<PAGE>   1
 
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                    U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
 
                             ---------------------
 
                                   FORM 10-Q
(MARK ONE)
     [X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
           EXCHANGE ACT OF 1934.
 
               FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998
 
     [ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
           EXCHANGE ACT OF 1934.
 
               FOR THE TRANSITION PERIOD FROM           TO
 
                             ---------------------
 
                         COMMISSION FILE NUMBER 0-28834
 
                             ---------------------
 
                           ABACUS DIRECT CORPORATION
             (Exact name of registrant as specified in its charter)
 
<TABLE>
<S>                                            <C>
                  DELAWARE                                      84-1118166
       (State or other jurisdiction of                       (I.R.S. Employer
       incorporation or organization)                       Identification No.)
 
              8774 YATES DRIVE,                                    80030
            WESTMINSTER, COLORADO                               (Zip Code)
  (Address of principal executive offices)
</TABLE>
 
                                 (303) 657-2800
              (Registrants telephone number, including area code)
 
                             ---------------------
 
     Indicate by checkmark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  YES [X]  NO [ ]
 
                      APPLICABLE ONLY TO CORPORATE ISSUERS
 
     Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date. Common Stock, $0.001 par
value: 9,807,415 shares outstanding as of November 10, 1998.
 
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<PAGE>   2
 
                           ABACUS DIRECT CORPORATION
 
                               INDEX TO FORM 10-Q
                               SEPTEMBER 30, 1998
 
                         PART I. FINANCIAL INFORMATION
 
<TABLE>
<CAPTION>
                                                                       PAGE
                                                                       ----
<S>      <C>                                                           <C>
ITEM 1.  FINANCIAL STATEMENTS
         Statements of Operations....................................    3
         Balance Sheets..............................................    4
         Statements of Cash Flows....................................    5
         Notes to Condensed Financial Statements.....................    6
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS.........................    7
ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
         MARKET RISK.................................................   12
 
                        PART II. OTHER INFORMATION
 
ITEM 5.  OTHER INFORMATION...........................................   13
ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K............................   15
SIGNATURE............................................................   16
INDEX TO EXHIBITS....................................................   17
</TABLE>
 
                                        2
<PAGE>   3
 
                                     PART I
 
ITEM 1. FINANCIAL STATEMENTS
 
                           ABACUS DIRECT CORPORATION
 
                     STATEMENTS OF OPERATIONS -- UNAUDITED
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 
<TABLE>
<CAPTION>
                                                         THREE MONTHS ENDED    NINE MONTHS ENDED
                                                            SEPTEMBER 30,        SEPTEMBER 30,
                                                         -------------------   -----------------
                                                           1998       1997      1998      1997
                                                         --------   --------   -------   -------
<S>                                                      <C>        <C>        <C>       <C>
Net revenues...........................................  $16,008    $10,756    $34,458   $22,267
Cost of revenues.......................................    2,374      1,639      6,602     4,228
                                                         -------    -------    -------   -------
  Gross profit.........................................   13,634      9,117     27,856    18,039
Operating expenses:
  Selling and marketing................................    3,489      2,395      9,425     5,759
  General and administrative...........................    1,283      1,047      3,527     2,763
  Research and development.............................      400        329      1,251     1,040
  Facility relocation and other........................      360        102        360       102
                                                         -------    -------    -------   -------
          Total operating expenses.....................    5,532      3,873     14,563     9,664
                                                         -------    -------    -------   -------
Income from operations.................................    8,102      5,244     13,293     8,375
Interest and other income, net.........................      191         74        496       195
                                                         -------    -------    -------   -------
Income before income taxes.............................    8,293      5,318     13,789     8,570
Provision for income taxes.............................    3,303      1,941      5,309     3,128
                                                         -------    -------    -------   -------
          Net income...................................  $ 4,990    $ 3,377    $ 8,480   $ 5,442
                                                         =======    =======    =======   =======
Net income per common share -- basic...................  $  0.51    $  0.35    $  0.87   $  0.57
Net income per common share -- diluted.................  $  0.49    $  0.34    $  0.83   $  0.54
Weighted average number of outstanding common shares --
  basic................................................    9,721      9,569      9,702     9,535
Weighted average number of outstanding common shares --
  diluted..............................................   10,202     10,043     10,195    10,003
</TABLE>
 
            See accompanying Notes to Condensed Financial Statements
 
                                        3
<PAGE>   4
 
                           ABACUS DIRECT CORPORATION
 
                                 BALANCE SHEETS
                                 (IN THOUSANDS)
 
                                     ASSETS
 
<TABLE>
<CAPTION>
                                                              SEPTEMBER 30,   DECEMBER 31,
                                                                  1998            1997
                                                              -------------   ------------
                                                               (UNAUDITED)
<S>                                                           <C>             <C>
Current assets:
  Cash and cash equivalents.................................     $17,213        $10,490
  Accounts receivable (less allowance for doubtful accounts
     of $1,053 and $787 at September 30, 1998 and December
     31, 1997, respectively)................................      14,065          8,120
  Prepaid expenses and other assets.........................         437            391
  Income tax receivable.....................................          --             52
  Deferred tax assets.......................................         474            474
                                                                 -------        -------
          Total current assets..............................      32,189         19,527
Property and equipment, net.................................       4,234          3,065
                                                                 -------        -------
          Total assets......................................     $36,423        $22,592
                                                                 =======        =======
                           LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable..........................................     $   271        $   220
  Accrued expenses..........................................       3,739          3,166
  Obligations under capital leases..........................         323             14
  Income taxes payable......................................       2,656             --
                                                                 -------        -------
          Total current liabilities.........................       6,989          3,400
Obligations under capital leases, net of current portion....         694             15
Commitments and contingencies...............................          --             --
Stockholders' equity:
  Preferred stock, $1.00 par value, 1,000 shares authorized;
     no shares issued and outstanding.......................          --             --
  Common stock, $0.001 par value; 25,000 shares authorized;
     9,724 and 9,638 shares issued and outstanding at
     September 30, 1998 and December 31, 1997,
     respectively...........................................          10             10
  Additional paid-in capital................................       7,984          6,902
  Retained earnings.........................................      20,746         12,265
                                                                 -------        -------
          Total stockholders' equity........................      28,740         19,177
                                                                 -------        -------
          Total liabilities and stockholders' equity........     $36,423        $22,592
                                                                 =======        =======
</TABLE>
 
            See accompanying Notes to Condensed Financial Statements
 
                                        4
<PAGE>   5
 
                           ABACUS DIRECT CORPORATION
 
                     STATEMENTS OF CASH FLOWS -- UNAUDITED
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                              NINE MONTHS ENDED
                                                                SEPTEMBER 30,
                                                              ------------------
                                                               1998       1997
                                                              -------    -------
<S>                                                           <C>        <C>
Operating Activities
  Net income................................................  $ 8,480    $ 5,442
  Adjustments to reconcile net income to net cash provided
     by operating activities:
     Depreciation and amortization..........................    1,157        820
     Loss on disposal of equipment..........................        1          1
     Facility relocation and other..........................      183         --
Changes in assets and liabilities:
  Accounts receivable, net..................................   (5,945)    (5,934)
  Prepaid expenses and other assets.........................      (46)      (140)
  Accounts payable..........................................       51        208
  Accrued expenses..........................................      573        833
  Income taxes payable......................................    3,150      1,295
                                                              -------    -------
          Net cash provided by operating activities.........    7,604      2,525
Investing Activities
  Purchases of property and equipment.......................   (1,510)    (2,084)
  Proceeds from sales of equipment..........................       --         10
                                                              -------    -------
          Net cash provided by (used in) investing
           activities.......................................   (1,510)    (2,074)
Financing Activities
  Principal payments on capital leases......................      (10)       (11)
  Issuance (repurchases) of stock...........................      639        451
                                                              -------    -------
          Net cash provided by (used in) financing
           activities.......................................      629        440
                                                              -------    -------
Net increase (decrease) in cash.............................    6,723        891
Cash and cash equivalents at beginning of period............   10,490      5,924
                                                              -------    -------
Cash and cash equivalents at end of period..................  $17,213    $ 6,815
                                                              =======    =======
Supplemental Disclosure of Cash Flow Information
  Interest paid.............................................  $     2    $     1
  Income taxes paid.........................................  $ 2,264    $ 1,478
Supplemental Schedule of Non-Cash Investing Activities
  Purchase of equipment under capital lease.................  $ 1,000         --
</TABLE>
 
            See accompanying Notes to Condensed Financial Statements
 
                                        5
<PAGE>   6
 
                           ABACUS DIRECT CORPORATION
 
                    NOTES TO CONDENSED FINANCIAL STATEMENTS
 
NOTE 1. INTERIM FINANCIAL INFORMATION.
 
     These condensed financial statements are unaudited and have been prepared
by ABACUS Direct Corporation (the "Company") in accordance with generally
accepted accounting principles for interim financial information and with the
instructions under Rule 10-01 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting only of normal recurring adjustments)
considered necessary for a fair presentation have been reflected in these
condensed financial statements. Operating results for the quarter are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1998. Certain reclassifications have been made in the fiscal 1997
financial statements to conform to the 1998 presentation. For further
information, refer to the financial statements and footnotes thereto included in
the Company's Annual Report on Form 10-K for the year ended December 31, 1997.
 
                                        6
<PAGE>   7
 
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.
 
     The following discussion may be understood more fully by reference to the
financial statements, notes to the financial statements, and management's
discussion and analysis contained in the Company's Annual Report on Form 10-K
for the year ended December 31, 1997, as filed with the Securities and Exchange
Commission.
 
RESULTS OF OPERATIONS
 
  Three Months Ended September 30, 1998 Compared to Three Months Ended September
30, 1997
 
     Net Revenues. Net revenues increased 48.8% to $16.0 million for the three
months ended September 30, 1998 from $10.8 million for the three months ended
September 30, 1997 due primarily to an increase in sales to existing customers,
revenues from new customers and revenues from tests associated with developing
direct marketing initiatives outside the consumer catalog industry.
 
     Cost of Revenues. Cost of revenues increased 44.9% to $2.4 million for the
three months ended September 30, 1998 from $1.6 million for the three months
ended September 30, 1997 due primarily to increases in staff, depreciation and
processing costs associated with supporting higher revenues. Cost of revenues
decreased as a percentage of net revenues to 14.8% for the three months ended
September 30, 1998 from 15.2% for the three months ended September 30, 1997 due
primarily to the fixed cost nature of certain expenses which did not increase
proportionately with the growth in revenues.
 
     Selling and Marketing Expenses. Selling and marketing expenses increased
45.7% to $3.5 million or 21.8% of net revenues for the three months ended
September 30, 1998 from $2.4 million or 22.3% of net revenues for the three
months ended September 30, 1997. The increase in selling and marketing expenses
is due primarily to an increase in sales staff and associated expenses, higher
commissions as a result of significantly higher revenues, and the addition of
marketing personnel dedicated to developing new direct marketing initiatives
outside of the consumer catalog industry. The increase in the Company's sales
force is intended to reduce the average number of accounts serviced by an
account manager, improve customer service, and derive more revenues from
customers. The Company continued its development of direct marketing initiatives
outside the consumer catalog industry during the third quarter of 1998. Through
the initial stages of development, the Company has incurred, and expects to
continue to incur, costs in personnel, statistical modeling and other related
areas without an offsetting increase in revenues. While early testing in these
areas and initial customer response appear favorable, there can be no assurance
that meaningful revenues will be generated from these initiatives.
 
     General and Administrative. General and administrative expenses increased
22.5% to $1.3 million for the three months ended September 30, 1998 from $1.0
million for the three months ended September 30, 1997. The increase in general
and administrative expenses resulted primarily from increases in performance
bonuses, rent, professional fees and an increase in staff to support overall
Company growth. General and administrative expenses for the three months ended
September 30, 1998 decreased to 8.0% of net revenues compared to 9.7% for the
three months ended September 30, 1997 due primarily to the fixed cost nature of
certain expenses which did not increase proportionately with the growth in
revenues.
 
     Research and Development. Research and development expenses increased 21.5%
to $400,000 or 2.5% of net revenues for the three months ended September 30,
1998 from $329,000 or 3.1% of net revenues for the three months ended September
30, 1997. The increase in expense resulted from additional staff and development
efforts to achieve performance improvements in service efficiency in addition to
the development of new services.
 
     Facility Relocation and Other. During the third quarter of 1998, the
Company recorded a non-recurring charge of $360,000 for expenses related to its
planned move to a new headquarters facility. The move will consolidate two
leased facilities in Westminster, Colorado, where the Company's executive
offices and principal operations are currently located, into approximately
75,000 square feet of office space in Broomfield, Colorado in April 1999.
Included in the non-recurring charge is $183,000 for the impairment of fixed
assets (primarily office furniture, fixtures and equipment) that will not be
relocated to the Company's new
 
                                        7
<PAGE>   8
 
headquarters building. The remaining amount represents noncancelable lease
payments for its primary Westminster facility from the anticipated relocation
date through the expiration of the lease in September 1999. The charge of
$102,000 during the three months ended September 30, 1997 resulted from the
early termination of a consulting agreement with the Company's previous Chief
Financial Officer.
 
     Operating Profit. Operating profit increased 54.5% for the three months
ended September 30, 1998 to $8.1 million or 50.6% of net revenues from $5.2
million or 48.8% of net revenues for the three months ended September 30, 1997.
The increases in operating profit and operating margin are due primarily to the
combined effect of higher revenues and the fixed cost nature of certain
expenses, which did not increase proportionately. The improvement in operating
profit and margin was partially offset by growing investments in the development
of direct marketing initiatives outside the consumer catalog industry and the
increase in sales staff. Typically, revenue is much higher during the third
quarter of each year which results from a seasonal revenue pattern inherent in
the business of the Company. Accordingly, the margins achieved during the third
quarter are not indicative of the operating margin expected for the fourth
quarter and year ended December 31, 1998.
 
     Interest and Other Income, Net. Net interest income for the three months
ended September 30, 1998 increased 158.5% to $191,000 from $74,000 for the three
months ended September 30, 1997. The increase in interest income was due
primarily to interest earned on higher Company cash balances resulting from
internally generated funds.
 
     Income Taxes. The Company's provision for income taxes for the three months
ended September 30, 1998 increased to $3.3 million from $1.9 million for the
same period in 1997. The increase reflects a higher average tax rate due
primarily to higher pre-tax income and the expiration of a business research
expenditure credit available to the Company through June 30, 1998. For the three
months ended September 30, 1998, the Company's effective tax rate increased to
38.5% from an annual rate of 36.5% that was in effect during the same period in
1997.
 
     Net Income. Net income for the three months ended September 30, 1998
increased 47.8% to $5.0 million or $0.49 per common share (diluted) compared
with net income of $3.4 million or $0.34 per common share (diluted) for the
three months ended September 30, 1997. The increase in net income and net income
per common share reflects higher operating and net interest income.
 
  Nine Months Ended September 30, 1998 Compared to Nine Months Ended September
30, 1997
 
     Net Revenues. Net revenues increased 54.7% to $34.5 million for the nine
months ended September 30, 1998 from $22.3 million for the nine months ended
September 30, 1997 due primarily to an increase in sales to existing customers,
revenues from new customers and revenues from tests associated with developing
direct marketing initiatives outside the consumer catalog industry.
 
     Cost of Revenues. Cost of revenues increased 56.1% to $6.6 million for the
first nine months ended September 30, 1998 from $4.2 million for the first nine
months ended September 30, 1997, due primarily to increases in staff,
depreciation and processing costs associated with supporting higher revenues.
Cost of revenues increased as a percentage of net revenues to 19.2% for the nine
months ended September 30, 1998 from 19.0% for the nine months ended September
30, 1997, due primarily to an increase in staffing levels and higher software,
hardware and systems processing costs required to support higher revenues.
 
     Selling and Marketing Expenses. Selling and marketing expenses increased
63.6% to $9.4 million or 27.4% of net revenues for the nine months ended
September 30, 1998 from $5.8 million or 25.9% of net revenues for the nine
months ended September 30, 1997. The increase in selling and marketing expenses
is due primarily to an increase in sales staff and associated expenses, higher
commissions as a result of significantly higher revenues, and the addition of
marketing personnel dedicated to developing new direct marketing initiatives
outside of the consumer catalog industry. The increase in the Company's sales
force is intended to reduce the average number of accounts serviced by an
account manager, improve customer service, and derive more revenues from
customers. The Company continued its development of direct marketing initiatives
outside the consumer catalog industry during the third quarter of 1998. Through
the
 
                                        8
<PAGE>   9
 
initial stages of development, the Company has incurred, and expects to continue
to incur, costs in personnel, statistical modeling and other related areas
without an offsetting increase in revenues. While early testing in these areas
and initial customer response appear favorable, there can be no assurance that
meaningful revenues will be generated from these initiatives.
 
     General and Administrative. General and administrative expenses increased
27.7% to $3.5 million for the nine months ended September 30, 1998 from $2.8
million for the nine months ended September 30, 1997. The increase in general
and administrative expenses resulted primarily from increases in performance
bonuses, rent, professional fees and an increase in staff to support overall
Company growth. General and administrative expenses for the nine months ended
September 30, 1998 decreased to 10.2% of net revenues compared to 12.4% for the
nine months ended September 30, 1997 due primarily to the fixed cost nature of
certain expenses which did not increase proportionately with the growth in
revenues.
 
     Facility Relocation and Other. During the third quarter of 1998, the
Company recorded a non-recurring charge of $360,000 for expenses related to its
planned move to a new headquarters facility. The move will consolidate two
leased facilities in Westminster, Colorado, where the Company's executive
offices and principal operations are currently located, into approximately
75,000 square feet of office space in Broomfield, Colorado in April 1999.
Included in the non-recurring charge is $183,000 for the impairment of fixed
assets (primarily office furniture, fixtures and equipment) that will not be
relocated to the Company's new headquarters building. The remaining amount
represents noncancelable lease payments for its primary Westminster facility
from the anticipated relocation date through the expiration of the lease in
September 1999. The charge of $102,000 during the nine months ended September
30, 1997 resulted from the early termination of a consulting agreement with the
Company's previous Chief Financial Officer.
 
     Research and Development. Research and development expenses increased 20.3%
to $1.3 million or 3.6% of net revenues for the nine months ended September 30,
1998 from $1.0 million or 4.7% of net revenues for the nine months ended
September 30, 1997. The increase in expense resulted from additional staff and
development efforts to achieve performance improvements in service efficiency in
addition to the development of new services.
 
     Operating Profit. Operating profit increased 58.7% for the nine months
ended September 30, 1998 to $13.3 million or 38.6% of net revenues from $8.4
million or 37.6% of net revenues for the nine months ended September 30, 1997.
The increases in operating profit and operating margin are due primarily to the
combined effect of higher revenues and the fixed cost nature of certain
expenses, which did not increase proportionately. The improvement in operating
profit and margin was partially offset by growing investments in the development
of direct marketing initiatives outside the consumer catalog industry and the
increase in sales staff.
 
     Interest and Other Income, Net. Net interest income for the nine months
ended September 30, 1998 increased 154.4% to $496,000 from $195,000 for the nine
months ended September 30, 1997. The increase in interest income was due
primarily to interest earned on higher Company cash balances resulting from
internally generated funds.
 
     Income Taxes. The Company's provision for income taxes for the nine months
ended September 30, 1998 increased to $5.3 million from $3.1 million for the
same period in 1997. The increase reflects a higher average tax rate due
primarily to higher pre-tax income and the expiration of a business research
expenditure credit available to the Company through June 30, 1998. For the nine
months ended September 30, 1998, the Company's effective income tax rate
increased to 38.5% from an annual rate of 36.5% that was in effect during the
same period in 1997.
 
     Net Income. Net income for the nine months ended September 30, 1998
increased 55.8% to $8.5 million or $0.83 per common share (diluted) compared
with net income of $5.4 million or $0.54 per common share (diluted) for the nine
months ended September 30, 1997. The increase in net income and net income per
common share reflects higher operating and net interest income.
 
                                        9
<PAGE>   10
 
SEASONALITY
 
     The Company's business is seasonal in nature. The third and fourth quarters
of each year include the peak selling season during which the Company supplies
the direct marketing industry with data services in advance of the fall and
holiday seasons. In the first and second quarters, orders are fewer and smaller.
As a result, cost of operations, sales and marketing, general and
administrative, and research and development expenses as a percentage of net
revenues are usually higher and operating profit is usually lower during the
first half of each year.
 
LIQUIDITY AND CAPITAL RESOURCES
 
     The Company's cash provided by operating activities for the nine months
ended September 30, 1998 was $7.6 million compared to $2.5 million for the nine
months ended September 30, 1997. For the nine months ended September 30, 1998,
the increase in operating cash flow was due primarily to higher net income,
which was partially offset by additional investment in working capital
(primarily accounts receivable) to support the increase in net revenues as
compared to the same period during the previous year. As of September 30, 1998,
net working capital increased by $9.1 million to $25.2 million as of September
30, 1998 compared to $16.1 million as of December 31, 1997.
 
     Cash used in investing activities was $1.5 million for the nine months
ended September 30, 1998 compared to $2.1 million for the nine months ended
September 30, 1997. These activities represent capital expenditures for computer
equipment and peripheral systems and office equipment necessary to support
revenue growth. For the remainder of 1998, the Company anticipates making
additional investments in its computing infrastructure. As a result of the
Company's planned relocation to a new headquarters facility in Broomfield,
Colorado in April 1999, the Company anticipates that it will spend approximately
$2.2 million for office furniture, leasehold improvements and other relocation
expenses. Funding for these expenditures will come from existing cash reserves,
operating cash flow and lease financing. On September 2, 1998, the Company
entered into an equipment lease agreement providing for the lease of $1.0
million in computer equipment at $31,530 per month for a period of 36 months.
The obligations of the Company under such agreement are secured by the leased
equipment and the lease is accounted for as a capital lease. As part of its
recently announced plans for a joint venture with VNU, the Company plans to
invest approximately $2.0 million to develop the operations of the joint venture
during the next twelve months.
 
     During the nine months ended September 30, 1998, net cash generated from
financing activities was $629,000 compared to $440,000 for the nine months ended
September 30, 1997 due primarily to proceeds received from the exercise of
employee stock options that were partially offset by principal payments on an
existing capital lease obligation.
 
     The Company's principal sources of liquidity are cash generated from
operations as well as cash and cash equivalents, which totaled approximately
$17.2 million at September 30, 1998. Historically, the Company has funded its
operations through cash flow from operations and debt and equity financing. The
Company believes that its cash flow from operations and cash on hand will
provide sufficient resources to meet its capital requirements and operational
needs for the foreseeable future.
 
YEAR 2000 ISSUE
 
     For many years, computer systems and applications were often programmed to
assume that the century portion of a date was "19" to conserve the use of
storage and memory. This assumption resulted in the use of two-digits (rather
than four) to define an applicable year. Accordingly, computer systems that rely
on two-digits to define an applicable year may recognize a date using "00" as
the year 1900, rather than the year 2000 (the "Year 2000 Issue"). This could
result in a system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process or transmit data
or engage in normal business activities.
 
     The Company is currently in the process of assessing its Year 2000
readiness. This assessment includes a review of the Company's internal
information technology systems, non-information technology systems and
 
                                       10
<PAGE>   11
 
the systems of third parties upon which the Company's systems may rely.
Preliminarily, it appears that the Company will be required to modify or replace
its proprietary software so that its computer systems will properly utilize
dates beyond December 31, 1999. The Company presently believes that with
modifications to existing software and, in certain instances, conversions to new
software, the Year 2000 Issue can be mitigated. However, if such modifications
and conversions are not made, or are not completed timely, the Year 2000 Issue
could have a material adverse impact on the operations of the Company.
 
     The Company is in the process of communicating with all of its significant
suppliers and members of the Abacus Alliance to determine the extent to which
the Company is vulnerable to those third parties' failure to remediate their own
Year 2000 Issues. Presently, the Company is reviewing the transactional files
contributed by the Abacus Alliance members to determine if those files contain
date-sensitive data which may require modification or conversion to recognize
the correct century prior to loading to the Abacus Alliance database. Similarly,
demographic information that is obtained from a third party and used to enhance
the transactional data on the Abacus Alliance database may also require
conversion or modification to be Year 2000 compliant. To the extent that the
systems of third parties or other companies on which the Company's systems rely
are not timely converted or if such conversion is incompatible with the
Company's systems, the Company's operations may be adversely affected.
 
     The Company is utilizing both internal and external resources to reprogram,
or replace, and test the software for Year 2000 modifications. Costs incurred by
the Company in its Year 2000 remediation efforts must be expensed as incurred.
In addition, the replacement of computer hardware or software to comply with the
Year 2000 Issue may result in a charge to income. The Company plans to complete
the Year 2000 project in 1999. The total remaining cost of the Year 2000 project
is estimated at $400,000 to $600,000 and is being funded through operating cash
flow and is not expected to have a material effect on the results of operations
or financial condition of the Company. Through the third quarter of 1998, the
Company has incurred and expensed approximately $150,000 related to the
assessment of, and preliminary efforts in connection with, its Year 2000 project
and the development of a remediation plan. The Company has not yet developed any
contingency plans in the event its Year 2000 remediation efforts are
unsuccessful, but plans to do so in 1999. While the Company has not identified a
reasonably likely worst case scenario in the event it doesn't become Year 2000
compliant, the Company continues to evaluate the Year 2000 Issue and is
attempting to address any Year 2000 deficiencies.
 
     The Company's total Year 2000 project cost and estimates to complete
include the estimated costs and time associated with the impact of a third
party's Year 2000 Issue, and are based on presently available information.
However, there can be no guarantee that the systems of other companies on which
the Company's systems rely will be timely converted, or that failure to convert
by another company, or a conversion that is incompatible with the Company's
systems, would not have a material adverse effect on the Company. The cost of
the project and the date on which the Company plans to complete the Year 2000
modifications are based on management's best estimates, which were derived
utilizing numerous assumptions of future events including the continued
availability of certain resources, third party modification plans and other
factors. However, there can be no guarantee that these estimates will be
achieved and actual results could differ materially from those plans. Specific
factors that might cause such material differences include, but are not limited
to, the availability and cost of personnel trained in this area, the ability to
locate and correct all relevant computer codes, and similar uncertainties.
 
FORWARD-LOOKING INFORMATION
 
     Certain statements in this Form 10-Q and elsewhere (such as in other
filings by the Company with the Securities and Exchange Commission, press
releases, presentations by the Company or its management and oral statements)
may constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
include those relating to future opportunities, the outlook of customers, the
expansion of the Abacus Alliance, the reception of new services and
technologies, resolution of the Year 2000 Issue, the VNU joint venture, the
success of new initiatives and the likelihood of incremental revenues offsetting
expenses related to those new initiatives. In addition, such forward-looking
statements involve known and unknown risks, uncertainties, and other factors
which may
                                       11
<PAGE>   12
 
cause the actual results, performance or achievements of the Company to be
materially different from any future results expressed or implied by such
forward-looking statements. Such factors include: (i) demand for the Company's
services from the direct marketing industry; (ii) governmental regulation
regarding privacy issues; (iii) the actions of current and potential new
competitors; (iv) changes in technology; (v) the seasonality and cyclical nature
of the direct marketing industry; (vi) changes in postal rates and paper prices;
(vii) the nature and amount of the Company's revenues and expenses; and (viii)
overall economic conditions and other risks detailed from time to time in the
Company's periodic earnings releases and reports filed with the Securities and
Exchange Commission, as well as the risks and uncertainties discussed in this
Form 10-Q.
 
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
 
     The Company is exposed to interest rate risk primarily through its
portfolio of cash equivalents and short-term marketable securities, which is
designed for safety of principal, liquidity and diversification. Such
investments are subject to inherent interest rate risk as they mature and are
renewed at current market rates. The Company does not presently use derivative
financial instruments to adjust its risk profile. The Company is subject to
competitive and fluctuating economic conditions of the direct marketing industry
as a result of the Company's activities in such industry.
 
                                       12
<PAGE>   13
 
                                    PART II
 
ITEM 5. OTHER INFORMATION.
 
OFFICER AND DIRECTOR ADDITIONS
 
     The Board of Directors of the Company has appointed Robert L. North as a
Director. Since 1987, Mr. North has served as President and Chief Executive
Officer of HNC Software, Inc., a publicly traded software development company.
 
     The Company has entered into an employment agreement (the "Employment
Agreement"), dated November 2, 1998, with Christopher M. Dice, pursuant to which
he will serve as President and Chief Operating Officer of the Company. Mr. Dice
was hired to fill the vacancy created by Daniel C. Snyder, who has assumed the
position as President of Emerging Markets and Chairman of ABACUS Direct Europe.
 
     The Employment Agreement has an initial term of one year and provides for
automatic renewal for up to three additional one year periods, unless the
Company or Mr. Dice elects to terminate the Employment Agreement by written
notice. The Employment Agreement provides for an initial annual base salary of
$225,000, with future increases based on increases in the consumer price index
or by such higher amount as determined by the Company's Board of Directors. The
Employment Agreement also provides that Mr. Dice may be granted a bonus of up to
fifty percent (50%) of Mr. Dice's base salary based on the Company's financial
performance, and any additional bonus the Company's Board of Directors may deem
appropriate. In addition, the Employment Agreement provides for the grant of
stock options to purchase 125,000 shares of Common Stock at an exercise price
equal to the fair market value of the Common Stock on the date of grant, which
become exercisable in four equal annual installments commencing the first
anniversary of the date of grant.
 
     The Company may terminate the Employment Agreement for disability or with
or without cause. Mr. Dice may terminate his Employment Agreement in the event
of (i) a material breach of the agreement by the Company, (ii) Mr. Dice's
removal from his current position without cause, or (iii) "a change in control"
of the Company. In the event the Company terminates Mr. Dice's employment for a
reason other than disability or cause, or if Mr. Dice terminates his employment
as set forth above, or if the Employment Agreement is not renewed, Mr. Dice will
be entitled to receive a payment equal to his annual base salary then in effect
and the bonus amount Mr. Dice would have been eligible for on the date of the
termination. Under the Employment Agreement, "change in control" of the Company
means (i) the acquisition by any person of beneficial ownership of forty percent
(40%) or more of the voting stock of the Company or (ii) the approval by the
Board of Directors of a sale of all or substantially all of the assets of the
Company unless Mr. Dice is a member of the Board of Directors who affirmatively
votes in favor of such sale transaction resulting in the "change of control."
 
     In connection with the appointment of Messrs. North and Dice, the Company
entered into its standard form of agreement for its officers and directors
providing for indemnification for liability for acts and omissions as directors
and officers of the Company.
 
JOINT VENTURE AND STRATEGIC ALLIANCE
 
     The Company anticipates signing a definitive agreement with VNU Business
Information Europe B.V. ("VNU"), a Dutch publishing and business information
company, providing for the creation of a joint venture in which the Company will
have a 50% ownership interest. The joint venture, ABACUS Direct Europe, is being
formed to create an alliance similar to the ABACUS Alliance, which will provide
services similar to those of the Company to the European Community. ABACUS and
VNU will contribute approximately $2.0 million in debt and equity during the
next 12 months as well as certain services, information and licenses.
 
     On October 6, the Company formed a strategic alliance with Catalog City,
Inc. ("Catalog City"), an on-line portal offering on-line shopping services to
catalog shoppers, to jointly promote each others services and share certain
accrued e-commerce data. In connection with the formation of the strategic
alliance, the Company was granted rights to acquire certain stock of Catalog
City, and M. Anthony White, Chairman of
 
                                       13
<PAGE>   14
 
the Board and Chief Executive Officer of the Company, or another executive
officer of the Company designated by Mr. White, has agreed to serve on the Board
of Directors of Catalog City.
 
EQUIPMENT LEASE
 
     On September 2, 1998, the Company entered into an equipment lease agreement
with COMDISCO, Inc. providing for the lease of $1.0 million in computer
equipment at $31,530 per month for a period of 36 months. The obligations of the
Company under such agreement are secured by the leased equipment and the lease
is accounted for as a capital lease.
 
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
 
     (a) Exhibits.
 
     The following exhibit is hereby filed as part of this Quarterly Report on
Form 10-Q.
 
<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                            DESCRIPTION OF DOCUMENT
        -------                            -----------------------
<C>                      <S>
         10.01           -- Master Lease dated September 2, 1998, between COMDISCO,
                            Inc. as Lessor, and the Company.
         10.02           -- Employment Agreement dated November 2, 1998 between the
                            Company and Christopher M. Dice.
         10.03           -- Form of Indemnification Agreement entered into between
                            the Company and each of its officers and directors.
                            Incorporated by reference to Exhibit 3.01 to the
                            Registration Statement on Form SB-2 filed by the Company
                            on August 7, 1996 (Registration No. 333-5380).
         27.01           -- Financial Data Schedule (for electronic filing only).
</TABLE>
 
                                       14
<PAGE>   15
 
                                   SIGNATURE
 
     In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
 
                                            ABACUS DIRECT CORPORATION
 
                                            By:     /s/ CARLOS E. SALA
                                              ----------------------------------
                                                        Carlos E. Sala
                                               Senior Vice President -- Finance
                                                 and Chief Financial Officer
 
                                                   (Principal Financial and
                                                           Accounting
                                                 Officer and duly authorized
                                                            officer)
 
Dated: November 16, 1998
 
                                       15
<PAGE>   16
 
                               INDEX TO EXHIBITS
 
<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                            DESCRIPTION OF DOCUMENT
        -------                            -----------------------
<C>                      <S>
         10.01           -- Master Lease dated September 2, 1998, between COMDISCO,
                            Inc. as Lessor, and the Company.
         10.02           -- Employment Agreement dated November 2, 1998 between the
                            Company and Christopher M. Dice.
         10.03           -- Form of Indemnification Agreement entered into between
                            the Company and each of its officers and directors.
                            Incorporated by reference to Exhibit 3.01 to the
                            Registration Statement on Form SB-2 filed by the Company
                            on August 7, 1996 (Registration No. 333-5380).
         27.01           -- Financial Data Schedule (for electronic filing only).
</TABLE>