARS ENDED SEPTEMBER 30, 2006 AND 2005

     The following is a tabular presentation of our results of operations for
the fiscal year ended September 30, 2006, compared to the fiscal year ended
September 30, 2005. Following the table is a discussion and analysis of our
business and results of operations for these years.


<Table>
<Caption>
                                            YEAR ENDED SEPTEMBER        INCREASE
                                                    30,                (DECREASE)
                                          -----------------------   ----------------
                                             2006         2005       AMOUNT      %
                                          ----------   ----------   --------   -----
                                                    (IN THOUSANDS)
                                          ----------------------------------

<S>                                       <C>          <C>          <C>        <C>

Revenue:
  License...............................  $  116,285   $  100,044   $ 16,241    16.2%
  Service...............................   2,363,765    1,938,577    425,188    21.9
                                          ----------   ----------   --------
                                           2,480,050    2,038,621    441,429    21.7
                                          ----------   ----------   --------
Operating expenses:
  Cost of license.......................       4,003        4,083        (80)   (2.0)
  Cost of service.......................   1,579,823    1,291,572    288,251    22.3
  Research and development..............     186,760      144,457     42,303    29.3
  Selling, general and administrative...     313,997      232,066     81,931    35.3
  Amortization of purchased intangible
     assets.............................      37,610       15,356     22,254   144.9
  Restructuring charges, in-process
     research and development and other
     acquisition related costs..........      25,725       12,595     13,130   104.2
                                          ----------   ----------   --------
                                           2,147,918    1,700,129    447,789    26.3
                                          ----------   ----------   --------
Operating income........................     332,132      338,492     (6,360)   (1.9)
Interest income and other, net..........      41,741       22,303     19,438    87.2
                                          ----------   ----------   --------
Income before income taxes..............     373,873      360,795     13,078     3.6
Income taxes............................      55,237       72,159    (16,922)  (23.5)
                                          ----------   ----------   --------
Net income..............................  $  318,636   $  288,636   $ 30,000    10.4%
                                          ==========   ==========   ========

</Table>


     Revenue.  Total revenue increased by $441.4 million, or 21.7%, in fiscal
2006 to $2,480.0 million from $2,038.6 million in fiscal 2005. Approximately 58%
of the increase in total revenue in fiscal 2006 was attributable to revenue
contributed by acquisitions made during fiscal 2006 and during the fourth
quarter of fiscal 2005, of which $187.6 was attributable to DST Innovis. The
remainder of the increase in total revenue was primarily attributable to
additional revenue from consolidation projects for existing Tier 1 customers.

     License and service revenue from the sale of ICM Enabling Systems was
$2,201.2 million for fiscal 2006, an increase of $424.7 million, or 23.9%, from
fiscal 2005. Approximately 60% of the increase was attributable to revenue
contributed by acquisitions made during fiscal 2006 and during the fourth
quarter of fiscal 2005, of which $187.6 was attributable to DST Innovis. The
remainder of the increase in total revenue was attributable to additional
revenue from consolidation projects for existing Tier 1 customers. License and
service revenue from the sale of ICM Enabling Systems represented 88.8% and
87.1% of our total revenue in fiscal 2006 and 2005, respectively. The demand for
our ICM Enabling Systems is primarily driven by the need for communications
service providers to rapidly introduce new offerings and focus on their
customers.

     License and service revenue from the sale of Directory Systems was $278.8
million for fiscal 2006, an increase of $16.7 million, or 6.4%, from fiscal
2005. Approximately 69% of the increase in Directory Systems revenue in fiscal
2006 was attributable to an increase in business related to Managed Services
customers. License and service revenue from the sale of Directory Systems
represented 11.2% and 12.9% of our total revenue in fiscal 2006 and 2005,
respectively. We believe that we are a leading provider of Directory Systems in
most of the markets we serve. We expect that our revenue from Directory Systems
in absolute amount will increase slightly in fiscal 2007.


                                       34

<PAGE>

     In fiscal 2006, revenue from customers in North America, Europe and the
rest of the world accounted for 69.9%, 21.8% and 8.3%, respectively, of total
revenue compared to 68.3%, 24.0% and 7.7%, respectively, for fiscal 2005.
Approximately 54% of the increase in revenue from customers in North America was
attributable to revenue contributed by DST Innovis, and the remainder was
primarily attributable to projects for existing customers in North America.
Revenue from customers in Europe increased in absolute amounts, but the increase
was less than the 21.7% increase in our total revenue which resulted in a
decrease in revenue from customers in Europe as a percentage of total revenue.
The increase in revenue from customers in the rest of the world as a percentage
of our total revenue in fiscal 2006 was attributable primarily to revenue
contributed in China.

     Cost of License.  Cost of license consists primarily of amortization of
purchased computer software and intellectual property rights. Such amortization
is relatively stable from period to period and, absent items that were fully
amortized or impaired, is generally fixed in amount. Therefore, an increase or
decrease in license revenue could cause a significant fluctuation in cost of
license as a percentage of license revenue. In fiscal 2006, cost of license, as
a percentage of license revenue, was 3.4% compared to 4.1% in fiscal 2005.

     Cost of Service.  Cost of service consists primarily of costs associated
with providing services to customers, including compensation expense, warranty
expense and costs of third-party products. The increase in cost of service in
fiscal 2006 was 22.3%, which is greater than the increase in our total revenue
in fiscal 2006. As a percentage of revenue, cost of service was 63.7%, compared
to 63.4% in fiscal 2005. Cost of service in fiscal 2006 includes the effect of
$18.0 million of equity-based compensation expense. Equity-based compensation
expense in fiscal 2005 was insignificant. Our gross margin may vary depending on
the types and geographic locations of projects that we undertake.

     Research and Development.  As a percentage of revenue, research and
development expense was 7.5% and 7.1% in fiscal 2006 and 2005, respectively.
Research and development expense increased by $42.3 million, or 29.3%, in fiscal
2006 to $186.8 million from $144.5 million in fiscal 2005. The increase in
research and development expense was attributable primarily to research and
development activities in our efforts to develop new products for the cable
broadband and satellite industry and integrate products into our ICM Enabling
Systems as well as research and development activities related to the Qpass and
Cramer acquisitions. Research and development expense in fiscal 2006 includes
the effect of $4.7 million of equity-based compensation expense. Equity-based
compensation expense in fiscal 2005 was not significant.

     While we invested in upgrading our existing systems in fiscal 2006, we also
devoted significant research and development efforts to the integration between
our products and a unified user interface in order to enable our customers to
adopt an ICM approach. As part of these efforts, during fiscal 2006, we invested
in the next major release of our comprehensive portfolio, Amdocs 7. In October
2006, we made available the billing and mediation components of Amdocs 7 and we
expect to release the comprehensive Amdocs 7 portfolio in the first half of
fiscal 2007. Amdocs 7 will expand on the capabilities of our previous Amdocs 6
release and will comprise an enhanced portfolio of modular billing, CRM, self-
service, order management, mediation, OSS and content management software
products.

     The majority of our research and development expenditures is directed at
our ICM Enabling Systems, and the remainder to Directory Systems. We believe
that our research and development efforts are a key element of our strategy and
are essential to our success. However, an increase or a decrease in our total
revenue would not necessarily result in a proportional increase or decrease in
the levels of our research and development expenditures, which could affect our
operating margin. Please see the discussion above under the caption "Research
and Development, Patents and Licenses."

     Selling, General and Administrative.  Selling, general and administrative
expense increased by $81.9 million, or 35.3%, in fiscal 2006 to $314.0 million
from $232.1 million in fiscal 2005. Selling, general and administrative expense
primarily consisted of compensation expense. The increase in selling, general
and administrative expense was attributable to an overall increase in our
operations including the impact of DST Innovis, Longshine, Qpass and Cramer
acquisitions, as well as to the inclusion of $23.4 million of equity-based
compensation expense. Equity-based compensation expense in fiscal 2005 was not
significant.


                                       35

<PAGE>

     Amortization of Purchased Intangible Assets.  Amortization of purchased
intangible assets for fiscal 2006 was $37.6 million, compared to $15.4 million
in fiscal 2005. The increase in amortization of purchased intangible assets was
due to purchased intangible assets acquired in the DST Innovis, Longshine, Qpass
and Cramer acquisitions, partially offset by purchased intangible assets that
were fully amortized in the first quarter of fiscal 2005.

     Restructuring Charges, In-Process Research and Development and Other
Acquisition Related Costs.  Restructuring charges, in-process research and
development and other acquisition related costs in fiscal 2006 consisted of
$25.7 million for the write-off of purchased in-process research and development
related to our acquisitions of Cramer and Qpass. In fiscal 2005, restructuring
charges, in-process research and development and other acquisition related costs
consisted of an $8.1 million restructuring charge related to our restructuring
plan in the fourth quarter of fiscal 2005 to allow better integration of our
acquisitions of DST Innovis and Longshine and to improve efficiency, and a
charge of $4.5 million for the write-off of purchased in-process research and
development and other costs related to our acquisition of DST Innovis.

     In-process research and development was written-off as of the closing dates
of the acquisitions, in accordance with Financial Accounting Standards Board
Interpretation No. 4, "Applicability of FASB Statement No. 2 to Business
Combinations Accounted for by the Purchase Method." The in-process research and
development had no alternative future use and had not reached technological
feasibility as of the closing date of the acquisition. The acquisition of Cramer
accounted for $17.3 million of in-process research and development during fiscal
2006, which related to the next two major releases of Cramer's current
technology, of which one was launched during the first quarter of fiscal 2007.

     Operating Income.  Despite the 21.7% increase in revenue in fiscal 2006,
operating income in fiscal 2006 was negatively affected by the inclusion of
$46.2 million of equity-based compensation expense, by the $22.3 million
increase in amortization of purchased intangible assets and by the $13.1 million
increase in restructuring charges, in-process research and development and other
acquisition related costs. In total, fiscal 2006 operating income decreased by
$6.4 million, or 1.9%, to $332.1 million from $338.5 million in fiscal 2005.

     Interest Income and Other, Net.  Interest income and other, net increased
by $19.4 million, or 87.2%, in fiscal 2006 to $41.7 million from $22.3 million
in fiscal 2005. The increase in interest income and other, net, was primarily
attributable to the increase in market interest rates on our short-term
interest-bearing investments.

     Income Taxes.  Income taxes for fiscal 2006 were $55.2 million on pretax
income of $373.9 million, which resulted in an effective tax rate of 14.8%
compared to 20% in fiscal 2005. Of the reduction in our effective tax rate, 3.0%
was attributable to an increase in lower taxed earnings from global operations
and approximately 2.2% was attributable to the net effect of acquisition-related
costs and equity-based compensation expense. Our effective tax rate may
fluctuate between quarters as a result of discrete items that may affect a
specific quarter.

     See the discussion below under the caption "Effective Tax Rate."

     Net Income.  Net income was $318.6 million in fiscal 2006, compared to net
income of $288.6 million in fiscal 2005. The increase in net income was
attributable to the overall increase in our operations, the increase in interest
income and other, net, and the decrease in our effective tax rate partially
offset by the increase in restructuring charges, in-process research and
development and other, the increase in amortization of purchased intangible
assets, and by the inclusion of equity-based compensation expense during fiscal
2006.

     Diluted Earnings Per Share.  Diluted earnings per share was $1.48 for
fiscal 2006, compared to $1.35 in fiscal 2005. The increase in diluted earnings
per share resulted primarily from the increase in net income. Please see Note 18
to the consolidated financial statements included in this Annual Report.


                                       36

<PAGE>

  FISCAL YEARS ENDED SEPTEMBER 30, 2005 AND 2004

     The following is a tabular presentation of our results of operations for
the fiscal year ended September 30, 2005, compared to the fiscal year ended
September 30, 2004. Following the table is a discussion and analysis of our
business and results of operations for these years.


<Table>
<Caption>
                                            YEAR ENDED SEPTEMBER        INCREASE
                                                    30,                (DECREASE)
                                          -----------------------   ----------------
                                             2005         2004       AMOUNT      %
                                          ----------   ----------   --------   -----
                                                    (IN THOUSANDS)
                                          ----------------------------------

<S>                                       <C>          <C>          <C>        <C>

Revenue:
  License...............................  $  100,044   $   76,586   $ 23,458    30.6%
  Service...............................   1,938,577    1,697,146    241,431    14.2
                                          ----------   ----------   --------
                                           2,038,621    1,773,732    264,889    14.9
                                          ----------   ----------   --------
Operating expenses:
  Cost of license.......................       4,083        5,022       (939)  (18.7)
  Cost of service.......................   1,291,572    1,117,810    173,762    15.5
  Research and development..............     144,457      126,407     18,050    14.3
  Selling, general and administrative...     232,066      210,384     21,682    10.3
  Amortization of purchased intangible
     assets.............................      15,356       17,909     (2,553)  (14.3)
  Restructuring charges and other.......      12,595           --     12,595      --
                                          ----------   ----------   --------
                                           1,700,129    1,477,532    222,597    15.1
                                          ----------   ----------   --------
Operating income........................     338,492      296,200     42,292    14.3
Interest income and other, net..........      22,303        4,903     17,400   354.9
                                          ----------   ----------   --------
Income before income taxes..............     360,795      301,103     59,692    19.8
Income taxes............................      72,159       66,243      5,916     8.9
                                          ----------   ----------   --------
Net income..............................  $  288,636   $  234,860   $ 53,776    22.9%
                                          ==========   ==========   ========

</Table>


     Revenue.  Total revenue increased by $264.9 million, or 14.9%, in fiscal
2005 to $2,038.6 million from $1,773.7 million in fiscal 2004. Approximately
32.0% of the increase in total revenue in fiscal 2005 was due to an increase in
business related to Managed Services customers, approximately 19.4% was
attributable to revenue contributed by DST Innovis and the remainder was
attributable to additional revenue from existing and new customers.

     License and service revenue from the sale of ICM Enabling Systems was
$1,776.5 million for fiscal 2005, an increase of $239.5 million, or 15.6%, from
fiscal 2004. Approximately 23.2% of the increase was attributable to revenues
from Managed Services customers. Approximately 21.5% of the increase was
attributable to revenue contributed by DST Innovis, and the remainder was
attributable to additional revenue from existing and new customers. License and
service revenue from the sale of ICM Enabling Systems represented 87.1% and
86.7% of our total revenue in fiscal 2005 and 2004, respectively. The demand for
our ICM Enabling Systems is primarily driven by the need for communications
service providers to continue to integrate their billing, CRM and order
management systems into Integrated Customer Management products and services.

     License and service revenue from the sale of Directory Systems was $262.1
million for fiscal 2005, an increase of $25.4 million, or 10.7%, from fiscal
2004. Approximately 88.2% of the increase in Directory Systems revenue in fiscal
2005 was attributable to an increase in business related to Managed Services
customers and the remainder was attributable to additional revenue from existing
and new customers. License and service revenue from the sale of Directory
Systems represented 12.9% and 13.3% of our total revenue in fiscal 2005 and
2004, respectively. We believe that we are a leading provider of Directory
Systems in most of the markets we serve.


                                       37

<PAGE>

     In fiscal 2005, revenue from customers in North America, Europe and the
rest of the world accounted for 68.3%, 24.0% and 7.7%, respectively, of total
revenue compared to 65.9%, 27.1% and 7.0%, respectively, for fiscal 2004.
Approximately 35.9% of the increase in revenue from customers in North America
was attributable to Managed Services agreements, approximately 21.9% of the
increase was attributable to revenue contributed by DST Innovis, and the
remainder was attributable to additional revenue from existing and new customers
in North America. Revenue from customers in Europe, in absolute amounts, was
relatively stable compared to fiscal 2004, and this resulted in a decrease as a
percentage of total revenue. The increase in revenue from customers outside of
North America and Europe was attributable to additional revenue from existing
and new customers.

     Cost of License.  Cost of license consists primarily of amortization of
purchased computer software and intellectual property rights. Such amortization
is relatively stable from period to period and, absent items that were fully
amortized or impaired, is generally fixed in amount. Therefore, an increase or
decrease in license revenue could cause a significant fluctuation in cost of
license as a percentage of license revenue. In fiscal 2005, cost of license, as
a percentage of license revenue, was 4.1% compared to 6.6% in fiscal 2004.

     Cost of Service.  Cost of service consists primarily of costs associated
with providing services to customers, including compensation expense, warranty
expense and costs of third-party products. Cost of service increased by 15.5% in
fiscal 2005 as compared to fiscal 2004. This increase in cost of service was
slightly higher than the 14.9% increase in our total revenue in fiscal 2005. As
a percentage of revenue, cost of service was 63.4% compared to 63.0% in fiscal
2004. Our gross margin may vary depending on the types and geographic locations
of projects that we undertake.

     Research and Development.  As a percentage of revenue, research and
development expense was 7.1% in fiscal 2005 and 2004. Research and development
expense increased by $18.1 million, or 14.3%, in fiscal 2005 to $144.5 million
from $126.4 million in fiscal 2004. Approximately 85.4% of the increase, in
absolute amounts, was attributable to the acquisition of DST Innovis. While we
continued to upgrade our existing systems in fiscal 2005, we also devoted
significant research and development efforts in fiscal 2005 to the integration
between our products and a unified user interface in order to enable our
customers to adopt an ICM approach. As part of these efforts, in February 2005,
we launched a comprehensive portfolio of products, which we refer to as Amdocs
6. Amdocs 6 is our pre-integrated portfolio of modular, billing, CRM, self-
service, order management, mediation and content revenue management software
products. The majority of our research and development expenditures is directed
at our ICM Enabling Systems, and the remainder to Directory Systems. We believe
that our research and development efforts are a key element of our strategy and
are essential to our success. However, an increase or a decrease in our total
revenue, would not necessarily result in a proportional increase or decrease in
the levels of our research and development expenditures, which could affect our
operating margin. Please see the discussion above under the caption "Research
and Development, Patents and Licenses."

     Selling, General and Administrative.  Selling, general and administrative
expense increased by $21.7 million, or 10.3%, in fiscal 2005 to $232.1 million
from $210.4 million in fiscal 2004. Selling, general and administrative expense
primarily consisted of compensation expense. The increase in selling, general
and administrative expense was attributable to an overall increase in our
operations, as well as to the increase in our selling and marketing efforts,
although the 10.3% increase was less than the 14.9% increase in our total
revenue.

     Amortization of Purchased Intangible Assets.  Amortization of purchased
intangible assets for fiscal 2005 was $15.4 million, compared to $17.9 million
in fiscal 2004. The decrease in amortization of purchased intangible assets was
due to purchased intangible assets that were fully amortized in fiscal 2004 and
in the first three months of fiscal 2005 offset by $5.4 million in amortization
of purchased intangible assets acquired in the DST Innovis and Longshine
acquisitions.

     Restructuring Charges, In-Process Research and Development and Other
Acquisition Related Costs.  Restructuring charges, in-process research and
development and other acquisition related costs in fiscal 2005 consisted of an
$8.1 million restructuring charge related to our restructuring plan in the
fourth quarter of fiscal

                                       38

<PAGE>

2005, and a charge of $4.5 million for the write-off of purchased in-process
research and development and other costs related to our acquisition of DST
Innovis.

     Operating Income.  Operating income increased by $42.3 million, or 14.3%,
in fiscal 2005, to $338.5 million, from $296.2 million in fiscal 2004. Operating
income in fiscal 2005 was negatively affected by $12.6 million in restructuring
charges, in-process research and development and other and by the slight
increase of cost of service as a percentage of revenue. These negative effects
were partially offset by the decrease, as a percentage of revenue, in selling,
general and administrative expense.

     Interest Income and Other, Net.  Interest income and other, net increased
by $17.4 million, or 354.9%, in fiscal 2005 to $22.3 million from $4.9 million
in fiscal 2004. The increase in interest income and other, net, was primarily
attributable to the increase in market interest rates on our short-term
interest-bearing investments, and to the decrease in our interest expense due to
our June 2004 redemption of our 2% Convertible Notes, due 2008, which we refer
to as our 2% Notes, partially offset by interest expense on our 0.50%
Convertible Senior Notes due 2024, or our 0.50% Notes, which we issued in March
2004.

     Income Taxes.  Income taxes for fiscal 2005 were $72.2 million on pretax
income of $360.8 million, which resulted in an effective tax rate of 20%
compared to 22% in fiscal 2004. Our effective tax rate is dependent on the
corporate income tax rates in the various countries in which we operate and the
relative magnitude of our business in those countries. The reduction in our
effective tax rate in fiscal 2005 was due to our continued expansion into
countries with lower income tax rates. See the discussion below under the
caption "Effective Tax Rate."

     Net Income.  Net income was $288.6 million in fiscal 2005, compared to net
income of $234.9 million in fiscal 2004. The increase in net income was
attributable to the 14.3% increase in our operating income, the increase in
interest income and other, net and the decrease in our effective tax rate during
fiscal 2005.

     Diluted Earnings Per Share.  Diluted earnings per share was $1.35 for
fiscal 2005, compared to $1.08 in fiscal 2004. The increase in diluted earnings
per share resulted from the increase in net income and from the reduction in
diluted weighted average number of shares outstanding due to our share
repurchases during fiscal 2004 and 2005, partially offset by the dilutive effect
of our convertible notes. Please see Note 18 to the consolidated financial
statements included in this Annual Report.

LIQUIDITY AND CAPITAL RESOURCES

     Cash, cash equivalents and short-term interest-bearing investments totaled
$979.4 million as of September 30, 2006, compared to $1,145.6 million as of
September 30, 2005. The decrease during fiscal 2006 is attributable to the use
of approximately $624.8 million in net cash paid in connection with our Cramer
and Qpass acquisitions and approximately $80.7 million for capital expenditures,
partially offset by $429.2 million in positive cash flows from operations and
$106.9 million in proceeds from the exercise of employee stock options. Net cash
provided by operating activities amounted to $429.2 million for fiscal 2006 and
$381.8 million for fiscal 2005. We currently intend to retain our future
operating cash flows to support the further expansion of our business, including
by acquisitions.

     Our policy is to retain substantial cash balances in order to support the
growth of the Company. We believe that our current cash balances, cash generated
from operations and our current lines of credit will provide sufficient
resources to meet our operational needs for at least the next fiscal year.

     In March 2004, we issued $450.0 million aggregate principal amount of our
0.50% Notes through a private placement to qualified institutional buyers
pursuant to Rule 144A under the Securities Act. We used the net proceeds and
additional cash resources to retire $400.2 million of outstanding debt. We also
used approximately $170.1 million of the net proceeds from the sale of the 0.50%
Notes to repurchase approximately 6.1 million ordinary shares sold short by
purchasers of the 0.50% Notes in negotiated transactions concurrently with the
offering. As of September 30, 2006, $450.0 million aggregate principal amount of
our 0.50% Notes were outstanding.


                                       39

<PAGE>

     As of September 30, 2006, we had available short-term general revolving
lines of credit totaling $30.9 million, none of which was outstanding. In
addition, as of September 30, 2006, we had outstanding letters of credit and
bank guarantees from various banks totaling $8.7 million.

     As of September 30, 2006, we had outstanding short-term loans of $1.7
million, which are secured by specified pledges and guaranties.

     The following table summarizes our contractual obligations as of September
30, 2006, and the effect such obligations are expected to have on our liquidity
and cash flows in future periods (in millions):


<Table>
<Caption>
                                                        CASH PAYMENTS DUE BY PERIOD
                                               --------------------------------------------
                                                        LESS THAN     1-3     4-5    OVER 5
CONTRACTUAL OBLIGATIONS                         TOTAL     1 YEAR     YEARS   YEARS    YEARS
-----------------------                        ------   ---------   ------   -----   ------

<S>                                            <C>      <C>         <C>      <C>     <C>

Convertible notes............................  $455.8     $ 2.4     $453.4   $  --    $  --
Financing arrangements.......................     1.7       1.7         --      --       --
Pension funding..............................    19.9       1.9        5.4     3.9      8.7
Non-cancelable operating leases..............   293.9      72.8      147.7    48.7     24.7
                                               ------     -----     ------   -----    -----
                                               $771.3     $78.8     $606.5   $52.6    $33.4
                                               ======     =====     ======   =====    =====

</Table>


     Our capital expenditures were approximately $80.7 million in fiscal 2006.
Approximately 80% of these expenditures consisted of purchases of computer
equipment with the remainder attributable mainly to leasehold improvements. Our
policy is to fund our capital expenditures principally from operating cash flows
and we do not anticipate any changes to this policy in the foreseeable future.

     From time to time, we have engaged in share repurchase programs in which we
repurchase our shares in the open market or privately negotiated transactions
and at times and prices we deem appropriate. During fiscal 2004, we purchased
approximately 9.9 million of our ordinary shares at a weighted average price of
$22.64 per share. In December 2004, we extended our share repurchase program for
the additional repurchase of up to $100.0 million of our ordinary shares. In
accordance with this extension, we repurchased in fiscal 2005 approximately 3.5
million ordinary shares, at an average price of $28.33 per share and an
aggregate purchase price of approximately $100.0 million.

NET DEFERRED TAX ASSETS

     As of September 30, 2006, deferred tax assets of $29.3 million, derived
from net capital and operating loss carry forwards related to some of our
subsidiaries, were offset by valuation allowances due to the uncertainty of the
realizing any tax benefit for such losses. When realization of the tax benefits
associated with such net capital and operating losses is deemed more likely than
not, the valuation allowance will be released through income taxes or through
goodwill.

EFFECTIVE TAX RATE

     Our effective tax rate for fiscal year 2006 was 14.8%, compared to 20% in
fiscal 2005. Our effective tax rate depends on the corporate income tax rates in
the various countries in which we operate and the relative magnitude of our
business in those countries. We expect our effective tax rate in fiscal 2007 to
be between 14% and 16%.

CRITICAL ACCOUNTING POLICIES

     Our discussion and analysis of our consolidated financial condition and
results of operations are based upon our consolidated financial statements,
which have been prepared in accordance with U.S. generally accepted accounting
principles. The preparation of these financial statements requires us to make
estimates, assumptions and judgments that affect the reported amounts of assets,
liabilities, revenue and expenses, and related disclosure of contingent
liabilities. On a regular basis, we evaluate and may revise our estimates. We
base our estimates on historical experience and various other assumptions that
we believe to be reasonable under the circumstances, the results of which form
the basis for making judgments about the carrying values

                                       40

<PAGE>

of assets and liabilities that are not readily apparent. Actual results could
differ materially from the estimates under different assumptions or conditions.

     We believe that the estimates, assumptions and judgments involved in the
accounting policies described below have the greatest potential impact on our
financial statements, so we consider these to be our critical accounting
policies. These policies require that we make estimates in the preparation of
our financial statements as of a given date. Our critical accounting policies
are as follows:

     - Revenue recognition and contract accounting

     - Tax accounting

     - Business combinations

     - Equity-based compensation expense

     - Goodwill and intangible assets

     - Derivative and hedge accounting

     - Realizability of long-lived assets

     - Accounts receivable reserves

     Below, we discuss these policies further, as well as the estimates and
judgments involved. We also have other key accounting policies. We believe that,
compared to the critical accounting policies listed above, the other policies
either do not generally require us to make estimates and judgments that are as
difficult or as subjective, or it is less likely that they would have a material
impact on our reported consolidated results of operations for a given period.

  REVENUE RECOGNITION AND CONTRACT ACCOUNTING

     We derive our revenue principally from:

     - the initial sales of licenses to use our products and related services,
       including modification, implementation and integration services,

     - providing Managed Services and other related services for our solutions,
       and

     - recurring revenue from ongoing support and maintenance provided to our
       customers, and from incremental license fees resulting from increases in
       a customer's business volume.

     Revenue is recognized only when all of the following conditions have been
met: (i) there is persuasive evidence of an arrangement; (ii) delivery has
occurred; (iii) the fee is fixed and determinable; and (iv) collectability of
the fee is reasonably assured. We usually sell our software licenses as part of
an overall solution offered to a customer that combines the sale of software
licenses with a broad range of services, which normally include significant
customization, modification, implementation and integration. As a result, we
generally recognize combined license and service revenue over the course of
these long-term projects, using the percentage of completion method of
accounting. Initial license fee revenue is recognized as work is performed,
using the percentage of completion method of accounting. Subsequent license fee
revenue is recognized upon completion of specified conditions in each contract,
based on a customer's subscriber or transaction volume or other measurements
when greater than the level specified in the contract for the initial license
fee. Service revenue that involves significant ongoing obligations, including
fees for software customization, implementation and modification, also is
recognized as work is performed, under the percentage of completion method of
accounting. Revenue from software solutions that do not require significant
customization and modification is recognized upon delivery or as services are
provided. In Managed Services contracts, we typically recognize revenue from the
operation of a customer's system as services are performed based on time
elapsed, output produced or volume of data processed, depending on the specific
contract terms of the Managed Services arrangement. Typically, Managed Services
contracts are long-term in duration and are not subject to seasonality. Revenue
from ongoing support services is recognized

                                       41

<PAGE>

as work is performed. Revenue from third-party hardware sales is recognized upon
delivery and installation, and revenue from third-party software sales is
recognized upon delivery. Maintenance revenue is recognized ratably over the
term of the maintenance agreement. A significant portion of our revenue is
recognized over the course of long-term projects under the percentage of
completion method of accounting. The percentage of completion method requires
the exercise of judgment, such as with respect to estimations of progress-to-
completion, contract revenue, loss contracts and contract costs. Progress in
completing such projects may significantly affect our annual and quarterly
operating results.

     We follow very specific and detailed guidelines, several of which are
discussed above, in measuring revenue; however, certain judgments affect the
application of our revenue recognition policy.

     Our revenue recognition policy takes into consideration the
creditworthiness and past transaction history of each customer in determining
the probability of collection as a criterion of revenue recognition. This
determination requires the exercise of judgment, which affects our revenue
recognition. If we determine that collection of a fee is not reasonably assured,
we defer the revenue recognition until the time collection becomes reasonably
assured, which is generally upon receipt of cash.

     For arrangements with multiple deliverables, we allocate revenue to each
component based upon its relative fair value, which is determined in reliance on
the specific objective evidence for that element. Such determination is
judgmental and for most contracts is based on normal pricing and discounting
practices for those elements in similar arrangements.

     Revenue from third-party hardware and software sales is recorded at a gross
or net amount according to certain indicators. The application of these
indicators for gross and net reporting of revenue depends on the relative facts
and circumstances of each sale and requires significant judgment.

     See Note 2 to the consolidated financial statements included in this
document for further information.

  TAX ACCOUNTING

     As part of the process of preparing our consolidated financial statements,
we are required to estimate our income tax expense in each of the jurisdictions
in which we operate. In the ordinary course of a global business, there are many
transactions and calculations where the ultimate tax outcome is uncertain. Some
of these uncertainties arise as a consequence of revenue sharing and
reimbursement arrangements among related entities, the process of identifying
items of revenue and expenses that qualify for preferential tax treatment and
segregation of foreign and domestic income and expense to avoid double taxation.
This process involves us estimating our current tax exposure, which is accrued
as taxes payable, together with assessing temporary differences resulting from
differing treatment of items, such as deferred revenue, for tax and accounting
differences. These differences result in deferred tax assets and liabilities,
which are included within our consolidated balance sheet. We may record a
valuation allowance to reduce our deferred tax assets to the amount of future
tax benefit that is more likely than not to be realized.

     Although we believe that our estimates are reasonable and that we have
considered future taxable income and ongoing prudent and feasible tax strategies
in estimating our tax outcome and in assessing the need for the valuation
allowance, there is no assurance that the final tax outcome and the valuation
allowance will not be different than those that are reflected in our historical
income tax provisions and accruals. Such differences could have a material
effect on our income tax provision, net income and cash balances in the period
in which such determination is made.

     We have filed or are in the process of filing federal, state and foreign
tax returns that are subject to audit by the respective tax authorities.
Although the ultimate outcome is unknown, we believe that adequate amounts have
been provided for and any adjustments that may result from tax return audits are
not likely to have a material, adverse effect on our consolidated results of
operations, financial condition or cash flows.


                                       42

<PAGE>

  BUSINESS COMBINATIONS

     In accordance with business combination accounting, we allocate the
purchase price of acquired companies to the tangible and intangible assets
acquired and liabilities assumed, as well as to in-process research and
development based on their estimated fair values. We engage third-party
appraisal firms to assist management in determining the fair values of certain
assets acquired and liabilities assumed. Such valuations require management to
make significant estimates and assumptions, especially with respect to
intangible assets.

     Management makes estimates of fair value based upon assumptions believed to
be reasonable. These estimates are based on historical experience and
information obtained from the management of the acquired companies and are
inherently uncertain. Critical estimates in valuing certain assets acquired and
liabilities assumed include but are not limited to: future expected cash flows
from license and service sales, maintenance and hosting agreements, customer
contracts and acquired developed technologies, expected costs to develop the in-
process research and development into commercially viable products and estimated
cash flows from the projects when completed, the acquired company's brand
awareness and discount rate. Unanticipated events and circumstances may occur
that may affect the accuracy or validity of such assumptions, estimates or
actual results.

  EQUITY-BASED COMPENSATION EXPENSE

     We account for equity-based compensation in accordance with SFAS No.
123(R), Share-Based Payment. Under the fair value recognition provisions of this
statement, share-based compensation cost is measured at the grant date based on
the value of the award and is recognized as expense over the requisite service
periods. Determining the fair value of share-based awards at the grant date
requires the exercise of judgment. In addition, the exercise of judgment is also
required in estimating the amount of share-based awards that are expected to be
forfeited. If actual results differ significantly from these estimates, equity-
based compensation expense and our results of operations could be materially
impacted. Please see further discussion below under the caption "Adoption of New
Accounting Standard."

  GOODWILL AND INTANGIBLE ASSETS

     We follow SFAS No. 142, "Goodwill and Other Intangible Assets." Under SFAS
No. 142, goodwill and intangible assets deemed to have indefinite lives are no
longer amortized but are subject to periodic impairment tests in accordance with
the Statement. Goodwill impairment is deemed to exist if the net book value of a
reporting unit exceeds its estimated fair value. The total purchase price of
business acquisitions accounted for using the purchase method is allocated first
to identifiable assets and liabilities based on estimated fair values. The
excess of the purchase price over the fair value of net assets of purchased
businesses is recorded as goodwill.

     We perform an annual impairment test during the fourth quarter of each
fiscal year, or more frequently if impairment indicators are present. We operate
in one operating segment, and this segment comprises our only reporting unit. In
calculating the fair value of the reporting unit, we used a discounted cash flow
methodology. There was no impairment of goodwill upon adoption of SFAS No. 142
and there was no impairment at the annual impairment test date.

  DERIVATIVE AND HEDGE ACCOUNTING

     Approximately 70% to 80% of our revenue and 50% to 60% of our operating
expenses are denominated in U.S. dollar or linked to the U.S. dollar. We enter
into foreign exchange forward contracts and options to hedge a significant
portion of our foreign currency exposure to lower fluctuations in revenue and
expenses. The majority of our hedging arrangements are classified as cash flow
hedges. Accordingly, changes in the fair value of these forward exchange
contracts and options are recorded in other comprehensive income (loss). We
estimate the fair value of such derivative contracts by reference to forward and
spot rates quoted in active markets.


                                       43

<PAGE>

     Establishing and accounting for foreign exchange contracts involve
judgments, such as determining the nature of the exposure, assessing its amount
and timing, and evaluating the effectiveness of the hedging arrangement.

     Although we believe that our estimates are accurate and meet the
requirement of hedge accounting, actual results differ from these estimates, and
such difference could cause fluctuation of our recorded revenue and expenses.

  REALIZABILITY OF LONG-LIVED ASSETS

     We are required to assess the impairment of long-lived assets, other than
goodwill, tangible and intangible under SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," on a periodic basis, and if events
or changes in circumstances indicate that the carrying value may not be
recoverable. Impairment indicators include any significant changes in the manner
of our use of the assets or the strategy of our overall business, significant
negative industry or economic trends and significant decline in our share price
for a sustained period.

     Upon determination that the carrying value of a long-lived asset may not be
recoverable based upon a comparison of fair value to the carrying amount of the
asset, an impairment charge is recorded. We measure fair value using an
undiscounted projected future cash flow.

  ACCOUNTS RECEIVABLE RESERVES

     The allowance for doubtful accounts is for estimated losses resulting from
the inability of our customers to make required payments. We evaluate accounts
receivable to determine if they will ultimately be collected. In performing this
evaluation, significant judgments and estimates are involved, such as past
experience, credit quality of the customer, age of the receivable balance and
current economic conditions that may affect a customer's ability to pay. If
collection is not reasonably assured at the time the transaction is consummated,
we do not recognize revenue until collection becomes reasonably assured. If the
financial condition of our customers were to deteriorate, resulting in an
impairment of their ability to make payments, additional allowances may be
required. The allowance for doubtful accounts is established either through a
charge to selling, general and administrative expenses or as a reduction to
revenue.

     Within the context of these critical accounting policies, we are not
currently aware of any reasonably likely events or circumstances that would
result in materially different amounts being reported.

ADOPTION OF NEW ACCOUNTING STANDARD

  ACCOUNTING FOR EQUITY-BASED COMPENSATION

     Effective October 1, 2005, we adopted FASB Statement No. 123 (revised
2004), "Share-Based Payment," a revision of SFAS No. 123 ("SFAS 123(R)"). SFAS
123(R) supersedes Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB No. 25") and related
interpretations, and amends FASB Statement No. 95, "Statement of Cash Flows."
Generally, the approach in SFAS 123(R) is similar to the approach described in
SFAS 123. However, SFAS 123(R) requires all equity-based payments to employees,
including grants of employee stock options, to be recognized in the income
statement based on their fair values. Pro forma disclosure is no longer an
alternative. In March 2005, the U.S. Securities and Exchange Commission, or the
SEC, issued Staff Accounting Bulletin No. 107 ("SAB 107"), which provides
supplemental implementation guidance on SFAS 123(R). We have applied the
provisions of SAB 107 in our adoption of SFAS 123(R). Prior to October 1, 2005,
we accounted for equity-based payments to employees under the recognition and
measurement provisions of APB No. 25. Equity-based compensation expense
recognized under SFAS 123(R) for fiscal 2006 was $46.2 million.

     As of September 30, 2006, there was $63.5 million of unrecognized
compensation expense related to nonvested stock options and nonvested restricted
stock awards. We recognize compensation costs using the graded vesting
attribution method which results in a weighted average period of approximately
one year over which the unrecognized compensation expense is expected to be
recognized.


                                       44

<PAGE>

     We adopted SFAS 123(R) using the modified prospective method. Under this
transition method, compensation costs recognized in fiscal 2006 include (a)
compensation costs for all stock-based payments granted prior to, but that had
not yet vested as of, October 1, 2005, based on the grant date fair value
estimated in accordance with the pro forma provisions of SFAS 123, and (b)
compensation costs for the equity-based payments granted subsequent to October
1, 2005, based on the grant date fair value estimated in accordance with SFAS
123(R). Our consolidated financial statements for prior periods have not been
restated to reflect, and do not include, the impact of SFAS 123(R). We selected
the Black-Scholes option pricing model as the most appropriate fair value method
for our stock-options awards and value restricted stock based on the market
value of the underlying shares at the date of grant. We recognize compensation
costs using the graded vesting attribution method that results in an accelerated
recognition of compensation costs in comparison to the straight line method.

     As a result of adopting SFAS 123(R) on October 1, 2005, our income before
income taxes for fiscal 2006 (not including restricted stock expense) was $40.4
million lower than if we had continued to account for equity-based compensation
under APB No. 25. Net income for fiscal 2006 (not including restricted stock
expense) was $35.7 million lower than if we had continued to account for equity-
based compensation under APB No. 25. Basic earnings per share for fiscal 2006
was $0.17 lower than if we had continued to account for equity-based
compensation under APB No. 25. Diluted earnings per share for fiscal 2006 was
$0.15 lower than if we had continued to account for equity-based compensation
under APB No. 25.

     Prior to the adoption of SFAS 123(R), we presented all tax benefits of
deductions resulting from the exercise of stock options as operating cash flows
in the statement of cash flows. SFAS 123(R) requires the cash flows resulting
from the tax deductions in excess of the compensation costs recognized for those
stock options to be classified as financing cash flows. The $0.7 million excess
tax benefit classified as financing cash inflows would have been classified as
an operating cash inflow if we had not adopted SFAS 123(R).

     We use a combination of implied volatility of the Company's traded options
and historical stock price volatility ("blended volatility") as the expected
volatility assumption required in the Black-Scholes option valuation model.
Prior to October 1, 2005, we had used our historical stock price volatility in
accordance with SFAS 123 for purpose of presenting pro forma information. The
selection of the blended volatility approach was based upon the availability of
traded options on our shares and our assessment that blended volatility is more
representative of future share price trends than historical volatility. As
equity-based compensation expense recognized in the Consolidated Statement of
Operations for fiscal 2006 is based on awards ultimately expected to vest, it
has been reduced for estimated forfeitures. SFAS 123(R) requires forfeitures to
be estimated at the time of grant and revised, if necessary, in subsequent
periods if actual forfeitures differ from those estimates. In our pro forma
information required under SFAS 123 for the periods prior to fiscal 2006, we
accounted for forfeitures as they occurred.

RECENT ACCOUNTING PRONOUNCEMENTS

     In September 2006, the Financial Accounting Standards Board (FASB) issued
Statement No. 158, "Employers' Accounting for Defined Benefit Pension and Other
Postretirement Plans," an amendment of FASB Statements No. 87, 88, 106 and
132(R) ("SFAS 158"). SFAS 158 requires an entity to recognize in its statement
of financial position an asset for a defined benefit postretirement plan's
overfunded status or a liability for a plan's underfunded status, measure a
defined benefit postretirement plan's assets and obligations that determine its
funded status as of the end of the employer's fiscal year, and recognize changes
in the funded status of a defined benefit postretirement plan in comprehensive
income in the year in which the changes occur.

     SFAS 158 does not change the amount of net periodic benefit cost included
in net income or address the various measurement issues associated with
postretirement benefit plan accounting. The requirement to recognize the funded
status of a defined benefit postretirement plan and the disclosure requirements
are effective for fiscal years ending after December 15, 2006. The requirement
to measure plan assets and benefit obligations as of the date of the employer's
fiscal year-end statement of financial position is effective for fiscal

                                       45

<PAGE>

years ending after December 15, 2008. We are currently evaluating the effect
that the application of SFAS 158 will have on our consolidated results of
operations and financial condition.

     In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements"
("SFAS 157"). SFAS No. 157 defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles (GAAP), and
expands disclosures about fair value measurements. SFAS No. 157 applies under
other accounting pronouncements that require or permit fair value measurements.
SFAS 157 will be effective for fiscal years beginning after November 15, 2007,
and interim periods within those fiscal years. We are currently evaluating the
effect that the application of SFAS 157 will have on our consolidated results of
operations and financial condition.

     In September 2006, the SEC issued Staff Accounting Bulletin No. 108,
"Financial Statements -- Considering the Effects of Prior Year Misstatements
when Quantifying Misstatements in Current Year Financial Statements" ("SAB
108"). SAB 108 requires companies to quantify the impact of all correcting
misstatements, including both the carryover and reversing effects of prior year
misstatements, on the current year financial statements. SAB 108 is effective
for fiscal years ending after November 15, 2006. We do not believe SAB 108 will
have a material effect on our financial statements and related disclosures.

     In June 2006, the FASB issued Interpretation No. 48, "Accounting for
Uncertainty in Income Taxes," An Interpretation of SFAS No. 109, ("FIN 48"). FIN
48 clarifies the accounting for uncertainty in income taxes recognized in an
enterprise's financial statements in accordance with SFAS No. 109, Accounting
for Income Taxes. FIN 48 also prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return that results in a tax
benefit. Additionally, FIN 48 provides guidance on de-recognition, income
statement classification of interest and penalties, accounting in interim
periods, disclosure, and transition. This interpretation is effective for fiscal
years beginning after December 15, 2006. We are currently evaluating the effect
that the application of FIN 48 will have on our consolidated results of
operations and financial condition.

     In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain
Hybrid Financial Instruments," an amendment of FASB Statement No. 133 and 140
("FAS 155"), which permits fair value measurement for any hybrid financial
instrument that contains an embedded derivative that otherwise would require
bifurcation, with changes in fair value recognized in earnings. The fair-value
election will eliminate the need to separately recognize certain derivatives
embedded in hybrid financial instruments under FASB Statement No. 133,
Accounting for Derivative Instruments and Hedging Activities. We are currently
evaluating the effect of SFAS 155, which is effective for all financial
instruments acquired or issued after the beginning of the first fiscal year that
begins after September 15, 2006.

ITEM 6.  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

DIRECTORS AND SENIOR MANAGEMENT

     We rely on the executive officers of our principal 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.


                                       46

<PAGE>

     As of November 30, 2006, our directors, senior managers and key employees
upon whose work we are dependent were as follows:


<Table>
<Caption>
NAME                        AGE                   POSITION
----                        ---                   --------

<S>                         <C>     <C>

Bruce K. Anderson(2)(4)..   66      Chairman of the Board, Amdocs Limited
Adrian Gardner(1)(3).....   44      Director and Chairman of the Audit
                                      Committee, Amdocs Limited
Charles E. Foster(1)(3)..   70      Director and Chairman of the
                                      Nominating and Corporate Governance
                                      Committee, Amdocs Limited
James S. Kahan(2)(3)(4)..   59      Director and Chairman of the
                                      Compensation Committee, Amdocs
                                      Limited
Julian A. Brodsky(3).....   73      Director, Amdocs Limited
Nehemia Lemelbaum(4).....   64      Director, Amdocs Limited
John T. McLennan(1)......   61      Director, Amdocs Limited
Robert A.                   54
  Minicucci(2)(4)........           Director, Amdocs Limited
Simon Olswang(1).........   63      Director, Amdocs Limited
Mario Segal(3)...........   59      Director, Amdocs Limited
Joseph Vardi.............   64      Director, Amdocs Limited
Dov Baharav(4)...........   56      Director, Amdocs Limited; President
                                      and Chief Executive Officer, Amdocs
                                      Management Limited
Eli Gelman...............   48      Director, Amdocs Limited; Executive
                                      Vice President and Chief Operating
                                      Officer, Amdocs Management Limited
Ron Moskovitz............   43      Senior Vice President and Chief
                                      Financial Officer, Amdocs Management
                                      Limited
Harel Kodesh.............   48      Senior Vice President and Chief
                                      Products Officer, Amdocs Management
                                      Limited
Michael Matthews.........   50      Senior Vice President and Chief
                                      Marketing Officer, Amdocs Management
                                      Limited
Thomas G. O'Brien........   46      Treasurer and Secretary, Amdocs
                                      Limited
Spyros Christodoulides...   45      Managing Director, Amdocs Development
                                      Limited
</Table>


--------

   (1) Member of the Audit Committee

   (2) Member of the Compensation Committee

   (3) Member of the Nominating and Corporate Governance Committee

   (4) Member of the Executive Committee

     Bruce K. Anderson has been Chairman of the Board of Directors of Amdocs
since September 1997. Since August 1978, Mr. Anderson has been a general partner
of Welsh, Carson, Anderson & Stowe ("WCAS"), an investment firm that specializes
in the acquisition of companies in the information and business services and
health care industries. Until September 2003, investment partnerships affiliated
with WCAS had been among our largest shareholders. 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
Alliance Data Systems, Inc., a publicly held company that provides transaction,
credit and marketing services to large consumer based businesses.

     Adrian Gardner has been a director of Amdocs since April 1998 and is
Chairman of the Audit Committee. Mr. Gardner is the Chief Financial Officer and
a director of ProStrakan Group plc, a

                                       47

<PAGE>

pharmaceuticals company based in the United Kingdom and listed on the London
Stock Exchange, which he joined in April 2002. Prior to joining ProStrakan, he
was a Managing Director of Lazard LLC, based in London, where he worked with
technology- and telecommunications-related companies. Prior to joining Lazard in
1989, Mr. Gardner qualified as a chartered accountant with Price Waterhouse (now
PricewaterhouseCoopers). Mr. Gardner is a member of the Institute of Chartered
Accountants in England & Wales.

     Charles E. Foster has been a director of Amdocs since December 2001 and is
Chairman of the Nominating and Corporate Governance Committee. He was Chairman
of the Board of Prodigy Communications Corporation from June until November
2001. From April 1997 until June 2001, Mr. Foster served as Group President of
SBC, where he was responsible, at various times, for engineering, network,
centralized services, marketing and operations, information systems,
procurement, treasury, international operations, wireless services, merger
integration, real estate, yellow pages and cable TV operations. On November 18,
2005, SBC acquired AT&T Corp. and became AT&T Inc., which we refer to as AT&T.
AT&T, together with its affiliates, holds 5.2% of our outstanding ordinary
shares and is a significant customer of ours. Mr. Foster serves as trustee of
the Southwest Foundation for Bio-Medical Research, a non-profit research
institute. Mr. Foster is a member of the Texas Society of Professional Engineers
and a director of Morningside Ministries, a non-profit operator of nursing homes
in the San Antonio area.

     James S. Kahan has been a director of Amdocs since April 1998 and is
Chairman of the Compensation Committee. Since 1983, he has worked at SBC, which
is now known as AT&T, and currently serves as a Senior Executive Vice President,
a position he has held since 1992. AT&T, together with its affiliates, holds
5.2% of our outstanding ordinary shares and is a significant customer of ours.
Prior to joining AT&T, Mr. Kahan held various positions at several
telecommunications companies, including Western Electric, Bell Laboratories,
South Central Bell and AT&T Corp.

     Julian A. Brodsky has been a director of Amdocs since July 2003. Mr.
Brodsky has served as a director and as Vice Chairman of Comcast Corporation for
more than five years. Prior to November 2002, he served as a director and Vice
Chairman of Comcast Holdings for more than five years. For five years prior to
May 2004, Mr. Brodsky was Chairman of Comcast Interactive Capital, LP, a venture
fund affiliated with Comcast. He is also a director of RBB Fund, Inc.

     Nehemia Lemelbaum has been a director of Amdocs since December 2001 and was
a Senior Vice President of Amdocs Management Limited from 1985 until January
2005. He joined Amdocs in 1985, with initial responsibility for U.S. operations.
Mr. Lemelbaum led our development of graphic products for the yellow pages
industry and later led our development of customer care and billing systems, as
well as our penetration into that market. Prior to joining Amdocs, he served for
nine years with Contahal Ltd., a leading Israeli software company, 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 (the
organization that predated Bezeq, the Israel Telecommunication Corp. Ltd.), with
responsibility for computer technology in the area of business data processing.

     John T. McLennan has been a director of Amdocs since November 1999. From
May 2000 until June 2004, he served as Vice-Chair and Chief Executive Officer of
Allstream (formerly AT&T Canada). Mr. McLennan founded and was the President of
Jenmark Consulting Inc. from 1997 until May 2000. From 1993 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 is
also a director of Manitoba Telephone Systems, Air Canada Enterprises, Emera
Inc., a Canadian publicly held energy services company, Hummingbird Ltd., a
Canadian publicly held enterprise management software company, Medisys Health
Group Inc., a Canadian publicly held health services company, and several other
private software and communication companies.

     Robert A. Minicucci has been 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

                                       48

<PAGE>

American Express Company. He served for twelve years with Lehman Brothers (and
its predecessors) until his resignation as a Managing Director in 1991. Mr.
Minicucci is also a director of Alliance Data Systems, Inc., a publicly held
company, and several private companies.

     Simon Olswang has been a director of Amdocs since November 2004. In 2002,
Mr. Olswang retired as Chairman of Olswang, a media and communications law firm
in the United Kingdom that he founded in 1981. He is a member of the Boards of
Directors of The British Library, DIC Entertainment Corporation and the British
Screen Advisory Council, and he has served as a non-executive director of a
number of companies and organizations, including Aegis Group plc, The Press
Association and the British Film Institute. Mr. Olswang serves as Chairman of
Governors of Langdon College of Further (Special) Education in Salford, of which
he is a co-founder and trustee.

     Mario Segal has been a director of Amdocs since December 2001 and served as
a Senior Vice President and the Chief Operating Officer of Amdocs Management
Limited from 1995 until July 2002. He joined Amdocs in 1984 as Senior Vice
President and was a leading member of the team that developed our directory
automation systems and our customer care and billing systems platform. Prior to
joining Amdocs, Mr. Segal was 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.

     Joseph Vardi has been a director of Amdocs since November 2006. He co-
founded numerous technology and other companies, including Advanced Technology
Ltd, International Technologies Lasers Ltd and Contigo Mobility Inc. In 1998,
Dr. Vardi served as chairman of Mirabilis Ltd., which created ICQ, the first
internet-wide instant messaging application, and which was acquired by America
Online Inc in 1998. Dr. Vardi has served as an advisor to AOL since 1999. From
2003 to 2005, Dr. Vardi served as an advisor to Amazon Inc. Since May 2006, he
has served as an advisor to Commtouch Software Ltd., an email security company,
and since April 2006, he has served as an advisor to RichFX Inc, a rich media
merchandising company. From 1970 to 1974, Dr. Vardi was Director General of the
Israeli Ministry of Development, and from 1977 to 1979, he was Director General
of the Ministry of Energy and the chairman of the Israeli National Oil Company.
From 1971 to 1974 he was chairman of Israel Chemicals LTD., Israel's largest
natural resources company. Dr. Vardi has served on the boards of numerous
government and private corporations, including the advisory board of the Central
Bank of Israel, Israel Electric Corp., Bezeq, Scitex and Israel Oil Refineries
LTD.

     Dov Baharav has been a director of Amdocs and the President and Chief
Executive Officer of Amdocs Management Limited, our wholly owned subsidiary,
since July 2002. Mr. Baharav has overall coordination responsibilities for the
operations and activities of our operating subsidiaries. In 1991, Mr. Baharav
joined Amdocs Inc., our principal wholly owned U.S. subsidiary, serving as its
Vice President and then President in St. Louis, Missouri until 1995. From 1995
until July 2002, Mr. Baharav was a Senior Vice President and the Chief Financial
Officer of Amdocs Management Limited. Prior to joining Amdocs, Mr. Baharav
served as Chief Operating Officer of Optrotech Ltd., a publicly held company
that develops, manufactures and markets electro-optical devices.

     Eli Gelman has been a director of Amdocs and the Executive Vice President
of Amdocs Management Limited since July 2002 and its Chief Operating Officer
since October 2006. Mr. Gelman has more than 28 years of experience in the
software industry, including the last 17 years with Amdocs. Prior to his current
position, he was a division president, where he headed our United States sales
and marketing operations and helped spearhead our entry into the customer care
and billing systems market. Before that, Mr. Gelman was an account manager for
our major European and North American installations, and has led several major
software development projects. Before joining Amdocs, Mr. Gelman was involved in
the development of real-time software systems for communications networks.

     Ron Moskovitz has been Senior Vice President and the Chief Financial
Officer of Amdocs Management Limited since July 2002, and has overall
responsibility for the financial reporting, treasury, planning and control,
operations and investor relationsof our operating subsidiaries. Mr. Moskovitz
joined Amdocs in 1998 and served until July 2002 as Vice President of Finance.
He has been responsible for the Company's financial organization, and was
involved in Amdocs' initial public offering, merger and acquisition activities
and various other financial operations. Prior to joining Amdocs, Mr. Moskovitz
served in various senior financial

                                       49

<PAGE>

positions with Tower Semiconductor, a publicly held semiconductor manufacturer.
Mr. Moskovitz is a Certified Public Accountant (Isr) and holds an MBA degree.

     Harel Kodesh has been the Chief Products Officer of Amdocs Management
Limited since 2003. Mr. Kodesh oversees Amdocs' product activities and is
responsible for the company's technological vision and execution. From 2000
until 2003, Mr. Kodesh served as president and chief executive officer of
Wingcast LLC, a joint venture between Qualcomm Inc. and Ford Motor Company
formed to offer telecommunications and other technology services for vehicles.
Between 1990 and 2000, Mr. Kodesh held executive positions at Microsoft Corp.,
where he served from 1998 until 2000 as vice president of its information
appliances division.

     Michael Matthews has been with Amdocs since February 2003 and is the Chief
Marketing Officer of Amdocs Management Limited. He has more than twenty-five
years experience across a broad spectrum of disciplines in high technology
companies. From 1999 until February 2003, he was an early investor, strategist
and operating executive at Groove Networks, a privately held start-up technology
company. From 1996 through 1999, Mr. Matthews was executive vice president,
worldwide marketing for PLATINUM Technology Inc., a database management company
that has since been acquired by Computer Associates International Inc. Mr.
Matthews began his career in Australia selling computers for NCR Corporation and
has also worked with Digital Equipment Corp. and Sterling Software Inc. as sales
and marketing manager and vice president, business development, respectively. He
holds a degree in Civil Engineering from the University of Queensland
(Australia).

     Thomas G. O'Brien has been Treasurer and Secretary of Amdocs Limited since
1998 and has held other financial management positions within Amdocs since 1995.
From 1993 to 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 with Arthur Young and Company (now Ernst & Young LLP). Mr. O'Brien
is a member of the American Institute of Certified Public Accountants.

     Spyros Christodoulides is Managing Director of Amdocs Development Limited.
Mr Christodoulides joined Amdocs in March 2006 and is also the Financial
Controller of Amdocs Development Limited in Cyprus. Prior to joining Amdocs, Mr.
Christodoulides worked for almost sixteen years for Reuters, a global
information company, where he held several senior financial positions. Mr
Christodoulides is a member of the American Institute of Certified Public
Accountants and of the Cyprus Institute of Certified Public Accountants and he
is a registered auditor in Cyprus.

COMPENSATION

     Our directors who are not employees of the Company, which we refer to as
our Non-Employee Directors, receive compensation for their services as directors
in the form of cash and options to purchase ordinary shares. Our compensation
policy provides that each Non-Employee Director receives an annual cash payment
of $35,000. Each member of our Audit and Executive Committees who is a Non-
Employee Director receives an annual cash payment of $10,000. In addition, the
chairmen of our Audit and Executive Committees each receive an annual cash
payment of $10,000 and the chairmen of our Compensation and Nominating and
Corporate Governance Committees each receive an annual cash payment of $5,000.
Upon election or appointment to our Board of Directors, each Non-Employee
Director also receives an initial option grant for the purchase of 12,000
ordinary shares. Thereafter, Non-Employee Directors receive an annual option
grant for the purchase of 11,500 ordinary shares. All option grants to our Non-
Employee Directors vest as to one-quarter of the shares immediately, with the
remainder vesting annually in three equal installments. The exercise price of
all options granted to our Non-Employee Directors is the NYSE closing price of
our shares on the last trading day preceding the grant date. Each Non-Employee
Director receives $1,500 per meeting of the Board of Directors and $1,000 per
meeting of a committee of the Board of Directors, except for Non-Employee
Directors who are members of our Audit Committee or Executive Committee, who
each receive $2,000 per meeting. We reimburse all of our directors for their
reasonable travel expenses incurred in connection with attending Board or
committee meetings.


                                       50

<PAGE>

     During fiscal 2006, we granted to ten Non-Employee Directors options to
purchase an aggregate of 75,000 ordinary shares at a weighted average price of
$27.60 per share, with vesting over three year terms.

     All options were granted pursuant to our 1998 Stock Option and Incentive
Plan, as amended. See discussion below -- "Share Ownership -- Employee Stock
Option and Incentive Plan".

     A total of 18 persons who served either as directors of Amdocs or members
of its administrative, supervisory or management bodies during all or part of
fiscal 2006 received remuneration from Amdocs. The aggregate remuneration paid
by us to such persons was approximately $8.9 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 such
persons, expenses (including business travel, professional and business
association dues) or other fringe benefits. Included in this amount is
remuneration to one former officer for the applicable portion of fiscal 2006.

BOARD PRACTICES

     Our Board of Directors is comprised of 13 directors, 12 of whom were
elected to our Board of Directors at our annual meeting of shareholders on
January 19, 2006, and one of whom was elected by our Board of Directors on
November 1, 2006. All directors hold office until the next annual meeting of our
shareholders, which generally is in January of each calendar year, or until
their respective successors are duly elected and qualified or their positions
are earlier vacated by resignation or otherwise.

     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 and 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 and qualified or their positions are earlier vacated by
resignation or otherwise.

     Other than the employment agreements between us and the President and Chief
Executive Officer of Amdocs Management Limited, and the Executive Vice President
and Chief Operating Officer of Amdocs Management Limited, which provide for
immediate cash severance upon termination of employment, there are currently no
service contracts in effect between us and any of our directors providing for
immediate cash severance upon termination of their employment.

  BOARD COMMITTEES

     Our Board of Directors has formed four committees set forth below. Members
of each committee are appointed by the Board of Directors.

     The Audit Committee reviews, acts on and reports to the Board of Directors
with respect to various auditing and accounting matters, including the selection
of our independent registered public accounting firm, the scope of the annual
audits, fees to be paid to our independent registered public accounting firm,
the performance of our independent registered public accounting firm, and
assists with the Board of Directors' oversight of our accounting practices,
financial statement integrity and compliance with legal and regulatory
requirements, including establishing and maintaining adequate internal control
over financial reporting. The current members of our Audit Committee are Messrs.
Gardner (Chair), Foster, McLennan and Olswang, all of whom are independent
directors, as defined by the rules of the NYSE, and pursuant to the categorical
director independence standards adopted by our Board of Directors. The Board of
Directors has determined that Mr. Gardner is an "audit committee financial
expert" as defined by rules promulgated by the SEC, and that each member of the
Audit Committee is financially literate as required by the rules of the NYSE.
The Audit Committee written charter is available on our website at
www.amdocs.com.

     The Nominating and Corporate Governance Committee identifies individuals
qualified to become members of our Board of Directors, recommends to the Board
of Directors the persons to be nominated for election as directors at the annual
general meeting of shareholders, develops and makes recommendations to the Board
of Directors regarding our corporate governance principles and oversees the
evaluations of our

                                       51

<PAGE>

Board of Directors and our management. The current members of the Nominating and
Corporate Governance Committee are Messrs. Foster (Chair), Brodsky, Gardner,
Kahan and Segal, all of whom are independent directors, as required by the NYSE
listing standards, and pursuant to the categorical director independence
standards adopted by our Board of Directors. The Nominating and Corporate
Governance Committee written charter is available on our website at
www.amdocs.com. The Nominating and Corporate Governance Committee has approved
corporate governance guidelines that are also available on our website at
www.amdocs.com.

     The Compensation Committee discharges the responsibilities of our Board of
Directors relating to the compensation of the Chief Executive Officer of Amdocs
Management Limited and makes recommendations to our Board of Directors with
respect to the compensation of our other executive officers. The current members
of our Compensation Committee are Messrs. Kahan (Chair), Anderson and Minicucci,
all of whom are independent directors, as defined by the rules of the NYSE, and
pursuant to the categorical director independence standards adopted by our Board
of Directors. The Compensation Committee written charter is available on our
website at www.amdocs.com.

     The Executive Committee has such responsibilities as may be delegated to it
from time to time by the Board of Directors. The current members of our
Executive Committee are Messrs. Anderson (Chair), Baharav, Kahan, Lemelbaum and
Minicucci.

     Our independent directors receive no compensation from the Company, except
in connection with their membership on the Board of Directors and its committees
as described above regarding Non-Employee Directors under "-- Compensation".

WORKFORCE PERSONNEL

     The following table presents the approximate number of our workforce as of
each date indicated, by function and by geographical location:


<Table>
<Caption>
                                                         AS OF SEPTEMBER 30,
                                                      ------------------------
                                                       2006     2005     2004
                                                      ------   ------   ------

<S>                                                   <C>      <C>      <C>

Software and Information Technology
     Israel.........................................   4,686    4,090    4,100
     North America..................................   4,391    4,173    3,400
     Rest of World..................................   5,749    3,747    2,100
                                                      ------   ------   ------
                                                      14,826   12,010    9,600
  Management and Administration.....................   1,408    1,190    1,000
                                                      ------   ------   ------
Total workforce.....................................  16,234   13,200   10,600
                                                      ======   ======   ======

</Table>


     As of September 30, 2006, our workforce consisted of approximately 14,800
software and information technology specialists, engaged in research,
development, consulting, maintenance and support activities, and approximately
1,400 management and administrative professionals.

     As a company with global operations, we are required to comply with various
labor and immigration laws throughout the world, including laws and regulations
in Australia, Brazil, Canada, China, Cyprus, Europe, India, Israel, Japan,
Mexico, South Africa and the United States. Our employees in Europe are
protected, in some countries, by mandatory collective bargaining agreements. To
date, compliance with such laws has not been a material burden for us. As the
number of our employees increases over time in particular countries, our
compliance with such regulations could become more burdensome.

     Our principal operating subsidiaries are not party to any collective
bargaining agreements. However, our Israeli subsidiaries are subject to certain
labor-related statutes and to certain provisions of general extension orders
issued by the Israeli Ministry of Labor and Welfare. A significant provision
applicable to all employees in Israel under collective bargaining agreements and
extension orders is an adjustment of wages in relation to

                                       52

<PAGE>

increases in the consumer price index, or CPI. The amount and frequency of these
adjustments are modified from time to time.

     Some employees in Canada have union representation. In addition, all
employees in Brazil, including members of management, are represented by unions.
Collective bargaining between employers and unions is mandatory, negotiated
annually, and covers work conditions, including cost of living increases,
minimum wages that exceed government thresholds and overtime pay.

     We consider our relationship with our employees to be good and have never
experienced an organized labor dispute, strike or work stoppage.

SHARE OWNERSHIP

  SECURITY OWNERSHIP OF DIRECTORS AND SENIOR MANAGEMENT AND CERTAIN KEY
  EMPLOYEES

     As of November 30, 2006, the aggregate number of our ordinary shares
beneficially owned by our directors and officers was 17,607,162 shares. This
number includes 10,747,698 ordinary shares held by AT&T, since Mr. Kahan, Senior
Executive Vice President of AT&T, serves on our Board of Directors, and
accordingly, he may be deemed to be the beneficial owner of the shares held by
AT&T. Mr. Kahan disclaims beneficial ownership of such shares. Historically,
this number also included shares held by WCAS, since Messrs. Anderson and
Minicucci, affiliates of WCAS, serve on our Board of Directors. As of September
24, 2003, various investment partnerships affiliated with WCAS ceased to be
shareholders of the Company. See "Major Shareholders and Related Party
Transactions". As of November 30, 2006, other than Mr. Kahan, none of our
directors or officers beneficially owned 1% or more of our outstanding ordinary
shares.

     Beneficial ownership by a person, as of a particular date, assumes the
exercise of all options and warrants held by such person that are currently
exercisable or are exercisable within 60 days of such date.

  STOCK OPTION AND INCENTIVE PLAN

     Our Board of Directors has adopted, and our shareholders have approved, our
1998 Stock Option and Incentive Plan, as amended (the "1998 Plan"), pursuant to
which up to 46,300,000 of our Ordinary Shares may be issued. The 1998 Plan
expires on January 17, 2016.

     The 1998 Plan provides for the grant of restricted shares, stock options
and other stock-based awards to our directors, officers, employees and
consultants. The purpose of the 1998 Plan is to enable us to attract and retain
qualified personnel and to motivate such persons by providing them with an
equity participation in the Company. As of September 30, 2006, of the 46,300,000
ordinary shares available for issuance under the 1998 Plan, 12,790,097 ordinary
shares had been issued as a result of option exercises and restricted shares
issuance, under the provisions of the 1998 Plan, and 11,247,751 ordinary shares
remained available for future grants. As of November 30, 2006, there were
outstanding options to purchase an aggregate of 22,480,888 ordinary shares at
exercise prices ranging from $1.92 to $78.31 per share and an aggregate of
731,149 restricted shares.

     The 1998 Plan is administered by a committee, which determines all the
terms of the awards (subject to the above), including which employees, directors
or consultants are granted awards. The Board of Directors may amend or terminate
the 1998 Plan, provided that shareholder approval is required to increase the
number of ordinary shares available under the 1998 Plan, to materially increase
the benefits accruing to participants, to change the class of employees eligible
for participation, to decrease the basis upon which the minimum exercise price
of options is determined or to extend the period in which awards may be granted
or to grant an option that is exercisable for more than ten years. Ordinary
shares acquired upon exercise of an award are subject to certain restrictions on
sale, transfer or hypothecation. No awards may be granted after January 2016.

     As a result of acquisitions, as of September 30, 2006, we are obligated to
issue (and have reserved for issuance) an additional 531,794 ordinary shares
upon exercise of options that had previously been granted under the option plans
of the acquired companies and were exchanged for options to purchase our
ordinary shares. These options have exercise prices ranging from $0.38 to $71.97
per share. No additional options have been or will be granted under these
predecessor plans.


                                       53

<PAGE>

ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

MAJOR SHAREHOLDERS

     The following table sets forth specified information with respect to the
beneficial ownership of the ordinary shares as of November 30, 2006 of (i) any
person known by us to be the beneficial owner of more than 5% of our ordinary
shares, and (ii) all of our directors and executives officers as a group.
Beneficial ownership is determined in accordance with the rules of the SEC and,
unless otherwise indicated, includes voting and investment power with respect to
all ordinary shares, subject to community property laws, where applicable. The
number of ordinary shares used in calculating the percentage beneficial
ownership included in the table below is based on 207,415,797 ordinary shares
outstanding as of November 30, 2006.


<Table>
<Caption>
                                                                 SHARES
                                                              BENEFICIALLY   PERCENTAGE
NAME AND ADDRESS                                                  OWNED       OWNERSHIP
----------------                                              ------------   ----------

<S>                                                           <C>            <C>

Massachusetts Financial Services Company(1).................   19,359,027        9.3%
  500 Boylston Street, 15th Floor
  Boston, Massachusetts 02116
AT&T Inc.(2)................................................   10,747,698        5.2%
  175 E. Houston Street
  San Antonio, Texas 78205-2233
All directors and executive officers as a group (18
  persons)(3)...............................................   17,607,162        8.5
</Table>


--------

   (1) The address of Massachusetts Financial Services Company ("MFS") is 500
       Boylston Street, Boston, Massachusetts 02116. Based on a Schedule 13G
       filed by MFS with the SEC on February 14, 2006, as of December 31, 2005,
       MFS has sole voting power over 19,164,807 of our ordinary shares and sole
       dispositive power over 19,359,027 ordinary shares.

   (2) The address of AT&T Inc. is 175 East Houston, San Antonio, Texas 78205.
       Based upon information provided to us by AT&T, as of November 30, 2006,
       AT&T beneficially owned 10,747,698 of our ordinary shares. James S.
       Kahan, Senior Executive Vice President of AT&T, serves on our Board of
       Directors.

   (3) Includes ordinary shares held by AT&T. See footnote 2 above. Mr. Kahan,
       Senior Executive Vice President of AT&T, serves on our Board of Directors
       and, accordingly, may be deemed to be the beneficial owner of the
       ordinary shares held by AT&T. Mr. Kahan disclaims beneficial ownership of
       such shares. Also includes options granted to our directors and executive
       officers that are exercisable within 60 days of November 30, 2006.

     Over the last three years, our major shareholders have included our
directors and executive officers as a group, AT&T, Fidelity Management and
Research, or FMR, which became a major shareholder in fiscal 2003, MFS, which
became a major shareholder in September 2003, and other institutional investors.
AT&T's share ownership has decreased to 5.2% as of November 30, 2006 from 9.1%
in November 2002. FMR ceased to be a major shareholder in fiscal 2004.

     As of November 30, 2006, our ordinary shares were held by 224
recordholders. Based on a review of the information provided to us by our
transfer agent, 166 recordholders, holding approximately 99% of our outstanding
ordinary shares held of record, were residents of the United States.

RELATED PARTY TRANSACTIONS

     In addition to being a major shareholder, AT&T, and some of its operating
subsidiaries, are also significant customers of ours. During fiscal 2006 and
2005, AT&T and those subsidiaries accounted for approximately 10% or more of our
revenue in each of these years. We expect that revenue currently attributable to
Cingular will become attributable to AT&T in fiscal 2007 as a result of the
pending acquisition of Bell South by AT&T, pursuant to which we expect AT&T will
acquire complete ownership of Cingular. Mr. Kahan, a member of our Board of
Directors, is also Senior Executive Vice President of AT&T.

     AT&T is also a beneficial owner of companies that provide certain
miscellaneous support services to us in United States.


                                       54

<PAGE>

ITEM 8.  FINANCIAL INFORMATION

FINANCIAL STATEMENTS

     See "Financial Statements" for our audited Consolidated Financial
Statements and Financial Statement Schedule filed as part of this Annual Report.

LEGAL PROCEEDINGS

     The Company is involved in various legal proceedings arising in the normal
course of its business. The Company does not believe that the ultimate
resolution of these matters will have a material adverse effect on the Company's
consolidated financial position, results of operations or cash flows.

DIVIDEND POLICY

     After the payment of dividends in 1998 that followed a corporate
reorganization, we decided in general to retain earnings to finance the
development of our business, and we have not paid any cash dividends on our
ordinary shares since that time. The payment of any future dividends will be
paid by us based on conditions then existing, including our earnings, financial
condition and capital requirements, as well as other conditions we deem
relevant. The terms of any debt that we may incur could effectively limit our
ability to pay dividends.


                                       55

<PAGE>

ITEM 9.  THE OFFER AND LISTING

     Our ordinary shares have been quoted on the NYSE since June 19, 1998, under
the symbol "DOX". The following table sets forth the high and low reported sale
prices for our ordinary shares for the periods indicated:


<Table>
<Caption>
                                                             HIGH      LOW
                                                            ------   ------

<S>                                                         <C>      <C>

FISCAL YEAR ENDED SEPTEMBER 30
2002......................................................  $39.25   $ 6.10
2003......................................................  $27.25   $ 5.85
2004......................................................  $30.69   $18.08
2005......................................................  $30.96   $20.70
2006......................................................  $41.01   $24.30
QUARTER
Fiscal 2005:
  First Quarter...........................................  $27.56   $20.70
  Second Quarter..........................................  $30.66   $24.29
  Third Quarter...........................................  $30.96   $25.48
  Fourth Quarter..........................................  $30.30   $25.97
Fiscal 2006:
  First Quarter...........................................  $28.91   $24.30
  Second Quarter..........................................  $36.07   $27.00
  Third Quarter...........................................  $39.15   $33.20
  Fourth Quarter..........................................  $41.01   $32.89
Fiscal 2007:
  First Quarter (through December 8, 2006)................  $40.74   $36.38
MOST RECENT SIX MONTHS
  June, 2006..............................................  $38.09   $33.20
  July, 2006..............................................  $38.00   $32.89
  August, 2006............................................  $38.50   $34.25
  September, 2006.........................................  $41.01   $37.80
  October, 2006...........................................  $40.74   $38.62
  November, 2006..........................................  $40.24   $36.38
</Table>


ITEM 10.  ADDITIONAL INFORMATION

MEMORANDUM AND ARTICLES OF ASSOCIATION

     The Company is registered at the Greffe (Companies Registry) in Guernsey,
the Channel Islands and has been assigned company number 19528, with its
registered office situated at Suite 5, Tower Hill House, Le Bordage, St Peter
Port, Island of Guernsey, GY1 3QT, Channel Islands. The telephone number at that
location is +44-1481-728444.

     The purpose of the Company is to perform any and all corporate activities
permissible under Guernsey law, as set forth in detail at Clause 3(1) to (37) of
the Memorandum of Association of the Company (the "Memorandum of Association").

     Article 21(2) of the Amended and Restated Articles of Association of the
Company (the "Articles of Association") provides that a director may vote in
respect of any contract or arrangement in which such director has an interest
notwithstanding such director's interest and an interested director will not be
liable to the Company for any profit realized through any such contract or
arrangement by reason of such director holding the office of director. Article
20 of the Articles of Association provides that the remuneration of the

                                       56

<PAGE>

directors shall from time to time be determined by the Company by ordinary
resolution, but that the directors are authorized to determine from time to time
the remuneration for any outside or unaffiliated directors. Article 22 provides
that directors may exercise all the powers of the Company to borrow money, and
to mortgage or charge its undertaking, property and uncalled capital or any part
thereof, and to issue securities whether outright or as security for any debt,
liability or obligation of the Company for any third party. Such borrowing
powers can only be altered through an amendment to the Articles of Association.
Directors of the Company are not required to own shares of the Company in order
to serve as directors.

     The share capital of the Company is L5,750,000 divided into (i) 25,000,000
preferred shares with a par value of L0.01 per share and (ii) 550,000,000
ordinary shares with a par value of L0.01 per share, consisting of 500,000,000
voting ordinary shares and 50,000,000 non-voting ordinary shares. As of
September 30, 2006, 206,792,730 ordinary shares were outstanding (net of
treasury shares) and no non-voting ordinary shares or preferred shares were
outstanding. The rights, preferences and restrictions attaching to each class of
the shares are as follows:

  PREFERRED SHARES

     - Issue -- the preferred shares may be issued from time to time in one or
       more series of any number of shares up to the amount authorized.

     - Authorization to Issue Preferred Shares -- authority is vested in the
       directors from time to time to authorize the issue of one or more series
       of preferred shares and to provide for the designations, powers,
       preferences and relative participating, optional or other special rights
       and qualifications, limitations or restrictions thereon.

     - Relative Rights -- all shares of any one series of preferred shares must
       be identical with each other in all respects, except that shares of any
       one series issued at different times may differ as to the dates from
       which dividends shall be cumulative.

     - Liquidation -- in the event of any liquidation, dissolution or winding-up
       of the Company, the holders of preferred shares are entitled to
       preference with respect to payment and to receive payment (at the rate
       fixed in any resolution or resolutions adopted by the directors in such
       case) plus an amount equal to all dividends accumulated to the date of
       final distribution to such holders. The holders of preferred shares are
       entitled to no further payment other than that stated above. If upon any
       liquidation the assets of the Company are insufficient to pay in full the
       amount stated above then such assets shall be distributed among the
       holders of preferred shares.

     - Voting Rights -- except as otherwise provided for by the directors upon
       the issue of any new series of preferred shares, the holders of preferred
       shares have no right or power to vote on any question or in any
       proceeding or to be represented at, or to receive notice of, any meeting
       of members.

  ORDINARY SHARES AND NON-VOTING ORDINARY SHARES

     Except as otherwise provided by the Memorandum of Association and Articles
of Association, the ordinary shares and non-voting ordinary shares are identical
and entitle holders thereof to the same rights and privileges.

     - Dividends -- when and as dividends are declared on the shares of the
       Company the holders of voting ordinary shares and non-voting shares are
       entitled to share equally, share for share, in such dividends except that
       if dividends are declared that are payable in voting ordinary shares or
       non-voting ordinary shares, dividends must be declared that are payable
       at the same rate in both classes of shares.

     - Conversion of Non-Voting Ordinary Shares into Voting Ordinary
       Shares -- upon the transfer of non-voting ordinary shares from the
       original holder thereof to any third party not affiliated with such
       original holder, non-voting ordinary shares are redesignated in the books
       of the Company as voting ordinary shares and automatically convert into
       the same number of voting ordinary shares.


                                       57

<PAGE>

     - Liquidation -- upon any liquidation, dissolution or winding-up of the
       Company, the assets of the Company remaining after creditors and the
       holders of any preferred shares have been paid in full shall be
       distributed to the holders of voting ordinary shares and non-voting
       ordinary shares equally share for share.

     - Voting Rights -- the holders of voting ordinary shares are entitled to
       vote on all matters to be voted on by the members, and the holders of
       non-voting ordinary shares are not entitled to any voting rights.

     - Preferences -- the voting ordinary shares and non-voting ordinary shares
       are subject to all the powers, rights, privileges, preferences and
       priorities of the preferred shares as are set out in the Articles of
       Association.

     As regards both preferred shares and voting and non-voting ordinary shares,
the Company has power to purchase any of its own shares, whether or not they are
redeemable and may make a payment out of capital for such purchase, however the
terms of such repurchases must be approved in advance by a special resolution of
the holders of our ordinary shares.

     There are no provisions for a classified Board of Directors or for
cumulative voting for directors.

     Article 8 of the Articles of Association provides that all or any of the
rights, privileges, or conditions attached to any class or group of shares may
be changed as follows:

     - by an agreement between the Company and any person purporting to contract
       on behalf of the holders of shares of the class or group affected,
       provided that such agreement is ratified in writing by the holders of at
       least two-thirds of the issued shares of the class affected; or

     - with the consent in writing of the holders of three-fourths of the issued
       shares of that class or with the sanction of an extraordinary resolution
       passed by majority of three-fourths of the votes of the holders of shares
       of the class or group affected entitled to vote and voting in person or
       by attorney or proxy and passed at a separate meeting of the holders of
       such shares but not otherwise.

     A special resolution must be passed by not less than three-quarters of the
votes recorded at a meeting called for purposes of voting on the matter. As
such, the conditions set out above are as significant as the requirements of
Guernsey law.

     Provisions in respect of the holding of general meetings and extraordinary
general meetings are set out at Articles 14, 15 and 16 of the Articles of
Association. The Articles of Association provide that an annual general meeting
must be held once in every calendar year (provided that not more than 15 months
have elapsed since the last such meeting) at such time and place as the
directors appoint and, in default, an annual general meeting may be convened by
any two members holding at least 10% in the aggregate of the Company's share
capital. The directors may, whenever they deem fit, convene an extraordinary
general meeting, and extraordinary general meetings will also be convened on the
requisition in writing of holders of at least 20% of the issued share capital of
the Company carrying voting rights or, if the directors fail upon such
requisition to convene such meeting within 21 days, then such meeting may be
convened by such holders in such manner as provided by the Companies (Guernsey)
Law, 1994 (the "Companies Law"). A minimum of 10 days' written notice is
required in connection with an annual general meeting and a minimum of 14 days'
written notice is required in connection with any other meeting. The notice
shall specify the place, the day and the hour of the meeting, and in the case of
any special business, the general nature of that business to such persons as are
entitled by the Articles of Association to receive such notices from the Company
provided that a meeting of the Company shall, notwithstanding that it is called
by shorter notice than that specified in the Articles, be deemed to have been
duly called if it is so agreed by all the members entitled to attend and vote
thereat.

     There are no limitations on the rights to own securities, including the
rights of non-resident or foreign shareholders to hold or exercise voting rights
on the securities.

     There are no provisions in the Memorandum of Association or Articles of
Association that would have the effect of delaying, deferring or preventing a
change in control of the Company and that would operate

                                       58

<PAGE>

only with respect to a merger, acquisition or corporate restructuring involving
the Company (or any of its subsidiaries).

     There are no provisions in the Memorandum of Association or Articles of
Association governing the ownership threshold above which shareholder ownership
must be disclosed. United States federal law, however, requires that all
directors, executive officers and holders of 10% or more of the stock of a
company that has a class of stock registered under the Securities Exchange Act
of 1934, as amended (other than a foreign private issuer, such as Amdocs),
disclose such ownership. In addition, holders of more than 5% of a registered
equity security of a company (including a foreign private issuer) must disclose
such ownership.

     Pursuant to Article 13 of the Articles of Association, the Company may from
time to time by ordinary resolution increase the share capital by such sum, to
be divided into shares of such amount, as the resolution prescribes. A
restructuring of the existing share capital must be done by extraordinary
resolution (which requires the same vote as a special resolution), and the
Company may by special resolution reduce its share capital, any capital
redemption reserve fund or any share premium account in accordance with Guernsey
law. These provisions in relation to the alteration of the Company's capital are
in accordance with but no more onerous than the Companies Law.

MATERIAL CONTRACTS

     On April 17, 2006, we and a wholly-owned subsidiary entered into an
Agreement and Plan of Merger with Qpass and Ray A. Rothrock, as agent of the
shareholders of Qpass. The aggregate purchase price for Qpass was $281.8
million, which consisted of $274.0 million in cash, $2.4 million related to the
assumption of stock options held by Qpass employees and $5.4 million of
transaction costs. The description of this agreement is not complete and is
qualified in its entirety by reference to the full text of agreement, which was
filed as Exhibit 99.1 to our April 21, 2006 Form 6-K Report of Foreign Private
Issuer.

     On July 18, 2006, we and a wholly-owned subsidiary entered into a Share
Sale and Purchase Agreement to acquire all the capital stock of Cramer. The
aggregate purchase price for Cramer was $417.2 million, which consisted of
$410.6 million in cash (including cash on hand), $2.2 million related to the
assumption of stock options and restricted shares held by Cramer employees and
$4.4 million of transaction costs. The purchase price is subject to post closing
adjustments that we expect will not be material. The description of this
agreement is not complete and is qualified in its entirety by reference to the
full text of agreement, which was filed as Exhibit 99.1 to our July 20, 2006
Form 6-K Report of Foreign Private Issuer.

     In the past two years, we have not entered into any other materials
contracts other than contracts entered into in the ordinary course of our
business.

TAXATION

  TAXATION OF THE COMPANY

     The following is a summary of certain material tax considerations relating
to Amdocs 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 effective tax rate was 14.8% for the year ended September 30, 2006,
compared to 20% for fiscal 2005 and 22% for fiscal 2004.

     We expect our effective tax rate in fiscal 2007 to be between 14% and 16%.
This reduction is attributable to lower taxed earnings from global operations
and the net effect of acquisition-related costs and equity-based compensation
expense.


                                       59

<PAGE>

     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, the Company and certain of
our subsidiaries have been granted certain special tax benefits, discussed
below, in Cyprus, India, Ireland 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. Tax legislation recently enacted in Guernsey
with effect from January 1, 2008 is expected to repeal the exemption and subject
us to a zero percent corporate tax rate, which we believe will not impact our
effective tax rate.

     Certain Cypriot Tax Considerations

     Our Cyprus subsidiary operates a development center. Corporations resident
in Cyprus are taxed on income at 10% commencing January 1, 2003 (previously at a
25% corporate tax rate) following the Income Tax law enacted in July 2002, that
introduced a number of changes to the current system in an attempt to harmonize
the regulations with E.U. provisions and abandon any harmful tax practices as
defined by the Organization for Economic Co-operation and Development. The
Government of Cyprus had issued a permit to our Cypriot subsidiary pursuant to
which the activities conducted by it were deemed to be offshore activities for
the purpose of Cypriot taxation. As a result, our Cypriot subsidiary was
subject, until December 31, 2005, to an effective tax rate in Cyprus of 4.25%,
as long as certain requirements imposed by the Government of Cyprus were met,
and our subsidiary is currently taxed at the 10% corporate tax rate.

     Certain Indian Tax Considerations

     Through subsidiaries, we operate a development center and a business
processing operations center in India. In 2006, the corporation tax rate
applicable in India on trading activities was 33.66%. Our subsidiaries in India
operate under a specific favorable tax entitlement that is based upon pre-
approved information technology related services activity. As a result, our
subsidiaries are entitled to corporate income tax exemptions on all income
derived from such pre-approved information technology activity, provided they
continue to meet the conditions required for such tax benefits. The benefits are
scheduled to expire April 1, 2009. Under Indian laws, any dividend distribution
by our Indian subsidiaries shall be subject to dividend distribution tax at the
rate of 14.025% to be paid by such subsidiaries.

     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, Amdocs (Israel) Limited.

     General Corporate Taxation in Israel.  In August 2005, the Israeli
parliament enacted legislation, which has gradually reduced the "Companies Tax"
rates of taxable income apply to Israeli companies. According to this
legislation, the Companies Tax rate on taxable income in 2005 and upcoming years
was and will be as follows: 34% in 2005, 31% in 2006, and 29% in 2007, 27% in
2008, 26% in 2009 and 25% for 2010 and thereafter. However, the effective tax
rate payable by an Israeli company that derives income from an Approved
Enterprise 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.


                                       60

<PAGE>

     In April 2005, the Israeli parliament enacted legislation which
significantly revised the Investment Law. Generally, investment programs of our
Israeli subsidiary, Amdocs (Israel) Limited, that have already obtained
instruments of approval for an Approved Enterprise by the Israeli Investment
Center will continue to be subject to the old provisions as described below of
the Investment Law prior being revised. The revisions that were introduced into
the Investment Law did not affect our effective tax rate for year ended
September 30, 2006 and we do not expect them to have a significant impact on our
effective tax rate in fiscal year 2007.

     The provisions of the Investment Law applicable to investment programs
approved prior to the effective date of the amendments to the Investment Law
provide 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 are owned by non-Israeli residents. The tax rate is 20% if the foreign
investment is 49% or more but less than 74%; 15% if the foreign investment is
74% or more but less than 90%; and 10% if the foreign investment is 90% or more.
The determination of foreign ownership is made on the basis of the lowest level
of foreign ownership during the tax year. A company that owns an Approved
Enterprise, approved after April 1, 1986, may elect to forego the entitlement to
grants and apply for an alternative package of tax benefits. In addition, a
company (like our Israeli subsidiary) with an enterprise outside the National
Priority Regions (which is not entitled to grants) may also apply for the
alternative benefits. Under the alternative benefits, undistributed income from
the Approved Enterprise operations is fully tax exempt (a tax holiday) for a
defined period. The tax holiday ranges between two to ten years from the first
year of taxable income subject to the limitations as described above, depending
principally upon the geographic location within Israel. On expiration of the tax
holiday, the Approved Enterprise is eligible for a beneficial tax rate (25% or
lower in the case of an FIC, as described above) for the remainder of the
otherwise applicable period of benefits.

     Our Israeli subsidiary, Amdocs (Israel) Limited, 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, based on the location
of activities within Israel, for a period of two or ten years (and in some cases
for a period of four years) and, in the case of a two year tax holiday, 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 an instrument of approval issued in December
1997 and an amendment issued in September 2006 to an instrument of approval
issued in December 2000 and relating to specific investment programs 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

                                       61

<PAGE>

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, Amdocs (Israel) Limited,
substantially complies with all such conditions currently, but there can be no
assurance that it will continue to do so.

     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. This withholding tax is in addition to the corporate
tax that a company is subject to in the event it pays a dividend out of income
earned during the tax holiday period related to its Approved Enterprise status.

  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 the ownership or disposition of our ordinary shares
to a holder that is:

          (i) an individual who is a citizen or resident of the United States;

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

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

          (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 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, this 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.

     This summary is for general information only and is not binding on the
Internal Revenue Service ("IRS"). There can be no assurance that the IRS will
not challenge one or more of the statements made

                                       62

<PAGE>

herein. U.S. holders are urged to consult their own tax advisers as to the
particular tax consequences to them of owning and disposing of our ordinary
shares.

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

     Dividend income is generally taxed as ordinary income. However, as a result
of recent United States tax legislation, a maximum United States federal income
tax rate of 15% will apply to "qualified dividend income" received by
individuals (as well as certain trusts and estates) in taxable years beginning
after December 31, 2002 and before January 1, 2009, provided that certain
holding period requirements are met. "Qualified dividend income" includes
dividends paid on shares of United States corporations as well as dividends paid
on shares of "qualified foreign corporations", including shares of a foreign
corporation which are readily tradable on an established securities market in
the United States. Since our ordinary shares are readily tradable on the New
York Stock Exchange, we believe that dividends paid by us with respect to our
ordinary shares should constitute "qualified dividend income" for United States
federal income tax purposes, provided that the holding period requirements are
satisfied and none of the other special exceptions applies.

     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" or "financial services 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 after May 5, 2003 and before the end of a taxable year which
begins before January 1, 2011 generally will be subject to a maximum United
States federal tax income rate of 15%. 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 IRS
and possible U.S. backup withholding. Backup withholding will not apply,
however, to a U.S. holder who furnishes a correct taxpayer identification number
and makes any other required certification or who is otherwise exempt from
backup withholding. Generally a U.S. holder will provide such certification on
IRS Form W-9 (Request for Taxpayer Identification Number and Certification).

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

     Passive Foreign Investment Company Considerations.  If, during any taxable
year, 75% or more of our gross income consists of certain types of passive
income, or the average value during a taxable year of passive

                                       63

<PAGE>

assets (generally assets that generate passive income) is 50% or more of the
average value of all of our assets, we will be treated as a "passive foreign
investment company" under U.S. federal income tax law for such year and
succeeding years. If we are treated as a passive foreign investment company, a
U.S. holder may be subject to increased tax liability upon the sale of our
ordinary shares or upon the receipt of certain distributions, unless such U.S.
holder makes an election to mark our ordinary shares to market annually.

     Based on an analysis of our financial position, we believe that we have not
been a passive foreign investment company for U.S. federal income tax purposes
for any preceding taxable year and expect that we will not become a passive
foreign investment company during the current taxable year. However, because the
tests for determining passive foreign investment company status are applied as
of the end of each taxable year and are dependent upon a number of factors, some
of which are beyond our control, including the value of our assets, based on the
market price of our ordinary shares, and the amount and type of our gross
income, we cannot assure you that we will not become a passive foreign
investment company in the future or that the IRS will agree with our conclusion
regarding our current passive foreign investment company status. We intend to
use reasonable efforts to avoid becoming a passive foreign investment company.

     Rules relating to a passive foreign investment company are very complex.
U.S. holders should consult their own tax advisors regarding the U.S. federal
income tax considerations discussed above and the applicability of passive
foreign investment company rules to their investments in our ordinary shares.

     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 exempt from
Guernsey income tax on dividends paid with respect to the ordinary shares and is
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. Recent tax
legislation was enacted in Guernsey, effective as of January 1, 2008, to tax
Guernsey resident shareholders on actual or deemed distribution of certain
profits of a Guernsey company. We do not believe this legislation will affect
the taxation of a holder of ordinary shares who is not a resident of Guernsey
and who does not carry on business in Guernsey through a permanent establishment
situated there.

     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.

DOCUMENTS ON DISPLAY

     We are subject to the reporting requirements of foreign private issuers
under the U.S. Securities Exchange Act of 1934. Pursuant to the Exchange Act, we
file reports with the SEC, including this Annual Report on Form 20-F. We also
submit reports to the SEC, including Form 6-K Reports of Foreign Private
Issuers. You may read and copy such reports at the SEC's public Reference Room
at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may call the SEC
at 1-800-SEC-0330 for further information about the Public Reference Room. Such
reports are also available to the public on the SEC's website at www.sec.gov.
Some of this information may also be found on our website at www.amdocs.com.

     You may request copies of our reports, at no cost, by writing to or
telephoning us as follows:

            Amdocs, Inc.
            1390 Timberlake Manor Parkway
            Chesterfield, Missouri 63017
            Telephone: +1-314-212-8328


                                       64

<PAGE>

ITEM 11.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

CURRENCY FLUCTUATIONS

     We manage our foreign subsidiaries as integral direct components of our
operations. The U.S. dollar is our functional currency. According to the salient
economic factors indicated in SFAS No. 52, "Foreign Currency Translation," our
cash flow, sales price, sales market, expense, financing and intercompany
transactions and arrangement indicators are predominantly denominated in the
U.S. dollar. The operations of our foreign subsidiaries provide the same type of
services with the same type of expenditures throughout the Amdocs group.

     During fiscal 2006, our revenue and operating expenses in the U.S. dollar
or linked to the U.S. dollar were approximately 70% to 80% and 50% to 60%,
respectively. As a result of long-term contracts in currencies other than the
U.S. dollar and more customers seeking contracts that are denominated in
currencies such as the Euro, the percentage of our revenue and operating
expenses in the U.S. dollar or linked to the U.S. dollar may decrease slightly
over time. Historically, the effect of fluctuations in currency exchange rates
on our consolidated operations was not material. As more of our customers seek
contracts that are denominated in currencies other than the U.S. dollar, 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 hedging contracts and options. We do not hedge all of our exposure in
currencies other than the U.S. dollar, but rather our policy is to hedge
significant net exposures in the major foreign currencies in which we operate.
We periodically assess the applicability of the U.S. dollar as our functional
currency by reviewing the salient indicators.

FOREIGN CURRENCY RISK

     We enter into foreign exchange forward contracts and options to hedge most
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, primarily British pounds, Canadian dollars and the Euro,
and anticipated costs to be incurred in a foreign currency, primarily Israeli
shekels. We also use forward contracts to hedge the impact of the variability in
exchange rates on certain accounts receivable, denominated primarily in British
pounds and the Euro, and on certain accounts payable, primarily Israeli shekels.
We seek to minimize the risk that the anticipated cash flow from sales of our
products and services and cash flow required for our expenses denominated in a
currency other than our functional currency will be affected by changes in
exchange rates. See Note 21 to our consolidated financial statements included in
this document. The following table summarizes our foreign currency forward
exchange agreements and options as of September 30, 2006. A significant portion
of the forward contracts are expected to mature during fiscal 2007 and the rest
during fiscal 2008. The table below (all dollar amounts in millions) presents
the notional amounts and fair value of the total derivative instruments as of
September 30, 2006. Notional values are calculated based on forward rates as of
September 30, 2006, U.S. dollar translated.


<Table>
<Caption>
                                                       AS OF SEPTEMBER 30, 2006
                                                   -------------------------------
                                                   NOTIONAL AMOUNT
                                                    TRANSLATED TO
                                                    U.S. DOLLAR(*)
                                                   ---------------
                                                     DERIVATIVES
                                                       MATURING
                                                    DURING FISCAL
                                                   ---------------   FAIR VALUE OF
                                                     2007     2008    DERIVATIVES
                                                   -------   -----   -------------

<S>                                                <C>       <C>     <C>

Revenue..........................................  $  54.0   $  --       $(3.9)
Costs............................................   (182.6)   (0.9)        7.3
Balance sheet items..............................     18.0      --         0.2
                                                   -------   -----       -----
                                                   $(110.6)  $(0.9)      $ 3.6
                                                   =======   =====       =====

</Table>


--------

(*)    Positive notional amounts represent forward contracts to sell foreign
       currency. Negative notional amounts represent forward contracts and
       options to buy foreign currency.


                                       65

<PAGE>

INTEREST RATE RISK

     Our interest expenses and income are sensitive to changes in interest
rates, as all of our cash reserves and some of our borrowings, other than the
0.50% Notes, are subject to interest rate changes. Excess liquidity is invested
in short-term interest-bearing investments. Such short-term interest-bearing
investments consist primarily of commercial paper, U.S. treasury notes, U.S.
federal agency securities, corporate bonds, corporate backed obligations and
mortgages. As of September 30, 2006, there were no outstanding borrowings under
our revolving lines of credit or our short-term credit facilities and $1.7
million outstanding short term loans, and accordingly, we believe we are subject
to insignificant interest rate risk.

ITEM 12.  DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

     Not applicable.

                                     PART II

ITEM 13.  DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

     Not applicable.

ITEM 14.  MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
          PROCEEDS

     Not applicable.

ITEM 15.  CONTROLS AND PROCEDURES

     The Company's management, with the participation of the Chief Executive
Officer and Chief Financial Officer of Amdocs Management Limited, evaluated the
effectiveness of the Company's disclosure controls and procedures as of
September 30, 2006. The term "disclosure controls and procedures," as defined in
Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other
procedures of a company that are designed to ensure that information required to
be disclosed by a company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported, within the time
period specified in the SEC's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by a company in the reports
that it files or submits under the Exchange Act is accumulated and communicated
to the company's management, including its principal executive and principal
financial officers, as appropriate to allow timely decisions regarding adequate
disclosure. Management recognizes that any controls and procedures, no matter
how well designed and operated, can provide only reasonable assurance of
achieving their objectives and management necessarily applies its judgment in
evaluating the cost-benefit relationship of possible controls and procedures.
Based on the evaluation of the Company's disclosure controls and procedures as
of September 30, 2006, the Chief Executive Officer and the Chief Financial
Officer of Amdocs Management Limited concluded that, as of such date, the
Company's disclosure controls and procedures were effective at the reasonable
assurance level.

     No change in the Company's internal control over financial reporting (as
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during
the fiscal year ended September 30, 2006 that has materially affected, or is
reasonably likely to materially affect, the Company's internal control over
financial reporting.

     Management's report on the Company's internal control over financial
reporting (as such defined in Rules 13a-15(f) and 15d-15(f) under the Exchange
Act), and the related report of our independent public accounting firm, are
included in on pages F-3 and F-4 of this Annual Report on Form 20-F, and are
incorporated herein by reference.


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<PAGE>

ITEM 16A.  AUDIT COMMITTEE FINANCIAL EXPERT

     Our Board of Directors has determined that the Company has at least one
audit committee financial expert, Adrian Gardner, serving on its Audit
Committee. Our Board of Directors has determined that Mr. Gardner is an
independent director.

ITEM 16B.  CODE OF ETHICS AND BUSINESS CONDUCT

     Our Board of Directors has adopted a Code of Ethics and Business Conduct
that sets forth legal and ethical standards of conduct for directors and
employees, including executive officers, of the Company, our subsidiaries and
other business entities controlled by us worldwide.

     Our Code of Ethics and Business Conduct is available on our website at
www.amdocs.com, or you may request a copy of our code of ethics, at no cost, by
writing to or telephoning us as follows:

            Amdocs, Inc.
            1390 Timberlake Manor Parkway
            Chesterfield, Missouri 63017
            Telephone: +1-314-212-8328

     We intend to post on our website all disclosures that are required by law
or NYSE rules concerning any amendments to, or waivers from, any provision of
the code.

ITEM 16C.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

     During each of the last three fiscal years, Ernst & Young LLP has acted as
the Company's independent registered public accounting firm.

AUDIT FEES

     Ernst & Young billed the Company approximately $3.5 million for audit
services for fiscal 2006, including fees associated with the annual audit and
reviews of the Company's quarterly financial results submitted on Form 6-K,
consultations on various accounting issues and performance of local statutory
audits. Ernst & Young billed the Company approximately $2.7 million for audit
services for fiscal 2005.

AUDIT-RELATED FEES

     Ernst & Young billed the Company approximately $1.5 million for audit-
related services for fiscal 2006. Audit-related services principally include due
diligence examinations, SAS 70 report issuances and attestation services that
are not required by statute or regulation. Ernst & Young billed the Company
approximately $1.1 million for audit-related services for fiscal 2005.

TAX FEES

     Ernst & Young billed the Company approximately $1.1 million for tax advice,
including fees associated with tax compliance, tax advice and tax planning
services for fiscal 2006. Ernst & Young billed the Company approximately $1.5
million for tax advice in fiscal 2005.

ALL OTHER FEES

     Ernst & Young did not bill the Company for services other than Audit Fees,
Audit-Related Fees and Tax Fees described above for fiscal 2006 or fiscal 2005.

PRE-APPROVAL POLICIES FOR NON-AUDIT SERVICES

     The Audit Committee has adopted policies and procedures relating to the
approval of all audit and non-audit services that are to be performed by the
Company's independent registered public accounting firm. These policies
generally provide that the Company will not engage its independent registered
public

                                       67

<PAGE>

accounting firm to render audit or non-audit services unless the service is
specifically approved in advance by the Audit Committee or the engagement is
entered into pursuant to the pre-approval procedure described below.

     From time to time, the Audit Committee may pre-approve specified types of
services that are expected to be provided to the Company by its independent
registered public accounting firm during the next 12 months. Any such pre-
approval is detailed as to the particular service or type of services to be
provided and is also generally subject to a maximum dollar amount. In fiscal
2006, the Company's Audit Committee approved all of the services provided by
Ernst & Young.

ITEM 16D.  EXEMPTION FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

     Not applicable.

ITEM 16E.  PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
           PURCHASERS

     The following table provides information about purchases by us and our
affiliated purchasers during the fiscal year ended September 30, 2006 of equity
securities that are registered by us pursuant to Section 12 of the Exchange Act:

     2% Notes


<Table>
<Caption>
                                                                             (C)                      (D)

                                                         (B)           TOTAL NUMBER OF
                                      (A)                            PRINCIPAL AMOUNT OF       MAXIMUM NUMBER (OR
                                                    AVERAGE PRICE     CONVERTIBLE NOTES    APPROXIMATE DOLLAR VALUE)
                                TOTAL PRINCIPAL    PAID PER $1,000    PURCHASED AS PART      OF PRINCIPAL AMOUNT OF
                                   AMOUNT OF          PRINCIPAL          OF PUBLICLY         CONVERTIBLE NOTES THAT
                               CONVERTIBLE NOTES      AMOUNT OF        ANNOUNCED PLANS     MAY YET BE PURCHASED UNDER
PERIOD                             PURCHASED      CONVERTIBLE NOTES      OR PROGRAMS      THE PLANS OR PROGRAMS(1)(2)
------                         -----------------  -----------------  -------------------  ---------------------------

<S>                            <C>                <C>                <C>                  <C>

06/01/06-06/30/06............        97,000             $1,000              97,000                  $175,000
                                     ------                                 ------
Total........................        97,000             $1,000              97,000                  $175,000
                                     ======                                 ======

</Table>




                                       68

<PAGE>

                                    PART III

ITEM 17.  FINANCIAL STATEMENTS

     Not applicable.

ITEM 18.  FINANCIAL STATEMENTS

FINANCIAL STATEMENTS AND SCHEDULE

     The following Financial Statements and Financial Statement Schedule of
Amdocs Limited, with respect to financial results for the fiscal years ended
September 30, 2006, 2005 and 2004, are included at the end of this Annual
Report:

  AUDITED FINANCIAL STATEMENTS OF AMDOCS LIMITED

     Reports of Independent Registered Public Accounting Firm

     Consolidated Balance Sheets as of September 30, 2006 and 2005

     Consolidated Statements of Income for the years ended September 30, 2006,
2005 and 2004

     Consolidated Statements of Changes in Shareholders' Equity for the years
          ended September 30, 2006, 2005 and 2004

     Consolidated Statements of Cash Flows for the years ended September 30,
2006, 2005 and 2004

     Notes to Consolidated Financial Statements

  FINANCIAL STATEMENT SCHEDULES OF AMDOCS LIMITED

     Valuation and Qualifying Accounts

     All other schedules have been omitted since they are either not required or
not applicable, or the information has otherwise been included.

ITEM 19.  EXHIBITS

     The exhibits listed on the Exhibit Index hereof are filed herewith in
response to this Item.


                                       69

<PAGE>

                                   SIGNATURES

     The registrant hereby certifies that it meets all of the requirements for
filing on Form 20-F and that it has duly caused and authorized the undersigned
to sign this annual report on its behalf.

                                        Amdocs Limited

                                         /s/ Thomas G. O'Brien
                                         ---------------------------------------
                                         Thomas G. O'Brien
                                         Treasurer and Secretary
                                         Authorized U.S. Representative

Date: December 12, 2006

<PAGE>

                                  EXHIBIT INDEX


<Table>
<Caption>
   EXHIBIT
     NO.                                     DESCRIPTION
   -------                                   -----------

<S>            <C>

1.             Memorandum and Articles of Association of Amdocs Limited (incorporated
               by reference to Exhibits 3.1 and 3.2 to Amdocs' Registration Statement
               on Form F-1 dated June 19, 1998; Registration No. 333-8826)
2.a.1          Indenture dated May 30, 2001 between Amdocs and United States Trust
               Company of New York (incorporated by reference to Exhibit 4.1 to
               Amdocs' Form 6-K dated May 31, 2001)
2.a.2          Registration Rights Agreement dated May 30, 2001 between Amdocs and
               Goldman, Sachs & Co. (incorporated by reference to Exhibit 4.2 to
               Amdocs' Form 6-K dated May 31, 2001)
2.a.3          Indenture, dated March 5, 2004, between Amdocs Limited and The Bank of
               New York, as trustee, for 0.50% Convertible Senior Notes due 2024
               (incorporated by reference to Exhibit 99.1 to Amdocs' Form 6-K, filed
               March 5, 2004)
2.a.4          Registration Rights Agreement, dated March 5, 2004, among Amdocs
               Limited and Morgan Stanley & Co. Incorporated, Goldman, Sachs & Co.
               and Merrill Lynch, Pierce Fenner & Smith Incorporated (incorporated by
               reference to Exhibit 99.2 to Amdocs' Form 6-K, filed March 5, 2004)
4.a.1          Share Sale and Purchase Agreement, dated as of July 1, 2005, by and
               among DST Systems, Inc., Amdocs, Inc. and Amdocs Limited (incorporated
               by reference to Exhibit 99.1 to Amdocs' Form 6-K dated July 5, 2005)
4.a.2          Agreement and Plan of Merger, dated as of April 17, 2006, by and among
               Amdocs Limited, Amdocs Thesaurus, Inc., Qpass Inc. and Ray A.
               Rothrock, as Shareholders' Agent (incorporated by reference to Exhibit
               99.1 to Amdocs' Form 6-K dated April 21, 2006)
4.a.3          Share Sale and Purchase Agreement relating to Cramer Systems Group
               Limited, dated July 18, 2006, by and among Amdocs Limited, Amdocs
               Astrum Limited and certain shareholders of Cramer Systems Group
               Limited (incorporated by reference to Exhibit 99.1 to Amdocs' Form 6-K
               dated July 20, 2006)
4.a.4          Agreement, dated August 14, 2006, amending the Share Sale and Purchase
               Agreement relating to Cramer Systems Group Limited dated July 18,
               2006, by and among Amdocs Limited, Amdocs Astrum Limited and certain
               shareholders of Cramer Systems Group Limited (incorporated by
               reference to Exhibit 99.1 to Amdocs' Form 6-K dated August 17, 2006)
4.a.5          Agreement, dated September 14, 2006, amending the Share Sale and
               Purchase Agreement relating to Cramer Systems Group Limited dated July
               18, 2006, by and among Amdocs Limited, Amdocs Astrum Limited and
               certain shareholders of Cramer Systems Group Limited, as amended
               (incorporated by reference to Exhibit 99.1 to Amdocs' Form 6-K dated
               September 14, 2006)
4.b.1          Information Technology Services Agreement between Amdocs, Inc. and SBC
               Services, Inc. dated January 9, 2003 (confidential material has been
               redacted and complete exhibits have been separately filed with the
               Securities and Exchange Commission) (incorporated by reference to
               Exhibit 4.b.1 to Amdocs' Annual Report on Form 20-F for the fiscal
               year ended September 30, 2003)
4.b.2          Master Agreement for Software and Services between Amdocs, Inc. and
               SBC Operations, Inc., effective July 7, 1998 (confidential material
               has been redacted and complete exhibits have been separately filed
               with the Securities and Exchange Commission) (incorporated by
               reference to Exhibit 10.13 to Amdocs' Amendment No. 1 to Registration
               Statement on Form F-1, dated May 21, 1999, Registration No. 333-75151)
4.b.3          Software Master Agreement between Amdocs Software Systems Limited and
               SBC Services, Inc., effective December 10, 2003 (confidential material
               has been redacted and complete exhibits have been separately filed
               with the Securities and Exchange Commission) (incorporated by
               reference to Exhibit 99.2 to Amdocs' Amendment No. 1 to Registration
               Statement on Form F-3, dated September 21, 2004, Registration No. 333-
               114344)
4.b.4          Agreement between Amdocs Inc. and SBC Services, Inc. for Software and
               Professional Services, effective August 7, 2003 (confidential material
               has been redacted and complete exhibits have been separately filed
               with the Securities and Exchange Commission) (incorporated by
               reference to Exhibit 99.3 to Amdocs' Amendment No. 1 to Registration
               Statement on Form F-3, dated September 21, 2004, Registration No. 333-
               114344)
</Table>

<PAGE>

<Table>
<Caption>
   EXHIBIT
     NO.                                     DESCRIPTION
   -------                                   -----------

<S>            <C>
4.b.5          Amended and Restated Customer Care and Billing Services Agreement,
               dated as of July 1, 2006, between Sprint/United Management Company and
               Amdocs Software Systems Limited (confidential material has been
               redacted and complete exhibits have been separately filed with the
               Securities and Exchange Commission) (incorporated by reference to
               Exhibit 99.1 to Amdocs' Form 6-K dated December 13, 2006)
4.b.6          Agreement Amending the Further Amended and Restated Master Outsourcing
               Agreement and Master License and Services Agreement, dated as of
               October 5, 2006, between Bell Canada and Amdocs Canadian Managed
               Services Inc. (confidential material has been redacted and complete
               exhibits have been separately filed with the Securities and Exchange
               Commission) (incorporated by reference to Exhibit 99.2 to Amdocs' Form
               6-K dated December 13, 2006)
4.c.1          Amdocs Limited 1998 Stock Option and Incentive Plan, as amended
8              Subsidiaries of Amdocs Limited
12.1           Certification of Chief Executive Officer pursuant to Rule 13a-
               14(a)/15d-14(a)
12.2           Certification of Chief Financial Officer pursuant to Rule 13a-
               14(a)/15d-14(a)
13.1           Certification of Chief Executive Officer pursuant to 18U.S.C. 1350
13.2           Certification of Chief Financial Officer pursuant to 18U.S.C. 1350
14.1           Consent of Ernst & Young LLP
</Table>

<PAGE>

                                 AMDOCS LIMITED
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



<Table>
<Caption>
                                                                          PAGE
                                                                          ----

<S>                                                                       <C>

AUDITED CONSOLIDATED FINANCIAL STATEMENTS
  Management's Report on Internal Control Over Financial Reporting.....    F-2
  Reports of Independent Registered Public Accounting Firm.............    F-3
  Consolidated Balance Sheets as of September 30, 2006 and 2005........    F-5
  Consolidated Statements of Income for the years ended September 30,
     2006, 2005 and 2004...............................................    F-6
  Consolidated Statements of Changes in Shareholders' Equity for the
     years ended September 30, 2006, 2005 and 2004.....................    F-7
  Consolidated Statements of Cash Flows for the years ended September
     30, 2006, 2005 and 2004...........................................    F-8
  Notes to the Consolidated Financial Statements.......................   F-10
FINANCIAL STATEMENT SCHEDULE
  Valuation and Qualifying Accounts....................................   F-44
</Table>




                                       F-1

<PAGE>

        MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

     The management of the Company is responsible for establishing and
maintaining adequate internal control over financial reporting for the Company.
Internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles and includes those policies and
procedures that:

     - Pertain to the maintenance of records that in reasonable detail
       accurately and fairly reflect the transactions and dispositions of the
       assets of the Company;

     - Provide reasonable assurance that transactions are recorded as necessary
       to permit preparation of financial statements in accordance with
       generally accepted accounting principles, and that receipts and
       expenditures of the Company are being made only in accordance with
       authorizations of management and directors of the Company; and

     - Provide reasonable assurance regarding prevention or timely detection of
       unauthorized acquisition, use or disposition of the Company's assets that
       could have a material effect on the financial statements.

     Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.

     The Company's management assessed the effectiveness of the Company's
internal control over financial reporting as of September 30, 2006. In making
this assessment, the Company's management used the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
Internal Control-Integrated Framework.

     Based on its assessment, management concluded that, as of September 30,
2006, the Company's internal control over financial reporting is effective based
on those criteria.

     The financial statements and internal control over financial reporting have
been audited by Ernst & Young LLP, an independent registered public accounting
firm. Ernst & Young's report with respect to the management's assessment of the
Company's internal control over financial reporting is included herein.


                                       F-2

<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders
Amdocs Limited

     We have audited the accompanying consolidated balance sheets of Amdocs
Limited as of September 30, 2006 and 2005, and the related consolidated
statements of income, changes in shareholders' equity, and cash flows for each
of the three years in the period ended September 30, 2006. Our audits also
included the financial statement schedule listed in the Index at Item 18 of Part
III. These financial statements and the schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and the schedule based on our audits.

     We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (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, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion. Also, in our opinion, the related financial statement schedule,
when considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Amdocs Limited
at September 30, 2006 and 2005, and the consolidated results of its operations
and its cash flows for each of the three years in the period ended September 30,
2006, in conformity with U.S. generally accepted accounting principles.

     We also have audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), the effectiveness of Amdocs
Limited's internal control over financial reporting as of September 30, 2006,
based on criteria established in Internal Control-Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission and our
report dated November 30, 2006 expressed an unqualified opinion thereon.

                                                           /s/ ERNST & YOUNG LLP

New York, New York
November 30, 2006


                                       F-3

<PAGE>

     REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON MANAGEMENT'S
             ASSESSMENT OF INTERNAL CONTROL OVER FINANCIAL REPORTING

To the Board of Directors and Shareholders
Amdocs Limited

     We have audited management's assessment, included in the accompanying
Management's Report on Internal Control Over Financial Reporting, that Amdocs
Limited maintained effective internal control over financial reporting as of
September 30, 2006, based on criteria established in Internal
Control -- Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (the COSO criteria). Amdocs Limited's
management is responsible for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness of internal
control over financial reporting. Our responsibility is to express an opinion on
management's assessment and an opinion on the effectiveness of the company's
internal control over financial reporting based on our audit.

     We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal
control over financial reporting, evaluating management's assessment, testing
and evaluating the design and operating effectiveness of internal control, and
performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our
opinion.

     A company's internal control over financial reporting is a process designed
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.

     Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.

     In our opinion, management's assessment that Amdocs Limited maintained
effective internal control over financial reporting as of September 30, 2006, is
fairly stated, in all material respects, based on the COSO criteria. Also, in
our opinion, Amdocs Limited maintained, in all material respects, effective
internal control over financial reporting as of September 30, 2006, based on the
COSO criteria.

     We also have audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), the consolidated balance
sheets of Amdocs Limited as of September 30, 2006 and 2005, and the related
consolidated statements of income, changes in shareholders' equity, and cash
flows for each of the three years in the period ended September 30, 2006 and our
report dated November 30, 2006 expressed an unqualified opinion thereon.

                                                           /s/ ERNST & YOUNG LLP

New York, New York
November 30, 2006


                                       F-4

<PAGE>

                                 AMDOCS LIMITED

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


<Table>
<Caption>
                                                              AS OF SEPTEMBER 30,
                                                           -------------------------
                                                              2006           2005
                                                           ----------     ----------

<S>                                                        <C>            <C>

ASSETS
CURRENT ASSETS:
  Cash and cash equivalents.............................   $  607,187     $  707,552
  Short-term interest-bearing investments...............      372,194        438,011
  Accounts receivable, net..............................      425,805        304,237
  Deferred income taxes and taxes receivable............      136,044        101,162
  Prepaid expenses and other current assets.............       97,476         76,780
                                                           ----------     ----------
          TOTAL CURRENT ASSETS..........................    1,638,706      1,627,742
Equipment, vehicles and leasehold improvements, net.....      220,290        181,812
Deferred income taxes...................................      133,690        120,217
Goodwill................................................    1,461,606        969,639
Intangible assets, net..................................      347,716        159,619
Other noncurrent assets.................................      160,820        143,439
                                                           ----------     ----------
          TOTAL ASSETS..................................   $3,962,828     $3,202,468
                                                           ==========     ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
  Accounts payable......................................   $  148,398     $  114,392
  Accrued expenses and other current liabilities........      270,268        199,458
  Accrued personnel costs...............................      178,441        148,426
  Short-term portion of financing arrangements and
     capital lease obligations..........................        1,963          8,480
  Deferred revenue......................................      253,376        216,770
  Deferred income taxes and taxes payable...............      179,241        171,377
                                                           ----------     ----------
          TOTAL CURRENT LIABILITIES.....................    1,031,687        858,903
Convertible notes.......................................      450,000        450,272
Deferred income taxes...................................      129,339         50,571
Noncurrent liabilities and other........................      197,637        186,270
                                                           ----------     ----------
          TOTAL LIABILITIES.............................    1,808,663      1,546,016
                                                           ----------     ----------
SHAREHOLDERS' EQUITY:
  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; 233,932 and 227,321 issued and 206,793
     and 200,182 outstanding, in 2006 and 2005,
     respectively.......................................        3,763          3,644
  Additional paid-in capital............................    2,035,309      1,870,922
  Treasury stock, at cost -- 27,139 Ordinary Shares in
     2006 and 2005......................................     (602,392)      (602,392)
  Accumulated other comprehensive income (loss).........        2,723        (10,886)
  Unearned compensation.................................           --           (962)
  Retained earnings.....................................      714,762        396,126
                                                           ----------     ----------
          TOTAL SHAREHOLDERS' EQUITY....................    2,154,165      1,656,452
                                                           ----------     ----------
          TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY....   $3,962,828     $3,202,468
                                                           ==========     ==========

</Table>



The accompanying notes are an integral part of these consolidated financial
                                   statements.


                                       F-5

<PAGE>

                                 AMDOCS LIMITED

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


<Table>
<Caption>
                                                          YEAR ENDED SEPTEMBER 30,
                                                    ------------------------------------
                                                      2006(1)       2005         2004
                                                    ----------   ----------   ----------

<S>                                                 <C>          <C>          <C>

REVENUE:
  License.........................................  $  116,285   $  100,044   $   76,586
  Service.........................................   2,363,765    1,938,577    1,697,146
                                                    ----------   ----------   ----------
                                                     2,480,050    2,038,621    1,773,732
                                                    ----------   ----------   ----------
OPERATING EXPENSES:
     Cost of license..............................       4,003        4,083        5,022
     Cost of service..............................   1,579,823    1,291,572    1,117,810
     Research and development.....................     186,760      144,457      126,407
     Selling, general and administrative..........     313,997      232,066      210,384
     Amortization of purchased intangible assets..      37,610       15,356       17,909
     Restructuring charges, in-process research
       and development and other acquisition-
       related costs..............................      25,725       12,595           --
                                                    ----------   ----------   ----------
                                                     2,147,918    1,700,129    1,477,532
                                                    ----------   ----------   ----------
Operating income..................................     332,132      338,492      296,200
Interest income and other, net....................      41,741       22,303        4,903
                                                    ----------   ----------   ----------
Income before income taxes........................     373,873      360,795      301,103
Income taxes......................................      55,237       72,159       66,243
                                                    ----------   ----------   ----------
NET INCOME........................................  $  318,636   $  288,636   $  234,860
                                                    ==========   ==========   ==========
BASIC EARNINGS PER SHARE..........................  $     1.57   $     1.44   $     1.13
                                                    ==========   ==========   ==========
DILUTED EARNINGS PER SHARE........................  $     1.48   $     1.35   $     1.08
                                                    ==========   ==========   ==========
BASIC WEIGHTED AVERAGE NUMBER OF SHARES
  OUTSTANDING.....................................     203,194      201,023      208,726
                                                    ==========   ==========   ==========
DILUTED WEIGHTED AVERAGE NUMBER OF SHARES
  OUTSTANDING.....................................     218,534      217,162      220,285
                                                    ==========   ==========   ==========

</Table>


--------

   (1) The twelve months ended September 30, 2006 include equity-based
       compensation pre-tax expense of $46,178, which was classified as follows:
       $18,042 to cost of service, $4,711 to research and development and
       $23,425 to selling, general and administrative.

The accompanying notes are an integral part of these consolidated financial
                                   statements.


                                       F-6

<PAGE>

                                 AMDOCS LIMITED

           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                 (IN THOUSANDS)



<Table>
<Caption>
                                                                       ACCUMULATED
                                                                          OTHER                      RETAINED
                              ORDINARY SHARES  ADDITIONAL             COMPREHENSIVE                  EARNINGS        TOTAL
                              ---------------    PAID-IN    TREASURY      INCOME       UNEARNED    (ACCUMULATED  SHAREHOLDERS'
                               SHARES  AMOUNT    CAPITAL     STOCK        (LOSS)     COMPENSATION    DEFICIT)        EQUITY
                              -------  ------  ----------  ---------  -------------  ------------  ------------  -------------

<S>                           <C>      <C>     <C>         <C>        <C>            <C>           <C>           <C>

BALANCE AS OF OCTOBER 1,
  2003......................  216,058  $3,580  $1,820,956  $(109,281)    $  3,715       $    --      $(127,370)    $1,591,600
Comprehensive income:
  Net income................       --      --          --         --           --            --        234,860        234,860
  Unrealized loss on foreign
     currency hedging
     contracts, net of
     $(1,575) tax...........       --      --          --         --       (4,915)           --             --         (4,915)
  Unrealized loss on short-
     term interest-bearing
     investments, net of
     $(204) tax.............       --      --          --         --         (719)           --             --           (719)
                                                                                                                   ----------
  Comprehensive income......                                                                                          229,226
                                                                                                                   ----------
Employee stock options
  exercised.................    1,157      21      12,056         --           --            --             --         12,077
Tax benefit of stock options
  exercised.................       --      --       3,094         --           --            --             --          3,094
Repurchase of shares........  (16,442)     --          --   (407,527)          --            --             --       (407,527)
Issuance of Ordinary Shares
  related to acquisition,
  net.......................      561      --         747     14,392           --            --             --         15,139
Stock options granted, net
  of forfeitures............       --      --         749         --           --          (749)            --             --
Amortization of unearned
  compensation..............       --      --          --         --           --           575             --            575
Expense related to vesting
  of stock options..........       --      --           6         --           --            --             --              6
                              -------  ------  ----------  ---------     --------       -------      ---------     ----------
BALANCE AS OF SEPTEMBER 30,
  2004......................  201,334   3,601   1,837,608   (502,416)      (1,919)         (174)       107,490      1,444,190
Comprehensive income:
  Net income................       --      --          --         --           --            --        288,636        288,636
  Unrealized loss on foreign
     currency hedging
     contracts, net of
     $(1,927) tax...........       --      --          --         --       (7,865)           --             --         (7,865)
  Unrealized loss on short-
     term interest-bearing
     investments, net of
     $(253) tax.............       --      --          --         --       (1,102)           --             --         (1,102)
                                                                                                                   ----------
  Comprehensive income......                                                                                          279,669
                                                                                                                   ----------
Employee stock options
  exercised.................    2,229      41      23,983         --           --            --             --         24,024
Tax benefit of stock options
  exercised.................       --      --       3,147         --           --            --             --          3,147
Repurchase of shares........   (3,525)     --          --    (99,976)          --            --             --        (99,976)
Issuance of restricted stock
  and stock options related
  to acquisitions, net......      144       2       6,034         --           --        (1,428)            --          4,608
Amortization of unearned
  compensation..............       --      --          --         --           --           640             --            640
Expense related to vesting
  of stock options..........       --      --         150         --           --            --             --            150
                              -------  ------  ----------  ---------     --------       -------      ---------     ----------
BALANCE AS OF SEPTEMBER 30,
  2005......................  200,182   3,644   1,870,922   (602,392)     (10,886)         (962)       396,126      1,656,452
     Comprehensive income:
  Net income................       --      --          --         --           --            --        318,636        318,636
  Unrealized gain on foreign
     currency hedging
     contracts, net of
     $1,847 tax.............       --      --          --         --       11,938            --             --         11,938
  Unrealized gain on short-
     term interest-bearing
     investments, net of
     $485 tax...............       --      --          --         --        1,671            --             --          1,671
                                                                                                                   ----------
  Comprehensive income......                                                                                          332,245
                                                                                                                   ----------
Employee stock options
  exercised.................    5,869     106     106,853         --           --            --             --        106,959
Tax benefit of stock options
  exercised.................       --      --       7,619         --           --            --             --          7,619
Issuance of restricted
  stock, net of
  cancellations.............      742      13          --         --           --            --             --             13
Issuance of restricted stock
  and stock options related
  to acquisitions, net......       --      --       4,634         --           --            --             --          4,634
Equity-based compensation
  expense related to
  employees.................       --      --      46,178         --           --            --             --         46,178
Reclassification of unearned
  compensation to additional
  paid-in capital...........       --      --        (962)        --           --           962             --             --
Equity-based compensation
  expense related to non
  employee stock options....       --      --          65         --           --            --             --             65
                              -------  ------  ----------  ---------     --------       -------      ---------     ----------
BALANCE AS OF SEPTEMBER 30,
  2006......................  206,793  $3,763  $2,035,309  $(602,392)    $  2,723       $    --      $ 714,762     $2,154,165
                              =======  ======  ==========  =========     ========       =======      =========     ==========

</Table>



     As of September 30, 2006, 2005 and 2004, accumulated other comprehensive
income (loss) is comprised of unrealized (loss) gain on derivatives, net of tax,
of $2,841, $(9,097) and $(1,232) and unrealized loss on cash equivalents and
short-term interest-bearing investments, net of tax, of $(118), $(1,789) and
$(687).

The accompanying notes are an integral part of these consolidated financial
                                   statements.


                                       F-7

<PAGE>

                                 AMDOCS LIMITED

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)



<Table>
<Caption>
                                                          YEAR ENDED SEPTEMBER 30,
                                                   -------------------------------------
                                                       2006         2005         2004
                                                   -----------   ---------   -----------

<S>                                                <C>           <C>         <C>

CASH FLOW FROM OPERATING ACTIVITIES:
Net income.......................................  $   318,636   $ 288,636   $   234,860
Reconciliation of net income to net cash provided
  by operating activities:
     Depreciation and amortization...............      117,900      93,828       100,877
     In-process research and development
       expenses..................................       25,725       2,760            --
     Equity-based compensation expense...........       46,178          --            --
     Loss (gain) on sale of equipment............          789        (786)       (1,436)
     Deferred income taxes.......................       22,811       8,062       (11,272)
     Excess tax benefit from equity-based
       compensation..............................         (722)         --            --
     Tax benefit of stock options exercised......           --       3,147         3,094
     Realized (gain) loss from short-term
       interest-bearing investments and other....       (4,030)       (657)        1,850
Net changes in operating assets and liabilities,
  net of amounts acquired:
  Accounts receivable............................      (79,363)    (15,106)      (53,723)
  Prepaid expenses and other current assets......      (10,536)      3,667         1,856
  Other noncurrent assets........................      (18,313)    (17,593)      (44,401)
  Accounts payable and accrued expenses..........       54,569      26,542        31,697
  Deferred revenue...............................      (52,050)     (5,702)       46,713
  Income taxes payable...........................      (10,796)     (6,643)       33,773
  Noncurrent liabilities and other...............       18,422       1,596           516
                                                   -----------   ---------   -----------
Net cash provided by operating activities........      429,220     381,751       344,404
                                                   -----------   ---------   -----------
CASH FLOW FROM INVESTING ACTIVITIES:
Proceeds from sale of equipment, vehicles and
  leasehold improvements.........................        4,274       5,829         4,431
Payments for purchase of equipment, vehicles and
  leasehold improvements.........................      (80,717)    (71,374)      (54,148)
Purchase of short-term interest-bearing
  investments....................................   (1,216,259)   (747,073)   (1,325,383)
Proceeds from sale of short-term interest-bearing
  investments....................................    1,288,261     948,711     1,125,538
Net cash paid for acquisitions...................     (624,801)   (262,253)      (10,651)
                                                   -----------   ---------   -----------
Net cash used in investing activities............     (629,242)   (126,160)     (260,213)
                                                   -----------   ---------   -----------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from employee stock options exercised...      106,853      24,024        12,077
Excess tax benefit from equity-based
  compensation...................................          722          --            --
Repurchase of shares.............................           --     (99,976)     (407,527)
Repurchase of 2% convertible notes...............          (97)         --      (400,169)
Net proceeds from issue of long-term 0.50%
  convertible notes..............................           --          --       441,610
Borrowings under financing arrangements..........           --          --           987
Principal payments under financing arrangements..       (4,677)       (667)       (2,213)
Principal payments on capital lease obligations..       (3,144)    (21,772)      (26,204)
                                                   -----------   ---------   -----------
Net cash provided by (used in) financing
  activities.....................................       99,657     (98,391)     (381,439)
                                                   -----------   ---------   -----------
Net (decrease) increase in cash and cash
  equivalents....................................     (100,365)    157,200      (297,248)
Cash and cash equivalents at beginning of year...      707,552     550,352       847,600
                                                   -----------   ---------   -----------
Cash and cash equivalents at end of year.........  $   607,187   $ 707,552   $   550,352
                                                   ===========   =========   ===========

</Table>



The accompanying notes are an integral part of these consolidated financial
                                   statements.


                                       F-8

<PAGE>

                                 AMDOCS LIMITED

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


<Table>
<Caption>
                                                           YEAR ENDED SEPTEMBER 30,
                                                         ---------------------------
                                                           2006      2005      2004
                                                         -------   -------   -------

<S>                                                      <C>       <C>       <C>

SUPPLEMENTARY CASH FLOW INFORMATION
Interest and Income Taxes Paid Cash paid for:
  Income taxes, net of refunds.........................  $40,861   $62,668   $35,677
  Interest.............................................    2,630     5,233    11,940
</Table>



The accompanying notes are an integral part of these consolidated financial
                                   statements.


                                       F-9

<PAGE>

                                 AMDOCS LIMITED

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
         (DOLLAR AND SHARE AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
                               SEPTEMBER 30, 2006

NOTE 1 -- NATURE OF ENTITY

     Amdocs Limited (the "Company") is a leading provider of software products
and services to the communications industry. The Company and its subsidiaries
operate in one segment, providing integrated offering products and services that
enable its customers to move toward an integrated approach to customer
management. The Company designs, develops, markets, supports, operates and
provides information system solutions, including Managed Services, primarily to
leading communications companies throughout the world.

     The Company is a Guernsey corporation, which directly or indirectly holds
several wholly owned subsidiaries around the world. The majority of the
Company's customers are in North America, Europe, Latin America and the Asia-
Pacific region. The Company's main production and operating facilities are
located in Israel, the United States, United Kingdom, Cyprus, Australia, Canada,
China, Ireland and India.

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  BASIS OF PRESENTATION

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

  CONSOLIDATION

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

  FUNCTIONAL CURRENCY

     The Company manages its foreign subsidiaries as integral direct components
of its operations. According to the salient economic factors indicated in
Statement of Financial Accounting Standards ("SFAS") No. 52, "Foreign Currency
Translation," the Company's cash flow, sales price, sales market, expense,
financing and intercompany transactions and arrangement indicators are
predominantly denominated in the U.S. dollar. The operations of the Company's
foreign subsidiaries provide the same type of services with the same type of
expenditures throughout the Amdocs group. Accordingly, the Company has
determined that its functional currency is the U.S. dollar. The Company
periodically assesses the applicability of the U.S. dollar as the Company's
functional currency by reviewing the salient indicators.

  CASH AND CASH EQUIVALENTS

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

  INVESTMENTS

     The Company classifies all of its short-term interest-bearing investments
as available-for-sale securities. Such short-term interest-bearing investments
consist primarily of commercial paper, U.S. treasury notes, U.S. federal agency
securities, corporate bonds, corporate backed obligations and mortgages, which
are stated at market value. Unrealized gains and losses are comprised of the
difference between market value and amortized costs of such securities and are
reflected, net of tax, as "accumulated other comprehensive income (loss)" in
shareholders' equity. Realized gains and losses on short-term interest-bearing
investments are included in earnings and are derived using the specific
identification method for determining the cost of securities.


                                      F-10

<PAGE>

                                 AMDOCS LIMITED

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

  EQUIPMENT, VEHICLES AND LEASEHOLD IMPROVEMENTS

     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
primarily ranges from 3 to 10 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 related 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.

  GOODWILL AND OTHER INTANGIBLE ASSETS

     SFAS No. 141, "Business Combinations" ("SFAS No. 141") requires that the
purchase method of accounting be used for all business combinations. Under SFAS
No. 142, "Goodwill and Other Intangible Assets," goodwill and intangible assets
deemed to have indefinite lives are subject to an annual impairment test in
accordance with the Statement. Goodwill impairment is deemed to exist if the net
book value of a reporting unit exceeds its estimated fair value. Other
intangible assets are amortized over their useful lives.

     The total purchase price of business acquisitions accounted for using the
purchase method is allocated first to identifiable assets and liabilities based
on estimated fair values. The excess of the purchase price over the fair value
of net assets of purchased businesses is recorded as goodwill.

     Other intangible assets consist primarily of purchased computer software,
intellectual property rights, core technology and customer arrangements.
Intellectual property rights, purchased computer software and core technology
acquired by the Company are amortized over their estimated useful lives on a
straight-line basis.

     Some of the acquired customer arrangements are amortized over their
estimated useful lives in proportion to the economic benefits realized. This
accounting policy results in accelerated amortization of such customer
arrangements as compared to the straight-line method. All other acquired
customer arrangements are amortized over their estimated useful lives on a
straight-line basis.

  LONG-LIVED ASSETS

     The Company considers whether there are indicators of impairment that would
require the comparison of the estimated net realizable value of intangible
assets with finite lives, equipment, leasehold improvements and vehicles and
other long-lived assets, using an undiscounted cash flow analysis, to their
carrying value under SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets." Any impairment would be recognized when the fair market
value of such long-lived assets is less than their carrying value. During the
year ended September 30, 2004, the Company identified and recognized an
impairment charge (included in cost of service) of $2,785 related to software
technology that the Company had no future use for, and therefore was abandoned.

  COMPREHENSIVE INCOME (LOSS)

     The Company accounts for comprehensive income (loss) under the provisions
of SFAS No. 130, "Reporting Comprehensive Income," which established standards
for the reporting and display of comprehensive income (loss) and its components.
Comprehensive income (loss) 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>

                                 AMDOCS LIMITED

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

  CONVERTIBLE NOTES

     Accrued interest on the Company's convertible notes is included in "accrued
expenses and other current liabilities." The Company amortizes the issuance
costs related to the convertible notes on a straight-line basis over the term of
the convertible notes. The amortized issuance cost calculated on a pro-rata
basis, related to the repurchased 0.5% convertible notes, is included in
"interest income and other, net."

  TREASURY STOCK

     The Company repurchases its Ordinary Shares from time to time on the open
market or in other transactions and holds such shares as treasury stock. The
Company presents the cost to repurchase treasury stock as a reduction of
shareholders' equity.

  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 and tax purposes. Deferred taxes are computed based on tax
rates anticipated to be in effect when the deferred taxes are expected to be
paid or realized. A valuation allowance is provided for deferred tax assets if
it is more likely than not these items will either expire before the Company is
able to realize their benefit, or where future deductibility is uncertain. In
the event that a valuation allowance relating to a business acquisition is
subsequently reduced, the adjustment will reduce the original amount allocated
to goodwill.

     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.

     It is the Company's policy to establish accruals for taxes that may become
payable in future years as a result of examinations by tax authorities. The
Company establishes the accruals based upon management's assessment of probable
contingencies. The Company believes it has appropriately accrued for probable
contingencies.

  REVENUE RECOGNITION

     Revenue is recognized only when all of the following conditions have been
met: (i) there is persuasive evidence of an arrangement; (ii) delivery has
occurred; (iii) the fee is fixed and determinable; and (iv) collectibility of
the fee is reasonably assured. The Company usually sells its software licenses
as part of an overall solution offered to a customer that combines the sale of
software licenses with a broad range of services, which normally include
significant customization, modification, implementation and integration. As a
result, combined license and service revenue generally is recognized over the
course of these long-term projects, using the percentage of completion method of
accounting in conformity with Accounting Research Bulletin ("ARB") No. 45, "Long
Term Construction-Type Contracts," Statement of Position ("SOP") 81-1,
"Accounting for Performance of Construction-Type and Certain Production-Type
Contracts" and SOP 97-2, "Software Revenue Recognition." Losses are recognized
on contracts in the period in which the loss is identified in accordance with
SOP 81-1.

     Initial license fee for software revenue is recognized as work is
performed, under the percentage of completion method of accounting. Subsequent
license fee revenue is recognized upon completion of specified conditions in
each contract, based on a customer's subscriber level or transaction volume or
other measurements when greater than the level specified in the contract for the
initial license fee.


                                      F-12

<PAGE>

                                 AMDOCS LIMITED

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

     Service revenue that involves significant ongoing obligations, including
fees for software customization, implementation and modification as part of a
long-term contract is recognized as work is performed, under the percentage of
completion method of accounting. In cases where extended payment terms exist,
license and related customization fees are recognized when payments are due, in
accordance with SOP 97-2. Revenue from software solutions that do not require
significant customization and modification is recognized upon delivery or as
services are provided, in accordance with SAB 104, "Revenue Recognition" and SOP
97-2. The Company complies with Emerging Issues Task Force ("EITF") 03-05,
"Applicability of AICPA SOP 97-2 to Non-Software Deliverables in an Arrangement
Containing More Than Incidental Software."

     In Managed Services contracts as well as in other long term contracts,
revenue from the operation of a customer's system is recognized either as
services are performed based on time elapsed, output produced or volume of data
processed. Revenue from ongoing support services is recognized as work is
performed.

     Revenue from third-party hardware sales is recognized upon delivery and
installation, and revenue from third-party software sales is recognized upon
delivery. Revenue from third-party hardware and software sales is recorded
according to the criteria established in EITF 99-19, "Recording Revenue Gross as
a Principal versus Net as an Agent" and SAB 104. Revenue is recorded at gross
amount for transactions in which the Company is the primary obligor under the
arrangement and/or possesses other attributes such as pricing and supplier
selection latitude. In specific circumstances where the Company does not meet
the above criteria, particularly when the contract stipulates that the Company
is not the primary obligor, the Company recognizes revenue on a net basis.

     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 was less than 10% of total revenue in each of fiscal 2006,
2005 and 2004.

     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 a significant portion of the Company's revenue being subject
to the percentage of completion accounting method, 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.

     Many of the Company's agreements include multiple deliverables. For these
multiple element arrangements, the fair value of each component is determined
based on specific objective evidence for that element and revenue is allocated
to each component based upon its fair value. The revenue associated with each
element is recognized using the respective methodology discussed above. The
Company uses the residual method in accordance with SOP 97-2 and EITF 00-21,
"Revenue Arrangements with Multiple Deliverables," in multiple element
arrangements that include license for the sale of software solutions that do not
require significant customization and modification and first year maintenance to
determine the appropriate value for the license component.

     In circumstances where the Company enters into a contract with a customer
for the provision of Managed Services for a defined period of time, the Company
defers, in accordance with SAB 104, certain incremental costs incurred at the
inception of the contract. These costs include time and expense incurred in
association with the origination of a contract. The deferred costs are amortized
on a straight-line basis over the life of the respective customer contract.
Revenue associated with these capitalized costs is deferred and is recognized
over the same period.

     In cases where extended payment terms exist and revenue is deferred until
payments are due, related costs are capitalized as contract costs and recognized
as revenue is recognized.


                                      F-13

<PAGE>

                                 AMDOCS LIMITED

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

     Deferred revenue represents billings to customers for licenses, services
and third-party products for which revenue has not been recognized. Unbilled
accounts receivable include all revenue amounts that had not been billed as of
the balance sheet date due to contractual or other arrangements with customers.
Allowances that are netted against accounts receivable represent amounts
provided for accounts for which their collectibility is not reasonably assured.

  COST OF LICENSE AND COST OF SERVICE

     Cost of license and cost of service consist of all costs associated with
providing services to customers, including identified losses on contracts and
warranty expense. Estimated losses on contracts are recognized in the period in
which the loss is identified in accordance with SOP 81-1. 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 royalty payments to software suppliers,
amortization of purchased computer software and intellectual property rights.

     Cost of service also includes costs of third-party products associated with
reselling third-party computer hardware and software products to customers, when
revenue from third-party products is recorded at the gross amount. Customers
purchasing third-party products from the Company generally do so in conjunction
with the purchase of services.

  RESEARCH AND DEVELOPMENT

     Research and development expenditures consist of costs incurred in the
development of new software modules and product offerings, either as part of the
Company's internal product development programs or in conjunction with customer
projects. Research and development costs, which are incurred in conjunction with
a customer project, are expensed as incurred.

     Based on the Company's product development process, technological
feasibility, as defined in SFAS No. 86, "Accounting for the Costs of Computer
Software to be Sold, Leased or Otherwise Marketed," 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.

  EMPLOYEE BENEFIT PLANS

     The Company maintains a non-contributory defined benefit plan for one of
its Canadian subsidiaries that provides for pensions for substantially all of
that subsidiary's employees based on length of service and rate of pay.
Additionally, the Company provides to these employees other retirement benefits
such as certain health care and life insurance benefits on retirement and
various disability plans, workers' compensation and medical benefits to former
or inactive employees, their beneficiaries and covered dependants, after
employment but before retirement, under specified circumstances.

     The Company accrues its obligations to these employees under employee
benefit plans and the related costs net of returns on plan assets. Pension
expense and other retirement benefits earned by employees are actuarially
determined using the projected benefit method pro-rated on service and based on
management's best estimates of expected plan investments performance, salary
escalation, retirement ages of employees and expected health care costs.

     The fair value of the employee benefit plans' assets is based on market
values. The plan assets are valued at market value for the purpose of
calculating the expected return on plan assets and the amortization of
experience gains and losses. Past service costs, which may arise from plan
amendments, are amortized on a straight-line basis over the average remaining
service period of the employees who were active at the date of

                                      F-14

<PAGE>

                                 AMDOCS LIMITED

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

amendment. The excess of the net actuarial gain (loss) over 10% of the greater
of the benefit obligation and the market-related value of plan assets is
amortized over the average remaining service period of active employees.

  EQUITY-BASED COMPENSATION

     Effective October 1, 2005, the Company adopted FASB Statement No. 123
(revised 2004), "Share-Based Payment," a revision of SFAS No. 123 ("SFAS
123(R)"). SFAS 123(R) supersedes Accounting Principles Board ("APB") Opinion No.
25, "Accounting for Stock Issued to Employees" ("APB No. 25") and related
interpretations, and amends FASB Statement No. 95, "Statement of Cash Flows."
Generally, the approach in SFAS 123(R) is similar to the approach described in
SFAS 123. However, SFAS 123(R) requires all equity-based payments to employees,
including grants of employee stock options, to be recognized in the income
statement based on their fair values. Pro forma disclosure is no longer an
alternative. In March 2005, the SEC issued Staff Accounting Bulletin No. 107
("SAB 107"), which provides supplemental implementation guidance on SFAS 123(R).
The Company has applied the provisions of SAB 107 in its adoption of SFAS
123(R).

     Prior to October 1, 2005, the Company accounted for equity-based payments
to employees under the recognition and measurement provisions of APB No. 25.
Pursuant to these accounting standards, the Company recorded deferred
compensation for stock 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, and for restricted stock based on the
market value of the underlying shares at the date of grant. No compensation
expense was recorded for stock options that were granted to employees and
directors at an exercise price equal to or greater than the fair market value of
the Ordinary Shares at the time of the grant.

     The Company adopted SFAS 123(R) using the modified prospective method.
Under this transition method, compensation costs recognized in fiscal 2006
include (a) compensation costs for all equity-based payments granted prior to,
but that had not yet vested as of, October 1, 2005, based on the grant date fair
value estimated in accordance with the pro forma provisions of SFAS 123, and (b)
compensation costs for the equity-based payments granted subsequent to October
1, 2005, based on the grant date fair value estimated in accordance with SFAS
123(R). The Company's consolidated financial statements for prior periods have
not been restated to reflect, and do not include, the impact of SFAS 123(R). The
Company selected the Black-Scholes option pricing model as the most appropriate
fair value method for its stock-options awards and values restricted stock based
on the market value of the underlying shares at the date of grant. The Company
recognizes compensation costs using the graded vesting attribution method that
results in an accelerated recognition of compensation costs in comparison to the
straight line method.

     As a result of adopting SFAS 123(R) on October 1, 2005, the Company's
income before income taxes and net income for fiscal 2006 (not including
restricted stock expense) were $40,432 and $35,725, respectively, lower, than if
the Company had continued to account for equity-based compensation under APB No.
25. Basic and diluted earnings per share for fiscal 2006 were $0.17 and $0.15
lower, respectively, than if the Company had continued to account for share
based compensation under APB No. 25. The total income tax benefit recognized in
the income statement for equity-based compensation (including restricted stock)
for fiscal 2006 was $5,575, and $0 for fiscal 2005.

     Prior to the adoption of SFAS 123(R), the Company presented all tax
benefits of deductions resulting from the exercise of stock options as operating
cash flows in the statement of cash flows. SFAS 123(R) requires the cash flows
resulting from the tax deductions in excess of the compensation costs recognized
for those stock options to be classified as financing cash flows. The $722
excess tax benefit classified as financing cash inflows would have been
classified as an operating cash inflow if the Company had not adopted SFAS
123(R).


                                      F-15

<PAGE>

                                 AMDOCS LIMITED

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

     The Company uses a combination of implied volatility of the Company's
traded options and historical stock price volatility ("blended volatility") as
the expected volatility assumption required in the Black-Scholes option
valuation model. Prior to October 1, 2005, the Company had used its historical
stock price volatility in accordance with SFAS 123 for purposes of presenting
its pro forma information. The selection of the blended volatility approach was
based upon the availability of traded options on the Company's shares and the
Company's assessment that blended volatility is more representative of future
share price trends than historical volatility. As equity-based compensation
expense recognized in the Company's consolidated statement of income for fiscal
2006 is based on awards ultimately expected to vest, such expense has been
reduced for estimated forfeitures. SFAS 123(R) requires forfeitures to be
estimated at the time of grant and revised, if necessary, in subsequent periods
if actual forfeitures differ from those estimates. In the Company's pro forma
information required under SFAS 123 for the periods prior to fiscal 2006, the
Company accounted for forfeitures as they occurred.

  FAIR VALUE OF FINANCIAL INSTRUMENTS

     The financial instruments of the Company consist mainly of cash and cash
equivalents, short-term interest-bearing investments, accounts receivable,
accounts payable, short-term financing arrangements, forward exchange contracts
and options, lease obligations and convertible notes. The fair value of the
financial instruments, excluding the convertible notes (for which the fair value
as of September 30, 2006 is approximately $481,000), 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. See Note 21.

  CONCENTRATIONS OF CREDIT RISK

     Financial instruments that potentially subject the Company to concentration
of credit risk consist principally of cash and cash equivalents, short-term
interest-bearing investments and trade receivables. The Company invests its
excess cash primarily in highly liquid U.S. dollar-denominated securities
primarily with major U.S. institutions. The Company does not expect any credit
losses with respect to these items.

     The Company's revenue is generated primarily in North America and Europe.
To a lesser extent, revenue is generated in the Asia-Pacific region and Latin
America. Most of the Company's customers are among the largest communications
and directory publishing companies in the world (or are owned by them). The
Company's business is subject to the effects of general global economic
conditions and, in particular, market conditions in the communications industry.
The Company performs ongoing credit analyses of its customer base and generally
does not require collateral. The allowance for doubtful accounts is for
estimated losses resulting from the inability of the Company's customers to make
required payments. The Company evaluates accounts receivable to determine if
they will ultimately be collected. In performing this evaluation, significant
judgments and estimates are involved, such as past experience, credit quality of
the customer, age of the receivable balance and current economic conditions that
may affect a customer's ability to pay. As of September 30, 2006, the Company
had two customers that had accounts receivable balances of more than 10% of
total accounts receivable, aggregating 23.4% (12.1% and 11.3%). As of September
30, 2005, the Company had two customers that had accounts receivable balances of
more than 10% of total accounts receivable, aggregating 21.7% (11.0% and 10.7%).

  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

                                      F-16

<PAGE>

                                 AMDOCS LIMITED

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

are 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 dilutive outstanding
equity-based awards using the treasury stock method and the effect of dilutive
outstanding convertible notes using the if-converted method.

  DERIVATIVES AND HEDGING

     The Company accounts for derivatives and hedging based on SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," as amended and
related Interpretations. SFAS No. 133 requires the Company to recognize all
derivatives on the balance sheet at fair value. If a derivative meets the
definition of a hedge and is so designated, depending on the nature of the
hedge, changes in the fair value of the derivative 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.

  GUARANTOR'S ACCOUNTING AND DISCLOSURE REQUIREMENTS FOR GUARANTEES

     The Company follows FASB Interpretation No. 45, "Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others" ("FIN No. 45"). FIN No. 45 requires that, at the
inception of certain types of guarantees, the guarantor must disclose and
recognize a liability for the fair value of the obligation it assumes under the
guarantee.

  RECLASSIFICATIONS

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

  RECENT ACCOUNTING PRONOUNCEMENTS

     In September 2006, the Financial Accounting Standards Board (FASB) issued
Statement No. 158, "Employers' Accounting for Defined Benefit Pension and Other
Postretirement Plans," an amendment of FASB Statements No. 87, 88, 106 and
132(R) ("SFAS 158"). SFAS 158 requires an entity to recognize in its statement
of financial position an asset for a defined benefit postretirement plan's over
funded status or a liability for a plan's under funded status, measure a defined
benefit postretirement plan's assets and obligations that determine its funded
status as of the end of the employer's fiscal year, and recognize changes in the
funded status of a defined benefit postretirement plan in comprehensive income
in the year in which the changes occur.

     SFAS 158 does not change the amount of net periodic benefit cost included
in net income or address the various measurement issues associated with
postretirement benefit plan accounting. The requirement to recognize the funded
status of a defined benefit postretirement plan and the disclosure requirements
are effective for fiscal years ending after December 15, 2006. The requirement
to measure plan assets and benefit obligations as of the date of the employer's
fiscal year-end statement of financial position is effective for fiscal years
ending after December 15, 2008. The Company is currently evaluating the effect
that the application of SFAS 158 will have on its consolidated results of
operations and financial condition.

     In September 2006, the FASB issued Statement No. 157, "Fair Value
Measurements" ("SFAS 157"). SFAS 157 defines fair value, establishes a framework
for measuring fair value in generally accepted accounting principles, and
expands disclosures about fair value measurements. SFAS No. 157 applies under
other accounting pronouncements that require or permit fair value measurements.
SFAS 157 will be effective for fiscal years beginning after November 15, 2007,
and interim periods within those fiscal years.

                                      F-17

<PAGE>

                                 AMDOCS LIMITED

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

The Company is currently evaluating the effect that the application of SFAS 157
will have on our consolidated results of operations and financial condition.

     In September 2006, the SEC issued Staff Accounting Bulletin No. 108,
"Financial Statements -- Considering the Effects of Prior Year Misstatements
when Quantifying Misstatements in Current Year Financial Statements" ("SAB
108"). SAB 108 requires companies to quantify the impact of all correcting
misstatements, including both the carryover and reversing effects of prior year
misstatements, on the current year financial statements. SAB 108 is effective
for fiscal years ending after November 15, 2006. The Company does not believe
SAB 108 will have a material effect on its financial statements and related
disclosures.

     In June 2006, the FASB issued Interpretation No. 48, "Accounting for
Uncertainty in Income Taxes," An Interpretation of SFAS No. 109," ("FIN 48").
FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an
enterprise's financial statements in accordance with SFAS No. 109, "Accounting
for Income Taxes." FIN 48 also prescribes a recognition threshold and
measurement attribute for the financial statement recognition and measurement of
a tax position taken or expected to be taken in a tax return that results in a
tax benefit. Additionally, FIN 48 provides guidance on de-recognition, income
statement classification of interest and penalties, accounting in interim
periods, disclosure, and transition. This interpretation is effective for fiscal
years beginning after December 15, 2006. The Company is currently evaluating the
effect that the application of FIN 48 will have on our consolidated results of
operations and financial condition.

     In February 2006, the FASB issued Statement No. 155, "Accounting for
Certain Hybrid Financial Instruments," an amendment of FASB Statement No. 133
and 140 ("FAS 155"), which permits fair value measurement for any hybrid
financial instrument that contains an embedded derivative that otherwise would
require bifurcation, with changes in fair value recognized in earnings. The
fair-value election will eliminate the need to separately recognize certain
derivatives embedded in hybrid financial instruments under FASB Statement No.
133, "Accounting for Derivative Instruments and Hedging Activities." The Company
is currently evaluating the effect of SFAS 155, which is effective for all
financial instruments acquired or issued after the beginning of the first fiscal
year that begins after September 15, 2006.

  USE OF ESTIMATES

     The preparation of financial statements in conformity with U.S. 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. Actual results could differ from those estimates.

NOTE 3 -- ACQUISITIONS

  CRAMER

     On August 14, 2006, the Company acquired all of the capital stock of Cramer
Systems Group Limited, or Cramer, a privately-held leading provider of
operations support systems (OSS) solutions. The Company expects that this
acquisition will enable it to leverage and greatly enhance its current assets in
the BSS (business support systems) and OSS market.

     The aggregate purchase price for Cramer was $417,228, which consisted of
$410,551 in cash (including cash on hand), $2,228 related to the assumption of
stock options and restricted shares held by Cramer employees and $4,449 of
transaction costs. The purchase price is subject to post closing adjustments
which the Company expects will not be material. The fair value of the stock
options was estimated using the Black-Scholes option pricing model and the fair
value of the restricted shares was valued based on the market

                                      F-18

<PAGE>

                                 AMDOCS LIMITED

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

value of the underlying shares at the date of grant (see note 17). The
acquisition was accounted for as a business combination using the purchase
method of accounting, as required by SFAS No. 141. The fair market value of
Cramer assets and liabilities has been included in the Company's consolidated
balance sheet and the results of Cramer's operations have been included in the
Company's consolidated statements of income, commencing on August 15, 2006. The
Company obtained a preliminary independent valuation of the intangible assets
acquired in the Cramer transaction. The total purchase price was allocated to
Cramer's assets and liabilities, including identifiable intangibles, based on
their respective estimated fair values, on the date the transaction was
consummated. The value of acquired technology included both existing technology
and in-process research and development. The valuation of these items was
determined by applying the income forecast method, which considered the present
value of cash flows by product lines. Of the $177,203 of acquired identifiable
intangible assets, $17,310 was assigned to in-process research and development
related to the next two major releases of Cramer's current technology, of which
one was launched during the first quarter of fiscal 2007. The in-process
research and development was written-off as of the closing date of the
acquisition, in accordance with Financial Accounting Standards Board
Interpretation No. 4, "Applicability of FASB Statement No. 2 to Business
Combinations Accounted for by the Purchase Method." The in-process research and
development had no alternative future use and had not reached technological
feasibility as of the closing date of the acquisition. The fair value assigned
to core technology was $88,690 and is being amortized over five years commencing
on August 15, 2006. The fair value assigned to customer arrangements was $69,043
and is being amortized over seven years commencing on August 15, 2006 based on
pro-rata amounts of the future discounted cash flows. The fair value assigned to
trademark was $2,160 and is being amortized over two years commencing on August
15, 2006. The excess of the purchase price over the fair value of the net assets
and identifiable intangibles acquired, or goodwill, was $249,464 of which none
is tax deductible.

     The following is the allocation of the purchase price:


<Table>
<S>                                                        <C>

Assets acquired..........................................  $ 93,050
Liabilities assumed......................................   (70,673)
                                                           --------
Net assets acquired......................................    22,377
Core technology..........................................    88,690
Customer arrangements....................................    69,043
Trademark................................................     2,160
In-process research and development......................    17,310
Deferred taxes resulting from the difference between the
  assigned value of certain assets and their respective
  tax bases and loss carry forward, net..................   (31,816)
Goodwill.................................................   249,464
                                                           --------
                                                           $417,228
                                                           ========

</Table>


  QPASS

     On May 31, 2006, the Company acquired all of the capital stock of Qpass
Inc., or Qpass, a leading provider of digital commerce software and solutions.
The Company expects that this acquisition will allow it to support service
providers and media companies seeking to launch and monetize digital content,
and believes that this acquisition positions it as the leader in the emerging
digital content market.

     The aggregate purchase price for Qpass was $281,829, which consisted of
$274,024 in cash, $2,405 related to the assumption of stock options held by
Qpass employees and $5,400 of transaction costs. The fair value of the stock
options was estimated using the Black-Scholes option pricing model (see note
17). The acquisition was accounted for as a business combination using the
purchase method of accounting, as required

                                      F-19

<PAGE>

                                 AMDOCS LIMITED

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

by SFAS No. 141. The fair market value of Qpass assets and liabilities has been
included in the Company's consolidated balance sheet and the results of Qpass's
operations have been included in the Company's consolidated statements of
income, commencing on June 1, 2006. The Company obtained a preliminary
independent valuation of the intangible assets acquired in the Qpass
transaction. The total purchase price was allocated to Qpass's assets and
liabilities, including identifiable intangibles, based on their respective
estimated fair values, on the date the transaction was consummated. The value of
acquired technology included both existing technology and in-process research
and development. The valuation of these items was determined by applying the
income forecast method, which considered the present value of cash flows by
product lines. Of the $72,981 of acquired identifiable intangible assets, $8,340
was assigned to in-process research and development and was written-off as of
the closing date of the acquisition, in accordance with Financial Accounting
Standards Board Interpretation No. 4. The in-process research and development
had no alternative future use and had not reached technological feasibility as
of the closing date of the acquisition. The fair value assigned to core
technology was $28,060 and is being amortized over three to 4.5 years commencing
on June 1, 2006. The fair value assigned to customer arrangements was $36,581
and is being amortized over seven years commencing on June 1, 2006. The excess
of the purchase price over the fair value of the net liabilities and
identifiable intangibles acquired, or goodwill, was $238,455, of which none is
tax deductible.

     The following is the allocation of the purchase price:


<Table>
<S>                                                        <C>

Assets acquired..........................................  $ 25,801
Liabilities assumed......................................   (54,824)
                                                           --------
Net liabilities assumed..................................   (29,023)
Core technology..........................................    28,060
Customer arrangements....................................    36,581
In-process research and development......................     8,340
Deferred taxes resulting from the difference between the
  assigned value of certain assets and liabilities and
  their respective tax bases and loss carry forward,
  net....................................................      (584)
Goodwill.................................................   238,455
                                                           --------
                                                           $281,829
                                                           ========

</Table>


  LONGSHINE

     On August 3, 2005, the Company acquired Longshine Information Technology
Company Ltd., or Longshine, a privately-held leading vendor of customer care and
billing software in China. This acquisition enables the Company to offer its
products and services to Chinese service providers and the Company believes it
will allow the Company to expand its presence in this fast growing market. The
purchase price for Longshine was approximately $41,696, which included $8,851 of
additional purchase price as a result of the achievements of specified
performance targets at the end of the first year from acquisition, and $1,312 of
transaction costs. The Company may also be obligated to pay up to approximately
$8,000, in additional purchase price, over the next year based on the
achievement of specified performance targets. The fair market value of Longshine
assets and liabilities has been included in the Company's consolidated balance
sheet and the results of Longshine operations have been included in the
Company's consolidated statement of income, commencing on August 3, 2005. The
Company obtained an independent valuation of the intangible assets acquired in
the Longshine transaction. The total purchase price was allocated to Longshine's
assets and liabilities, including identifiable intangibles, based on their
respective estimated fair values, on the date the transaction was consummated.
The excess of the purchase price over the fair value of the net liabilities and
identifiable intangibles acquired, or goodwill, was $45,305. During fiscal 2006,
within the one year allocation

                                      F-20

<PAGE>

                                 AMDOCS LIMITED

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

period the Company revised the allocation of the purchase price as it obtained
more information required to measure the fair value of the assets and
liabilities acquired and as a result of the additional purchase price of $8,851,
as mentioned above. The revised purchase price allocation resulted in an
increase of $4,033 in goodwill.

     The following is the final allocation of the purchase price:


<Table>
<S>                                                        <C>

Net liabilities assumed..................................  $(11,109)
Core technology..........................................     1,000
Customer arrangements....................................     6,500
Goodwill.................................................    45,305
                                                           --------
                                                           $ 41,696
                                                           ========

</Table>


  DST INNOVIS

     On July 1, 2005, the Company acquired from DST Systems, Inc., or DST, all
of the common stock of DST's wholly owned subsidiaries, DST Innovis, Inc. and
DST Interactive, Inc. The Company refers to these acquired subsidiaries together
as DST Innovis, a leading provider of customer care and billing solutions to
broadband media cable and satellite companies, which the Company refers to as
the Broadband Industry. The Company believes that this acquisition has
positioned the Company to offer a comprehensive set of solutions to companies in
the Broadband Industry as they transition to ICM.

     The purchase price for DST Innovis was approximately $237,461, which
included $3,150 of transaction costs. The acquisition was accounted for as a
business combination using the purchase method of accounting, as required by
SFAS No. 141. The fair market value of DST Innovis's assets and liabilities has
been included in the Company's consolidated balance sheet and the results of DST
Innovis's operations are included in the Company's consolidated statements of
income, commencing on July 1, 2005. The Company obtained an independent
valuation of the intangible assets acquired in the DST Innovis transaction. The
total purchase price was allocated to DST Innovis's assets and liabilities,
including identifiable intangibles, based on their respective estimated fair
values, on the date the transaction was consummated. The value of acquired
technology included both existing technology and in-process research and
development. The valuation of these items was made by applying the income
forecast method, which considered the present value of cash flows by product
lines. Of the $125,642 of acquired identifiable intangible assets, $2,760 was
assigned to in-process research and development and was written-off as of the
closing date of the acquisition, in accordance with FASB Interpretation No. 4,
"Applicability of FASB Statement No. 2 to Business Combinations Accounted for by
the Purchase Method." The fair value assigned to core technology was $63,180 and
is amortized over three to 4.5 years commencing on July 1, 2005. The fair value
assigned to customer arrangements was $59,702 and is amortized over 15 years
commencing on July 1, 2005. The excess of the purchase price over the fair value
of the net assets and identifiable intangibles acquired, or goodwill, was
$130,120, of which $101,312 is tax deductible. During fiscal 2006, within the
one year allocation period the Company revised the allocation of the purchase
price as it obtained more information and changed its estimations relating to
the printing and mailing obligation and to other assets and liabilities
acquired. The revised purchase price allocation resulted in a decrease of $1,266
in goodwill.

     In connection with the DST acquisition, the Company signed a long-term
agreement with DST, pursuant to which DST will continue to support the printing
and mailing of bills for the DST Innovis customer base. Under the terms of that
agreement, DST will be a preferred vendor of billing, printing, and mailing for
projects that combine those services with billing support for additional Amdocs
customers in the United States. The Company recorded a liability of $25,777
resulting from this agreement. This liability will be amortized over the life of
the agreement.


                                      F-21

<PAGE>

                                 AMDOCS LIMITED

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

     In addition, the Company commenced integration activities based on a plan
to exit specific research and development activities and to terminate employees
associated with these activities. In accordance with EITF 95-3, "Recognition of
Liabilities in connection with a Purchase Business Combination," The liability
associated with this plan, which was recorded as part of the purchase
accounting, is presented in the following table:


<Table>
<Caption>
                                       EMPLOYEE
                                      SEPARATION   CONTRACTUAL
                                         COSTS     OBLIGATIONS   OTHER    TOTAL
                                      ----------   -----------   -----   -------

<S>                                   <C>          <C>           <C>     <C>

Balance as of October 1, 2005.......    $ 4,940       $7,103     $ 673   $12,716
Cash payments.......................     (4,681)        (219)     (418)   (5,318)
Adjustments(1)......................       (247)          (9)     (155)     (411)
                                        -------       ------     -----   -------
Balance as of September 30, 2006....    $    12       $6,875     $ 100   $ 6,987
                                        =======       ======     =====   =======

</Table>



   (1) Reflects adjustments due to changes in original estimates within the one
       year allocation period. The adjustments were recorded as part of the
       purchase accounting which resulted in reduction of goodwill.

     The following is the final allocation of the purchase price and deferred
tax assets:


<Table>
<S>                                                        <C>

Net assets acquired......................................  $  7,388
Core technology..........................................    63,180
Customer arrangements....................................    59,702
In-process research and development......................     2,760
EITF 95-3 and other liabilities..........................   (17,059)
Printing and mailing obligation..........................   (25,777)
Deferred taxes resulting from the difference between the
  assigned value of certain assets and liabilities and
  their respective tax bases.............................    17,147
Goodwill.................................................   130,120
                                                           --------
                                                           $237,461
                                                           ========

</Table>


  PRO FORMA FINANCIAL INFORMATION

     Set forth below are the unaudited pro forma revenue, operating income, net
income and per share figures for the years ended September 30, 2006, 2005 and
2004, as if DST Innovis had been acquired as of October 1, 2003, and as if
Cramer had been acquired as of October 1, 2004, excluding the capitalization of
research and development expense, write-off of purchased in-process research and
development and other acquisition related costs:


<Table>
<Caption>
                                              YEAR ENDED SEPTEMBER 30,
                                        ------------------------------------
                                           2006         2005         2004
                                        ----------   ----------   ----------

<S>                                     <C>          <C>          <C>

Revenue...............................  $2,575,703   $2,290,361   $2,013,612
Operating income......................     321,333      314,173      292,137
Net income............................     297,746      259,412      229,179
Basic earnings per share..............        1.47         1.29         1.10
Diluted earnings per share............        1.38         1.21         1.05
</Table>


     Pro forma information regarding the Company's consolidated statements of
income for the years ended September 30, 2006, 2005 and 2004 to reflect the
Longshine and Qpass acquisitions is not presented, as these acquisitions are not
considered material business combinations.


                                      F-22

<PAGE>

                                 AMDOCS LIMITED

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

NOTE 4 -- SHORT-TERM INTEREST-BEARING INVESTMENTS

     Short-term interest-bearing investments consist of the following:


<Table>
<Caption>
                                             AMORTIZED COST         MARKET VALUE
                                          AS OF SEPTEMBER 30,   AS OF SEPTEMBER 30,
                                          -------------------   -------------------
                                            2006       2005       2006       2005
                                          --------   --------   --------   --------

<S>                                       <C>        <C>        <C>        <C>

Federal agencies........................  $ 45,928   $ 87,116   $ 46,202   $ 86,591
U.S. government treasuries..............    11,815     70,644     11,940     70,187
Corporate backed obligations............   131,129    157,834    130,921    157,059
Corporate bonds.........................    47,892     50,401     47,776     50,218
Mortgages (including government and
  corporate)............................    81,656     47,852     81,559     47,622
Commercial paper/CD.....................    39,458      4,056     39,458      4,056
Private placement.......................    14,397     22,344     14,338     22,278
                                          --------   --------   --------   --------
                                           372,275    440,247    372,194    438,011
Allowance for unrealized loss...........       (81)    (2,236)        --         --
                                          --------   --------   --------   --------
Total...................................  $372,194   $438,011   $372,194   $438,011
                                          ========   ========   ========   ========

</Table>


     As of September 30, 2006, short-term interest-bearing investments had the
following maturity dates:


<Table>
<Caption>
                                                         MARKET VALUE
                                                         ------------

<S>                                                      <C>

2007...................................................    $ 57,713
2008...................................................      36,022
2009...................................................      92,904
2010...................................................      30,227
Thereafter.............................................     155,328
                                                           --------
                                                           $372,194
                                                           ========

</Table>


NOTE 5 -- ACCOUNTS RECEIVABLE, NET

     Accounts receivable, net consists of the following:


<Table>
<Caption>
                                                   AS OF SEPTEMBER 30,
                                                   -------------------
                                                     2006       2005
                                                   --------   --------

<S>                                                <C>        <C>

Accounts receivable -- billed....................  $383,763   $282,151
Accounts receivable -- unbilled..................    54,117     28,994
Less -- allowances...............................   (12,075)    (6,908)
                                                   --------   --------
Accounts receivable, net.........................  $425,805   $304,237
                                                   ========   ========

</Table>




                                      F-23

<PAGE>

                                 AMDOCS LIMITED

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

NOTE 6 -- EQUIPMENT, VEHICLES AND LEASEHOLD IMPROVEMENTS, NET

     Components of equipment, vehicles and leasehold improvements, net are:


<Table>
<Caption>
                                                   AS OF SEPTEMBER 30,
                                                   -------------------
                                                     2006       2005
                                                   --------   --------

<S>                                                <C>        <C>

Computer equipment...............................  $474,794   $406,705
Vehicles furnished to employees..................    11,642     24,493
Leasehold improvements...........................    93,397     68,882
Furniture and fixtures...........................    45,281     43,076
                                                   --------   --------
                                                    625,114    543,156
Less accumulated depreciation....................   404,824    361,344
                                                   --------   --------
                                                   $220,290   $181,812
                                                   ========   ========

</Table>


     Total depreciation expense on equipment, vehicles and leasehold
improvements for fiscal years 2006, 2005 and 2004, was $75,964, $74,193 and
$73,619, respectively.

NOTE 7 -- GOODWILL AND INTANGIBLE ASSETS, NET

     The following table presents details of the Company's total goodwill:


<Table>
<S>                                                       <C>

As of October 1, 2004...................................  $  806,874
Decrease in goodwill as a result of a purchase price
  allocation adjustment (related to fiscal 2003
  acquisition)..........................................      (9,893)
Goodwill resulted from DST Innovis acquisition (see Note
  3)....................................................     131,386
Goodwill resulted from Longshine acquisition (see Note
  3)....................................................      41,272
                                                          ----------
As of September 30, 2005................................     969,639
Goodwill resulted from Cramer acquisition (see Note 3)..     249,464
Goodwill resulted from Qpass acquisition (see Note 3)...     238,455
Decrease in DST goodwill as a result of a purchase price
  allocation adjustment (see Note 3)....................      (1,266)
Increase in Longshine goodwill as a result of a purchase
  price allocation adjustment (see Note 3)..............       4,033
Other(1)................................................       1,281
                                                          ----------
As of September 30, 2006................................  $1,461,606
                                                          ==========

</Table>



   (1) Represents goodwill related to immaterial acquisition.

     The following table presents details of amortization expense of purchased
intangible assets as reported in the consolidated statements of income:


<Table>
<Caption>
                                                YEAR ENDED SEPTEMBER 30,
                                              ---------------------------
                                                2006      2005      2004
                                              -------   -------   -------

<S>                                           <C>       <C>       <C>

Cost of license.............................  $ 2,620   $ 2,620   $ 3,878
Cost of service.............................       --        --     2,785
Amortization of purchased intangible
  assets....................................   37,610    15,356    17,909
                                              -------   -------   -------
Total.......................................  $40,230   $17,976   $24,572
                                              =======   =======   =======

</Table>




                                      F-24

<PAGE>

                                 AMDOCS LIMITED

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

     The Company performs an annual impairment test during the fourth quarter of
each fiscal year, or more frequently if impairment indicators are present. The
Company operates in one operating segment, and this segment comprises its only
reporting unit. In calculating the fair value of the reporting unit, the Company
used a discounted cash flow methodology. There was no impairment of goodwill
upon adoption of SFAS No. 142 and there was no impairment at the annual
impairment test dates.

     The following table presents details of the Company's total purchased
intangible assets:


<Table>
<Caption>
                                          ESTIMATED
                                         USEFUL LIFE               ACCUMULATED
                                          (IN YEARS)     GROSS    AMORTIZATION      NET
                                         -----------   --------   ------------   --------

<S>                                      <C>           <C>        <C>            <C>

SEPTEMBER 30, 2006
Core technology........................      3-5       $235,946     $ (78,560)   $157,386
Customer arrangements..................      7-15       248,155       (62,251)    185,904
Intellectual property rights and
  purchased computer software..........      3-10        51,996       (49,595)      2,401
Trademark..............................       2           2,160          (135)      2,025
                                                       --------     ---------    --------
Total..................................                $538,257     $(190,541)   $347,716
                                                       ========     =========    ========
SEPTEMBER 30, 2005
Core technology........................     2-4.5      $117,925     $ (53,699)   $ 64,226
Customer arrangements..................      2-15       140,009       (49,637)     90,372
Intellectual property rights and
  purchased computer software..........      3-10        51,996       (46,975)      5,021
                                                       --------     ---------    --------
Total..................................                $309,930     $(150,311)   $159,619
                                                       ========     =========    ========

</Table>


     The estimated future amortization expense of purchased intangible assets as
of September 30, 2006 is as follows:


<Table>
<Caption>
                                          AMOUNT
                                         --------

<S>                                      <C>

FISCAL YEAR:
2007...................................  $ 70,813
2008...................................    73,221
2009...................................    63,628
2010...................................    52,549
2011...................................    34,545
Thereafter.............................    52,960
                                         --------
Total..................................  $347,716
                                         ========

</Table>




                                      F-25

<PAGE>

                                 AMDOCS LIMITED

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

NOTE 8 -- OTHER NONCURRENT ASSETS

     Other noncurrent assets consist of the following:


<Table>
<Caption>
                                                         AS OF SEPTEMBER 30,
                                                         -------------------
                                                           2006       2005
                                                         --------   --------

<S>                                                      <C>        <C>

Funded employee benefit costs(1).......................  $ 70,669   $ 59,086
Managed services deferred costs(2).....................    63,352     54,314
Prepaid maintenance and other..........................     8,262     10,900
Rent and other deposits................................    10,599      8,908
Other..................................................     7,938     10,231
                                                         --------   --------
                                                         $160,820   $143,439
                                                         ========   ========

</Table>



   (1) See Note 15.

   (2) See Note 2.

NOTE 9 -- INCOME TAXES

     The provision for income taxes consists of the following:


<Table>
<Caption>
                                                     YEAR ENDED SEPTEMBER 30,
                                                   ---------------------------
                                                     2006      2005      2004
                                                   -------   -------   -------

<S>                                                <C>       <C>       <C>

Current..........................................  $42,290   $64,038   $72,588
Deferred.........................................   12,947     8,121    (6,345)
                                                   -------   -------   -------
                                                   $55,237   $72,159   $66,243
                                                   =======   =======   =======

</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.


                                      F-26

<PAGE>

                                 AMDOCS LIMITED

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

     Deferred income taxes are comprised of the following components:


<Table>
<Caption>
                                                    AS OF SEPTEMBER 30,
                                                   --------------------
                                                      2006       2005
                                                   ---------   --------

<S>                                                <C>         <C>

Deferred tax assets:
  Deferred revenue...............................  $  29,369   $ 38,041
  Accrued employee costs.........................     53,851     42,343
  Equipment, vehicles and leasehold improvements,
     net.........................................     18,842     45,752
  Intangible assets, computer software and
     intellectual property.......................     17,221     14,257
  Net operating loss carry forwards..............     97,813     35,924
  Other..........................................     58,102     43,324
  Valuation allowances...........................    (29,335)   (14,302)
                                                   ---------   --------
  Total deferred tax assets......................    245,863    205,339
                                                   ---------   --------
Deferred tax liabilities:
  Anticipated withholdings on subsidiaries'
     earnings....................................    (47,004)   (43,909)
  Equipment, vehicles and leasehold improvements,
     net.........................................     (3,992)    (7,262)
  Intangible assets, computer software and
     intellectual property.......................   (108,171)   (32,683)
  Managed services costs.........................    (14,580)   (10,110)
  Other..........................................    (12,025)    (5,514)
                                                   ---------   --------
  Total deferred tax liabilities.................   (185,772)   (99,478)
                                                   ---------   --------
Net deferred tax assets..........................  $  60,091   $105,861
                                                   =========   ========

</Table>


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


<Table>
<Caption>
                                                         YEAR ENDED
                                                        SEPTEMBER 30,
                                                     ------------------
                                                     2006   2005   2004
                                                     ----   ----   ----

<S>                                                  <C>    <C>    <C>

Statutory Guernsey tax rate........................    20%    20%    20%
Guernsey tax-exempt status.........................   (20)   (20)   (20)
Foreign taxes......................................    16     19     20
Valuation allowance................................     1      1      2
                                                      ---    ---    ---
Income tax rate before effect of acquisition-
  related costs, and equity-based compensation
  expense..........................................    17     20     22
Effect of acquisition-related costs and equity-
  based compensation expense.......................    (2)    --     --
                                                      ---    ---    ---
                                                       15%    20%    22%
                                                      ===    ===    ===

</Table>


     As a Guernsey company with tax-exempt status, the Company's overall
effective tax rate is attributable solely to foreign taxes.

     During fiscal 2006, the Company recognized deferred tax assets of $15,033
derived from net capital and operating loss carry forwards related to certain of
its subsidiaries. The expiration period of $7,451 of these losses carry forwards
is up to 20 years, the rest of the losses expiration is unlimited. Given the
uncertainty of the realization of these assets through future taxable earnings,
an additional valuation allowance of $15,033

                                      F-27

<PAGE>

                                 AMDOCS LIMITED

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

was recorded during fiscal 2006, out of which $11,393 was recorded in connection
with the Cramer and Qpass acquisitions.

     During fiscal 2005, the Company recognized deferred tax assets of $2,878
derived from operating loss carry forwards related to one of its subsidiaries.
During fiscal 2004, the Company recognized deferred tax assets of $11,424
derived from net capital and operating loss carry forwards related to certain of
its subsidiaries. The expiration of these losses carry forwards is unlimited.
Given the uncertainty of the realization of these assets through future taxable
earnings, additional valuation allowances of $2,878 and $11,424 was recorded
during fiscal 2005 and 2004, respectively.

NOTE 10 -- FINANCING ARRANGEMENTS

     The Company's financing transactions are described below:

     As of September 30, 2006, the Company had available short-term general
revolving lines of credit totaling $30,936. As of September 30, 2006, no amounts
were outstanding under these credit lines. The cost of maintaining these
revolving lines of credit was insignificant.

     As of September 30, 2006, the Company had outstanding letters of credit and
bank guarantees of $8,671. These were mostly supported by a combination of the
credit facilities and restricted cash balances that the Company maintains with
various banks.

     In addition, as of September 30, 2006, the Company had outstanding short
term loans of $1,733, which is secured by certain pledges and guarantees and
$175 related to another debt instrument.

NOTE 11 -- CONVERTIBLE NOTES

     In March 2004, the Company issued $450,000 aggregate principal amount of
0.50% Convertible Senior Notes due 2024 (the "0.50% Notes") through a private
placement to qualified institutional buyers pursuant to Rule 144A under the
Securities Act. The Company is obligated to pay interest on the 0.50% Notes
semi-annually on March 15 and September 15 of each year. The 0.50% Notes are
senior unsecured obligations of the Company and rank equal in right of payment
with all existing and future senior unsecured indebtedness of the Company. The
0.50% Notes are convertible, at the option of the holders at any time before the
maturity date, into Ordinary Shares of the Company at a conversion rate of
23.1911 shares per one thousand dollars principal amount, representing a
conversion price of approximately $43.12 per share, as follows: (i) during any
fiscal quarter commencing after March 31, 2004, and only during that quarter if
the closing sale price of the Company's Ordinary Shares exceeds 130% of the
conversion price for at least 20 trading days in the 30 consecutive trading days
ending on the last trading day of the proceeding fiscal quarter (initially 130%
of $43.12, or $56.06); (ii) upon the occurrence of specified credit rating
events with respect to the notes; (iii) subject to certain exceptions, during
the five business day period after any five consecutive trading day period in
which the trading price per note for each day of that measurement period was
less than 98% of the product of the closing sale price of the Company's Ordinary
Shares and the conversion rate; provided, however, holders may not convert their
notes (in reliance on this subsection) if on any trading day during such
measurement period the closing sale price of the Company's Ordinary Shares was
between 100% and 130% of the then current conversion price of the notes
(initially, between $43.12 and $56.06); (iv) if the notes have been called for
redemption, or (v) upon the occurrence of specified corporate events.

     The 0.50% Notes are subject to redemption at any time on or after March 20,
2009, in whole or in part, at the option of the Company, at a redemption price
of 100% of the principal amount plus accrued and unpaid interest, if any, on
such redemption date. The 0.50% Notes are subject to repurchase, at the holders'
option, on March 15, 2009, 2014 and 2019, at a repurchase price equal to 100% of
the principal amount plus accrued

                                      F-28

<PAGE>

                                 AMDOCS LIMITED

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

and unpaid interest, if any, on such repurchase date ("Put Rights"). The Company
may choose to pay the repurchase price in cash, Ordinary Shares or a combination
of cash and Ordinary Shares.

     The FASB issued an exposure draft that would amend SFAS No. 128 to require
that if a convertible financial instrument has an option to settle a required
redemption in cash or shares, the assumption is the option would be settled in
shares and therefore the "if converted" method should be applied based on the
current share price and not according to the conversion price (the current
accounting guidelines) when computing diluted earnings per share. The Board of
Directors has authorized the Company to amend the 0.50% Notes by waiving its
right to a share settlement upon exercise of Put Rights and committing to a cash
settlement. If the Company amends the 0.50% Notes as authorized by its Board of
Directors, then the expected new accounting rule would have no impact on the
Company's consolidated financial results.

NOTE 12 -- NONCURRENT LIABILITIES AND OTHER

     Noncurrent liabilities and other consist of the following:


<Table>
<Caption>
                                                   AS OF SEPTEMBER 30,
                                                   -------------------
                                                     2006       2005
                                                   --------   --------

<S>                                                <C>        <C>

Accrued employees costs(1).......................  $111,909   $ 88,353
Noncurrent customer advances.....................    28,936     34,994
Accrued pension liability........................    24,476     23,193
Accrued print and mail obligation................    14,424     17,806
Accrued lease obligations........................     8,514     12,475
Other............................................     9,378      9,449
                                                   --------   --------
                                                   $197,637   $186,270
                                                   ========   ========

</Table>



   (1) Primarily severance pay liability in accordance with Israeli law (see
       note 15).

NOTE 13 -- INTEREST INCOME AND OTHER, NET

     Interest income and other, net consists of the following:


<Table>
<Caption>
                                               YEAR ENDED SEPTEMBER 30,
                                             ----------------------------
                                               2006      2005      2004
                                             -------   -------   --------

<S>                                          <C>       <C>       <C>

Interest income............................  $50,962   $32,341   $ 17,941
Interest expense...........................   (5,433)   (5,734)   (12,867)
Other, net.................................   (3,788)   (4,304)      (171)
                                             -------   -------   --------
                                             $41,741   $22,303   $  4,903
                                             =======   =======   ========

</Table>




                                      F-29

<PAGE>

                                 AMDOCS LIMITED

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

NOTE 14 -- CONTINGENCIES

  COMMITMENTS

     The Company leases office space under non-cancelable operating leases in
various countries in which it does business. Future minimum non-cancelable lease
payments required after October 1, 2006 are as follows:


<Table>
<Caption>
FOR THE YEARS ENDED SEPTEMBER 30,
---------------------------------

<S>                                      <C>

2007...................................  $ 60,832
2008...................................    52,967
2009...................................    42,505
2010...................................    37,972
2011...................................    34,298
Thereafter.............................    39,064
                                         --------
                                         $267,638
                                         ========

</Table>


     Future minimum non-cancelable lease payments, as stated above, do not
reflect committed future sublease income of $8,122, $4,919, $3,497, $3,278,
$4,022 and $5,907 for the years ended September 30, 2007, 2008, 2009, 2010, 2011
and thereafter, respectively. Of the $237,893 net operating leases, net of
$29,745 of sublease income, $5,837 has been included in accrued restructuring
charges as of September 30, 2006.

     Rent expense net of sublease income, including accruals for future lease
losses, was approximately $41,088, $38,982 and $43,505 for fiscal 2006, 2005 and
2004, respectively.

     The Company leases vehicles under operating leases. Future minimum non-
cancelable lease payments required after October 1, 2006 are as follows:


<Table>
<Caption>
FOR THE YEARS ENDED SEPTEMBER 30,
---------------------------------

<S>                                       <C>

2007....................................  $11,896
2008....................................    8,928
2009....................................    4,657
2010....................................      655
                                          -------
                                          $26,136
                                          =======

</Table>


  LEGAL PROCEEDINGS

     The Company is involved in various legal proceedings arising in the normal
course of its business. Based upon the advice of counsel, the Company does not
believe that the ultimate resolution of these matters will have a material
adverse effect on the Company's consolidated financial position, results of
operations or cash flows.

  GUARANTOR'S ACCOUNTING AND DISCLOSURE REQUIREMENTS FOR GUARANTEES

     The Company generally sells its products with a limited warranty for a
period of 90 days. The Company's policy is to accrue for warranty costs, if
needed, based on historical trends in product failure. Based on the Company's
experience, only minimal warranty services have been required and, as a result,
the Company did not accrue any amounts for product warranty liability during
fiscal years 2006 and 2005.


                                      F-30

<PAGE>

                                 AMDOCS LIMITED

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

     The Company generally indemnifies its customers against claims of
intellectual property infringement made by third parties arising from the use of
the Company's software. To date, the Company has incurred only minimal costs as
a result of such obligations and has not accrued any liabilities related to such
indemnification in its consolidated financial statements.

NOTE 15 -- 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 operations. The severance pay
liability, which is included as accrued employee costs in noncurrent liabilities
and other, is partially funded by amounts on deposit with insurance companies,
which are included in other noncurrent assets. These severance expenses were
approximately $26,403, $16,720 and $15,363 for fiscal 2006, 2005 and 2004,
respectively.

     The Company sponsors defined contribution plans covering certain of its
employees around the world. The plans provide for Company matching contributions
based upon a percentage of the employees' voluntary contributions. The Company's
contributions in fiscal 2006, 2005 and 2004 under such plans were not
significant compared to total operating expenses.

     The Company maintains non-contributory defined benefit plans that provide
for pension, other retirement and post employment benefits for employees of a
Canadian subsidiary based on length of service and rate of pay. The measurement
date for the pension plan and for the other benefits was September 30, 2006.

  COMPONENTS OF NET BENEFIT PLANS COST

     The net periodic benefit costs for the years ended September 30, related to
pension and other benefits were as follows:


<Table>
<Caption>
                                           PENSION BENEFITS          OTHER BENEFITS
                                     ---------------------------   ------------------
                                       2006      2005      2004    2006   2005   2004
                                     -------   -------   -------   ----   ----   ----

<S>                                  <C>       <C>       <C>       <C>    <C>    <C>

Service costs......................  $ 1,886   $ 2,185   $ 1,967   $324   $265   $373
Interest on benefit obligations....    3,345     3,340     2,676    507    482    386
Expected return on plan assets.....   (3,182)   (2,739)   (2,200)    --     --     --
Settlements........................      313        --        --     --     --     --
                                     -------   -------   -------   ----   ----   ----
                                     $ 2,362   $ 2,786   $ 2,443   $831   $747   $759
                                     =======   =======   =======   ====   ====   ====

</Table>




                                      F-31

<PAGE>

                                 AMDOCS LIMITED

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

  COMPONENTS OF ACCRUED BENEFIT LIABILITY

     The following table sets forth changes in the fair value of plan assets,
benefit obligations and the funded status of the plans as of September 30, 2006:


<Table>
<Caption>
                                              PENSION BENEFITS   OTHER BENEFITS
                                              ----------------   --------------

<S>                                           <C>                <C>

CHANGE IN PLAN ASSETS:
Fair value of plan assets as of October 1,
  2005......................................      $ 41,824          $     --
Actual return on plan assets................         3,458                --
Foreign exchange gain.......................         1,973                --
Employer contribution.......................         2,889               156
Benefits paid...............................        (9,857)             (156)
                                                  --------          --------
FAIR VALUE OF PLAN ASSETS AS OF SEPTEMBER
  30, 2006..................................        40,287                --
                                                  --------          --------
CHANGE IN BENEFIT OBLIGATIONS:
Benefit obligations as of October 1, 2005...       (67,305)          (11,731)
Service costs...............................        (1,886)             (324)
Interest on benefit obligations.............        (3,345)             (507)
Actuarial gains (losses)....................         2,289              (774)
Curtailment gains...........................         2,785             2,726
Foreign exchange loss.......................        (3,068)             (547)
Benefits paid...............................         9,857               156
                                                  --------          --------
BENEFIT OBLIGATIONS AS OF SEPTEMBER 30,
  2006......................................       (60,673)          (11,001)
                                                  --------          --------
FUNDED STATUS-PLAN DEFICIT AS OF SEPTEMBER
  30, 2006..................................       (20,386)          (11,001)
Unrecognized actuarial net losses...........        (5,122)           (1,789)
                                                  --------          --------
ACCRUED BENEFIT COSTS AS OF SEPTEMBER 30,
  2006, INCLUDED IN NONCURRENT LIABILITIES
  AND OTHER.................................      $(15,264)         $ (9,212)
                                                  ========          ========

</Table>


     As of September 30, 2006, the accumulated benefit obligation for the
pension plan was $54,292, and $10,611 for other benefits.


                                      F-32

<PAGE>

                                 AMDOCS LIMITED

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

     The following table sets forth the funded status of the plans as of
September 30, 2005:


<Table>
<Caption>
                                              PENSION BENEFITS   OTHER BENEFITS
                                              ----------------   --------------

<S>                                           <C>                <C>

CHANGE IN PLAN ASSETS:
Fair value of plan assets as of October 1,
  2004......................................      $ 34,042          $     --
Actual return on plan assets................         4,360                --
Foreign exchange gain.......................         2,674                --
Employer contribution.......................         3,300               164
Benefits paid...............................        (2,552)             (164)
                                                  --------          --------
FAIR VALUE OF PLAN ASSETS AS OF SEPTEMBER
  30, 2005..................................        41,824                --
                                                  --------          --------
CHANGE IN BENEFIT OBLIGATIONS:
Benefit obligations as of October 1, 2004...       (49,751)           (7,234)
Service costs...............................        (2,185)             (265)
Interest on benefit obligations.............        (3,340)             (483)
Actuarial losses............................       (10,237)           (3,210)
Foreign exchange loss.......................        (4,344)             (703)
Benefits paid...............................         2,552               164
                                                  --------          --------
BENEFIT OBLIGATIONS AS OF SEPTEMBER 30,
  2005......................................       (67,305)          (11,731)
                                                  --------          --------
FUNDED STATUS-PLAN DEFICIT AS OF SEPTEMBER
  30, 2005..................................       (25,481)          (11,731)
Unrecognized actuarial net losses...........       (10,409)           (3,610)
                                                  --------          --------
ACCRUED BENEFIT COSTS AS OF SEPTEMBER 30,
  2005, INCLUDED IN NONCURRENT LIABILITIES
  AND OTHER.................................      $(15,072)         $ (8,121)
                                                  ========          ========

</Table>


     As of September 30, 2005, the accumulated benefit obligation for the
pension plan was $54,775, and $11,278 for other benefits.

  SIGNIFICANT ASSUMPTIONS

     The significant assumptions adopted in measuring the Canadian subsidiary's
accrued benefit obligations and the net periodic benefit cost were as follows:


<Table>
<Caption>
                                                        2006     2005
                                                        ----     ----

<S>                                                     <C>      <C>

AS OF SEPTEMBER 30:
  ACCRUED BENEFIT OBLIGATIONS
  Weighted average discount rate, end of year.........  5.25%    5.50%
  Weighted average rate of compensation increase, end
     of year..........................................  3.50     3.50
FOR THE YEAR ENDED SEPTEMBER 30:
  NET PERIODIC BENEFIT COST
  Weighted average discount rate, end of preceding
     year.............................................  5.50%    6.25%
  Weighted average expected long-term rate of return
     on plan assets, end of preceding year............  7.50     7.50
  Weighted average rate of compensation increase, end
     of preceding year................................  3.50     3.50
</Table>


     The expected future rate of return assumption is based on the target asset
allocation policy and the expected future rates of return on these assets.


                                      F-33

<PAGE>

                                 AMDOCS LIMITED

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

     For measurement purposes, a 4.5% annual rate of increase in the per capita
cost of covered health care benefits (the health care cost trend rate) was
assumed for the year ended September 30, 2006, except for the cost of
medication, which was assumed to increase at an annual rate of 10% for 2006.
This rate was assumed to gradually decline to 5% by 2014 and remain stable
thereafter.

     A 1% change in the assumed health care cost trend rates would have the
following effect as of September 30, 2006:


<Table>
<Caption>
                                                       1% INCREASE   1% DECREASE
                                                       -----------   -----------

<S>                                                    <C>           <C>

Effect on other benefits -- total service and
  interest cost......................................     $  164       $  (135)
Effect on other benefits -- accrued benefit
  obligations........................................      2,189        (1,695)
</Table>


  PENSION PLAN ASSETS

     The following table sets forth the allocation of the pension plan assets as
of September 30, 2006 and 2005, the target allocation for 2007 and the expected
long-term rate of return by asset class. The fair value of the plan assets was
$40,287 as of September 30, 2006 and $41,824 as of September 30, 2005.


<Table>
<Caption>
                                                            PERCENTAGE OF
                                                           PLAN ASSETS AS     WEIGHTED-AVERAGE
                                                            OF SEPTEMBER       LONG-TERM RATE
                                       TARGET ALLOCATION         30,              OF RETURN
                                       -----------------   --------------     ----------------
ASSET CATEGORY                                2007         2006      2005           2006
--------------                         -----------------   ----      ----     ----------------

<S>                                    <C>                 <C>       <C>      <C>

Equity securities....................       45%-65%          55%       57%           9.7%
Debt securities......................         35-55          45        43            4.9
                                            -------         ---       ---
Total................................          100%         100%      100%           7.5
                                            =======         ===       ===

</Table>


     Plan assets consist primarily of Canadian and other equities, government
and corporate bonds, debentures and secured mortgages, which are held in units
of the BCE Master Trust Fund, a Trust established by Bell Canada. The investment
strategy is to maintain an asset allocation that is diversified between multiple
different asset classes, and between multiple managers within each asset class,
in order to minimize the risk of large losses and to maximize the long-term
risk-adjusted rate of return.

  PROJECTED CASH FLOWS

     The Company is responsible for adequately funding the pension plan.
Contributions by the Company are based on various generally accepted actuarial
methods and reflect actuarial assumptions concerning future investment returns,
salary projections and future service benefits. The Company contributed $2,889
to the pension plan in 2006 which was the minimum contribution required by law.
Because the Company does not fund the other employee future benefit plan, the
total payments of $156 paid in 2006 represents benefit payments made to
beneficiaries. The following table sets forth the Company's estimates for future
minimum contributions to the pension plan and for other benefit payments.


<Table>
<Caption>
FOR THE YEARS ENDED SEPTEMBER 30,             PENSION BENEFITS   OTHER BENEFITS
---------------------------------             ----------------   --------------

<S>                                           <C>                <C>

2007........................................       $ 1,700           $  200
2008........................................         1,400              300
2009........................................         1,500              300
2010........................................         1,500              400
2011........................................         1,500              400
2012 - 2016.................................         8,400            2,300
                                                   -------           ------
Total.......................................       $16,000           $3,900
                                                   =======           ======

</Table>




                                      F-34

<PAGE>

                                 AMDOCS LIMITED

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

NOTE 16 -- CAPITAL TRANSACTIONS

     On November 5, 2003, the Company announced that its Board of Directors had
authorized a share repurchase program of up to 5,000 Ordinary Shares over the
next twelve months. The authorization permitted the Company to purchase Ordinary
Shares in open market or privately negotiated transactions and at prices the
Company deems appropriate. The Company stated that one of the main purposes of
the repurchase program was to offset the dilutive effect of any future share
issuances, including issuances pursuant to employee equity plans or in
connection with acquisitions. During the first quarter of fiscal 2004, the
Company repurchased 4,990 Ordinary Shares under this repurchase program, for an
aggregate purchase price of $123,993. In connection with an acquisition by the
Company in fiscal 2004, the Company's Board of Directors approved the repurchase
of additional Ordinary Shares to offset the dilutive effect of share issuances
in the acquisition. The closing of the acquisition occurred in February 2004,
and the Company repurchased 484 Ordinary Shares in February 2004 for an
aggregate purchase price of $13,417.

     In connection with the Company's issuance of the 0.50% Notes (see Note 11),
the Board of Directors approved the repurchase of Ordinary Shares sold short by
purchasers of the 0.50% Notes in negotiated transactions, concurrently with the
sale of the notes, to offset the dilutive effect of the Ordinary Shares issuable
upon conversion of the 0.50% Notes. The closing of the sale of the 0.50% Notes
occurred in March 2004, and the Company repurchased 6,074 Ordinary Shares, for
an aggregate purchase price of $170,061, out of the 10,436 Ordinary Shares
issuable upon conversion of the 0.50% Notes, based on a conversion rate of
23.1911 shares per $1,000 principal amount.

     On July 28, 2004, the Company announced that its Board of Directors
extended the share repurchase program for the additional repurchase of up to
$100,000 of its Ordinary Shares in open market or privately negotiated
transactions and at times and prices the Company deems appropriate. In
accordance with this extension, the Company repurchased 4,894 Ordinary Shares,
at an average price of $20.40 per share.

     On December 20, 2004, the Company announced that its Board of Directors had
extended the Company's share repurchase program for the additional repurchase of
up to $100,000 of its Ordinary Shares in the open market or privately negotiated
transactions and at times and prices the Company deems appropriate. In
accordance with this extension, the Company repurchased in the third quarter of
fiscal 2005, 3,525 Ordinary Shares, at an average price of $28.33 per share.

     The Company funded these repurchases, and intends to fund any future
repurchases, with available funds.

NOTE 17 -- STOCK OPTION AND INCENTIVE PLAN

     In January 1998, the Company adopted the 1998 Stock Option and Incentive
Plan (the "Plan"), which provides for the grant of restricted stock awards,
stock options and other equity-based awards to employees, officers, directors,
and consultants. The purpose of the Plan is to enable the Company to attract and
retain qualified personnel and to motivate such persons by providing them with
an equity participation in the Company. Since its adoption, the Plan has been
amended on several occasions to, among other things, increase the number of
Ordinary Shares issuable under the Plan. In January 2006, the maximum number of
Ordinary Shares authorized to be granted under the Plan was increased from
38,300 to 46,300. Awards granted under the Plan generally vest over a period of
four years and stock options have a term of ten years. In the fourth quarter of
fiscal 2005, the Company commenced routinely granting restricted shares and the
Company's equity-based grant package may be comprised of restricted stock awards
and a fewer number of stock options. As of September 30, 2006, 11,247.8 Ordinary
Shares remained available for grant pursuant to the Plan.


                                      F-35

<PAGE>

                                 AMDOCS LIMITED

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

     The following table summarizes information about stock options to purchase
the Company's Ordinary Shares, as well as changes during the years ended
September 30, 2006, 2005 and 2004:


<Table>
<Caption>
                                                NUMBER OF     WEIGHTED AVERAGE
                                              SHARE OPTIONS    EXERCISE PRICE
                                              -------------   ----------------

<S>                                           <C>             <C>

Outstanding as of October 1, 2003...........     25,565.7          $27.04
Granted.....................................      4,177.2           22.07
Exercised...................................     (1,156.5)          10.44
Forfeited...................................     (2,539.9)          30.89
                                                 --------
Outstanding as of September 30, 2004........     26,046.5           26.61
Granted.....................................      4,892.0           24.36
Exercised...................................     (2,228.7)          10.78
Forfeited...................................     (2,902.4)          32.32
                                                 --------
Outstanding as of September 30, 2005........     25,807.4           26.91
Granted(1)..................................      4,812.1           29.41
Exercised...................................     (5,869.5)          18.24
Forfeited...................................     (1,956.0)          34.42
                                                 --------
Outstanding as of September 30, 2006........     22,794.0          $29.02
                                                 ========
Exercisable on September 30, 2006...........     12,609.7          $32.14
                                                 ========

</Table>



   (1) Includes options to purchase 297.6 Ordinary Shares assumed in connection
       with the Company's acquisition of Qpass at weighted average exercise
       price of $8.01, and options to purchase 161.0 Ordinary Shares assumed in
       connection with the Company's acquisition of Cramer at weighted average
       exercise price of $6.50.

     The following table summarizes information relating to awards of restricted
shares, as well as changes to such awards during fiscal 2006:


<Table>
<Caption>
                                                           WEIGHTED AVERAGE
                                               NUMBER OF    GRANT DATE FAIR
                                                 SHARES          VALUE
                                               ---------   ----------------

<S>                                            <C>         <C>

Outstanding as of October 1, 2005............    133.8          $26.43
Granted(1)...................................    747.4           31.96
Vested.......................................    (94.9)          26.43
Forfeited....................................     (6.0)          32.12
                                                 -----          ------
Outstanding as of September 30, 2006.........    780.3          $31.68
                                                 =====          ======

</Table>



   (1) Includes 156.8 restricted shares assumed in connection with the Company's
       acquisition of Cramer at weighted average grant date fair value of $40.7
       per share.

     The total intrinsic value of options exercised and the value of restricted
shares vested during fiscal 2006 was $92,583 and $2,777, respectively. The
aggregate intrinsic value of outstanding and exercisable stock options as of
September 30, 2006 was $290,758 and $143,677, respectively.

     As of September 30, 2006, there was $63,545 of unrecognized compensation
expense related to nonvested stock options and nonvested restricted stock
awards. The Company recognizes compensation costs using the

                                      F-36

<PAGE>

                                 AMDOCS LIMITED

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

graded vesting attribution method which results in a weighted average period of
approximately one year over which the unrecognized compensation expense is
expected to be recognized.

     The following table summarizes information about stock options outstanding
as of September 30, 2006:


<Table>
<Caption>
                                  OUTSTANDING
------------------------------------------------------------------------------            EXERCISABLE
                                             WEIGHTED AVERAGE                    ----------------------------
                                                 REMAINING         WEIGHTED                       WEIGHTED
EXERCISE                          NUMBER        CONTRACTUAL         AVERAGE         NUMBER         AVERAGE
PRICE                          OUTSTANDING    LIFE (IN YEARS)   EXERCISE PRICE   EXERCISABLE   EXERCISE PRICE
--------                       -----------   ----------------   --------------   -----------   --------------

<S>                            <C>           <C>                <C>              <C>           <C>

$0.38 - 4.76.................      334.6           5.25             $ 2.51           166.7         $ 1.99
6.40 - 18.60.................    3,431.1           5.94              10.99         2,090.8          10.74
19.78 - 22.75................    3,630.1           7.68              22.02           946.7          21.99
23.43 - 26.68................    3,013.7           6.41              25.21         1,453.6          24.31
27.30 - 29.91................    2,577.3           8.29              27.95           623.3          28.45
31.01 - 32.15................    4,001.4           6.29              31.30         2,961.9          31.01
32.95 - 40.80................    2,543.8           7.27              35.79         1,104.7          34.43
43.05 - 65.01................    2,899.9           4.19              52.87         2,899.9          52.87
66.50 - 78.31................      362.1           3.81              70.15           362.1          70.15
</Table>


     The fair value of options granted was estimated on the date of grant using
the Black-Scholes pricing model with the assumptions noted in the following
table (all in weighted averages for options granted during the year):


<Table>
<Caption>
                                                YEAR ENDED SEPTEMBER 30,
                                                ------------------------
                                                 2006     2005     2004
                                                ------   ------   ------

<S>                                             <C>      <C>      <C>

Risk-free interest rate(1)....................    4.56%    3.42%    3.12%
Expected life of stock options(2).............    4.37     4.47     4.49
Expected volatility(3)........................    34.9%    63.0%    68.7%
Expected dividend yield(4)....................    None     None     None
Fair value per option(5)......................  $13.36   $12.75   $12.62
</Table>



   (1) Risk-free interest rate is based upon U.S. Treasury yield curve
       appropriate for the term of the Company's employee stock options.

   (2) Expected life of stock options is based upon historical experience.

   (3) Expected volatility for fiscal 2006 is based on blended volatility. For
       fiscal years 2005 and 2004, expected volatility is based on the Company's
       historical stock price.

   (4) Expected dividend yield is based on the Company's history and future
       expectation of dividend payouts.

   (5) Fiscal 2006 includes fair value of options assumed in connection with the
       Company's acquisitions of Qpass and Cramer (see note 3). Fiscal 2006 fair
       value excluding Qpass and Cramer assumed options is $11.34.


                                      F-37

<PAGE>

                                 AMDOCS LIMITED

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

     The following table sets forth the pro forma effect of applying SFAS No.
123 on net income and earnings per share for the presented periods:


<Table>
<Caption>
                                                        YEAR ENDED
                                                      SEPTEMBER 30,
                                                   -------------------
                                                     2005       2004
                                                   --------   --------

<S>                                                <C>        <C>

Net income as reported...........................  $288,636   $234,860
Add: Equity-based compensation expense included
  in net income, net of related tax effects......       632        453
Less: Total equity-based compensation expense
  determined under fair value method for all
  awards, net of related tax effects.............   (35,666)   (35,989)
                                                   --------   --------
Pro forma net income.............................  $253,602   $199,324
                                                   ========   ========
Basic earnings per share:
  As reported....................................  $   1.44   $   1.13
                                                   ========   ========
  Pro forma......................................  $   1.26   $   0.95
                                                   ========   ========
Diluted earnings per share:
  As reported....................................  $   1.35   $   1.08
                                                   ========   ========
  Pro forma......................................  $   1.19   $   0.92
                                                   ========   ========

</Table>


NOTE 18 -- EARNINGS PER SHARE

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


<Table>
<Caption>
                                              YEAR ENDED SEPTEMBER 30,
                                           ------------------------------
                                             2006       2005       2004
                                           --------   --------   --------

<S>                                        <C>        <C>        <C>

Numerator:
  Numerator for basic earnings per
     share...............................  $318,636   $288,636   $234,860
  Effect of assumed conversion of 0.50%
     convertible notes...................     3,948      3,939      2,296
                                           --------   --------   --------
Numerator for diluted earnings per
  share..................................  $322,584   $292,575   $237,156
                                           ========   ========   ========
Denominator:
  Denominator for basic earnings per
     share -- weighted average number of
     shares outstanding..................   203,194    201,023    208,726
  Restricted stock.......................       141         25         --
  Effect of assumed conversion of 0.50%
     convertible notes...................    10,436     10,436      6,088
  Effect of dilutive stock options
     granted.............................     4,763      5,678      5,471
                                           --------   --------   --------
  Denominator for dilutive earnings per
     share -- adjusted weighted average
     shares and assumed conversions......   218,534    217,162    220,285
                                           ========   ========   ========
Basic earnings per share.................  $   1.57   $   1.44   $   1.13
                                           ========   ========   ========
Diluted earnings per share...............  $   1.48   $   1.35   $   1.08
                                           ========   ========   ========

</Table>




                                      F-38

<PAGE>

                                 AMDOCS LIMITED

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

     The effect of the 0.50% Notes issued by the Company in March 2004 on
diluted earnings per share was included in the above calculation (See Note 2).

     The weighted average effect of the repurchase of Ordinary Shares by the
Company has been included in the calculation of basic earnings per share.

NOTE 19 -- SEGMENT INFORMATION AND SALES TO SIGNIFICANT CUSTOMERS

     The Company and its subsidiaries operate in one operating segment,
providing business and operations support systems and related services primarily
for the communications industry.

  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,
                                        ------------------------------------
                                           2006         2005         2004
                                        ----------   ----------   ----------

<S>                                     <C>          <C>          <C>

REVENUE
United States.........................  $1,319,261   $  985,811   $  824,931
Canada................................     406,941      404,212      333,898
Europe................................     539,784      488,193      480,177
Rest of the world.....................     214,064      160,405      134,726
                                        ----------   ----------   ----------
Total.................................  $2,480,050   $2,038,621   $1,773,732
                                        ==========   ==========   ==========

</Table>




<Table>
<Caption>
                                                 AS OF SEPTEMBER 30,
                                        ------------------------------------
                                           2006         2005         2004
                                        ----------   ----------   ----------

<S>                                     <C>          <C>          <C>

LONG-LIVED ASSETS
United States(1)......................  $  889,879   $  588,448   $  340,090
Canada(2).............................     637,328      655,014      668,806
Europe(3).............................     447,106       18,187       18,979
Rest of the world.....................     145,450      133,774       79,838
                                        ----------   ----------   ----------
Total.................................  $2,119,763   $1,395,423   $1,107,713
                                        ==========   ==========   ==========

</Table>



   (1) Primarily goodwill, intangible assets and computer software and hardware.

   (2) Primarily goodwill.

   (3) Primarily goodwill and intangible assets as of September 30, 2006.


                                      F-39

<PAGE>

                                 AMDOCS LIMITED

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

  REVENUE AND CUSTOMER INFORMATION

     Integrated Customer Management Enabling Systems, or ICM Enabling Systems
includes the following offerings: revenue management (including billing,
mediation and partner settlement), customer management (including ordering,
customer relationship management, or CRM and self-service), service and resource
management (including fulfillment, activation, inventory management, network
planning and customer assurance) and digital commerce management (including
content revenue management). Directory includes directory sales and publishing
systems for publishers of both traditional printed yellow pages and white pages
directories and electronic Internet directories.


<Table>
<Caption>
                                              YEAR ENDED SEPTEMBER 30,
                                        ------------------------------------
                                           2006         2005         2004
                                        ----------   ----------   ----------

<S>                                     <C>          <C>          <C>

ICM Enabling Systems..................  $2,201,245   $1,776,536   $1,536,993
Directory.............................     278,805      262,085      236,739
                                        ----------   ----------   ----------
Total.................................  $2,480,050   $2,038,621   $1,773,732
                                        ==========   ==========   ==========

</Table>


  SALES TO SIGNIFICANT CUSTOMERS

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


<Table>
<Caption>
                                                  YEAR ENDED SEPTEMBER 30,
                                                  ------------------------
                                                  2006   2005(1)   2004(1)
                                                  ----   -------   -------

<S>                                               <C>    <C>       <C>

Customer 1......................................   14%      17%       18%
Customer 2......................................   13       15        17
Customer 3......................................   11       10        (*)
Customer 4......................................   10       (*)       (*)
</Table>



   (*) Less than 10 percent of total revenue.

   (1) The percentage of sales to significant customers groups for fiscal years
       2005 and 2004 were restated to reflect customer consolidation.

NOTE 20 -- OPERATIONAL EFFICIENCY AND COST REDUCTION PROGRAMS

     In accordance with SFAS No. 112 "Employers' Accounting for Post Employment
Benefits" (SFAS 112) and SFAS No. 146, "Accounting for Costs Associated with
Exit or Disposal Activities" (SFAS 146), the Company recognized a total of $0,
$8,135 and $0 in restructuring charges in fiscal 2006, 2005 and 2004,
respectively.


                                      F-40

<PAGE>

                                 AMDOCS LIMITED

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

     The following describes restructuring actions the Company has initiated in
fiscal 2005:

     In the fourth quarter of fiscal 2005, the Company commenced a series of
measures designed to align its operational structure to its expected future
growth, to allow better integration following the acquisitions of DST Innovis
and Longshine, and to improve efficiency. As part of this plan, the Company
recorded a charge of $8,135 in connection with the termination of employment of
software and information technology specialists and administrative
professionals. Approximately $7,238 of the total charge had been paid in cash as
of September 30, 2006. The remaining separation costs are expected to be paid
out during fiscal 2007.


<Table>
<Caption>
                                                            EMPLOYEE
                                                           SEPARATION
                                                              COSTS
                                                           ----------

<S>                                                        <C>

Balance as of October 1, 2004............................    $    --
Charges..................................................      8,135
Cash payments............................................     (1,133)
                                                             -------
Balance as of September 30, 2005.........................      7,002
Cash payments............................................     (6,105)
Adjustments(1)...........................................       (651)
                                                             -------
Balance as of September 30, 2006.........................    $   246
                                                             =======

</Table>




   (1) Reflects adjustments due to changes in previous estimates, which were
       recorded in cost of service expenses, and differences in foreign exchange
       rates from balances paid in currencies other than the U.S. dollar, which
       were recorded in interest income and other, net.

NOTE 21 -- FINANCIAL INSTRUMENTS

     The Company enters into forward contracts and options to purchase and sell
foreign currencies to reduce the exposure associated with revenue denominated in
a foreign currency and exposure associated with anticipated expenses (primarily
personnel costs), in non-U.S. dollar-based currencies and designates these for
accounting purposes as cash flow hedges. The Company also may enter into forward
contracts to sell foreign currency in order to hedge its exposure associated
with some firm commitments from customers in non-U.S. dollar-based currencies
and designates these for accounting purposes as fair value hedges. As of
September 30, 2006 and 2005, the Company had no outstanding fair value 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. The Company currently enters into forward exchange contracts
exclusively with major financial institutions. Forward contracts, which are not
designated as hedging instruments under SFAS No. 133, are used to offset the
effect of exchange rates on certain assets and liabilities. The Company
currently hedges its exposure to the variability in future cash flows for a
maximum period of two years.

     The hedges are evaluated for effectiveness at least quarterly. As the
critical terms of the forward contract or options and the hedged transaction are
matched at inception, the hedge effectiveness is assessed generally based on
changes in the fair value for cash flow hedges as compared to the changes in the
fair value of the cash flows associated with the underlying hedged transactions.
The effective portion of the change in the fair value of forward exchange
contracts or options, which are classified as cash flow hedges, is recorded as
comprehensive income until the underlying transaction is recognized in earnings.
Any residual change in fair value of the forward contracts, such as time value,
excluded from effectiveness testing for hedges of estimated receipts from
customers, is recognized immediately in "interest income and other, net." Hedge
ineffectiveness, if any, is also included in current period in earnings in
"interest income and other, net."


                                      F-41

<PAGE>

                                 AMDOCS LIMITED

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

     The Company discontinues hedge accounting for a forward contract or options
when (1) it is determined that the derivative is no longer effective in
offsetting changes in the fair value of cash flows of hedged item; (2) the
derivative matures or is terminated; (3) it is determined that the forecasted
hedged transaction will no longer occur; (4) a hedged firm commitment no longer
meets the definition of a firm commitment; or (5) management decides to remove
the designation of the derivative as a hedging instrument.

     When hedge accounting is discontinued, and if the derivative remains
outstanding, the Company will record the derivative at its fair value on the
consolidated balance sheet, recognizing changes in the fair value in current
period earnings in "interest income and other, net." When the Company
discontinues hedge accounting because it is no longer probable that the
forecasted transaction will occur, the gains and losses that were accumulated in
other comprehensive income will be recognized immediately in earnings in
"interest income and other, net."

     The fair value of the open contracts recorded by the Company in its
consolidated balance sheets as an asset or a liability is as follows:


<Table>
<Caption>
                                                            AS OF SEPTEMBER
                                                                  30,
                                                          ------------------
                                                            2006      2005
                                                          -------   --------

<S>                                                       <C>       <C>

Prepaid expenses and other current assets...............  $ 7,792   $    369
Other noncurrent assets.................................        9         46
Accrued expenses and other current liabilities..........   (4,165)   (10,755)
Noncurrent liabilities and other........................       --     (2,361)
                                                          -------   --------
Net fair value..........................................  $ 3,636   $(12,701)
                                                          =======   ========

</Table>


     A significant portion of the forward contracts and options outstanding as
of September 30, 2006 are expected to mature within the next year.

     During fiscal years 2006, 2005 and 2004, the gains or losses recognized in
earnings for hedge ineffectiveness, excluding the time value portion excluded
from effectiveness testing, were not material. During fiscal years 2006, 2005
and 2004, the Company did not recognize any losses for a hedged firm commitment
that no longer qualified as a fair value hedge. During fiscal years 2006, 2005
and 2004, the Company recognized losses of $0, $265 and $1,189, respectively,
resulting from hedged forecasted cash flows that no longer qualified as cash
flow hedges. All of the above gains or losses are included in "interest income
and other, net."

     Derivatives gains and losses, that are included in other comprehensive
income, are reclassified into earnings at the time the forecasted revenue or
expenses are recognized. The Company estimates that a $2,834 net gain related to
forward contracts and options that are included in other comprehensive income as
of September 30, 2006 will be reclassified into earnings within the next twelve
months. The amount ultimately realized in earnings will likely differ due to
future changes in foreign exchange rates.


                                      F-42

<PAGE>

                                 AMDOCS LIMITED

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

NOTE 22 -- 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>

2006
  Revenue.................................     $665,445     $626,448    $601,129     $587,028
  Operating income........................       76,194       84,470      88,789       82,679
  Net income..............................       75,955       85,585      81,762       75,334
  Basic earnings per share................         0.37         0.42        0.40         0.38
  Diluted earnings per share..............         0.35         0.39        0.38         0.36
2005
  Revenue.................................     $573,318     $507,355    $488,416     $469,532
  Operating income........................       77,396       92,062      87,193       81,841
  Net income..............................       67,799       77,097      74,297       69,443
  Basic earnings per share................         0.34         0.38        0.37         0.34
  Diluted earnings per share..............         0.32         0.36        0.34         0.32
</Table>




                                      F-43

<PAGE>

                        VALUATION AND QUALIFYING ACCOUNTS
                                 (IN THOUSANDS)


<Table>
<Caption>
                                                                     VALUATION ALLOWANCES
                                                                            ON NET
                                               ACCOUNTS RECEIVABLE       DEFERRED TAX
                                                    ALLOWANCES              ASSETS
                                               -------------------   --------------------

<S>                                            <C>                   <C>

Balance as of October 1, 2003................        $ 18,018               $    --
Additions:
  Charged to costs and expenses..............              --                 8,076 (1)
  Charged to revenue.........................           2,881                    --
  Charged to other accounts..................           4,176                 3,348
Deductions...................................         (12,904)                   --
                                                     --------               -------
Balance as of September 30, 2004.............          12,171                11,424
Additions:
  Charged to costs and expenses..............             571                 2,878 (2)
  Charged to revenue.........................             426                    --
  Charged to other accounts..................           2,580 (3)                --
Deductions...................................          (8,840)                   --
                                                     --------               -------
Balance as of September 30, 2005.............           6,908                14,302
  Charged to costs and expenses..............           1,592                 3,640 (4)
  Charged to revenue.........................           1,448                    --
  Charged to other accounts..................           4,406 (5)            11,393 (6)
Deductions...................................          (2,279)                   --
                                                     --------               -------
Balance as of September 30, 2006.............        $ 12,075               $29,335
                                                     ========               =======

</Table>




   (1) Valuation allowances on deferred tax assets incurred during fiscal 2004.

   (2) Valuation allowances on deferred tax assets incurred during fiscal 2005.

   (3) Includes accounts receivable allowance of $2,580 acquired as part of the
       acquisitions of DST Innovis and Longshine.

   (4) Valuation allowances on deferred tax assets incurred during fiscal 2006.

   (5) Includes accounts receivable allowance of $4,406 acquired primarily as
       part of the acquisition of Cramer.

   (6) Includes valuation allowances on deferred tax assets incurred in
       connection with the Cramer and Qpass acquisitions.


                                      F-44