Amdocs Limited Reports Strong Growth

ST. LOUIS, April 20 /PRNewswire-FirstCall/ -- Amdocs Limited today reported that for the second quarter ended March 31, 2005, revenue was $488.4 million, representing sequential growth of 4.0% and an increase of 10.3% from last year's second quarter. Excluding acquisition-related costs net of related tax effects of $1.7 million, net income was $76.0 million, or $0.35 per diluted share, and increased by $12.7 million, or 20.1%, when compared to net income, excluding $2.9 million of acquisition-related costs net of related tax effects, of $63.2 million, or $0.29 per diluted share, in the second quarter of fiscal 2004. The Company's net income was $74.3 million, or $0.34 per diluted share, compared to net income of $60.3 million, or $0.28 per diluted share, in the second quarter of fiscal 2004.

"This was a very good quarter for Amdocs, with continued demand for our offerings," said Dov Baharav, Chief Executive Officer of Amdocs Management Limited. "We attribute this quarter's success to our strategy of helping the world's leading service providers transform themselves to adopt integrated customer management or ICM. We launched the Amdocs 6 product portfolio and new consulting services that support the carriers' move toward ICM, and they have been very well received. These offerings address a key need of the industry, which is being transformed by the trend of continued consolidation. Amdocs is well positioned to take advantage of this trend. All this makes us optimistic about our future -- despite the uncertainties that still exist in the market, including those associated with consolidation -- and we anticipate continued growth in the coming quarters."

Sales Highlights

During the second quarter, our new business included eight new key wins, highlighted below.

* Elisa Corporation, a leading Finnish communications service provider (CSP), has selected Amdocs to help transform the company to achieve true integrated customer management. Amdocs will provide Elisa with business process reengineering services and the Amdocs 6 products. As a result, Elisa will have a single, integrated platform of Amdocs software for consolidated billing, CRM and ordering across the carrier's Finnish and Estonian operations. Elisa will benefit from a single customer view across its wireline, wireless and Internet Protocol (IP) pre-paid and post-paid offerings. Amdocs will be the systems integrator for this complex project. * Several carriers have selected Amdocs Self Service, which allows a service provider's customers to self-manage their operations with their provider over the web. The ability to offer web-based self-service capabilities is critical as carriers strive to reduce expenses and increase customer satisfaction. Amdocs will also provide turn-key systems integration services in one of these projects, as Amdocs Self Service is merged with an existing Amdocs billing system. * Amdocs has signed an agreement to convert a European wireless customer to the new Amdocs Billing product. The agreement also includes a substantial extension of an existing maintenance contract. These upgrades will assist this carrier to efficiently provide new services. * Amdocs has signed a new managed services contract to help upgrade and manage components of customer care and billing applications for a North American wireline carrier. * Amdocs Partner Manager is gaining traction in the marketplace with the proliferation of third-party content services that carriers offer to their customers. Several service providers in various geographies have chosen Amdocs Partner Manager to help them manage billing and revenue settlement agreements with their partners. * Amdocs is working with a European customer to assist in supporting Mobile Virtual Network Operator (MVNO) activity. Operating and Financial Highlights During the second quarter: * Two major Amdocs CRM deployments were announced this quarter -- Nextel and MegaFon-Moscow. Nextel has successfully deployed Amdocs CRM as part of a strategic initiative to help enhance the customer experience for Nextel's more than 15 million subscribers, thus driving customer growth and loyalty. Amdocs CRM is integrated with the Amdocs Billing product that is already in place at Nextel, allowing Nextel to manage its customers in an integrated fashion. Amdocs also announced that MegaFon-Moscow is implementing the Amdocs CRM solution which will seamlessly integrate with existing billing and operational infrastructure of the company's Moscow network. * Amdocs launched Amdocs 6, the comprehensive portfolio of products that makes it easier for service providers to journey toward integrated customer management. Amdocs 6 is a pre-integrated portfolio of modular, industry-leading billing, CRM, self-service, order management, mediation and content revenue management software products. It is the culmination of Amdocs R&D investments in areas such as technical platform integration, which reduces implementation costs for service providers and drives a lower total cost of ownership for service providers. This launch marked the first time that the telecommunications industry could benefit from a simultaneous release of an entire software product portfolio. * Amdocs announced unique new business consulting services that help accelerate the pace to integrated customer management for CSPs. Amdocs consulting services are designed to accelerate the delivery of optimal solutions that lower risk, enable CSPs to deliver a superior experience to their customers and facilitate each CSP's unique journey to integrated customer management. In addition to a broad set of implementation, integration and managed services that Amdocs provides to customers, the new consulting services unveiled include a wide range of offerings -- from high-level strategy to business process integration, training and testing -- designed to help CSPs design, plan and execute their transformation from a voice service utility to a customer-centric, multi-media retailer. * Free cash flow, defined as cash flow from operations less net capital expenditures and payments on capital leases, was $70.4 million in the quarter. Financial Outlook

Amdocs expects that revenue for the third quarter of fiscal 2005 ending June 30, 2005, will increase to approximately $505 million. Diluted earnings per share for the quarter are expected to be $0.36 excluding acquisition- related costs net of related tax effects of between $0.01 and $0.02 per share.

Amdocs will host a conference call on April 20, 2005 at 5 p.m. Eastern Daylight Time to discuss the Company's second quarter results. The call will be carried live on the Internet via http://www.vcall.com/ and the Amdocs website, http://www.amdocs.com/.

About Amdocs

Amdocs combines innovative software and services with deep business knowledge to accelerate implementation of integrated customer management by the world's leading service providers. By delivering a comprehensive portfolio of software and services that spans the customer lifecycle -- target, sell, deliver, bill and support -- Amdocs enables service companies to deliver an intentional customer experience, which results in stronger, more profitable customer relationships. Service providers also benefit from a rapid return on investment, lower total cost of ownership and improved operational efficiencies. A global company with the revenue of $1.774 billion in fiscal 2004, Amdocs employs over 9,500 IT professionals and serves customers in 40 countries around the world. For more information, visit Amdocs at http://www.amdocs.com/.

Cautionary statements

Investors are cautioned that this press release contains certain information that is not prepared in accordance with GAAP. Investors should not construe these financial measures as being superior to GAAP. The Company's management uses this financial information in its internal analysis in order to exclude the effect of acquisitions and other significant one-time events that may have a disproportionate effect in a particular period. Accordingly, management believes that isolating the effects of such events enables management and investors to consistently analyze the critical components and results of operations of the Company's business and to have a meaningful comparison to prior periods.

This press release includes information that constitutes forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995, including statements about Amdocs' growth and business results in future quarters. Although we believe the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be obtained or that any deviations will not be material. Such statements involve risks and uncertainties that may cause future results to differ from those anticipated. These risks include, but are not limited to, the effects of general economic conditions, Amdocs' ability to grow in the mobile, wireline and IP business markets, adverse effects of market competition, rapid technological shifts that may render the Company's products and services obsolete, potential loss of a major customer, our ability to develop long-term relationships with our customers, and risks associated with operating businesses in the international market. These and other risks are discussed at greater length in the Company's filings with the Securities and Exchange Commission, including in our Annual Report on Form 20-F, filed on December 30, 2004 and our Form 6-K furnished on February 14, 2005.

Contact: Thomas G. O'Brien Treasurer and Vice President of Investor Relations Amdocs Limited 314-212-8328 E-mail: dox_info@amdocs.com AMDOCS LIMITED Consolidated Statements of Income (Unaudited) (in thousands, except per share data) Three months ended Six months ended March 31, March 31, ------------------- ------------------- 2005 2004 2005 2004 ------- ------- ------- ------- Revenue: License $27,344 $18,107 $47,710 $34,728 Service 461,072 424,651 910,238 836,325 ------- ------- ------- ------- 488,416 442,758 957,948 871,053 Operating expenses: Cost of license 998 1,227 2,153 2,359 Cost of service 310,291 278,258 605,238 550,361 Research and development 33,263 30,084 66,174 60,582 Selling, general and administrative 54,592 53,836 109,552 106,333 Amortization of purchased intangible assets 2,079 3,769 5,797 8,865 ------- ------- ------- ------- 401,223 367,174 788,914 728,500 ------- ------- ------- ------- Operating income 87,193 75,584 169,034 142,553 Interest income and other, net 5,680 1,711 10,639 2,778 ------- ------- ------- ------- Income before income taxes 92,873 77,295 179,673 145,331 Income taxes 18,576 17,005 35,933 31,973 ------- ------- ------- ------- Net income $74,297 $60,290 $143,740 $113,358 ======= ======= ======= ======= Basic earnings per share $0.37 $0.29 $0.71 $0.53 ======= ======= ======= ======= Diluted earnings per share $0.34 $0.28 $0.67 $0.52 ======= ======= ======= ======= Basic weighted average number of shares outstanding 202,168 209,977 201,933 212,556 ======= ======= ======= ======= Diluted weighted average number of shares outstanding(1) 218,807 219,643 218,127 220,119 ======= ======= ======= ======= (1) Diluted weighted average number of shares outstanding for the three months and six months ended March 31, 2004 were restated, due to the adoption of EITF 04-8, "The Effect of Contingently Convertible Instruments on Diluted Earnings per Share", which requires that prior period earnings per share computations be restated to conform to the new rule. The restatement had no material impact on diluted earnings per share for the three months and six months ended March 31, 2004. AMDOCS LIMITED Consolidated Statements of Income (Unaudited), Excluding Amortization of Purchased Intangible Assets and Related Tax Effects (in thousands, except per share data) Three months ended Six months ended, March 31, March 31, -------------------- --------------------- 2005(1) 2004(1) 2005(2) 2004(2) -------- -------- -------- -------- Revenue: License $27,344 $18,107 $47,710 $34,728 Service 461,072 424,651 910,238 836,325 -------- -------- -------- -------- 488,416 442,758 957,948 871,053 Operating expenses: Cost of license 998 1,227 2,153 2,359 Cost of service 310,291 278,258 605,238 550,361 Research and development 33,263 30,084 66,174 60,582 Selling, general and administrative 54,592 53,836 109,552 106,333 -------- -------- -------- -------- 399,144 363,405 783,117 719,635 -------- -------- -------- -------- Operating income 89,272 79,353 174,831 151,418 Interest income and other, net 5,680 1,711 10,639 2,778 -------- -------- -------- -------- Income before income taxes 94,952 81,064 185,470 154,196 Income taxes 18,990 17,834 37,094 33,923 -------- -------- -------- -------- Net income $75,962 $63,230 $148,376 $120,273 ======== ======== ======== ======== Diluted earnings per share $0.35 $0.29 $0.69 $0.55 ======== ======== ======== ======== Diluted weighted average number of shares outstanding(3) 218,807 219,643 218,127 220,119 ======== ======== ======== ======== (1) Excludes $2,079 and $3,769 for amortization of purchased intangible assets and tax effects related to the above of $(414) and $(829) for the three months ended March 31, 2005 and 2004, respectively. Including the above items, income before income taxes was $92,873 and $77,295, and diluted earnings per share were $0.34 and $0.28 for the three months ended March 31, 2005 and 2004, respectively. (2) Excludes $5,797 and $8,865 for amortization of purchased intangible assets and tax effects related to the above of $(1,161) and $(1,950) for the six months ended March 31, 2005 and 2004, respectively. Including the above items, income before income taxes was $179,673 and $145,331, and diluted earnings per share were $0.67 and $0.52 for the six months ended March 31, 2005 and 2004, respectively. (3) Diluted weighted average number of shares outstanding for the three months and six months ended March 31, 2004 were restated, due to the adoption of EITF 04-8, "The Effect of Contingently Convertible Instruments on Diluted Earnings per Share", which requires that prior period earnings per share computations be restated to conform to the new rule. The restatement had no material impact on diluted earnings per share for the three months and six months ended March 31, 2004. AMDOCS LIMITED Condensed Consolidated Balance Sheets (in thousands) As of ------------------------- March 31, September 30, 2005 2004 ---------- ---------- (Unaudited) ASSETS Current assets Cash, cash equivalents and short-term interest-bearing investments $1,332,334 $1,190,699 Accounts receivable, net, including unbilled of $27,779 and $24,696, respectively 260,397 254,779 Deferred income taxes and taxes receivable 93,993 62,284 Prepaid expenses and other current assets 76,583 80,229 ---------- ---------- Total current assets 1,763,307 1,587,991 Equipment, vehicles and leasehold improvements, net 174,123 181,121 Goodwill and other intangible assets, net 837,388 854,386 Other noncurrent assets 260,290 240,386 ---------- ---------- Total assets $3,035,108 $2,863,884 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payable and accruals $317,238 $366,363 Short-term portion of capital lease obligations and other financing arrangements 14,814 21,310 Deferred revenue 251,117 223,122 Deferred income taxes and taxes payable 186,274 163,648 ---------- ---------- Total current liabilities 769,443 774,443 0.50% Convertible notes 450,000 450,000 Noncurrent liabilities and other 218,492 195,251 Shareholders' equity 1,597,173 1,444,190 ---------- ---------- Total liabilities and shareholders' equity $3,035,108 $2,863,884 ========== ==========