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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 15, 2001.
REGISTRATION NO. 333-
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM F-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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AMDOCS LIMITED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ISLAND OF GUERNSEY 7371 NOT APPLICABLE
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
SUITE 5, TOWER HILL HOUSE LE BORDAGE
ST. PETER PORT, ISLAND OF GUERNSEY, GY1 3QT CHANNEL ISLANDS
011-44-1481-728444
(ADDRESS AND TELEPHONE NUMBER OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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AMDOCS, INC.
1390 TIMBERLAKE MANOR PARKWAY, CHESTERFIELD, MISSOURI 63017
ATTENTION: THOMAS G. O'BRIEN, TREASURER
(314) 212-8328
(NAME, ADDRESS, AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
THE COMMISSION IS REQUESTED TO SEND COPIES OF ALL COMMUNICATIONS TO:
ROBERT A. SCHWED, ESQ.
MERRILL A. ULMER, ESQ.
REBOUL, MACMURRAY, HEWITT, MAYNARD & KRISTOL
45 ROCKEFELLER PLAZA
NEW YORK, NEW YORK 10111
(212) 841-5700
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. [X] ________
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ] ________
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE AGGREGATE PRICE AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED PER UNIT(1) PRICE(1) REGISTRATION FEE
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2% Convertible Notes due June 1, $500,000,000 100% $500,000,000 $125,000
2008
Ordinary Shares, L0.01 par value(2) 5,429,350 shares -- -- --
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(1) Equals the aggregate principal of the notes being registered.
(2) Represents the number of ordinary shares issuable upon conversion of the
notes at a conversion price of $92.09 per share. No additional consideration
will be received for the ordinary shares, and therefore no registration fee
is required for these shares pursuant to Rule 457(i).
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
STATE.
Subject To Completion, dated August 15, 2001
PROSPECTUS
AMDOCS LIMITED
$500,000,000
2% CONVERTIBLE NOTES DUE JUNE 1, 2008
AND
5,429,350 ORDINARY SHARES ISSUABLE
UPON CONVERSION OF THE NOTES
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The selling holders listed under the caption "Selling Holders" beginning on
page 50 may offer and resell for each of their own accounts up to an aggregate
of $500,000,000 2% Convertible Notes due June 1, 2008 and the 5,429,350 ordinary
shares issuable upon conversion of the notes. In May 2001, we issued and sold
these notes to the initial purchaser in private offering. For a more detailed
description of the plan of distribution, see "Plan of Distribution," beginning
on page 55.
The notes are senior unsecured obligations of Amdocs Limited, an Island of
Guernsey corporation. Holders of the notes may convert the notes into our
ordinary shares at any time before their maturity or their prior redemption or
repurchase by Amdocs. The notes will mature on June 1, 2008. The conversion rate
is 10.8587 ordinary shares per each $1,000 principal amount of the notes,
subject to adjustment in some circumstances. This is equivalent to a conversion
price of approximately $92.09 per share.
We will pay interest on the notes on June 1 and December 1 of each year.
The first interest payment will be made on December 1, 2001. On or after June 1,
2006, we have the option to redeem all or a portion of the notes that have not
been previously converted at a redemption price of 100% of principal amount plus
accrued interest to, but excluding, the redemption date. On June 1, 2004 and
June 1, 2006, you have the option to require us to repurchase any notes held by
you at a price equal to 100% of the principal amount of the notes plus accrued
interest to, but excluding, the date of repurchase. You also have the option,
subject to certain conditions, to require us to repurchase any notes held by you
in the event of a "change in control" at a price equal to 100% of the principal
amount of the notes plus accrued interest to, but excluding, the date of
repurchase. Upon the exercise by you of either of the repurchase rights, we may
choose to pay the repurchase price in our ordinary shares.
Our ordinary shares are listed on the New York Stock Exchange under the
symbol "DOX". The last reported sale price of the ordinary shares on the New
York Stock Exchange on August 14, 2001 was $41.55 per share.
We have not applied for listing of the notes on any securities exchange or
for quotation through any automated quotation system. The notes are eligible for
trading in the Private Offerings, Resales and Trading through Automated Linkages
("PORTAL") market of the NASDAQ Stock Market.
The notes and the ordinary shares issuable upon conversion of the notes may
be offered for sale from time to time by the selling holders in brokerage
transactions at prevailing market prices, in transactions at negotiated prices
or otherwise. No representation is made that any ordinary shares will or will
not be offered for sale. We will not receive any proceeds from the sale by the
selling holders of the notes or ordinary shares issuable upon conversion of the
notes. We will pay all costs, expenses and fees in connection with the
registration of the notes and the ordinary shares, except that all selling
commissions and fees and other expenses incurred by the selling holders will be
borne by such holders.
The selling holders and the brokers who sell our ordinary shares may be
"underwriters" within the meaning of Section 2(11) of the Securities Act of
1933, as amended. In addition, any profits realized by the selling holders or
such brokers on the sale of any shares of ordinary shares may constitute
underwriting commissions.
SEE "RISK FACTORS" ON PAGE 8 TO READ ABOUT IMPORTANT FACTORS YOU SHOULD
CONSIDER BEFORE BUYING THE NOTES OR THE ORDINARY SHARES ISSUABLE UPON CONVERSION
OF THE NOTES.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
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PROSPECTUS DATED AUGUST , 2001.
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TABLE OF CONTENTS
PAGE
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Documents Incorporated by Reference......................... 2
Forward-Looking Statements.................................. 2
Summary..................................................... 4
Risk Factors................................................ 8
Ratio of Earnings to Fixed Charges.......................... 17
Offer Statistics and Timetable.............................. 17
Use of Proceeds............................................. 18
The Offer and Listing....................................... 18
Capitalization.............................................. 20
Unaudited Proforma Condensed Combined Statements of
Operations................................................ 21
Description of the Notes.................................... 25
Description of Share Capital................................ 40
Comparison of United States and Guernsey Corporate Law...... 42
Taxation of the Company..................................... 43
Certain U.S. Federal Income Tax Considerations.............. 46
Certain Guernsey Tax Considerations......................... 49
Selling Holders............................................. 50
Plan of Distribution........................................ 55
Legal Matters............................................... 56
Experts..................................................... 56
Available Information....................................... 56
Enforceability of Civil Liabilities......................... 56
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DOCUMENTS INCORPORATED BY REFERENCE
We incorporate by reference into this prospectus the documents listed below
and any future filings we make with the Securities and Exchange Commission,
referred to herein as the SEC, under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended, including any filings after the
date of this prospectus, until the selling holders have sold all of the notes
and the ordinary shares issuable upon conversion of the notes to which this
prospectus relates or the offering is otherwise terminated:
- Our annual report on Form 20-F/A for the year ended September 30, 2000,
filed on April 3, 2001;
- Our quarterly reports on Form 6-K for the quarterly periods ended
December 31, 2000, March 31, 2001 and June 30, 2001 filed on February 1,
2001, May 10, 2001 and August 9, 2001, respectively;
- Our reports of foreign private issuer on Form 6-K filed on May 24, 2001
and May 31, 2001; and
- The description of our ordinary shares contained in our Registration
Statement on Form 8-A filed on June 17, 1998 under Section 12 of the
Securities Exchange Act of 1934, including any amendment or report
updating this description.
- Our reports of foreign private issuer on Form 6-K filed on December 13,
1999, April 11, 2000 (as amended by Form 6-K/A filed on June 8, 2000) and
December 29, 2000.
The information incorporated by reference is an important part of this
prospectus. Any statement in a document incorporated by reference into this
prospectus will be deemed to be modified or superseded for purposes of this
prospectus to the extent that a statement contained in (1) this prospectus or
(2) any other subsequently filed document that is incorporated by reference into
this prospectus modifies or supersedes such statement.
You may request a copy of any or all of the documents referred to above
other than exhibits to such documents that are not specifically incorporated by
reference therein. Written or telephone requests should be directed to Thomas
O'Brien, Secretary and Treasurer, Amdocs, Inc., 1390 Timberlake Manor Parkway,
Chesterfield, Missouri 63017, telephone (314) 212-8328. Copies of such documents
may also be obtained from various alternative sources -- see "Available
Information".
FORWARD-LOOKING STATEMENTS
In addition to historical information, this prospectus contains and
incorporates by reference statements relating to our future business and/or
results, including, without limitation, the statements under the captions
"Summary" and "Risk Factors" contained in this prospectus and the statements
under the captions, "Operating and Financial Review and Prospects" and
"Information on the Company" incorporated by reference from our annual report on
Form 20-F/A for the year ended September 30, 2000. These statements include
certain projections and business trends which are "forward-looking" within the
meaning of the Private Securities Litigation Reform Act of 1995. You can
identify these statements by the use of words like "may", "will", "could",
"should", "project", "believe", "anticipate", "expect", "plan", "estimate",
"forecast", "potential", "intend", "continue" and variations of these words or
comparable words. Forward-looking statements do not guarantee future performance
and involve risks and uncertainties. Actual results may differ materially from
projected results as a result of certain risks and uncertainties. These risks
and uncertainties include, without limitation, those described under "Risk
Factors" and those detailed from time to time in our filings with the SEC. These
forward-looking statements are made only as of the date of this prospectus. We
do not undertake to update or revise the forward-looking statements, whether as
a result of new information, future events or otherwise.
In making an investment decision, you must rely on your own examination of
Amdocs Limited and the terms of this offering, including the merits and risks
involved. These notes and the ordinary
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shares issuable upon conversion of the notes have not been recommended by any
federal or state securities commission or regulatory authority. Furthermore,
these authorities have not confirmed the accuracy or determined the adequacy of
this document. Any representation to the contrary is a criminal offense. The
notes and ordinary shares issuable upon conversion of the notes may not be
transferred or resold except as permitted under the Securities Act of 1933, as
amended, and applicable state securities laws. You should be aware that you may
be required to bear the financial risks of this investment for an indefinite
period of time.
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SUMMARY
This summary highlights some information from this prospectus, and it may
not contain all of the information that is important to you. You should read the
following summary together with the more detailed information regarding our
company and the notes and ordinary shares issuable upon conversion of the notes
being sold by the selling holders, including "Risk Factors" and our consolidated
financial statements and related notes, incorporated by reference into this
prospectus.
In this document, references to "Amdocs", "we", "our", "us" and the
"Company" refer to Amdocs Limited and its consolidated subsidiaries and their
respective predecessors. References to "dollars" or $ are to United States
dollars. Unless otherwise stated, all references in this prospectus to ordinary
shares are to both voting and nonvoting ordinary shares, all references to
percentage ownership of our ordinary shares assume the exchange of all
outstanding exchangeable shares for our ordinary shares and all references to
ordinary voting and nonvoting share ownership, as expressed in percentages, are
as of June 30, 2001.
We are a leading provider of software products and services to major
communications companies in North America, Europe and the rest of the world.
Our Business Support Systems, or BSS, consist of software products designed
to support the business operations of communications companies. Our BSS products
and related services are designed to manage and improve key aspects of the
business operations of communications companies, such as customer care, order
management, call rating, invoice calculation and preparation, bill formatting,
collections, fraud management and directory publishing services. We tailor our
BSS products to address the unique needs of each communications provider.
We provide primarily Customer Care and Billing, CRM or Customer
Relationship Management, and Order Management Systems, or collectively, CC&B
Systems, for communications service providers. Our systems support a wide range
of communications services including wireline, wireless, broadband, electronic
and mobile commerce and Internet Protocol, or IP, services. We also support
companies that offer multiple service packages, commonly referred to as
convergent services. In addition, we provide a full range of Directory Sales and
Publishing Systems, or Directory Systems, to publishers of both traditional
printed yellow page and white page directories and electronic Internet
directories. Due to the complexity of BSS projects and the expertise required
for system support, we also provide extensive customization, implementation,
system integration, ongoing support, system enhancement, maintenance and
outsourcing services.
Since the inception of our business in 1982, we have concentrated on
providing software products and services to major communications companies. By
focusing on this market, we believe that we have been able to develop the
innovative products and the industry expertise, project management skills and
technological competencies required for the advanced, large-scale,
specifications-intensive system projects typical of leading communications
providers. Our customer base includes major North American and foreign
communications companies, including major wireline companies (such as Verizon,
BellSouth, SBC, Bell Canada, Tele Danmark and Deutsche Telekom), wireless
companies (such as Sprint PCS, Nextel, Cingular and Vodafone Group) and Internet
companies (such as BT Global Mobile Portal, SBC Internet Services, E-Plus Online
and Freeserve).
STRATEGY
Our goal is to provide advanced information technology software products
and related customer service and support to the world's leading communications
companies. We seek to accomplish our goal by pursuing the strategies described
below.
- Continued Focus on the Communications Industry. We intend to continue to
concentrate our resources and efforts on providing strategic information systems
to communications companies. This strategy has enabled us to develop the
specialized industry know-how and capability necessary to deliver the
technologically advanced, large-scale, specifications-intensive information sys-
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tems solutions required by the leading communications companies in the wireless,
wireline, IP and convergent service sectors.
- Target Industry Leaders and Promising New Entrants. We intend to
continue to direct our marketing efforts principally towards the major
communications companies and new entrants that are believed to have the
potential to be market leaders. Our customer base includes major communications
companies in North America (including SBC, Verizon, Bellsouth, Sprint PCS, Bell
Canada and Nextel), major foreign network operators and service providers
(including Deutsche Telekom (Germany), Telstra (Australia), BT (UK) and Vodafone
Group (UK)) and emerging market leaders. We believe that the development of this
premier customer base has helped position us as a market leader, while
contributing to the stability of our business. By targeting industry leaders and
promising new entrants that require the most sophisticated information systems
solutions, we believe that we are best able to ensure that we remain at the
forefront of developments in the industry.
- Deliver and Support Total Solutions. Our strategy is to use our BSS
products as the basis for providing customers with total systems solutions.
Using this product-driven solutions strategy, we strive to tailor our core
software modules to the specific, individualized requirements of our customers.
Working directly with the customer, our development personnel prepare the
detailed functional specifications of the system required by the customer. In
accordance with such specifications, system modules are then adapted or
customized to meet the customer's specific business requirements. We believe
that this approach minimizes risks and increases efficiencies by drawing on
field-proven BSS products and techniques, and also helps to create significant
time-to-market and other competitive advantages for our customers. By leveraging
our specialized product knowledge, we believe that we can provide more effective
system integration and implementation support services to our customers.
- Maintain and Develop Long-Term Customer Relationships. We seek to
maintain and develop long-term, mutually beneficial relationships with our
customers. These relationships generally involve additional product sales, as
well as ongoing support, system enhancement and maintenance services. As such,
these long-term customer relationships enhance the predictability and visibility
of our revenue flows. We believe that such relationships are facilitated in many
cases by the mission-critical strategic nature of the systems provided by us and
by the customer's reliance on our specialized skills and knowledge. In addition,
our strategy is to solidify our existing customer relationships by means of
long-term support and maintenance contracts.
EMPLOYEES
As of June 30, 2001, we employed on a full-time basis approximately 8,450
software and information technology specialists, engaged in research,
development, maintenance and support activities and approximately 1,100
administrative personnel. We employ approximately 4,200 and 2,700 software and
information technology specialists in Israel and North America, respectively,
with the remaining principally located in Europe and the Asia-Pacific region. We
often maintain teams of employees at a customer's premises to work on specific
projects. In the United States, our main development center is located in St.
Louis, Missouri. The executive offices of our principal subsidiary in the United
States are located at 1390 Timberlake Manor Parkway, Chesterfield, Missouri
63017, and the telephone number at that location is (314) 212-8328.
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THE OFFERING
Securities Offered............ $500,000,000 aggregate principal amount of 2%
Convertible Notes due June 1, 2008 and
5,429,350 ordinary shares issuable upon
conversion of the notes to be sold by the
selling holders listed under the caption
"Selling Holders" beginning on page 50.
Maturity...................... June 1, 2008.
Ranking....................... The notes will be senior unsecured obligations
of Amdocs and will rank equal in right of
payment with all existing and future senior
unsecured indebtedness of Amdocs.
Interest...................... We will pay interest on the notes semi-annually
on June 1 and December 1 of each year,
commencing December 1, 2001.
Conversion rights............. You may convert your notes into our ordinary
shares at a conversion rate of 10.8587 shares
per $1,000 principal amount of notes. This is
equivalent to a conversion price of
approximately $92.09 per share. The conversion
rate is subject to adjustment in certain
events. The notes will be convertible at any
time before the close of business on the
maturity date, unless we have previously
redeemed or repurchased the notes. You may
convert your notes called for redemption or
submitted for repurchase up to and including
the business day immediately preceding the date
fixed for redemption or repurchase, as the case
may be.
Redemption of the notes at our
option...................... On or after June 1, 2006, we may redeem for
cash all or part of the notes at any time, at a
redemption price of 100% of the principal
amount plus accrued and unpaid interest.
Purchase of notes at your
option........................ You have the right to require us to repurchase
the notes on June 1, 2004 and June 1, 2006,
each a repurchase date. In each case, the
repurchase price payable will be equal to 100%
of the principal amount plus accrued and unpaid
cash interest, if any, on such repurchase date.
We may choose to pay the repurchase price in
cash or in ordinary shares or a combination of
cash and ordinary shares. If we elect to pay
the repurchase price in ordinary shares or a
combination of cash and ordinary shares, we
must notify holders not less than 20 days prior
to the repurchase date. The ordinary shares
will be valued at 100% of the average closing
sales price for five trading days ending on the
third day prior to the repurchase date.
Change in control............. If we undergo a change in control, you will
have the option to require us to repurchase all
of your notes not previously called for
redemption or any portion thereof for cash or,
at our option, ordinary shares (which will be
valued at 95% of the average closing sales
prices of our ordinary shares for the five
trading days immediately preceding and
including the third trading day prior to the
repurchase date). We will pay a repurchase
price equal to the 100% of the principal amount
plus accrued and unpaid cash interest, if any,
on the repurchase date.
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Events of default............. The following will be events of default under
the indenture for the notes:
- we fail to pay principal of, or any premium
on, any note when due;
- we fail to pay any interest on any note when
due and that default continues for 30 days;
- we fail to provide the notice that we are
required to give in the event of a change in
control;
- we fail to perform any other covenant in the
indenture and that failure continues for 60
days after written notice to us by the trustee
or the holders of at least 25% in the aggregate
principal amount of outstanding notes;
- we or any of our significant subsidiaries
fail to pay when due at final maturity thereof,
either at its maturity or upon acceleration,
any indebtedness under any bonds, debentures,
notes or other evidences of indebtedness for
money borrowed, or any guarantee thereof, in
excess of $50 million if the indebtedness is
not discharged, or the acceleration is not
annulled, within 30 days after written notice
to us by the trustee or the holders of at least
25% in aggregate principal amount of the
outstanding notes; and
- events of bankruptcy, insolvency or
reorganization with respect to us or any of our
significant subsidiaries specified in the
indenture.
Registration rights........... Pursuant to a registration rights agreement, we
agreed to register the resale of the notes and
the sale of the ordinary shares issuable upon
conversion of the notes. If we fail to comply
with certain of our obligations under the
registration rights agreement, liquidated
damages will be payable on the notes and the
ordinary shares issued upon conversion of the
notes.
Use of proceeds............... We will not receive any proceeds from the sale
by the selling holders of the notes or the
ordinary shares issuable upon conversion of the
notes.
Book-entry form............... The notes have been issued in book-entry form
and are represented by permanent global
certificates deposited with a custodian for and
registered in the name of a nominee of The
Depository Trust Company, commonly known as
DTC, in New York, New York. Beneficial
interests in any of the notes will be shown on,
and transfers will be effected only through,
records maintained by DTC and its direct and
indirect participants and any such interest may
not be exchanged for certificated notes, except
in limited circumstances.
Trading....................... The notes will not be listed on any securities
exchange or included in any automated quotation
system. Our ordinary shares are traded on the
New York Stock Exchange under the symbol "DOX".
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RISK FACTORS
Before you invest in our notes or the ordinary shares issuable upon
conversion of the notes, you should carefully consider and evaluate all of the
information contained in this prospectus and the information incorporated by
reference into this prospectus, including the risks described below. Any of
these risks could materially and adversely affect our business, financial
condition and results of operations, which in turn could materially and
adversely affect the price of the notes and the ordinary shares issuable upon
conversion of the notes.
RISKS RELATED TO OUR BUSINESS
WE ARE EXPOSED TO GENERAL GLOBAL ECONOMIC AND MARKET CONDITIONS,
PARTICULARLY THOSE IMPACTING THE COMMUNICATIONS INDUSTRY
Developments in the communications industry, such as the impact of general
global economic conditions, continued industry consolidation, the formation of
alliances among network operators and service providers, and changes in the
regulatory environment could materially affect our existing or potential
customers. These conditions have reduced the high growth that the communications
industry had experienced over the past several years, and have caused the market
value, financial results and prospects, and capital spending levels of many
communications companies to decline. The impact of these conditions on the
communications industry could reduce the demand for our products and services,
and the growth rates that we have achieved in recent years. As a result, we may
be unable to effectively market and sell our information systems to potential
customers in the communications industry.
A portion of our revenue is derived from products and services provided to
directory publishers. We believe that the demand for those products and services
will be reduced as a result of the increased competition between directory
publishers and other media channels. Our new products for these markets may not
be successful and we believe our current levels of revenue from the sales of
products and services to directory publishers are not likely to grow
significantly.
IF WE CANNOT COMPETE SUCCESSFULLY WITH EXISTING OR NEW COMPETITORS OUR
BUSINESS COULD BE MATERIALLY ADVERSELY AFFECTED
We may be unable to compete successfully with existing or new competitors
and our failure to adapt to changing market conditions and to compete
successfully with established or new competitors could have a material adverse
effect on our results of operations and financial condition.
The market for communications information systems is highly competitive and
fragmented, and we expect competition to increase. We compete with independent
providers of information systems and services and with in-house software
departments of communications companies. Our competitors include firms that
provide comprehensive information systems, software vendors that sell products
for particular aspects of a total information system, software vendors that
specialize in systems for particular communications services such as Internet
and wireless services, systems integrators, service bureaus and companies that
offer software systems in combination with the sale of network equipment. We
anticipate continued growth and competition in the communications industry and,
consequently, the emergence of new software providers in the industry that will
compete with us.
We also believe that our ability to compete depends in part on a number of
factors, including:
- the development by others of software that is competitive with our
products and services,
- the price at which others offer competitive software and services,
- the responsiveness of our competitors to customer needs, and
- the ability of our competitors to hire, retain and motivate key
personnel.
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We compete with a number of companies that have long operating histories,
large customer bases, substantial financial, technical, sales, marketing and
other resources, and strong name recognition. Current and potential competitors
have established, and may establish in the future, cooperative relationships
among themselves or with third parties to increase their ability to address the
needs of our prospective customers. In addition, our competitors have acquired,
and may continue to acquire in the future, companies that may enhance their
market offerings. Accordingly, new competitors or alliances among competitors
may emerge and rapidly acquire significant market share. As a result, our
competitors may be able to adapt more quickly than us to new or emerging
technologies and changes in customer requirements, and may be able to devote
greater resources to the promotion and sale of their products. We cannot assure
you that we will be able to compete successfully with existing or new
competitors. Failure by us to adapt to changing market conditions and to compete
successfully with established or new competitors may have a material adverse
effect on our results of operations and financial condition.
WE MUST CONTINUALLY ENHANCE OUR PRODUCTS TO REMAIN COMPETITIVE
We believe that our future success will depend, to a significant extent,
upon our ability to enhance our existing products and to introduce new products
and features to meet the requirements of our customers in a rapidly developing
and evolving market. We are currently devoting significant resources to refining
and expanding our base software modules and to developing Business Support
Systems, or BSS, products that operate in state-of-the-art computing
environments. Our present or future products may not satisfy the evolving needs
of the communications market. If we are unable to anticipate or respond
adequately to such demands, due to resource, technological or other constraints,
our business and results of operations could be materially adversely affected.
On November 30, 1999, in a stock-for-stock transaction, we completed our
acquisition of International Telecommunication Data Systems, Inc., or ITDS, a
leading provider of billing and customer care service bureau solutions to
wireless communications service providers (we have since renamed ITDS, Amdocs
Stamford, Inc.). On April 5, 2000, in a stock-for-stock transaction, we
completed our acquisition of Solect Technology Group Inc., or Solect, a leading
provider of billing and customer care software to Internet Protocol, or IP,
service providers (we have since renamed Solect, Amdocs Canada, Inc.). We also
may acquire other companies where we believe we can acquire new products or
services or otherwise enhance our market position or strategic strengths. We
cannot assure you that suitable acquisition candidates can be found, that
acquisitions can be consummated on favorable terms, that the ITDS or Solect
acquisitions will continue to enhance our products or strengthen our competitive
position or that we will be able to successfully and efficiently integrate these
businesses into our own.
OUR BUSINESS IS HIGHLY DEPENDENT ON A LIMITED NUMBER OF SIGNIFICANT
CUSTOMERS
Our business is highly dependent on a limited number of significant
customers. The loss of any significant customer or a significant decrease in
business from any of those customers could have a material adverse effect on our
results of operations and financial condition. Aggregate revenue derived from
the multiple business arrangements we have with each of our five largest
customer groups and their affiliates, excluding SBC and its operating
subsidiaries (see below), accounted for approximately 41.1% of revenue in the
nine months ended June 30, 2001 and 39.7%, 33.4% and 39.0% of revenue in fiscal
2000, 1999 and 1998, respectively. After giving effect to the acquisition of
Mannesmann Mobilfunk by Vodafone Group in 2000, the combined company would have
been one of our largest customers and would have accounted for more than 10% of
our revenue in each of fiscal 2000 and 1999.
Although we have received a substantial portion of our revenue from repeat
business with established customers, most of our major customers do not have any
obligation to purchase additional products or services and generally have
already acquired fully paid licenses to their
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installed systems. Therefore, our customers may not continue to purchase new
systems, system enhancements and services in amounts similar to previous years.
WE DEPEND ON SBC COMMUNICATIONS INC. FOR A SIGNIFICANT PORTION OF OUR
REVENUE
One of our largest groups of customers is SBC Communications Inc., or SBC,
and its operating subsidiaries. SBC International Inc., or SBCI, a wholly-owned
subsidiary of SBC, is also one of our largest shareholders. As of June 30, 2001,
it held approximately 14.1% of our outstanding voting ordinary shares and all of
our outstanding non-voting ordinary shares. A significant decrease in the sale
of products and services to SBC or its subsidiaries may materially adversely
affect our results of operations and financial condition.
Substantially all of our work for SBC is conducted directly with SBC's
operating subsidiaries, such as Cingular Wireless, Southwestern Bell Yellow
Pages, Southwestern Bell Communications Services (SBC's long distance provider)
and Southwestern Bell Telephone Company. These SBC relationships accounted for
in the aggregate 12.6%, 15.9% and 20.8% of our total revenue in fiscal 2000,
1999 and 1998, respectively. The revenue attributable to SBC and such
subsidiaries amounted to $149.2 million, or 13.3% of our total revenue, in the
nine months ended June 30, 2001 and $141.0 million, $99.5 million and $84.4
million in fiscal 2000, 1999 and 1998, respectively.
OUR FUTURE SUCCESS DEPENDS ON OUR ABILITY TO DEVELOP LONG-TERM RELATIONSHIPS
WITH OUR CUSTOMERS
We believe that our future success depends to a significant extent on our
ability to develop long-term relationships with successful network operators and
service providers with the financial and other resources required to invest in
significant ongoing BSS products. We may be unable to develop new customer
relationships and our new customers may be unsuccessful. Our failure to maintain
customer relationships or the failure of new customers to be successful could
have a material adverse effect on our business, results of operations and
financial condition.
THE SKILLED EMPLOYEES THAT WE NEED MAY BE DIFFICULT TO HIRE AND RETAIN
Our success depends in large part on our ability to attract, train,
motivate and retain highly skilled information technology professionals,
software programmers and communications engineers. These types of qualified
personnel are in great demand and are likely to remain a limited resource for
the foreseeable future. As of June 30, 2001, we employed on a full time basis
approximately 8,450 software and information technology specialists, of which
over 4,200 are located in Israel and 2,700 are located in North America. We
intensively recruit technical personnel for our principal development centers in
Israel, the United States, Cyprus, Ireland and Canada. Our ability to expand our
business is highly dependent upon our success in recruiting such personnel and
our ability to manage and coordinate our worldwide development efforts. We may
be unable to continue to attract and retain the skilled employees we require and
any inability to do so could adversely impact our ability to manage and complete
our existing projects and to compete for new customer contracts. In addition,
the resources required to attract and retain such personnel may adversely affect
our operating margins. The failure to attract and retain qualified personnel may
have a material adverse effect on our business, results of operations and
financial condition. Our success also depends, to a certain extent, upon the
continued active participation of a relatively small group of senior management
personnel who have been with us for many years. The loss of the services of all
or some of these employees could have a material adverse effect on our business.
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OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE
We have experienced fluctuations in our quarterly operating results and
anticipate that such fluctuations may continue and could intensify. Our
quarterly operating results may fluctuate as a result of many factors,
including:
- the size and timing of significant customer projects and license fees,
- increased competition,
- cancellations of significant projects by customers,
- changes in operating expenses,
- changes in our strategy,
- personnel changes,
- foreign currency exchange rates, and
- general economic and political factors.
Generally, our license fee revenue and our service fee revenue relating to
customization and implementation are recognized as work is performed, using
percentage of completion accounting. Given our reliance on a limited number of
significant customers, our quarterly results may be significantly affected by
the size and timing of customer projects and our progress in completing such
projects.
We believe that the placement of customer orders may be concentrated in
specific quarterly periods due to the time requirements and budgetary
constraints of our customers. Although we recognize revenue as projects
progress, progress may vary significantly from project to project, and we
believe that variations in quarterly revenue are sometimes attributable to the
timing of initial order placements. Due to the relatively fixed nature of
certain of our costs, a decline of revenue in any quarter would result in lower
profitability for that quarter.
OUR BUSINESS IS IMPACTED BY LENGTHENING SALES CYCLES
As a result of the current slowdown in the growth of the global
communications market, the sales cycle associated with the purchase of our
information systems has recently lengthened, with the time between our initial
contact with a prospective customer and the signing of a sales contract now
typically being between six and twelve months. We believe that such lengthening
of our sales cycle timing could reduce growth in our revenue. Moreover,
information systems for communications companies are relatively complex and
their purchase generally involves a significant commitment of capital, with
attendant delays frequently associated with large capital expenditures and
implementation procedures within an organization. The purchase of such products
typically also requires coordination and agreement across a potential customer's
entire organization. Delays associated with such timing factors may reduce our
revenue in a particular period without a corresponding reduction in our costs,
which could have a material adverse effect on our results of operations and
financial condition.
OUR INTERNATIONAL PRESENCE CREATES SPECIAL RISKS
We are subject to certain risks inherent in doing business in international
markets, including:
- lack of acceptance of non-localized products,
- legal and cultural differences in the conduct of business,
- difficulties in staffing and managing foreign operations,
- longer payment cycles,
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- difficulties in collecting accounts receivable and withholding taxes that
limit the repatriation of earnings,
- trade barriers,
- immigration regulations that limit our ability to deploy our employees,
- political instability, and
- variations in effective income tax rates among countries where we conduct
business.
One or more of these factors could have a material adverse effect on our
international operations.
We maintain development facilities in Israel, the United States, Cyprus,
Ireland and Canada, operate a support center in Brazil and have operations in
North America, Europe, Latin America and the Asia-Pacific region. Although a
majority of our revenue is derived from customers in North America and Europe,
we obtain significant revenue from customers in the Asia-Pacific region and
Latin America. Our strategy is to continue to broaden our European and North
American customer base and to expand into new international markets.
FLUCTUATIONS IN FOREIGN CURRENCY EXCHANGE RATES COULD ADVERSELY AFFECT OUR
BUSINESS
A significant portion of our operating costs are incurred outside the
United States, and therefore fluctuations in exchange rates between the
currencies in which such costs are incurred and the dollar may have a material
adverse effect on our results of operations and financial condition. The cost of
our operations in Israel, as expressed in dollars, could be adversely affected
by the extent to which any increase in the rate of inflation in Israel is not
offset (or is offset with a time delay) by a devaluation of the Israeli currency
in relation to the dollar. As a result of this differential, from time to time
we experience increases in the costs of our operations in Israel, as expressed
in dollars, which could in the future have a material adverse effect on our
results of operations and financial condition.
Generally, the effects of fluctuations in foreign currency exchange rates
are mitigated by the fact that a significant portion of our revenue is in
dollars and we generally hedge our currency exposure on both a short-term and
long-term basis with respect to the balance of our revenue.
The imposition of exchange or price controls or other restrictions on the
conversion of foreign currencies could also have a material adverse effect on
our business, results of operations and financial condition.
WE MAY BE UNABLE TO PROTECT OUR PROPRIETARY TECHNOLOGY
Any misappropriation of our technology or the development of competitive
technology could seriously harm our business. We regard a substantial portion of
our software products and systems as proprietary and rely on a combination of
statutory and common law copyright, trademark and trade secret laws, customer
licensing agreements, employee and third party non-disclosure agreements and
other methods to protect our proprietary rights. We do not include in our
software any mechanisms to prevent or inhibit unauthorized use, but we generally
enter into confidentiality agreements with our employees, consultants, customers
and potential customers and limit access to and distribution of proprietary
information.
The steps we have taken to protect our proprietary rights may be
inadequate. If so, we might not be able to prevent others from using what we
regard as our technology to compete with us. Existing trade secret, copyright
and trademark laws offer only limited protection. In addition, the laws of some
foreign countries do not protect our proprietary technology to the same extent
as the laws of the United States. Other companies could independently develop
similar or superior technology without violating our proprietary rights.
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If we have to resort to legal proceedings to enforce our intellectual
property rights, the proceedings could be burdensome and expensive and could
involve a high degree of risk.
CLAIMS BY OTHERS THAT WE INFRINGE THEIR PROPRIETARY TECHNOLOGY COULD HARM
OUR BUSINESS
Although we have not received any notices from third parties alleging
infringement claims, third parties could claim that our current or future
products or technology infringe their proprietary rights. We expect that
software developers will increasingly be subject to infringement claims as the
number of products and competitors providing software and services to the
communications industry increase and overlaps occur. Any claim of infringement
by a third party could cause us to incur substantial costs defending against the
claim, even if the claim is invalid, and could distract our management from our
business. Furthermore, a party making such a claim could secure a judgment that
requires us to pay substantial damages. A judgment could also include an
injunction or other court order that could prevent us from selling our products.
Any of these events could seriously harm our business.
If anyone asserts a claim against us relating to proprietary technology or
information, we might seek to license their intellectual property or to develop
non-infringing technology. We might not be able to obtain a license on
commercially reasonable terms or on any terms. Alternatively, our efforts to
develop non-infringing technology could be unsuccessful. Our failure to obtain
the necessary licenses or other rights or to develop non-infringing technology
could prevent us from selling our products and could therefore seriously harm
our business.
THE TERMINATION OR REDUCTION OF CERTAIN GOVERNMENT PROGRAMS AND TAX BENEFITS
COULD ADVERSELY AFFECT OUR OVERALL EFFECTIVE TAX RATE
We benefit from certain government programs and tax benefits, including
programs and benefits in Israel, Cyprus and Ireland. To be eligible for these
programs and tax benefits, we must meet certain conditions. If we fail to meet
these conditions we could be required to refund tax benefits already received.
Additionally, some of these programs and the related tax benefits are available
to us for a limited number of years, and these benefits expire from time to
time.
Any of the following could have a material effect on our overall effective
tax rate:
- some programs may be discontinued,
- we may be unable to meet the requirements for continuing to qualify for
some programs,
- these programs and tax benefits may be unavailable at their current
levels, or
- upon expiration of a particular benefit, we may not be eligible to
participate in a new program or qualify for a new tax benefit that would
offset the loss of the expiring tax benefit or we may be required to
refund previously accredited tax benefits if we are found to be in
violation of the stipulated conditions.
PRODUCT DEFECTS OR SOFTWARE ERRORS COULD ADVERSELY AFFECT OUR BUSINESS
Design defects or software errors may cause delays in product introductions
or damage customer satisfaction and may have a material adverse effect on our
business, results of operations and financial condition. Our software products
are highly complex and may, from time to time, contain design defects or
software errors that may be difficult to detect and correct.
Since our products are generally used by our customers to perform critical
business functions, design defects, software errors, misuse of our products,
incorrect data from external sources or other potential problems within or out
of our control may arise from the use of our products, and may result in
financial or other damages to our customers. Completion of the development and
implementation phases of a project generally requires between six and twelve
months of work. During this period, a customer's budgeting constraints and
internal reviews, over which we have
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little or no control, can impact operating results. Our failure or inability to
meet a customer's expectations in providing products or performing services may
result in the termination of our relationship with that customer or could give
rise to claims against us. Although we have license agreements with our
customers that contain provisions designed to limit our exposure to potential
claims and liabilities arising from customer problems, these provisions may not
effectively protect us against such claims in all cases. Claims and liabilities
arising from customer problems could damage our reputation, adversely affecting
our business, results of operations and financial condition.
OUR DEVELOPMENT FACILITIES IN ISRAEL AND CYPRUS MAY BE ADVERSELY AFFECTED BY
POLITICAL AND ECONOMIC CONDITIONS IN THOSE COUNTRIES
Out of the five development centers we maintain worldwide, our largest
development center is located in Israel, which is also where we employ
approximately half of our employees. As a result, we are directly influenced by
the political, economic and military conditions affecting Israel and any major
hostilities involving Israel could have a material adverse effect on our
business. We have developed contingency plans to move some development
operations within Israel to various sites both within and outside of Israel in
the event political or military conditions disrupt our normal operations.
While Israel has entered into peace agreements with both Egypt and Jordan,
Israel has not entered into any peace arrangement with Syria or Lebanon.
Moreover, while Israel has conducted peace negotiations with the Palestinian
community, recently there has been a significant deterioration in Israel's
relationship with the Palestinian community. Efforts to resolve the problem have
failed to result in an agreeable solution. Continued hostilities between the
Palestinian community and Israel and any failure to settle the conflict may have
a material adverse effect on us and our business. Further deterioration of
hostilities into a full scale conflict might require more widespread military
reserve service by some of our employees which may have a material adverse
effect on our business.
Our development facility in Cyprus may be adversely affected by political
conditions in that country. As a result of intercommunal strife between the
Greek and Turkish communities, Turkish troops invaded Cyprus in 1974 and
continue to occupy approximately 40% of the island. Efforts to finally resolve
the problem have not yet resulted in an agreeable solution, although the parties
did recently agree to enter into negotiations to be facilitated by the United
Nations and the United States. Any major hostilities between Cyprus and Turkey
or any failure of the parties to reach a peaceful resolution may have a material
adverse effect on our development facility in Cyprus.
RISKS APPLICABLE TO OUR CAPITAL STRUCTURE
THE MARKET PRICE OF OUR ORDINARY SHARES HAS AND MAY CONTINUE TO FLUCTUATE
WIDELY
The market price of our ordinary shares has fluctuated widely and may
continue to do so. For example, since our initial public offering in June 1998
through August 14, 2001, the closing price of our ordinary shares ranged from a
low of $8.38 per share to a high of $89.75 per share. Many factors could cause
the market price of our ordinary shares to rise and fall. Some of these factors
are:
- variations in our quarterly operating results;
- announcements of technological innovations by us or our competitors;
- introduction of new products or new pricing policies by us or our
competitors;
- trends in the communications industry;
- acquisitions or strategic alliances by us or others in our industry;
- changes in estimates of our performance or recommendations by financial
analysts; and
- market conditions in the industry and the economy as a whole.
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In addition, the stock market often experiences significant price and
volume fluctuations. These fluctuations particularly affect the market prices of
the securities of many high technology companies. These broad market
fluctuations could adversely affect the market price of our ordinary shares.
When the market price of a stock has been volatile, holders of that stock have
often instituted securities class action litigation against the company that
issued the stock. If any of our shareholders brought a securities class action
lawsuit against us, we could incur substantial costs defending the lawsuit. The
lawsuit could also divert the time and attention of our management. Any of these
events could seriously harm our business.
FUTURE SALES BY EXISTING SHAREHOLDERS COULD DEPRESS THE MARKET PRICE OF OUR
ORDINARY SHARES
Sales of substantial amounts of ordinary shares in the public market, or
the perception that such sales could occur, could adversely affect prevailing
market prices for the ordinary shares. As of June 30, 2001, we had 222,485,576
ordinary shares issued and outstanding, a substantial portion of which are
either freely tradeable on the New York Stock Exchange or currently eligible for
sale pursuant to Rule 144, under the Securities Act of 1933 (subject to
compliance with the volume and manner of sale limitation of Rule 144), or
pursuant to another exemption from the registration requirements of the
Securities Act.
Our principal shareholders have the right, in certain circumstances, to
require us to register their shares under the Securities Act for resale to the
public. In addition, we have registered under the Securities Act a total of
35,062,121 ordinary shares, reserved for issuance upon the exercise of options
that have been or may be granted under our stock option plans and stock option
plans assumed by us in connection with our acquisition of ITDS and Solect. The
right to exercise options outstanding under these plans is subject to certain
vesting requirements.
WE DO NOT ANTICIPATE PAYING DIVIDENDS ON OUR ORDINARY SHARES IN THE
FORESEEABLE FUTURE
We do not anticipate paying dividends on our ordinary shares in the
foreseeable future.
THE RIGHTS OF SHAREHOLDERS OF GUERNSEY CORPORATIONS DIFFER IN SOME RESPECTS
FROM THOSE OF SHAREHOLDERS OF UNITED STATES CORPORATIONS
We are incorporated under the laws of Guernsey. The rights of holders of
ordinary shares are governed by Guernsey law, including the Companies Act of
Guernsey, and by our Articles of Association. These rights differ in some
respects from the rights of shareholders in corporations incorporated in the
United States.
RISKS RELATED TO THIS OFFERING
THE NOTES ARE EFFECTIVELY SUBORDINATED TO THE DEBT AND OTHER LIABILITIES OF
OUR SUBSIDIARIES
The notes will be unsecured and effectively subordinated to the
liabilities, including trade payables, of our subsidiaries. Neither we nor our
subsidiaries are prohibited from incurring debt under the indenture, including
senior indebtedness. If we or our subsidiaries were to incur additional debt or
liabilities, our ability to pay our obligations on the notes could be adversely
affected. As of June 30, 2001, our subsidiaries had liabilities of approximately
$505.7 million. We may from time to time incur additional debt. Our subsidiaries
may also from time to time incur other additional debt and liabilities. The
notes will also be effectively subordinated to all secured obligations to the
extent of the value of the assets securing such obligations. See "Description of
the Notes".
A PUBLIC MARKET MAY NOT DEVELOP FOR THE NOTES
In May 2001, we issued the notes to the initial purchaser in a private
placement. The notes are eligible to trade on the PORTAL market. However, the
notes resold pursuant to this prospectus will
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no longer trade on the PORTAL market. As a result, there may be a limited market
for the notes. We do not intend to list the notes on any national securities
exchange.
A public market may not develop for the notes. The initial purchaser has
advised us that it currently intends to make a market in the notes. However, the
initial purchaser is not obligated to make a market and may discontinue this
market making activity at any time without notice. In addition, market making
activity by the initial purchaser will be subject to the limits imposed by the
federal securities laws. As a result, we cannot assure you that any market for
the notes will develop or, if one does develop, that it will be maintained. If
an active market for the notes fails to develop or be sustained, the trading
price of the notes could be materially and adversely affected.
WE MAY NOT BE ABLE TO REFINANCE THE NOTES IF REQUIRED OR IF WE SO DESIRE
We may need or desire to refinance all or a portion of our indebtedness on
or before maturity. There can be no assurance that we will be able to refinance
any of our indebtedness on commercially reasonable terms, if at all.
WE ARE DEPENDENT UPON OUR SUBSIDIARIES TO SERVICE OUR DEBT AND OBTAIN FUNDS
FOR DIVIDEND PAYMENTS
Our assets consist primarily of the capital stock or other equity interests
of our operating subsidiaries. Consequently, our cash flow and ability to pay
dividends and service debt obligations, including the notes, are dependent upon
the earnings of our subsidiaries and the distribution of those earnings to us,
or upon loans, advances or other payments made by the subsidiaries to us. The
ability of our subsidiaries to pay dividends or make other payments or advances
to us will depend upon their operating results and will be subject to applicable
laws and contractual restrictions contained in the instruments governing their
indebtedness. The instruments governing some of the indebtedness of our
subsidiaries currently contain restrictions on their ability to make payments to
us. We cannot be certain that payments from our subsidiaries will be adequate to
pay dividends or service our debt obligations, including the notes.
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RATIO OF EARNINGS TO FIXED CHARGES
Our ratio of earnings to fixed charges is as follows:
NINE MONTHS
ENDED YEAR ENDED
JUNE 30, SEPTEMBER 30,
------------- -----------------------------------
2001 2000 2000 1999 1998 1997 1996
----- ----- ----- ----- ---- ---- -----
(UNAUDITED)
Ratio of earnings to fixed charges(1)....................... 11.69 10.01 10.10 15.29 3.26 9.52 12.97
Pro forma, as adjusted ratio of earnings to fixed
charges(2)................................................ 6.52 4.04
---------------
(1) The ratio of earnings to fixed charges is calculated as (i) the sum of
earnings before taxes from continuing operations plus fixed charges and
amortization of capitalized interest less interest capitalized, divided by
(ii) fixed charges, which include amortization of expenses related to
indebtedness, interest within rental expense and interest expensed and
capitalized.
(2) The pro forma, as adjusted ratio of earnings to fixed charges is calculated
for the year ended September 30, 2000 and the nine months ended June 30,
2001 as (i) the sum of earnings before taxes from continuing operations plus
fixed charges and amortization of capitalized interest less interest
capitalized, divided by (ii) fixed charges, which include amortization of
expenses related to indebtedness, interest within rental expense and
interest expensed and capitalized, as if the convertible notes had been
issued on October 1, 1999.
OFFER STATISTICS AND TIMETABLE
The $500,000,000 of our convertibles notes and 5,429,350 ordinary shares
issuable upon conversion of the notes are being sold by the selling holders
listed under the caption "Selling Holders" beginning on page 50. The offer will
be open until the earlier of (1) the date on which all of the notes and ordinary
shares being offered have been sold, and (2) the date on which all of the notes
and ordinary shares issuable upon conversion of the notes no longer qualify as
"restricted securities" under our registration rights agreement.
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USE OF PROCEEDS
The selling holders will receive all of the proceeds from the sale under
this prospectus of the notes and the ordinary shares issuable upon conversion of
the notes. We will not receive any proceeds from these sales.
THE OFFER AND LISTING
MARKET INFORMATION
Our ordinary shares have been listed on the New York Stock Exchange since
June 19, 1998, under the symbol "DOX". The annual high and low reported sale
prices for the ordinary shares were $96.00 and $19.81, respectively, for fiscal
2000 and were $30.25 and $8.75, respectively, for fiscal 1999. Through August
14, 2001, the high and low reported sale prices for the ordinary shares were as
follows:
LOW HIGH
--- ----
FISCAL YEAR ENDING SEPTEMBER 30, 1999:
First Quarter 1999.......................................... $ 8.75 $17.50
Second Quarter 1999......................................... 13.50 26.38
Third Quarter 1999.......................................... 18.38 29.69
Fourth Quarter 1999......................................... 20.00 30.25
LOW HIGH
--- ----
FISCAL YEAR ENDING SEPTEMBER 30, 2000:
First Quarter 2000.......................................... $19.81 $37.94
Second Quarter 2000......................................... 32.44 96.00
Third Quarter 2000.......................................... 49.00 88.75
Fourth Quarter 2000......................................... 59.38 88.75
LOW HIGH
--- ----
FISCAL YEAR ENDING SEPTEMBER 30, 2001:
First Quarter 2001.......................................... $51.63 $73.50
Second Quarter 2001......................................... 43.50 80.50
Third Quarter 2001.......................................... 40.60 66.50
LOW HIGH
--- ----
MOST RECENT SIX MONTHS:
February, 2001.............................................. $61.38 $79.32
March, 2001................................................. 43.50 69.35
April, 2001................................................. 40.60 60.35
May, 2001................................................... 58.50 66.15
June, 2001.................................................. 52.80 66.50
July, 2001.................................................. 37.00 55.75
As of August 10, 2001 there were 221 holders of record of our ordinary
shares. The last reported sale price of our ordinary shares on August 14, 2001
was $41.55 per share.
You are advised to obtain a current market quotation for our ordinary
shares.
EXPENSES OF THE ISSUE
We will pay all costs and expenses incurred by us in connection with the
registration of the sale of the notes and the ordinary shares pursuant to this
prospectus. We will not be responsible for any commissions, underwriting
discounts or similar charges on sales of the ordinary shares or notes.
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Securities and Exchange Commission registration fee......... $125,000
Legal fees and expenses..................................... 25,000
Registrar and Transfer Agent fees and expenses.............. 5,000
Accounting fees and expenses................................ 5,000
Printing, EDGAR formatting and mailing expenses............. 25,000
Miscellaneous............................................... 10,000
--------
Total..................................................... $195,000
========
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CAPITALIZATION
The following table sets forth our capitalization as of June 30, 2001:
AS OF
JUNE 30, 2001
--------------
(UNAUDITED)
(IN THOUSANDS)
ACTUAL
------
Current portion of capital lease obligations................ $ 9,522
Capital lease obligations, less current portion............. 23,183
----------
Total capital lease obligations................... 32,705
2% Convertible Notes due June 1, 2008....................... 500,000
Shareholders' equity:
Preferred Shares, par value L0.01 per share; 25,000 shares
authorized;............................................ --
Ordinary Shares, par value L0.01 per share; 550,000 shares
authorized; 222,486 shares issued and outstanding on an
actual basis(1)(2)..................................... 3,558
Additional paid-in capital................................ 1,803,597
Accumulated other comprehensive loss...................... (2,535)
Unearned compensation..................................... (370)
Accumulated deficit....................................... (311,097)
----------
Total shareholders' equity........................ 1,493,153
----------
Total capitalization.............................. $2,025,858
==========
---------------
(1) Does not include 12,857,655 ordinary shares reserved for issuance upon the
exercise of stock options that have been granted to employees.
(2) Non-voting ordinary shares comprise 50,000,000 of the authorized ordinary
shares and 10,781,798 of the issued and outstanding ordinary shares.
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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
The unaudited pro forma condensed combined statements of operations of
Amdocs, ITDS and Solect presented below are derived from the historical
consolidated financial statements of each of Amdocs, ITDS and Solect. On
November 30, 1999 Amdocs acquired ITDS and on April 5, 2000 Amdocs acquired
Solect. The unaudited pro forma condensed combined statements of operations were
prepared using the purchase method of accounting, as if the transactions had
been completed as of October 1, 1999.
The unaudited pro forma condensed combined statements of operations are
based upon the historical financial statements of Amdocs, ITDS and Solect
adjusted to give effect to the business combination. The pro forma assumptions
and adjustments for each transaction are described in the accompanying notes
presented on the following pages. The assumptions and related pro forma
adjustments have been developed from:
- the audited consolidated financial statements of Amdocs as of and for the
fiscal year ended September 30, 2000;
- the unaudited financial statements of ITDS as of and for the two month
period ended November 30, 1999; and
- the unaudited financial statements of Solect as of and for the six month
period ended January 31, 2000.
In connection with the acquisition of ITDS, we converted approximately 17.3
million common shares of ITDS and approximately 3.0 million options to purchase
common shares of ITDS into the right to receive approximately 6.5 million
ordinary shares and approximately 1.1 million options to purchase ordinary
shares of Amdocs. The estimated total purchase price for ITDS, based on an
Amdocs share price of $28.25, including estimated transaction costs, equals
approximately $189.0 million. We accounted for the acquisition of ITDS under the
purchase method of accounting. The estimated total purchase price was allocated
to ITDS' tangible assets and liabilities based on their respective estimated
fair values on the date the transaction was consummated, November 30, 1999. We
allocated the excess of the purchase price over the fair value of the net
tangible assets acquired to identifiable intangible assets, including core
technology, workforce-in-place, customer base, and in process research and
development costs, and the remainder to goodwill. In addition, deferred taxes
were recognized for the differences between the book and tax basis of certain
intangible assets.
In connection with the acquisition of Solect, we converted approximately
24.2 million common shares of Solect and approximately 2.9 million options to
purchase common shares of Solect into the right to receive approximately 13.8
million ordinary shares and approximately 1.7 million options to purchase
ordinary shares of Amdocs. The estimated total purchase price for Solect, based
on an Amdocs share price of $69.875, including estimated transaction costs,
equals approximately $1.1 billion. We accounted for the acquisition under the
purchase method of accounting. The estimated total purchase price was allocated
to Solect's tangible assets and liabilities based on their respective estimated
fair values on the date the transaction was consummated, April 5, 2000. We
allocated the excess of the purchase price over the fair value of the net
tangible assets acquired to identifiable intangible assets, including core
technology, workforce-in-place, customer base, and in process research and
development costs, and the remainder to goodwill. In addition, deferred taxes
were recognized for the differences between the book and tax basis of certain
intangible assets.
The unaudited pro forma condensed combined statements of operations are
provided for illustrative purposes only and do not purport to represent what the
actual consolidated results of operations or the consolidated financial position
Amdocs would have been had the acquisitions occurred on the dates assumed, nor
is it necessarily indicative of future consolidated results of operations or
financial position.
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The unaudited pro forma condensed combined statements of operations do not
include the realization of cost savings from operating efficiencies, synergies
or other restructurings resulting from the acquisitions.
The following unaudited pro forma condensed combined statements of
operations and notes thereto contain forward-looking statements that involve
risks and uncertainties.
The pro forma statement of operations has not been adjusted to give effect
to the issue of the notes.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 2000
ITDS SOLECT
AMDOCS ITDS PRO FORMA SOLECT PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS HISTORICAL ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(IN U.S. DOLLARS, UNLESS OTHERWISE STATED)
Revenue......................... $1,118,320 $23,289 $ -- $11,174 $ -- $1,152,783
Cost of revenue................. 645,524 11,841 (1,120)(A2) 6,607 -- 662,852
Research and development........ 74,852 5,384 -- 3,416 -- 83,652
Selling, general and
administrative................ 137,004 11,311 (575)(A1) 6,308
(5,825)(A5) -- 148,223
Amortization of goodwill and
purchased intangible assets... 111,199 -- 787(A1) -- 4,565(B2)
411(A2) 543(B3)
180(A3) 98,631(B1)
22(A3) 202(B3) 216,540
In process research and
development and other indirect
acquisition related costs..... 75,617 -- (19,876)(A6) -- (55,741)(B5) --
---------- ------- -------- ------- -------- ----------
1,044,196 28,536 (25,996) 16,331 48,200 1,111,267
---------- ------- -------- ------- -------- ----------
Operating income (loss)......... 74,124 (5,247) 25,996 (5,157) (48,200) 41,516
Other income (expenses), net.... 10,734 386 -- (797) 704(B6) 11,027
---------- ------- -------- ------- -------- ----------
Income (loss) before income
taxes......................... 84,858 (4,861) 25,996 (5,954) (47,496) 52,543
Income taxes.................... 78,880 1,156 110(A4) 37 (2,124)(B4) 78,059
---------- ------- -------- ------- -------- ----------
Net income (loss)............... $ 5,978 $(6,017) $ 25,886 $(5,991) $(45,372) $ (25,516)
========== ======= ======== ======= ======== ==========
Basic earnings (loss) per
share......................... $ 0.03 $ (0.12)
========== ==========
Diluted earnings (loss) per
share......................... $ 0.03 $ (0.12)
========== ==========
Basic weighted average number of
shares outstanding............ 212,005 220,003
========== ==========
Diluted weighted average number
of shares outstanding......... 216,935 220,003(C)
========== ==========
See notes to Unaudited Pro Forma Condensed Combined Statements of Operations
for discussion of adjustments.
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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
(IN U.S. DOLLARS, UNLESS OTHERWISE STATED)
(A) ITDS TRANSACTION:
Amdocs acquired ITDS on November 30, 1999. Accordingly, the operations of
ITDS are included in the historical results of Amdocs from that date. The
amounts presented under the column headed ITDS Historical represent the
historical results of ITDS for the two months ended November 30, 1999.
(1) Reflects the elimination of ITDS historical goodwill amortization and
the amortization of goodwill resulting from the acquisition of ITDS for the two
months ended November 30, 1999:
Amortization expense relating to goodwill of $70,797 over 15
years..................................................... $ 787
Less historical amortization expense........................ (575)
-----
Additional goodwill amortization, net....................... $ 212
=====
(2) Reflects the elimination of ITDS historical amortization of
intellectual property and core technology and the amortization of the core
technology resulting from the valuation at the time of the acquisition for the
two months ended November 30, 1999:
Amortization expense relating to core technology of
$12,342 over 5 years.................................... $ 411
Less historical amortization expense...................... (1,120)
-------
Reduction of amortization expense related to core
technology, net......................................... $ (709)
=======
(3) Reflects the amortization of the workforce-in-place and customer list
for the two months ended November 30, 1999, as follows:
Amortization expense relating to workforce-in-place of
$5,407 over 5 years....................................... $180
Amortization expense relating to customer base of $647 over
5 years................................................... 22
(4) Tax effect resulting from the differences between the values assigned
to core technology, workforce-in-place and customer list and the respective tax
basis of such assets.
(5) Reflects elimination of ITDS transaction costs.
(6) Reflects elimination of in process research and development expenses
included in Amdocs' historical financial statements as a result of the ITDS
acquisition.
(B) SOLECT TRANSACTION:
Amdocs acquired Solect on April 5, 2000. Accordingly, Solect's operations
are included in the historical results of Amdocs from that date. The amounts
presented under the column headed Solect Historical represent the historical
results of Solect for the six months ended January 31, 2000. There were no
substantial changes in Solect's financial position or results of operations
during the two month period ended March 31, 2000.
(1) Reflects the amortization of goodwill resulting from the acquisition
for the six months ended January 31, 2000:
Amortization expense relating to goodwill of $986,312 over
5 years................................................. $98,631
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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
(CONTINUED)
(IN THOUSANDS)
(IN U.S. DOLLARS, UNLESS OTHERWISE STATED)
(2) Reflects amortization of the core technology resulting from the
valuation at the time of the acquisition for the six months ended January 31,
2000:
Amortization expense relating to core technology of $18,259
over 2 years.............................................. $4,565
(3) Reflects the amortization of the workforce-in-place and customers base
for the six months ended January 31, 2000, as follows:
Amortization expense relating to workforce-in-place of
$3,259 over 3 years....................................... $543
Amortization expense relating to customer base of $1,211
over 3 years.............................................. 202
(4) Tax effect resulting from the differences between the values assigned
to core technology, workforce-in-place and customer base and their respective
tax basis.
(5) Reflects elimination of in process research and development and other
indirect acquisition related costs included in the historical financial
statements of Amdocs as a result of the Solect acquisition.
(6) Reflects decrease in interest expenses related to Solect's debentures
that converted to common stock prior to the closing.
(C) DILUTED LOSS PER SHARE
The amount of shares used in the diluted loss per share calculation does
not include any stock options due to their anti-dilutive effect.
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DESCRIPTION OF THE NOTES
We issued the notes under an indenture between us and United States Trust
Company of New York, as trustee. The indenture and the notes are governed by New
York law. As this section is a summary, it does not describe every aspect of the
notes and the indenture. The following summaries of provisions of the indenture
do not purport to be complete and are subject to, and are qualified in their
entirety by reference to, the detailed provisions of the notes and the
indenture, including the definitions of terms. You may request copies of these
documents by contacting us in writing.
In this section, references to "Amdocs", "we", "our", "us" or the "Company"
refer solely to Amdocs Limited and not its subsidiaries.
GENERAL
The notes were issued in fully registered form, without coupons, in
denominations of $1,000 principal amount and whole multiples of $1,000.
The notes are senior, unsecured general obligations of Amdocs. The notes
are limited to $500 million aggregate principal amount or $600 million if the
underwriters exercise in full their right to purchase additional notes to cover
over-allotments. We are required to repay the principal amount of the notes in
full on June 1, 2008, unless they are redeemed or repurchased on an earlier
date. The notes rank equally with our other senior unsecured obligations.
The notes bear interest at the rate per annum shown on the front cover of
this prospectus from May 30, 2001. We will pay interest on the notes on June 1
and December 1 of each year, commencing on December 1, 2001. Interest payable
per $1,000 principal amount of notes for the period from May 30, 2001 to
December 1, 2001 will be approximately $10.
You may convert the notes into our ordinary shares initially at the
conversion rate stated on the front cover of this prospectus at any time before
the close of business on June 1, 2008, unless the notes have been previously
redeemed or repurchased. Holders of notes called for redemption or submitted for
repurchase will be entitled to convert the notes up to and including the
business day immediately preceding the date fixed for redemption or repurchase,
as the case may be. The conversion rate may be adjusted as described below.
We may redeem the notes at our option at any time on or after June 1, 2006,
in whole or in part, at a redemption price of 100% of principal amount plus
accrued and unpaid interest to the redemption date. On June 1, 2004 and June 1,
2006, you will have the right to require us to repurchase any notes held by you
as described below under "-- Repurchase Rights". In addition, if we undergo a
change in control, you will have the right to require us to repurchase your
notes as described below under "-- Repurchase at Option of Holders Upon a Change
In Control".
CONVERSION RIGHTS
You have the option to convert any portion of the principal amount of any
note that is an integral multiple of $1,000 into our ordinary shares of our
common stock at any time on or prior to the close of business on the maturity
date, unless the notes have been previously redeemed or repurchased. The
conversion rate will be equal to 10.8587 shares per $1,000 principal amount of
notes. The conversion rate is equivalent to a conversion price of approximately
$92.09 per share. Your right to convert a note called for redemption or
delivered for repurchase will terminate at the close of business on the business
day immediately preceding the redemption date or repurchase date for that note,
unless we default in making the payment due upon redemption or repurchase.
You may convert all or part of any note by delivering the note at the
Corporate Trust Office of the trustee in the Borough of Manhattan, The City of
New York, accompanied by a duly signed and completed conversion notice, a copy
of which may be obtained from the trustee. The conversion
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date will be the date on which the note and the duly signed and completed
conversion notice are so delivered.
As promptly as practicable on or after the conversion date, we will issue
and deliver to the trustee a certificate or certificates for the number of full
ordinary shares issuable upon conversion, together with payment in lieu of any
fraction of a share. The certificate or certificates will then be sent by the
trustee to the conversion agent for delivery to the holder of the note being
converted. Our ordinary shares issuable upon conversion of the notes will be
fully paid and nonassessable and will rank equally with our other ordinary
shares.
If you surrender a note for conversion on a date that is not an interest
payment date, you will not be entitled to receive any interest for the period
from the immediately preceding interest payment date to the conversion date,
except as described below in this paragraph. Any note surrendered for conversion
during the period from the close of business on any regular record date to the
opening of business on the next succeeding interest payment date, except notes,
or portions thereof, called for redemption on a redemption date or to be
repurchased on a repurchase date for which the right to convert would terminate
during such period, must be accompanied by payment of an amount equal to the
interest payable on such interest payment date on the principal amount of notes
being surrendered for conversion. In the case of any note that has been
converted after any regular record date but before the next succeeding interest
payment date, interest payable on such interest payment date shall be payable on
such interest payment date notwithstanding such conversion, and such interest
shall be paid to the holder of such note on such regular record date.
No other payment or adjustment for interest, or for any dividends in
respect of our ordinary shares, will be made upon conversion. Holders of our
ordinary shares issued upon conversion will not be entitled to receive any
dividends payable to holders of our ordinary shares as of any record time or
date before the close of business on the conversion date. We will not issue
fractional shares upon conversion. Instead, we will pay cash based on the market
price of our ordinary shares at the close of business on the conversion date.
You will not be required to pay any taxes or duties relating to the issue
or delivery of our ordinary shares on conversion, but you will be required to
pay any tax or duty relating to any transfer involved in the issue or delivery
of our ordinary shares in a name other than yours. Certificates representing
ordinary shares will not be issued or delivered unless all taxes and duties, if
any, payable by you have been paid.
The conversion rate will be subject to adjustment for, among other things:
- dividends and other distributions payable in our ordinary shares on
shares of our capital stock;
- the issuance to all holders of our ordinary shares of rights, options or
warrants entitling them to subscribe for or purchase our ordinary shares
at less than the then current market price of such ordinary shares as of
the record date for shareholders entitled to receive such rights, options
or warrants;
- subdivisions, combinations and reclassifications of our ordinary shares;
- distributions to all holders of our ordinary shares of evidences of our
indebtedness, shares of capital stock, cash or assets, including
securities, but excluding:
(1) those dividends, rights, options, warrants and distributions referred
to above;
(2) dividends and distributions paid exclusively in cash; and
(3) distributions upon mergers or consolidations discussed below;
- distributions consisting exclusively of cash, excluding any cash portion
of distributions referred to in the bullet point immediately above, or
cash distributed upon a merger or
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consolidation to which the next succeeding bullet point applies, to all
holders of our ordinary shares in an aggregate amount that, combined
together with:
(1) other all-cash distributions made within the preceding 365-day period
in respect of which no adjustment has been made; and
(2) any cash and the fair market value of other consideration payable in
connection with any tender offer by us or any of our subsidiaries for
our ordinary shares concluded within the preceding 365-day period in
respect of which no adjustment has been made,
exceeds 10% of our market capitalization, being the product of the current
market price per ordinary share on the record date for such distribution
and the number of ordinary shares then outstanding; and
- the successful completion of a tender offer made by us or any of our
subsidiaries for our ordinary shares which involves an aggregate
consideration that, together with:
(1) any cash and other consideration payable in a tender offer by us or
any of our subsidiaries for our ordinary shares expiring within the
365-day period preceding the expiration of that tender offer in
respect of which no adjustment has been made; and
(2) the aggregate amount of all cash distributions referred to in the
immediately preceding bullet point above to all holders of our
ordinary shares within the 365-day period preceding the expiration of
that tender offer in respect of which no adjustments have been made,
exceeds 10% of our market capitalization on the expiration of such tender
offer.
We reserve the right to effect such increases in the conversion rate in
addition to those required by the foregoing provisions as we consider to be
advisable so that any event treated for U.S. federal income tax purposes as a
dividend of stock or stock rights will not be taxable to the recipients. We will
not be required to make any adjustment to the conversion rate until the
cumulative adjustments amount to 1.0% or more of the conversion rate. We will
compute all adjustments to the conversion rate and will give notice by mail to
holders of the registered notes of any adjustments.
If we consolidate or merge with or into another entity or another entity is
merged into us, or in case of any sale or transfer of all or substantially all
of our assets, each note then outstanding will become convertible only into the
kind and amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by a holder of the number of ordinary
shares into which the notes were convertible immediately prior to the
consolidation or merger or sale or transfer. The preceding sentence will not
apply to a merger that does not result in any reclassification, conversion,
exchange or cancellation of our ordinary shares.
We may increase the conversion rate for any period of at least 20 days,
upon at least 15 days notice, if our board of directors determines that the
increase would be in our best interest. The board of directors' determination in
this regard will be conclusive. We will give holders of notes at least 15 days'
notice of such an increase in the conversion rate. No such increase, however,
will be taken into account for purposes of determining whether the closing price
of our ordinary shares exceeds the conversion price by 105% in connection with
an event that otherwise would be a change in control as defined below.
If at any time we make a distribution of property to our shareholders that
would be taxable to such shareholders as a dividend for U.S. federal income tax
purposes, such as distributions of evidences of indebtedness or assets by us,
but generally not share dividends of ordinary shares on our ordinary shares or
rights to subscribe for ordinary shares, and, pursuant to the anti-dilution
provisions of the indenture, the number of shares into which notes are
convertible is increased, that increase may be deemed for U.S. federal income
tax purposes to be the payment of a taxable
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dividend to holders of notes. See "Certain U.S. Federal Income Tax
Considerations -- U.S. Holders".
REPURCHASE RIGHTS
You have the right to require us to repurchase the notes on June 1, 2004
and June 1, 2006. We will be required to repurchase any outstanding notes for
which you deliver a valid written repurchase notice to the paying agent. This
notice must be delivered during the period beginning at any time from the
opening of business on the date that is 20 business days prior to the relevant
repurchase date until the close of business on the last day prior to the
repurchase date. Under the terms of the indenture, we will have the right to pay
the repurchase price of the notes at any time during the five business days
following the repurchase date. If the repurchase notice is given and withdrawn
during the period, we will not be obligated to repurchase the related notes. Our
repurchase obligation is subject to some additional conditions.
The repurchase price payable will be equal to 100% of the principal amount
plus accrued and unpaid cash interest, if any, on such repurchase date.
We may choose to pay the repurchase price in cash or in our ordinary shares
or a combination of cash and ordinary shares. For a discussion of the tax
treatment of a holder receiving cash, ordinary shares or any combination
thereof, see "Certain U.S. Federal Income Tax Considerations".
If we choose to pay the repurchase price in whole or in part in ordinary
shares or a combination of cash and ordinary shares, we will be required to give
notice on a date not less than 20 business days prior to each repurchase date to
all holders at their addresses shown in the register of the registrar, and to
beneficial owners as required by applicable law (i.e. if no notice is given, we
will pay the repurchase price with cash), stating, among other things:
- whether we will pay the repurchase price of the notes in cash, in our
ordinary shares, or any combination thereof, specifying the percentages
of each;
- if we elect to pay with our ordinary shares, the method of calculating
the price of our ordinary shares; and
- the procedures that holders must follow to require us to repurchase their
notes.
If we pay with ordinary shares, they will be valued at 100% of the average
closing sales price for the five trading days ending on the third day prior to
repurchase.
Simultaneously with such notice of repurchase, we will disseminate a press
release through Dow Jones & Company, Inc. or Bloomberg Business News containing
this information or publish the information on our website or through such other
public medium as we may use at that time.
A holder's notice electing to require us to repurchase our notes must
state:
- if certificated notes have been issued, the notes certificate numbers, or
if not certificated, your notice must comply with appropriate DTC
procedures;
- the portion of the principal amount of notes to be repurchased, in
multiples of $1,000;
- that the notes are to be repurchased by us pursuant to the applicable
provisions of the notes; and
- in the event we elect, pursuant to the notice that we are required to
give, to pay the repurchase price in our ordinary shares, in whole or in
part, but the repurchase price is ultimately to be paid to the holder
entirely in cash because any of the conditions to payment of the
repurchase price or portion of the repurchase price in our ordinary
shares is not satisfied prior to the close of business on the last day
prior to the repurchase date, as described below, whether the holder
elects:
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- to withdraw the repurchase notice as to some or all of the notes to
which it relates, or
- to receive cash in respect of the entire repurchase price for all notes
or portions of notes subject to the repurchase notice.
If the holder fails to indicate the holder's choice with respect to the
election described in the final bullet point above, the holder will be deemed to
have elected to receive cash in respect of the entire repurchase price for all
notes subject to the repurchase notice in these circumstances. For a discussion
of the tax treatment of a holder receiving cash instead of our ordinary shares,
see "Certain U.S. Federal Income Tax Considerations".
You may withdraw any repurchase notice by a written notice of withdrawal
delivered to the paying agent prior to the close of business on the last day
prior to the repurchase date. The notice of withdrawal must state:
- the principal amount of the withdrawn notes;
- if certificated notes have been issued, the certificate numbers of the
withdrawn notes, or if not certificated, your notice must comply with
appropriate DTC procedures; and
- the principal amount, if any, which remains subject to the repurchase
notice.
If we elect to pay the repurchase price, in whole or in part, in our
ordinary shares, the number of shares to be delivered by us will be equal to the
portion of the repurchase price to be paid in our ordinary shares divided by the
market price of one ordinary share as determined by us in our repurchase notice.
We will pay cash based on the market price for all fractional shares.
The "market price" means the average of the sale price of our ordinary
shares for the five trading day period ending on the third business day prior to
the applicable repurchase date (if the third business day prior to the
applicable repurchase date is a trading day, or if not, then on the last trading
day prior to the third business day), appropriately adjusted to take into
account the occurrence, during the period commencing on the first of the trading
days during the five trading day period and ending on the repurchase date, of
some events that would result in an adjustment of the conversion rate with
respect to our ordinary shares.
The "sale price" of our ordinary shares on any date means the closing per
share sale price (or if no closing sale price is reported, the average of the
bid and ask prices, or, if more than one in either case, the average of the
average bid and the average asked prices) on that date as reported in composite
transactions for the principal U.S. securities exchange on which our ordinary
shares are traded or, if our ordinary shares are not listed on a U.S. national
or regional securities exchange, as reported by the NASDAQ system.
As the market price of our ordinary shares is determined prior to the
applicable repurchase date, holders of notes bear the market risk with respect
to the value of our ordinary shares to be received from the date the market
price is determined to the repurchase date. We may pay the repurchase price or
any portion of the repurchase price in ordinary shares only if the information
necessary to calculate the market price is published in a daily newspaper of
national circulation.
Upon determination of the actual number of ordinary shares to be paid upon
redemption of the notes, we will disseminate a press release through Dow Jones &
Company, Inc. or Bloomberg Business News containing this information or publish
the information on our website or through such other public medium as we may use
at that time.
A holder must either effect book-entry transfer or deliver the notes,
together with necessary endorsements, to the office of the paying agent after
delivery of the repurchase notice to receive payment of the repurchase price.
You will receive payment on the repurchase date or the time of book-entry
transfer or the delivery of the notes. If the paying agent holds money or
securities
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sufficient to pay the repurchase price of the notes on the business day
following the repurchase date, then:
- the notes will cease to be outstanding;
- interest, including any interest payable pursuant to an interest
adjustment (including any cash interest) will cease to accrue; and
- all other rights of the holder will terminate.
This will be the case whether or not book-entry transfer of the note is
made or whether or not the note is delivered to the paying agent.
We will comply with the provisions of Rule 13e-4 and any other tender offer
rules under the Exchange Act which may be applicable at the time. We will file
Schedule TO or any other schedule required in connection with any offer by us to
repurchase the notes at your option.
OPTIONAL REDEMPTION BY AMDOCS
On or after June 1, 2006, we may redeem the notes in whole or in part, at
our option, at a redemption price of 100% of principal amount plus accrued
interest to, but excluding, the redemption date.
No sinking fund is provided for the notes, which means that the indenture
does not require us to redeem or retire the notes periodically.
We may, to the extent permitted by applicable law, at any time purchase
notes in the open market, by tender at any price or by private agreement. Any
note that we purchase may, to the extent permitted by applicable law, be
re-issued or resold or may, at our option, be surrendered to the trustee for
cancellation. Any notes surrendered for cancellation may not be re-issued or
resold and will be cancelled promptly.
PAYMENT AND CONVERSION
We will make all payments of principal and interest on the notes by dollar
check drawn on an account maintained at a bank in the city of New York. If you
hold registered notes with a face value greater than $2,000,000, at your request
we will make payments of principal or interest to you by wire transfer to an
account maintained by you at a bank in the city of New York. Payment of any
interest on the notes will be made to the person in whose name the note, or any
predecessor note, is registered at the close of business on May 15 or November
15, whether or not a business day, immediately preceding the relevant interest
payment date, a "regular record date". If you hold registered notes with a face
value in excess of $2,000,000 and you would like to receive payments by wire
transfer, you will be required to provide the trustee with wire transfer
instructions at least 15 days prior to the relevant payment date.
Payments on any global note registered in the name of DTC or its nominee
will be payable by the trustee to DTC or its nominee in its capacity as the
registered holder under the indenture. Under the terms of the indenture, we and
the trustee will treat the persons in whose names the notes, including any
global note, are registered as the owners for the purpose of receiving payments
and for all other purposes. Consequently, neither we, the trustee nor any of our
agents or the trustee's agents has or will have any responsibility or liability
for:
- any aspect of DTC's records or any participant's or indirect
participant's records relating to or payments made on account of
beneficial ownership interests in the global note, or for maintaining,
supervising or reviewing any of DTC's records or any participant's or
indirect participant's records relating to the beneficial ownership
interests in the global note; or
- any other matter relating to the actions and practices of DTC, or any of
its participants or indirect participants.
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We will not be required to make any payment on the notes due on any day
which is not a business day until the next succeeding business day. The payment
made on the next succeeding business day will be treated as though it were paid
on the original due date and no interest will accrue on the payment for the
additional period of time.
Notes may be surrendered for conversion at the Corporate Trust Office of
the trustee in the Borough of Manhattan, New York. Notes surrendered for
conversion must be accompanied by appropriate notices and any payments in
respect of interest or taxes, as applicable, as described above under
"-- Conversion Rights".
We have initially appointed the trustee as paying agent and conversion
agent. We may terminate the appointment of any paying agent or conversion agent
and appoint additional or other paying agents and conversion agents. However,
until the notes have been delivered to the trustee for cancellation, or moneys
sufficient to pay the principal of, premium, if any, and interest on the notes
have been made available for payment, and either paid or returned to us as
provided in the indenture, the trustee will maintain an office or agency in the
Borough of Manhattan, New York for surrender of notes for conversion. Notice of
any termination or appointment and of any change in the office through which any
paying agent or conversion agent will act will be given in accordance with
"-- Notices" below.
All moneys deposited with the trustee or any paying agent, or then held by
us, in trust for the payment of principal of, premium, if any, or interest on,
any notes which remain unclaimed at the end of two years after the payment has
become due and payable will be repaid to us, and you will then look only to us
for payment.
REPURCHASE AT OPTION OF HOLDERS UPON A CHANGE IN CONTROL
If a "change in control" as defined below occurs, you will have the right,
at your option, to require us to repurchase all of your notes not previously
called for redemption, or any portion of the principal amount thereof, that is
equal to $1,000 or an integral multiple of $1,000. The price we are required to
pay is 100% of the principal amount of the notes to be repurchased, together
with interest accrued to, but excluding, the repurchase date.
At our option, instead of paying the repurchase price in cash, we may pay
the repurchase price in our ordinary shares valued at 95% of the average of the
closing prices of our ordinary shares for the five trading days immediately
preceding and including the third trading day prior to the repurchase date. We
may only pay the repurchase price in our ordinary shares if we satisfy
conditions provided in the indenture.
Within 30 days after the occurrence of a change in control, we are
obligated to give to you notice of the change in control and of the repurchase
right arising as a result of the change in control. We must also deliver a copy
of this notice to the trustee. To exercise the repurchase right, you must
deliver on or before the 30th day after the date of our notice irrevocable
written notice to the trustee of your exercise of your repurchase right,
together with the notes with respect to which that right is being exercised. We
are required to repurchase the notes on the date that is 45 days after the date
of our notice.
A change in control will be deemed to have occurred at the time after the
notes are originally issued that any of the following occurs:
- any person, as defined below, acquires beneficial ownership, directly or
indirectly, through a purchase, merger or other acquisition transaction
or series of transactions, of shares of our capital stock entitling that
person to exercise 50% or more of the total voting power of all shares of
our capital stock that is entitled to vote generally in elections of
directors, other than an acquisition by us, any of our subsidiaries or
any of our employee benefit plans; or
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- we merge or consolidate with or into any other person, any merger of
another person into us or we convey, sell, transfer or lease all or
substantially all of our assets to another person, other than any such
transaction:
- that does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of our capital stock;
- pursuant to which the holders of 50% or more of the total voting power
of all shares of our capital stock entitled to vote generally in
elections of directors immediately prior to such transaction have the
entitlement to exercise, directly or indirectly, 50% or more of the
total voting power of all shares of capital stock entitled to vote
generally in the election of directors of the continuing or surviving
corporation immediately after such transaction; or
- which is effected solely to change our jurisdiction of incorporation and
results in a reclassification, conversion or exchange of outstanding
ordinary shares into solely ordinary shares or other common stock of the
surviving entity.
However, a change in control will not be deemed to have occurred if either:
- the closing price per share of our ordinary shares for any five trading
days within the period of 10 consecutive trading days ending immediately
after the later of the change in control or the public announcement of
the change in control, in the case of a change in control relating to an
acquisition of capital stock, or the period of 10 consecutive trading
days ending immediately before the change in control, in the case of
change in control relating to a merger, consolidation or asset sale,
equals or exceeds 105% of the conversion price of the notes in effect on
each of those five trading days; or
- all of the consideration, excluding cash payments for fractional shares
and cash payments made pursuant to dissenters' appraisal rights, in a
merger or consolidation otherwise constituting a change in control under
the first and second bullet points in the preceding paragraph above
consists of ordinary shares or other common stock traded on a national
securities exchange or quoted on the Nasdaq National Market, or will be
so traded or quoted immediately following such merger or consolidation,
and as a result of such merger or consolidation the notes become
convertible solely into such ordinary shares or other common stock.
For purposes of these provisions:
- the conversion price is equal to $1,000 divided by the conversion rate;
- whether a person is a "beneficial owner" will be determined in accordance
with Rule 13d-3 under the Exchange Act; and
- a "person" includes any syndicate or group that would be deemed to be a
person under Section 13(d)(3) of the Exchange Act.
The rules and regulations promulgated under the Exchange Act require the
dissemination of prescribed information to security holders in the event of an
issuer tender offer and may apply if the repurchase option becomes available to
you. We will comply with these rules to the extent they apply to us at that
time.
The definition of change in control includes a phrase relating to the
conveyance, transfer, sale, lease or disposition of all or substantially all of
our assets. There is no precise, established definition of the phrase
"substantially all" under applicable law. Accordingly, your ability to require
us to repurchase your notes as a result of conveyance, transfer, sale, lease or
other disposition of less than all of our assets may be uncertain.
The foregoing provisions would not necessarily provide you with the
protection if we are involved in a highly leveraged or other transaction that
may adversely affect you.
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Our ability to repurchase notes upon the occurrence of a change in control
is subject to important limitations. Some of the events constituting a change in
control could result in an event of default under, or be prohibited or limited
by, the terms of our then existing borrowing arrangements. Further, although we
have the right to repurchase the notes with our ordinary shares, subject to
certain conditions, we cannot assure you that we would have the financial
resources, or would be able to arrange financing, to pay the repurchase price in
cash for all the notes that might be delivered by holders of notes seeking to
exercise the repurchase right. If we were to fail to repurchase the notes when
required following a change in control, an event of default under the indenture
would occur, whether or not such repurchase is permitted by the terms of our
then existing borrowing arrangements. Any such default may, in turn, cause a
default under our other debt.
MERGERS AND SALES OF ASSETS BY AMDOCS
We may not consolidate with or merge into any other person or convey,
transfer, sell or lease our properties and assets substantially as an entirety
to any person, and we may not permit any person to consolidate with or merge
into us or convey, transfer, sell or lease such person's properties and assets
substantially as an entirety to us unless:
- the person formed by such consolidation or into or with which we are
merged or the person to which our properties and assets are so conveyed,
transferred, sold or leased, shall be a corporation, limited liability
company, partnership or trust organized and validly existing under either
(1) the laws of Guernsey, the United States, any State within the United
States or the District of Columbia or any other country (including its
political subdivisions) which on the issue date is a member of the
Organization for Economic Cooperation and Development or (2) any other
country whose legal and jurisprudential system is principally based on,
or substantially similar to, English common law so long as the location
of that entity in such common law country would not adversely affect the
rights of holders and, in each case, if we are not the surviving person,
the surviving person files a supplement to the indenture and expressly
assumes the payment of the principal of, premium, if any, and interest on
the notes and the performance of our other covenants under the indenture;
- immediately after giving effect to the transaction, no event of default,
and no event that, after notice or lapse of time or both, would become an
event of default, will have occurred and be continuing; and
- other requirements as described in the indenture are met.
EVENTS OF DEFAULT
The following will be events of default under the indenture:
- we fail to pay principal of or premium, if any, on any note when due;
- we fail to pay any interest on any note when due, which failure continues
for 30 days;
- we fail to provide notice of a change in control;
- we fail to perform any other covenant in the indenture, which failure
continues for 60 days after written notice as provided in the indenture;
- any indebtedness under any bonds, debentures, notes or other evidences of
indebtedness for money borrowed, or any guarantee thereof, by us or any
of our significant subsidiaries in an aggregate principal amount in
excess of $50 million is not paid when due either at its stated maturity
or upon acceleration thereof, and such indebtedness is not discharged, or
such acceleration is not rescinded or annulled, within a period of 30
days after notice as provided in the indenture; and
- certain events of bankruptcy, insolvency or reorganization involving us
or any of our significant subsidiaries.
Subject to the provisions of the indenture relating to the duties of the
trustee in case an event of default shall occur and be continuing, the trustee
will be under no obligation to exercise any of its
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rights or powers under the indenture at the request or direction of any holder,
unless the holder shall have furnished reasonable indemnity to the trustee.
Subject to providing indemnification of the trustee, the holders of a majority
in aggregate principal amount of the outstanding notes will have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the trustee or exercising any trust or power conferred on the
trustee.
If an event of default other than an event of default arising from events
of insolvency, bankruptcy or reorganization occurs and is continuing, either the
trustee or the holders of at least 25% in principal amount of the outstanding
notes may accelerate the maturity of all notes. However, after such
acceleration, but before a judgment or decree based on acceleration, the holders
of a majority in aggregate principal amount of outstanding notes may, under
certain circumstances, rescind and annul the acceleration if all events of
default, other than the non-payment of principal of the notes that have become
due solely by such declaration of acceleration, have been cured or waived as
provided in the indenture. If an event of default arising from events of
insolvency, bankruptcy or reorganization occurs, then the principal of, and
accrued interest on, all the notes will automatically become immediately due and
payable without any declaration or other act on the part of the holders of the
notes or the trustee. For information as to waiver of defaults, see
"-- Meetings, Modification and Waiver" below.
You will not have any right to institute any proceeding with respect to the
indenture, or for any remedy under the indenture, unless:
- you give the trustee written notice of a continuing event of default;
- the holders of at least 25% in aggregate principal amount of the
outstanding notes have made written request and offered reasonable
indemnity to the trustee to institute proceedings;
- the trustee has not received from the holders of a majority in aggregate
principal amount of the outstanding notes a direction inconsistent with
the written request; and
- the trustee shall have failed to institute such proceeding within 60 days
of the written request.
However, these limitations do not apply to a suit instituted by you for the
enforcement of payment of the principal of, premium, if any, or interest on your
note on or after the respective due dates expressed in your note or your right
to convert your note in accordance with the indenture.
We will be required to furnish to the trustee annually a statement as to
our performance of certain of our obligations under the indenture and as to any
default in such performance.
WITHHOLDING TAXES
All amounts payable (whether in respect of principal, interest or
otherwise) in respect of the notes will be made free and clear of and without
withholding or deduction for or on account of any present or future taxes,
duties, levies, assessments or governmental charges of whatever nature imposed
or levied by or on behalf of Guernsey or any political subdivision thereof or
any authority or agency therein or thereof having power to tax, unless the
withholding or deduction of such taxes, duties, levies, assessments or
governmental charges is required by law. In that event, we will pay, or cause to
be paid, such additional amounts as may be necessary in order that the net
amounts receivable by the holder after such withholding or deduction shall equal
the respective amounts which would have been receivable by such holder in the
absence of such withholding or deduction; except that no such additional amounts
shall be payable in relation to any payment in respect of any of the notes:
- to, or to a third party on behalf of, a person who is liable for such
taxes, duties, levies, assessments or governmental charges in respect of
such note by reason of his having some connection with (including,
without limitation, being a citizen of, being incorporated or engaged in
a trade or business in, or having a residence or principal place of
business or other presence in) Guernsey other than (a) the mere holding
of such note or (b) the receipt of principal, interest or other amount in
respect of such note; or
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- presented for payment more than 30 days after the relevant date (as
defined below), except to the extent that the relevant holder would have
been entitled to such additional amounts on presenting the same for
payment on or before the expiry of such period of 30 days; or
- on account of any inheritance, gift, estate, personal property, sales, or
transfer or similar taxes duties, levies, assessments or similar
governmental charges; or
- on account of any taxes, duties, levies, assessments or governmental
charges that are payable otherwise than by withholding from payments in
respect of such note.
The "relevant date" means, in respect of any payment, the date on which
such payment first becomes due and payable, but if the full amount of the moneys
payable has not been received by the Trustee on or prior to such due date, it
means the first date on which, the full amount of such moneys having been so
received and being available for payment to holders, notice to that effect shall
have been duly given to the holders of the notes.
If we become subject generally at any time to any taxing jurisdiction other
than or in addition to Guernsey, references in this section to Guernsey shall be
read and construed as references to such other jurisdiction(s) and/or to
Guernsey.
Notwithstanding the foregoing discussion concerning withholding taxes, in
the event that any deduction or withholding on account of tax be required to be
made, or be made, in connection with any European Union directive on the
taxation of savings implementing the conclusions of the ECOFIN Council meeting
of November 26-27, 2000, or any law, regardless of whether or not enacted by a
member state of the European Union or otherwise, required by such directive
implementing or complying with, or introduced in order to conform to, such
directive, no additional amounts shall be payable or paid by us to any holder in
respect of the notes. See "Certain Guernsey Tax Considerations -- Proposed
European Union Tax Directive".
Any reference in this section to "principal" and/or "interest" in respect
of the notes shall be deemed also to refer to any additional amounts which may
be payable under this section. Unless the context otherwise requires, any
reference in this section to "principal" shall include any premium payable in
respect of a note, any redemption amount and any other amounts in the nature of
principal payable pursuant to this section and "interest" shall include all
amounts payable pursuant to this section and any other amounts in the nature of
interest payable pursuant to this section.
MEETINGS, MODIFICATION AND WAIVER
The indenture contains provisions for convening meetings of the holders of
notes to consider matters affecting their interests.
Certain limited modifications of the indenture may be made without the
necessity of obtaining the consent of the holders of the notes. Other
modifications and amendments of the indenture may be made, and certain past
defaults by us may be waived, either:
- with the written consent of the holders of not less than a majority in
aggregate principal amount of the notes at the time outstanding; or
- by the adoption of a resolution, at a meeting of holders of the notes at
which a quorum is present, by the holders of at least 66 2/3% in
aggregate principal amount of the notes represented at such meeting.
The quorum at any meeting called to adopt a resolution will be persons
holding or representing a majority in aggregate principal amount of the notes at
the time outstanding and, at any reconvened meeting adjourned for lack of a
quorum, 25% of such aggregate principal amount.
However, a modification or amendment requires the consent of the holder of
each outstanding note affected if it would:
- change the stated maturity of the principal or interest of a note;
- reduce the principal amount of, or any premium or interest on, any note;
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- reduce the amount payable upon a redemption or mandatory repurchase;
- modify the provisions with respect to the repurchase rights of holders of
notes in a manner adverse to the holders;
- change the place or currency of payment on a note;
- impair the right to institute suit for the enforcement of any payment on
any note;
- modify our obligation to maintain an office or agency in New York City;
- adversely affect the right to convert the notes;
- reduce the above-stated percentage of the principal amount of the holders
whose consent is needed to modify or amend the indenture;
- reduce the percentage of the principal amount of the holders whose
consent is needed to waive compliance with certain provisions of the
indenture or to waive certain defaults; or
- reduce the percentage required for the adoption of a resolution or the
quorum required at any meeting of holders of notes at which a resolution
is adopted.
The holders of a majority in aggregate principal amount of the outstanding
notes may waive compliance by us with certain restrictive provisions of the
indenture by written consent. Holders of at least 66 2/3% in aggregate of the
principal amount of notes represented at a meeting may also waive compliance by
us with certain restrictive provisions of the indenture by the adoption of a
resolution at the meeting if a quorum of holders are present and certain other
conditions are met. The holders of a majority in aggregate principal amount of
the outstanding notes also may waive by written consent any past default under
the indenture, except a default in the payment of principal, premium, if any, or
interest.
REGISTRATION RIGHTS
We have entered into a registration rights agreement with the initial
purchaser (the "registration rights agreement"). Pursuant to the registration
rights agreement we have filed, for the benefit of the holders of the notes and
our ordinary shares issuable upon conversion of the notes (together, the
"registrable securities"), shelf registration statement, of which this
prospectus forms a part, with the SEC covering the registrable securities, and
we will use our reasonable efforts to keep the registration statement effective
until expiration of the "effectiveness period", which occurs on the earliest of:
- the sale of all registrable securities under the shelf registration
statement;
- the expiration of the Securities Act Rule 144(k) period with respect to
all registrable securities held by non-affiliates of Amdocs; and
- two years from the effective date of the shelf registration statement.
We will provide to each holder of registrable securities copies of this
prospectus, notify each holder that the shelf registration statement has become
effective and take certain other actions required to permit public resales of
the registrable securities. We may suspend the holder's use of the registration
statement for a period not to exceed 30 days in any 90 day period, and not to
exceed an aggregate of 90 days in any 360-day period, for reasons relating to
the acquisition or divestiture of our assets, pending corporate developments and
other events.
Liquidated damages will accrue if:
- the shelf registration statement ceases to be effective, or we otherwise
prevent or restrict holders of registrable securities from making sales
under the shelf registration statement, for more than 30 days, whether or
not consecutive, during any 90-day period; or
- the shelf registration statement ceases to be effective, or we otherwise
prevent or restrict holders of registrable securities from making sales
under the shelf registration statement, for more than 90 days, whether or
not consecutive, during any 12-month period.
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In either event, we will pay liquidated damages at a rate of 0.50% per
annum from the 31st day of the 90-day period or the 91st day of the 12-month
period. Liquidated damages will be paid semi-annually in arrears, with the first
semi-annual payment due on the first interest payment date following the date on
which the liquidated damages began to accrue. Liquidated damages for any day
accrue either on the principal amount of the notes or based on the conversion
price of ordinary shares issued upon conversion of the notes. The liquidated
damages will continue to accrue until the earlier of the following:
- the time the shelf registration statement again becomes effective or the
holders of registrable securities are again able to make sales under the
shelf registration statement, depending on which event triggered the
increase in interest rate; or
- the date the effectiveness period expires.
A holder who elects to sell any registrable securities pursuant to the
shelf registration statement will be required to be named as a selling security
holder in this prospectus, may be required to deliver a prospectus to
purchasers, may be subject to certain civil liability provisions under the
Securities Act in connection with those sales and will be bound by the
provisions of the registration rights agreement that apply to a holder making
such an election, including certain indemnification provisions.
We mailed the notice and questionnaire to the holders of registrable
securities not less than 30 calendar days prior to the time we intend in good
faith to have the shelf registration statement declared effective (the
"effective time").
A holder of registrable securities was not entitled to be named as a
selling security holder in the shelf registration statement of which this
prospectus forms part as of the effective time, and a holder of registrable
securities is not entitled to use this prospectus for offers and resales of
registrable securities at any time, unless such holder returned a completed and
signed notice and questionnaire to us by the deadline for response set forth in
the notice and questionnaire. Holders of registrable securities had, however, at
least 20 business days from the date on which the notice and questionnaire was
first mailed to them to return a completed and signed notice and questionnaire
to us.
Beneficial owners of registrable securities who did not return a notice and
questionnaire by the questionnaire deadline described above may receive another
notice and questionnaire from us upon request. Following our receipt of a
completed and signed notice and questionnaire, we will include the registrable
securities covered thereby in the shelf registration statement, subject to
restrictions on the timing and number of supplements to the shelf registration
statement provided in the registration rights agreement.
The New York Stock Exchange, Inc. authorized the listing of the ordinary
shares issuable upon conversion of the notes on May 29, 2001.
This summary of certain provisions of the registration rights agreement may
not contain all the information important to you. Holders may request from us a
copy of the registration rights agreement by contacting us in writing.
NOTICES
Notice to holders of the registered notes will be given by mail to the
addresses as they appear in the security register. Notices will be deemed to
have been given on the date of such mailing.
Notice of a redemption of notes will be given not less than 30 nor more
than 60 days prior to the redemption date and will specify the redemption date.
A notice of redemption of the notes will be irrevocable.
REPLACEMENT OF NOTES
We will replace any note that becomes mutilated, destroyed, stolen or lost
at the expense of the holder upon delivery to the trustee of the mutilated notes
or evidence of the loss, theft or destruction
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satisfactory to us and the trustee. In the case of a lost, stolen or destroyed
note, indemnity satisfactory to the trustee and us may be required at the
expense of the holder of the note before a replacement note will be issued.
PAYMENT OF STAMP AND OTHER TAXES
We will pay all stamp and other duties, if any, that may be imposed by the
United States or any political subdivision thereof or taxing authority thereof
or therein with respect to the issuance of the notes or of ordinary shares upon
conversion of the notes.
GOVERNING LAW
The indenture and the notes are governed by and construed in accordance
with the laws of the State of New York.
THE TRUSTEE
If an event of default occurs and is continuing, the trustee will be
required to use the degree of care of a prudent person in the conduct of his own
affairs in the exercise of its powers. Subject to such provisions, the trustee
will be under no obligation to exercise any of its rights or powers under the
indenture at the request of any of the holders of notes, unless they shall have
furnished to the trustee reasonable security or indemnity.
BOOK-ENTRY SYSTEM
The notes are represented by one or more global securities (each a "global
security"). Each global security will be deposited with, or on behalf of, DTC
and be registered in the name of a nominee of DTC. Except under circumstances
described below, the notes will not be issued in definitive form.
DTC has credited on its book-entry registration and transfer system the
accounts of persons designated by the initial purchaser with the respective
principal amounts of the notes represented by the global security. Ownership of
beneficial interests in a global security will be limited to persons that have
accounts with DTC or its nominee ("participants") or persons that may hold
interests through participants. Ownership of beneficial interests in a global
security is shown on, and the transfer of that ownership will be effected only
through, records maintained by DTC or its nominee (with respect to interests of
persons other than participants). The laws of some states require that some
purchasers of securities take physical delivery of the securities in definitive
form. Such limits and such laws may impair the ability to transfer beneficial
interests in a global security.
So long as DTC or its nominee is the registered owner of a global security,
DTC or its nominee, as the case may be, will be considered the sole owner or
holder of the notes represented by that global security for all purposes under
the indenture. Except as provided below, owners of beneficial interests in a
global security will not be entitled to have the notes represented by that
global security registered in their names, will not receive or be entitled to
receive physical delivery of the notes in definitive form and will not be
considered the owners or holders thereof under the Indenture. Principal and
interest payments, if any, on the notes registered in the name of DTC or its
nominee will be made to DTC or its nominee, as the case may be, as the
registered owner of the relevant global security. Neither us, the trustee, any
paying agent or the registrar for the notes will have any responsibility or
liability for any aspect of the records relating to nor payments made on account
of beneficial interests in a global security or for maintaining, supervising or
reviewing any records relating to such beneficial interests.
We expect that DTC or its nominee, upon receipt of any payment of principal
or interest, if any, will credit immediately participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of the relevant global security as shown on the records of
DTC or its nominee. We also expect that payments by participants to owners of
beneficial interests in a global security held through these participants will
be governed by standing instruc-
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tions and customary practices, as is the case with securities held for the
accounts of customers in bearer form or registered in "street name", and will be
the responsibility of the participants.
If DTC is at any time unwilling or unable to continue as a depositary and a
successor depositary is not appointed by us within 90 days, we will issue the
notes in definitive form in exchange for the entire global security for the
notes. In addition, we may at any time and in our sole discretion determine not
to have the notes represented by a global security and, in such event, will
issue the notes in definitive form in exchange for the entire global security
relating to the notes. In any such instance, an owner of a beneficial interest
in a global security will be entitled to physical delivery in definitive form of
the notes represented by the global security equal in principal amount to the
beneficial interest and to have the notes registered in its name. Notes so
issued in definitive form will be issued as registered notes in denominations of
$1,000 and integral multiples thereof, unless otherwise specified by us.
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DESCRIPTION OF SHARE CAPITAL
The following description summarizes the most important terms of our share
capital. Because it is only a summary, it does not contain all of the
information that may be important to you. For a complete description, you should
refer to our Articles of Association.
The share capital of the Company is L5,750,000 divided into (i) 25,000,000
preferred shares with a par value of L0.01 per share and (ii) 550,000,000
ordinary shares with a par value of L0.01 per share, consisting of 500,000,000
voting ordinary shares and 50,000,000 non-voting ordinary shares. The rights,
preferences and restrictions attaching to each class of the shares are as
follows:
PREFERRED SHARES
- Issue -- the preferred shares may be issued from time to time in one or
more series of any number of shares up to the amount authorized.
- Directors Authorization to Issue Preferred Shares -- authority is vested
in the directors from time to time to authorize the issue of one or more
series of preferred shares and to provide for the designations, powers,
preferences and relative participating, optional or other special rights
and qualifications, limitations or restrictions thereon.
- Relative Rights -- all shares of any one series of preferred shares must
be identical with each other in all respects, except that shares of any
one series issued at different times may differ as to the dates from
which dividends shall be cumulative.
- Liquidation -- in the event of any liquidation, dissolution or winding-up
of the Company, the holders of preferred shares are entitled to
preference over classes of shares ranking junior to the preferred shares
upon liquidation and to receive payment at the rate fixed in any
resolution or resolutions adopted by the directors in such case plus an
amount equal to all dividends accumulated to the date of final
distribution to such holders. The holders of preferred shares are
entitled to no further payment other than that stated above. If upon any
liquidation the assets of the Company are insufficient to pay in full the
amount stated above then such assets shall be distributed among the
holders of preferred shares.
- Voting Rights -- except as otherwise provided for by the directors upon
the issue of any new series of preferred shares, the holders of shares of
preferred shares have no right or power to vote on any question or in any
proceeding or to be represented at, or to receive notice of, any meeting
of members.
ORDINARY SHARES AND NON-VOTING ORDINARY SHARES
Except as otherwise provided by the Memorandum of Association and Articles
of Association, the ordinary shares and non-voting ordinary shares are identical
and entitle holders thereof to the same rights and privileges.
- Dividends -- when and as dividends are declared on the shares of the
Company the holders of voting ordinary shares and non-voting ordinary
shares are entitled to share equally, share for share, in such dividends
except that if dividends are declared which are payable in voting
ordinary shares or non-voting ordinary shares, dividends must be declared
which are payable at the same rate in both classes of shares.
- Conversion of Non-Voting Ordinary Shares into Voting Ordinary
Shares -- upon the transfer of non-voting ordinary shares from the
original holder thereof to any third party not affiliated with such
original holder, non-voting ordinary shares are redesignated in the books
of the Company as voting ordinary shares and automatically convert into
the same number of voting ordinary shares.
- Liquidation -- upon any liquidation, dissolution or winding-up of the
Company, the assets of the Company remaining after creditors and the
holders of any preferred shares have been paid in full shall be
distributed to the holders of voting ordinary shares and non-voting
ordinary shares equally share for share.
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- Voting Rights -- the holders of voting ordinary shares are entitled to
vote on all matters to be voted on by shareholders, and the holders of
non-voting ordinary shares are not entitled to any voting rights.
- Preferences -- the voting ordinary shares and non-voting ordinary shares
are subject to all the powers, rights, privileges, preferences and
priorities of the preferred shares as are set out in the Articles of
Association.
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COMPARISON OF UNITED STATES AND GUERNSEY CORPORATE LAW
The following discussion is a summary of the material differences between
United States and Guernsey corporate law relevant to an investment in the notes
and is based on the advice of Reboul, MacMurray, Hewitt, Maynard & Kristol, with
respect to the corporate law of the United States, and Carey Langlois, with
respect to the corporate law of Guernsey. The following discussion is based upon
laws and relevant interpretations thereof in effect as of the date of this
prospectus, all of which are subject to change.
Under the laws of many jurisdictions in the United States, controlling
shareholders generally have certain "fiduciary" responsibilities to minority
shareholders. Shareholder action by controlling shareholders must be taken in
good faith and actions by such shareholders that are obviously unreasonable may
be declared null and void. Guernsey law protecting the interests of minority
shareholders may not be as protective in all circumstances as the law protecting
minority shareholders in United States jurisdictions.
Under Guernsey law, an individual shareholder cannot, without the authority
of the majority of the shareholders of the corporation, initiate litigation in
the corporation's name, but an individual shareholder may seek to enforce the
corporation's rights by suing in representative form on behalf of himself and
all of the other shareholders of the corporation (except the wrongdoers where
the complaint is against other shareholders) against the wrongdoers, who may
include directors. In these circumstances, the corporation itself may be joined
as a nominal defendant in order that it can be bound by the judgment and, if an
action results in any property or damages recovered, such recovery goes not to
the plaintiff, but to the corporation. Alternatively, Guernsey law makes
specific provision to enable a shareholder to apply to the court for relief on
the ground that the affairs of the corporation are being or have been conducted
in a manner that is unfairly prejudicial to the interests of certain
shareholders (including at least himself) or any actual or proposed act or
omission of the corporation is or would be so prejudicial. In such
circumstances, the court has wide discretion to make orders to regulate the
conduct of the corporation's affairs in the future, to require the corporation
to refrain from doing or continuing to do an act that the applicant has
complained it has omitted to do, to authorize civil proceedings to be brought in
the name and on behalf of the corporation and to provide for the purchase of
shares of any shareholder of the corporation by other members or by the
corporation itself.
As in most United States jurisdictions, unless approved by a special
resolution of our shareholders, our directors do not have the power to take
certain actions, including an amendment of our Memorandum of Association or
Articles of Association or an increase or reduction in our authorized capital.
Directors of a Guernsey corporation, without shareholder approval, in certain
instances may, among other things, implement a reorganization and effect certain
mergers or consolidations, certain sales, transfers, exchanges or dispositions
of assets, property, parts of the business or securities of the corporation; or
any combination thereof, if they determine any such action is in the best
interests of the corporation, its creditors or its shareholders.
As in most United States jurisdictions, the board of directors of a
Guernsey corporation is charged with the management of the affairs of the
corporation. In most United States jurisdictions, directors owe a fiduciary duty
to the corporation and its shareholders, including a duty of care, pursuant to
which directors must properly apprise themselves of all reasonably available
information, and a duty of loyalty, pursuant to which they must protect the
interests of the corporation and refrain from conduct that injures the
corporation or its shareholders or that deprives the corporation or its
shareholders of any profit or advantage. Many United States jurisdictions have
enacted various statutory provisions that permit the monetary liability of
directors to be eliminated or limited. Guernsey law protecting the interests of
shareholders may not be as protective in all circumstances as the law protecting
shareholders in United States jurisdictions. Under our Articles of Association,
we are obligated to indemnify any person who is made or threatened to be made a
party to a legal or administrative proceeding by virtue of being a director,
officer or agent of Amdocs, provided that we have no obligation to indemnify any
such persons for any claims they incur or sustain by or through their own
willful act or default. See "Risk Factors -- The rights of shareholders of
Guernsey corporations differ in some respects from those of shareholders of
United States corporations".
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TAXATION OF THE COMPANY
The following is a summary of certain material tax considerations relating
to us and our subsidiaries. To the extent that the discussion is based on tax
legislation that has not been subject to judicial or administrative
interpretation, there can be no assurance that the views expressed in the
discussion will be accepted by the tax authorities in question. The discussion
is not intended, and should not be construed, as legal or professional tax
advice and is not exhaustive of all possible tax considerations.
GENERAL
Our overall effective tax rate has historically been approximately 30% due
to the various corporate income tax rates in the countries in which we operate
and the relative magnitude of our activities in those countries. Our
consolidated effective tax rate (calculated based on the income taxes out of the
income before income taxes, excluding nonrecurring charges for write-offs of
purchased in-process research and development and other indirect
acquisition-related costs) for the nine months ended June 30, 2001 and for
fiscal 2000 was 63% and 49%, respectively. This higher effective tax rate was
attributable to amortization of goodwill related to our acquisitions of ITDS and
Solect, much of which is not tax deductible. Excluding the impact of the ITDS
and Solect acquisition-related charges, the effective tax rate for the nine
months ended June 30, 2001 and for fiscal 2000 was 30%. There can be no
assurance that our effective tax rate will not change over time as a result of a
change in corporate income tax rates or other changes in the tax laws of the
various countries in which we operate. Moreover, our effective tax rate in
future years may be adversely affected in the event that a tax authority
challenges the manner in which items of income and expense are allocated among
us and our subsidiaries. In addition, we and certain of our subsidiaries have
been granted certain special tax benefits, discussed below, in Cyprus, Ireland
and Israel. The loss of any such tax benefits could have an adverse effect on
our effective tax rate.
CERTAIN GUERNSEY TAX CONSIDERATIONS
We qualify as an exempt company (i.e. our shareholders are not Guernsey
residents and we do not carry on business in Guernsey) so we generally are not
subject to taxation in Guernsey.
CERTAIN CYPRUS TAX CONSIDERATIONS
Our Cypriot subsidiary, Amdocs Development Ltd., operates a development
center. Corporations resident in Cyprus currently are subject to a maximum 25%
income tax rate. The Government of Cyprus has issued a permit to our Cypriot
subsidiary pursuant to which the activities to be conducted by it will be deemed
to be offshore activities for the purpose of Cyprus taxation. As a result, our
Cypriot subsidiary is subject to an effective tax rate in Cyprus of 4.25%. In
order for our subsidiary to remain entitled to this reduced rate of taxation
pursuant to the permit, it must continue to satisfy certain requirements
concerning its operations in Cyprus and it must undertake certain information
reporting obligations to the Government of Cyprus.
CERTAIN IRISH TAX CONSIDERATIONS
Our Irish subsidiary, Amdocs Software Systems Ltd., operates a development
center. The corporation tax rate on its trading activities is 20% in 2001 and
will decline to 16% in 2002, and finally to 12.5% in 2003. The subsidiary has
entered into an agreement with the Irish Industrial Development Agency pursuant
to which it qualifies for certain job creation grants and, consequently, certain
activities conducted by it are deemed to be manufacturing activities for the
purpose of Irish taxation. As a result, the subsidiary is subject to a
corporation tax rate in Ireland of 10% with respect to its manufacturing
activities. This tax rate on manufacturing activities will be available to our
Irish subsidiary until December 31, 2002. As of January 1, 2003, our Irish
subsidiary will be subject to a single corporation tax rate of 12.5% on all of
its trading and manufacturing activities.
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CERTAIN ISRAELI TAX CONSIDERATIONS
Our Israeli subsidiary, Amdocs (Israel) Limited, operates our largest
development center. Discussed below are certain Israeli tax considerations
relating to our Israeli subsidiary:
GENERAL CORPORATE TAXATION IN ISRAEL
Effective January 1, 1996, and thereafter, in general, Israeli companies
are subject to "Company Tax" at the rate of 36% of taxable income. However, the
effective tax rate payable by an Israeli company that derives income from an
Approved Enterprise (as further discussed below) may be considerably less.
LAW FOR THE ENCOURAGEMENT OF CAPITAL INVESTMENTS, 1959
GENERAL. Certain production and development facilities of our Israeli
subsidiary have been granted "Approved Enterprise" status pursuant to the Law
for the Encouragement of Capital Investments, 1959, or the Investment Law, which
provides certain tax and financial benefits to investment programs that have
been granted such status.
The Investment Law provides that capital investments in production
facilities (or other eligible assets) may, upon application to the Israeli
Investment Center, be designated as an Approved Enterprise. Each instrument of
approval for an Approved Enterprise relates to a specific investment program
delineated both by the financial scope of the investment, including source of
funds, and by the physical characteristics of the facility or other assets. The
tax benefits available under any instrument of approval relate only to taxable
profits attributable to the specific investment program and are contingent upon
compliance with the conditions set out in the instrument of approval.
TAX BENEFITS. Taxable income derived from an Approved Enterprise is
subject to a reduced corporate tax rate of 25% until the earlier of
- seven consecutive years (or ten in the case of an FIC (as defined below))
commencing in the year in which the Approved Enterprise first generates
taxable income,
- twelve years from the year of commencement of production or
- fourteen years from the year of the approval of the Approved Enterprise
status.
Such income is eligible for further reductions in tax rates if the company
qualifies as a Foreign Investors' Company, or FIC, depending on the percentage
of the foreign ownership. Subject to certain conditions, an FIC is a company
more than 25% of whose share capital (in terms of shares, rights of profits,
voting and appointment of directors) and more than 25% of whose combined share
and loan capital is owned by non-Israeli residents. The tax rate is 20% if the
foreign investment is 49% or more but less than 74%; 15% if the foreign
investment is 74% or more but less than 90%; and 10% if the foreign investment
is 90% or more. The determination of foreign ownership is made on the basis of
the lowest level of foreign ownership during the tax year. A company that owns
an Approved Enterprise, approved after April 1, 1986 may elect to forego the
entitlement to grants and apply for an alternative package of tax benefits. In
addition, a company (like our Israeli subsidiary) with an enterprise outside the
National Priority Regions (which is not entitled to grants) may also apply for
the alternative benefits. Under the alternative benefits, undistributed income
from the Approved Enterprise operations is fully tax exempt (a tax holiday) for
a defined period. The tax holiday ranges between two to ten years from the first
year of taxable income subject to the limitations as described above, depending
principally upon the geographic location within Israel. On expiration of the tax
holiday, the Approved Enterprise is eligible for a beneficial tax rate (25% or
lower in the case of an FIC, as described above) for the remainder of the
otherwise applicable period of benefits.
Our Israeli subsidiary has elected the alternative benefits with respect to
its current Approved Enterprise and its enlargements, pursuant to which the
Israeli subsidiary enjoys, in relation to its
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Approved Enterprise operations, certain tax holidays for a period of two years
(and in some cases for a period of four years) and reduced tax rates for an
additional period of up to eight years. In case our Israeli subsidiary pays a
dividend, at any time, out of income earned during the tax holiday period in
respect of its Approved Enterprise, it will be subject, assuming that the
current level of foreign investment in Amdocs is not reduced, to corporate tax
at the otherwise applicable rate of 10% of the income from which such dividend
has been paid and up to 25% if such foreign investments are reduced (as detailed
above). This tax is in addition to the withholding tax on dividends as described
below. Under a new instrument of approval issued in December 1997 and relating
to the current investment program of our Israeli subsidiary and to the income
derived therefrom, our Israeli subsidiary is entitled to a reduced tax rate
period of thirteen years (instead of the eight year period referred to above).
The tax benefits, available with respect to an Approved Enterprise only to
taxable income attributable to that specific enterprise, are given according to
an allocation formula provided for in the Investment Law or in the instrument of
approval, and are contingent upon the fulfillment of the conditions stipulated
by the Investment Law, the regulations published thereunder and the instruments
of approval for the specific investments in the Approved Enterprises. In the
event our Israeli subsidiary fails to comply with these conditions, the tax and
other benefits could be canceled, in whole or in part, and the subsidiary might
be required to refund the amount of the canceled benefits, with the addition of
CPI linkage differences and interest. We believe that the Approved Enterprise of
our Israeli subsidiary substantially complies with all such conditions
currently, but there can be no assurance that it will continue to do so.
From time to time, the Government of Israel has discussed reducing the
benefits available to companies under the Investment Law. The termination or
substantial reduction of any of the benefits available under the Investment Law
could have a material adverse effect on future investments by us in Israel
(although such termination or reduction would not affect our Israeli
subsidiary's existing Approved Enterprise or the related benefits).
DIVIDENDS
Dividends paid out of income derived by an Approved Enterprise during the
benefit periods (or out of dividends received from a company whose income is
derived by an Approved Enterprise) are subject to withholding tax at a reduced
rate of 15% (deductible at source). In the case of companies that do not qualify
as a FIC, the reduced rate of 15% is limited to dividends paid at any time up to
twelve years thereafter.
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CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain U.S. federal income tax
considerations relating to the purchase, ownership and disposition of the notes
and ordinary shares into which notes may be converted, but does not purport to
be a complete analysis of all the potential tax considerations relating thereto.
This summary is based on laws, regulations, rulings and decisions now in effect,
all of which are subject to change or differing interpretation possibly with
retroactive effect. Except as specifically discussed below with regard to
Non-U.S. Holders (as defined below), this summary applies only to U.S. Holders
(as defined below) that are beneficial owners of notes and that will hold notes
and, upon conversion, ordinary shares as "capital assets" (within the meaning of
Section 1221 of the Internal Revenue Code of 1986, as amended (the "Code")). For
purposes of this summary, "U.S. Holders" include (i) individual citizens or
residents of the U.S., (ii) corporations, partnerships or other entities created
or organized in or under the laws of the U.S. or of any political subdivision
thereof (unless, in the case of a partnership, Treasury Regulations otherwise
provide), (iii) estates, the incomes of which are subject to U.S. federal income
taxation regardless of the source of such income or (iv) trusts subject to the
primary supervision of a U.S. court and the control of one or more U.S. persons.
Persons other than U.S. Holders ("Non-U.S. Holders") are subject to special U.S.
federal income tax considerations, some of which are discussed below. This
discussion does not address tax considerations applicable to an investor's
particular circumstances or to investors that may be subject to special tax
rules such as banks, holders subject to the alternative minimum tax, tax-exempt
organizations, insurance companies, foreign persons or entities (except to the
extent specifically set forth below), dealers in securities or currencies,
persons that will hold notes as a position in a hedging transaction, "straddle"
or "conversion transaction" for tax purposes or persons deemed to sell notes or
ordinary shares under the constructive sale provisions of the Code. This summary
discusses the tax considerations applicable to an initial purchaser of the notes
who purchases the notes at their "issue price" as defined in Section 1273 of the
Code and does not discuss the tax considerations applicable to subsequent
purchasers of the notes. We have not sought any ruling from the Internal Revenue
Service (the "IRS") or an opinion of counsel with respect to the statements made
and the conclusions reached in the following summary, and there can be no
assurance that the IRS will agree with such statements and conclusions. This
summary does not consider the effect of the federal estate or gift tax laws or
the tax laws of any applicable foreign, state, local or other jurisdiction.
INVESTORS CONSIDERING THE PURCHASE OF NOTES SHOULD CONSULT THEIR TAX
ADVISORS WITH RESPECT TO THE APPLICATION OF THE UNITED STATES FEDERAL INCOME TAX
LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES ARISING
UNDER THE FEDERAL ESTATE OR GIFT TAX RULES OR UNDER THE LAWS OF ANY STATE, LOCAL
OR FOREIGN TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.
U.S. HOLDERS
TAXATION OF INTEREST
Interest paid on the notes will be included in the income of a U.S. Holder
as ordinary income at the time it is treated as received or accrued, in
accordance with such holder's regular method of accounting for U.S. federal
income tax purposes. Under Treasury Regulations, the possibility of an
additional payment under a note may be disregarded for purposes of determining
the amount of interest or original issue discount income to be recognized by a
holder in respect of such note (or the timing of such recognition) if the
likelihood of the payment, as of the date the notes are issued, is remote. Our
failure to file or cause to be declared effective a shelf registration statement
as described under "Description of the Notes -- Registration Rights" may result
in the payment of predetermined liquidated damages in the manner described
therein. In addition, a holder may require us to redeem any and all of his notes
in the event of a fundamental change. We believe that the likelihood of a
liquidated damages payment with respect to the notes is remote and do not intend
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to treat such possibility as affecting the yield to maturity of any note.
Similarly, we intend to take the position that a "fundamental change" is remote
under the Treasury Regulations, and likewise do not intend to treat the
possibility of a "fundamental change" as affecting the yield to maturity of any
note. In the event either contingency occurs, it would affect the amount and
timing of the income that must be recognized by a U.S. Holder of notes. There
can be no assurance that the IRS will agree with such positions.
SALE, EXCHANGE OR REDEMPTION OF THE NOTES
Upon the sale, exchange (other than a conversion) or redemption of a note,
a U.S. Holder generally will recognize capital gain or loss equal to the
difference between (i) the amount of cash proceeds and the fair market value of
any property received on the sale, exchange or redemption (except to the extent
such amount is attributable to accrued interest income not previously included
in income, which will be taxable as ordinary income, or is attributable to
accrued interest that was previously included in income which amount may be
received without generating further income) and (ii) such holder's adjusted tax
basis in the note. A U.S. Holder's adjusted tax basis in a note generally will
equal the cost of the note to such holder. Such capital gain or loss will be
long-term capital gain or loss if the U.S. Holder's holding period in the note
is more than one year at the time of sale, exchange or redemption. Long-term
capital gains recognized by certain noncorporate U.S. Holders, including
individuals, will generally be subject to a maximum rate of tax of 20%. The
deductibility of capital losses is subject to limitations.
CONVERSION OF THE NOTES
A U.S. Holder generally will not recognize any income, gain or loss upon
conversion of a note into ordinary shares except with respect to cash received
in lieu of a fractional ordinary share. A U.S. Holder's tax basis in the
ordinary shares received on conversion of a note will be the same as such
holder's adjusted tax basis in the note at the time of conversion (reduced by
any basis allocable to a fractional share interest), and the holding period for
the ordinary shares received on conversion will generally include the holding
period of the note converted.
Cash received in lieu of a fractional ordinary share upon conversion will
be treated as a payment in exchange for the fractional ordinary share.
Accordingly, the receipt of cash in lieu of a fractional ordinary share
generally will result in capital gain or loss (measured by the difference
between the cash received for the fractional share and the holder's adjusted tax
basis in the fractional share).
SALE OR EXCHANGE OF ORDINARY SHARES
Upon the sale or exchange of ordinary shares, a U.S. Holder generally will
recognize capital gain or loss equal to the difference between (i) the amount of
cash and the fair market value of any property received upon the sale or
exchange and (ii) such U.S. Holder's adjusted tax basis in the ordinary shares.
Such capital gain or loss will be long-term capital gain or loss if the U.S.
Holder's holding period in the ordinary shares is more than one year at the time
of the sale or exchange. Long-term capital gains recognized by certain
non-corporate U.S. Holders, including individuals, will generally be subject to
a maximum rate of tax of 20%. A U.S. Holder's basis and holding period in
ordinary shares received upon conversion of a note are determined as discussed
above under "Conversion of the Notes". The deductibility of capital losses is
subject to limitations.
DIVIDENDS
Distributions, if any, made on the ordinary shares after a conversion
generally will be included in the income of a U.S. Holder as ordinary dividend
income to the extent of our current or accumulated earnings and profits.
Distributions in excess of our current and accumulated earnings and profits will
be treated as a return of capital to the extent of the U.S. Holder's basis in
the ordinary shares and thereafter as capital gain.
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Holders of convertible debt instruments such as the notes may, in certain
circumstances, be deemed to have received distributions of stock if the
conversion price of such instruments is adjusted. Adjustments to the conversion
price made pursuant to a bona fide reasonable adjustment formula which has the
effect of preventing the dilution of the interest of the holders of the debt
instruments, however, will generally not be considered to result in a
constructive distribution of stock. Certain of the possible adjustments provided
in the notes (including, without limitation, adjustments in respect of certain
taxable dividends to our stockholders) will not qualify as being pursuant to a
bona fide reasonable adjustment formula. If such adjustments are made, the U.S.
Holders of the notes may be deemed to have received constructive distributions
taxable as dividends to the extent of our current and accumulated earnings and
profits even though they have not received any cash or property as a result of
such adjustments.
SPECIAL TAX RULES APPLICABLE TO NON-U.S. HOLDERS
Payments on the notes or the ordinary shares to a Non-U.S. Holder, or gain
realized on the sale, exchange or redemption of the notes or the ordinary shares
by a Non-U.S. Holder, will not be subject to U.S. federal income or withholding
tax, as the case may be, unless such income is effectively connected with a
trade or business conducted by such Non-U.S. Holder in the United States, or, in
the case of gain, such Non-U.S. Holder is a nonresident alien individual who
holds the notes or ordinary shares, as the case may be, as a capital asset and
who is present in the United States more than 182 days in the taxable year of
the sale and certain other conditions are met.
U.S. trade or business income of a Non-U.S. Holder will generally be
subject to regular United States federal income tax in the same manner as if it
were realized by a U.S. Holder. Non-U.S. Holders that realize U.S. trade or
business income with respect to the notes or ordinary shares should consult
their tax advisors as to the treatment of such income or gain.
BACKUP WITHHOLDING AND INFORMATION REPORTING
U.S. Holders
Payments of interest or dividends made by us on, or the proceeds of the
sale or other disposition of, the notes or ordinary shares may be subject to
information reporting and United States federal backup withholding tax at the
rate of 31% if the recipient of such payments fails to supply an accurate
taxpayer identification number or otherwise fails to comply with applicable
United States information reporting or certification requirements. Any amount
withheld from a payment to a U.S. Holder under the backup withholding rules is
allowable as a credit against the holder's United States federal income tax,
provided that the required information is furnished to the IRS.
Non-U.S. Holders
A Non-U.S. Holder may be required to comply with certification procedures
to establish that the holder is not a U.S. person in order to avoid backup
withholding tax and information reporting requirements.
THE PRECEDING DISCUSSION OF CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. ACCORDINGLY, EACH
PROSPECTIVE INVESTOR SHOULD CONSULT ITS TAX ADVISOR AS TO THE PARTICULAR U.S.
FEDERAL, STATE, AND LOCAL TAX CONSEQUENCES OF PURCHASING, HOLDING AND DISPOSING
OF THE NOTES AND OUR ORDINARY SHARES. TAX ADVISORS SHOULD ALSO BE CONSULTED AS
TO THE U.S. ESTATE AND GIFT TAX CONSEQUENCES AND THE FOREIGN TAX CONSEQUENCES OF
PURCHASING, HOLDING AND DISPOSING OF THE NOTES AND OUR ORDINARY SHARES, AS WELL
AS THE CONSEQUENCES OF ANY PROPOSED CHANGE IN APPLICABLE LAWS.
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CERTAIN GUERNSEY TAX CONSIDERATIONS
Under the laws of Guernsey, as currently in effect, a holder of the notes
(and, upon conversion, a holder of ordinary shares) who is not a resident of
Guernsey and who does not carry on business in Guernsey through a permanent
establishment situated there, would be exempt from Guernsey income tax on
interest and dividends paid with respect to such notes and such ordinary shares,
respectively, and would not be liable for Guernsey income tax on gains realized
upon the sale or disposition of such notes and such ordinary shares. In
addition, Guernsey would not impose a withholding tax on interest and dividends
paid by us to the holders of such notes and such ordinary shares.
There are no capital gains, gift or inheritance taxes levied by Guernsey,
and the notes and ordinary shares generally would not be subject to any transfer
taxes, stamp duties or similar charges on issuance or transfer.
PROPOSED EUROPEAN UNION TAX DIRECTIVE
The European Union is currently considering proposals for a new directive
regarding the taxation of savings income. See "Description of the
Notes -- Withholding Taxes". Subject to a number of important conditions being
met, it is proposed that states that are members of the European Union ("Member
States") be required to provide to the tax authorities of another Member State
details of payments of interest or other similar income paid by an issuer within
its jurisdiction to an individual resident in that other Member State, subject
to the right of certain Member States to opt instead for a withholding tax
system for a transitional period in relation to such payments. This directive
contemplates that states that are not members of the European Union, such as
Guernsey, will implement comparable information reporting or withholding tax
arrangements. If Guernsey were to implement any such withholding tax
arrangement, we would not make any additional payments to holders to compensate
them for the amounts so withheld.
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SELLING HOLDERS
The notes were originally issued by us and sold by Goldman, Sachs & Co., as
the initial purchaser, in a transaction exempt from the registration
requirements of the Securities Act to persons reasonably believed by the initial
purchaser to be qualified institutional buyers. Selling holders, including their
transferees, pledgees or donees or their successors, may from time to time offer
and sell any or all the notes and ordinary shares issuable upon conversion of
the notes.
The selling holders have represented to us that they purchased the notes
and the ordinary shares issuable upon conversion of the notes for their own
account for investment only and not with a view toward selling or distributing
them, except through sales registered under the Securities Act or exemptions
therefrom. We agreed with the initial purchaser to file this registration
statement to register the resale of the notes and the sale of the ordinary
shares issuable upon conversion of the notes. We agreed to prepare and file all
necessary amendments and supplements to the registration statement to keep it
effective until the date on which the notes and the ordinary shares issuable
upon conversion of the notes no longer qualify as "registrable securities" under
our registration rights agreement.
The following table sets forth, as of August 14, 2001, information
regarding the beneficial ownership of the notes and ordinary shares issuable
upon conversion of the notes by the selling holders. The information is based on
information provided by or on behalf of the selling holders.
The selling holders may offer all, some or none of the notes or ordinary
shares issuable upon conversion of the notes. Thus, we cannot estimate the
amount of the notes or the ordinary shares issuable upon conversion of the notes
that will be held by the selling holders upon termination of any sales. The
column showing ownership after completion of the offering assumes that the
selling holders will sell all of the securities offered by this prospectus. In
addition, the selling holders identified below may have sold, transferred or
otherwise disposed of all or a portion of their notes since the date on which
they provided the information about their notes in transactions exempt from the
registration requirements of the Securities Act. Except as indicated below, none
of the selling holders has had any material relationship with us or our
affiliates within the past three years. This table assumes that other holders of
notes or any future transferees from any such holder do not beneficially own any
ordinary shares other than ordinary shares issuable upon conversion of the
notes.
PRINCIPAL ORDINARY ORDINARY SHARES
AMOUNT OF SHARES BENEFICIALLY
NOTES BENEFICIALLY OWNED AFTER
BENEFICIALLY OWNED ORDINARY OFFERING
OWNED AND BEFORE SHARES ----------------
NAME AND ADDRESS OFFERED OFFERING OFFERED(1) AMOUNT PERCENT
---------------- ------------ ------------ ---------- ------ -------
AIG/National Union Fire Insurance $ 550,000 5,972 5,972 0 *
c/o Froley Revy Investment Company,
Inc.
10900 Wilshire Blvd. Ste 900
Los Angeles, CA 90024
Arkansas PERS 1,200,000 13,030 13,030 0 *
c/o Froley Revy Investment Company,
Inc.
10900 Wilshire Blvd. Ste 900
Los Angeles, CA 90024
Bank Austria Cayman Islands, LTD 8,000,000 86,869 86,869 0 *
666 Third Avenue
26th Floor
New York, NY 10019
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PRINCIPAL ORDINARY ORDINARY SHARES
AMOUNT OF SHARES BENEFICIALLY
NOTES BENEFICIALLY OWNED AFTER
BENEFICIALLY OWNED ORDINARY OFFERING
OWNED AND BEFORE SHARES ----------------
NAME AND ADDRESS OFFERED OFFERING OFFERED(1) AMOUNT PERCENT
---------------- ------------ ------------ ---------- ------ -------
Bay County PERS $ 150,000 1,628 1,628 0 *
c/o Froley Revy Investment Company,
Inc.
10900 Wilshire Blvd. Ste 900
Los Angeles, CA 90024
Bear Stearns & Co. Inc. 6,000,000 65,152 65,152 0 *
245 Park Avenue
13th Floor -- Global Fund
Management
New York, NY 10167
Boilermakers Blacksmith Pension Trust 1,550,000 16,830 16,830 0 *
c/o Froley Revy Investment Company,
Inc.
10900 Wilshire Blvd. Ste 900
Los Angeles, CA 90024
CALAMOS Market Neutral Fund -- 4,500,000 48,864 48,864 0 *
CALAMOS Investment Trust
c/o CALAMOS Asset
Management, Inc.
1111 East Warrenville Road
Naperville, IL 60353-1493
Circlet (IMA) Limited 500,000 5,429 5,429 0 *
c/o Camden Asset Management, LP
2049 Century Park East, Suite 330
Los Angeles, CA 90067
Commerzbank AG 21,000,000 228,032 228,032 0 *
2nd Floor, Sherbourne House,
119-121 Cannon St.
London EC4N 5AT
Consulting Group Capital Markets Funds 580,000 6,298 6,298 0 *
c/o CALAMOS Asset
Management, Inc.
1111 East Warrenville Road
Naperville, IL 60353-1493
Deutsche Banc Alex Brown Inc. 50,250,000 545,649 545,649 0 *
1251 Avenue of the Americas
New York, NY 10020
First Union National Bank 11,600,000 125,960 125,960 0 *
3739 Research Drive
Charlotte, NC 28262-0675
Goldman Sachs and Company 22,500,000 244,320 244,320 0 *
180 Maiden Lane
8th Floor
New York, NY 10038
51
54
PRINCIPAL ORDINARY ORDINARY SHARES
AMOUNT OF SHARES BENEFICIALLY
NOTES BENEFICIALLY OWNED AFTER
BENEFICIALLY OWNED ORDINARY OFFERING
OWNED AND BEFORE SHARES ----------------
NAME AND ADDRESS OFFERED OFFERING OFFERED(1) AMOUNT PERCENT
---------------- ------------ ------------ ---------- ------ -------
Jersey (IMA) LTD. $ 1,000,000 10,858 10,858 0 *
c/o LibertyView Capital
101 Hudson Street
Suite 3700
Jersey City, NJ 07302
KD Offshore Fund CV 500,000 5,429 5,429 0 *
c/o Kellner DiLeo & Co.
900 Third Avenue
Suite 1000
New York, NY 10022
Kellner, DiLeo & Co. 500,000 5,429 5,429 0 *
900 Third Avenue
Suite 1000
New York, NY 10022
LDG Limited 500,000 5,429 5,429 0 *
48 Par-La-Ville Road
Suite 780
Hamilton, HM 11
Bermuda
LibertyView Fund LLC 500,000 5,429 5,429 0 *
c/o LibertyView Capital
101 Hudson Street
Suite 3700
Jersey City, NJ 07302
LibertyView Funds L.P. 2,000,000 21,717 21,717 0 *
c/o LibertyView Capital
101 Hudson Street
Suite 3700
Jersey City, NJ 07302
LibertyView Global Volatility Fund 1,500,000 16,288 16,288 0 *
L.P.
c/o LibertyView Capital
101 Hudson Street
Suite 3700
Jersey City, NJ 07302
MFS Total Return Fund 5,000,000 54,293 54,293 0 *
c/o Froley Revy Investment Company,
Inc.
10900 Wilshire Blvd. Ste 900
Los Angeles, CA 90024
Ondeo Nalco 150,000 1,628 1,628 0 *
c/o Froley Revy Investment Company,
Inc.
10900 Wilshire Blvd. Ste 900
Los Angeles, CA 90024
52
55
PRINCIPAL ORDINARY ORDINARY SHARES
AMOUNT OF SHARES BENEFICIALLY
NOTES BENEFICIALLY OWNED AFTER
BENEFICIALLY OWNED ORDINARY OFFERING
OWNED AND BEFORE SHARES ----------------
NAME AND ADDRESS OFFERED OFFERING OFFERED(1) AMOUNT PERCENT
---------------- ------------ ------------ ---------- ------ -------
RCG Latitude Master Fund $ 2,000,000 21,717 21,717 0 *
666 Third Avenue
26th Floor
New York, NY 10019
SG Cowen Securities Corp. 10,500,000 114,016 114,016 0 *
Financial Square
New York, NY 10005
St. Albans Partner Ltd. 2,500,000 27,146 27,146 0 *
c/o Camden Asset Management, LP
2049 Century Park East, Suite 330
Los Angeles, CA 90067
Starvest Combined Portfolio 600,000 6,515 6,515 0 *
c/o Froley Revy Investment Company,
Inc.
10900 Wilshire Blvd. Ste 900
Los Angeles, CA 90024
Starvest Managed Portfolio 70,000 760 760 0 *
c/o Froley Revy Investment Company,
Inc.
10900 Wilshire Blvd. Ste 900
Los Angeles, CA 90024
State of Oregon -- Equity 5,500,000 59,722 59,722 0 *
c/o Froley Revy Investment Company,
Inc.
10900 Wilshire Blvd. Ste 900
Los Angeles, CA 90024
TD Securities (USA) Inc. 38,500,000 418,059 418,059 0 *
31 West 52nd Street
21st Floor
New York, NY 10009
TQA Master Fund, LTD. 3,000,000 32,576 32,576 0 *
405 Lexington Avenue
45th Floor
New York, NY 10174
TQA Master Plus Fund, LTD. 7,500,000 81,440 81,440 0 *
405 Lexington Avenue
45th Floor
New York, NY 10174
53
56
PRINCIPAL ORDINARY ORDINARY SHARES
AMOUNT OF SHARES BENEFICIALLY
NOTES BENEFICIALLY OWNED AFTER
BENEFICIALLY OWNED ORDINARY OFFERING
OWNED AND BEFORE SHARES ----------------
NAME AND ADDRESS OFFERED OFFERING OFFERED(1) AMOUNT PERCENT
---------------- ------------ ------------ ---------- ------ -------
Zurich Institutional Benchmark Master $ 500,000 5,429 5,429 0 *
Fund
One Chase Plaza
44th Floor
New York, NY 10005
Any other holder of notes or future
transferee, pledgee, donee or
successor of any holder (2)(3) 289,300,000 3,141,437 3,141,437 0 *
------------ --------- --------- --
TOTAL $500,000,000 5,429,350 5,429,350 0 *
============ ========= ========= ==
---------------
* Indicates less than 1%.
(1) Assumes conversion of all the holder's notes at a conversion rate of 10.8587
ordinary shares per each $1,000 principal amount of the notes and resale of
all ordinary shares offered hereby.
(2) Information about other selling holders will be set forth in prospectus
supplements, if required.
(3) Assumes that any other holders of notes, or any future transferees,
pledgees, donees or successors of or from any other holders of notes, do not
beneficially own any ordinary shares other than the ordinary shares issuable
upon conversion of the notes at the initial conversion rate.
Information concerning the selling holders may change from time to time and
any changed information will be set forth in supplements to this prospectus if
necessary. In addition, the per share conversion price, and therefore the number
of ordinary shares issuable upon conversion of the notes, is subject to
adjustment. As a result, the aggregate principal amount of the notes and the
number of shares of ordinary shares issuable upon conversion of the notes may
increase or decrease.
54
57
PLAN OF DISTRIBUTION
The selling holders and any of their pledgees, assignees, donees, other
transferees and successors-in-interest may, from time to time, sell any or all
of their notes or ordinary shares issuable upon conversion of the notes at fixed
prices, at prevailing market prices at the time of sale, at prices related to
such prevailing market prices, at varying prices determined at the time of sale
or at negotiated prices. These sales may be effected in transactions on any
national securities exchange or quotation service on which the notes or the
ordinary shares issuable upon conversion of the notes may be listed or quoted at
the time of the sale. The selling holders may use any one or more of the
following methods when selling the notes or the ordinary shares issuable upon
conversion of the notes.:
- ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
- block trades in which the broker-dealer will attempt to sell the notes or
the ordinary shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction;
- purchase by a broker-dealer as principal and resale by the broker-dealer
for its account;
- an exchange distribution in accordance with the rules of the applicable
exchange;
- privately negotiated transactions;
- short sales;
- broker-dealers may agree with the selling holders to sell a specified
number of ordinary shares at a stipulated price per share;
- a combination of any such methods of sale; and
- any other method permitted pursuant to applicable law.
The selling holders may also sell notes or ordinary shares issuable upon
conversion of the notes under Rule 144A of the Securities Act, if available,
rather than under the prospectus.
The selling holders may also engage in short sales against the box, puts
and calls and other transactions in our securities or derivatives of our
securities and may sell or deliver shares in connection with these trades. The
selling holders may pledge their notes or ordinary shares to their brokers under
the margin provisions of customer agreements. If a selling holder defaults on a
margin loan, the broker, may, from time to time, offer and sell the pledged
notes or ordinary shares.
Our ordinary shares are listed for trading on the New York Stock Exchange.
While the notes are eligible for trading in the PORTAL market, we do not expect
the notes to remain eligible for trading on that market. We do not intend to
list the notes for trading on any national securities exchange or on the NASDAQ
National Market. We cannot assure you that a trading market for the notes will
develop. If a trading market for the notes fails to develop, the trading price
of the notes may decline.
Broker-dealers engaged by the selling holders may arrange for other
broker-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling holders (or, if any broker-dealer acts as agent
for the purchaser of notes or ordinary shares, from the purchaser) in amounts to
be negotiated.
The selling holders and any broker-dealers or agents that are involved in
selling the notes or the ordinary shares issuable upon conversion of the notes
may be deemed to be "underwriters" within the meaning of the Securities Act of
1933 in connection with the sales. In such event, any commissions received by
such broker-dealers or agents and any profit on the resale of the notes or
ordinary shares issuable upon conversion of the notes purchased by them may be
deemed to be underwriting commissions or discounts under the Securities Act.
We are required to pay all fees and expenses incident to the registration
of the notes and the ordinary shares issuable upon conversion of the notes,
except that all selling commissions and fees and other expenses incurred by the
selling holders will be borne by such holders.
55
58
LEGAL MATTERS
The validity of the notes and the ordinary shares issuable upon conversion
of the notes were passed upon for us by Carey Langlois, Island of Guernsey.
Certain legal matters in connection with the offering have passed upon for us by
Reboul, MacMurray, Hewitt, Maynard & Kristol, New York, New York.
EXPERTS
Ernst & Young LLP, independent auditors, have audited the Consolidated
Financial Statements and Schedule of Amdocs as set forth in their report
included in our Annual Report on Form 20-F/A for the year ended September 30,
2000, which is incorporated by reference in this prospectus. The Consolidated
Financial Statements and Schedule of Amdocs Limited are incorporated by
reference in reliance on Ernst & Young LLP's report, given on their authority as
experts in accounting and auditing.
Ernst & Young LLP, independent auditors, have audited the Financial
Statements and Schedules of ITDS as set forth in their report included in our
Registration Statement on Form F-3/A (No. 333-86609) dated October 4, 1999 and
incorporated herein by reference in this prospectus from our Report of Foreign
Private Issuer on Form 6-K dated December 13, 1999. The Financial Statements and
Schedule of ITDS are incorporated by reference in reliance on Ernst & Young
LLP's report, given on their authority as experts in accounting and auditing.
Ernst & Young LLP, independent auditors, have audited the Consolidated
Financial Statements of Solect as set forth in their report included in our
Report of Foreign Private Issuer on Form 6-K/A dated June 8, 2000, which is
incorporated by reference in this prospectus. The Consolidated Financial
Statements of Solect are incorporated by reference in reliance on Ernst & Young
LLP's report, given on their authority as experts in accounting and auditing.
AVAILABLE INFORMATION
We are subject to the informational requirements of the Exchange Act and in
accordance therewith file reports and other information with the SEC. These
reports and other information may be inspected and copied at the Public
Reference Section of the SEC at 450 Fifth Street, N.W, Judiciary Plaza,
Washington, D.C. 20549-1004. Information on the operation of the Public
Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. Reports and
information statements and other information filed electronically with the SEC
are available at the SEC's website at http://www.sec.gov.
ENFORCEABILITY OF CIVIL LIABILITIES
We are incorporated under the laws of the Island of Guernsey. Several of
our directors and officers are not residents of the United States, and a
significant portion of our assets and the assets of those persons are located
outside the United States. As a result, it may not be possible for investors to
effect service of process within the United States upon those persons or to
enforce against them in U.S. courts judgments predicated upon the civil
liability provisions of the laws of the United States, including the federal
securities laws.
We have been advised by Carey Langlois, our Guernsey counsel, that there is
doubt as to the enforceability against our directors and officers in Guernsey,
whether in original actions in a Guernsey court or in actions in a Guernsey
court for the enforcement of judgments of a U.S. court, of civil liabilities
predicated solely upon the laws of the United States, including the federal
securities laws. However, subject to certain time limitations, Guernsey courts
may base original actions in Guernsey on foreign final executory judgments,
including those of the United States, for liquidated amounts in civil matters,
obtained after completion of due process before a court of competent
56
59
jurisdiction (according to the rules of private international law currently
prevailing in Guernsey) which recognizes and enforces similar Guernsey
judgments, provided that:
- adequate service of process has been effected and the defendant has had a
reasonable opportunity to be heard;
- such judgments or the enforcement thereof are not contrary to the law,
public policy, security or sovereignty of Guernsey;
- such judgments were not obtained by fraudulent means and do not conflict
with any other valid judgment in the same matter between the same
parties; and
an action between the same parties in the same matter is not pending in any
Guernsey court at the time the lawsuit is instituted in the foreign court.
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60
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Guernsey law permits a company's articles of association to provide for the
indemnification of officers and directors except to the extent that such a
provision may be held by the courts of Guernsey to be contrary to public policy
(for instance, for purporting to provide indemnification against the
consequences of committing a crime) and except to the extent that Guernsey law
prohibits the indemnification of any director against any specific provisions of
Guernsey Company law under which personal liability may be imposed or incurred.
Under our Articles of Association, we are obligated to indemnify any person
who is made or threatened to be made a party to a legal or administrative
proceeding by virtue of being a director, officer or agent of Amdocs, provided
that we have no such obligation to indemnify any such persons for any claims
they incur or sustain by or through their own willful act or default.
We have entered into an indemnity agreement with our directors and some of
our officers, under which we have agreed to pay the indemnified party the amount
of Loss (as defined therein) suffered by that party due to claims made against
that party for a Wrongful Act (as defined therein).
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
------- -----------
2.1 Agreement and Plan of Merger dated as of September 3, 1999
among Amdocs Limited, Ivan Acquisition Corp. and
International Telecommunication Data Systems, Inc. (Exhibit
2.1 to Amdocs' Current Report on Form 6-K dated September
10, 1999)
2.2 Combination Agreement dated as of February 28, 2000 among
Amdocs Limited, Solect Technology Group Inc., Amdocs
(Denmark) ApS. and Amdocs Holdings ULC (Exhibit 2.1 to
Amdocs' Current Report on Form 6-K dated March 3, 2000)
2.3 Principal Securityholders Voting Agreement dated as of
February 28, 2000 among Amdocs Limited, Solect Technology
Group Inc., Amdocs (Denmark) ApS. and Amdocs Holdings ULC
(Exhibit 2.2 to Amdocs' Current Report on Form 6-K dated
March 3, 2000)
4.1 Specimen certificate for the ordinary shares of the
Registrant (Exhibit 4.1 to Amdocs' Registration Statement on
Form F-1 dated June 19, 1998; Registration Number 333-8826)
4.2 Stock Option and Incentive Plan, as amended, of Amdocs
(Exhibit 4.2 to Amdocs' Registration Statement on Form F-1
dated June 19, 1998; Registration No. 333-8826)
4.3 Note Purchase Agreement, dated as of September 22, 1997,
among European Software Marketing Ltd., WCAS Capital
Partners III, L.P., as Agent, and the several Purchasers
named in Schedule 1 thereto (Exhibit 4.3 to Amdocs'
Registration Statement on Form F-1 dated June 19, 1998;
Registration No. 333-8826)
4.4 Amended and Restated Credit Agreement, dated as of June 29,
1998, among European Software Marketing Limited, the other
subsidiaries of Amdocs named therein, the Initial Lenders,
Initial Issuing Bank and Swing Line Bank named therein, and
NationsBank, N.A., as Administrative Agent and the Bank of
Nova Scotia, as Syndication Agent (Exhibit 4.4 to Amdocs'
Registration Statement on Form F-1 dated June 7, 1999;
Registration No. 333-75151)
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EXHIBIT
NO. DESCRIPTION
------- -----------
4.5 Amendment No. 1, dated December 16, 1999, to the Amended and
Restated Credit Agreement among European Software Marketing
Ltd., the other subsidiaries of Amdocs named therein, the
Lenders, Initial Issuing Bank and Swing Line Bank named
therein, and Bank of America, N.A., as Administrative Agent
and the Bank of Nova Scotia, as Syndication Agent. (Exhibit
4.5 to Amdocs' Registration Statement on Form F-3, dated
June 14, 2000, Registration No. 333-39278)
4.6 Letter Amendment and Waiver No. 2, dated February 29, 2000,
to the Amended and Restated Credit Agreement among European
Software Marketing Ltd., the other subsidiaries of Amdocs
named therein, the Lenders, Initial Issuing Bank and Swing
Line Bank named therein, and Bank of America, N.A., as
Administrative Agent and the Bank of Nova Scotia, as
Syndication Agent. (Exhibit 4.6 to Amdocs' Registration
Statement on Form F-3, dated June 14, 2000, Registration No.
333-39278)
4.7 Share Subscription Agreement, dated as of September 22,
1997, among the several Investors named therein and Amdocs
(Exhibit 4.5 to Amdocs' Registration Statement on Form F-1
dated June 19, 1998; Registration No. 333-8826)
4.8 Conditional Investment Agreement, dated as of September 22,
1997, among the several investors named therein and Amdocs
(Exhibit 4.6 to Amdocs' Registration Statement on Form F-1
dated June 19, 1998; Registration No. 333-8826)
4.9 Letter Agreement, dated September 22, 1997, as amended as of
May 20, 1998, between Amdocs and Welsh, Carson, Anderson and
Stowe, on behalf of the Investors named therein (Exhibit 4.7
to Amdocs' Registration Statement on Form F-1 dated June 19,
1998; Registration No. 333-8826)
4.10 Letter of Understanding, dated September 22, 1997, between
Amdocs and Welsh, Carson, Anderson and Stowe, on behalf of
the Investors named therein (Exhibit 4.8 to Amdocs'
Registration Statement on Form F-1 dated June 19, 1998;
Registration No. 333-8826)
4.11 Shareholders Agreement, Summary of Terms, dated September
22, 1997 (Exhibit 4.9 to Amdocs' Registration Statement on
Form F-1 dated June 19, 1998; Registration No. 333-8826)
4.12 Certain proxies executed by investment partnerships
affiliated with Welsh, Carson, Anderson and Stowe and
certain other entities in favor of Conbond Holding Company
Ltd. (Exhibit 4.10 to Amdocs' Registration Statement on Form
F-1 dated June 19, 1998; Registration No. 333-8826)
4.13 Indenture dated May 30, 2001 between Amdocs and United
States Trust Company of New York (Exhibit 4.1 to Amdocs'
Form 6-K dated May 31, 2001)
4.14 Registration Rights Agreement dated May 30, 2001 between
Amdocs and Goldman, Sachs & Co. (Exhibit 4.2 to Amdocs' Form
6-K dated May 31, 2001)
*5.1 Opinion of Carey Langlois
*5.2 Opinion of Reboul, MacMurray, Hewitt, Maynard & Kristol
*12.1 Statement re: Computation of Ratio of Earnings to Fixed
Charges
*23.1 Consent of Ernst & Young LLP, independent auditors
*23.2 Consent of Ernst & Young LLP, independent auditors
*23.3 Consent of Ernst & Young LLP, independent auditors
*23.4 Consent of Carey Langlois (included in Exhibit 5.1)
*23.5 Consent of Reboul, MacMurray, Hewitt, Maynard & Kristol
(included in Exhibit 5.2)
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EXHIBIT
NO. DESCRIPTION
------- -----------
*24.1 Powers of Attorney (contained on the signature pages hereof)
*25.1 Form T-1 Statement of Eligibility of Trustee for Indenture
under the Trust Indenture Act of 1939
---------------
* Filed herewith.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 15, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-3
63
(3) To remove from registration by means of a post-effective amendment the
securities being registered which remain unsold at the termination of the
offering.
(4) To file a post-effective amendment to the registration statement to
include any financial statements required by Rule 3-19 of Regulation S-K, or to
incorporate such financial statements in the registration statement by reference
to a report filed or made pursuant to the Securities Exchange Act of 1934.
(5) For purposes of determining any liability under the Securities Act,
each filing of the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-4
64
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form F-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of New York, State of New York, on this 15th day of
August, 2001.
AMDOCS LIMITED
By: /s/ BRUCE K. ANDERSON
------------------------------------
Bruce K. Anderson
Chief Executive Officer
and Chairman of the Board
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each individual whose signature appears
below hereby constitutes and appoints Bruce K. Anderson and Robert A. Minicucci,
and each of them, as his true and lawful attorney-in-fact and agent with full
power of substitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto,
and all documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing which said
attorney-in-fact and agent may deem necessary or advisable to be done in
connection with this Registration Statement, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agent, or any substitute or substitutes for said
attorney-in-fact and agent, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ BRUCE K. ANDERSON Chairman of the Board and Chief August 15, 2001
--------------------------------------------------- Executive Officer (Principal
Bruce K. Anderson Executive Officer)
/s/ ROBERT A. MINICUCCI Director and Chief Financial August 15, 2001
--------------------------------------------------- Officer (Principal Financial
Robert A. Minicucci and Accounting Officer)
/s/ AVINOAM NAOR Director of Amdocs Limited and August 15, 2001
--------------------------------------------------- Chief Executive Officer of
Avinoam Naor Amdocs Management Limited
/s/ ADRIAN GARDNER Director August 15, 2001
---------------------------------------------------
Adrian Gardner
/s/ JAMES S. KAHAN Director August 15, 2001
---------------------------------------------------
James S. Kahan
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65
SIGNATURE TITLE DATE
--------- ----- ----
/s/ JOHN T. MCLENNAN Director August 15, 2001
---------------------------------------------------
John T. McLennan
Director
---------------------------------------------------
Lawrence Perlman
Director
---------------------------------------------------
Michael J. Price
/s/ MODI ROSEN Director August 15, 2001
---------------------------------------------------
Modi Rosen
Director
---------------------------------------------------
Ron Zuckerman
/s/ THOMAS G. O'BRIEN Amdocs Limited's Authorized August 15, 2001
--------------------------------------------------- Representative in the United
Thomas G. O'Brien States
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EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
------- -----------
2.1 Agreement and Plan of Merger dated as of September 3, 1999
among Amdocs Limited, Ivan Acquisition Corp. and
International Telecommunication Data Systems, Inc. (Exhibit
2.1 to Amdocs' Current Report on Form 6-K dated September
10, 1999)
2.2 Combination Agreement dated as of February 28, 2000 among
Amdocs Limited, Solect Technology Group Inc., Amdocs
(Denmark) ApS. and Amdocs Holdings ULC (Exhibit 2.1 to
Amdocs' Current Report on Form 6-K dated March 3, 2000)
2.3 Principal Securityholders Voting Agreement dated as of
February 28, 2000 among Amdocs Limited, Solect Technology
Group Inc., Amdocs (Denmark) ApS. and Amdocs Holdings ULC
(Exhibit 2.2 to Amdocs' Current Report on Form 6-K dated
March 3, 2000)
4.1 Specimen certificate for the ordinary shares of the
Registrant (Exhibit 4.1 to Amdocs' Registration Statement on
Form F-1 dated June 19, 1998; Registration Number 333-8826)
4.2 Stock Option and Incentive Plan, as amended, of Amdocs
(Exhibit 4.2 to Amdocs' Registration Statement on Form F-1
dated June 19, 1998; Registration No. 333-8826)
4.3 Note Purchase Agreement, dated as of September 22, 1997,
among European Software Marketing Ltd., WCAS Capital
Partners III, L.P., as Agent, and the several Purchasers
named in Schedule 1 thereto (Exhibit 4.3 to Amdocs'
Registration Statement on Form F-1 dated June 19, 1998;
Registration No. 333-8826)
4.4 Amended and Restated Credit Agreement, dated as of June 29,
1998, among European Software Marketing Limited, the other
subsidiaries of Amdocs named therein, the Initial Lenders,
Initial Issuing Bank and Swing Line Bank named therein, and
NationsBank, N.A., as Administrative Agent and the Bank of
Nova Scotia, as Syndication Agent (Exhibit 4.4 to Amdocs'
Registration Statement on Form F-1 dated June 7, 1999;
Registration No. 333-75151)
4.5 Amendment No. 1, dated December 16, 1999, to the Credit
Agreement among European Software Marketing Ltd., the other
subsidiaries of Amdocs named therein, the Lenders, Initial
Issuing Bank and Swing Line Bank named therein, and Bank of
America, N.A., as Administrative Agent and the Bank of Nova
Scotia, as Syndication Agent. (Exhibit 4.5 to Amdocs'
Registration Statement on Form F-3, dated June 14, 2000;
Registration No. 333-39278)
4.6 Letter Amendment and Waiver No. 2, dated February 29, 2000,
to the Credit Agreement among European Software Marketing
Ltd., the other subsidiaries of Amdocs named therein, the
Lenders, Initial Issuing Bank and Swing Line Bank named
therein, and Bank of America, N.A., as Administrative Agent
and the Bank of Nova Scotia, as Syndication Agent. (Exhibit
4.6 to Amdocs' Registration Statement on Form F-3, dated
June 14, 2000; Registration No. 333-39278)
4.7 Share Subscription Agreement, dated as of September 22,
1997, among the several Investors named therein and Amdocs
(Exhibit 4.5 to Amdocs' Registration Statement on Form F-1
dated June 19, 1998; Registration No. 333-8826)
4.8 Conditional Investment Agreement, dated as of September 22,
1997, among the several investors named therein and Amdocs
(Exhibit 4.6 to Amdocs' Registration Statement on Form F-1
dated June 19, 1998; Registration No. 333-8826)
4.9 Letter Agreement, dated September 22, 1997, as amended as of
May 20, 1998, between Amdocs and Welsh, Carson, Anderson and
Stowe, on behalf of the Investors named therein (Exhibit 4.7
to Amdocs' Registration Statement on Form F-1 dated June 19,
1998; Registration No. 333-8826)
67
EXHIBIT
NO. DESCRIPTION
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4.10 Letter of Understanding, dated September 22, 1997, between
Amdocs and Welsh, Carson, Anderson and Stowe, on behalf of
the Investors named therein (Exhibit 4.8 to Amdocs'
Registration Statement on Form F-1 dated June 19, 1998;
Registration No. 333-8826)
4.11 Shareholders Agreement, Summary of Terms, dated September
22, 1997 (Exhibit 4.9 to Amdocs' Registration Statement on
Form F-1 dated June 19, 1998; Registration No. 333-8826)
4.12 Certain proxies executed by investment partnerships
affiliated with Welsh, Carson, Anderson and Stowe and
certain other entities in favor of Conbond Holding Company
Ltd. (Exhibit 4.10 to Amdocs' Registration Statement on Form
F-1 dated June 19, 1998; Registration No. 333-8826)
4.13 Indenture dated May 30, 2001 between Amdocs and United
States Trust Company of New York (Exhibit 4.1 to Amdocs'
Form 6-K dated May 31, 2001)
4.14 Registration Rights Agreement dated May 30, 2001 between
Amdocs and Goldman, Sachs & Co. (Exhibit 4.2 to Amdocs' Form
6-K dated May 31, 2001)
*5.1 Opinion of Carey Langlois
*5.2 Opinion of Reboul, MacMurray, Hewitt, Maynard & Kristol
*12.1 Statement re: Computation of Ratio of Earnings to Fixed
Charges
*23.1 Consent of Ernst & Young LLP, independent auditors
*23.2 Consent of Ernst & Young LLP, independent auditors
*23.3 Consent of Ernst & Young LLP, independent auditors
*23.4 Consent of Carey Langlois (included in Exhibit 5.1)
*23.5 Consent of Reboul, MacMurray, Hewitt, Maynard & Kristol
(included in Exhibit 5.2)
*24.1 Powers of Attorney (contained on the signature pages hereof)
*25.1 Form T-1 Statement of Eligibility of Trustee for Indenture
under the Trust Indenture Act of 1939
---------------
* Filed herewith.