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


                                    Form 10-Q

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


                  For the quarterly period ended June 30, 1999

                                       OR

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

             FOR THE TRANSITION PERIOD FROM __________ TO __________

                         Commission File Number 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. |x| Yes |_| No

Number of shares  outstanding of the registrant's class of Ordinary Shares as of
August 5, 1999 was 39,224,714.


<PAGE>



                               SAVILLE SYSTEMS PLC

                                FORM 10-Q REPORT

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999

                                TABLE OF CONTENTS



                         Part I - Financial Information                     PAGE

Item 1.  Consolidated Financial Statements

         Consolidated Balance Sheets as of June 30, 1999
         (unaudited) and December 31, 1998                                     3

         Consolidated Statements of Income for the three months and
         for the six months ended June 30, 1999 and 1998 (unaudited)           4

         Consolidated Statements of Cash Flows for the six months ended
         June 30, 1999 and 1998 (unaudited)                                    5

         Notes to Consolidated Financial Statements (unaudited)              6-9

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                         10-19

Item 3.  Market Risk                                                          20

                           Part II - Other Information


Item 1.  Legal Proceedings                                                    21

Item 2.  Changes in Securities                                                21

Item 3.  Defaults Upon Senior Securities                                      21

Item 4.  Submission of Matters to a Vote of Security Holders                  21

Item 5.  Other Information                                                    21

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
                                                           1999        1998
                                                       (unaudited)
------------------------------------------------------ ------------ -----------
<S>                                                    <C>          <C>
ASSETS

Current Assets
   Cash and cash equivalents                               $51,699     $40,330
   Short-term investments                                   47,256      47,492
   Accounts receivable, less allowance for doubtful
     accounts of  $3,593 and $1,943, respectively           37,550      43,729
   Prepaid expenses and other assets                         8,160       4,471
------------------------------------------------------ ------------ -----------
Total current assets                                       144,665     136,022
   Property and equipment, net                              15,027      12,277
   Other assets, net                                        12,292      13,346
------------------------------------------------------ ------------ -----------
Total assets                                              $171,984    $161,645
------------------------------------------------------ ------------ -----------

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities
   Accounts payable                                          6,137       5,377
   Accrued compensation and related benefits                 8,004       7,128
   Accrued expenses and other liabilities                    6,647       4,644
   Income taxes payable                                      7,080       8,804
   Deferred revenue                                          7,432         947
   Current portion of long-term liabilities                  1,144       1,116
------------------------------------------------------ ------------ -----------
Total current liabilities                                   36,444      28,016
   Long-term liabilities                                       113       1,178
   Minority interest                                           253         361
------------------------------------------------------ ------------ -----------
Total liabilities                                           36,810      29,555
------------------------------------------------------ ------------ -----------

Commitments and Contingencies (note 5)

Shareholders' equity
Ordinary Shares, nominal value $0.0025 per share
     Authorized:  75,000,000
     Issued and outstanding:  39,181,575
       and 38,908,488, respectively                             98          97
Deferred Ordinary Shares, nominal value IR(pound)
     1.00 per share
     Authorized, issued and outstanding:  30,000                48          48
Additional paid-in capital                                  66,443      63,766
Retained earnings                                           69,370      69,802
Accumulated other comprehensive income                       (785)     (1,623)
------------------------------------------------------ ------------ -----------
Total shareholders' equity                                 135,174     132,090
------------------------------------------------------ ------------ -----------
Total liabilities and shareholders' equity                $171,984    $161,645
------------------------------------------------------ ------------ -----------
</TABLE>

See accompanying notes



<PAGE>


Saville Systems PLC

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(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
                                      1999     1998        1999       1998
---------------------------------- --------- --------- ---------- ----------
<S>                                <C>       <C>       <C>        <C>
REVENUE
Services                            $30,832   $31,114    $57,215    $61,053
License fees                         10,666    11,797     14,451     19,880
---------------------------------- --------- --------- ---------- ----------
Total revenue                        41,498    42,911     71,666     80,933
---------------------------------- --------- --------- ---------- ----------

EXPENSES
Cost of services                     19,857    16,063     37,814     30,111
Cost of license fees                    358       270        449        550
Sales and marketing                   3,142     2,186      5,599      4,108
Research and development              6,080     5,968     12,168      9,899
General and administrative            9,228     8,108     17,637     14,651
Charge for purchased in-process
  research and development                -     9,168          -      9,168
---------------------------------- --------- --------- ---------- ----------
Total expenses                       38,665    41,763     73,667     68,487
---------------------------------- --------- --------- ---------- ----------

Income (loss) from operations         2,833     1,148    (2,001)     12,446
Other income, net                       722       631      1,441      1,354
---------------------------------- --------- --------- ---------- ----------

Income (loss) before income taxes     3,555     1,779      (560)     13,800
Income tax provision (benefit)          818     1,743      (128)      4,568
---------------------------------- --------- --------- ---------- ----------
---------------------------------- --------- --------- ---------- ----------
Net income (loss)                   $ 2,737     $  36     $(432)     $9,232
---------------------------------- --------- --------- ---------- ----------

Basic earnings (loss) per share      $ 0.07      $  -   $ (0.01)     $ 0.24
Diluted earnings (loss) per share    $ 0.07      $  -   $ (0.01)     $ 0.23
---------------------------------- --------- --------- ---------- ----------

(in thousands)
Ordinary shares                      39,188    38,554     39,108     38,188
Ordinary shares assuming dilution    39,905    41,269     39,108     41,057
---------------------------------- --------- --------- ---------- ----------
</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
                                                             1999        1998
-------------------------------------------------------- ----------- ----------
<S>                                                      <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income                                           $ (432)   $  9,232
Adjustments to reconcile net (loss) income to net cash
 provided by operating activities:
  Depreciation of property and equipment                      1,640      1,170
  Amortization of other assets                                1,638        543
  Provision for doubtful accounts                             2,420        585
  Loss (gain) on sale of property and equipment                  26      (119)
  Compensation related to stock transactions                    103        103
  Deferred income taxes                                     (1,318)    (1,088)
  Charge for purchased in-process research
    and development                                               -      9,168
Changes in operating assets and liabilities:
  Accounts receivable                                         3,754   (15,023)
  Prepaid expenses and other assets                         (2,408)    (1,768)
  Accounts payable                                            (332)        160
  Accrued compensation and related benefits                     876      2,367
  Accrued expenses and other liabilities                      1,978      (339)
  Income taxes payable                                      (1,724)        651
  Deferred revenue                                            6,485      5,610
-------------------------------------------------------- ----------- ----------
Net cash provided by operating activities                    12,706     11,252
-------------------------------------------------------- ----------- ----------

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment                          (2,902)    (2,893)
Purchase of other assets                                          -    (2,089)
Purchase of business assets                                       -   (19,167)
Net maturity (purchase) of short-term investments               236   (34,596)
-------------------------------------------------------- ----------- ----------
Net cash used in investing activities                       (2,666)   (58,745)
-------------------------------------------------------- ----------- ----------

CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on capital lease obligations                (67)       (64)
Repayment of long-term liabilities                            (981)          -
Advances on operating line of credit                            383     15,100
Repayments on operating line of credit                        (383)   (15,100)
Proceeds from share issuances                                 2,481     23,356
Share issue costs                                              (25)      (428)
Tax benefit on employee stock transactions                       38        634
-------------------------------------------------------- ----------- ----------
Net cash provided by financing activities                     1,446     23,498
-------------------------------------------------------- ----------- ----------
Effect of exchange rate changes on cash                       (117)         90
-------------------------------------------------------- ----------- ----------

Net increase (decrease) in cash and cash equivalents         11,369   (23,905)
Cash and cash equivalents, beginning of period               40,330     55,785
-------------------------------------------------------- ----------- ----------
Cash and cash equivalents, end of period                   $ 51,699   $ 31,880
-------------------------------------------------------- ----------- ----------
Short-term investments                                       47,256     47,611
-------------------------------------------------------- ----------- ----------
Cash and short-term investments                            $ 98,955   $ 79,491
-------------------------------------------------------- ----------- ----------
</TABLE>

See accompanying notes


<PAGE>


Saville Systems PLC

Notes to Consolidated Financial Statements as of June 30, 1999  (unaudited)

1.       BASIS OF PRESENTATION

The accompanying  unaudited consolidated financial statements have been prepared
by Saville  Systems PLC ("the  Company" or "Saville")  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 United States  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, 1999 and 1998 and the  financial  position as of June 30,
1999.

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, 1998.


2.       ACQUISITION BY ADC TELECOMMUNICATIONS, INC.

In June 1999, the Company announced, in conjunction with ADC Telecommunications,
Inc.  ("ADC"),  that the two companies had reached a definitive  agreement dated
June 19,  1999 (as  amended by the First  Amendment  to  Agreement  between  the
parties,  dated June 30, 1999, the  "Agreement")  for ADC to acquire 100% of the
Company  pursuant to a Scheme of Arrangement  under the Companies Act of Ireland
(the  "Acquisition").  ADC is a leading global supplier of voice, video and data
systems and software for communications networks. Through the Acquisition, which
is structured as a tax-free reorganization for U.S. federal income tax purposes,
ADC will issue 0.358 of a share of its Common Stock for each  Ordinary  Share of
the Company (the "Exchange  Ratio") and 0.027 of a share of its Common Stock for
each Deferred  Share.  Outstanding  options to purchase the  Company's  Ordinary
Shares will be assumed by ADC with adjustments to the shares issuable thereunder
and the exercise price thereof based on the Exchange Ratio.

The  Company  has also  granted  ADC an  option to  purchase  up to 19.9% of the
Company's  Ordinary  Shares  exercisable  in  certain  circumstances,  including
certain events causing termination of the Agreement.  Pursuant to the Agreement,
the Company has agreed to pay ADC's  actual  expenses up to $1.5  million if the
agreement is terminated  in certain  circumstances  and has also agreed,  if the
Agreement is terminated in certain other  circumstances,  to purchase the option
from ADC for cash and limit the profit which ADC can realize in conjunction with
the option and the payment of a termination fee combined to $21.0 million.

The Acquisition, which is expected to close during the Company's fourth quarter,
is intended to be accounted for as a "pooling of  interests",  and is subject to
certain conditions,  including Company shareholder approval and other regulatory
filings and approvals, which includes the sanction of the High Court in Ireland.


3.       SUPPLEMENTAL CASH FLOW INFORMATION

(in thousands of U.S. dollars)

<TABLE>
                                                      Six Months Ended
                                                    June 30      June 30
                                                      1999        1998
------------------------------------------------- ------------- -----------
<S>                                               <C>           <C>
Cash Transactions:
  Cash paid for interest                               64          157

  Cash paid for income taxes                         3,688        4,043

Non-Cash Transactions:
  Technology acquired by long-term liabilities         -          2,000

------------------------------------------------- ------------- -----------
</TABLE>


4.       LONG-TERM LIABILITIES

Line of credit

During the quarter ended March 31, 1999 the Company received an extension of its
US $15.0 million line of credit until August 31, 2000. This  multi-currency line
of credit was obtained in 1997 from a financial institution and was available to
the Company and its  subsidiaries  for a two year period ending August 31, 1999.
The terms of the line of  credit  including  interest  rates,  standby  fees and
financial  covenants remain unchanged from December 31, 1998. The Company was in
compliance  with the  covenants  at June 30, 1999 and  December  31, 1998 and no
advances were outstanding on either date.

Minimum Royalty Payments

During the six months ended June 30, 1999 the Company made a royalty  payment of
$982,000  which  was  required  as part of the  purchase  of  telecommunications
interconnect  billing  software  technology  made in 1998.  The  remaining  $1.0
royalty payment (less any additional  royalties paid in 1999) is due in 2000 and
is included in the current portion of long-term liabilities.


5.       COMMITMENTS AND CONTINGENCIES

During the six months ended June 30, 1999,  the Company  entered into new office
leases with commitments totaling $23.1 million through 2010.

On April 19, 1999, the Company received a notice of demand for arbitration filed
by a former customer,  Cellular Holdings, Inc. (also known as Cellular South and
Telepak),  alleging certain failures to perform under the agreements between the
Company and Cellular Holdings. The customer seeks a refund of approximately $6.6
million paid to Saville under the agreements plus additional expenses and costs.
The Company denies Cellular  Holdings'  allegations and believes that its claims
are without merit.  In addition,  Cellular  Holdings  presently owes the Company
approximately $4.0 million for work performed under these agreements. On May 11,
1999 the Company filed an answering statement and counterclaim in arbitration to
pursue the payment of all outstanding amounts, applicable interest and expenses.
There can be no assurance, however, as to the outcome of this dispute.

6.       SHARE CAPITAL

During the three and six month  periods  ended June 30, 1999 the Company  issued
96,681 and 273,087 Ordinary Shares, respectively, for approximately $466,000 and
$2.5 million to officers and  employees  pursuant to option  exercises and stock
purchases  under the 1995 Share Option Plan ("1995  Plan") and the 1996 Employee
Share Purchase Plan ("1996 Plan").

Also  during the six month  period  ended June 30,  1999,  the  Company  granted
approximately  2,355,000  options under the 1995 Plan to employees at a weighted
average  exercise price of $19.48.  The Company also granted to ADC an option to
purchase up to 19.9% of the Company's  Ordinary  Shares at an exercise  price of
$17.50 (7,793,133 optioned shares as at June 30, 1999).

7.       COMPREHENSIVE INCOME

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
                                  1999       1998       1999         1998
------------------------------ ---------- ---------- ---------- ------------
<S>                           <C>         <C>        <C>        <C>
Net income                      $ 2,737      $ 36     $ (432)       $9,232
Foreign currency translation
  adjustment, net of NIL tax        324    (1,007)        838         (976)
------------------------------ ---------- ---------- ---------- ------------

Comprehensive (loss) income     $ 3,061    $ (971)      $ 406       $8,256
------------------------------ ---------- ---------- ---------- ------------
</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.

8.       EARNINGS (LOSS) PER SHARE

<TABLE>
                                        Three Months Ended   Six Months Ended
                                        June 30   June 30    June 30   June 30
                                          1999     1998        1999      1998
--------------------------------------- -------- --------- ---------- ---------
<S>                                     <C>      <C>       <C>        <C>
(in thousands of U.S. dollars)
Numerator:
Net income (loss)                       $ 2,737     $  36    $ (432)    $ 9,232

(in thousands)
Denominator:
Denominator for basic earnings
  per share -
   Weighted average shares outstanding   39,188    38,554     39,108     38,188
--------------------------------------- -------- --------- ---------- ---------
Effect of dilutive securities:
Stock options                               717     2,715         -       2,869
--------------------------------------- -------- --------- ---------- ---------
Denominator for diluted earnings
  per share                              39,905    41,269     39,108     41,057

Basic earnings (loss) per share         $  0.07     $   -   $ (0.01)     $ 0.24
Diluted earnings (loss) per share       $  0.07     $   -   $ (0.01)     $ 0.23
--------------------------------------- -------- --------- ---------- ---------
</TABLE>

Options to purchase  approximately 195,000 and 5,892,000 shares,  outstanding as
of June 30, 1998 and June 30,  1999,  respectively,  were  excluded in the above
computation for the respective three month periods because the exercise price of
such  options  was  greater  than the  average  market  price of the  shares and
therefore would be anti-dilutive.

Options to purchase approximately  6,990,000 shares,  outstanding as of June 30,
1999,  were not included in the above  computation of diluted loss per share for
the six months ended June 30, 1999 because,  given the net loss for this period,
the effect of such  options  would be  anti-dilutive  on an  earnings  per share
basis.

The  computation  for the six month  period  ended June 30,  1998 also  excluded
approximately  210,000 options to purchase shares as the exercise price exceeded
the average market price of the shares.

Also excluded in the  calculation of diluted  earnings  (loss) per share for the
three and six month periods ended June 30, 1999 was the option granted to ADC to
purchase  7,793,133  shares,  the exercise price for which was also greater than
the average market price of the shares,  but is only  exercisable  under certain
circumstances.

9.       SEGMENT INFORMATION

The Company  operates in a single business segment which offers similar products
and services.  The Company's products are similar in nature,  providing customer
care  and   billing   solutions   software   for   service   providers   in  the
telecommunications  and energy industries.  The Company distributes its products
throughout the world through a direct sales force.


<PAGE>

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


Overview

Saville Systems PLC (together with its subsidiaries, "Saville" or the "Company")
provides  innovative  convergent  customer care and billing solutions to service
providers in the global  telecommunications  and energy markets.  Saville offers
products and services designed to enable  telecommunications  and energy service
providers  to  bring  new  service  offerings  to  market  quickly,  and to bill
accurately  and reliably for multiple  services on one  convergent  invoice.  In
order to meet the current and evolving  billing  requirements  of its customers,
the Company continuously  refines its sophisticated  convergent billing platform
(CBP(R)) software products for both the  UNIX/Oracle(R)  and DB2/400  platforms.
The  customer  can either  license CBP from  Saville or CBP can be provided by a
Company-operated   service  bureau.   Saville  has  also  introduced  facilities
management services,  which allow customers to license CBP from Saville and have
Saville  manage  the  operation  of the  software  on  customer-owned  hardware.
Additionally, Saville has developed relationships with authorized integrators to
assist it in providing implementation services to purchasers of CBP products.

Saville also offers its  interconnect  billing platform (IBPTM) software product
which  allows  telecommunications   companies  to  bill  for  carrier-to-carrier
transactions. In addition, during the three months ended March 31, 1999, Saville
released its SavilleCareTM  product and its SavilleExpressTM GSM product module.
SavilleCare  allows  telecommunications   service  providers  to  integrate  the
SavilleCare  call center desktop with the providers'  billing and other business
support systems. SavilleExpress GSM is a pre-configured module that, through the
SavilleExpress modular billing platform,  supports the billing of services using
the  Global  System  for  Mobile  Communications  (GSM)  standard  for  wireless
telecommunications. Each of these three products was developed from technologies
purchased in 1998.

In addition to its product offerings, Saville provides its customers with a full
range of professional services,  including assisting a customer in analyzing its
requirements and then designing, developing and implementing a customer care and
billing  solution.  The Company  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.

Pursuant  to a  definitive  agreement  dated June 19,  1999,  by and between the
Company and ADC  Telecommunication,  Inc., a Minnesota  corporation  ("ADC"), as
amended by the First Amendment to Agreement between the parties,  dated June 30,
1999 (as so amended, the "Agreement"),  ADC will acquire the Company pursuant to
a Scheme of Arrangement under the Companies Act of Ireland (the  "Acquisition").
Through the Acquisition,  which is structured as a tax-free  reorganization  for
U.S. federal income tax purposes,  ADC will issue 0.358 of a share of its Common
Stock for each Ordinary Share (or each American Depositary Receipt  representing
an Ordinary  Share) of the Company and 0.027 of a share of its Common  Stock for
each Deferred  Share.  The Company has also granted ADC an option to purchase up
to 19.9% of the Company's Ordinary Shares exercisable in certain  circumstances,
including certain events causing  termination of the Agreement.  Pursuant to the
Agreement,  the  Company  has  agreed to pay ADC's  actual  expenses  up to $1.5
million if the  agreement is terminated  in certain  circumstances  and has also
agreed , if the  Agreement is  terminated  in certain  other  circumstances,  to
purchase the option from ADC for cash and limit the profit which ADC can realize
in conjunction  with the option and the payment of a termination fee combined to
$21.0 million.  The Acquisition is intended to be accounted for as a "pooling of
interests," and is subject to certain conditions,  including Company shareholder
approval,  certain governmental approvals, and the sanction of the High Court of
Ireland.  The  Acquisition  is expected  to close  during the  Company's  fourth
quarter.  In the event that the Acquisition is not successfully  completed,  the
Company's  results of  operations  and Ordinary  Share price could be materially
adversely affected.

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, 1998.


Results of Operations

         Revenue.  Total revenue  decreased 3.3% from $42.9 million in the three
months  ended June 30, 1998 to $41.5  million in the three months ended June 30,
1999,  and  decreased  11.5% from $80.9 million in the six months ended June 30,
1998 to $71.7  million in the six months ended June 30,  1999.  Both license and
services  revenue were lower due  primarily to fewer new  customers  being added
during the first quarter,  some delay in previously initiated projects,  as well
as additional  work  required  during the first quarter of 1999 to bring several
UNIX/Oracle sites into production.

Services revenue decreased slightly from $31.1 million in the three months ended
June 30,  1998 to $30.8  million in the three  months  ended  June 30,  1999 and
decreased 6.3% from $61.1 million in the six months ended June 30, 1998 to $57.2
million in the six months ended June 30, 1999.  The  decreases for the three and
six month periods were  primarily due to several  existing  customers'  changing
implementation schedules,  additional work required to bring several UNIX/Oracle
sites into production and a decline in new services  revenue  resulting from the
shortfall in new license sales.

License fees revenue decreased 9.6% from $11.8 million in the three months ended
June 30,  1998 to $10.7  million in the three  months  ended  June 30,  1999 and
decreased  27.3% from $19.9  million  in the six months  ended June 30,  1998 to
$14.5  million  in the six months  ended June 30,  1999.  The  decrease  was due
primarily to fewer new license sales in the first quarter of 1999. The Company's
new license sales were  adversely  affected by a lengthening  of the sales cycle
due, in part, to uncertainty caused by recent  consolidation among the Company's
competition, as well as marketing issues related to the Company's UNIX customers
going into  production  later in the first quarter of 1999 than  expected.  This
decrease was offset,  partially,  by license fee revenue  realized as several of
the Company's customers reached incremental thresholds on their license fees.

         Cost of  Services.  Cost of  services  is  comprised  primarily  of the
salaries and related benefits of software development, technical, service bureau
and client service  personnel.  It also includes costs of external  contractors,
operating costs of computer  equipment,  training and travel  expenses.  Cost of
services  increased  23.6% from $16.1 million in the three months ended June 30,
1998 to $19.9  million in the three  months  ended June 30,  1999 and  increased
25.6% from $30.1  million in the six months ended June 30, 1998 to $37.8 million
in the six months ended June 30, 1999. As a percentage of services revenue, cost
of services  increased  from 51.6% and 49.3% in the three  months and six months
ended June 30,  1998,  respectively,  to 64.4% and 66.1% in the same  periods in
1999.  The overall  dollar  increase in cost of services  was due  primarily  to
increased expenses to support the Company's UNIX/Oracle product implementations,
specifically, additional personnel hired during 1998, including personnel at the
Company's  Australian  subsidiary  which the Company  acquired in April 1998,  a
larger  proportion  of  outside  consultants  used  for  implementation  of  the
Company's  CBP for  UNIX/Oracle  product,  as well as increased  costs to retain
qualified personnel.  Additionally,  computer system costs to support the growth
of  Saville's  business  during 1998 and  increased  costs  associated  with Y2K
readiness  testing,  also  contributed to the increase.  The increase in cost of
services as a  percentage  of services  revenue was due  primarily to the higher
overall services costs and lower services  revenue,  each as described above. As
the market demands for skilled employees and contractors  increase,  the Company
expects that the costs to attract,  retain and train  qualified  personnel  will
continue to increase in absolute dollars.

         Cost of License Fees.  Cost of license fees consists of the  commission
expense on license  fee  revenue  earned by the  Company.  Cost of license  fees
increased  32.6%  from  $270,000  in the three  months  ended  June 30,  1998 to
$358,000 in the three  months  ended June 30,  1999,  but  decreased  18.4% from
$550,000  in the six months  ended June 30,  1998 to  $449,000 in the six months
ended June 30, 1999. Although total dollar amounts may fluctuate on a quarter to
quarter basis, the Company expects that the cost of license fees as a percentage
of license fees revenue will remain substantially the same.

         Sales  and  Marketing.  Sales and  marketing  expenses  consist  of the
salaries,  sales  commissions and benefits of those employees  performing  these
duties as well as the related travel,  marketing and promotional expenses. Sales
and  marketing  expenses  increased  43.7% from $2.2 million in the three months
ended June 30, 1998 to $3.1  million in the three months ended June 30, 1999 and
increased  36.3% from $4.1 million in the six months ended June 30, 1998 to $5.6
million in the six months ended June 30, 1999. As a percentage of total revenue,
sales and marketing  expenses increased from 5.1% in the three months ended June
30, 1998 to 7.6% in the three months ended June 30, 1999 and increased from 5.1%
in the six months  ended June 30, 1998 to 7.8% in the six months  ended June 30,
1999.  The results  from the three and six months  ended June 30,  1999  include
$500,000 of  incremental  compensation  expense  related to the  departure  of a
senior  sales  executive.  The  remainder  of the overall  dollar  increase  was
primarily due to the growth of the Company's worldwide sales force and marketing
efforts  during 1998. The increase in costs as a percentage of total revenue was
due primarily to higher  overall sales and  marketing  costs and lower  revenue,
each as described above. The Company  anticipates that the continued emphasis on
its North American and European marketing efforts to increase market penetration
will increase its sales and marketing  expenses in absolute  dollars but expects
such expenses to decrease  slightly from current levels as a percentage of total
revenue for the remainder of 1999.

         Research  and  Development.   Research  and  development  expenses  are
comprised  of the salaries and related  benefits of the  employees  and external
contractors  involved  in product  software  development,  as well as  computer,
travel  and  related  expenses.  Research  and  development  expenses  increased
slightly  from $6.0  million in the three  months  ended  June 30,  1998 to $6.1
million in the three months ended June 30, 1999,  but increased  22.9% from $9.9
million in the six months ended June 30, 1998 to $12.2 million in the six months
ended June 30, 1999. As a percentage of total revenue,  research and development
expenses  increased  from 13.9% and 12.2% in the three and six months ended June
30, 1998, respectively, to 14.7% and 17.0%, respectively, in the same periods in
1999. The overall dollar increase was due to new release  development efforts by
the Company on its CBP products on both the UNIX/Oracle platform and to a lesser
extent,  the  DB2/400  platform,  and  additional  stabilization  efforts on the
current  release  of  the  CBP  product  for  UNIX/Oracle.  As  well,  increased
development  efforts for product releases of SavilleCare and  SavilleExpress  in
the first  quarter of 1999 and the  continued  development  of new  releases  of
Saville IBP contributed to the increase.  In addition,  the increase in research
and development expenses as a percentage of revenue was due primarily to overall
decreases in total revenue and, to a lesser extent, additional development costs
of  technologies  purchased in 1998.  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 in absolute dollars during the remainder of 1999.

         General and Administrative. General and administrative expenses consist
mainly of the salaries and related  benefits of  management  and  administrative
personnel,  related travel expenses, and general office administration  expenses
(rent and occupancy, telephone and other office supply costs) of the Company. It
also  includes  recruitment  expenses,   professional  fees,   depreciation  and
amortization, and provision for doubtful collections. General and administrative
expenses  increased  13.8% from $8.1  million in the three months ended June 30,
1998 to $9.2  million in the three months  ended June 30,  1999,  and  increased
20.4% from $14.7  million in the six months ended June 30, 1998 to $17.6 million
in the six months ended June 30, 1999. As a percentage of total revenue, general
and administrative expenses also increased from 18.9% and 18.1% in the three and
six months ended June 30, 1998, respectively,  to 22.2% and 24.6%, respectively,
in the  same  periods  in 1999.  The  overall  increase  in  total  general  and
administrative  expenses  was  attributable,  in part,  to facility  and service
expansion  in several  locations  associated  with the  growth in the  Company's
employee  base  and the  expansion  of the  Company's  business,  including  the
acquisition  of the Company's  Australian  subsidiary in April 1998.  Additional
general and  administrative  expenses in the six months ended June 30, 1999 were
due to increased  provisions for doubtful accounts due to uncertainty  regarding
the   collectibility  of  certain  specific  customer   accounts,   as  well  as
amortization of goodwill and completed  technology  arising from the acquisition
of the Company's  Australian  subsidiary.  In addition to the overall  increases
discussed  above,  the  increase  in general  and  administrative  expenses as a
percentage  of total  revenue was also due to the  decrease in total  revenue as
compared to 1998.  Although the Company expects that general and  administrative
expenses will remain fairly consistent in absolute dollars,  the Company expects
such expenses to decrease as a percentage of total revenue.

         Charge for Purchased  In-Process  Research and Development.  The charge
for  purchased  in-process  research  and  development  during the three and six
months  ended June 30, 1998 was based on the fair value of  acquired  technology
that had not yet reached technological feasibility and had no future alternative
use.  The value  assigned  to the  intangible  assets  purchased  as part of the
acquisition of Saville's  Australian  subsidiary 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.

Based on this valuation,  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,  Net. Other income, net, increased 14.4% from $631,000 in
the three  months ended June 30, 1998 to $722,000 in the three months ended June
30,  1999,  and  remained  relatively  unchanged at $1.4 million in both the six
months ended June 30, 1998 and 1999.  Increased  interest  income on larger cash
and short-term  investment  balances  offset by losses on revaluation of foreign
currency denominated items due to fluctuations of market rates accounted for the
overall change.

         Income Tax Provision (Benefit).  The Company recorded tax provisions of
$2.5  million and $5.3  million 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. These provisions for the 1998
periods represent effective tax rates of 23.0% and 23.2%,  respectively.  In the
three  months  ended June 30,  1999,  the Company  recorded a tax  provision  of
$818,000  (effective  tax rate of 23%)  while in the six  months  ended June 30,
1999,  the Company  recorded an overall tax benefit of $128,000.  The  Company's
effective  tax rate is largely  dependent  on the  proportion  of the  Company's
income  earned in different tax  jurisdictions.  The Company earns a significant
portion  of  its  taxable  income  in the  Republic  of  Ireland  of  which  its
"manufacturing  income"  qualifies  for a  reduced  tax  rate  of 10%  which  is
substantially lower than statutory rates in Ireland,  Canada, the United States,
the United Kingdom and Australia.  The Company anticipates that it will continue
to benefit from this tax  treatment,  although  the extent of the benefit  could
vary from period to period, and there can be no assurance that the Company's tax
situation will not change.  The Irish Minister of Finance  announced in December
1998 that the  standard  Irish tax rate would be reduced to 28% as of January 1,
1999 and will be reduced  gradually  to a tax rate of 12.5% for  taxation  years
ending after 2002 (as compared to 32% in 1998).  Under the announced  plan,  the
tax rate on manufacturing income will remain at 10% until the tax relief program
is due to  terminate in 2010,  at which time the tax rate would  increase to the
standard rate of 12.5%.  Should the Company no longer qualify for this lower tax
rate or if tax laws were rescinded or changed, the effect on net income would be
materially adversely affected.

Liquidity and Capital Resources

On a combined basis,  cash and cash  equivalents  and short-term  investments of
$99.0  million at June 30, 1999  increased  $11.1  million from $87.8 million at
December  31,  1998.  During  the  first  six  months  of  1999,  cash  and cash
equivalents  increased  $11.4 million to $51.7  million at June 30, 1999,  while
short-term investments decreased slightly to $47.3 million at June 30, 1999.

         Operating  Activities.  During the six months ended June 30, 1999,  net
cash provided by operating activities was $12.7 million. An increase in deferred
revenue,  a decrease  in accounts  receivable,  and the  non-cash  effect of the
provision for doubtful accounts  accounted for the majority of the cash provided
by the Company's operating activities.

         Investing  Activities.  The cash used in investing  activities  was due
primarily to the purchase of property and equipment of $2.9 million,  consisting
mainly of furniture and fixtures  associated  with the build out of new premises
in Brisbane, Australia and Galway, Ireland.

         Financing  Activities.  During the six months  ended June 30,  1999 net
cash  provided by financing  activities  was $1.4  million.  This was due to the
issuance of Ordinary Shares to employees  pursuant to exercises of options under
the 1995 Share Option Plan and to shares  issued under the 1996  Employee  Share
Purchase  Plan  which  were  partially  offset by the  payment  of a royalty  of
approximately  $1.0 million during the period pursuant to the Company's purchase
of certain interconnect billing software in 1998.

The Company and its subsidiaries  have available a $15.0 million  multi-currency
operating  line of credit  (the "Line of Credit")  from a financial  institution
that  expires on August 31,  2000.  The Line of Credit  bears  interest at rates
varying  from 0.25% to 1% above the base rate which  depends on the  currency of
the funds drawn on the facility and includes the Canadian U.S. Dollar Base rate,
the  Canadian  Bank  Prime  rate and LIBOR  and DIBOR  rates.  No  amounts  were
outstanding under the Line of Credit at June 30, 1999.

At June 30, 1999, the Company had  outstanding an irrevocable  standby letter of
credit  for  $493,000  that  expired  on July 30,  1999,  which was  issued to a
customer to serve as a performance  bond  associated  with the completion of the
Company's  contract.  During the six months  ended  June 30,  1999,  a letter of
credit  was  also  issued  to one of the  Company's  lessors  for  approximately
$162,000 which is due to expire  September 30, 2000.  Funds  available under the
Line of Credit are reduced by amounts under any letters of credit outstanding.

The Company had capital lease obligations in principal amounts of $257,000 as of
June  30,  1999.  The  current   portion  of  long-term   liabilities   includes
approximately  $1.0  million of royalty  payments  due in 2000  pursuant  to the
Company's purchase agreement relating to certain  interconnect  billing software
in 1998.

The Company believes that existing cash balances,  funds generated by operations
and the  availability  of the  Line of  Credit  will be  sufficient  to meet its
anticipated  liquidity and working  capital  requirements  for at least 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  customers who are invoiced  primarily in
Canadian  dollars,  Pounds Sterling,  Australian  dollars,  New Zealand dollars,
Swiss Francs,  and Japanese Yen. The impact of foreign currency  translation has
not been material to the Company's operations.

Euro Conversion

On January 1, 1999, eleven of the fifteen member countries of the European Union
established  fixed  conversion rates between their existing  currencies  (legacy
currencies) and one common  currency,  the Euro. The Euro now trades on currency
exchanges and may be used in business  transactions.  Beginning in January 2002,
new  Euro-denominated  bills and coins will be issued and legacy currencies will
be withdrawn from circulation. The Company has begun to identify and ensure that
all Euro  conversion  compliance  issues are  addressed  during this  transition
period  ending in 2001.  The  Company  does not  expect  the  effect of the Euro
conversion  on its business  operations  to be  significant  since the Company's
international sales are predominately invoiced and paid in U.S. currency and the
cost of  modification  to internal  systems is not  expected to be  significant.
Therefore,  based on current  information,  the Company does not expect that the
Euro conversion will have a material adverse impact on its business or financial
condition.

Recently Issued Accounting Standards

The  Financial  Accounting  Standards  Board has issued  Statement  of Financial
Standards No. 133 "Accounting for Derivative Instruments and Hedging Activities"
("SFAS 133") and No. 137  "Accounting  for  Derivative  Instruments  and Hedging
Activities  Deferral of the  Effective  Date of FASB  Statement  No. 133" ("SFAS
137").  SFAS 137 delays the effective date of SFAS 133 to fiscal years beginning
after June 15, 2000. The Company has not determined the impact, if any, of these
pronouncements on its consolidated financial statements.

Year 2000 Readiness Disclosure

The Company has reviewed and continues to review 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 use a field of two
digits to define the applicable  year. In such  applications,  a date using "00"
may be  recognized  as the year 1900  rather  than the year  2000.  The  Company
considers "Year 2000 Ready" to mean that a product, when used in accordance with
its  associated  documentation,  is capable of correctly  processing,  providing
and/or  receiving  date data within and between the twentieth  and  twenty-first
centuries,  provided that all non-Saville products (i.e., hardware, software and
firmware) used with such product properly exchange accurate date data with it.

The Company's  internal systems include both its information  technology  ("IT")
and non-IT  systems.  The  Company  has  assessed  and  continues  to assess its
material internal IT systems  including its accounting and software  development
systems and its non-IT systems including  security systems,  building  equipment
and utilities. To the extent that the Company is not able to test the technology
provided by third-party  vendors,  the Company is seeking  assurances  from such
vendors that their  systems are Year 2000 Ready.  Management  believes  that all
material  systems which the Company uses will be Year 2000 Ready when  necessary
and that the cost to ensure  that those  systems are Year 2000 Ready will not be
material.  It should be noted,  however,  that the Company depends on timely and
uninterrupted  interactions with its vendors and its customers,  through the use
of  banking  systems,   commercial   airline  travel,   telecommunications   via
long-distance and local service providers, and local utilities, including power.
To the extent that Year 2000 Ready alternatives are not readily available at the
time,  any  interruption  caused by a lack of Year 2000 Readiness on the part of
such vendors could have a material  adverse  effect on the  Company's  business,
operating results and financial condition.

The Company has designed, tested and continues to test the most current versions
of its products to ensure that they are Year 2000 Ready.  However,  a portion of
the Company's  currently  installed  customer base may require  upgrade or other
remediation  to  become  Year  2000  Ready.   The  Company  is  assessing  on  a
case-by-case  basis  whether  testing,  upgrade  or  modification  for Year 2000
Readiness is required.  The Company's  total cost relating to these  activities,
and any modifications  required thereby,  has not been and is not expected to be
material to the Company's financial  condition,  results of operations,  or cash
flows. Any such expenditures to date have been, and any such expenditures in the
future are expected to be,  treated as normal  business  expenses  funded out of
operating cash flow. The Company  believes that its exposure to legal  liability
for any such Year 2000 Readiness failures is limited and that it will be able to
make any necessary  modifications on a timely basis.  There can be, however,  no
assurance  that  there  will  not  be  increased   costs   associated  with  the
implementation of any such activities or required modifications and there can be
no assurance that there will not be  significant  legal  liabilities,  either of
which could have a material adverse effect on the Company's business,  operating
results and financial condition.

Despite  testing  by the  Company  and  current  and  potential  customers,  the
Company's new and installed  products and the IT and non-IT  systems used by the
Company may contain  undetected errors or defects associated with Year 2000 date
functions.  Known or  unknown  errors or defects in the  Company's  IT  systems,
non-IT systems, or products could result in delay or loss of revenue,  diversion
of  development  resources,  damage to the Company's  reputation,  and increased
service and warranty costs, any of which could  materially  adversely affect the
Company's business,  operating results, or financial condition. In addition, the
Company is aware of the potential for claims against it and other  companies for
damages  arising  from  products  and  services  provided  by it and third party
suppliers that were not Year 2000 Ready.  Because of the unprecedented nature of
such  litigation,  it is uncertain  whether or to what extent the Company may be
affected by any such claims.

The Company  believes that the most likely worst case  scenario  related to Year
2000  risks  is  a  material   business   interruption   that  leads  to  client
dissatisfaction  and the  termination  of a project or projects by  dissatisfied
clients.  Such an interruption in services could occur due to a breakdown in any
number of the Company's IT or non-IT  Systems,  or the systems of third parties.
The Company currently does not have a contingency plan in the event a particular
system or vendor is not Year 2000  Ready.  Such a plan will be  developed  if it
becomes clear that the Company is not going to achieve its scheduled  objectives
in respect of Year 2000  Readiness.  There can be no assurance  that  unexpected
Year 2000  Readiness  problems  of the  Company or its  vendors,  customers  and
service providers will not materially  adversely affect the Company's  business,
operating results and financial condition.  The foregoing assessment  represents
management's   best   estimates  at  the  present   time,   which  could  change
significantly in the future.

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  expectations  regarding  future
growth in revenue,  the Company's  expectation  that the Acquisition by ADC will
close during the Company's  fourth  quarter,  the Company's  plans to expand its
product lines and international 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 1999,  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, the Company's expectation that the result
of Euro  conversion will not have a material  adverse effect,  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,
fluctuations in the Company's sales cycle, the Company's  ability to attract and
retain qualified 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.

On June 19,  1999 the  Company  and ADC  entered  into a  definitive  agreement,
pursuant to which ADC will acquire the Company  through a Scheme of  Arrangement
under  the  Companies  Act  of  Ireland.  Through  this  acquisition,  which  is
structured as a tax-free reorganization for U.S. federal income tax purposes and
is intended to be  accounted  for as a "pooling  of  interests,"  ADC will issue
0.358 of a share of its Common Stock for each  Ordinary  Share (or each American
depositary receipt representing an Ordinary Share) of the Company and 0.027 of a
share of its Common  Stock for each  Deferred  Share.  The  announcement  of the
acquisition could have an adverse impact on the ability of the Company to market
its products and services to its customers,  possibly causing  operating results
to vary from those expected.  The acquisition is subject to certain  conditions,
including Company shareholder approval and compliance with the Hart-Scott-Rodino
Antitrust  Improvements Act, as well as certain other  governmental  filings and
approvals, including the sanction of the High Court of Ireland, and there can be
no assurance that the acquisition will be successfully  completed.  In the event
that the acquisition is not  successfully  completed,  the Company's  results of
operations and ordinary share price could be materially adversely affected.

If the acquisition is successfully completed,  holders of the Company's ordinary
shares will become holders of ADC common stock. ADC's business is different from
that of the Company,  and ADC's results of  operations,  as well as the price of
ADC common stock, may be affected by factors  different than those affecting the
Company's results of operations and the price of the Company's common stock. For
a  discussion  of ADC's  business and certain  important  factors to consider in
connection  with such  business,  see ADC's public  filings with the  Securities
Exchange  Commission,  including ADC's Annual Report on Form 10-K for the fiscal
year ended October 31, 1998.

Historically,   the   Company  has  been   dependent   on   long-term   customer
relationships. 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,  including obtaining references from such existing customers,  or
that emerging 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 any 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
products and services as well as the  cancellation of any projects  underway.  A
significant  decrease in business from any of its major customers or the failure
of the  Company to compete  effectively  for new  customers  or  projects in the
telecommunications  and energy markets,  would have a material adverse effect on
the Company's business, financial condition and results of operations.

The Company's  quarterly and annual operating results may fluctuate from quarter
to quarter and year to year depending on various  factors  including new product
development  and other  expenses,  introduction  of new products by competitors,
fluctuations in the numbers and types of customer contracts (i.e. service bureau
or license) signed in any given quarter, the hiring of additional staff, pricing
pressures, the effect of acquisitions,  the evolving and unpredictable nature of
the markets in which the  Company's  products  and services are sold and general
economic  conditions.  The sales cycle for the Company's products has lengthened
recently due, in part, to consolidation  within the industry.  This has made the
timing of revenues  difficult  to predict.  Because of the  significant  size of
customer  projects,  a delay in one or more projects during a particular quarter
could have a material adverse impact on the Company's operating results for that
quarter. Most of the Company's expenses, such as employee compensation, computer
costs and rent, are relatively fixed in the short term. Moreover,  the Company's
expense  levels are based,  in part,  on the  Company's  expectations  regarding
future revenue levels. As a result, if revenue for a particular quarter is below
the  Company's  expectations,  the Company  may not be able to reduce  operating
expenses  proportionately  for  that  quarter,  and,  therefore,   this  revenue
shortfall  would  have a  disproportionately  negative  effect on the  Company's
operating results for that quarter.

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. For example,
in February 1999,  Lucent  Technologies,  Inc., a  telecommunications  equipment
maker with substantially greater resources and name recognition than the Company
and with  which the  Company  had  entered  into  several  alliance  agreements,
purchased Kenan Systems Corp., a customer care and billing  software  competitor
of 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  currently offers both  DB2/400-based  and
UNIX-based CBP products and is devoting significant resources to develop, refine
and enhance these CBP products,  as well as its other  customer care and billing
technology.  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 perform or gain market  acceptance,  or if there should be a
rapid shift from the telecommunications industry's use of either DB2/400 or UNIX
as a standard platform for billing, 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
Latin America and Asia Pacific  regions have  experienced a downturn in economic
conditions,  the  continuation  of which could  adversely  affect the  Company's
ability to expand into this  region.  Additionally,  credit  markets for smaller
telecommunications  companies in the U.S. have weakened,  while  competition has
increased,  all of which could adversely  affect the Company's  ongoing projects
for such  customers,  as well as the  Company's  ability to attract and maintain
relationships with such companies.

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,
as well as to attract and retain qualified  personnel,  including  highly-sought
UNIX software development personnel.  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.

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 of operations and financial
condition could be materially adversely affected.

From time to time,  the  Company may  receive  threats of or become  involved in
litigation in the ordinary  course of its business.  In April 1999,  the Company
received a notice of demand for arbitration filed by a customer alleging certain
failures  to  perform  by  the  Company.   The  customer   alleges   damages  of
approximately $6.6 million. The Company denies all such allegations and believes
that they are  without  merit.  There can be no  assurance,  however,  as to the
outcome of this or any other dispute that may arise.

The Company has  significant  operations and generates a substantial  portion of
its  taxable  income  in the  Republic  of  Ireland,  and is taxed on its  Irish
"manufacturing  income"  at a rate that is  substantially  lower  than U.S.  tax
rates.  This  incentive tax  arrangement is due to terminate in 2010, but during
the period to 2010,  the  general  income  tax rate is  scheduled  to  gradually
decline until the rate for  manufacturing  income is only marginally  lower than
the rate on all income. If the Company could no longer qualify for the lower tax
rate on manufacturing  income 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, United Kingdom 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.


<PAGE>

Item 3.  Market Risk

The  Company is exposed  to market  risks,  which  include  changes in  currency
exchange  rates as measured  against the U.S.  dollar and each other which could
positively or negatively affect results of operations and retained earnings.

As of June 30, 1999, the Company has evaluated its risk and determined  that any
exposure  to currency  exchange  is not  significant  to the  Company's  overall
consolidated  financial  results.  There can be no assurance  that the Company's
exposure will remain at these levels, especially in the event of significant and
sudden fluctuations in the value of local currencies.

<PAGE>

                               SAVILLE SYSTEMS PLC

                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

         None

Item 2.  Changes in Securities

         None

Item 3.  Defaults Upon Senior Securities

         None

Item 4.  Submission of Matters to a Vote of Security Holders

          The Company held its 1999 Annual General Meeting of Shareholders  (the
          "Annual Meeting) on May 18, 1999. At the Annual meeting, the following
          actions were taken.

     1.   The  shareholders  considered the audited  accounts of the Company for
          the year ended  December 31, 1998 and the Reports of the Directors and
          the Accountants  thereon and approved by a vote of 36,705,729 Ordinary
          Shares voted for,  25,355  Ordinary  Shares against and 6,672 Ordinary
          Shares not voting;

     2.   The shareholders re-elected William F. Cunningham,  Fergus G. McGovern
          and David P. Mixer as Class I Directors of the Company,  each to serve
          for a three year term. Holders of 36,637,640 Ordinary Shares voted for
          Mr.  Cunningham,  73 Ordinary  Shares  against and 100,043  shares not
          voting.  Holders  of  36,638,040  Ordinary  Shares  voted for  Messrs.
          McGovern  and Mixer,  respectively,  73  Ordinary  Shares  against and
          99,643 Ordinary Shares not voting. In addition to Messrs.  Cunningham,
          McGovern and Mixer,  the  Company's  continuing  Directors are Messrs.
          John A. Blanchard III, Brian E. Boyle,  John J. Boyle III,  Richard A.
          Licursi, James B. Murray, Jr., Bruce A. Saville and John W. Sidgmore;

     3.   The  shareholders  passed a special  resolution which proposed certain
          amendments to the Company's Articles of Association required to obtain
          a listing of the Company's Ordinary Shares on the Irish Stock Exchange
          by a vote of 36,636,611  Ordinary  Shares for,  90,054 Ordinary Shares
          against and 11,091 Ordinary Shares not voting;

     4.   The  shareholders  passed a special  resolution  which  authorizes the
          Company,  in the  discretion  of the Board of Directors and subject to
          the  listing  of the  Company's  Ordinary  Shares on the  Irish  Stock
          Exchange, to purchase up to 5,000,000 of the Company's Ordinary Shares
          and  authorizes  the  Company  to  reissue  any such  Ordinary  Shares
          purchased  by it and not  cancelled by a vote of  36,702,488  Ordinary
          Shares for,  25,473  Ordinary Shares against and 9,795 Ordinary Shares
          not voting;

     5.   The  shareholders  ratified the appointment of  PricewaterhouseCoopers
          LLP as the Company's  independent  accountants  for the current fiscal
          year by a vote of  36,703,452  Ordinary  Shares for,  26,286  Ordinary
          Shares against and 8,018 Ordinary Shares not voting;

     6.   The   shareholders   authorized   the   Directors  to  determine   the
          remuneration  of the  independent  accountants by a vote of 36,653,591
          Ordinary  Shares  for,  69,540  Ordinary  Shares  against  and  14,625
          Ordinary Shares not voting, and

     7.   The  shareholders  authorized  the holding of the 2000 Annual  General
          Meeting  of the  Company  in  North  America  by a vote of  36,521,045
          Ordinary  Shares  for,  211,600  Ordinary  Shares  against  and  5,111
          Ordinary Shares not voting.


Item 5.  Other Information

         None

Item 6.  Exhibits and Reports on Form 8-K

          (a)  Exhibits

          The  exhibits  listed in the  Exhibit  Index as part of or included in
          this report.

          (b)  Reports on form 8-K

          The Company filed current  reports on Form 8-K dated April 8, 1999 and
          June 23, 1999.


<PAGE>

                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                                                  SAVILLE SYSTEMS PLC
                                                  (Registrant)



Date:  August 11, 1999                      By:   /s/ Christopher A. Hanson
       ---------------                            --------------------------
                                                  Christopher A. Hanson
                                                  Chief Financial Officer
                                                  (Principal Financial and
                                                  Accounting Officer)



<PAGE>

                               SAVILLE SYSTEMS PLC

                                FORM 10-Q REPORT

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999


                                INDEX TO EXHIBITS

<TABLE>

Exhibit No.    Description
<S>            <C>

  10.1         Lease agreement between Saville Systems PLC, Patrick J. O'Grady
               and Bernadette O'Grady, Clybaun Construction Limited and O'Grady
               Construction Limited dated January 27, 1999

  27.0         Financial Data Schedule

  99.1         First Amendment to Agreement, dated as of June 30, 1999 by and
               among Saville and ADC Telecommunications, Inc.

</TABLE>