<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 September 30, 1997

                                      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 October 31, 1997
    -----------------------------            -------------------------------
    Common Stock, $.05 par value             23,165,793 shares

<PAGE>

                          USCS INTERNATIONAL, INC.
                            REPORT ON FORM 10-Q
                   FOR THE QUARTER ENDED SEPTEMBER 30, 1997


<TABLE>
<CAPTION>

                                                                     PAGE NO.
                                                                     --------
<S>                                                                  <C>
Part I.  Financial Information          
                                        
   Item 1.  Financial Statements                                          3
                                        
     Consolidated Condensed Balance Sheets
     September 30, 1997 (Unaudited) and December 31, 1996                 4

     Consolidated Condensed Statements of Operations (Unaudited)
     Three months and Nine months ended September 30, 1997 and 1996       5
                                        
     Consolidated Condensed Statements of Cash Flows (Unaudited)
     Nine months ended September 30, 1997 and 1996                        6
                                                
     Notes to Consolidated Condensed Financial Statements                 7
                                        
   Item 2.  Management's Discussion and Analysis of Financial
            Condition, Results of Operations, and Certain Factors
            That May Affect Future Results.                             8-15            
                                        
Part II. Other Information              
                                        
   Item 1.  Legal Proceedings                                             16
                                        
   Item 2.  Changes in Securities                                         16
                                        
   Item 3.  Defaults Upon Senior Securities                               16
                                        
   Item 4.  Submission of Matters to a Vote of Security Holders           16
                                        
   Item 5.  Other Information                                             16
                                        
   Item 6.  Exhibits and Reports on Form 8-K                              16
                                        
                 Signature                                                17

</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, 1996, 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 Registration Statement on Form S-1 (Registration 
No. 333-3842) declared effective by the SEC on June 20, 1996 and the 
Company's Annual Report to Stockholders and the Company's Annual Report on 
Form 10-K for the year ended December 31, 1996.  The results of operations for 
the quarter and nine months ended September 30, 1997 are not necessarily 
indicative of the results to be expected for the entire year ending December 
31, 1997.


                                       3

<PAGE>

                             USCS INTERNATIONAL, INC.
                        CONSOLIDATED CONDENSED BALANCE SHEETS

                   (In thousands except share and per share amounts)

<TABLE>
<CAPTION>

                                             September 30,        December 31,
                                                 1997                 1996 
                                             -------------        ------------
<S>                                          <C>                  <C>
                                              (Unaudited)
                     ASSETS
Current Assets:
 Cash                                        $       8,815        $      8,452
 Accounts receivable                                80,311              73,458
 Current portion of net investment in leases         4,585               4,922 
 Paper products and other inventory                  4,033               4,418 
 Other                                               6,570               8,972 
                                             -------------        ------------
    Total current assets                           104,314             100,222 
Property and equipment, net                         96,706              94,350 
Net investment in leases, net of 
  current portion                                    3,281               6,252 
Other                                                9,683               4,735 
                                             -------------        ------------
    Total assets                             $     213,984        $    205,559 
                                             -------------        ------------
                                             -------------        ------------
    LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
 Accounts payable and accrued expenses       $      48,525        $     48,975
 Current portion of long-term debt                   3,992               4,772 
 Deferred revenue                                    1,660               9,434 
                                             -------------        ------------
    Total current liabilities                       54,177              63,181 
Long-term debt, net of current portion               2,079               5,647 
Customer deposits                                   18,176              12,752 
Other liabilities                                    8,627               8,646 
                                             -------------        ------------
    Total liabilities                               83,059              90,226 
                                             -------------        ------------

Stockholders' Equity:
 Preferred Stock, $.05 par value, 
   10,000,000 shares authorized;
   no shares issued and outstanding                      -                   - 
 Common Stock, $.05 par value,
    Authorized 40,000,000 shares; Issued 
      and outstanding: 23,257,969 shares 
      at September 30, 1997 (unaudited) and
      23,068,826 shares at December 31, 1996         1,172               1,153 
 Additional paid-in capital                         56,221              53,902 
 Retained earnings                                  76,883              60,437 
 Treasury stock                                     (3,157)                  - 
 Foreign currency translation adjustment              (194)               (159)
                                             -------------        ------------
    Total stockholders' equity                     130,925             115,333
                                             -------------        ------------
Total liabilities and stockholders' equity   $     213,984        $    205,559 
                                             -------------        ------------
                                             -------------        ------------

</TABLE>


                                       4

<PAGE>

                             USCS INTERNATIONAL, INC.
                   CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

                                    (Unaudited)
                       (In thousands except per share amounts)


<TABLE>
<CAPTION>

                                     Three months ended               Nine months ended
                                        September 30,                   September 30,
                                  -------------------------     ---------------------------
                                     1997           1996            1997            1996
                                  ----------     ----------     -----------     -----------
<S>                               <C>            <C>            <C>             <C>
Revenue:
 Software and services:
   Customer management            $   39,646     $   37,084     $   115,080     $   103,368 
   Bill processing                    28,998         26,056          86,917          72,982 
                                  ----------     ----------     -----------     -----------
     Total                            68,644         63,140         201,997         176,350 
 Equipment sales and services          4,479          6,217          14,794          16,834 
                                  ----------     ----------     -----------     -----------
     Total revenue                    73,123         69,357         216,791         193,184 
                                  ----------     ----------     -----------     -----------
Cost of revenue:
 Software and services:
   Customer management                17,759         18,601          53,670          55,352
   Bill processing                    20,923         19,294          62,847          54,129 
                                  ----------     ----------     -----------     -----------
     Total                            38,682         37,895         116,517         109,481 
 Equipment sales and services          2,536          3,749           8,062          10,095 
                                  ----------     ----------     -----------     -----------
     Total cost of revenue            41,218         41,644         124,579         119,576 
                                  ----------     ----------     -----------     -----------
Gross profit                          31,905         27,713          92,212          73,608 
                                  ----------     ----------     -----------     -----------
Operating expenses:
 Research and development              7,323          6,768          22,054          18,301 
 Selling, general and 
   administrative                     14,799         13,033          42,261          36,111 
                                  ----------     ----------     -----------     -----------
     Total operating expenses         22,122         19,801          64,315          54,412 
                                  ----------     ----------     -----------     -----------
Operating income                       9,783          7,912          27,897          19,196 
Interest expense                         109            757             464           3,106
                                  ----------     ----------     -----------     -----------
Income before income taxes             9,674          7,155          27,433          16,090 

Income tax provision                   3,883          2,827          10,987           6,356 
                                  ----------     ----------     -----------     -----------
Net income                        $    5,791     $    4,328     $    16,446     $     9,734 
                                  ----------     ----------     -----------     -----------
                                  ----------     ----------     -----------     -----------
Earnings per share                $     0.24     $     0.18     $      0.68         $  0.44 
                                  ----------     ----------     -----------     -----------
                                  ----------     ----------     -----------     -----------
Weighted average common
 shares and equivalents               24,399         24,154          24,312          22,039 
                                  ----------     ----------     -----------     -----------
                                  ----------     ----------     -----------     -----------

</TABLE>


                                       5

<PAGE>

                               USCS INTERNATIONAL, INC.
                    CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

                                    (Unaudited)
                                   (In thousands)

<TABLE>
<CAPTION>


                                                       Nine months ended
                                                         September 30,
                                                 ------------------------------
                                                     1997               1996
                                                 -----------        -----------
<S>                                              <C>                <C>
Cash flows from operating activities:
Net cash provided by operating activities        $    31,564        $    15,762
                                                 -----------        -----------
Cash flows from investing activities:
   Capital expenditures, net                         (23,988)           (20,042)
   Purchase of subsidiary                             (2,046)                 - 
                                                 -----------        -----------
Net cash used in investing activities                (26,034)           (20,042)
                                                 -----------        -----------
Cash flows from financing activities:
   Net paydown under revolving credit 
     agreement                                             -            (28,500)
   Payments on long-term debt                         (4,348)           (24,337)
   Proceeds from issuance of common stock              2,338             54,286 
   Repurchase of common stock                         (3,157)               (38)
                                                 -----------        -----------

Net cash (used) provided by financing 
  activities                                          (5,167)             1,411 
                                                 -----------        -----------

Net increase (decrease) in cash                          363             (2,869)

Cash at January 1                                      8,452              6,627 
                                                 -----------        -----------

Cash at September 30                             $     8,815        $     3,758
                                                 -----------        -----------
                                                 -----------        -----------

</TABLE>


                                       6

<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.   Stockholders' Equity
       
       In June 1996, the Company completed an initial public offering 
       (IPO) of its common stock.  Upon the close of the IPO, the Company
       effected certain stock splits and conversions of its Voting and
       Non-Voting Common Stock.  All share and per share data have been
       restated to reflect the effect of the stock splits.
 
3.  Treasury Stock

       In August 1997, the Board of Directors authorized the repurchase of
       the Company's common stock to be held as treasury stock with the
       reservation of such treasury stock for, among other purposes, 
       issuance under various employee stock purchase and incentive stock
       option plans.  As of September 30, 1997, the Company had
       repurchased 169,613 shares at an aggregate purchase price of 
       $3,157,000.
 
4.  Income Tax

       Income tax provisions for interim periods are based on estimated
       effective annual income tax rates.  The Company recognizes deferred
       tax assets and liabilities for the expected future tax consequences
       of temporary differences between tax bases and financial reporting
       bases of assets and liabilities.
       
5.   Earnings per Share

       Earnings per share are based on the weighted average number of
       shares outstanding and common stock equivalents during the
       respective periods, including the assumed net shares issuable upon
       exercise of stock options when dilutive.  Common and common
       equivalent shares issued during the twelve-month period prior to
       the IPO are included in the calculations as if they were
       outstanding for all periods presented.
       
       Under the recently issued FAS 128, the pro forma basic and diluted
       earnings per share, as defined by the statement, would be as
       follows:

<TABLE>
<CAPTION>
                                                       Three months ended          Nine months ended
                                                          September 30,              September 30,
                                                      ----------------------    ----------------------
       Share amounts in (000's)                          1997        1996         1997         1996
       ------------------------                       ---------    ---------    ---------    ---------
       <S>                                            <C>          <C>          <C>          <C>      
       Basic earnings per share                       $    0.25    $    0.19    $    0.71    $    0.47
                                                      ---------    ---------    ---------    ---------
                                                      ---------    ---------    ---------    ---------
       Weighted average shares outstanding               23,291       22,957       23,180       20,537 
                                                      ---------    ---------    ---------    ---------
                                                      ---------    ---------    ---------    ---------
       Diluted earnings per share                     $    0.24    $    0.18    $    0.68    $    0.45 
                                                      ---------    ---------    ---------    ---------
                                                      ---------    ---------    ---------    ---------
       Weighted average shares outstanding               24,398       23,966       24,279       21,578
                                                      ---------    ---------    ---------    ---------
                                                      ---------    ---------    ---------    ---------
</TABLE>


                                       7

<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, USCS is a leading global provider of customer care and 
billing solutions to the communications industry and other service 
industries.  USCS operates in one segment with revenue derived primarily from 
providing software and bill processing services to cable television and 
multi-service providers and bill processing services to telecommunications 
companies.  Software and bill processing services for cable television and 
multi-service providers are generally provided under bundled service 
arrangements.  Most of the Company's revenue is derived 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, generally one-page-side, 
produced.  Most of the Company's revenue is derived under long-term 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 provides software and services to North American and U.K. cable 
television and multi-service providers primarily through a direct sales 
force.  Outside of North America and the U.K., the Company markets its 
software and services 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 international, multi-service and 
telecommunications markets because it believes these represent opportunities 
to grow at rates greater than in the U.S. cable television marketplace alone.


                                       8

<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:

<TABLE>
<CAPTION>

                                                    Three months ended                            Nine months ended
                                                        September 30,                               September 30,
                                         ------------------------------------------    ------------------------------------------
                                                 1997                   1996                   1997                    1996
                                         -------------------    -------------------    -------------------    -------------------
                                                   (Dollars in thousands)                         (Dollars in thousands)
                                                         (Unaudited)                                    (Unaudited)
<S>                                      <C>          <C>       <C>          <C>       <C>          <C>       <C>          <C>
Revenue:
 Software and services:
   Customer management                   $39,646       54.2%    $37,084       53.5%    $115,080      53.1%    $103,368      53.5%
   Bill processing                        28,998       39.7      26,056       37.5       86,917      40.1       72,982      37.8
                                         -------      -----     -------      -----     --------     -----     --------     -----
     Total                                68,644       93.9      63,140       91.0      201,997      93.2      176,350      91.3

 Equipment sales and services              4,479        6.1       6,217        9.0       14,794       6.8       16,834       8.7
                                         -------      -----     -------      -----     --------     -----     --------     -----
     Total revenue                        73,123      100.0      69,357      100.0      216,791     100.0      193,184     100.0
                                         -------      -----     -------      -----     --------     -----     --------     -----
Cost of revenue:
 Software and services:
   Customer management                    17,759       24.3      18,601       26.8       53,670      24.8       55,352      28.7
   Bill processing                        20,923       28.6      19,294       27.8       62,847      29.0       54,129      28.0
                                         -------      -----     -------      -----     --------     -----     --------     -----
     Total                                38,682       52.9      37,895       54.6      116,517      53.8      109,481      56.7
 Equipment sales and services              2,536        3.5       3,749        5.4        8,062       3.7       10,095       5.2
                                         -------      -----     -------      -----     --------     -----     --------     -----
     Total cost of revenue                41,218       56.4      41,644       60.0      124,579      57.5      119,576      61.9
                                         -------      -----     -------      -----     --------     -----     --------     -----
Gross profit                              31,905       43.6      27,713       40.0       92,212      42.5       73,608      38.1
                                         -------      -----     -------      -----     --------     -----     --------     -----
Operating expenses:
 Research and development                  7,323       10.0       6,768        9.8       22,054      10.2       18,301       9.5
 Selling, general and administrative      14,799       20.3      13,033       18.8       42,261      19.4       36,111      18.7
                                         -------      -----     -------      -----     --------     -----     --------     -----
     Total operating expenses             22,122       30.3      19,801       28.6       64,315      29.6       54,412      28.2
                                         -------      -----     -------      -----     --------     -----     --------     -----
Operating income                           9,783       13.3       7,912       11.4       27,897      12.9       19,196       9.9
Interest expense                             109         .1         757        1.1          464        .2        3,106       1.6
                                         -------      -----     -------      -----     --------     -----     --------     -----
Income before income taxes                 9,674       13.2       7,155       10.3       27,433      12.7       16,090       8.3

Income tax provision                       3,883        5.3       2,827        4.1       10,987       5.1        6,356       3.3
                                         -------      -----     -------      -----     --------     -----     --------     -----
Net income                               $ 5,791        7.9%    $ 4,328        6.2%    $ 16,446       7.6%    $  9,734       5.0%
                                         -------      -----     -------      -----     --------     -----     --------     -----
                                         -------      -----     -------      -----     --------     -----     --------     -----

</TABLE>


                                       9

<PAGE>

Revenue.  Total revenue increased by 5%, to $73.1 million in the third quarter 
of 1997 from $69.4 million in the comparable quarter in 1996.  Software and 
services, which was 94% of total revenue in the third quarter of 1997 versus 
91% in the third quarter of 1996, increased in the third quarter of 1997 by 
9% over the prior year quarter.  Customer management software and services 
revenue, of which a significant majority comes from bundling software with 
bill processing services, increased by 7% to $39.6 million in the third 
quarter of 1997 from $37.1 million in the 1996 third quarter.  Bill processing 
services revenue provided primarily to telecommunications companies as a 
stand-alone service increased by 11%, to $29 million in the third quarter of 
1997 from $26.1 million in the comparable quarter of the prior year.  
Equipment sales and services, as expected, declined to $4.5 million in the 
third quarter of 1997 compared to $6.2 million in the same quarter of 1996.  
As a percentage of revenue, equipment sales and services declined to 6% in 
the third quarter of 1997 from 9% in the same quarter of 1996.

Total revenue increased by 12%, to $216.8 million for the nine months ended 
September 30, 1997 from $193.2 million in the comparable period in 1996.  
Software and services, which was 93% of total revenue for the nine months 
ended September 30, 1997 versus 91% for the same period in 1996, increased by 
15% in the first nine months of 1997 over the first nine months of 1996.  
Customer management software and services revenue increased by 11%, to $115.1 
million in the nine months ended September 30, 1997 from $103.4 million for 
the same period in 1996.  Bill processing services revenue increased by 19%, 
to $86.9 million in the first nine months of 1997 from $73.0 million in the 
comparable period of the prior year.  Equipment sales and services declined to 
$14.8 million in the first nine months of 1997 compared to $16.8 million for 
the same period in 1996 and decreased to 7% of revenue in 1997 from 9% in the 
comparable 1996 period.

During the third quarter, Tele-Communications Inc. ("TCI"), the Company's 
largest customer, which accounted for approximately 17% and 18% of the 
Company's total revenue in the third quarter and nine-month period ended 
September 30, 1997, and 23% and 21% in the same periods in 1996, 
respectively, informed the Company that it had entered into a long-term, 
exclusive contract to replace the Company's customer management software and 
services with those of a competitor.  See New Products, Rapid Technological 
Changes and Competition under CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS 
for additional discussion.  Exclusive of TCI, total revenue was approximately 
$60.7 million, customer management software and services revenue was $29.3 
million, bill processing services revenue was $28.8 million and equipment 
related revenue was $2.6 million in the third quarter of 1997, which 
represent increases of 14%, 16%, 12% and 8% over the same quarter last year, 
respectively.  Comparable numbers for the nine-month period ended September 
30, 1997 were $177.7 million, $82.4 million, $86.1 million and $9.2 million, 
which represent increases of 16%, 13%, 20% and 5% over the comparable period 
in 1996, respectively.

Growth in revenue in customer management software and services, for the third 
quarter and nine months ended September 30, 1997 compared to the same periods 
in 1996, came primarily from sales of additional services, increases in the 
number of subscribers from the growth of existing clients and addition of new 
clients primarily in international markets, and contractually based price 
adjustments.  The bill processing services revenue increase for the third 
quarter and nine-month period ending September 30, 1997, compared to the same 
periods in 1996, was attributable to increased statement production from the 
addition of new customers, the internal growth of existing customers and from 
the sale of additional services.

Cost of Revenue and Gross Profit.  The Company's gross profit margin increased 
to approximately 44% in the third quarter of 1997 from approximately 40% in 
the comparable quarter in 1996.  For the nine-month period ending September 
30, 1997, the gross profit margin was 43%, compared to 38% for the same 
period in 1996.  Customer management software and services gross profit 
margin increased to approximately 55% in the third quarter of 1997 from 50% 
in the comparable quarter in 1996.  For the nine-month period ending 
September 30, 1997, the gross profit was approximately 53%, compared to 46% 
for the same period in 1996.  Bill processing services gross profit margin 
approximated 28% in the third quarter of 1997, compared to 26% for the same 
period in 1996.  For the nine-month period ended September 30, 1997, the 
gross profit margin approximated 28%, compared to 26% in the same period in 
1996.  Gross profit margins increased because of economies of scale 
associated with overall higher subscriber counts, increased statement 
processing volumes, operational efficiencies and increased revenue from 
selling additional services.  The gross profit margin on equipment-related 
revenue increased to approximately 43% in the third quarter of 1997 from 40% 
in the comparable quarter in 1996.  For the nine-month period ending 
September 30, 1997, the gross profit margin was 46%, compared to 40% in the 
same period in 1996.  The increase in margins is the result of the mix of 
declining equipment sales and increasing higher-margin lease revenues.


                                       10

<PAGE>

Research and Development.  Research and development expense in the third 
quarter of 1997 was $7.3 million, an increase of $.5 million, or 7%, over the 
comparable quarter in the prior year.  For the nine-month period ended 
September 30, 1997, research and development expense was $22.1 million, 
compared to $18.3 million in the same period in 1996, an increase of 21%.  
Research and development expense was 10% of total revenue in the third 
quarter of 1997 and 1996, and 10% of total revenue in the first nine months 
of 1997, compared to 9% in the first nine months of 1996.  The added expense 
was incurred for expanding features and functionality, primarily in customer 
management software and services.

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 is an ongoing process, the Company believes, based on current 
known information, that it can effectively mitigate any "Year 2000" date 
issues, dependant upon cooperation from third parties.  The Company is 
currently assessing the impact of this issue on the Company's financial 
position and results of operations.

Selling, General and Administrative.  Selling, general and administrative 
expenses approximated 20% and 19% of total revenue for the quarter ended 
September 30, 1997 and 1996, respectively, and approximated 19% for the 
nine-month period ended September 30, 1997 and 1996.  Selling, general and 
administrative expenses in the third quarter of 1997 increased by 
approximately 14% over the comparable quarter in the prior year, and for the 
nine-month period ending September 30, 1997 increased by 17% over the same 
period in 1996.  Sales and marketing increased by 28% in the third quarter of 
1997, compared to the first quarter of 1996, and by 25% in the first nine 
months of 1997, compared to 1996.  This increase is attributable to increased 
sales and marketing activities in the domestic and international markets.  
General and administrative expenses increased 5% in the third quarter of 
1997, compared to the third quarter of 1996, and increased by 12% in the 
first nine months of 1997, compared to the same period in 1996, but remained 
constant as a percentage of revenue.  This increase is attributed to greater 
support for the increased sales and marketing activity and support required 
for company growth.

Net Income.  Net income in the third quarter of 1997 increased by 
approximately 34%, to $5.8 million from $4.3 million in the comparable 1996 
quarter, and in the nine-month period ended September 30, 1997, net income 
increased by 69% to $16.4 million from $9.7 million in the comparable 1996 
period.  This increase is primarily because of the factors cited above and a 
net reduction of interest expense of approximately $.6 million in the third 
quarter and $2.6 million in the first nine months of 1997 due to the 
retirement of debt primarily through IPO proceeds.  Net income per share 
increased 33% and 55% in the third quarter and first nine months of 1997, 
respectively, versus the comparable periods in 1996.  The increase in net 
income per share in the third quarter and first nine months of 1997 resulted 
from the Company's higher earnings, partially offset by an increase of 1% and 
10%, respectively, in the number of shares used in the calculation of 
earnings per share.


                                       11

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

The primary sources of financing the Company's growth have been cash provided 
by operations, borrowing from banks and financial institutions and the IPO 
proceeds.  The Company utilized the net proceeds from the IPO to reduce debt 
under certain revolving credit agreements and, in combination with positive 
cash flow from operations, to prepay insurance company loans in 1996.  The 
retirement of a majority of the Company's debt allowed the redirection of 
cash used for debt service to operations and growth.  Cash flow generated 
from operations doubled from $15.8 million in the first nine months of 1996 
to $31.6 million for the same period in 1997, primarily due to an increase in 
earnings and non-cash expenses.

The Company collects from its clients and remits to the U.S. Postal Service a 
substantial amount of postage.  The majority of contracts allow the Company 
to pre-bill and/or require deposits from its clients to mitigate the effect 
on cash flow.  As of September 30, 1997, 30% of the Company's accounts 
receivable represented amounts due from clients for postage.  Postage 
collections and remittances are not included in the Company's statements of 
operations.

At September 30, 1997, the Company had $8.8 million of cash, $80.3 million of 
accounts receivable (including postage receivable of $ 23.9 million), $4.6 
million of current net investment in leases, and $50.1 million of working 
capital.  At September 30, 1997, the Company had no borrowings under 
unsecured bank credit arrangements with a total borrowing availability of $50 
million.  Of the $6.1 million of total debt outstanding at September 30, 1997, 
$4 million is due over the following 12-month period.  Of the total debt 
outstanding, $5.2 million pertains to the Company's leasing subsidiary and is 
collateralized, without recourse, by rents receivable, and $.9 million is for 
bonds collateralized by real estate.

The Company continues to make significant investments in capital equipment 
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.  The Company, from time to time, 
may continue to repurchase shares of its common stock.

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 cable 
television market, the Company's ability to retain existing customers and 
attract new customers, 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 clients and general economic factors.

Dependence on the Cable Television Market

The Company is highly dependent on the cable television market.  
Approximately 60% of the Company's revenue was derived from sales to U.S. and 
international cable television service providers in the third quarter and 
first nine months of 1997 and 1996.  The number of providers of cable 
television service in the U.S. has been declining, 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.  Also see "International 
Business Activities."


                                       12

<PAGE>

Changing Communications Market

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.  Further, 
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.

Variability of Quarterly Operating Results

The Company's quarterly operating results may fluctuate from quarter to 
quarter 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 evolving and unpredictable nature of the markets in which the 
Company's products and services are sold and general economic conditions.

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.

Tele-Communications, Inc. ("TCI"), is the Company's largest customer and 
represented approximately 17% and 18% of the Company's revenue in the third 
quarter and nine-month period ended September 30, 1997, and 23% and 21% in 
the same periods in 1996, respectively.  More than two 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 such 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, and no subscribers were converted in the third quarter of 1997, it 
is believed that the competitor and TCI wish to complete the transfer by the 
end of 1998.  The Company intends to mitigate the impact of this by 
aggressively pursuing other domestic and international opportunities and to 
allocate the Company's resources to other existing or new customers.  If 
these efforts are not fully successful in mitigating the TCI loss, 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.

Another client, which accounted for approximately 5% of total revenue in the 
third quarter of 1997, orally advised the Company more than a year ago that 
it may move to an alternate solution for its customer management software 
requirements.  Through the third quarter of 1997, no transfers of this 
customer's business to this alternate solution have been made.

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.


                                       13

<PAGE>

Concentration of Client Base

Aggregate revenue from the Company's ten largest clients accounted for over 
two-thirds of total revenue in the third quarter and nine-month period ending 
September 30, 1997 and 1996.  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 
represented approximately 39% and 47% of total revenue in the third quarter 
of 1997 and 1996, respectively, and approximately 41% and 46% in the 
nine-month period ending September 30, 1997 and 1996, respectively.

Management of Growth

Management of the Company's growth 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.

Client Failure to Renew or Utilize Contracts

A substantial portion of the Company's revenue is derived from the sale of 
services or products under long-term contracts with its clients.  The Company 
typically 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.

International Business Activities

The Company markets its products in a variety of international markets.  To 
date, the Company's customer management software has been installed in 20 
countries.  Approximately 5% of the Company's total revenue came from 
international sources in the third quarter and first nine months of 1997 and 
1996.  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.  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.

Attraction and Retention of Key Personnel

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.


                                       14

<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.

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 worldwide 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.

Possible 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.  For
the foregoing reasons, recent trends should not be considered reliable
indicators of future stock prices or financial results.


                                       15

<PAGE>

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.

         None.


Item 5.  Other information.

         In order to give the participants in the Company's Employee Stock
         Ownership Plan (ESOP) access to Company stock in their ESOP account in
         an orderly phased manner for purposes of self-direction, in July 1997,
         the Board of Directors terminated the Company's ESOP effective
         January 1, 1997, with distribution of the ESOP assets to take place in
         phased quarterly increments.  The initial distribution of ESOP assets
         to ESOP participants began in August 1997, with a distribution of the
         greater of 400 shares or 10% of the shares in each ESOP participant's
         account, plus all cash in the account, for a total initial
         distribution of 517,968 shares and $578,756 distributed.  Rather than
         distribute a minimum number of shares in subsequent quarters, the
         Company will distribute the entire remaining balance of ESOP assets to
         participants in December 1997, a total of 2,935,920 shares and
         $97,145.  The Company registered the shares in the ESOP pursuant to a
         Form S-8 effective November 12, 1996.


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

    (a)  Exhibits.

         Exhibit 11     Computation of Per Share Earnings

         Exhibit 27     Financial Data Schedule


    (b)  Reports on Form 8-K.

         The Registrant filed the following report on Form 8K:

         Registrant's Press Release, dated as of August 13, 1997, announcing
         the authorization of a stock repurchase program.


                                       16

<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: November 7, 1997            By: /s/ DOUGLAS L. SHURTLEFF
                                   ------------------------------
                                   Douglas L. Shurtleff
                                   Senior Vice President, Finance
                                   (Chief Financial Officer)


                                       17