UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                         Amendment No. 1 on Form 10-Q/A
                                  to Form 10-Q

                Quarterly Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934


                  For the quarterly period ended June 30, 1998

                                       OR

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

             FOR THE TRANSITION PERIOD FROM __________ TO __________

                         Commission File Number 0-27176


                               Saville Systems PLC
             (Exact name of registrant as specified in its charter)

                               Republic of Ireland
         (State or other jurisdiction of incorporation or organization)

                                 Not Applicable
                      (I.R.S. Employer Identification No.)

                   IDA Business Park, Dangan, Galway, Ireland
          (Address of principal executive offices, including zip code)


                               011-353-9-152-6611
              (Registrant's telephone number, including area code)

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  | |

Number of shares  outstanding of the registrant's class of Ordinary Shares as of
July 31, 1998 was 38,652,159.


<PAGE>



                                EXPLANATORY NOTE

This Amendment No. 1 on Form 10-Q/A amends the Registrant's  Quarterly Report on
Form 10-Q,  as filed by the  Registrant on August 12, 1998 and is being filed to
reflect the restatement of the Registrant's  Consolidated  Financial Statements.
See  "Restatement of Quarterly  Financial  Statements" in Note 1 of the Notes to
the  Consolidated  Financial  Statements  for a discussion of the basis for such
restatement.


<PAGE>



                               SAVILLE SYSTEMS PLC

                         AMENDMENT NO. 1 ON FORM 10-Q/A
                                  TO FORM 10-Q

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998

                                TABLE OF CONTENTS

                                                                           PAGE

Part I - Financial Information

Item 1.  Consolidated Financial Statements

         Consolidated Balance Sheets as of June 30, 1998                       4
         (unaudited) and December 31, 1997                       

         Consolidated Statements of  Income for the three months 
         and for the six months ended June 30, 1998 and 1997 (unaudited)       5

         Consolidated Statements of Cash Flows for the six months ended    
         June 30, 1998 and 1997 (unaudited)                                    6

         Notes to Consolidated Financial Statements (unaudited)             7-12

Item 2.  Management's Discussion and Analysis of Financial Condition 
         and Results of Operations                                         13-20


                           Part II - Other Information


Item 6.  Exhibits and Reports on Form 8-K                                     21

Signatures                                                                    22




<PAGE>


Saville Systems PLC


CONSOLIDATED BALANCE SHEETS


(in thousands of U.S. dollars, except share data amounts)

<TABLE>

                                                            June 30  December 31
                                                              1998       1997
                                                           (unaudited)
                                                            (restated)
--------------------------------------------------------- ---------- -----------
<S>                                                       <C>        <C>  
ASSETS
Current
Cash and cash equivalents                                  $ 31,880    $ 55,785
Short-term investments                                       47,611      13,015
Accounts receivable, less allowance for 
  doubtful accounts of  $1,737 and $1,687, respectively      36,799      22,373
Prepaid expenses and other assets                             5,540       3,581
--------------------------------------------------------- ---------- -----------
Total current assets                                        121,830      94,754
Property and equipment, net                                  12,835      10,621
Other assets, net                                            15,114         -
--------------------------------------------------------- ---------- -----------
Total assets                                              $ 149,779   $ 105,375
--------------------------------------------------------- ---------- -----------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable                                              5,758       5,336
Accrued compensation and related benefits                     7,616       5,248
Accrued expenses and other liabilities                        4,595       3,084
Income taxes payable                                          7,817       7,167
Deferred revenue                                              9,012       3,402
Current portion of long-term liabilities                      1,136         134
--------------------------------------------------------- ---------- -----------
Total current liabilities                                    35,934      24,371
Long-term liabilities                                         1,257         336
Minority interest                                               240         366
--------------------------------------------------------- ---------- -----------
Total liabilities                                            37,431      25,073
--------------------------------------------------------- ---------- -----------

Shareholders' equity
Ordinary Shares, nominal value $0.0025 per share
     Authorized:  75,000,000
     Issued and outstanding:  38,652,159 and 37,504,596          97          94
Deferred Ordinary Shares, nominal value 
     IR(pound)1.00 per share
     Authorized, issued and outstanding:  30,000                 48          48
Additional paid-in capital                                   61,521      37,734
Retained earnings                                            51,982      42,750
Accumulated other comprehensive income                      (1,300)       (324)
--------------------------------------------------------- ---------- -----------
Total shareholders' equity                                  112,348      80,302
--------------------------------------------------------- ---------- -----------
Total liabilities and shareholders' equity                $ 149,779   $ 105,375
--------------------------------------------------------- ---------- -----------
</TABLE>

See accompanying notes

<PAGE>

Saville Systems PLC


CONSOLIDATED STATEMENTS OF INCOME

(unaudited)
(in thousands of U.S. dollars, except share and per share data)

<TABLE>
                                      Three months ended     Six months ended
                                      June 30    June 30    June 30    June 30
                                        1998      1997        1998       1997
                                     (restated)            (restated)
------------------------------------ ---------- ---------- ---------- ---------
<S>                                  <C>        <C>        <C>        <C> 
REVENUE
Services                              $ 31,114   $ 20,088   $ 61,053  $ 36,603
License fees                            11,797      5,405     19,880     9,020
------------------------------------ ---------- ---------- ---------- ---------
Total revenue                           42,911     25,493     80,933    45,623
------------------------------------ ---------- ---------- ---------- ---------

EXPENSES
Cost of services                        16,063      9,448     30,111    17,485
Cost of license fees                       270        128        550       216
Sales and marketing                      2,186      1,522      4,108     2,724
Research and development                 5,968      2,530      9,899     4,011
General and administrative               8,108      4,913     14,651     8,822
Charge for purchased in-process 
     research and development            9,168         -       9,168        -
------------------------------------ ---------- ---------- ---------- ---------
Total expenses                          41,763     18,541     68,487    33,258
------------------------------------ ---------- ---------- ---------- ---------
Income from operations                   1,148      6,952     12,446    12,365
Other income, net                          631        559      1,354       913
------------------------------------ ---------- ---------- ---------- ---------
Income before income taxes               1,779      7,511     13,800    13,278
Provision for income taxes               1,743      1,995      4,568     3,320
------------------------------------ ---------- ---------- ---------- ---------
Income before minority interest             36      5,516      9,232     9,958
Minority interest share in 
    subsidiaries' net income                -          75         -        115
------------------------------------ ---------- ---------- ---------- ---------
Net Income                               $  36     $5,441     $9,232   $ 9,843
------------------------------------ ---------- ---------- ---------- ---------
Basic earnings per share                 $   -     $ 0.15     $ 0.24    $ 0.27 
Diluted earnings per share               $   -     $ 0.14     $ 0.23    $ 0.25                                         
------------------------------------ ---------- ---------- ---------- ---------
(in thousands)
Ordinary shares                         38,554     36,449     38,188    36,329
Ordinary shares assuming dilution       41,269     39,131     41,057    38,841
------------------------------------ ---------- ---------- ---------- ---------
</TABLE>

See accompanying notes

<PAGE>

Saville Systems PLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)
(in thousands of U.S. dollars)

<TABLE>
                                                           Six months ended
                                                          June 30    June 30
                                                            1998       1997
                                                         (restated)
------------------------------------------------------ ---------- -------------
<S>                                                    <C>        <C> 
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                               $ 9,232       $ 9,843
Adjustments to reconcile net income to net cash
Provided by operating activities:
  Depreciation of property and equipment                   1,170           600
  Amortization of other assets                               543            - 
  Allowance for doubtful accounts                            585           614
  Minority interest in net income                             -            115
  Gain on sale of property and equipment                   (119)          (24)
  Compensation related to stock transactions                 103            60
  Deferred taxes                                         (1,088)            -
  Charge for purchased in-process research                 9,168            -
   and development                                                        
Changes in operating assets and liabilities:
  Accounts receivable                                   (15,023)       (8,997)
  Prepaid expenses and other assets                      (1,768)       (1,555)
  Accounts payable                                           160           955
  Accrued compensation and related benefits                2,367           843
  Accrued expenses and other liabilities                   (339)         2,113
  Income taxes payable                                       651         1,918
  Deferred revenue                                         5,610         7,371
------------------------------------------------------ ---------- -------------
Net cash provided by operating activities                 11,252        13,856
------------------------------------------------------ ---------- -------------

CASH FLOWS FROM INVESTING ACTIVITIES
Net purchase of property and equipment                   (2,893)       (1,525)
Purchase of other assets                                 (2,089)            -
Purchase of short-term investments                      (34,596)      (18,059)
Purchase of business assets                             (19,167)            -
------------------------------------------------------ ---------- -------------
Net cash used in investing activities                   (58,745)      (19,584)
------------------------------------------------------ ---------- -------------

CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of long-term liabilities                          (64)          (43)
Advances on operating line of credit                      15,100             -
Repayments on operating line of credit                  (15,100)             -
Proceeds from share issuances                             23,356         1,439
Share issue costs                                          (428)          (63)
Tax benefit on employee stock transactions                   634           645
------------------------------------------------------ ---------- -------------
Net cash provided by financing activities                 23,498         1,978
------------------------------------------------------ ---------- -------------
Effect of exchange rate changes on cash                       90           (3)
------------------------------------------------------ ---------- -------------
Net decrease in cash and cash equivalents               (23,905)       (3,753)
Cash and cash equivalents, beginning of period            55,785        34,395
------------------------------------------------------ ---------- -------------
Cash and cash equivalents, end of period                $ 31,880       $30,642
------------------------------------------------------ ---------- -------------
Short-term investments                                    47,611        19,059
------------------------------------------------------ ---------- -------------
Cash and short-term investments                         $ 79,491       $49,701
------------------------------------------------------ ---------- -------------
  Supplementary disclosure of cash flow information:
  Cash paid for interest                                     157            -
  Cash paid for income taxes                               4,043           833

</TABLE>

See accompanying notes

<PAGE>


Saville Systems PLC

Notes to  Consolidated  Financial  Statements  as of June 30,  1998  (unaudited)

1.   Basis of Presentation

The accompanying  unaudited consolidated financial statements have been prepared
by the Company in accordance with U.S. generally accepted accounting  principles
for  interim   financial   information  and  with  instructions  to  Form  10-Q.
Accordingly,  certain  information and footnote  disclosure normally included in
the  Company's  audited  annual  consolidated  financial  statements  have  been
condensed  or  omitted  in  accordance  with the  rules and  regulations  of the
Securities and Exchange Commission. The unaudited interim consolidated financial
statements,  in the opinion of management,  reflect all adjustments  (consisting
only of normal and recurring  adjustments)  necessary for a fair presentation of
the  results  of the  interim  periods  ended  June  30,  1998  and 1997 and the
financial position as of June 30, 1998.

The results of operations for the interim periods are not necessarily indicative
of the results of operations  to be expected for the fiscal year.  These interim
consolidated financial statements should be read in conjunction with the audited
consolidated  financial  statements  of the Company  which are  contained in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997.

Earnings per share amounts for comparative  periods have been restated to comply
with Statement of Financial Accounting Standards No. 128.

Restatement of Quarterly Financial Statements

The Company  recorded a one-time  charge for purchased  in-process  research and
development  ("IPRD") in its operating  results for the second  quarter of 1998.
This one-time  charge was recorded in accordance  with U.S.  generally  accepted
accounting  principles and established  industry  practice at that time, and was
supported by an independent third party valuation. Since that time, however, the
U.S. Securities and Exchange Commission ("SEC") has expressed views on valuation
methods for purchased  IPRD,  which differ from prior  industry  practice.  As a
result,  the Company evaluated the applicability of the SEC's views with respect
to the charge taken in the second quarter of 1998 and  voluntarily  adjusted its
IPRD charge. The Company  originally  recorded a one-time charge for IPRD in its
operating results for the second quarter of 1998 in the amount of $18.8 million.
After  revaluing the IPRD charge,  the Company  adjusted the one-time  charge to
$9.2  million  ($8.4  million  net of  related  tax  benefits),  representing  a
reduction  of $9.6 million to be  amortized  in  subsequent  periods as goodwill
($6.0 million) and completed technology ($3.6 million).  Additional amortization
due to this  adjustment was $328,000 for the three and six months ended June 30,
1998.  The  following  tables  outline  the  revisions  to  previously  reported
unaudited  Consolidated  Financial  Statements  (in  thousands of U.S.  Dollars,
except per share data).

Consolidated Balance Sheet:
<TABLE>
                                                      June 30, 1998
---------------------------------------- ----------------------------------
                                               Previously
                                                reported          Restated
---------------------------------------- ----------------- ----------------
<S>                                     <C>                <C> 
Other assets, net                                  $6,675         $ 15,114

Income taxes payable                                7,892            7,817

Retained earnings                                  42,984           51,982
Accumulated other comprehensive income              (816)          (1,300)
---------------------------------------- ----------------- ----------------
</TABLE>

<PAGE>

Consolidated Statements of Income:

<TABLE>

                                       Three months ended    Six months ended
                                          June 30, 1998        June 30, 1998
----------------------------------------------------------    ---------------
                                     Previously           Previously
                                      reported   Restated  reported  Restated
------------------------------------------------ --------- --------- --------
<S>                                <C>           <C>      <C>         <C> 
Expenses:
   General and administrative           $ 7,780    $8,108   $14,323   $14,651
   Charge for purchased in-process
        research and development         18,808     9,168    18,808     9,168

(Loss) income from operations           (8,164)     1,148     3,134    12,446

(Loss) income before income taxes       (7,533)     1,779     4,488    13,800

Provision for income taxes                1,429     1,743     4,254     4,568

Net (loss) income                       (8,962)        36       234     9,232

Basic (loss) earnings per share        $ (0.23)    $   -     $ 0.01    $ 0.24
Diluted (loss) earnings per share      $ (0.22)    $   -     $ 0.01    $ 0.23
------------------------------------------------ --------- --------- ---------
</TABLE>

2.   Share Capital

During the three and six month  periods  ended June 30, 1998 the Company  issued
148,765 and 863,865  Ordinary  Shares,  respectively,  to officers and employees
pursuant to option  exercises for aggregate cash  consideration of approximately
$1.4  million and $9.3  million,  respectively.  All of these shares were issued
under  the  1995  Share  Option  Plan  ("1995   Plan")  with  the  exception  of
approximately  62,000 issued under the 1996 Employee  Share Purchase Plan ("1996
Plan").

During the three  months  ended June 30,  1998 the Company  also issued  283,698
Ordinary  Shares to BHA Pty Ltd. for aggregate  consideration  of  approximately
$14.0  million  in order to fund,  in  part,  an asset  acquisition.  See Note 4
"Acquisition".

The following table  summarizes the activity in Ordinary Share options under the
1995 and 1996 Plans from December 31, 1997 to June 30, 1998:

<TABLE>

                                         Number of Ordinary Share Options
------------------------------------ ----------------- --------------- -------
                                      Available for  Unexercised   Weighted
                                          grant                  average price
                                                                   per share
------------------------------------ ------------- ------------- --------------
<S>                                  <C>           <C>           <C> 
Balance at December 31, 1997            5,449,408     4,279,435     $13.61

Options granted                       (2,236,773)     2,236,773      39.56
Options exercised                            -        (863,865)      10.78
Options cancelled                         107,617     (107,617)      30.30
------------------------------------ ------------- ------------- --------------                                     
Balance at June 30, 1998                3,320,252     5,544,726     $24.20
------------------------------------ ------------- ------------- --------------

</TABLE>

<PAGE>

A summary  of  Ordinary  Share  options  outstanding  as of June 30,  1998 is as
follows:

<TABLE>

------------------- ----------------- ----------------- ----------------- ----------------- -----------------
Total Outstanding       Range of          Weighted          Weighted       Exercisable at       Weighted
                    Exercise Prices       Average           Average        June 30, 1998        Average
                                       Exercise Price      Remaining                         Exercise Price
                                                          Contractual                        of Exercisable
                                                        Life (in years)                         Options
------------------- ----------------- ----------------- ----------------- ----------------- -----------------
<S>                 <C>                 <C>            <C>                <C>               <C> 
           235,528       $1.20             $1.20              1.6             235,528             1.20
         1,105,271      4.33-5.00           4.48              7.2             552,266             4.55
            40,590     7.50-13.32           8.79              7.6              27,256             8.28
         1,584,162    14.06-21.50          18.62              8.6             643,155            18.81
           207,000    21.75-32.56          29.51              9.3               8,666            25.44
         2,218,875    33.50-50.25          38.23              9.3                -                 -
           153,300    50.25-59.00          53.06              9.8                -                 -
------------------- ----------------- ----------------- ----------------- ----------------- -----------------
         5,544,726    $1.20-59.00         $24.20              8.4           1,466,871           $10.46
------------------- ----------------- ----------------- ----------------- ----------------- -----------------

</TABLE>

Of the options granted in 1998,  approximately 1,698,000 options were granted to
employees  and  directors  that may vest earlier  than the  original  three year
vesting period if the market price of the Company's American Depositary Receipts
(ADRs)  increases in  specified  time  frames.  At June 30, 1998,  approximately
1,647,000 of these options were outstanding.

3.       Comprehensive (Loss) Income

The Company has adopted  Statement of  Financial  Accounting  Standards  No. 130
(SFAS 130),  "Reporting  Comprehensive  Income",  which became effective for the
Company's quarter ended March 31, 1998. The Company's  comprehensive  income was
as follows:

(in thousands of U.S. dollars)
<TABLE>

                                      Three months ended     Six months ended
                                      June 30    June 30    June 30     June 30
                                       1998       1997       1998        1997
                                    (restated)             (restated)
--------------------------------- ------------------------ ----------- --------
<S>                                <C>          <C>         <C>        <C>   
Net income                             $ 36      $5,441      $ 9,232    $9,843
Foreign currency translation
     adjustment, net of NIL tax      (1,007)          7        (976)      (26)
                                  ------------------------ ----------- --------

Comprehensive (loss) income          $ (971)     $5,448     $ 8,256    $9,817
                                  ======================== =========== ========

</TABLE>

The earnings of the Company's non-Irish foreign subsidiaries, which give rise to
the foreign currency  translation  adjustments,  are reinvested with no plan for
repatriation.  Therefore,  there is no tax  effect  on this  component  of other
comprehensive income.

4.    Acquisition

On  April  3,  1998,   the  Company   acquired  the  net  assets  of  Australian
telecommunications  software company BHA Pty Ltd. ("BHA") and its majority-owned
subsidiary  BHA Computer Pty Ltd.  ("BHAC") for  approximately  $15.8 million in
cash and the settlement of  approximately  $3.3 million in related bank debt, as
well as $906,000 in acquisition related costs and expenses including  applicable
duties and taxes. The Company funded the acquisition,  in part, by the borrowing
of  approximately  $15.1  million  from the  Company's  working  capital line of
credit.  The entire amount borrowed was repaid during the quarter ended June 30,
1998, in part,  from the proceeds  resulting from the issuance of 283,698 of the
Company's  Ordinary Shares to BHA for aggregate  consideration  of approximately
$14.0 million.

This asset acquisition was accounted for using the purchase method of accounting
and results have been included since the date of acquisition.  Pro forma results
have  not  been  provided  as the  impact  on  revenue  and net  income  are not
considered  material to the current and preceding periods.  The assets purchased
consist  of  those  assets  used by BHA and  BHAC in  developing  and  marketing
customer  care  and  billing  software  for  the  telecommunications   industry,
including property and equipment and completed technology and other intangibles.
The purchase price was allocated  among tangible and intangible  assets based on
estimated  fair values at the date of  acquisition.  The  aggregate  cost of the
acquisition  on the  acquisition  date exceeded the estimated  fair value of the
acquired net assets by $8.9 million,  which is being  amortized as goodwill on a
straight-line  basis  over the  estimated  useful  life of such  assets of seven
years.  The  balance  remaining  in  goodwill as of June 30, 1998 is included in
Other Assets.  This balance is subject to translation to the reporting  currency
of the  Company as  required  by SFAS 52  "Foreign  Currency  Translation".  Any
changes in the balance due to foreign exchange fluctuations are recorded as part
of accumulated other comprehensive income.

Also during 1998, the Company purchased telecommunications  interconnect billing
software  technology  from a  Swedish  company  for a  total  of  $4.1  million,
including  acquisition costs. This was paid for by a cash outlay of $2.0 million
with a  commitment  of at least $2.0 million in minimum  royalty  payments to be
paid in 1999 and 2000. Minimum royalty payments  outstanding as of June 30, 1998
are included in Long-Term Liabilities.

The  value  assigned  to the  intangible  assets  purchased  as  part of the BHA
acquisition and to the interconnect  billing software  technology  purchased was
determined with the assistance of an independent  appraiser based on fair market
value using a risk  adjusted  discounted  cash flow  approach.  The  significant
assumptions that affected the valuations included potential revenues and cost of
completion,  as well as the timing of the product  releases.  In  addition,  the
selection of an  appropriate  discount  rate was a major factor in the valuation
analysis.  The valuation utilized a discount rate of 30% for the BHA acquisition
and  31%  for the  acquisition  of the  interconnect  billing  technology,  each
reflecting the  difficulties  and  uncertainties  in completing the  development
effort,  risks related to the viability and potential  changes to target markets
and the inherent uncertainty of predicting cash flows in the  telecommunications
billing industry.

Acquired incomplete  technology from the BHA acquisition,  specifically  billing
technology  (SavilleExpress)  and customer care  technology  (SavilleCare)  were
evaluated using a stage of completion approach.  The Company,  through extensive
interviews  and  analysis of data  concerning  the state of the  technology  and
required  development  work,  estimated the  stage-of-completion  at the date of
acquiring the products to be approximately  53% for  SavilleExpress  and 55% for
SavilleCare.   Each  of  the   purchased   technologies   required   significant
modifications  in  order  to  reach  technological  feasibility.  At the time of
acquisition,  additional development of SavilleExpress  included,  among others,
additional core functionality including tariffing, language support, data fields
to support different currencies, credit limit notification and automatic service
shut-off,  as well as revision of all existing  software  code to be  compatible
with different hardware platforms.  SavilleCare  required  substantial effort to
complete   the   technology   and  ensure  that  it  was  more  focused  on  the
telecommunications  industry than the original  product  design.  This included,
among others,  ensuring scalability existed as well as full functionality in the
areas  of  provisioning,   call  reporting  and  billing.   SavilleExpress   and
SavilleCare were completed in August 1998 and January 1999, respectively. Actual
revenue received and costs incurred to complete  SavilleCare were not materially
different than estimates made. Also, for SavilleExpress, costs of completion did
not differ  significantly from estimates.  However,  actual revenue received was
less than expected due to a change in market conditions.

Saville  IBP  had  significant   functionality   deficiencies  at  the  date  of
acquisition that had to be corrected as part of further  development so that the
product could be commercialized.  Specifically,  these  modifications  included,
among others, the addition of a critical application program interface, improved
detailed reporting capability,  datawarehousing  capability without slowing down
overall   information    technology   systems   and   scalability   for   larger
telecommunications operations. Saville IBP was completed in October 1998. Actual
costs to complete and revenue  received were not  significantly  different  from
estimates.

Based on this evaluation,  the Company assigned fair values to SavilleExpress of
$2.1 million, to SavilleCare of $3.0 million and to Saville IBP of $4.1 million.
These in-process  technologies had not reached technological  feasibility at the
time of  acquisition  and had no  alternative  future use in other  research and
development  projects or otherwise.  Accordingly,  the acquired  technology  was
expensed as  in-process  research  and  development  for a total  charge of $9.2
million to the Company's consolidated results in the second quarter of 1998.

5.    Recently Issued Accounting Standards

The  American  Institute  of  Certified  Public  Accountants  (AICPA) has issued
Statements of Position 97-2 "Software  Revenue  Recognition"  ("SOP 97-2") which
was effective  for the  Company's  quarter ended March 31, 1998 and Statement of
Position 98-4  "Deferral of the Effective Date of a Provision of SOP 97-2" ("SOP
98-4")  which  was  effective  as of  March  31,  1998.  The  Company's  revenue
recognition policies were largely unaffected by SOP 97-2 and SOP 98-4 and are in
accordance with their requirements.

Statement of Position 98-1 "Accounting for Costs of Computer Software  Developed
or Obtained  for  Internal  Use" ("SOP  98-1") has also been issued and provides
guidance on capitalization of the costs incurred for computer software developed
or obtained for internal  use. The Company has adopted SOP 98-1 as of January 1,
1998.

Statement of Position 98-5 "Reporting on the Costs of Start-Up Activities" ("SOP
98-5") has also been issued and will be effective for the Company's December 31,
1999 year end.  The  Company  does not  expect  any  significant  impact of this
pronouncement on its consolidated financial statements.

The  Financial  Accounting  Standards  Board  (FASB)  has  issued  Statement  of
Financial  Accounting  Standards  No.  131  "Disclosures  about  Segments  of an
Enterprise  and  Related  Information"  which  is  effective  for the  Company's
December  31, 1998 year end. No  additional  disclosure  is required for interim
financial statements until the Company's quarter ending March 31, 1999.

<PAGE>


Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations (continued)


Overview

Saville is a leading provider of customer care and billing solutions for service
providers in the  telecommunications  market.  The Company  offers an innovative
convergent  billing  product  called  Saville  CBP(R)  ("CBP") that  operates on
DB2/400 and Oracle/UNIX platforms for the telecommunications and energy markets.
The Oracle/UNIX-based  platform of this software was introduced to the market in
December  1997.  In  addition,  Saville  offers  its  customers  a full range of
professional   services.  The  Company  assists  a  customer  in  analyzing  the
customer's  requirements  and then designs,  develops and  implements a customer
care and billing  solution.  The customer can either  license the solution  from
Saville or the solution can be provided by a Company  operated  service  bureau.
Saville has also introduced facilities management services.  This service allows
customers  to contract  with Saville to manage the  operation of the  customized
billing software on customer owned hardware.  Saville also assists its customers
on an ongoing basis by addressing  their changing  business needs through future
enhancements and developments to their customer care and billing solutions.

The  following  information  should be read in  conjunction  with the  Unaudited
Consolidated  Financial  Statements and Notes thereto included in Item 1 of this
Quarterly  Report and the Audited  Consolidated  Financial  Statements and Notes
thereto and  Management's  Discussion  and Analysis of Financial  Condition  and
Results of Operations  contained in the Company's Annual Report on Form 10-K for
the year ended December 31, 1997.


Results of Operations

Revenue

Total revenue  increased 68.3% from $25.5 million in the three months ended June
30, 1997 to $42.9 million in the three months ended June 30, 1998, and increased
77.4% from $45.6  million in the six months ended June 30, 1997 to $80.9 million
in the six months  ended June 30, 1998 due to overall  increases in services and
license fees as described below.

Services  revenue  increased  54.9% from $20.1 million in the three months ended
June 30,  1997 to $31.1  million in the three  months  ended  June 30,  1998 and
increased  66.8% from $36.6  million  in the six months  ended June 30,  1997 to
$61.1  million  in the six months  ended June 30,  1998.  The  increase  in both
periods  was   attributable   primarily  to  an  increase  in   consulting   and
implementation  services  provided  to new  customers  as well as  increases  in
projects  for  existing  customers  and, to a lesser  extent,  the  inclusion of
revenue from the operations  since the acquisition of the assets of BHA and BHAC
in April 1998. As a result of the significant merger and consolidation  activity
currently  being  experienced  by  the  telecommunications  industry,  including
certain  customers  of the  Company,  the  Company  expects  revenue to maintain
current levels in the near term.

License  fees  revenue  increased  118.3% from $5.4  million in the three months
ended June 30, 1997 to $11.8  million in the three  months  ended June 30, 1998,
and increased  120.4% from $9.0 million in the six months ended June 30, 1997 to
$19.9  million in the six months ended June 30,  1998.  The increase in both the
quarterly  and  six  month  results  was due  primarily  to the  recognition  of
additional  license fees for the Company's  CBP product  contracted in both 1997
and 1998 and, to a lesser  extent,  fees  recognized  with the  execution  of an
authorized reseller agreement.

Cost of Services

Cost of services  increased  70.0% from $9.4  million in the three  months ended
June 30, 1997 to $16.1  million in the three  months  ended June 30,  1998,  and
increased  72.2% from $17.5  million  in the six months  ended June 30,  1997 to
$30.1 million in the six months ended June 30, 1998. As a percentage of services
revenue, cost of services increased from 47.0% and 47.8% in the three months and
six months  ended June 30,  1997 to 51.6% and 49.3%,  respectively,  in the same
periods in 1998.  The overall  increase in cost of services was primarily due to
additional  personnel hired to support the growth of the Company including those
employees hired as a result of the acquisition of the assets of BHA and BHAC, as
well as additional costs incurred to attract and retain qualified personnel. The
increase  in cost  of  services  as a  percentage  of  services  revenue  is due
primarily to the training of current personnel on the UNIX platform,  the hiring
of additional  UNIX-skilled  personnel in  anticipation  of additional  services
related to the Company's UNIX-based CBP product, and to a lesser extent, the use
of more independent contractors to support the Company's services. As the market
demands for skilled employees and contractors increase, the Company expects that
the costs to attract,  retain and train  personnel  will  continue to  increase.
Also,  as the Company  continues  to expand,  it expects  the  overall  costs of
services to increase accordingly.

Cost of License Fees

Cost of license fees  increased  110.9% from  $128,000 in the three months ended
June 30, 1997 to $270,000 in the three months ended June 30, 1998, and increased
154.6% from  $216,000  in the six months  ended June 30, 1997 to $550,000 in the
six  months  ended  June 30,  1998.  This  increase  was due to an  increase  in
commission expense resulting from the increase in the license fees earned by the
Company.

Sales and Marketing

Sales and  marketing  expenses  increased  43.6% from $1.5  million in the three
months  ended June 30, 1997 to $2.2  million in the three  months ended June 30,
1998,  and  increased  50.8% from $2.7  million in the six months ended June 30,
1997 to $4.1 million in the six months ended June 30, 1998.  As a percentage  of
total  revenue,  sales and marketing  expenses  decreased from 6.0% in the three
months and six months  ended June 30, 1997 to 5.1% in the same  periods in 1998.
The overall increase was primarily due to the Company's  continued  expansion of
its sales force globally,  including in North America, Europe, Latin America and
Asia Pacific,  the associated  expansion of its infrastructure and the inclusion
of the sales and marketing  costs in Australia as a result of the acquisition of
the assets of BHA and BHAC. The Company  anticipates  that the  establishment of
new sales offices and the continued  emphasis on its North American and European
marketing  efforts will  increase its sales and  marketing  expenses in absolute
dollars  through the  remainder  of 1998 and that such  expenses  will remain at
similar levels to the first half of 1998 as a percentage of total revenue.

Research and Development

Research  and  development  expenses  increased  135.9% from $2.5 million in the
three  months ended June 30, 1997 to $6.0 million in the three months ended June
30, 1998,  and  increased  146.8% from $4.0 million in the six months ended June
30, 1997 to $9.9 million in the six months ended June 30, 1998.  As a percentage
of total revenue, research and development expenses increased from 9.9% and 8.8%
in the three months and six months ended June 30, 1997,  respectively,  to 13.9%
and 12.2%, respectively,  in the same periods in 1998. Both the overall increase
and  the  increase  as a  percentage  of  total  revenue  was  due to  increased
development  efforts by the  Company on its CBP  products  for both the  DB2/400
platform  and UNIX  platform,  including a scheduled  additional  release of its
UNIX-based  product later this year and the development of acquired  technology,
as well as the use of more independent  contractors to support these development
activities.  The Company  intends to continue to invest  resources to expand and
enhance its product  offerings in the future and therefore expects that research
and  development  expenses  will  remain at similar  levels to the first half of
1998.

General and Administrative

General and  administrative  expenses  increased  65.0% from $4.9 million in the
three  months ended June 30, 1997 to $8.1 million in the three months ended June
30, 1998, and increased 66.1% from $8.8 million in the six months ended June 30,
1997 to $14.7  million in the six months ended June 30, 1998. As a percentage of
total revenue,  general and administrative  expenses decreased from 19.3% in the
three   months  and  six  months  ended  June  30,  1997  to  18.9%  and  18.1%,
respectively,  in the same periods in 1998.  The overall  additional  costs were
attributable  to additional  senior and middle  management  and  recruiting  and
infrastructure  costs associated with the growth in the Company's  employee base
and the expansion of the Company's  business,  including the  acquisition of the
assets of BHA and BHAC in April 1998 which  included,  among  other  costs,  the
amortization of goodwill and completed technology.

Charge for Purchased In-Process Research and Development

The charge for purchased  in-process  research and  development  is based on the
fair  value  of  acquired  technology  that  had not yet  reached  technological
feasibility  and has no  future  alternative  use.  The  value  assigned  to the
intangible  assets  purchased  as  part  of  the  BHA  acquisition  and  to  the
interconnect  billing  software  technology  purchased was  determined  with the
assistance of an independent  appraiser  based on fair market value using a risk
adjusted  discounted  cash  flow  approach.  The  significant  assumptions  that
affected the valuations  included potential revenues and cost of completion,  as
well as the timing of the product  releases.  In addition,  the  selection of an
appropriate  discount  rate was a major factor in the  valuation  analysis.  The
valuation  utilized a discount rate of 30% for the BHA  acquisition  and 31% for
the  acquisition of the  interconnect  billing  technology,  each reflecting the
difficulties  and  uncertainties  in completing the  development  effort,  risks
related  to the  viability  and  potential  changes  to target  markets  and the
inherent uncertainty of predicting cash flows in the telecommunications  billing
industry.

Acquired incomplete  technology from the BHA acquisition,  specifically  billing
technology  (SavilleExpress)  and customer care  technology  (SavilleCare)  were
evaluated using a stage of completion approach.  The Company,  through extensive
interviews  and  analysis of data  concerning  the state of the  technology  and
required  development  work,  estimated the  stage-of-completion  at the date of
acquiring the products to be approximately  53% for  SavilleExpress  and 55% for
SavilleCare.   Each  of  the   purchased   technologies   required   significant
modifications  in  order  to  reach  technological  feasibility.  At the time of
acquisition,  additional development of SavilleExpress  included,  among others,
additional core functionality including tariffing, language support, data fields
to support different currencies, credit limit notification and automatic service
shut-off,  as well as revision of all existing  software  code to be  compatible
with different hardware platforms.  SavilleCare  required  substantial effort to
complete   the   technology   and  ensure  that  it  was  more  focused  on  the
telecommunications  industry than the original  product  design.  This included,
among others,  ensuring scalability existed as well as full functionality in the
areas  of  provisioning,   call  reporting  and  billing.   SavilleExpress   and
SavilleCare were completed in August 1998 and January 1999, respectively. Actual
revenue received and costs incurred to complete  SavilleCare were not materially
different than estimates made. Also, for SavilleExpress, costs of completion did
not differ  significantly from estimates.  However,  actual revenue received was
less than expected due to a change in market conditions.

Saville  IBP  had  significant   functionality   deficiencies  at  the  date  of
acquisition that had to be corrected as part of further  development so that the
product could be commercialized.  Specifically,  these  modifications  included,
among others, the addition of a critical application program interface, improved
detailed reporting capability,  datawarehousing  capability without slowing down
overall   information    technology   systems   and   scalability   for   larger
telecommunications operations. Saville IBP was completed in October 1998. Actual
costs to complete and revenue  received were not  significantly  different  from
estimates.

Based on this evaluation,  the Company assigned fair values to SavilleExpress of
$2.1 million, to SavilleCare of $3.0 million and to Saville IBP of $4.1 million.
These in-process  technologies had not reached technological  feasibility at the
time of  acquisition  and had no  alternative  future use in other  research and
development  projects or otherwise.  Accordingly,  the acquired  technology  was
expensed as  in-process  research  and  development  for a total  charge of $9.2
million to the Company's consolidated results in the second quarter of 1998.

Other Income and Expenses

Other  income and other  expenses  increased  12.9% from  $559,000  in the three
months  ended June 30, 1997 to $631,000 in the three months ended June 30, 1998,
and  increased  48.3% from  $913,000  in the six months  ended June 30,  1997 to
$1,354,000 in the six months ended June 30, 1998.  Increased  interest income on
larger cash and short-term investment balances accounted for the majority of the
increase in other income.

Provision for Income Taxes

The Company  recorded a tax  provision  of $2.0  million and $3.3 million in the
three and six months  ended June 30, 1997  representing  effective  tax rates of
26.6% and 25.0%, respectively. Comparatively, tax provisions of $2.5 million and
$5.3  million  were  recorded  in the three and six months  ended June 30,  1998
before the deferred tax benefit of $773,000  recognized  on the one-time  charge
for  purchased  in-process  research  and  development  of $9.2  million.  These
provisions  for the 1998  periods  represent  effective  tax  rates of 23.0% and
23.2%,  respectively.  The Company's  effective tax rate is largely dependent on
the  proportion of the Company's  income earned in different tax  jurisdictions.
The Company is currently eligible for a 10% tax rate on  "manufacturing"  income
earned in the  Republic  of  Ireland  and a 32% tax rate on  "non-manufacturing"
income,  such as income  earned on the  Company's  Irish cash  investments.  The
Company's  effective  tax rate reflects the tax relief on  manufacturing  income
subject  to this  reduced  rate of tax,  which is below the  statutory  rates of
Ireland,  Canada,  the United States and  Australia.  There can be no assurances
that the  Company  will  continue  to be  eligible  for the reduced tax rate for
manufacturing income in future periods.


Liquidity and Capital Resources

On a  combined  basis,  cash and cash  equivalents  and  short-term  investments
increased $10.7 million from $68.8 million at December 31, 1997 to $79.5 million
at June 30,  1998.  This  increase  was  composed of a decrease in cash and cash
equivalents  of $23.9  million from $55.8  million at December 31, 1997 to $31.9
million at June 30, 1998 that was more than offset by an increase in  short-term
investments  of $34.6  million from $13.0  million at December 31, 1997 to $47.6
million  at  June  30,  1998.  This  overall  increase  in cash  and  short-term
investments  was due primarily to cash  provided by operations  and net proceeds
received from the issuance of Ordinary Shares offset by the purchase of property
and equipment, a software product and the assets of BHA and BHAC.

Operating Activities

During the six months  ended  June 30,  1998,  net cash  provided  by  operating
activities was $11.3 million.  During this period,  the Company received cash of
$5.6 million from deferred  revenue from customers offset by a $15.0 million use
of cash as accounts receivable balances grew in relation to increasing revenue.

Investing Activities

The net cash used in investing  activities  during the six months ended June 30,
1998 was  comprised of $2.9 million to purchase  property  and  equipment,  $2.1
million  to  purchase  other  assets,   $34.6  million  invested  in  short-term
investments  and $19.2  million to purchase the assets of BHA and BHAC (see Note
4) which included the settlement of $3.3 million in related bank debt as well as
approximately  $906,000 in acquisition  related costs and expenses.  The Company
continues to make property and equipment  expenditures  to support the growth of
the Company as locations are expanded  worldwide and expects to continue to make
property and equipment investments to support its business growth.

Financing Activities

During the three months  ended June 30, 1998 net cash  provided  from  financing
activities  was $23.5  million.  This was primarily due to the issue of Ordinary
Shares in relation  to the asset  acquisition  of BHA and BHAC and to  employees
pursuant to exercises of options under the 1995 Share Option Plan.

The Company and its subsidiaries  have available a $15.0 million  multi-currency
operating line of credit from a financial institution that expires on August 31,
1999 and bears  interest at rates  varying from 0.25% to 1% above the base rate.
This base rate  depends on the  currency of the funds drawn of the  facility and
includes the Canadian  U.S.  Dollar Base rate,  the Canadian Bank Prime rate and
LIBOR and DIBOR rates.  Total advances  drawn on this facility  during the three
months  ended June 30, 1998 were  approximately  $15.1  million and were used to
fund, in part,  the  acquisition of the assets of BHA and BHAC (see Note 5). The
entire  amount  borrowed was repaid  during the quarter  ended June 30, 1998, in
part, by the Company  through the issuance of 283,698 of its Ordinary  shares in
relation to the asset acquisition of BHA and BHAC for aggregate consideration of
approximately $14.0 million.

The Company had capital lease obligations in principal amounts of $394,000 as of
June 30, 1998 ($470,000 as of December 31, 1997) and subsequent to such date has
incurred no additional capital lease obligations.  Long-term liabilities include
$2.0 million of minimum royalty  payments due over the next two years as part of
the purchase of a  telecommunications  billing software  product,  of which $1.0
million is due on January 31,  1999 and is  included  in the current  portion of
long-term liabilities.

The Company believes that existing cash balances,  funds generated by operations
and the  availability of the Company's line of credit will be sufficient to meet
its anticipated  liquidity and working capital  requirements for the next twelve
months.

Foreign Currency Exposure

The Company's  international  sales are predominately  invoiced and paid in U.S.
currency  with the  exception of certain  clients who are invoiced  primarily in
Canadian dollars,  Pounds Sterling,  Australian dollars, New Zealand dollars and
Swiss Francs.  The impact of foreign currency  translation has not been material
to the Company's overall operations.

Certain Factors That May Affect Future Results

This Quarterly Report contains forward-looking  statements that involve a number
of  risks  and   uncertainties.   The  Company's   actual   results  may  differ
significantly  from the results  discussed  in the  forward-looking  statements,
including  statements  regarding  the  Company's  expectation  that revenue will
maintain  current  levels in the near term,  the  Company's  plans to expand its
international and North American sales presence, the Company's plans to continue
its research and development  efforts,  the Company's  expectation  that it will
continue to make  property and  equipment  investments  in 1998,  the  Company's
belief that its existing cash balance and funds  generated by operations will be
sufficient to meet its anticipated  liquidity and working  capital  requirements
for the next twelve  months,  the possible  adverse  foreign  currency  exposure
involved with international  expansion and the Company's general expectations of
growth. A number of  uncertainties  exist that could affect the Company's future
operating  results,  including,  without  limitation,  the Company's  ability to
retain existing  customers and attract new customers,  the Company's  ability to
attract and retain  qualified  employees,  the costs associated with significant
increases in number of employees,  the Company's  continuing  ability to develop
products that are responsive to the evolving  needs of its customers,  increased
competition, changes in operating expenses, foreign currency exchange rates, the
Company's  continued  ability  to take  advantage  of  favorable  tax  treatment
currently available to the Company and general economic factors.

Historically,   the   Company  has  been   dependent   on   long-term   customer
relationships.  To date, a substantial  portion of the Company's  total revenues
has  been  derived  from  a  relatively   small  number  of   customers,   which
concentration  can cause the Company's  revenues and earnings to fluctuate  from
quarter to quarter,  based on these  customers'  requirements  and the timing of
their orders.  The Company's future success depends in large part on its ability
to maintain its current  relationships  and develop new  customer  relationships
with successful telecommunications and energy service providers. There can be no
assurance  that the Company will be able to develop and maintain such  long-term
relationships or that the service  providers that are or become customers of the
Company  will be  successful.  In  addition,  the  telecommunications  market is
presently experiencing significant merger,  consolidation and alliance formation
activity  among both  established  and start-up  carriers.  A  consolidation  or
alliance affecting one of the Company's  customers could result in such customer
shifting to another billing  system,  thus decreasing such customer's use of the
Company's  services.  A  significant  decrease in business from any of its major
customers or the failure of the Company to compete effectively for new customers
in the  telecommunications  and energy  markets,  would have a material  adverse
effect on the Company's business, financial condition and results of operations.

The billing and customer  care  industry is intensely  competitive.  The Company
competes  with both  independent  providers of systems and  services  similar to
those offered by the Company and with internal  billing  departments of existing
telecommunications   and   energy   service   providers,   many  of  which  have
substantially  greater  financial,   technical,   sales,   marketing  and  other
resources,  as well as greater name recognition,  than the Company. There can be
no  assurance  that the Company  will be able to compete  successfully  with its
existing competitors or with new competitors.

The market for the Company's  products is characterized  by rapid  technological
change,  frequent new product  introductions,  evolving  industry  standards and
changing customer needs. The Company has recently  introduced its UNIX-based CBP
for Oracle product, with an additional version release of this product scheduled
for later  this year.  In  addition  to the  resources  used for this  scheduled
release,  the Company is currently  devoting  significant  resources to develop,
refine and enhance its  DB2/400-based  CBP product and additional  customer care
and billing  technology  acquired in the past six months.  The Company  believes
that its future success will depend in large part on its ability to maintain and
enhance its current product and service offerings and to continually develop and
introduce  new  products  and  services  that will keep pace with  technological
advances and satisfy evolving customer requirements. If the Company is unable to
develop and  introduce new products and services in a timely  manner,  or if the
Company's  new  products,  developments  and  enhancements  do not  gain  market
acceptance,   the  Company's  business,   financial  condition  and  results  of
operations would be materially adversely affected.

The Company's international business is subject to risks such as fluctuations in
exchange rates,  difficulties or delays in developing and supporting non-English
language versions of the Company's  products,  political and economic conditions
in various jurisdictions, unexpected changes in regulatory requirements, tariffs
and  other  trade  barriers,  difficulties  in  staffing  and  managing  foreign
operations and longer accounts receivable payment cycles. Specifically, the Asia
Pacific region has  experienced a recent  downturn in economic  conditions,  the
continuation  of which could  adversely  affect the Company's  ability to expand
into this region.

Recently,  the Company has expanded  its  operations  rapidly,  which has placed
significant demands on the Company's  administrative,  operational and financial
personnel and systems.  Additional  expansion by the Company may further  strain
the  Company's  management,  financial  and  other  resources.  There  can be no
assurance that the Company's  systems,  procedures,  controls and existing space
will be adequate to support expansion of the Company's operations. The Company's
future  operating  results  will  substantially  depend  on the  ability  of its
officers  and key  employees  to  manage  changing  business  conditions  and to
implement and improve its operational,  financial control and reporting systems.
If the Company is unable to respond to and manage changing business  conditions,
the quality of the Company's  services,  its ability to retain key personnel and
its results of operations could be materially adversely affected.

The Company's  strategy  includes the acquisition of businesses and technologies
that  complement or augment the  Company's  existing  business and products.  On
April 3, 1998, the Company completed its acquisition of substantially all of the
assets of BHA and BHAC.  In  addition,  the Company  purchased  an  interconnect
telecommunications   software   product  from  a  Swedish   company.   Promising
acquisitions  are  difficult  to identify  and complete for a number of reasons,
including competition among prospective buyers and the need to obtain regulatory
approvals,  including  antitrust  approvals.  There can be no assurance that the
Company will be able to complete future acquisitions or that the Company will be
able to successfully integrate any acquired businesses. In order to finance such
acquisitions,  it may be  necessary  for the Company to raise  additional  funds
through public or private financing.  Any equity or debt financing, if available
at all, may be on terms that are not  favorable to the Company,  and in the case
of equity offerings, may result in dilution to the Company's shareholders.

Fluctuations  in  exchange  rates  may have a  material  adverse  effect  on the
Company's  results of operations,  particularly its operating  margins and could
also result in exchange losses.  The impact of future exchange rate fluctuations
on the Company's results of operations cannot be accurately predicted.  To date,
the Company has not sought to hedge the risks  associated  with  fluctuations in
exchange rates, but may undertake such transactions in the future.  There can be
no  assurance  that any hedging  techniques  implemented  by the Company will be
successful  or that the Company's  results of operations  will not be materially
adversely affected by exchange rate fluctuations.

The Company regards its software products as proprietary and relies primarily on
a combination of statutory and common law copyright,  trademark and trade secret
laws,  customer  licensing  agreements,  employee and third-party  nondisclosure
agreements and other methods to protect its proprietary  rights.  These laws and
contractual   provisions  provide  only  limited  protection  of  the  Company's
proprietary rights. Despite the Company's precautions,  it may be possible for a
third party to copy or otherwise obtain and use the Company's technology without
authorization.  Furthermore,  the laws of certain countries in which the Company
sells its  products do not  protect  the  Company's  software  and  intellectual
property  rights to the same  extent,  as do the laws of the United  States.  If
unauthorized  copying or misuse of the  Company's  products  was to occur to any
substantial degree, the Company's business,  results or operations and financial
condition could be materially adversely affected.

The Company has  significant  operations and generates a substantial  portion of
its taxable  income in the  Republic of Ireland,  and,  under an  incentive  tax
program due to terminate in 2010,  is taxed on its  "manufacturing  income" at a
rate that is  substantially  lower than U.S. tax rates.  If the Company could no
longer  qualify  for this  lower tax rate or if the tax laws were  rescinded  or
changed,  the Company's net income could be materially  adversely  affected.  In
addition, if U.S., Canadian, Australian or other foreign tax authorities were to
challenge  successfully  the manner in which  profits are  recognized  among the
Company and its  subsidiaries,  the Company's  effective tax rate could increase
and its cash  flow and  results  of  operations  could be  materially  adversely
affected.

The Company is reviewing  its products and  operations  to ensure that they will
not be adversely  affected by year 2000  software  failures,  which can arise in
time-sensitive  software  applications  that  utilize  a field of two  digits to
define the applicable year. In such applications,  a date using "00" as the year
may be  recognized  as the year 1900  rather than the year 2000.  The  Company's
current software product releases are year 2000 ready, and therefore the Company
does  not  believe  that  it  will  need  to  undertake  material  research  and
development  efforts in this  regard.  The  Company's  review,  correction,  and
upgrade of its internal  systems to ensure year 2000  readiness is ongoing.  The
Company believes that any correction or upgrade  necessary to make the Company's
major internal  systems year 2000 ready will be completed by early 1999 and that
the  cost of such  actions  will  not  have a  material  adverse  effect  on the
Company's  results  of  operations  or  financial  condition.  There  can  be no
assurances  that there will not be a delay in, or  increased  or material  costs
associated with, the  implementation  of any corrections or upgrades or that the
Company  will suffer no material  adverse  effects  from the year 2000  problem,
including  due to the lack of readiness on the part of third party  suppliers of
goods and services to the Company.


<PAGE>




                               SAVILLE SYSTEMS PLC

                           PART II - OTHER INFORMATION


Item 6.  Exhibits and Reports on Form 8-K

(a)  Exhibits

     27.0   Financial Data Schedule

(b)  Reports on form 8-K

     The Company filed a current Report on Form 8-K dated April 3, 1998.



<PAGE>

                                         
                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly caused this  Amendment No. 1 on Form 10-Q/A to Form 10-Q to
be signed on its behalf by the undersigned thereunto duly authorized.

                               SAVILLE SYSTEMS PLC
                               (Registrant)



Date:  March 15, 1999          By   /s/Christopher A. Hanson
                                    ------------------------
                                    Christopher A. Hanson
                                    Chief Financial Officer
                                    (Principal Financial and Accounting Officer)