DOX:NYSE

Amdocs Ltd.

Recent Price (10/16/09) 52-Week Range

$26.89 $14.61 - $27.65

About DOX
Amdocs Limited (Amdocs) is a holding company. The Company's principal operating subsidiaries are located in
Cyprus, India, Ireland, Israel and the United States. Amdocs provides software and service for communications,
media and entertainment industry service providers. It develops, implements, and manages software and services
associated with the business support systems (BSS) and operational support systems (OSS). Its software systems
cover the range of revenue management, customer management, service and resource management, digital
commerce and service delivery, and information management. The Company's services portfolio includes
consulting and systems integration services, managed services, delivery services and product support services. The
Amdocs offering designed for service providers in high-growth emerging markets is called the Amdocs Compact
Convergence Solution. In April 2008, Amdocs acquired Jacobs Rimell, Ltd.

Financial Analysis

The schedule presented below shows the year-end balance sheets for the years between September 30, 2004 and
September 30, 2008 and for the trailing twelve months (TTM) for the period ending June 30, 2009. Accounts
receivable comprises approximately 26 percent of the business’s current assets. Cash and short-term investments
comprise approximately 64 percent of current assets.

Fixed assets include all of the company’s production machinery and equipment. As of June 30, 2009, they make up
approximately 11 percent of the business’s non-current assets. Goodwill and intangibles comprise approximately
71 percent of non-current assets.

Overall, the business’s total assets have increased approximately 60 percent during the five year period ending
September 30, 2008. The increase in total assets has been due primarily to increases in accounts receivable.

As the business’s earnings steadily increased, so did its equity. The company increased its equity by sixty percent
during the five-year period under consideration.
 Balance Sheet
(Amounts in Millions)
TTM FYE FYE FYE FYE FYE
06/60/09 09/30/08 09/30/07 09/30/06 09/30/05 09/30/04
Assets
Cash 684.90 718.90 615.50 607.20 707.60 550.40
ST Investments 595.40 525.50 563.80 372.20 438.00 640.30
Accounts Receivable 507.50 573.80 473.80 425.80 304.20 254.80
Inventory 0.00 0.00 0.00 0.00 0.00 0.00
Other Current Assets 202.10 187.40 216.40 233.50 177.90 142.50
Total Current Assets 1,989.90 2,005.60 1,869.50 1,638.70 1,627.70 1,588.00
Net Property,Plant & Equip. 279.20 317.10 283.80 220.30 181.80 181.10
LT Investments 0.00 0.00 0.00 0.00 0.00 0.00
Goodwill/Intangibles 1,790.60 1,796.90 1,792.60 1,809.30 1,129.30 854.40
Other LT Assets 439.10 459.50 399.40 294.50 263.70 240.40
Total Assets 4,498.80 4,579.10 4,345.40 3,962.80 3,202.50 2,863.90

Liabilities
Accounts Payable 111.90 382.10 415.00 418.70 313.90 242.10
Short Term Debt 1.00 1.70 2.10 2.00 8.50 21.30
Other Current Liabilities 527.10 446.30 558.40 611.10 536.60 511.10
Total Current Liabilities 640.00 830.00 975.50 1,031.70 858.90 774.40
LT Debt 301.00 450.00 450.00 450.00 450.30 450.30
Other LT Liabilities 483.10 493.80 319.60 327.00 236.80 195.00
Total Liabilities 1,424.20 1,773.90 1,745.10 1,808.70 1,546.00 1,419.70
Preferred Stock 0.00 0.00 0.00 0.00 0.00 0.00
Common Stock Equity 3,074.70 2,805.20 2,600.20 2,154.20 1,656.50 1,444.20
Total Liabilities & Equity 4,498.90 4,579.10 4,345.30 3,962.90 3,202.50 2,863.90

As part of my analysis of the company, I have analyzed the business’s income statements for the years September
30, 2004 through September 30, 2008 and for the twelve month period ending June 30, 2009.

Revenues have increased steadily from $1,773.7 million in FYE 2004 to $3,162.1 million in FYE 2008. During the
five-year period, the gross profit percentage has remained fairly stable, ranging from 35.9 percent to 42.2 percent.
The result is a seventy-four percent increase in gross margin dollars for the year ending September 2008, as
compared to September 2004. In recent years, operating expenses have been approximately 87.4 percent of
revenue.

Because operating expenses have grown at a rate greater than revenues, pre-tax operating profit has not grown in
line with revenues. Looking forward, we expect company management to focus on garnering a greater percentage
of sales from higher margin products.
 Income Statement
Amounts in Millions
TTM FYE FYE FYE FYE FYE
06/60/09 09/30/08 09/30/07 09/30/06 09/30/05 09/30/04
Sales 2,980.50 3,162.10 2,836.20 2,480.10 2,038.60 1,773.70
Cost of Goods Sold 1,914.80 2,026.30 1,796.40 1,583.80 1,295.70 1,122.80
Gross Income 1,065.70 1,135.80 1,039.80 896.30 742.90 650.90
Depreciation & Amortization 84.00 86.70 75.00 37.60 15.40 17.90
Research/Development 217.40 225.50 230.40 186.80 144.50 126.40
Interest Expense n/a n/a n/a n/a n/a n/a
Unusual Expenses/(Income) 32.90 13.90 6.80 25.70 12.60 0.00
Total Operating Expenses 2,608.50 2,756.50 2,478.70 2,147.90 1,700.10 1,477.50
Operating Income 371.90 405.60 357.50 332.20 338.50 296.20
Interest Expense - Non-Op. 0.00 6.80 6.50 5.40 5.70 12.90
Other Expenses/(Income) 12.90 (18.80) (57.00) (47.10) (28.00) (17.80)
Pretax Income 359.10 417.60 408.00 373.90 360.80 301.10
Income Taxes 35.90 38.60 43.10 55.20 72.20 66.20
Income After Taxes 323.10 378.90 364.90 318.60 288.60 234.90
Adjustments to Income 0.00 0.00 0.00 0.00 0.00 0.00
Income for Primary EPS 323.10 378.90 364.90 318.60 288.60 234.90
Nonrecurring Items 0.00 0.00 0.00 0.00 0.00 0.00
Net Income 323.00 378.90 364.90 318.60 288.60 234.90

The following schedule presents a comparative ratio analysis of DOX and other firms in the same industry. Four
categories of ratios (Profitability, Liquidity, Debt Management and Asset Management) have been used to
compare the operating results of Amdocs with that of the industry median. The company is compared the business
software and services industry.

The liquidity ratios give an indication of the company’s ability to meet its current obligations with the use of
current assets. As indicated by the comparative ratio analysis, Amdocs liquidity ratios are significantly better than
the industry median.

The debt management ratios indicate the extent to which the business’s assets are funded by debt. As shown in
the schedule, Amdocs is not highly leveraged.

The profitability ratios measure management’s effectiveness in overseeing the businesses resources. Compared to
the industry median, Amdocs is more effective than the industry in producing earnings from its assets.
 Industry Comparative Analysis

Industry Industry
PROFITABILITY Company Median LIQUIDITY Company Median
Gross Profit 35.80% 58.20% Quick ratio 3.10 1.10
Operating Margin 12.50% -13.30% Current Ratio 3.10 1.10
Net Profit Margin 10.80% -8.80% Payout Ratio 0.00 0.00
Return on Equity 11.00% 7.70% Times Interest Earned n/a -1.50
Return on Assets 7.10% -19.40%

Industry Industry
DEBT MANAGEMENT Company Median ASSET MANAGEMENT Company Median
Total Liab. / Total Assets 31.70% 54.00% Receivables Turnover 5.60 5.70
LT Debt / Equity 9.80% 0.00% Asset Turnover 0.70 0.90
LT Debt / Capital 8.90% 0.00% Inventory Turnover n/a 9.90

Valuation Metrics

Valuation Ratios

Industry
Company Median
Price Earnings 17.3 22.4
PE to Growth 1.0 1.2
Price to Book 1.7 2.0
Price to Sales 1.8 1.7
Price to Cash Flow 13.9 20.8
Price to Free Cash Flow 13.8 16.1

Value Conclusion

We use an EPS 2009E of $1.70 as compared to the consensus estimate of $2.08. This puts DOX selling at 15.8X our
estimate for FY 2009. We also have a FCF 2009E of $1.50 which is less than 2008A of $1.58 or the TTM $1.95. This
implies a P/FCF multiple of 17.9X. Based our analysis, we believe DOX is FAIRLY VALUED.