<PAGE>

                       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 June 30, 1998

                                         OR

/ /             TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

                       OF THE SECURITIES EXCHANGE ACT OF 1934

                For the transition period from ________ to ________

                          Commission file number: 0-28268

                            USCS INTERNATIONAL, INC.
           --------------------------------------------------------------
               (Exact name of registrant as specified in its charter)

         DELAWARE                                       94-1727009
-------------------------------------                   ------------------
(State or other jurisdiction of                         (IRS Employer
 incorporation or organization)                         Identification)

2969 PROSPECT PARK DRIVE,
RANCHO CORDOVA,  CALIFORNIA                             95670-6148
------------------------------------------------        ---------------
(Address of principal executive offices)                (Zip Code)

Registrant's telephone number, including area code (916) 636-4500

-------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                          Yes      X              No
                                  ---                    ---

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

    Class                                    Outstanding at July 31, 1998
    -----------------------------            ---------------------------------
    Common Stock, $.05 par value             23,286,188 shares


                                          1
<PAGE>

                              USCS INTERNATIONAL, INC.
                                REPORT ON FORM 10-Q
                        FOR THE QUARTER ENDED JUNE 30, 1998


<TABLE>
<CAPTION>
                                                                     Page No.
                                                                     --------
<S>                                                                  <C>
Part I.  Financial Information

   Item 1.  Financial Statements                                        3

    Consolidated Condensed Balance Sheets
    June 30, 1998 (Unaudited) and December 31, 1997                     4

    Consolidated Condensed Statements of Operations (Unaudited)         
    Three months and six months ended June 30, 1998 and 1997            5
                                                                       

    Consolidated Condensed Statements of Comprehensive Income
    (Unaudited) Three months and six months ended June 30, 1998
    and 1997                                                            6

    Consolidated Condensed Statements of Cash Flows (Unaudited)
    Six months ended June 30, 1998 and 1997                             7

    Notes to Consolidated Condensed Financial Statements                8

   Item 2.  Management's Discussion and Analysis of Financial
            Condition, Results of Operations, and Certain Factors
            That May Affect Future Results.                            9 - 18

   Item 3.  Quantitative and Qualitative Disclosures About Market
            Risk                                                        19

Part II. Other Information

   Item 1.  Legal Proceedings                                           19

   Item 2.  Changes in Securities                                       19

   Item 3.  Defaults Upon Senior Securities                             19

   Item 4.  Submission of Matters to a Vote of Security Holders       19 - 20

   Item 5.  Other Information                                           20

   Item 6.  Exhibits and Reports on Form 8-K                            20

            Signature                                                   21

</TABLE>


                                          2
<PAGE>

                               USCS INTERNATIONAL, INC.


PART I.   FINANCIAL INFORMATION

Item 1.   Financial Statements

The following consolidated condensed financial statements, except for the
balance sheet as of December 31, 1997, have been prepared by USCS International,
Inc. (the "Company") without audit by independent public accountants, but in
accordance with the rules and regulations of the Securities and Exchange
Commission ("SEC") and, in the opinion of the Company, include all adjustments
(consisting only of normal recurring adjustments) necessary for a fair statement
of results for each period shown. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
SEC rules and regulations. The Company believes that the disclosures made are
adequate to make the information presented not misleading.  These financial
statements should be read in conjunction with the financial statements and notes
thereto included in the Company's Annual Report to Stockholders and the
Company's Annual Report on Form 10-K for the year ended December 31, 1997. The
results of operations for the quarter and six months ended June 30, 1998 are not
necessarily indicative of the results to be expected for the entire year ending
December 31, 1998.










                                          3
<PAGE>


                              USCS INTERNATIONAL, INC.
                       CONSOLIDATED CONDENSED BALANCE SHEETS

                 (In thousands except share and per share amounts)

<TABLE>
<CAPTION>

                                                                             June 30,      December 31,
                                                                               1998            1997
                                                                            -----------    ------------
                                                                            (unaudited)
<S>                                                                         <C>            <C>
                                                 ASSETS
Current Assets:
    Cash                                                                    $    13,165    $     2,787
    Accounts receivable, net                                                     70,602         71,970
    Postage receivable                                                           24,470         25,684
    Current portion of net investment in leases                                   4,930          5,892
    Paper products and other inventory                                            4,734          4,573
    Other                                                                         8,821          9,853
                                                                            -----------    -----------
       Total current assets                                                     126,722        120,759
Property and equipment, net                                                     100,394        101,631
Net investment in leases, net of current portion                                  5,413          4,686
Other                                                                            17,665         11,543
                                                                            -----------    -----------
Total assets                                                                $   250,194    $   238,619
                                                                            -----------    -----------
                                                                            -----------    -----------

                  LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
    Accounts payable and accrued expenses                                   $    55,601    $    62,656
    Current portion of long-term debt                                             5,622          3,865
    Deferred revenue                                                              6,101          4,529
                                                                            -----------    -----------
        Total current liabilities                                                67,324         71,050
Long-term debt, net of current portion                                            3,454          5,453
Customer deposits                                                                18,592         18,170
Other liabilities                                                                12,435         12,585
                                                                            -----------    -----------
          Total liabilities                                                     101,805        107,258
                                                                            -----------    -----------

Stockholders' Equity:
    Preferred Stock, $.05 par value, 10,000,000 shares authorized;
       no shares issued and outstanding                                               -                -
    Common Stock, $.05 par value,
        40,000,000 shares authorized; 23,427,582 shares issued and
        23,330,099 shares outstanding  at June 30, 1998 (unaudited) and
        23,427,582 shares issued and 22,947,233 shares outstanding
        at December 31, 1997                                                      1,171          1,171
    Additional paid-in capital                                                   53,329         56,504
    Retained earnings                                                            95,957         82,897
    Treasury stock                                                               (1,895)        (9,047)
    Foreign currency translation adjustment                                        (173)          (164)
                                                                            -----------    -----------
       Total stockholders' equity                                               148,389        131,361
                                                                            -----------    -----------
Total liabilities and stockholders' equity                                  $   250,194    $   238,619
                                                                            -----------    -----------
                                                                            -----------    -----------

</TABLE>


                                          4
<PAGE>

                           USCS INTERNATIONAL, INC.
               CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

                                 (unaudited)
                   (In thousands except per share amounts)
<TABLE>
<CAPTION>

                                                      Three months ended                          Six months ended
                                                           June 30,                                   June 30,
                                                  -------------------------------            ------------------------------
                                                    1998                 1997                    1998                1997
                                                 ---------              ---------            ---------            ---------
<S>                                              <C>                    <C>                  <C>                  <C>
Revenue:
  Software and services:
    Customer management                          $  41,890              $  37,655            $  81,569            $  75,434
    Bill processing                                 36,360                 29,521               68,673               57,919
                                                 ---------              ---------            ---------            ---------
      Total                                         78,250                 67,176              150,242              133,353
  Equipment sales and services                       7,284                  5,522               13,820               10,315
                                                 ---------              ---------            ---------            ---------
      Total revenue                                 85,534                 72,698              164,062              143,668
                                                 ---------              ---------            ---------            ---------

Cost of revenue:
  Software and services:
    Customer management                             19,943                 17,383               38,580               35,911
    Bill processing                                 25,805                 21,064               49,464               41,924
                                                 ---------              ---------            ---------            ---------
      Total                                         45,748                 38,447               88,044               77,835
  Equipment sales and services                       4,893                  2,728                9,174                5,526
                                                 ---------              ---------            ---------            ---------
      Total cost of revenue                         50,641                 41,175               97,218               83,361
                                                 ---------              ---------            ---------            ---------
Gross profit                                        34,893                 31,523               66,844               60,307
                                                 ---------              ---------            ---------            ---------

Operating expenses:

  Research and development                           8,532                  7,860               16,657               14,731
  Selling, general and administrative               15,092                 14,197               28,488               27,462
                                                 ---------              ---------            ---------            ---------
      Total operating expenses                      23,624                 22,057               45,145               42,193
                                                 ---------              ---------            ---------            ---------
Operating income                                    11,269                  9,466               21,699               18,114
Interest expense, net                                  136                    186                  289                  355
                                                 ---------              ---------            ---------            ---------

Income before income taxes                          11,133                  9,280               21,410               17,759

Income tax provision                                 4,342                  3,678                8,350                7,104
                                                 ---------              ---------            ---------            ---------
Net income                                       $   6,791              $   5,602            $  13,060            $  10,655
                                                 ---------              ---------            ---------            ---------
                                                 ---------              ---------            ---------            ---------
Earnings per share:
  Basic                                          $    0.29               $    0.24           $    0.56             $   0.46
  Diluted                                        $    0.28               $    0.23           $    0.55             $   0.44
Weighted average common shares
      and equivalents:
  Basic                                             23,356                 23,152               23,195               23,124
  Diluted                                           24,099                 24,285               23,930               24,209

</TABLE>


                                          5
<PAGE>


                               USCS INTERNATIONAL, INC.
                         CONSOLIDATED CONDENSED STATEMENTS OF
                                 COMPREHENSIVE INCOME

                                     (unaudited)
                                    (In thousands)
<TABLE>
<CAPTION>
                                    Three months ended     Six months ended
                                         June 30,                June 30,
                                    ------------------     --------------------
                                      1998        1997       1998        1997
                                    -------     -------    --------    -------
<S>                                 <C>        <C>        <C>          <C>
Net income                          $ 6,791     $ 5,602    $ 13,060    $ 10,655
Other comprehensive income:
  Foreign currency translation
   adjustment                           (21)         48          (9)        (19)
                                    -------     -------    --------     -------
  Comprehensive income              $ 6,770     $ 5,650    $ 13,051    $ 10,636
                                    -------     -------    --------     -------
                                    -------     -------    --------     -------
</TABLE>


                                          6
<PAGE>


                            USCS INTERNATIONAL, INC.
                CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

                                  (unaudited)
                                (In thousands)

<TABLE>
<CAPTION>


                                                                                     Six months ended
                                                                                         June 30,
                                                                         -------------------------------------
                                                                             1998                       1997
                                                                         ---------                  ---------
<S>                                                                      <C>                        <C>
Cash flows from operating activities:
     Net income                                                          $  13,060                  $  10,655
     Depreciation and amortization                                          13,496                     11,558
     Net change in operating assets and liabilities                          1,668                     (5,239)
                                                                         ---------                  ---------
Net cash provided by operating activities                                   28,224                     16,974
                                                                         ---------                  ---------
Cash flows from investing activities:

     Capital expenditures, net                                             (12,098)                   (11,990)
     Other                                                                  (2,950)                    (3,020)
                                                                         ---------                  ---------
Net cash used in investing activities                                      (15,048)                   (15,010)
                                                                         ---------                  ---------

Cash flows from financing activities:
     Net paydown under revolving credit agreement                           (4,000)                         -
     Payments on long-term debt                                             (3,669)                    (3,394)
     Proceeds from issuance of long-term debt                                7,427                          -
     Proceeds from issuance of common stock                                      -                      1,619
     Purchases of treasury stock net of issuances                           (2,556)                         -
                                                                         ---------                  ---------
Net cash used in financing activities                                       (2,798)                    (1,775)
                                                                         ---------                  ---------

Net increase in cash                                                        10,378                        189

Cash at January 1                                                            2,787                      8,452
                                                                         ---------                  ---------
Cash at June 30                                                          $  13,165                  $   8,641
                                                                         ---------                  ---------
                                                                         ---------                  ---------
Supplemental Schedule of Noncash Financing Activities:

         Contribution of Company shares to 401(k)                        $   6,533                 $        -
                                                                         ---------                  ---------
                                                                         ---------                  ---------

</TABLE>


                                          7
<PAGE>



                              USCS INTERNATIONAL, INC.
                NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS



1.   Long-term Debt

          The Company has a five-year unsecured revolving credit line, expiring
          September 2001, with two banks in the amount of $50 million.
          Borrowings under the agreement bear interest at the Company's choice
          of LIBOR (plus a margin ranging from .55% to 1.25%), the bank's base
          rate or a quoted rate. Under the borrowing agreement, the Company is
          required to maintain certain financial ratios and meet a net worth
          test.


2.   Treasury Stock

          The Company, from time to time, at the authorization of the Board of
          Directors, repurchases shares of the Company's common stock to be held
          as treasury stock with reservation of such treasury stock for future
          issuance under various employee stock purchase and incentive stock
          option plans and for distributions to the Company's 401(k) Retirement
          Plan.

          In March 1998, the Company contributed approximately 312,000 shares of
          treasury stock to the Company's 401(k) Retirement Plan.  The fair
          market value on the date of contribution was $6,533,000.


3.   Earnings per Share

          The Company has presented earnings per share in accordance with
          Statement of Financial Accounting Standards No. 128, "Earnings Per
          Share" ("SFAS 128").  All previously reported amounts have been
          restated to conform to SFAS 128.  Under SFAS 128, basic earnings per
          share are computed using the weighted average number of outstanding
          registered shares.  Diluted earnings per share are computed using
          weighted average registered shares and common stock equivalents,
          including the net shares issuable upon exercise of stock options when
          dilutive.



                                          8
<PAGE>

Item 2.   Management's Discussion and Analysis of Financial Condition, Results
          of Operations, and Certain Factors that May Affect Future Results

          This Quarterly Report contains forward-looking statements that involve
risks and uncertainties.  The statements that are not historical facts or
statements of current status are forward-looking statements as defined in the
Private Securities Litigation Reform Act of 1995 and are subject to risks and
uncertainties including, but not limited to, the risks and uncertainties set
forth under the caption "Certain Factors That May Affect Future Results."  The
Company's future results may differ significantly from the results and
forward-looking statements discussed in this Report.

          Founded in 1969, the Company is a leading global provider of customer
management software and services to the communications and other service
industries.  The Company's revenues are derived primarily from providing
software to cable television and multi-service providers worldwide, as well as
bill processing services to cable television, telecommunications, financial
services, utilities and other service industries.  Software and bill processing
services are generally offered to North American cable television providers
under bundled service arrangements.  Outside of North America, software is
generally sold exclusive of the bill processing.  Most of the Company's revenue
is based on the number of subscribers or end-users of the Company's clients, the
number of billing statements mailed and/or the number of images produced under
contracts with terms ranging from three to seven years.  Clients are billed
monthly, generally based on the number of end-users they serve.  As a result, a
significant portion of the Company's revenue is recurring and increases as the
service provider's customer base grows.  In addition, the Company sells computer
hardware and provides associated maintenance.  Leasing is provided as an
alternative to equipment purchases for clients.

          The Company sells its software and services to cable television and
multi-service providers in North America and the U.K. primarily through a direct
sales force.  Outside of North America and the U.K., the Company markets its
software primarily through strategic alliances with companies specializing in
system integration or computer hardware manufacturing that are capable of
providing local sales and support.  Building and maintaining relationships with
its clients is an important part of the Company's strategy because selling
cycles can extend a year or longer.  The Company has committed increased
resources to the diversification of its customer base, focusing primarily on
international, multi-service, telecommunications and other high-volume markets
because it believes these represent opportunities to grow at rates greater than,
and decrease its dependence upon, the U.S. cable television marketplace.


                                          9

<PAGE>

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, the Company's
consolidated condensed statements of operations and the percentage of revenue
represented by each line item (dollars in thousands):

<TABLE>
<CAPTION>


                                              Three months ended                                Six months ended
                                                   June 30,                                          June 30,
                                    ---------------------------------------------     --------------------------------------------
                                              1998                     1997                     1998                     1997
                                    ---------------------    --------------------     --------------------     -------------------
                                                                                 (unaudited)
<S>                                  <C>          <C>        <C>          <C>        <C>          <C>        <C>          <C>
Revenue:
  Software and services:
    Customer management              $ 41,890        49.0%   $ 37,655        51.8%   $ 81,569        49.7%   $ 75,434        52.5%
    Bill processing                    36,360        42.5      29,521        40.6      68,673        41.9      57,919        40.3
                                     --------       -----    --------       -----    --------       -----    --------       -----
      Total                            78,250        91.5      67,176        92.4     150,242        91.6     133,353        92.8
  Equipment sales and services          7,284         8.5       5,522         7.6      13,820         8.4      10,315         7.2
                                     --------       -----    --------       -----    --------       -----    --------       -----
      Total revenue                    85,534       100.0      72,698       100.0     164,062       100.0     143,668       100.0
                                     --------       -----    --------       -----    --------       -----    --------       -----
Cost of revenue:
  Software and services:
    Customer management                19,943        23.3      17,383        23.9      38,580        23.5      35,911        25.0
    Bill processing                    25,805        30.2      21,064        29.0      49,464        30.2      41,924        29.2
                                     --------       -----    --------       -----    --------       -----    --------       -----
      Total                            45,748        53.5      38,447        52.9      88,044        53.7      77,835        54.2
  Equipment sales and services          4,893         5.7       2,728         3.7       9,174         5.6       5,526         3.8
                                     --------       -----    --------       -----    --------       -----    --------       -----
      Total cost of revenue            50,641        59.2      41,175        56.6      97,218        59.3      83,361        58.0
                                     --------       -----    --------       -----    --------       -----    --------       -----
Gross profit                           34,893        40.8      31,523        43.4      66,844        40.7      60,307        42.0
                                     --------       -----    --------       -----    --------       -----    --------       -----
Operating expenses:
  Research and development              8,532        10.0       7,860        10.8      16,657        10.1      14,731        10.3
  Selling, general and administrative  15,092        17.6      14,197        19.5      28,488        17.4      27,462        19.1
                                     --------       -----    --------       -----    --------       -----    --------       -----
      Total operating expenses         23,624        27.6      22,057        30.3      45,145        27.5      42,193        29.4
                                     --------       -----    --------       -----    --------       -----    --------       -----
Operating income                       11,269        13.2       9,466        13.1      21,699        13.2      18,114        12.6
Interest expense                          136          .2         186          .3         289          .2         355          .2
                                     --------       -----    --------       -----    --------       -----    --------       -----

Income before income taxes             11,133        13.0       9,280        12.8      21,410        13.0      17,759        12.4

Income tax provision                    4,342         5.1       3,678         5.1       8,350         5.0       7,104         5.0

                                     --------       -----    --------       -----    --------       -----    --------       -----
Net income                           $  6,791         7.9%   $  5,602         7.7%   $ 13,060         8.0%   $ 10,655         7.4%
                                     --------       -----    --------       -----    --------       -----    --------       -----
                                     --------       -----    --------       -----    --------       -----    --------       -----
</TABLE>


                                          10
<PAGE>

The following table sets forth revenue and percentage of revenue by line item
exclusive of a discontinued customer, revenue of a discontinued customer and
total revenue (dollars in thousands):


<TABLE>
<CAPTION>


                                              Three months ended                                Six months ended
                                                   June 30,                                          June 30,
                                    ---------------------------------------------     --------------------------------------------
                                              1998                     1997                     1998                     1997
                                    ---------------------    --------------------     --------------------     -------------------
                                                                                 (unaudited)
<S>                                  <C>          <C>        <C>          <C>        <C>          <C>        <C>          <C>
Revenue:
  Software and services:
    Customer management              $ 32,372        37.8%   $ 26,911        37.0%   $ 61,816        37.7%   $ 53,700        37.4%
    Bill processing                    34,906        40.8      28,957        39.9      66,472        40.5      57,101        39.7
  Equipment sales and services          5,880         6.9       3,223         4.4      10,804         6.6       5,993         4.2
                                     --------       -----    --------       -----    --------       -----    --------       -----
     Total                             73,158        85.5      59,091        81.3     139,092        84.8     116,794        81.3
  Discontinued customer                12,376        14.5      13,607        18.7      24,970        15.2      26,874        18.7
                                     --------       -----    --------       -----    --------       -----    --------       -----
      Total                          $ 85,534       100.0%   $ 72,698       100.0%   $164,062       100.0%   $143,668       100.0%
                                     --------       -----    --------       -----    --------       -----    --------       -----
                                     --------       -----    --------       -----    --------       -----    --------       -----

</TABLE>


                                          11

<PAGE>

REVENUE

          Revenue is derived primarily from providing customer management
software and services to cable television and multi-service providers in more
than 20 countries and from providing bill processing services primarily to
telecommunications companies in the U.S.  Software and bill processing services
to cable television and multi-service providers are provided generally under
bundled service arrangements.  In addition, the Company sells computer hardware
and associated maintenance and leasing services to cable television service
providers in connection with licensing the Company's software and provides
design, printing and graphics services in connection with its bill processing
services.  Most of the software and services revenue is based on the number of
end-users of the services of the Company's clients, the number of bills mailed
and/or the number of images produced under long-term contracts, which usually
have terms ranging from three to seven years. The Company generally recognizes
software and bill processing services revenue (collectively referred to as
"software and services revenue") as services are performed. Certain of the
Company's software licenses provide for fixed or minimum fees.  Fixed fees and
the present value of minimum fees under software licenses are recognized as
revenue upon installation.  Such amounts have not been material.  Most contracts
include provisions for inflation-based adjustments, including changes in paper
costs.

          Total revenue increased by 18% to $85.5 million in the second quarter
of 1998 from $72.7 million in the comparable quarter in 1997.  The increase in
the 1998 second quarter over the same period in 1997 was attributable to growth
in revenue from customer management software and services of $4.2 million or
11%, growth in bill processing of $6.8 million or 23%, and an increase in
equipment sales and services of $1.8 million or 32%.

          Total revenue increased by 14% to $164.1 million for the six months
ended June 30, 1998 from $143.7 million in the comparable period in 1997.  The
increase in the first six months of 1998 over the same period in 1997 was
attributable to growth in revenue from customer management software and services
of $6.1 million or 8%, growth in bill processing of $10.8 million or 19%, and an
increase in equipment sales and services of $3.5 million or 34%.

          Telecommunications, Inc. ("TCI") represented approximately 15% of the
Company's revenue in the second quarter and six months ended June 30, 1998 and
19% in the same periods in 1997.  Several years ago, TCI announced and began
development of an in-house system to replace the Company's customer management
software.  On August 11, 1997, TCI informed the Company that it had agreed to
sell its partially developed in-house system to a competitor and was going to
enter into an exclusive long-term contract for customer management software with
that competitor.  Under the contract between TCI and the Company, which expires
on December 31, 1999, TCI may remove subscribers after giving ninety days'
notice without significant economic penalty.  Although TCI has not provided the
Company with a definitive schedule for conversion of the TCI subscribers to the
competitor's software, the conversions have begun and it is believed that TCI
and the competitor wish to complete the transfer by the end of 1998.
Additionally, the Company believes that TCI's contract with the competitor
provides financial incentives to TCI for converting subscribers of certain TCI
affiliates, some of whom are currently clients of the Company, to the
competitor's software.  Revenue from TCI has declined in absolute dollars from
$13.6 million in the second quarter 1997 to $12.4 million in the second quarter
1998 or 9% and from $26.9 million for the six months ended June 30, 1997 to
$25.0 million in the same period in 1998.  The decrease was primarily from a
reduction in the number of subscribers serviced by TCI and services purchased by
TCI.  The number of total TCI subscribers on the Company's software declined by
approximately 3.7 million or 34% as of June 30, 1998, compared to December 31,
1997.  The actual rate of decline in the number of TCI subscribers served and
revenue derived from TCI cannot be definitively estimated on a quarter by
quarter basis.  However, the Company believes the decline in revenue from TCI
will increase throughout the year.  The Company is mitigating the impact of this
by aggressively pursuing other domestic and international opportunities and
allocating the Company's resources to other existing or new customers.  If these
efforts are not fully successful in mitigating the loss of TCI business, the
Company believes that it has sufficient financial resources and borrowing
ability to meet its obligations and fulfill its customer commitments during and
after the conversion period.  To the extent the Company is not successful in
generating additional revenue to offset the expected decline in revenue from
TCI, such decline in revenue could have a material adverse effect on the
Company's consolidated financial position, results of operations or cash flows.


                                          12
<PAGE>

          Customer management software and services revenue, exclusive of
revenue from TCI, increased by 20% to $32.4 million in the second quarter of
1998 from $26.9 million in the comparable 1997 quarter.  Bill processing revenue
as a stand-alone service increased by 21% to $34.9 million in the second quarter
of 1998 from $29.0 million in the comparable quarter of the prior year.
Equipment sales and services revenue increased to $5.9 million in the second
quarter of 1998 from $3.2 in the second quarter of 1997.

          Customer management software and services revenue, exclusive of
revenue from TCI, increased by 15% to $61.8 million for the six months ended
June 30, 1998 from $53.7 million for the same period in 1997.  Bill processing
revenue increased by 16% to $66.5 million for the six months ended June 30, 1998
from $57.1 million for the same period in 1997.  Equipment sales and services
revenue increased to $10.8 million for the six months ended June 30, 1998 from
$6.0 million for the same period in 1997.

          Growth in customer management software and services revenue for the
second quarter and six months ending June 30, 1998 compared to the same periods
in 1997, exclusive of revenue from TCI, came primarily from increases in the
number of subscribers of existing and new clients in the U.S. and international
markets, increases in prices allowed by existing contracts, and migration of
clients to higher-priced services.  Growth in bill processing revenue was
derived from an increase in the volume of statements and images produced because
of the internal growth of existing customers and the acquisition of new
customers, primarily in telecommunications and other high-volume markets.  The
increase in equipment sales and services revenue was primarily the result of
large equipment sales in the first and second quarters of 1998 and increased
leasing revenues related to new leasing transactions which occurred in the
latter part of 1997.  Equipment sales volumes experienced in prior quarters
should not be considered indicative of future equipment sales volumes.

          Three significant clients, including TCI, accounted for $31.4 million
and $30.0 million or 37% and 41% of total revenue in the second quarter of 1998
and 1997, respectively, and $61.5 million and $59.7 million or 37% and 42% of
total revenue for the six months ended June 30,1998 and 1997, respectively.  See
"Certain Factors That May Affect Future Results" regarding these clients and
other factors that may impact future revenue.

COST OF REVENUE AND GROSS PROFIT

          Cost of software and services revenue consists primarily of direct
labor, equipment-related expenses, cost of materials such as paper, and
facilities expense.  Cost of equipment sales and services revenue consists
primarily of computer hardware purchased for resale or lease and third-party
maintenance.

          The Company's gross profit margin of approximately 41% in the second
quarter of 1998 was lower than the second quarter 1997 gross margin of
approximately 43%.  The gross profit margin for the six months ending June 30,
1998 was 41% compared to 42% for the same period in 1997.  The software and
services gross profit margin slightly declined to approximately 42% in the
second quarter of 1998 from approximately 43% for the same period in 1997.  The
software and services gross profit margin for the six months ending June 30,
1998 was approximately 41% compared to 42% for the same period in 1997.  The
customer management software and services gross profit margin was 52% in the
second quarter of 1998 compared to 54% in the second quarter of 1997.  The gross
profit margin for customer management software and services for the six months
ending June 30, 1998 was 53% compared to 52% for the same period in 1997.  The
bill processing services gross profit margin of 29% in the second quarter of
1998 equaled the 1997 second quarter gross margin.  The bill processing gross
profit margin of 28% for the first six months ending June 30, 1998 equaled the
gross profit margin for the same period in 1997.   The gross profit margin on
equipment-related revenue decreased to 33% and 34% in the second quarter and six
months ending June 30, 1998 from 51% and 46% for the same periods in 1997,
respectively.

          The gross profit margin decrease in customer management software and
services in the second quarter of  1998, as well as the relatively static gross
profit margin for the six months ended June 30, 1998, compared to the same
periods in 1997, was attributed to temporary inefficiencies associated with
transitioning new customers on to the Company's products and services while
transitioning TCI off.  The decline in the software and services gross profit
margin, consisting of customer management and bill processing, was due to the
inefficiency cited above as well as a shift in revenue mix consisting of an
increased percentage of the gross profit contribution flowing from the lower
margin bill processing business.  Gross margins on equipment sales and services
typically vary based on the mix of equipment sales and services and underlying
demand.  The


                                          13
<PAGE>

decline in the second quarter and six months ended June 30, 1998 equipment sales
and services gross profit margin, in comparison to the same period in the prior
year, was attributable to discounting on equipment sales and increased
depreciation expense on leased equipment.

RESEARCH AND DEVELOPMENT

          Research and development costs relate primarily to ongoing product
development and consist of personnel costs, consulting, testing, supplies,
facilities and depreciation expenses.  Once the product under development
reaches technological feasibility, the development expenditures are capitalized
and amortized.

          Research and development expense was $8.5 million or 10% of revenue in
the second quarter of 1998 compared to $7.9 million, or 11% of revenue, for the
same period in 1997.  For the six months ended June 30, 1998, research and
development expense was $16.7 million or 10% of revenue compared to $14.7
million, also approximately 10% of revenue, for the same period in 1997.  The
increased expenditures are attributable to the Company's commitment to the
development of new products and enhancements to existing products.

YEAR 2000 COMPLIANCE

          Many currently installed computer systems and software products are
coded to accept only two-digit entries in the date code field.  Beginning in the
year 2000, these date code fields will need to accept four-digit entries to
distinguish 21st century dates from 20th century dates.  As a result, in less
than two years, computer systems and and/or software used by many companies may
need to be upgraded to comply with such "Year 2000" requirements.  Significant
uncertainty exists in the software industry concerning the potential effects
associated with such compliance.

          The Company has identified, assessed and remedied some known "Year
2000" date issues and is continuing to identify, assess and evaluate the full
scope of this issue as it relates to its software products,
infrastructure-related hardware and software, and third-party products.  While
identification and assessment are an ongoing process, the Company believes,
based on current known information, that it can effectively mitigate any "Year
2000" date issues, dependent upon cooperation from third parties.  However, such
modification of software products, infrastructure-related hardware and software
and third-party products is subject to all the risks of development.  If the
Company's efforts and/or third parties are not successful in the timely
mitigation of "Year 2000" issues, the impact on the Company will be significant.

          The cost of remediating the Company's "Year 2000" issues has not been
determined; however, management believes that the cost of this effort will not
have a material adverse effect on the Company's results of operations.  There
can be no assurance that the software or systems of other companies, on which
certain of the Company's software and systems rely, will be timely converted, or
that a failure to convert by another company will not have a material adverse
effect on the Company.

SELLING, GENERAL AND ADMINISTRATIVE

          Selling expenses consist of compensation for sales and marketing
personnel including commissions and related bonuses, travel, trade shows and
promotional expenses.  General and administrative expenses consist of
compensation for administration, finance and general management personnel, as
well as legal and accounting fees.

          Total selling, general and administrative expenses increased by
approximately 6% and 4% in the second quarter and six months ended June 30, 1998
in comparison to the same periods in 1997.  Selling and marketing expenditures
increased by 8% in the second quarter of 1998 compared to the second quarter of
1997.  As a percentage of revenue, selling and marketing expenditures decreased
by less than 1% in the second quarter and first six months of 1998 compared to
the same periods in 1997. General and administrative expenses for the second
quarter and six months ended June 30, 1998 increased approximately 5% and 2%
compared to the same periods in 1997.  As a percentage of revenue, general and
administrative expense in the second quarter and first six months of 1998
declined by approximately 1% compared to the same periods in 1997.  The decline
in selling, general and administrative expense as a percentage of revenue in the
second quarter and six months ended June 30, 1998 when compared to the same
periods in 1997 was due to increased revenue coupled with cost containment
efforts.


                                          14
<PAGE>

INTEREST EXPENSE

          Interest expense consists of interest on borrowings under revolving
credit agreements, revenue bonds pertaining to certain of the Company's
facilities and notes and credit agreements related to the Company's leasing
subsidiary.  Interest expense for the three and six months ended June 30, 1998
was unchanged in comparison to the same periods in 1997.

INCOME TAXES

          The Company's provision for income taxes represents estimated federal,
state and foreign income taxes.  The income tax rate for the three and six
months ended June 30, 1998 was 39%, approximately one percentage point lower
than the 1997 comparable periods.  The rate decline is attributable to the mix
of foreign and domestic income and the application of tax reduction strategies.


NET INCOME

          Net income increased by $1.2 million or 21% and by $2.4 million or 23%
in the second quarter and six months ended June 30, 1998 compared to the same
periods in 1997, respectively.  Diluted earnings per share for the quarter were
$0.28 per share in 1998 compared to $0.23 per share in 1997, and were $0.55 for
the first six months of 1998 compared to $0.44 in 1997.  This represents a 22%
increase for the quarter and a 25% year-to-date increase over the same periods
in 1997.  Diluted shares used in the calculation decreased by approximately 1%
in 1998 compared to the same periods in 1997.  The increase in net income for
the second quarter and first six months of 1998 compared to 1997 is attributable
to the factors cited above.


LIQUIDITY AND CAPITAL RESOURCES

          The Company's financial condition and liquidity remained strong
through the second quarter of 1998.  Total long-term debt, including the current
portion, was $9.1 million as of June 30, 1998 compared to $9.3 million at
December 31, 1997.  Of the debt outstanding at June 30, 1998, $8.6 million
pertains to the Company's leasing subsidiary and is collateralized, without
recourse, by rents receivable.  At June 30, 1998, the Company had an available
$50 million line of credit.  There were no borrowings outstanding at June 30,
1998.  Total capital expenditures through the second quarter of 1998 were $12.1
million compared to $12.0 million in the same period in 1997.  The Company, in
1998, has expended approximately $2.6 million, net of issuances, for the
repurchase of stock.  In addition, the Company has issued approximately 312,000
shares of treasury stock to fund its $6.5 million obligation to the 401(k)
Retirement Plan.

          The Company collects from its clients and remits to the U.S. Postal
Service a significant amount of postage.  Substantially all contracts allow the
Company to pre-bill and/or require deposits from its clients to mitigate the
effect on cash flow.  As of June 30, 1998, accounts receivable were
$95.1 million, including $24.5 million in amounts due from clients for postage.

          The Company continues to make significant investments in capital
equipment, facilities, and research and development as well as to expand into
new domestic and international markets.  The Company believes that net cash from
operations and the Company's borrowing availability will be sufficient to
support operations through the next twelve months.

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

          A number of uncertainties exist that could affect the Company's future
operating results, including, without limitation, changes in the global
communications market, concentration in the cable television market, the
Company's ability to retain existing customers and attract new customers in the
global communications market as well as other high-volume service industries,
the Company's continuing ability to develop products that are responsive to the
evolving needs of its customers, increased competition, changes in operating
expenses, changes in government regulation of the Company's customers and
general economic factors in the U.S. as well as the international marketplace.


                                          15
<PAGE>

CHANGING COMMUNICATIONS MARKET AND DEVELOPMENT OF SOFTWARE AND SERVICES

          The communications market is characterized by rapid technological
developments, changes in client requirements, evolving industry standards and
frequent new product introductions.  The Company's future success will depend,
in part, upon its ability to enhance its existing applications, develop and
introduce new products that take advantage of technological advances and respond
promptly to new client requirements and evolving industry standards.  The
Company has expended considerable funds to develop products to serve the
changing communications market.  If the communications market grows or converges
more slowly than anticipated or the Company's products and services fail to
achieve market acceptance, there could be a material adverse effect on the
financial condition and results of operations of the Company.

          The Company's development projects are subject to all of the risks
associated with the development of new software and other products based on
innovative technologies.  The failure of such development projects could have a
material adverse effect on the financial condition and results of operations of
the Company.

DEPENDENCE ON THE CABLE TELEVISION MARKET

          Although the Company's current strategy is to address the needs of the
global communications market and other high volume service providers, the
Company is highly dependent on the cable television market.  For the three and
six months ended June 30, 1998, more than 55% of the Company's revenue was
derived from sales to cable television service providers.  Although the cable
television industry outside of North America is generally expanding, the number
of providers of cable television service in the U.S. has been declining, due to
industry consolidation, resulting in a reduction of the number of potential
cable television clients in the U.S.  As the number of companies serving the
available subscriber base decreases, the loss of a single client could have a
greater adverse impact on the Company than in the past.  Even if the number of
clients remains the same, a decrease in the number of subscribers served by the
Company's cable television clients would result in lower revenue for the
Company.  Furthermore, a decrease in the number of cable subscribers or any
adverse development in the cable television market could have a material adverse
effect on the financial condition and results of operations of the Company.

CONCENTRATION OF CLIENT BASE

          Aggregate revenue from the Company's ten largest clients accounted for
approximately 65% of total revenue for the three and six months ended June 30,
1998.  Loss of all or a significant part of the business of any of these clients
or a decrease in their respective customer bases would have a material adverse
effect on the financial condition and results of operations of the Company.
Three of the Company's clients, including TCI, represented approximately 37% and
41% of total revenue in the second quarter of 1998 and 1997 and 37% and 42% of
total revenue for the six months ended June 30, 1998 and 1997, respectively.

VARIABILITY OF QUARTERLY OPERATING RESULTS

          The Company's quarterly and annual operating results may fluctuate 
from quarter to quarter and year to year depending on various factors, 
including the impact of significant start-up costs associated with initiating 
the delivery of contracted services to new clients, the hiring of additional 
staff, new product development and other expenses, introduction of new 
products by competitors, pricing pressures, the effect of acquisitions, the 
evolving and unpredictable nature of the markets in which the Company's 
products and services are sold and general economic conditions.

YEAR 2000 COMPLIANCE

          The cost of remediating the Company's "Year 2000" issues has not been
determined; however, management believes that the cost of this effort will not
have a material adverse effect on the Company's results of operations.  There
can be no assurance that the software or systems of other companies, on which
certain of the Company's software and systems rely, will be timely converted, or
that a failure to convert by another company will not have a material adverse
effect on the Company.  See "Management's Discussion And Analysis Of Financial
Condition And Results Of Operations - Year 2000 Compliance."




                                          16
<PAGE>

NEW PRODUCTS, RAPID TECHNOLOGICAL CHANGES AND COMPETITION

          The market for the Company's products and services is highly
competitive, and competition is increasing as additional market opportunities
arise.  The Company believes its most significant competitors for customer
management software and services are independent providers of such software and
services and in-house systems.

          In addition, competitive factors could influence or alter the
Company's overall revenue mix between customer management software, services,
including bill processing services, and equipment sales and leasing.  Any of
these events could have a material adverse effect on the financial condition and
results of operations, including gross profit margins, of the Company.

ELECTRONIC BILL PRESENTMENT

          The Company's bill processing business is dependent on its ability to
design, handle, print and distribute via first class mail paper-based statements
and related materials.  A number of companies, many with resources greater than
the Company, are developing and introducing electronic bill presentment services
that could reduce, if not eliminate, the need for paper statements.

          The Company has introduced products, begun customer applications and
pilots, and has formed alliances with other companies for the introduction,
marketing and deployment of electronic bill presentment and other electronic
services.  The maintenance of the Company's paper statement expertise,
successful development and marketing of electronic services and rate of customer
acceptance of such services are all subject to the technological, competitive
and market condition risks discussed in various sections of "Certain Factors
That May Affect Future Results."

CLIENT FAILURE TO RENEW OR UTILIZE CONTRACTS

          Substantially all of the Company's revenue is derived from the sale of
services or products under long-term contracts with its clients.  The Company
does not have the unilateral option to extend the terms of such contracts upon
their expiration.  In addition, certain of the Company's contracts do not
require clients to make any minimum purchase.  Others require minimum purchases
that are substantially below the current level of business under such contracts,
and all such contracts are cancelable by clients under certain conditions.  The
failure of clients to renew contracts, a reduction in usage by clients under any
contracts or the cancellation of contracts could have a material adverse effect
on the Company's financial condition and results of operations.  See
"Management's Discussion And Analysis Of Financial Condition And Results Of
Operations - Revenue."

INTERNATIONAL BUSINESS ACTIVITIES

          The Company's strategy to diversify its customer base includes the
selling of its products in a variety of international markets.  To date, the
Company's primary customer management software has been installed in more than
20 countries.  Generally, the Company operates in U.S. dollars, which reduces
but does not eliminate exposure to the adverse impact of currency fluctuations.
Currently, less than 10% of the Company's customer management software and
services revenue comes from international sources, and the Company is expanding
its international presence, primarily through third party marketing and
distribution alliances.  The Company's current and proposed international
business activities are subject to certain inherent risks, including, but not
limited to, specific country, regional or global economic conditions, exchange
rate fluctuation and its impact on liquidity, changes in the national priorities
of any given country and cultural differences.  There can be no assurance that
such risks will not have a material adverse effect on the Company's future
international sales and, consequently, the Company's business, operating results
and financial condition.


                                          17
<PAGE>

DEPENDENCE ON PROPRIETARY TECHNOLOGY

          The Company relies on a combination of patent, trade secret and
copyright laws, nondisclosure agreements, and other contractual and technical
measures to protect its proprietary technology.  There can be no assurance that
these provisions will be adequate to protect its proprietary rights.  Although
the Company believes that its products and services do not infringe upon the
proprietary rights of third parties, there can be no assurance that third
parties will not assert infringement claims against the Company or the Company's
clients.

          The Company has been advised by a cable customer that a third party
has orally asserted that patents held by the third party may be infringed by the
customer's use of interactive computer telephony systems, and that, should it
become necessary, the customer would seek indemnification from the Company.  To
the best of the Company's knowledge, no legal proceedings with regard to this
matter have been instituted against the customer or the Company as of the date
of this Report.  The Company believes that it has a substantial defense against
the third party's patent infringement claims, and the Company does not believe
that efforts by the third party to enforce the patents against the Company or
its clients are likely to have a material adverse effect on the Company's
financial position, results of operations or cash flows.  There can be no
assurance, however, that such claims, if brought, would not have a material
adverse effect on the Company.

MANAGEMENT OF GROWTH AND ATTRACTION AND RETENTION OF KEY PERSONNEL

          Management of the Company's growth, which may occur both internally 
and through acquisitions, may place a considerable strain on the Company's 
management, operations and systems.  The Company's ability to execute its 
business strategy will depend in part upon its ability to manage the demands 
of a growing business.  Any failure of the Company's management team to 
effectively manage growth could have a material adverse effect on the 
Company's business, financial condition or results of operations.

          The Company's future success depends in large part on the continued
service of its key management, sales, product development and operational
personnel.  The Company believes that its future success also depends on its
ability to attract and retain skilled technical, managerial and marketing
personnel, including, in particular, additional personnel in the areas of
research and development and technical support.  Competition for qualified
personnel is intense.  The Company has from time to time experienced
difficulties in recruiting qualified skilled technical personnel.  Failure by
the Company to attract and retain the personnel it requires could have a
material adverse effect on the financial condition and results of operations of
the Company.

GOVERNMENT REGULATION

          The Company's existing and potential clients are subject to extensive
regulation, and certain of the Company's revenue opportunities may depend on
continued deregulation in the world-wide communications industry.  In addition,
the Company's clients are subject to certain regulations governing the privacy
and use of the customer information that is collected and managed by the
Company's products and services.  Regulatory changes that adversely affect the
Company's existing and potential clients could have a material adverse effect on
the financial condition and results of operations of the Company.

VOLATILITY OF STOCK PRICE

          Although the Company believes that it has the product offerings and
resources needed for continuing success, future revenue and margin trends cannot
be reliably predicted and may cause the Company to adjust its operations.  The
Company's stock price, like that of other technology companies, is subject to
significant volatility.  The announcement of new products, services or
technologies by the Company or its competitors, quarterly variations in the
Company's results of operations, changes in revenue or earnings estimates by the
investment community and speculation in the press or investment community are
among the factors affecting the Company's stock price.  In addition, the stock
price may be affected by general market conditions and domestic and
international macroeconomic factors unrelated to the Company's performance.
Because of the foregoing reasons, recent trends should not be considered
reliable indicators of future stock prices or financial results.


                                          18
<PAGE>

Item 3.   Quantitative and Qualitative Disclosures About Market Risk

          Not Applicable


PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings.

          The Company has legal proceedings incidental to its normal business
          activities.  In the opinion of the Company, the outcome of the
          proceedings will not have a material adverse effect on the Company's
          consolidated financial position, results of operations or cash flows.


Item 2.   Changes in Securities.

          None.


Item 3.   Defaults Upon Senior Securities.

          None.


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

          (a)  The 1997 annual meeting (the "Annual Meeting") of stockholders of
               USCS International, Inc. was held on May 20, 1998, and 19,367,217
               (82.6%) shares were present in person or by proxy.


          (b)  The following persons were elected as Class II directors at the
               Annual Meeting:

               Class II (term expiring in 2001)
               -------------------------------------
                    James L. Hesburgh
                    Thomas A. Page
                    Larry W. Wangberg


          The following directors terms of office continued after the Annual
          Meeting.

               Class I (term expiring in 2000)
               ---------------------------------------
                    James C. Castle
                    John W. Clark
                    Charles D. Martin


               Class III (term expiring in 1999)
               ---------------------------------------
                    George L.  Argyros,  Sr.
                    Daniel R. Hesse
                    Michael F. McGrail


                                          19
<PAGE>

          (c)  (i)   Votes were cast or withheld in the election of Class II
                     directors at the Annual Meeting as follows:


                     Class II Director  For           Withheld        Against
                     -----------------  ----------    --------        -------
                     James L. Hesburgh  19,079,263     287,954             0

                     Thomas A. Page     19,100,224     266,993             0

                     Larry W. Wangberg  18,386,958     980,259             0


               (ii)  Votes were cast at the Annual Meeting with respect to
                     ratification of Price Waterhouse LLP as the Company's
                     independent accountants for 1998:

                              For:           19,199,240

                              Against:       149,184

                              Abstain:       18,793

                     This matter received sufficient votes to pass.


               (iii) During the meeting there were no broker non-votes.

Item 5.   Other information.

          None

Item 6.   Exhibits and Reports on Form 8-K.

    (a)   Exhibits.

          Exhibit 10   Addendum to the Statement Production Services Agreement
                       dated as of August 20, 1993 between International Billing
                       Services and Ameritech Corporation.

          Exhibit 10.1 Second Amendment to Amended, Consolidated and Restated
                       Credit Agreement dated as of September 30, 1996 among
                       USCS International, Inc. and NationsBank, N.A.

          Exhibit 11   Computation of Per Share Earnings

          Exhibit 27   Financial Data Schedule


    (b)   Reports on Form 8-K.

          None


                                          20
<PAGE>


USCS INTERNATIONAL, INC.

                                      SIGNATURE

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

                        USCS INTERNATIONAL, INC.
                       (Registrant)

Dated: August 7, 1998                 By:  /s/ DOUGLAS L. SHURTLEFF
                                          -------------------------
                                          Douglas L. Shurtleff
                                          Senior Vice-President of Finance and
                                          Chief Financial Officer
                                          (Principal Financial Officer)


                                          21