<PAGE>   1





===============================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549
                             ---------------------

                                  FORM 10-K

        [x]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                            EXCHANGE ACT OF 1934
                For the Fiscal Year 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:  0-28536

                       BILLING INFORMATION CONCEPTS CORP.
             (Exact Name of Registrant as Specified in its Charter)

                      DELAWARE                                     74-2781950
              (State of Incorporation)                        (I.R.S. Employer
                                                             Identification No.)

7411 JOHN SMITH DRIVE, SUITE 200, SAN ANTONIO, TEXAS                 78229
      (Address of Principal Executive Office)                      (Zip Code)

                                 (210) 949-7000
              (Registrant's Telephone Number, Including Area Code)

       Securities Registered Pursuant to Section 12(b) of the Act:  NONE

          Securities Registered Pursuant to Section 12(g) of the Act:
                    COMMON STOCK, PAR VALUE $0.01 PER SHARE
                                (Title of Class)
                             ---------------------

    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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.  [ ]

    The aggregate market value of the Registrant's outstanding Common Stock
held by non-affiliates of the Registrant as of December 11, 1997 was
approximately $730,055,170. There were 16,314,082 shares of the Registrant's
Common Stock outstanding as of December 11, 1997.

                      DOCUMENTS INCORPORATED BY REFERENCE

    Portions of the Registrant's Definitive Proxy Statement for the 1998 Annual
Meeting of Stockholders to be held on February 26, 1998, are incorporated by
reference in Part III hereof.
================================================================================
<PAGE>   2
                       BILLING INFORMATION CONCEPTS CORP.

                           ANNUAL REPORT ON FORM 10-K

                  FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1997

<TABLE>
<CAPTION>
  ITEM                                                                                                                  PAGE
 NUMBER                                                                                                                NUMBER
 ------                                                                                                                ------
 <S>       <C>                                                                                                            <C>
 -         Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         2
                                                        PART I
 1.        Business  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         3
 2.        Properties  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        11
 3.        Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        11
 4.        Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . . . . . . . .        11

                                                        PART II
 5.        Market for the Company's Common Equity and Related Stockholder Matters  . . . . . . . . . . . . . . . .        12
 6.        Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        13
 7.        Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . .        15
 8.        Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        23
 9.        Changes in and Disagreements with Accountants on Accounting and Financial Disclosure  . . . . . . . . .        43

                                                        PART III
 10.       Directors and Executive Officers of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . .        44
 11.       Executive Compensation  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        44
 12.       Security Ownership of Certain Beneficial Owners and Management  . . . . . . . . . . . . . . . . . . . .        44
 13.       Certain Relationships and Related Transactions  . . . . . . . . . . . . . . . . . . . . . . . . . . . .        44

                                                        PART IV
 14.       Exhibits, Financial Statement Schedules, and Reports on Form 8-K  . . . . . . . . . . . . . . . . . . .        45

           Signatures  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        49
</TABLE>





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                                     PART I

ITEM 1. BUSINESS

    This Annual Report on Form 10-K contains certain "forward-looking"
statements as such term is defined in the Private Securities Litigation Reform
Act of 1995 and information relating to the Company and its subsidiaries that
are based on the beliefs of the Company's management as well as assumptions
made by and information currently available to the Company's management. When
used in this report, the words "anticipate," "believe," "estimate," "expect"
and "intend" and words or phrases of similar import, as they relate to the
Company or its subsidiaries or Company management, are intended to identify
forward-looking statements. Such statements reflect the current risks,
uncertainties and assumptions related to certain factors including, without
limitations, competitive factors, general economic conditions, customer
relations, relationships with vendors, the interest rate environment,
governmental regulation and supervision, seasonality, distribution networks,
product introductions and acceptance, technological change, changes in industry
practices, onetime events and other factors described herein and in other
filings made by the Company with the Securities and Exchange Commission. Based
upon changing conditions, should any one or more of these risks or
uncertainties materialize, or should any underlying assumptions prove
incorrect, actual results may vary materially from those described herein as
anticipated, believed, estimated, expected or intended. The Company does not
intend to update these forward-looking statements.

General

    Billing Information Concepts Corp. (the "Company" or "BIC") is a
third-party billing clearinghouse and information management services provider
to the telecommunications industry. BIC also develops, sells and supports
sophisticated billing systems for telecommunications service providers, and
provides direct billing services through an in-house service bureau. BIC's
customers include direct dial long distance telephone companies, operator
services providers, information providers, telecommunications equipment
suppliers and other telecommunication services providers.

    The Company maintains contractual billing arrangements with over 1,300
local telephone companies that provide access lines to, and collect for
services from, end-users of telecommunication services. The Company processes
telephone call records and other transactions and collects the related end-user
charges from these local telephone companies on behalf of its customers. This
process is known within the industry as "Local Exchange Carrier billing" or
"LEC billing."

    BIC's direct dial long distance customers use the Company as a billing
clearinghouse for processing and collecting call records generated by their
end-users. Although such carriers can bill end-users directly, BIC provides
these carriers with a cost-effective means of billing and collecting
residential and small commercial accounts through the local telephone
companies.

    The Company also processes telephone call records for customers providing
operator services largely to the hospitality, penal, and private pay telephone
industries. In addition, BIC processes records for telephone calls that require
operator assistance and/or alternative billing options such as collect and
person-to-person calls, third-party billing and calling card billing. Since
operator services providers have only the billing number and not the name or
address of the billed party, they must have access to the services of the local
telephone companies to collect their charges. The Company provides this access
to its customers through its contractual billing arrangements with the local
telephone companies that bill and collect on behalf of these operator services
providers.

    BIC acts as an aggregator of telephone call records and other transactions
from various sources and due to its large volume, it receives discounted
billing costs with the local telephone companies and can pass on these
discounts to its customers. Additionally, BIC can provide its services to those
long distance carriers and operator services providers who would otherwise not
be able to make the investments in billing and collection agreements with the
local telephone companies, fees, systems, infrastructure and volume commitments
required to establish and maintain the necessary relationships with the local
telephone companies. The Company is obligated to pay certain local telephone
companies a total of approximately $6.9 million, $5.7 million, $4.2 million,
$4.1 million, $4.1 million and $11.0 million during fiscal 1998, 1999, 2000,
2001, 2002 and thereafter, respectively, for minimum usage charges under
billing and collection agreements, that, unless automatically renewed, expire
at varying dates through the end of fiscal 2005. The billing and collection





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<PAGE>   4
agreements do not provide for any penalties other than payment of the
obligation should the usage levels not be met. The Company has met all such
volume commitments in the past and anticipates exceeding the minimum usage
volumes with all of these vendors.

    In 1994, BIC began providing enhanced billing services for processing
transactions related to providers of premium services or products that can be
billed through the local telephone companies, such as charges for 900 access
pay-per-call transactions, cellular long distance services, paging services,
voice mail services, Internet access, Caller ID and other non-regulated
telecommunications equipment charges.

    In addition to its full-service LEC billing product, BIC also offers
billing management services to customers who have their own billing
arrangements with the local telephone companies. These management services may
include data processing, accounting, end-user customer service, and
telecommunication tax processing and reporting.

    Effective June 1, 1997, the Company acquired Computer Resources Management,
Inc. ("CRM"), a company that develops software systems for the direct billing
of telecommunication services. CRM has developed a long distance billing
application for inter-exchange carriers which provides a single source direct
billing solution allowing for multiple telecommunication products on one bill.
These products include long distance, cellular, personal communications systems
"PCS", paging, cable and satellite television, Internet, and utilities.
Effective September 1, 1997, this company was reorganized into Billing Concepts
Systems, Inc. ("BCS"). BCS offers software licensing, equipment sales, service
bureau billing, custom programming and other ancillary services as desired by
its customers.

INDUSTRY BACKGROUND

    Billing clearinghouse and information management services, or LEC billing,
in the telecommunications industry developed out of the 1984 breakup of
American Telephone & Telegraph ("AT&T") and the Bell System. In connection with
the breakup, the local telephone companies that make up the Regional Bell
Operating Companies ("RBOCs"), Southern New England Telephone, Cincinnati Bell
and the General Telephone Operating Companies ("GTE") were required to provide
billing and collections on a nondiscriminatory basis to all carriers that
provided telecommunication services to their end-user customers. Due to both
the cost of acquiring and the minimum charges associated with many of the local
telephone company billing and collection agreements, only the largest long
distance carriers, including AT&T, MCI Telecommunications Corporation ("MCI")
and Sprint Incorporated ("Sprint"), could afford the option of billing directly
through the local telephone companies. Several companies, including BIC,
entered into these billing and collection agreements and became aggregators of
telephone call records for operator services providers and second and third
tier long distance carriers, thereby becoming "third-party clearinghouses."

    The operator services industry began to develop in 1986 with the advent of
technology that allowed a zero-plus call (automated calling card call) or
zero-minus call (collect, third-party billing, operator assisted calling card
or person-to-person call) to be routed away from AT&T to a competitive long
distance services provider. Since a zero-plus or zero-minus call is placed by
an end-user whose billing information is unrelated to the telephone being used
to place the call, a long distance carrier would not typically have adequate
information to produce a bill. This information typically resides with the
billed party's local telephone company. In order to bill its telephone call
records, a long distance services provider carrying zero-plus and zero-minus
telephone calls must either obtain billing and collection agreements with the
local telephone companies or utilize the services of a third-party
clearinghouse that has the billing and collection agreements required.

    Third-party clearinghouses such as BIC process these telephone call records
and other transactions and submit them to the local telephone companies for
inclusion in their monthly bills to end-users. As the local telephone companies
collect payments from end-users, they remit them to the third-party
clearinghouses that, in turn, remit payments to their carrier customers.





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<PAGE>   5
    Before the 1984 breakup of AT&T and the Bell companies, all
telecommunications billing was accomplished by direct billing end-users. Direct
billing entails the rating and formatting of call records, printing of bill
pages and mailing the bill to end-users. This process can be controlled
completely by the telecommunications services provider or portions of this
process can be outsourced to third-party vendors. In either case, the end-user
receives an individual bill directly from the service provider. As the number
of telecommunications service providers grew since 1984, the need for
individual and customized billing systems grew as well. The new service
offerings that have developed over the last five years, such as PCS and
Internet, have also added to the demand for new and customized billing systems.
Over the last few years, service providers have begun to offer more than one
service in a single, packaged offering that requires the billing of these
multiple services on one bill. This is referred to as convergent billing within
the industry. The demand for convergent billing has more recently driven the
growth in the amount of dollars being spent for new billing solutions. Service
providers typically acquire their systems from a third-party vendor because the
development of these systems internally is not cost-effective.

DEVELOPMENT OF BUSINESS

    On August 2, 1996, U.S. Long Distance Corp. ("USLD") distributed to its
stockholders all of the outstanding shares of common stock of the Company (the
"Distribution"), which, prior to the Distribution, was a wholly-owned
subsidiary of USLD. Upon completion of the Distribution, BIC became an
independent, publicly held company that owns and operates the billing
clearinghouse and information management services business previously operated
by USLD through certain of its subsidiaries (the "Billing Group"), including
Zero Plus Dialing, Inc. ("ZPDI").

    In 1988, USLD acquired ZPDI and its billing and collection agreements with
several local telephone companies. USLD used these billing and collection
agreements to bill and collect through the local telephone companies for its
own operator services call record transactions. As USLD's operator services
business expanded, ZPDI entered into additional billing and collection
agreements with other local telephone companies, including the RBOCs, GTE and
other independent local telephone companies. The Company recognized the expense
and time related to obtaining and administering these billing and collection
agreements and began offering its services as a third-party clearinghouse to
other operator services businesses who did not have any proprietary agreements
with the local telephone companies. In 1992, BIC entered into a new set of
billing and collection agreements with the local telephone companies and began
offering LEC billing services to direct dial long distance services providers.
The Company has billing and collection agreements covering over 1,300 local
telephone companies with access lines into approximately 95% of the United
States, Canada and Puerto Rico.

    A key factor in the evolution of the Company's business has been the
ongoing development of its information management systems. In 1990, the Company
developed a comprehensive information system capable of processing, tracing and
accounting for telephone call record transactions (see "Business -
Operations"). Management believes that this proprietary system provides the
Company's customers with more detailed information and yields a better
collection rate than its competitors. Also in 1990, the Company became the
first third-party billing clearinghouse to finance its customers' accounts
receivable (see "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Advance Funding Program and Receivable Funding
Facility"). In 1991, USLD separated the day-to-day management and operations of
the Company from its long distance and operator services businesses (the
"Telecommunications Group"). The purpose of this separation was to satisfy some
of the Company's customers who were also competitors of USLD's long distance
and operator services businesses. These customers had two main concerns: (i)
that USLD's long distance and operator services businesses could gain knowledge
of its competitors through call records processed by BIC and (ii) that BIC was
somehow subsidizing USLD's long distance and operator services businesses with
which these customers compete. Subsequent to the separation, the Billing Group
and the Telecommunications Group operated independently, except for certain
corporate activities conducted by USLD's corporate staff.

    In 1993, the Company began to offer billing management services to direct
dial long distance carriers and information services providers who have their
own billing and collection agreements with the local telephone companies.
These customers collect charges directly from the local telephone companies
and, for marketing purposes, may desire to place their own logo, name and
customer service number on the long distance bill page. Billing management
services provided by the Company to such customers may include contract
management, transaction processing, information management and reporting, tax
compliance and customer service.





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<PAGE>   6
    In 1994, the Company began offering enhanced billing clearinghouse and
information management services to other businesses within the
telecommunications industry. These businesses include telecommunications
equipment providers, information providers and other communication services
providers of non-regulated services and products such as 900 access
pay-per-call transactions, cellular long distance services, paging services,
voice mail services, Internet access, Caller ID and other non-regulated
telecommunications equipment charges. The Company entered into additional
billing and collection agreements with the local telephone companies to process
these types of transactions. Management believes that billing for such
non-regulated telecommunications products and services represents a limited
expansion opportunity for the Company.

    Effective June 1, 1997, the Company acquired CRM, a company that develops
software systems for the direct billing of telecommunication services. CRM has
developed a long distance billing application for inter-exchange carriers which
provides a single source direct billing solution allowing for multiple
telecommunication products on one bill. These products include long distance,
cellular, PCS, paging, cable and satellite television, Internet, and utilities.
Effective September 1, 1997, this company was reorganized into BCS. BCS offers
software licensing, equipment sales, service bureau billing, custom programming
and other ancillary services as desired by its customers.

BILLING CLEARINGHOUSE AND INFORMATION MANAGEMENT SERVICES ("LEC BILLING")

    In general, the Company performs four types of LEC billing services under
different billing and collection agreements with the local telephone companies.
First, the Company performs direct dial long distance billing, which is the
billing of "1+" long distance telephone calls to individual residential
customers and small commercial accounts.  Second, the Company offers zero plus
- zero minus LEC billing services to operator services providers. This service
is the original form of local telephone company billing provided by the Company
and has driven the development of the systems and infrastructure utilized by
all of the Company's LEC billing services. Third, the Company performs enhanced
LEC billing services whereby it bills a wide array of charges that can be
applied to a local telephone company telephone bill, including charges for 900
pay-per-call transactions, cellular services, paging services, voice mail
services, Internet access, Caller ID and other telecommunications equipment.
Finally, under its billing management function, the Company provides any of the
three services discussed above utilizing the customer's own billing and
collection agreements.

LEC BILLING PROCESS

    LEC billing refers to billing for transactions that are included in the
monthly local telephone bill of the end-user as opposed to a direct bill that
the end-user would receive directly from the telecommunications or other
services provider. The Company's customers submit telephone call record data in
batches on a daily to monthly basis, but typically in weekly intervals. The
data is submitted either electronically or via magnetic tape. BIC, through its
proprietary software, processes the telephone call record data to determine the
validity of each record and to include for each record certain
telecommunication taxes and applicable customer identification information and
sets up an account receivable for each batch of call records processed. The
Company then submits, through a third-party vendor, the relevant billable
telephone call records and other transactions to the appropriate local
telephone company for billing and collection. BIC monitors and tracks each
account receivable by customer and by batch throughout the billing and
collection process. The local telephone companies then include these telephone
call records and other transactions in their monthly local telephone bills and
remit the collected funds to the Company for payment to its customers. The
complete cycle can take up to 18 months from the time the records are submitted
for billing until all bad debt reserves are "trued up" with actual bad debt
experience. However, the billing and collection agreements provide for the
local telephone companies to purchase the accounts receivable, with recourse,
within a 40 to 90 day period. The payment cycle from the time call records are
transmitted to the local telephone companies to the initial receipt of funds by
the Company is, on average, approximately 55 days. Approximately 90% of the
value of the call records is received in the initial payments by the local
telephone companies.

    The Company does not record an allowance for doubtful accounts for LEC
billing customer receivables, but does accrue an estimated liability for
end-user customer service refunds and local telephone company adjustments
related to certain customers. The Company reviews the activity of its customer
base to detect potential losses. If there is uncertainty with an account, the
Company can discontinue paying the customer in order to hold funds to cover
future end-user customer service refunds, bad debt and unbillable adjustments.
If a customer discontinues doing business with the Company, and





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there are insufficient funds being held to cover future refunds and
adjustments, the Company's only recourse is through legal action. Since these
adjustments are associated with customer receivable activity, the related
accrual is included in the "Accounts payable - billing customers" caption on
the balance sheet. An allowance for doubtful accounts is not necessary for LEC
billing trade receivables since these receivables are collected from the funds
received from the local telephone company before remittance is made to the
customer.

    The Company processes the tax records associated with each customer's
submitted telephone call records and other transactions and files certain
federal excise and state and local telecommunications-related tax returns
covering such records and transactions on behalf of many of its customers. The
Company currently submits more than 1,800 tax returns on behalf of its
customers each month.

    BIC provides end-user inquiry and investigation (customer service) for
billed telephone call records. This service allows end-users to inquire
regarding calls for which they were billed. The Company's customer service
telephone number is included in the local telephone company bill to the
end-user, and the Company's customer service representatives are authorized to
resolve end-user disputes regarding such calls.

    BIC earns its revenues based on (i) a processing fee that is assessed to
customers either as a fee charged for each telephone call record or other
transaction processed or as percentage of the customer's revenue that is
submitted by the Company to the local telephone companies for billing and
collection and (ii) a customer service inquiry fee that is assessed to
customers either as a fee charged for each record processed by the Company or
as a fee charged for each billing inquiry made by end-users. Any charges
assessed to the Company by local telephone companies for billing and collection
services are also included in revenues and are passed through to the customer.

    Through its advance funding program, BIC offers its customers the option to
receive, within five days of the customer's submission of records to BIC, a
significant portion of the revenue associated with such records. The customer
pays interest for the period of time between the purchase of records by the
Company and the time the local telephone company submits payment to BIC for the
subject records. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Advance Funding Program and Receivable
Financing Facility."

OPERATIONS

    The Company's LEC billing services are highly automated through the
Company's proprietary computer software and state-of-the-art data transmission
protocols. Except for the end-user inquiry and investigation service (customer
service), the staff required to provide the Company's LEC billing services is
largely administrative and the number of employees is not directly volume
sensitive. Many of BIC's customers submit their records to the Company using
electronic transmission protocols directly into the Company's electronic
bulletin board. These records are automatically accessed by BIC's proprietary
software, processed, and submitted to the local telephone companies
electronically. Upon completion of the billing process, the Company provides
reports relating to billable records and returns any unbillable records to its
customers electronically through the bulletin board.

    The Company operates two independent computer systems to ensure continual,
uninterrupted processing of LEC billing services. One system is dedicated to
daily processing activities, and the other serves as a back-up to the primary
system and provides storage for up to 12 months of billing detail, which is
immediately accessible to BIC's customer service representatives who handle
billing inquiries. Detail of records older than 12 months is stored on CD ROM
and magnetic tape for at least seven years. Since timely submission of call
records to the local telephone companies is critical to prompt collections and
high collection rates, BIC has made a significant investment in computer
systems so that its customers' call records are processed and submitted to the
local telephone companies in a timely manner, generally within 24 hours of
receipt by BIC.

    The Company's contracts with its customers provide for the LEC billing
services required by the customer, specifying, among other things, the services
to be provided and the cost and term of the services. Once the customer
executes an agreement, BIC updates tables within each of the local telephone
companies' billing systems to control the type of records processed, the
products or services allowed by the local telephone companies, and the printing
of the customer's





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<PAGE>   8
name on the end-user's monthly bill. While these local telephone company tables
are being updated, the Company's technical support staff tests the customer's
records through its proprietary software to ensure that the records can be
transmitted to the local telephone companies.

         The Company offers software licensing, software customization,
equipment sales and direct billing outsourcing services through its
wholly-owned subsidiary, BCS. BCS has developed, and continues to enhance,
sophisticated software applications known as Modular Billing Applications
("MBA"). This software can be acquired by a customer through a licensing
arrangement or BCS will bill a customer's transactions for the customer in a
service bureau environment. BCS also sells IBM AS/400 hardware, which is the
hardware platform required to run the MBA software. As of September 30, 1997,
BCS had 32 employees dedicated to the sale, implementation, training,
development and maintenance of its systems.

    BIC maintains a relatively small direct sales force of less than fifteen
people and accomplishes most of its marketing efforts through active
participation in telecommunications industry trade shows, educational seminars
and workshops. The Company advertises to a limited extent in trade journals and
other industry publications.

CUSTOMERS

    The Company provides LEC billing services and systems sales and development
to the following categories of telecommunications services providers:

    o    Interexchange Carriers or Long Distance Companies: Facilities-based
carriers that possess their own telecommunications switching equipment and
networks and provide traditional direct dial telecommunications services.
Certain long distance companies provide operator assisted services as well as
direct dial services. These calls are billed to the end-user by the local
telephone company in the case of residential and small commercial accounts.

    o    Switchless Resellers: Marketing organizations, affinity groups, or
even aggregator operations that buy direct dial long distance services in
volume at wholesale rates from a facilities based long distance company and
sell it back to individual customers at market rates. These calls are billed to
the end-user by the local telephone company in the case of residential and
small commercial accounts.

    o    Operator Services Providers: Carriers who handle "live" operator
assisted or "automated" operator assisted calls from remote locations using a
centralized telecommunications switching device. These calls are billed to
local telephone company calling cards, collect, to third-party numbers or
person-to-person.

    o    Customer Owned Coin-Operated Telephone Providers: Privately owned,
intelligent pay telephones that handle "automated" operator assisted calls that
are billed to a local telephone company calling card, collect or to a
third-party number.

    o    Customer Premise Equipment Providers: Carriers who install equipment
at aggregator locations, such as hotels, university dormitories, and penal
institutions, which handle calls originated from that location device. These
calls are subsequently billed to local telephone company calling cards,
collect, to third-party numbers or person-to-person.

    o    Information Providers: Companies that provide various forms of
information, entertainment or voice mail services to subscribers. These
services are typically billed to the end-user by the local telephone company
based on a 900 pay-per-call or a monthly recurring service fee.

    o    Competitive Local Exchange Carriers ("CLEC"): Carriers that provide
local exchange services to subscribers who were previously served exclusively
by the incumbent local exchange carrier.

    o    Other Customers: Suppliers of various forms of telecommunications
equipment and pager and cellular telephone companies.





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<PAGE>   9
COMPETITION

    The Company competes with several other billing clearinghouses in servicing
the telecommunications industry.  Management believes that BIC is the largest
participant in the third-party clearinghouse industry in the United States
followed by OAN Services, Inc. Competition among the clearinghouses is based on
the quality of information reporting, collection history, the speed of
collections and the price of services.

    The Company believes that there are several significant challenges that
face potential new entrants in the LEC billing industry. The cost to acquire
the necessary billing and collection agreements is significant as is the cost
to develop and implement the required systems for processing telephone call
records and other transactions. Additionally, most billing and collection
agreements require a user to make substantial monthly or annual volume
commitments. Given these factors, the average cost of billing and collecting a
record could hinder efforts to compete effectively on price until a new entrant
could generate sufficient volume. The price charged by most local telephone
companies for billing and collection services is based on volume commitments
and actual volumes being processed. As a large third-party clearinghouse, BIC
enjoys some of the most favorable rates available in the industry and passes
the benefits of its buying power on to its customers.

    Since most customers in the billing clearinghouse industry are under
contract with BIC or one of its competitors, management believes that the
majority of the existing market is already committed for up to three years. In
addition, a new entrant must be financially sound and have system integrity
because funds collected by the local telephone companies flow through the
third-party clearinghouse, which then distributes the cash to the customer
whose traffic is being billed. Management believes that the Company enjoys a
good reputation within the industry for the timeliness and accuracy of its
collections and disbursements to customers.

    The Company recently entered into the billing systems and related services
business with the acquisition of CRM. The market for telecommunications billing
systems and services is highly competitive, and the Company expects this
competition to increase. The Company competes with both independent providers
of billing systems and services and with the internal billing departments of
telecommunications service providers. The Company expects that the continued
growth of the telecommunications industry and the deregulation of other
industries will encourage new competitors to enter the billing market in the
future.

    The Company believes that the principal competitive factors in its market
include responsiveness to client needs, timeliness of implementation, quality
of service, price, project management capability and technical expertise. The
Company also believes that its ability to compete depends in part on a number
of competitive factors outside its control, including the development by others
of software that is competitive with the Company's services and products, the
price at which competitors offer comparable services and products, the extent
of competitors' responsiveness to customer needs and the ability of the
Company's competitors to hire, retain and motivate key personnel. In addition,
the Company competes with a number of companies that have substantially greater
financial, technical, sales, marketing and other resources, as well as greater
name recognition than the Company. As a result, the Company's competitors may
be able to adapt more quickly to new or emerging technologies and changes in
customer requirements, or to devote greater resources to the promotion and sale
of their products than can the Company.

    The Company does not currently hold any patents and relies upon a
combination of contractual non-disclosure obligations, and statutory and common
law copyright, trademark and trade secret laws to establish and maintain its
proprietary rights to its products. The Company believes that, because of the
rapid pace of technological change in the telecommunication and software
industries, the legal protections for its products are less significant factors
in the Company's success than the knowledge, ability and experience of the
Company's employees, the frequency of product enhancements and the timeliness
and quality of support services provided by the Company. The Company generally
enters into confidentiality agreements with its employees, consultants, clients
and potential clients and limits access to, and distribution of, its
proprietary information. Use of the Company's software products is usually
restricted to specified locations and is subject to terms and conditions
prohibiting unauthorized reproduction or transfer of the software products.





                                       9
<PAGE>   10
BUSINESS STRATEGY

    As the potential markets for the Company's convergent billing systems and
services continue to develop and the LEC billing market continues to demand
increasingly sophisticated billing services, the Company believes that
significant opportunities exist to continue the expansion of its business base.
The Company's business strategy contains the following key elements:

 MAINTAIN LEADERSHIP POSITION.  BIC believes it has developed a leadership
position in providing LEC billing services to its customers. These services
include managing relations with the local telephone companies, developing
automated reporting and cash management tools, providing cost efficient
customer service operations and offering cash flow alternatives through its
advance payment program. While each of these functions was developed separately
over time, the combination of these service offerings has positioned the
Company as a total solution for the management of a customer's billing and
information management function. Management believes that BIC will
maintain and expand its leadership position.

 EXPAND CUSTOMER BASE.  Management believes that the Company's reputation for
high quality services will make it an important resource for providers of
services and products other than telecommunications providers, such as utility,
energy and cable television companies. Like the Company's existing customers,
these services and product providers are likely candidates not only for the
core services of billing clearinghouse and information management, but also for
back- office services such as customer service and tax reporting. Management
believes that the high growth potential of these services providers may present
significant potential opportunities for the Company.

 INCREASE SALES OF NEW AND ENHANCED SERVICES.  The Company believes that
certain new or enhanced services it currently offers to the marketplace or
contemplates developing present significant opportunities. These include the
following:

 Expand Invoice Ready Capability.  The Company has enhanced its systems and
entered into additional billing and collection agreements with certain local
telephone companies to offer an "invoice ready" billing option to its
customers. The Company's invoice ready billing platform enables it to offer a
customized bill page for inclusion in the local telephone company bill.
Depending on limitations imposed on it by the respective local telephone
company, the Company is able to put a customer's logo, end-user customer
service number and a brief marketing message on this bill page. Currently,
companies such as AT&T, MCI and Sprint bill in this manner through the local
telephone companies. Due to the substantial cost associated with the
implementation of an invoice ready platform, it is not economical for many of
the Company's customers to develop this capability in-house. Therefore, the
Company intends to invest in additional billing and collection agreements that
will allow it to offer invoice ready billing to its customers.

 Market Direct Billing Capability.  Management believes that there is
substantial demand by its customers and potential customers for direct billing
products and services that allow them to bill end-users directly for the
services they provide. The Company plans to focus its marketing efforts on
licensing its recently acquired state-of-the-art direct billing software to
such customers. Since some of these customers do not have or desire to maintain
the operational infrastructure or the billing platform necessary to produce
bills and send them directly to end-users, these customers may also outsource
this activity to the Company's in-house service bureau. The Company has
targeted as likely candidates for such direct billing products and services the
following types of customers: long distance providers serving commercial
accounts, cellular services providers, PCS providers, competitive local access
providers, cable television companies and utilities. The Company's acquired
convergent billing platform has the capability to produce a "Universal Bill"
whereby multiple services and products can be billed directly to the end-user
under one, unified billing statement. The Company plans to continue developing
new billing modules and further enhance its convergent billing platform in
1998.

 Pursue New Telecommunications Act Opportunities.  Management believes that the
recently enacted Telecommunications Act of 1996 will create new opportunities
for third-party clearinghouses. The Telecommunications Act of 1996 requires
that the RBOCs use separate subsidiaries to provide services not related to
their existing regulated local services. The Company has contracted with two
RBOCs to provide long distance billing services and is presently negotiating
with several other RBOCs to provide both in-territory and out-of-territory
billing for their long distance services. The competition among the local
telephone companies created by the Telecommunications Act of 1996 may encourage
these companies to use a





                                       10
<PAGE>   11
third-party clearinghouse such as the Company. The Telecommunications Act of
1996 may provide an opportunity for the Company to compete for certain
telephone call records originated on pay telephones owned by the local
telephone companies. Management believes the Company is the most efficient
processor of these types of telephone call records and can succeed in
penetrating this potential market as it develops. The Company also expects to
utilize its direct billing capabilities to provide existing and potential
customers a means of billing and collecting long distance charges from
end-users subscribing to CLECs. CLECs were not required by the
Telecommunications Act of 1996 to provide nondiscriminatory billing and
collecting services, and thus, there are limited means available to customers
to collect charges incurred by such end-users.

EMPLOYEES

    At September 30, 1997, BIC had 433 full-time employees, including 12
executive officers, 14 sales and marketing personnel, 44 technical and
operations personnel, 109 accounting, administrative and support personnel, 30
systems personnel, and 224 customer service representatives and related support
personnel. At September 30, 1997, BIC also employed 97 part-time customer
service representatives and support personnel. None of BIC's employees are
represented by a union. BIC believes that its employee relations are good.

ITEM 2. PROPERTIES

    At September 30, 1997, BIC occupied approximately 130,000 square feet of
space at 7411 John Smith Drive, Suite 200, San Antonio, Texas, which serves as
both a customer service facility and the corporate headquarters for the
Company. The lease expires in October 2006 and has certain expansion options,
renewal options and rights of first refusal. At September 30, 1997, BIC also
occupied an additional 50,000 square feet for a customer service facility
located at 10500 Highway 281, San Antonio, Texas under a lease that expires in
September 2002. The Company believes that its current facilities are, and its
future facilities will be, adequate to meet its current and future needs.

ITEM 3. LEGAL PROCEEDINGS

    On December 18, 1996, the Securities and Exchange Commission (the
"Commission") filed a civil injunctive action in the United States District
Court for the District of Columbia alleging that Mr. Holmes failed to file
timely twelve reports regarding certain 1991 and 1992 transactions in the stock
of USLD as required by Section 16(a) of the Securities Exchange Act of 1934, as
amended. Section 16(a) requires officers and directors of such companies to
file reports with the Commission regarding their personal transactions in the
securities of their company. Mr. Holmes settled this action on December 18,
1996, without admitting or denying the allegations of the complaint, by
consenting to the entry of an injunction with respect to these requirements and
paying a civil penalty of $50,000. The Commission Staff also has notified Mr.
Holmes of its decision to terminate its investigation of trading in the
securities of USLD and the securities of Value-Added Communications, Inc. (In
the Matter of Trading in the Securities of Value-Added Communications, Inc.
(HO-2765)).

    The Company is involved in various claims, legal actions and regulatory
proceedings arising in the ordinary course of business. The Company believes it
is unlikely that the final outcome of any of the claims or proceedings to which
the Company is a party would have a material adverse effect on the Company's
financial position or results of operations; however, due to the inherent
uncertainty of litigation, there can be no assurance that the resolution of any
particular claim or proceeding would not have a material adverse effect on the
Company's results of operations for the fiscal period in which such resolution
occurred.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    During the fourth quarter of the fiscal year, no matter was submitted by
the Company to a vote of its stockholders through the solicitation of proxies
or otherwise.





                                       11
<PAGE>   12
                                    PART II

ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND
     RELATED STOCKHOLDER MATTERS

MARKET INFORMATION

    Subsequent to its spin-off from U.S. Long Distance Corp. effective August
2, 1996, the Company began trading as an independent public company. The
Company's common stock, par value $0.01 per share (the "Common Stock"), is
quoted on the Nasdaq National Market under the symbol "BILL." The table below
sets forth the high and low bid prices for the Common Stock from August 5,
1996, through December 11, 1997, as reported by the Nasdaq National Market.
These price quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission, and may not necessarily represent actual transactions.

<TABLE>
<CAPTION>
                                                                                       HIGH              LOW
                                                                                       ----              ---
 <S>                                                                                  <C>              <C>
 Fiscal Year Ended September 30, 1996:
     4th quarter (beginning August 5, 1996)                                           $22 3/4          $16

 Fiscal Year Ended September 30, 1997:
     1st quarter                                                                      $31 3/4          $24 1/4
     2nd quarter                                                                      $32 1/4          $24
     3rd quarter                                                                      $34 7/8          $21 3/8
     4th quarter                                                                      $39 1/8          $33 11/16

 Fiscal Year Ending September 30, 1998:
     1st quarter (through December 11, 1997)                                          $47 1/8          $35 3/4
</TABLE>

STOCKHOLDERS

    At December 11, 1997, there were 16,314,082 shares of Common Stock
outstanding, held by 462 holders of record. The last reported sales price of
the Common Stock on December 11, 1997, was $44 3/4 per share.

DIVIDEND POLICY

    The Company has never declared or paid any cash dividends on the Common
Stock. The Company presently intends to retain all earnings for the operation
and development of its business and does not anticipate paying any cash
dividends on the Common Stock in the foreseeable future. Furthermore, certain
covenants in various credit agreements of the Company prohibit the payment of
dividends on the Common Stock.





                                       12
<PAGE>   13
ITEM 6. SELECTED FINANCIAL DATA

    The following table presents selected financial and other data and pro
forma per share data for the Company. The income statement data for the years
ended September 30, 1997, 1996, 1995, 1994 and 1993, and the balance sheet data
at September 30, 1997, 1996, 1995 and 1994, presented below are derived from
the audited Consolidated Financial Statements of the Company. The balance sheet
data at September 30, 1993, the pro forma share data and the operating data
presented below are unaudited. The data presented below for the fiscal years
ended September 30, 1997, 1996 and 1995, should be read in conjunction with the
Consolidated Financial Statements and the notes thereto, "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the other financial information included in this report.

<TABLE>
<CAPTION>
                                                                                  FISCAL YEAR ENDED SEPTEMBER 30,
                                                                                  -------------------------------
                                                                        1997        1996        1995        1994       1993
                                                                        ----        ----        ----        ----       ----
                                                                               (IN THOUSANDS, EXCEPT PER SHARE DATA)
 <S>                                                                   <C>        <C>           <C>         <C>       <C>
 CONSOLIDATED INCOME STATEMENT DATA:
 Operating revenues  . . . . . . . . . . . . . . . . . . . . . . .     $122,836    $103,884     $80,847     $57,746    $46,451
 Gross profit  . . . . . . . . . . . . . . . . . . . . . . . . . .       46,174      37,016      29,510      20,158     16,458
 Advance funding program income  . . . . . . . . . . . . . . . . .        7,255       6,564       4,582       3,467      3,299
 Advance funding program expense . . . . . . . . . . . . . . . . .          688       1,367       1,351       1,858      2,581
 Special charges . . . . . . . . . . . . . .  . . . . . .  . . . .       21,252           0           0           0          0   
 Income from operations  . . . . . . . . . . . . . . . . . . . . .       13,439      28,641      22,253      13,392     10,416
 Net income  . . . . . . . . . . . . . . . . . . . . . . . . . . .        3,707      17,852      14,118       8,565      6,441

 Net income per common share . . . . . . . . . . . . . . . . . . .        $0.23           -           -           -          -
 Pro forma net income per common share (1) . . . . . . . . . . . .            -       $1.16       $0.97       $0.61      $0.53
 Weighted average common shares outstanding  . . . . . . . . . . .       16,259           -           -           -          -
 Pro forma weighted average common shares outstanding (1)  . . . .            -      15,385      14,587      14,069     12,117
</TABLE>

<TABLE>
<CAPTION>
                                                                                           SEPTEMBER 30,
                                                                                           -------------
                                                                        1997        1996        1995       1994        1993
                                                                        ----        ----        ----       ----        ----
                                                                                           (IN THOUSANDS)
 <S>                                                                    <C>         <C>         <C>         <C>         <C>
 CONSOLIDATED BALANCE SHEET DATA:
 Working capital . . . . . . . . . . . . . . . . . . . . . . . . .      $27,570     $13,530     $17,300     $11,132     $3,704
 Total assets  . . . . . . . . . . . . . . . . . . . . . . . . . .      167,012     137,782     106,895      89,710     74,660
 Long-term obligations, less current portion . . . . . . . . . . .        2,614       5,036       2,216         853        434
 USLD's investment in and advances to BIC  . . . . . . . . . . . .            0           0      21,122      13,001      5,032
 Additional paid-in capital  . . . . . . . . . . . . . . . . . . .       43,078      19,790           0           0          0
 Retained earnings (2) . . . . . . . . . . . . . . . . . . . . . .        6,397       2,690           0           0          0
</TABLE>

<TABLE>
<CAPTION>
                                                                                           SEPTEMBER 30,
                                                                                           -------------
                                                                        1997        1996        1995       1994        1993
                                                                        ----        ----        ----       ----        ----
                                                                                          (IN THOUSANDS)
 <S>                                                                    <C>         <C>         <C>         <C>        <C>
 OPERATING DATA:
 EBITDA (3)  . . . . . . . . . . . . . . . . . . . . . . . . . . .      $17,236     $30,768     $23,469     $14,346    $11,293
 LEC billing call records processed per month (4)(5) . . . . . . .       60,300      50,100      40,400      25,900     16,900
</TABLE>





                                       13
<PAGE>   14
(1) The per share and weighted average common shares outstanding data for the
    years ended September 30, 1996, 1995, 1994 and 1993 is unaudited and
    presented on a pro forma basis as Billing Information Concepts Corp. had no
    publicly held common shares outstanding prior to its spin-off from U.S.
    Long Distance Corp. on August 2, 1996. The number of weighted average
    common shares outstanding used in the calculation of the pro forma earnings
    per share gives effect to the shares assumed to be issued had the spin-off
    occurred at the beginning of each period presented.

(2) The Company has never declared cash dividends on its Common Stock, nor does
    it anticipate doing so in the foreseeable future.

(3) Earnings before interest, taxes, depreciation and amortization ("EBITDA")
    is a profitability/cash flow measurement that is commonly used in the
    telecommunications industry. EBITDA is not a financial measure pursuant to
    GAAP, nor is it acceptable or considered an alternative measure of cash
    flows from operations under GAAP or funds available for dividends,
    reinvestments or other discretionary uses. For a presentation of cash
    flows, including cash flows related to operating activities, investing
    activities and financing activities, see the Statements of Cash Flows
    included in the Company's Consolidated Financial Statements.

(4) Calculated based upon a monthly average over the fiscal quarter ended on the
    date indicated.

(5) Does not include call records that the Company processed for billing
    management customers that have their own billing and collecting agreements
    with the local telephone companies. Revenue per record for billing
    management customers is significantly less than revenue per record for
    BIC's other customers.





                                       14
<PAGE>   15
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        CONDITION AND RESULTS OF OPERATIONS

        The following discussion should be read in conjunction with the
Consolidated Financial Statements of the Company, the Notes thereto and the
other financial information included elsewhere in this Report. For purposes of
the following discussion, references to yearly periods refer to the Company's
fiscal years ended September 30.

GENERAL

        On August 2, 1996, U.S. Long Distance Corp. ("USLD") distributed to its
stockholders all of the outstanding shares of common stock of the Company (the
"Distribution") which, prior to the Distribution, was a wholly-owned subsidiary
of USLD. Upon the completion of the Distribution, Billing Information Concepts
Corp. ("BIC") became an independent, publicly held company that owns and
operates the billing clearinghouse and information management services business
previously owned by USLD (see "Pro Forma Results of Operations" below).

RESULTS OF OPERATIONS

        The following table presents certain items in the Company's
Consolidated Statements of Income as a percentage of total revenues:

<TABLE>
<CAPTION>
                                                                               YEAR ENDED SEPTEMBER 30,
                                                                         -----------------------------------
                                                                         1997           1996            1995
                                                                         ----           ----            ----
        <S>                                                             <C>            <C>             <C>
        Operating revenues  . . . . . . . . . . . . . . . . . . . .     100.0%         100.0%          100.0%
        Cost of revenues  . . . . . . . . . . . . . . . . . . . . .      62.4           64.4            63.5
                                                                        -----          -----           -----
        Gross profit  . . . . . . . . . . . . . . . . . . . . . . .      37.6           35.6            36.5
        Selling, general and administrative expenses   . . . . . . .     11.0           11.0            11.5
        Research and development  . . . . . . . . . . . . . . . . .       0.6            0.0             0.0
        Advance funding program income  . . . . . . . . . . . . . .      (5.9)          (6.3)           (5.7)
        Advance funding program expense . . . . . . . . . . . . . .       0.6            1.3             1.7
        Depreciation and amortization expense . . . . . . . . . . .       3.1            2.0             1.5
        Special charges . . . . . . . . . . . . . . . . . . . . . .      17.3            0.0             0.0
                                                                        -----          -----           -----
        Income from operations  . . . . . . . . . . . . . . . . . .      10.9           27.6            27.5
        Other income, net . . . . . . . . . . . . . . . . . . . . .       0.5            0.1             0.7
                                                                        -----          -----           -----
        Income before provision for income taxes  . . . . . . . . .      11.4           27.7            28.2
        Provision for income taxes  . . . . . . . . . . . . . . . .      (8.4)         (10.5)          (10.7)
                                                                        -----          -----           -----
        Net income  . . . . . . . . . . . . . . . . . . . . . . . .       3.0%          17.2%           17.5%
                                                                        =====          =====           =====
</TABLE>

Operating Revenues

        The Company's revenues are primarily derived from the provision of
billing clearinghouse and information management services to direct dial long
distance carriers and operator services providers ("Local Exchange Carrier
billing" or "LEC billing"). Revenues are also derived from enhanced billing
services provided to companies that offer 900 services or other non-regulated
telecommunications equipment and services. Effective June 1, 1997, the Company
acquired Computer Resources Management, Inc. ("CRM"), a company that develops
software systems for the direct billing of telecommunications services. As a
result of this acquisition, the Company also develops, licenses, and supports
billing systems for telecommunications service providers and provides direct
billing services through a service bureau operation. LEC billing fees charged
by the Company include processing and customer service inquiry fees. Processing
fees are assessed to customers either as a fee charged for each telephone call
record or other transaction processed or as a percentage of the customer's
revenue that is submitted by the Company to local telephone companies for
billing and collection. Processing fees also include any charges assessed to
the Company by local telephone companies for billing and collection services
that are passed through to the customer. Customer service inquiry fees are
assessed to customers either as a fee charged for each record processed by the
Company or as a fee charged for each billing inquiry made by end-users.





                                       15
<PAGE>   16
        Total revenues for 1997 were $122.8 million compared to $103.9 million
in 1996 and $80.8 million in 1995, representing increases of 18.2% and 28.5%,
respectively. LEC billing services revenues increased 15.9% to $120.5 million
in 1997 from $103.9 million in the prior year. The remaining increase in
revenues from 1996 to 1997 was attributable to billing systems sales and
related services revenues. The LEC billing services revenue increases are
primarily attributable to an increase in the number of telephone call records
processed and billed on behalf of direct dial long distance customers. Direct
dial long distance billing services revenues have exceeded prior period
revenues on a quarterly basis since the inception of this business in 1993.
From 1993 through 1996, revenues derived from operator services customers have
been relatively flat. This lack of operator services growth was attributable to
several factors, including increased regulation and an increased awareness on
the part of the consumer of the ability of the telephone user to select a
carrier of choice by dialing access codes of carriers other than the carrier
contracted by the telephone owner, resulting in a lower number of billable
telephone calls generated by the Company's customers. In 1997, the number of
zero telephone call records processed increased from the prior year primarily
due to records billed on behalf of a certain Regional Bell Operating Company.
Although the total revenue increase in 1996 from the prior year was partly due
to the growth of enhanced billing services revenues, 1997 revenues from
enhanced billing services were consistent with those of the prior year.
Management believes that such revenues do not represent a significant growth
opportunity in the future.

Telephone call record volumes (exclusive of records processed for billing
management customers) were as follows:

<TABLE>
<CAPTION>
                                                                       YEAR ENDED SEPTEMBER 30,
                                                                       ------------------------
                                                                       1997      1996     1995
                                                                       ----      ----     ----
                                                                            (IN MILLIONS)
<S>                                                                     <C>      <C>       <C>
Direct dial long distance services  . . . . . . . . . . . . . . . .     510.3    402.8     252.0
Operator services   . . . . . . . . . . . . . . . . . . . . . . . .     133.4    131.8     138.0
Enhanced billing services . . . . . . . . . . . . . . . . . . . . .       9.6      8.6       4.4
</TABLE>

Revenue per record for billing management customers, who have their own billing
and collection agreements with the local telephone companies, is significantly
less than revenue per record for the Company's other customers, and thus, the
volume of records processed for billing management customers is not presented
in the table above.

Cost of Revenues

        Cost of revenues includes billing and collection fees charged to the
Company by local telephone companies and related transmission costs, as well as
all costs associated with the customer service organization, including staffing
expenses and costs associated with telecommunications services. Billing and
collection fees charged by the local telephone companies include fees that are
assessed for each record submitted and for each bill rendered to its end-user
customers. The Company achieves discounted billing costs due to its aggregated
volumes and can pass these discounted costs on to its customers. Cost of
revenues also includes the cost of computer hardware and software sold, and the
salaries and benefits of software development, technical, service bureau and
client service personnel who generate revenue from hourly billings.

        Gross profit margin of 37.6 % reported for 1997 compares to 35.6%
achieved in 1996 and 36.5% achieved in 1995.  The improvement from 1996 to 1997
is due primarily to lower customer service and telecommunications services
costs, which were offset partially by higher transmission costs. The addition
of sales of billing systems and related services revenues in late 1997 also
served to improve gross margin due to the higher margins associated with
systems sales. The lower customer service costs were attributable to
efficiencies resulting from the implementation of an automated voice response
system. The lower telecommunications costs were due to a price decrease from
the Company's vendor as well as savings associated with the voice response
system. The decrease in gross profit margin from 1995 to 1996 is attributable
to higher customer service costs that were partially offset by lower billing
and collection fees as a percentage of revenues. The higher customer service
costs were due to increased telecommunications services usage and staffing
expenses incurred by the Company in order to support the rapid growth in the
volume of customer inquiries resulting from the significant growth in the
number of records processed. The lower billing and collection fees as a
percentage of revenues were the results of growth of the Company's direct dial
long distance business as such call records cost less per record to bill than
other types of records. The Company's gross profit margin could increase in
subsequent periods as a result of the addition of higher gross margin billing
systems sales and related services revenues.





                                       16
<PAGE>   17
Selling, General and Administrative

        Selling, general and administrative ("SG&A") expenses are comprised of
all selling, marketing and administrative costs incurred in direct support of
the business operations of the Company. Additionally, a portion of the expense
of certain USLD corporate functions, such as treasury, financial reporting,
investor relations, legal, payroll and management information systems has been
allocated to the Company and is reflected in its historical operating results
for 1996 and 1995.

        SG&A expenses for 1997 were $13.6 million, compared to $11.4 million in
1996, both representing 11.0% of revenues, and $9.3 million in 1995, or 11.5%
of revenues. SG&A expenses as a percentage of revenues for 1996 decreased from
the prior year primarily as a result of efficiencies associated with
significant revenue growth.

Research and Development

        Research and development expenses are comprised of the salaries and
benefits of the employees involved in software development and related
expenses. In 1997, the Company commenced internally funded research and
development activities with respect to efforts to offer "invoice ready" billing
services. During the third quarter of 1997, the Company also acquired a
software development company that was actively involved in ongoing research and
development efforts associated with creating new and enhanced products related
to its convergent billing software platform.  Consequently, research and
development expenses in 1997 were $688,000. The Company intends to continue its
research and development efforts in the future and anticipates spending from $3
to $5 million during 1998 for such expenses.

Advance Funding Program Income and Expense

        Advance funding program income was $7.3  million in 1997 compared with
$6.6 million in 1996 and $4.6 million in 1995. The year-to-year increases were
primarily the result of financing a higher level of customer receivables under
the Company's advance funding program (see "Advance Funding Program and
Receivable Financing Facility" below). The quarterly average balance of
purchased receivables was $73.6 million, $60.9 million and $51.1 million in
1997, 1996 and 1995, respectively. Advance funding program income may decrease
in subsequent periods due to a number of customers that are expected to
discontinue participating in the program.

        Advance funding program expense was $700,000 in 1997, compared with
$1.4 million in both 1996 and 1995. In addition to declining from 1996 to 1997,
advance funding program expense in 1997 and 1996 declined relative to advance
funding program income reported in the respective years. These decreases were
primarily attributable to the Company financing a higher level of customer
receivables with internally generated funds rather than with funds borrowed
through the Company's revolving credit facility. Cost savings were also
realized from the more favorable terms of its new credit facility.

Depreciation and Amortization

        Depreciation and amortization expenses are incurred with respect to
certain assets, including computer hardware, software, office equipment,
furniture, leasehold improvements, costs incurred in securing contracts with
local telephone companies, goodwill and other intangibles. Asset lives range
between three and fifteen years.

        Depreciation and amortization expense was $3.8 million in 1997 compared
with $2.1 million in 1996 and $1.2 million in 1995. Depreciation and
amortization expense as a percentage of revenues was 3.1%, 2.0% and 1.5%, in
1997, 1996 and 1995, respectively. The increase in the percentage of revenues
from year to year is attributable to increased capital expenditures made in
order to provide the infrastructure needed to support the growth of the
Company's employee base and the anticipated expansion of the Company's
business. These expenditures included the purchase of office furniture,
computer equipment and software and, during 1997, investments in leasehold
improvements in connection with the Company taking occupancy of a new facility
that serves as both a customer service center and the corporate headquarters of
the Company. During 1997, the Company recognized $205,000 of amortization
expense with respect to goodwill and other intangibles acquired in connection
with the acquisition of CRM.





                                       17
<PAGE>   18
Income from Operations

        Income from operations was $13.4 million, $28.6 million and $22.3
million in 1997, 1996 and 1995, respectively.  Income from operations decreased
from 1996 to 1997, due to special charges of $21.3 million in the third quarter
of 1997. The $21.3 million charge includes in-process research and development
costs of $13.0 million acquired in connection with the acquisition of CRM. The
remaining $8.3 million represents accumulated costs associated with the
development of a direct billing system for a service bureau operation. The
Company abandoned this development during the third quarter of 1997. Income
from operations, exclusive of special charges, represented 28.2%, 27.6% and
27.5% of revenues in 1997, 1996 and 1995, respectively. The improvement in
income from operations, exclusive of special charges, as a percentage of
revenues from 1996 to 1997 is attributable to a higher gross profit margin and
higher net advance funding income as a percentage of revenues, offset partly by
higher depreciation expenses as a percentage of revenues and research and
development expenses incurred in 1997. Income from operations as a percentage
of revenues improved from 1995 to 1996 due to higher net advance funding income
and lower SG&A expenses as a percentage of revenues, but this improvement was
partially offset by a lower gross profit margin and higher depreciation
expenses as a percentage of revenues.

Other Income

        Net other income of $552,000 in 1997 compares to net other income of
$152,000 in 1996 and $526,000 in 1995. The increase from 1996 to 1997, and the
decrease from 1995 to 1996, were both primarily due to a loss of $376,000
recognized in 1996 on the disposition of assets that were determined to be
obsolete, including certain assets that were transferred to the Company from
USLD as a result of the Distribution.

Income Taxes

        The Company's effective tax rate was 73.5% in 1997 and 38.0% in both
1996 and 1995. The Company's effective tax rate is higher than the federal
statutory rate due to the addition of state income taxes and certain deductions
taken for financial reporting purposes that are not deductible for federal
income tax purposes. The increase in the effective rate for 1997 is primarily
due to nondeductible in-process research and development costs and amortization
expenses related to the acquisition of CRM. Exclusive of special charges, the
Company's effective tax rate would have been 38.0% in 1997.





                                       18
<PAGE>   19
PRO FORMA RESULTS OF OPERATIONS

        The audited Consolidated Statements of Income included in this report
reflect the operations of the Company for the years ended September 30, 1997,
1996 and 1995. Included below is supplemental unaudited consolidated pro forma
financial information that management believes is important to provide an
understanding of the results of operations of the Company. Pro Forma Condensed
Consolidated Statements of Income are presented below on an annual basis for
1997, 1996 and 1995. These Pro Forma Condensed Consolidated Statements of
Income are based on the historical statements of the periods presented adjusted
to reflect the items discussed in the accompanying notes to the pro forma
financial statements. The Pro Forma Condensed Consolidated Statements of Income
for 1996 and 1995 give effect to the Distribution as if it had occurred at the
beginning of each year. The Pro Forma Condensed Consolidated Statements of
Income for 1997 include the results of operations for CRM since June 1, 1997,
the effective date of acquisition.

        The unaudited consolidated pro forma financial information is presented
for informational purposes only and should be read in conjunction with the
accompanying notes to the pro forma financial statements and with the Company's
historical financial statements and notes thereto and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" set forth herein
and in the Post Effective Amendment No. 2 to the Company's Registration
Statement on Form 10/A dated August 1, 1996. The pro forma financial statements
should not be considered indicative of the operating results that the Company
will achieve in the future because, among other things, these statements are
based on historical rather than prospective information and include certain
assumptions that are subject to change.

        The unaudited Pro Forma Condensed Consolidated Statements of Income
reflect, in management's opinion, all adjustments necessary to fairly state the
pro forma results of operations for the periods presented to make the unaudited
pro forma statements not misleading.





                                       19
<PAGE>   20
              BILLING INFORMATION CONCEPTS CORP. AND SUBSIDIARIES

             PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                  (UNAUDITED)




<TABLE>
<CAPTION>
                                                                                         FOR THE YEAR ENDED SEPTEMBER 30,       
                                                                     ---------------------------------------------------------------
                                                                                      As Reported 
                                                                     As Reported        Without 
                                                                     With Special       Special
                                                                       Charges         Charges(B)
                                                                     ------------     -----------
                                                                         1997             1997               1996            1995   
                                                                         ----             ----               ----            ----   
 <S>                                                                 <C>              <C>               <C>              <C>        
 Operating revenues  . . . . . . . . . . . . . . . . . . . . . . .   $  122,836       $   122,836       $      103,884   $  80,847  
 Cost of revenues  . . . . . . . . . . . . . . . . . . . . . . . .       76,662            76,662               66,868      51,337  
                                                                     ----------       -----------       --------------   ---------  
 Gross profit  . . . . . . . . . . . . . . . . . . . . . . . . . .       46,174            46,174               37,016      29,510  
 Selling, general and administrative expenses  . . . . . . . . . .       13,565            13,565               11,445       9,272  
 Research and development  . . . . . . . . . . . . . . . . . . . .          688               688                    0           0  
 Advance funding program income  . . . . . . . . . . . . . . . . .       (7,255)           (7,255)              (6,564)     (4,582) 
 Advance funding program expense (A) . . . . . . . . . . . . . . .          688               688                2,760       3,075  
 Depreciation and amortization expense . . . . . . . . . . . . . .        3,797             3,797                2,127       1,216  
 Special Charges . . . . . . . . . . . . . . . . . . . . . . . . .       21,252                 0                    0           0
                                                                     ----------       -----------       --------------   ---------  
 Income from operations. . . . . . . . . . . . . . . . . . . . . .       13,439            34,691               27,248      20,529  
 Other income, net . . . . . . . . . . . . . . . . . . . . . . . .          552               552                  152         526  
                                                                     ----------       -----------       --------------   ---------  
 Income before provision for income taxes . . .. . . . . . . . . .       13,991            35,243               27,400      21,055  
 Provision for income taxes (C). . . . . . . . . . . . . . . . . .      (10,284)          (13,381)             (10,411)     (8,005) 
                                                                     ----------       ------------      --------------   ---------  
 Net income  . . . . . . . . . . . . . . . . . . . . . . . . . . .        3,707       $    21,862       $       16,989   $  13,050  
                                                                     ==========       ===========       ==============   =========  
                                                                                                                                    
 Net income per common share . . . . . . . . . . . . . . . . . . .   $     0.23       $      1.33       $         1.10   $    0.89  
 Weighted average common shares and common share equivalents                                                                        
   outstanding (D) . . . . . . . . . . . . . . . . . . . . . . . .       16,259            16,488               15,385      14,587  
</TABLE>



Notes to unaudited pro forma condensed consolidated statements of income:

(A)     Reflects an adjustment to increase interest expense for the assumed
        borrowings for the cash transfer made to USLD of $11,713,000 in
        accordance with the terms of the Distribution Agreement and cash
        payments for direct costs incurred in connection with the Distribution
        of approximately $9,200,000. Interest expense was calculated at a rate
        of 8.0% and 8.25% per annum for 1996 and 1995, respectively.

(B)     Excludes special charges of $21,252,000 representing in-process
        research and development costs of $13.0 million acquired in connection
        with the acquisition of CRM and $8.3 million of accumulated costs
        associated with the development of a direct billing system that was
        abandoned by the Company.

(C)     Reflects related income tax effect of the adjustments in notes (A) 
        and (B)

(D)     The number of weighted average shares outstanding for 1996 and 1995
        gives effect to the shares assumed to be issued had the Distribution
        occurred at the beginning of each year. The number of weighted average
        shares outstanding for 1997 as reported without special charges 
        explained in note (B) gives effect to the net income that would have 
        been recognized during the third quarter of 1997 had the special 
        charges not been incurred.





                                       20
<PAGE>   21
LIQUIDITY AND CAPITAL RESOURCES

        The Company's cash balance increased to $41.4 million at September 30,
1997, from $34.1 million at September 30, 1996. Large fluctuations in daily
cash balances are normal due to the large amount of customer receivables that
the Company collects on behalf of its customers. The Company's working capital
position increased to $27.6 million at September 30, 1997, from $13.5 million
at September 30, 1996, and its current ratio was 1.2:1 and 1.1:1 at September
30, 1997 and 1996, respectively. Net cash provided by operating activities was
$31.1 million, $26.0 million and $14.3 million in 1997, 1996 and 1995,
respectively, and reflected the increases in net income from 1995 to 1997,
exclusive of special charges.

        In December 1996, the Company obtained a new $50.0 million revolving
line of credit facility with certain lenders primarily to draw upon to advance
funds to its billing customers prior to collection of the funds from the local
telephone companies. This new credit facility terminates on December 20, 1999,
and provides the Company with more favorable terms than those of the Company's
previous credit facility. Borrowings under the credit facility are limited to a
portion of the Company's eligible receivables. Management believes that the
capacity under the credit facility will be sufficient to fund advances to its
billing customers for the foreseeable future. The amount borrowed by the
Company under its credit facility to finance the advance funding program was $0
and $19.0 million at September 30, 1997 and 1996, respectively. At September
30, 1997, the amount available under the Company's credit facility was $50.0
million.

        In addition to the revolving line of credit facility described above,
the Company is obligated as a guarantor of USLD's equipment financing
agreements with certain lenders. The aggregate unpaid principal amount of
indebtedness under such agreements at September 30, 1997 was approximately $7.2
million, due in varying amounts through October 2000. Under certain of its
credit agreements, the Company is prohibited from paying dividends on its
common stock, is required to comply with certain financial covenants and is
subject to certain limitations on the issuance of additional secured debt.
Cross-default provisions of certain of the Company's equipment loans may place
the Company in default of such loans in the event that USLD defaults under the
equipment finance agreements that the Company has guaranteed. The Company was
in compliance with all required covenants at September 30, 1997.

        Capital expenditures amounted to approximately $17.6 million in 1997
and related primarily to the purchase of computer equipment and software.
During 1997, the Company financed approximately $4.1 million of equipment
through term debt agreements with two separate lenders. The Company anticipates 
spending approximately $12 million over the next twelve months, including 
expenditures for local telephone company agreements that will enable it to 
offer "invoice ready" billing services. The Company believes that it will be 
able to fund expenditures with internally generated funds and borrowings, 
but there can be no assurance that such funds will be available or
expended.

        Effective June 1, 1997, the Company acquired Computer Resources
Management, Inc. ("CRM"), a company that develops software systems for the
direct billing of telecommunications services. An aggregate of $8.5 million
cash and 325,000 shares of the Company's common stock were issued in connection
with this purchase transaction. Of these shares, 65,000 were deposited in an
escrow account to satisfy certain indemnification obligations. All of the
shares related to the acquisition have been included in the weighted average
shares outstanding for purposes of the earnings per share calculations. During
the third quarter of 1997, the Company expensed $13.0 million of in-process
research and development costs acquired from the acquisition. The Company
granted certain registration rights to and entered into an employment agreement
with the principal of CRM.

        The Company's operating cash requirements consist principally of
working capital requirements, requirements under its advance funding program,
scheduled payments of principal on its outstanding indebtedness and capital
expenditures. The Company believes that it has the ability to continue to
secure long-term equipment financing and that this ability, combined with cash
flows generated from operations and periodic borrowings under its receivable
financing facility, will be sufficient to fund capital expenditures, advance
funding requirements, working capital needs and debt repayment requirements for
the foreseeable future.





                                       21
<PAGE>   22
ADVANCE FUNDING PROGRAM AND RECEIVABLE FINANCING FACILITY

        Since it generally takes 40 to 90 days to collect receivables from the
local telephone companies, customers can significantly accelerate cash receipts
by utilizing the Company's advance funding program. The Company offers
participation in this program to qualifying customers through its Advance
Payment Agreement. Under the terms of this agreement, the Company purchases the
customer's accounts receivable for an amount equal to the face amount of the
billing records submitted to the local telephone companies by the Company for
billing and collection, less certain deductions. The purchase price is remitted
by the Company to its customers in two payments.

        Within five days from receiving a customer's records, an initial
payment is made to the customer based on a percentage of the value of the
customer's call records submitted to the local telephone companies. This
percentage is established by the Advance Payment Agreement and generally ranges
between 50% and 80%. The Company pays the remaining balance of the purchase
price upon collection of funds from the local telephone companies. A portion of
the funds used to make the advance payments may be borrowed under the Company's
revolving line of credit facility. The amount borrowed by the Company under
this credit facility to finance the advance funding program was $0 and $19.0
million at September 30, 1997 and 1996, respectively.

        Service fees charged to customers by the Company are recorded as
Advance Funding Program Income and are computed at a rate above the prime rate
on the amount of advances (initial payments) outstanding to a customer during
the period commencing from the date the initial payment is made until the
Company recoups the full amount of the initial payment from local telephone
companies. The rate charged to the customer by the Company is higher than the
interest rate charged to the Company, in part to cover the administrative
expenses incurred in providing this service. Borrowing costs are computed at a
rate below the prime interest rate and are based on the amount of borrowings
outstanding during the period commencing from the date the funds are borrowed
until the loan is repaid by the Company. Borrowing costs are recorded as
Advance Funding Program Expense. The result of these financing activities is
the generation of a net amount of Advance Funding Program Income that
contributes to the net income of the Company.

        As part of the Advance Payment Agreement, the Company contractually
purchases the customer accounts receivable upon which funds are advanced.
Further, the customer may grant a first lien security interest in other
customer accounts and assets and will take other action as may be required to
perfect the Company's first lien security interest in such assets. Under the
terms of the credit facility agreement, the Company is obligated to repay
amounts borrowed whether or not the purchased accounts receivable are actually
collected.

SEASONALITY

        To some extent, the revenues and telephone call record volumes of most
customers of the Company are affected by seasonality. For example, the
Company's direct dial long distance customers use the Company's services
primarily to bill residential accounts, which typically generate a higher
traffic volume around holidays, particularly Thanksgiving, Christmas and New
Year's Day. As a result of this seasonal variation, direct dial long distance
telephone call record volumes processed by the Company during the Company's
first and second fiscal quarters ending December 31 and March 31, respectively,
(which include the Thanksgiving, Christmas and New Year's Day holidays),
historically have been the highest level of any quarter of the year after
adjusting for new business. Consequently, revenues reported by the Company that
are derived from direct dial long distance telephone call records are similarly
affected. The seasonal effect caused by the Company's direct dial long distance
customers has been lessened, however, as a result of the Company's business
from operator services customers. Typically, the Company's operator services
customers experience decreases in operator services revenues and telephone call
record volumes in the fall and winter months as pay telephone usage declines
due to cold and inclement weather in many parts of the United States.
Conversely, due to increased traffic from pay telephones during the spring and
summer months, the Company has historically processed its highest volumes of
operator services telephone call records and reported its highest operator
services-related revenues in the third and fourth quarters of the fiscal year.
The billing revenues derived from operator services customers have mitigated
the seasonal effects of the revenues derived from the Company's direct dial
long distance customers.





                                       22
<PAGE>   23
EFFECT OF INFLATION

        Inflation is not a material factor affecting the Company's business.
Prices charged to the Company by local telephone companies and third-party
vendors for billing, collection and transmission services have not increased
significantly during the past year. General operating expenses such as
salaries, employee benefits and occupancy costs are, however, subject to normal
inflationary pressures.

NEW ACCOUNTING STANDARDS

        Management of the Company does not anticipate the adoption of any new
standards recently issued by the Financial Accounting Standards Board will have
a material impact on the Company's financial position or results of operations.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

        The Consolidated Financial Statements of the Company and the related
report of the Company's independent public accountants thereon are included in
this report at the page indicated.

<TABLE>
<CAPTION>
                                                                                                                          PAGE
                                                                                                                          ----
 <S>                                                                                                                       <C>
 Report of Independent Public Accountants  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     24
 Consolidated Balance Sheets at September 30, 1997 and 1996  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     25
 Consolidated Statements of Income for the Years Ended September 30, 1997, 1996 and 1995 . . . . . . . . . . . . . . .     26
 Consolidated Statements of Stockholders' Equity for the Years Ended September 30, 1997, 1996 and 1995 . . . . . . . .     27
 Consolidated Statements of Cash Flows for the Years Ended September 30, 1997, 1996 and 1995 . . . . . . . . . . . . .     28
 Notes to Consolidated Financial Statements  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     29
</TABLE>





                                       23
<PAGE>   24
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of
Billing Information Concepts Corp.:

        We have audited the accompanying consolidated balance sheets of Billing
Information Concepts Corp. (a Delaware corporation) and subsidiaries as of
September 30, 1997 and 1996, and the related consolidated statements of income,
stockholders' equity and cash flows for each of the three years in the period
ended September 30, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

        We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

        In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Billing Information
Concepts Corp. and subsidiaries as of September 30, 1997 and 1996, and the
results of their operations and their cash flows for each of the three years in
the period ended September 30, 1997, in conformity with generally accepted
accounting principles.


                              ARTHUR ANDERSEN LLP

San Antonio, Texas
November 14, 1997





                                       24
<PAGE>   25
             BILLING INFORMATION CONCEPTS CORP. AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS
                      (IN THOUSANDS, EXCEPT SHARE DATA)

                                    
<TABLE>
<CAPTION>
                                    ASSETS                                                                  SEPTEMBER 30,
                                                                                                            -------------
                                                                                                          1997        1996
                                                                                                          ----        ----
 <S>                                                                                                   <C>         <C>
 Current assets:
  Cash and cash equivalents  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $   41,444  $    34,135
  Accounts receivable, net of allowance for doubtful accounts of $138 (1997) and $0 (1996) . . . . .       25,919       17,707
  Purchased receivables  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       70,175       70,920
  Prepaids and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        3,196          883
                                                                                                       ----------  -----------

         Total current assets  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      140,734      123,645
  Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       22,906       11,403
  Less accumulated depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . .       (4,750)      (2,023)
                                                                                                       ----------  ----------- 

         Net property and equipment  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       18,156        9,380
  Equipment held under capital leases, net of accumulated amortization of $964 (1997)
                  and $482 (1996)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          606        3,519
  Other assets, net of accumulated amortization of $1,680 (1997) and $1,190 (1996) . . . . . . . . .        7,516        1,238
                                                                                                       ----------  -----------

         Total assets  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $  167,012  $   137,782
                                                                                                       ==========  ===========



                                             LIABILITIES AND STOCKHOLDERS' EQUITY
 Current liabilities:
  Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $   19,223  $    12,743
  Accounts payable - billing customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       75,166       58,525
  Accrued liabilities  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       17,728       18,338
  Revolving line of credit for purchased receivables . . . . . . . . . . . . . . . . . . . . . . . .            0       19,010
  Current portion of long-term debt  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          606          603
  Current portion of obligations under capital leases  . . . . . . . . . . . . . . . . . . . . . . .          441          896
                                                                                                       ----------  -----------

         Total current liabilities   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      113,164      110,115
  Long-term debt, less current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        2,324        2,370
  Obligations under capital leases, less current portion . . . . . . . . . . . . . . . . . . . . . .          290        2,666
  Deferred income taxes  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        2,048            0
  Other liabilities  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          499            0
                                                                                                       ----------  -----------

         Total liabilities   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      118,325      115,151
 Commitments and contingencies (See Notes 4 and 11)
 Stockholders' equity:
  Preferred stock, $0.01 par value, 10,000,000 shares authorized, no shares issued or outstanding at
         September 30, 1997 or 1996  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            0            0
  Common stock, $0.01 par value, 60,000,000 shares authorized, 16,197,585 shares issued and
         outstanding at September 30, 1997; 15,045,709 shares issued and outstanding at September 30,
         1996  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          162          151
  Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       43,078       19,790
  Retained earnings  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        6,397        2,690
  Deferred compensation  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         (950)           0
                                                                                                       ----------  -----------

         Total stockholders' equity  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       48,687       22,631
                                                                                                       ----------  -----------

         Total liabilities and stockholders' equity  . . . . . . . . . . . . . . . . . . . . . . . .   $  167,012  $   137,782
                                                                                                       ==========  ===========
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.





                                      25
<PAGE>   26
             BILLING INFORMATION CONCEPTS CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF INCOME
                    (IN THOUSANDS, EXCEPT PER SHARE DATA)


<TABLE>
<CAPTION>
                                                                               FOR THE YEAR ENDED SEPTEMBER 30,
                                                                               --------------------------------
                                                                             1997            1996            1995
                                                                             ----            ----            ----
      <S>                                                                 <C>               <C>             <C>
      Operating revenues  . . . . . . . . . . . . . . . . . . . . . . .   $122,836          $103,884        $80,847
      Cost of revenues  . . . . . . . . . . . . . . . . . . . . . . . .     76,662            66,868         51,337
                                                                          --------          --------        -------


      Gross profit  . . . . . . . . . . . . . . . . . . . . . . . . . .     46,174            37,016         29,510
      Selling, general and administrative expenses  . . . . . . . . . .     13,565            11,445          9,272
      Research and development  . . . . . . . . . . . . . . . . . . . .        688                 0              0
      Advance funding program income  . . . . . . . . . . . . . . . . .     (7,255)           (6,564)        (4,582)
      Advance funding program expense . . . . . . . . . . . . . . . . .        688             1,367          1,351
      Depreciation and amortization expense . . . . . . . . . . . . . .      3,797             2,127          1,216
      Special charges (See Note 6)  . . . . . . . . . . . . . . . . . .     21,252                 0              0
                                                                          --------          --------        -------

      Income from operations  . . . . . . . . . . . . . . . . . . . . .     13,439            28,641         22,253
      Other income (expense):
      Interest income . . . . . . . . . . . . . . . . . . . . . . . . .        989               938            883
      Interest expense  . . . . . . . . . . . . . . . . . . . . . . . .       (493)             (287)          (188)
      Other, net  . . . . . . . . . . . . . . . . . . . . . . . . . . .         56              (499)          (169)
                                                                          --------          --------        -------

                       Total other income, net  . . . . . . . . . . . .        552               152            526
                                                                          --------          --------        -------

      Income before provision for income taxes  . . . . . . . . . . . .     13,991            28,793         22,779
      Provision for income taxes  . . . . . . . . . . . . . . . . . . .    (10,284)          (10,941)        (8,661)
                                                                          --------          --------        -------

      Net income  . . . . . . . . . . . . . . . . . . . . . . . . . . .   $  3,707          $ 17,852        $14,118
                                                                          ========          ========        =======

      Primary:
      Net income per common share   . . . . . . . . . . . . . . . . . .      $0.23                 -              -
      Pro forma net income per common share (Unaudited - See Note 2). .          -             $1.16          $0.97
      Weighted average common shares and common share equivalents           16,259
              outstanding   . . . . . . . . . . . . . . . . . . . . . .                            -              -
      Pro forma weighted average common shares and common share
              equivalents outstanding (Unaudited - See Note 2). . . . .                       15,385         14,587

      Fully diluted:
      Net income per common share   . . . . . . . . . . . . . . . . . .      $0.22                 -              -
      Pro forma net income per common share (Unaudited - See Note 2)             -             $1.15          $0.97
      Weighted average common shares and common share equivalents           16,627
              outstanding   . . . . . . . . . . . . . . . . . . . . . .                            -              -
      Pro forma weighted average common shares and common share
              equivalents outstanding (Unaudited - See Note 2). . . . .          -            15,527         14,617
</TABLE>





  The accompanying notes are an integral part of these consolidated financial
                                  statements.





                                      26
<PAGE>   27
             BILLING INFORMATION CONCEPTS CORP. AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

            FOR THE YEARS ENDED SEPTEMBER 30, 1997, 1996 AND 1995
                                (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                                                                  
                                                                                 USLD'S                                           
                                      PREFERRED STOCK      COMMON STOCK       INVESTMENT IN   ADDITIONAL                          
                                      ---------------      ------------           AND           PAID-IN      DEFERRED     RETAINED
                                     SHARES   AMOUNT    SHARES     AMOUNT    ADVANCES TO BIC    CAPITAL    COMPENSATION   EARNINGS
                                     ------   ------    -------    ------    ---------------    -------    ------------   --------
 <S>                                 <C>      <C>       <C>        <C>       <C>                <C>        <C>            <C>
 Balances at September 30, 1994.....     10       $100       102       $ 1            $13,001    $      0        $     0    $    0
 Transfers to affiliates............      0          0         0         0            (5,997)           0              0         0
 Net income.........................      0          0         0         0             14,118           0              0         0
                                        ---     ------    ------      ----            -------     -------         ------    ------


 Balances at September 30, 1995.....     10        100       102         1             21,122           0              0         0
 Transfers (to) from affiliates.....      0          0      (102)       (1)             2,850     (15,448)             0         0
 Redemption of preferred stock......    (10)      (100)        0         0             (3,900)          0              0         0
 Issuance of common stock in
   connection with Distribution 
   (See Note 2).....................      0          0    15,032       151            (35,234)     35,083              0         0
 Exercise of stock options..........      0          0        14         0                  0         155              0         0
 Net income.........................      0          0         0         0             15,162           0              0     2,690
                                        ---     ------    ------      ----            -------     -------         ------    ------
 Balances at September 30, 1996.....      0          0    15,046       151                  0      19,790              0     2,690
 Issuance of common stock...........      0          0       343         3                  0       9,834              0         0
 Exercise of stock options and
   warrants.........................      0          0       809         8                  0      11,964              0         0
 Issuance of stock options..........      0          0         0         0                  0       1,490         (1,490)        0
 Compensation expense...............      0          0         0         0                  0           0            540         0
 Net income.........................      0          0         0         0                  0           0              0     3,707
                                        ---     ------    ------      ----            -------     -------         ------    ------


 Balances at September 30, 1997           0     $    0    16,198      $162            $     0     $43,078         $(950)    $6,397
                                        ===     ======    ======      ====            =======     =======         =====     ======
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.




                                      27
<PAGE>   28
             BILLING INFORMATION CONCEPTS CORP. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                                             FOR THE YEAR ENDED SEPTEMBER 30,
                                                                                             --------------------------------
                                                                                             1997          1996         1995
                                                                                             ----          ----         ----
 <S>                                                                                         <C>           <C>           <C>
 Cash flows from operating activities:
  Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     $  3,707       $17,852      $14,118
   Adjustments to reconcile net income to net cash provided by operating activities:
    Depreciation and amortization  . . . . . . . . . . . . . . . . . . . . . . . . . . .        3,797         2,127        1,216
    Deferred compensation  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          540            10           18
    Loss on disposition of equipment . . . . . . . . . . . . . . . . . . . . . . . . . .          141           376            0
    Special charges  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       21,252             0            0
    Changes in operating assets and liabilities:
      (Increase) decrease in accounts receivable . . . . . . . . . . . . . . . . . . . .       (7,445)          406       (5,445)
      Increase in prepaids and other . . . . . . . . . . . . . . . . . . . . . . . . . .       (1,538)         (259)        (550)
      Increase in trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . .        6,450           139        4,856
      Increase in accrued liabilities . . . . . .. . . . . . . . . . . . . . . . . . . .        3,695         5,403           81
      Increase (decrease) in other liabilities . . . . . . . . . . . . . . . . . . . . .          499           (21)         (35)
                                                                                             --------       -------      ------- 

 Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . .       31,098        26,033       14,259
 Cash flows from investing activities:
  Purchases of property and equipment  . . . . . . . . . . . . . . . . . . . . . . . . .      (17,578)       (6,679)      (1,922)
  Purchase of software development company, net of cash acquired . . . . . . . . . . . .       (8,403)            0            0
  Collections of (payments for) purchased receivables, net . . . . . . . . . . . . . . .          745       (15,692)      (1,881)
  Collections of proceeds due (payments made) to billing customers, net  . . . . . . . .       15,541        23,769       (2,239)
  Collections of sales taxes due on behalf of billing customers, net . . . . . . . . . .        2,136           743        6,818
  Proceeds from sale of equipment  . . . . . . . . . . . . . . . . . . . . . . . . . . .          127             0            0
  Other investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       (1,001)         (207)        (792)
                                                                                             -------       -------       ------- 

 Net cash provided by (used in) investing activities . . . . . . . . . . . . . . . . . .       (8,433)        1,934          (16)
 Cash flows from financing activities:
  Payments on revolving line of credit for purchased receivables, net  . . . . . . . . .      (19,010)       (4,020)      (2,205)
  Proceeds from issuance of long-term debt . . . . . . . . . . . . . . . . . . . . . . .        4,091         1,937          917
  Payments on long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       (4,184)         (688)        (148)
  Payments on capital leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       (2,831)         (436)        (230)
  Proceeds from issuance of common stock . . . . . . . . . . . . . . . . . . . . . . . .        6,578            96            0
  Transfers to affiliates  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            0       (17,491)      (6,549)
                                                                                              --------      -------      ------- 

 Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . .      (15,356)      (20,602)      (8,215)
                                                                                              -------       -------      ------- 

 Net increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . .        7,309         7,365        6,028
 Cash and cash equivalents, beginning of year  . . . . . . . . . . . . . . . . . . . . .       34,135        26,770       20,742
                                                                                              -------       -------      -------

 Cash and cash equivalents, end of year  . . . . . . . . . . . . . . . . . . . . . . . .      $41,444       $34,135      $26,770
                                                                                              =======       =======      =======
</TABLE>




  The accompanying notes are an integral part of these consolidated financial
                                  statements.





                                      28
<PAGE>   29
             BILLING INFORMATION CONCEPTS CORP. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                      SEPTEMBER 30, 1997, 1996 AND 1995

NOTE 1. BUSINESS ACTIVITY

        Billing Information Concepts Corp. ("BIC") was incorporated in the
State of Delaware in 1996. BIC was previously a wholly-owned subsidiary of U.S.
Long Distance Corp. ("USLD") that, upon its spin-off from USLD, became an
independent, publicly held company. BIC and its subsidiaries (collectively, the
"Company") primarily provide billing clearinghouse and information management
services in the United States to the telecommunications industry. In addition
to processing call records, the Company provides a wide range of back office
services including customer service, data processing, tax filings, accounting
services and an advance funding program. The Company also develops, licenses
and supports billing systems for telecommunications service providers and
provides direct billing services.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Basis of Presentation

        The accompanying consolidated financial statements include the accounts
of BIC and its wholly-owned subsidiaries. All significant intercompany accounts
and transactions have been eliminated in consolidation.

        On August 2, 1996 (the "Distribution Date"), USLD distributed all of
the outstanding common stock of BIC, pro rata to the stockholders of USLD (the
"Distribution") with the result being that BIC became an independent, publicly
held company that owns and operates all of the assets of, and is responsible
for all of the liabilities associated with, the billing clearinghouse and
information management services business previously owned by USLD. The
accompanying financial statements include the operations of BIC which, until
the Distribution, were combined with and reported as part of the consolidated
financial statements of USLD. Immediately prior to the Distribution, BIC
canceled all of USLD's intercompany payable owed to BIC. In recognition of
this, the balance of the intercompany receivable from USLD has been combined
with and included in the balance sheet caption entitled "USLD's investment in
and advances to BIC." All stockholder equity account balances, except for the
par value of BIC common stock, have also been reported as "USLD's investment in
and advances to BIC."

        Certain selling, general and administrative expenses of USLD were
historically accounted for on a consolidated basis with no allocation to
individual subsidiaries. The historical statements of BIC have been adjusted to
include all of the expenses that appropriately and fairly could have been
allocated to BIC except for the income taxes. USLD's federal income taxes have
historically been determined on a consolidated basis. For purposes of preparing
the BIC historical consolidated financial statements, income taxes have been
determined on a separate company basis. Deferred taxes have been recorded on
BIC's consolidated financial statements, as appropriate. Tax assets and
liabilities are reflected in a manner consistent with the Tax Sharing Agreement
between USLD and BIC.

        For purposes of preparing BIC's consolidated financial statements,
certain amounts that were previously classified as operating revenues, cost of
revenues, selling, general and administrative expenses, and other income
(expense) have been reclassified. Certain intercompany transactions that had
been eliminated in consolidation are properly reflected in the historical
consolidated financial statements of BIC at amounts that are believed by
management to reflect an arm's-length relationship. Certain prior period
amounts have been reclassified for comparative purposes.

Estimates in the Financial Statements

        The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.





                                       29
<PAGE>   30
Revenue Recognition Policies

        The Company recognizes revenue from its billing services when records
that are to be billed and collected by the Company are processed. Revenue from
the sale of billing systems, including the licensing of software rights, is
recognized at the time that the product is delivered to the customer, provided
that the Company has no significant related obligations or collection
uncertainties remaining. If there are significant obligations related to the
installation or development of the system delivered, revenue is recognized in
the period that the Company fulfills its obligations. Services revenue related
to the Company's billing systems is recognized in the period that the services
are provided.

Billing Services

        The Company provides billing services to operator services providers
and direct dial long distance companies through billing agreements with the
local telephone companies, which maintain the critical database of end-user
names and addresses of the billed parties. Bills are generated by the local
telephone companies and the collected funds are remitted to the Company, which
in turn remits these funds, net of fees, to its billing customers. The Company
records a trade accounts receivable and operating revenue for fees charged for
its billing services. When the customer's receivables are collected by the
Company from the local telephone companies, the Company's trade receivables are
reduced by the amount corresponding to the Company's processing fees and the
remaining funds are recorded as an accounts payable to billing customers.

        The Company offers participation in an advance funding program to
qualifying customers through its Advance Payment Agreement. Under the terms of
this agreement, the Company purchases the customer's accounts receivable for an
amount equal to the face amount of the billing records submitted to the local
telephone companies by the Company for billing and collection less:

        o        all local telephone company charges, rejects, unbillables and
                 bad debt deductions;

        o        all credits and adjustments granted to end-users;

        o        all of the Company's processing fees and sales taxes, if
                 appropriate;

        o        all financing service charges assessed by the Company; and

        o        any and all losses, costs or expenses incurred by the Company
                 in processing or collecting the customer accounts from all
                 previously billed records.

        The purchase price is remitted by the Company to its customers in two
payments. Within five days from receiving a customer's records, an initial
payment is made to the customer based on a percentage of the face amount of the
customer's call records submitted by the Company to the local telephone
companies. The Company pays the remaining balance of the purchase price to the
customer upon collection of funds from the local telephone companies. The
purchase date is the date the initial payment is made. In connection with its
purchase of billing records, the Company may draw on its revolving credit
facility.





                                       30
<PAGE>   31
        Any accounts receivable purchased by the Company are recorded as
purchased receivables in an amount equal to the face amount of the billing
records submitted to the local telephone companies by the Company for billing
and collection.  Concurrently, an equal amount is recorded as accounts payable
to billing customers. The amount of the initial payment made to the customer
reduces accounts payable to billing customers. The balance, reported as
accounts payable to billing customers ($75,166,000 and $58,525,000 at September
30, 1997 and 1996, respectively), consists of:

        o        an amount equal to the face value of all purchased
                 receivables, reduced for any amounts paid as initial payments
                 under Advance Payment Agreements,

        o        an amount equal to collections from local telephone companies
                 that have not yet been remitted to customers, and

        o        an amount accrued for the estimated liability associated with
                 future end-user refunds and local telephone company
                 adjustments related to customers who are no longer serviced by
                 the Company.

        The purchased receivables balance is relieved at the time the customer
receivables are collected from the local telephone companies. Any differences
between the amount initially recorded as a purchased receivable and the amount
ultimately collected from the local telephone companies are recorded as a
reduction of both the purchased receivable and accounts payable to billing
customers in an equal amount. The funds are remitted to the customer after the
Company deducts the amount funded, the financing service charges earned under
the Advance Payment Agreement, local telephone company billing fees due the
Company and any end-user customer service refunds.

        The Company has some risk with regard to these deductions to the extent
that they exceed the amount collected from the local telephone companies.
Generally, the Company will collect these amounts from future funds received
from the local telephone companies. However, in certain cases, such as if the
Company is no longer providing services to the customer, there may not be
adequate funds from which to collect these amounts. The Company does have the
right of offset against all funds held for the account of such customers and
may hold a first lien security interest in such billing customers' accounts,
generally including those not acquired by the Company. The Company has an
accrued liability included in the balance sheet caption entitled "Accounts
payable - billing customers" for the estimated amount that such deductions
exceed funds withheld from such customers.

        The following receivables purchased and financed by the Company were
outstanding at:


<TABLE>
<CAPTION>
                                                                                                    SEPTEMBER 30,
                                                                                                    -------------
                                                                                                   1997        1996
                                                                                                   ----        ----
                                                                                                    (IN THOUSANDS)
   <S>                                                                                             <C>         <C>
   Purchased receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       $70,175     $70,920
   Revolving line of credit for purchased receivables  . . . . . . . . . . . . . . . . . . .             0      19,010
</TABLE>

Property and Equipment

        Property and equipment are stated at cost. Depreciation and
amortization are computed on a straight-line basis over the estimated useful
lives of the related assets, which range from three to ten years. Upon
disposition, the cost and related accumulated depreciation and amortization are
removed from the accounts and the resulting gain or loss is reflected in other
income (expense) for that period. Expenditures for maintenance and repairs are
charged to expense as incurred and major improvements are capitalized.





                                       31
<PAGE>   32
Other Assets

        Other assets include costs incurred to acquire billing agreements with
local telephone companies for billing and collection services and other
agreements. These costs are being amortized over five to seven years. Other
assets also include financing costs related to the issuance of debt, which have
been deferred and are amortized over the life of the respective financing
agreement, and goodwill and other intangibles related to the acquisition of a
software development company (see Note 5). In addition, long-term deposits have
been included in other assets.

Accrued Liabilities

        Accrued liabilities include sales taxes payable on behalf of billing
customers of $13,061,000 and $12,025,000 at September 30, 1997 and 1996,
respectively.

Fair Value of Financial Instruments

        The estimated fair values of the Company's cash and cash equivalents
and all other financial instruments have been determined using appropriate
valuation methodologies and approximate their related carrying values.

Income Taxes

        Deferred tax assets and liabilities are recorded based on enacted
income tax rates that are expected to be in effect in the period in which the
deferred tax asset or liability is expected to be settled or realized. A change
in the tax laws or rates results in adjustments to the deferred tax assets or
liabilities. The effects of such adjustments are required to be included in
income in the period in which the tax laws or rates are changed.

        BIC and USLD entered into a Tax Sharing Agreement that defines the
parties' respective rights and obligations with respect to deficiencies and
refunds of federal, state and other income or franchise taxes relating to BIC's
business for tax years prior to the Distribution and with respect to certain
tax attributes of BIC after the Distribution. In general, with respect to
periods ending on or before the last day of the year in which the Distribution
occurred, USLD is responsible for (i) filing both consolidated federal tax
returns for the USLD affiliated group and combined or consolidated state tax
returns for any group that includes a member of the USLD affiliated group,
including in each case BIC and its subsidiaries for the relevant periods of
time that such companies were members of the applicable group and (ii) paying
the taxes related to such returns (including any subsequent adjustments
resulting from the redetermination of such tax liabilities by the applicable
taxing authorities). BIC will reimburse USLD for a portion of such taxes and
the cost of preparation of the associated tax returns related to the BIC
affiliated group. BIC is responsible for filing returns and paying taxes
related to the BIC affiliated group for subsequent periods. BIC and USLD have
agreed to cooperate with each other and to share information in preparing such
tax returns and in dealing with other tax matters.

Net Income Per Common Share

Net income per common share is computed by dividing net income by the weighted
average number of common shares and common share equivalents outstanding during
each period. Any options or warrants outstanding are considered common stock
equivalents provided they have a dilutive effect on net income per common share.
Net income per common share is presented on a pro forma basis for fiscal 1996
and 1995, as BIC had no publicly held common shares outstanding prior to the
Distribution. The unaudited pro forma net income per common share was computed
by dividing net income by the pro forma weighted average number of common shares
and common share equivalents outstanding during the applicable period. The pro
forma weighted average number of common shares outstanding during each fiscal
year gives effect to the number of shares assumed to be issued had the
Distribution occurred at the beginning of each period presented, including the
assumed conversions of options and warrants that were assumed to be outstanding
during the respective periods. The unaudited pro forma per share data is
presented for informational purposes only and should not be considered
indicative of the operating results which the Company will achieve in the future
because, among other things, this data is based on historical rather than
prospective information and includes certain assumptions which are subject to
change.





                                       32
<PAGE>   33
        Actual net income per common share for the period from the Distribution
Date to September 30, 1996, was $0.17 per share. The approximate weighted
average number of common shares and common share equivalents used in computing
actual net income per common share for the period from the Distribution Date to
September 30, 1996 was 15,761,000.

        In February 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings
Per Share," which establishes standards for computing and presenting earnings
per share ("EPS") for entities with publicly held common stock or potential
common stock. SFAS No. 128 simplifies the standards for computing EPS
previously found in Accounting Principles Board ("APB") Opinion No. 15,
"Earnings Per Share," and makes them comparable to international EPS standards.
It replaces the presentation of primary EPS with a presentation of basic EPS,
which excludes dilution. It also requires dual presentation of basic and
diluted EPS on the face of the income statement for all entities with complex
capital structures. SFAS No. 128 is effective for financial statements for
periods ending after December 15, 1997, and earlier application is not
permitted. After the effective date, SFAS No. 128 requires restatement of all
prior period EPS data presented.

        The pro forma effect of adopting SFAS No. 128 on EPS data is as
follows:

<TABLE>
<CAPTION>
                                                            YEAR ENDED SEPTEMBER 30,                  
                                  --------------------------------------------------------------------
                                           1997                     1996                      1995    
                                  -----------------         -----------------        -----------------
<S>                                        <C>                      <C>                       <C>
Primary EPS as reported                    $0.23                    $1.16                     $0.97
Pro forma effect of SFAS No. 128            0.01                     0.06                      0.09
                                  --------------            -------------            --------------
Basic EPS as restated                      $0.24                    $1.22                     $1.06
                                  ==============            =============            ==============

Fully diluted EPS as reported              $0.22                    $1.15                     $0.97
Pro forma effect of SFAS No. 128            0.01                     0.01                      0.00
                                  --------------            -------------            --------------
Diluted EPS as restated                    $0.23                    $1.16                     $0.97
                                  ==============            =============            ==============
</TABLE>


        Basic earnings per share were computed by dividing net income by the
weighted average number of shares of common stock outstanding during the
period. Diluted earnings per share differs from basic earnings per share due to
the assumed conversions of options and warrants that were outstanding during
the period.

New Accounting Standards

        In June 1996, the FASB issued SFAS No. 125, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities," which
provides accounting and reporting standards for, among other things, the
transfer and servicing of financial assets, such as factoring receivables. SFAS
No. 125 is effective for transfers and servicing of financial assets occurring
after December 31, 1996 and is to be applied prospectively. In December 1996,
the FASB issued SFAS No. 127, "Deferral of the Effective Date of Certain
Provisions of SFAS No. 125." SFAS No. 127 amends the effective date for certain
provisions of SFAS No. 125 to December 31, 1997. Management of the Company does
not anticipate the adoption of SFAS No.'s 125 and 127 will have a material
impact on the Company's financial position or results of operations.





                                       33
<PAGE>   34
Statements of Cash Flows

        Cash payments and non-cash activities during the periods indicated were
as follows:

<TABLE>
<CAPTION>
                                                                                           YEAR ENDED SEPTEMBER 30,
                                                                                           ------------------------
                                                                                          1997       1996      1995
                                                                                          ----       ----      ----
                                                                                                (IN THOUSANDS)
   <S>                                                                                     <C>       <C>        <C>
   Cash payments for interest  . . . . . . . . . . . . . . . . . . . . . . . . . . .       $1,375    $1,563     $1,564
   Cash payments for income taxes  . . . . . . . . . . . . . . . . . . . . . . . . .        8,913     8,366      8,859
   Noncash investing and financing activities: 
   Common stock issued in connection with the Distribution . . . . . . . . . . . . .            0    35,234          0
   Net assets transferred from USLD in connection with the Distribution  . . . . . .            0       892          0
   Capital lease obligations incurred  . . . . . . . . . . . . . . . . . . . . . . .            0     2,432      1,249
   Tax benefit recognized in connection with stock option exercises  . . . . . . . .        5,765        59         94
   Assets acquired in connection with acquisition  . . . . . . . . . . . . . . . . .       20,512         0          0
   Liabilities assumed in connection with acquisition  . . . . . . . . . . . . . . .        2,596         0          0
   Common stock issued in connection with acquisition  . . . . . . . . . . . . . . .        9,466         0          0
</TABLE>

        For purposes of determining cash flows, the Company considers all
temporary cash investments purchased with an original maturity of three months
or less to be cash equivalents.

NOTE 3. DEBT

        Long-term debt is comprised of the following:

<TABLE>
<CAPTION>
                                                                                                      SEPTEMBER 30,
                                                                                                      -------------
                                                                                                     1997        1996
                                                                                                     ----        ----
                                                                                                       (IN THOUSANDS)
   <S>                                                                                              <C>       
   Revolving line of credit for purchased receivables, 8.75% at September 30, 1996 (prime                     
     rate (8.25%) plus .5%), due in varying amounts through December 31, 1996  . . . . . . .        $   0     $ 19,010
   Fixed interest rate term notes  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        2,930        2,973
                                                                                                   ------      ------- 
                                                                                                              
   Total debt  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        2,930       21,983
   Less - Current portion  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         (606)     (19,613)
                                                                                                   ------      ------- 
                                                                                                              
                                                                                                              
                                                                                                   $2,324     $ 2,370
                                                                                                   ======      =======
</TABLE>

        The Company has various fixed rate term notes with rates ranging from
7.62% to 7.73%, due in varying amounts through June 2002. The proceeds from the
issuance of these notes were used to acquire certain computer equipment and
office furniture. The loans are secured by the assets acquired with the
proceeds of such notes.

        In December 1996, the Company repaid all amounts outstanding under its
$45 million revolving line of credit, which bore interest at the prime rate
plus 0.5%, and matured December 31, 1996. Effective December 23, 1996, the
Company obtained a new $50.0 million revolving line of credit facility with
certain commercial lending institutions to finance the purchase of accounts
receivable under the Company's Advance Funding Program and for general
corporate purposes. The credit facility terminates on December 20, 1999, and
bears interest at a variable rate based on the prime rate or federal funds rate
as determined by a formula defined in the credit agreement. The facility is
secured by the related accounts receivable, the stock of BIC's subsidiaries and
various other assets of the Company. The amount borrowed by the Company and the
amount available for borrowing under this credit facility was $0 and $50.0
million, respectively, at September 30, 1997. Additionally, at September 30,
1997, the Company has a $1.2 million letter of credit outstanding.

        Under the most restrictive terms of the Company's credit agreements,
the Company is prohibited from paying dividends on its common stock, is
required to comply with certain financial covenants and is subject to certain
limitations on the issuance of additional secured debt. The Company was in
compliance with all such covenants at September 30, 1997.





                                       34
<PAGE>   35
        In addition to the revolving line of credit facility and equipment
financing agreements described above, the Company is also obligated as a
guarantor of USLD's equipment financing agreements with certain lenders. Prior
to the Distribution, the Company obtained financing for capital expenditures
through term debt agreements and capital lease agreements that were guaranteed
and cross-collateralized by USLD and its other subsidiaries. Most of these debt
agreements were secured by the assets of all the subsidiaries within the
consolidated group, and in some cases, the existing cross guarantees and
security arrangements between the Company and USLD will remain in place for the
duration of the facility. In this regard, USLD and the Company have agreed to
pay each other a credit support fee equal to 1% per annum of the average
monthly balance of indebtedness guaranteed by one on behalf of the other for as
long as such guarantees continue. The aggregate unpaid principal amount of
indebtedness guaranteed by BIC under such agreements at September 30, 1997, was
approximately $7.2 million, due in varying amounts through October 2000.
Cross-default provisions of certain of these equipment loans may place the
Company in default of such loans in the event that USLD defaults under the
equipment finance agreements that the Company has guaranteed.

        Scheduled maturities of debt as of September 30, 1997, are as follows:
<TABLE>
<CAPTION>
                                                                                                    (IN THOUSANDS)
                                                                                                    --------------
   Year Ending September 30,
   <S>                                                                                                   <C>
   1998  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             606
   1999  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             606
   2000  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             606
   2001  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             606
   2002  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             506
                                                                                                         -----


                                                                                                         $2,930
                                                                                                         ======
</TABLE>




NOTE 4. LEASES

        The Company leases equipment and office space under operating leases.
Rental expense for the years ended September 30, 1997, 1996 and 1995, was
$1,630,000, $726,000, and $555,000, respectively. Future minimum lease payments
under non-cancelable operating leases as of September 30, 1997 are as follows:

<TABLE>
<CAPTION>
                                                                                                        (IN THOUSANDS)
                                                                                                        --------------
  Year Ending September 30,
  <S>                                                                                                   <C>
  1998  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           $        1,908
  1999  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    2,042
  2000  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    2,042
  2001  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    2,042
  2002  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    2,042
  Thereafter  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    8,176
                                                                                                        --------------

          Total minimum lease payments  . . . . . . . . . . . . . . . . . . . . . . . . . . .           $       18,252
                                                                                                        ==============
</TABLE>


        The Company also leases various computer equipment under capital lease
arrangements. Future minimum lease payments under these capital leases,
together with the present value of the net minimum lease payments as of
September 30, 1997, are as follows:

<TABLE>
<CAPTION>
                                                                                                    (IN THOUSANDS)
                                                                                                    --------------
  Year Ending September 30,
  <S>                                                                                                    <C>
  1998  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            $498
  1999  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             298
                                                                                                         ----

  Total minimum lease payments  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             796
  Less: Amount representing interest  . . . . . . . . . . . . . . . . . . . . . . . . . . . .             (65)
                                                                                                         ---- 

  Present value of net minimum lease payments . . . . . . . . . . . . . . . . . . . . . . . .            $731
                                                                                                         ====
</TABLE>





                                       35
<PAGE>   36
NOTE 5. ACQUISITION

        Effective June 1, 1997, the Company acquired Computer Resources
Management, Inc. ("CRM"), a company that develops software systems for the
direct billing of telecommunications services. This acquisition has been
accounted for as a purchase. Accordingly, the results of operations for CRM
have been included in the Company's consolidated financial statements, and the
shares related to the acquisition have been included in the weighted average
shares outstanding for purposes of calculating net income per common share
since the date of acquisition. The following unaudited pro forma information
gives effect to the acquisition of CRM as if it had occurred at the beginning
of the periods presented. The unaudited pro forma information is based on the
historical information for the periods presented and includes adjustments to
reflect the special charge resulting from expensing acquired in-process
research and development costs (see Note 6) and the effect on depreciation and
amortization expense of recording the fair value of assets acquired. The number
of weighted average shares outstanding used in the calculation of the pro forma
per share data gives effect to the shares assumed to be issued had the
acquisition occurred at the beginning of each period presented.

<TABLE>
<CAPTION>
                                                            YEAR ENDED SEPTEMBER 30,  
                                                   -------------------------------------------
                                                          1997                     1996
                                                   -----------------         -----------------
                                                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                                                  (UNAUDITED)
<S>                                                     <C>                      <C>        
Operating revenues...................................   $127,579                 $109,153
                                                                                         
Net income...........................................   $  4,203                 $  4,860
                                                                                         
Net income per common share - primary................   $   0.26                 $   0.31
                                                                                         
Net income per common share - fully diluted..........   $   0.25                 $   0.31
</TABLE> 
                                                        
        The pro forma financial information should not be considered indicative
of the operating results that would have occurred had the acquisition actually
taken place at the beginning of the periods specified or that the Company will
achieve in the future because, among other things, this information is based on
historical rather than prospective information and includes certain assumptions
which are subject to change. The unaudited pro forma financial information
reflects, in management's opinion, all adjustments necessary to fairly state
the pro forma operating results for the periods presented to make the unaudited
pro forma financial information not misleading.

        An aggregate of $8.5 million cash and 325,000 shares of the Company's
common stock were issued in connection with this purchase transaction. Of these
shares, 65,000 were deposited in an escrow account to satisfy certain
indemnification obligations. The excess of the purchase price over the fair
value of net tangible assets acquired was determined through an independent
appraisal and amounted to approximately $17.5 million, of which approximately
$1.2 million was recorded as goodwill and is being amortized on a straight-line
basis over fifteen years. In addition, $13.0 million was recorded as in-process
research and development expenses (see Note 6). The remaining balance was
recorded as the purchase price for a customer list and other intangibles, which
are being amortized on a straight-line basis over periods ranging from six to
twelve years.

NOTE 6. SPECIAL CHARGES

        During the third quarter of fiscal 1997, the Company recognized special
charges in the amount of $21.3 million.  The $21.3 million charge included
in-process research and development costs of $13.0 million acquired in
connection with the acquisition of CRM (see Note 5). At the date of
acquisition, the technological feasibility of the acquired technology had not
yet been established, and the technology had no future alternative uses. The
remaining $8.3 million charge represented accumulated costs associated with the
development of a direct billing system for a service bureau operation. This
development was abandoned by the Company.





                                       36
<PAGE>   37
NOTE 7. SHARE CAPITAL

        On July 10, 1996, the Company, upon authorization by its Board of
Directors, adopted a Shareholder Rights Plan ("Rights Plan") and declared a
dividend of one preferred share purchase right on each share of its outstanding
common stock. The rights will become exercisable if a person or group acquires
15% or more of the Company's common stock or announces a tender offer, the
consummation of which would result in ownership by a person or group of 15% or
more of the Company's common stock. These rights, which expire on July 10,
2006, entitle stockholders to buy one ten-thousandth of a share of a new series
of participating preferred shares at a purchase price of $130 per one
ten-thousandth of a preferred share. The Rights Plan was designed to ensure
that stockholders receive fair and equal treatment in the event of any proposed
takeover of the Company.

        On August 2, 1996, USLD distributed 15,032,001 shares of the Company's
common stock to the existing stockholders of USLD in order to effect the
spin-off of BIC from USLD. Prior to August 2, 1996, BIC operated as a
wholly-owned subsidiary of USLD and, consequently, had no publicly owned common
shares. No dividends were paid on the Company's common stock during fiscal
1997, 1996 or 1995.

NOTE 8. STOCK OPTIONS AND STOCK PURCHASE WARRANTS

        Prior to the Distribution, the Company adopted the BIC 1996
Comprehensive Stock Plan ("Comprehensive Plan") and the BIC 1996 Non-Employee
Director Plan ("Director Plan") under which officers and employees, and
non-employee directors, respectively, of the Company and its affiliates are
eligible to receive stock option grants. The Company has reserved 3,500,000 and
400,000 shares of its common stock for issuance pursuant to the Comprehensive
Plan and Director Plan, respectively. Under each plan, options vest and expire
pursuant to individual award agreements; however, the expiration date of
unexercised options may not exceed ten years from the date of grant.
Immediately prior to the Distribution, the Company granted, under the
Comprehensive Plan and Director Plan, respectively, options to purchase BIC
common stock to each holder of an outstanding option to purchase shares of USLD
common stock under the USLD Employee Stock Option Plan and the USLD
Non-Employee Director Plan, respectively. The BIC options are exercisable for
BIC common stock on the basis of one share of BIC common stock for every one
share of USLD common stock subject to the outstanding USLD options. BIC options
to purchase a total of 1,566,504 shares of BIC common stock were granted in
connection with the adjustment to the USLD options. In connection with the
grant of the BIC options, the exercise price of the USLD options was adjusted
to preserve the economic value of the USLD options existing immediately prior
to the Distribution after giving effect to the grant of the BIC options. The
BIC options will have vesting schedules mirroring the vesting schedules of the
related USLD options. Each BIC option granted in connection with the
Distribution will terminate in accordance with the original USLD option grant.

        Option activity for the years ended September 30, 1997 and 1996 is
summarized as follows:

<TABLE>
<CAPTION>
                                                                                           NUMBER    WEIGHTED AVERAGE
                                                                                         OF SHARES    EXERCISE PRICE
                                                                                         ---------    --------------
  <S>                                                                                     <C>                  <C>
  Outstanding, September 30, 1995 . . . . . . . . . . . . . . . . . . . . . . . . .               0                 -
   Granted  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       2,339,004            $  10.51
   Canceled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        (14,332)            $   7.78
   Exercised  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        (13,708)            $   6.99
                                                                                         ---------                     
  Outstanding, September 30, 1996 . . . . . . . . . . . . . . . . . . . . . . . . .       2,310,964            $  10.51
   Granted  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       1,290,100            $  31.62
   Canceled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        (89,524)            $  14.06
   Exercised  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       (721,596)            $   7.96
                                                                                         ---------                     
  Outstanding, September 30, 1997 . . . . . . . . . . . . . . . . . . . . . . . . .       2,789,944            $  20.85
                                                                                         ==========                    
</TABLE>

        At September 30, 1997 and 1996, stock options to purchase an aggregate
of 1,016,797 and 1,015,886 shares were exercisable and had weighted average
exercise prices of $12.03 and $7.14 per share, respectively.





                                       37
<PAGE>   38
        Stock options outstanding and exercisable at September 30, 1997, were
as follows:

<TABLE>
<CAPTION>
                                 OPTIONS OUTSTANDING                                  OPTIONS EXERCISABLE         
------------------------------------------------------------------------------ -------------------------------
RANGE OF                      NUMBER       WEIGHTED AVERAGE     WEIGHTED AVERAGE   NUMBER       WEIGHTED AVERAGE
EXERCISE PRICES             OUTSTANDING  REMAINING LIFE (YEARS) EXERCISE PRICE   EXERCISABLE     EXERCISE PRICE
---------------             -----------    ----------------   ---------------- -----------     --------------
<S>                         <C>              <C>                <C>              <C>              <C>
$1.11 - $2.22                  45,000        0.8                $ 1.48             45,000        $  1.48
$6.30 - $9.26                 722,645        2.3                $ 7.81            631,331        $  7.74
$13.62 - $14.55                52,499        3.3                $14.00              7,167        $ 13.74
$16.13 - $19.63               700,300        4.9                $16.14            230,799        $ 16.14
$24.75 - $29.13               325,000        5.6                $26.33                  0           -
$33.69 - $34.88               944,500        6.9                $33.73            102,500        $ 33.69
                            ---------                                           ---------               

                            2,789,944        4.9                $20.85          1,016,797        $ 12.03
                            =========                                           =========               
</TABLE>

      The Company has adopted SFAS No. 123, "Accounting for Stock-Based
Compensation," but has elected to apply APB Opinion No. 25, "Accounting for
Stock Issued to Employees" and related interpretations in accounting for its
stock option plans as allowed under SFAS No. 123. Accordingly, the Company has
not recognized compensation expense for stock options granted where the
exercise price is equal to the market price of the underlying stock at the date
of the grant.  During fiscal 1997, 1996 and 1995, the Company recognized
$540,000, $10,000 and $18,000, respectively, of compensation expense for
options granted below the market price of the underlying stock on such
measurement date. In addition, in accordance with the provisions of APB Opinion
No. 25, the Company has not recognized compensation expense for employee stock
purchases under the Billing Information Concepts Corp. Employee Stock Purchase
Plan ("ESPP").

      Had compensation expense for the Company's stock options granted and ESPP
purchases in 1997 and 1996 been determined based on the fair value at the grant
dates consistent with the methodology of SFAS No. 123, pro forma net income and
net income per common share would have been as follows (in thousands, except
per share amounts):

<TABLE>
<CAPTION>
                                                 Year ended September 30,         
                                          --------------------------------------
                                                   1997             1996
                                                   ----             ----
<S>                                          <C>              <C>
Pro forma net income                         $     2,230      $     15,511

Pro forma net income per common share:
      Primary                                $      0.14      $       1.01
      Fully diluted                          $      0.13      $       1.00
</TABLE>

      The fair value for these options was estimated at the respective grant
dates using the Black-Scholes option pricing model with the following
weighted-average assumptions:

<TABLE>
<CAPTION>
                                  Year ended September 30,    
                            ----------------------------------
                                    1997            1996
                                    ----            ----
<S>                               <C>              <C>
Expected volatility                   24%             25%
Expected dividend yield                0%              0%
Expected life                     2.4 years        2 years
Risk-free interest rate             6.05%           6.03%
</TABLE>

      The weighted average fair value and weighted average exercise price,
respectively, of options granted where the exercise price was equal to the 
market price of the underlying stock at the grant date was $7.10 and $32.92 
for the year ended September 30, 1997, and $10.14 and $10.46 for the year 
ended September 30, 1996. The weighted average fair value and weighted 
average exercise price of options granted during the year ended September 30, 
1997 where the exercise price was below the market price of the underlying 
stock at the grant date was $8.95 and $26.00, respectively. For purposes 
of the pro forma disclosures, the estimated fair value of options is 
amortized to expense over the options' vesting periods.





                                       38
<PAGE>   39
      Warrants to purchase 225,000 shares of common stock at an exercise price
of $9.25 per share were granted during fiscal 1996 immediately prior to the
Distribution to each holder of a warrant to purchase shares of USLD common stock
and had a weighted average fair value of $12.02. The fair value for these
warrants was estimated at the grant date using the Black-Scholes option pricing
model with an expected volatility of 25%, an expected dividend yield of 0%, an
expected life of 2 years and a risk-free interest rate of 6.09% as the
weighted-average assumptions. Warrants to purchase 87,677 shares of common stock
were exercised in fiscal 1997. There were no warrants exercised in fiscal 1996.

NOTE 9. INCOME TAXES

      The provision for income taxes is comprised of the following:

<TABLE>
<CAPTION>
                                                                                           YEAR ENDED SEPTEMBER 30,
                                                                                           ------------------------
                                                                                          1997       1996      1995
                                                                                          ----       ----      ----
                                                                                                (IN THOUSANDS)
   Federal:
   <S>                                                                                  <C>       <C>        <C>
   Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $   9,386 $  10,049  $   7,957
   Deferred  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         (146)     (113)      (266)
                                                                                        --------- ---------  --------- 
                                                                                        $   9,240 $   9,936     $7,691
                                                                                        ========= =========  =========
   State:
   Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $   1,044 $   1,005  $     970



   Total:
   Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $  10,430 $  11,054  $   8,927
   Deferred  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         (146)     (113)      (266)
                                                                                        --------- ---------  --------- 
                                                                                        $  10,284 $  10,941  $   8,661
                                                                                        ========= =========  =========
</TABLE>




      The provision for income taxes for fiscal 1997, 1996 and 1995 differs
from the amount computed by applying the statutory federal income tax rate of
35% to income before provision for income taxes. The reasons for these
differences were as follows:

<TABLE>
<CAPTION>
                                                                                           YEAR ENDED SEPTEMBER 30,
                                                                                           ------------------------
                                                                                          1997       1996      1995
                                                                                          ----       ----      ----
                                                                                                (IN THOUSANDS)
   <S>                                                                                  <C>                  <C>
   Computed income tax provision at statutory rate . . . . . . . . . . . . . . . . .    $   4,897 $  10,078  $   7,973
   Increases in taxes resulting from: . . . . . . . . . . . . . . . . .
     Nondeductible research and development expenses . . . . . . . . . . . . . . . .        4,536         0          0
     State income taxes, net of federal benefit  . . . . . . . . . . . . . . . . . .          679       653        631
     Other, net  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          172       210         57
                                                                                        --------- ---------  ---------
   Provision for income taxes  . . . . . . . . . . . . . . . . . . . . . . . . . . .    $  10,284 $  10,941  $   8,661
                                                                                        ========= =========  =========
</TABLE>





                                       39
<PAGE>   40
      The tax effect of significant temporary differences, which comprise the
deferred tax assets and liabilities, are as follows:

<TABLE>
<CAPTION>
                                                                                             SEPTEMBER 30,
                                                                                       -------------------------
                                                                                       1997       1996      1995
                                                                                       ----       ----      ----
                                                                                             (IN THOUSANDS)
      Deferred tax assets:
      <S>                                                                             <C>          <C>       <C>
        Expense provisions  . . . . . . . . . . . . . . . . . . . . . . . . . . .      $    12     $ 885     $  530
      Deferred tax liabilities:
        Acquisition of nondeductible intangibles  . . . . . . . . . . . . . . . .       (2,009)        0          0
        Tax depreciation and amortization in excess of book . . . . . . . . . . .          (51)      (96)      (325)
        Prepaid expenses  . . . . . . . . . . . . . . . . . . . . . . . . . . . .            0         0        (21)
                                                                                      --------      ----     ------ 
      Total deferred tax liabilities  . . . . . . . . . . . . . . . . . . . . . .       (2,060)      (96)      (346)
                                                                                      --------      ----     ------ 
      Net deferred tax asset (liability)  . . . . . . . . . . . . . . . . . . . .     ($ 2,048)     $789     $  184
                                                                                      ========      ====     ======
</TABLE>

      The Company has been notified by the Internal Revenue Service ("IRS")
that a fiscal 1992 transaction between a wholly-owned foreign subsidiary of
USLD (Mega Plus Dialing, Inc.) and the Company is proposed to be treated
differently by the IRS than originally characterized by the Company. The IRS
district office issued a report that proposed an assessment of taxes, interest
and penalties. The Company filed a written protest, and the assessment was
appealed to the appellate division of the IRS. The appellate division of the
IRS agreed with the Company's original treatment of the transaction.

NOTE 10. BENEFIT PLANS

      The Company did not have any benefit plans in effect prior to its
spin-off from USLD; however, certain employees and directors of the Company
were eligible to participate in certain similar compensation and benefit plans
provided by USLD.

      The Benefit Plans and Employment Matters Allocation Agreement ("Benefits
Agreement") entered into by the Company and USLD (see Note 12) provides for the
allocation of certain responsibilities with respect to employee compensation
benefit and labor matters. The allocation of responsibility and adjustments
made pursuant to the Benefits Agreement was substantially consistent with the
existing benefits provided to USLD employees under USLD's various compensation
plans.  Among other things, the Benefits Agreement provides that, effective as
of the Distribution Date, the Company will or will cause one or more of its
subsidiaries to, assume or retain, as the case may be, all liabilities of USLD,
to the extent unpaid as of the Distribution Date, under employee benefit plans,
policies, arrangements, contracts and agreements, with respect to employees
who, on or after the Distribution Date, were employees of the Company or its
subsidiaries. The Benefits Agreement also provides that, effective as of the
Distribution Date, USLD will, or will cause one or more of its subsidiaries to
assume or retain, as the case may be, all liabilities of USLD, to the extent
unpaid as of the Distribution Date, under employee benefit plans, policies,
arrangements, contracts and agreements, with respect to employees who on or
after the Distribution Date were employees of USLD or its subsidiaries.

      In addition, the Company has assumed, with respect to employees who, on
or after the Distribution Date, were employees of the Company or any of its
subsidiaries, all responsibility for liabilities and obligations as of the
Distribution Date for medical and dental plan coverage and for vacation and
welfare plans. USLD has assumed, with respect to the employees who, on or after
the Distribution Date, were employees of USLD or any of its subsidiaries, all
responsibilities for all liabilities and obligations as of the Distribution
Date for medical and dental plan coverage and for vacation and welfare plans.

      Participation in the Billing Information Concepts Corp. 401(k) Retirement
Plan ("Retirement Plan") is offered to eligible employees of the Company.
Generally, all employees of the Company who are 21 years of age or older and
who have completed six months of service during which they worked at least
1,000 hours were eligible for participation in the Retirement Plan. The
Retirement Plan is a defined contribution plan which provides that participants
generally may make voluntary salary deferral contributions, on a pretax basis,
of between 1% and 15% of their compensation in the form of voluntary payroll
deductions up to a maximum amount as indexed for cost-of-living adjustments.
The Company makes





                                       40
<PAGE>   41
matching contributions as a percentage determined annually of the first 3% of a
participant's compensation contributed as salary deferral. The Company may make
additional discretionary contributions. No discretionary contributions were
made in fiscal 1997, 1996 or 1995. During fiscal 1997, 1996 and 1995, the
Company's matching contributions totaled approximately $67,000, $35,000 and
$27,000, respectively.

      Participation in the Billing Information Concepts Corp. Executive
Compensation Deferral Plan ("Executive Plan") is offered to selected employees
occupying management positions as determined by BIC's board of directors from
time to time. The Executive Plan is a defined contribution plan which provides
that participants may make voluntary salary deferral contributions, on a pretax
basis, of between 1% and 100% of their eligible compensation. Under the
Executive Plan, the Company makes matching contributions equal to the lesser of
100% of a participant's contributions or an amount based on a formula
established by the plan. During fiscal 1997, 1996 and 1995, the Company
contributed $47,000, $22,000 and $12,000, respectively, to the Executive Plan.

      Additionally, the Billing Information Concepts Corp. Executive Qualified
Disability Plan ("Disability Plan") is provided to certain employees occupying
management positions. The Disability Plan provides long-term disability
benefits through disability insurance coverage purchased by the Company and
through Company funded payments. Benefits under the Disability Plan are
provided directly by the Company based on definitions contained in the
applicable insurance policies.

      The Billing Information Concepts Corp. Employee Stock Purchase Plan (the
"ESPP"), which was established under the requirements of Section 423 of the
Internal Revenue Code of 1986, as amended, is offered to eligible employees of
the Company. The Company has reserved 1,000,000 shares of its common stock for
issuance pursuant to the ESPP. The ESPP enables employees who have completed at
least six months of continuous service with the Company to purchase shares of
BIC's common stock at a 15% discount through voluntary payroll deductions. The
purchase price is the lesser of 85% of the closing price of the common stock on
the opening date of each participation period or 85% of the closing price of
the common stock on the ending date of each participation period. The Company
issued 9,751 and 7,852 shares of its common stock in January and June 1997
pursuant to the ESPP at purchase prices of $18.06 and $24.86, respectively.

NOTE 11. COMMITMENTS AND CONTINGENCIES

      The Company is involved in various claims, legal actions and regulatory
proceedings arising in the ordinary course of business. The Company believes it
is unlikely that the final outcome of any of the claims or proceedings to which
the Company is a party will have a material adverse effect on the Company's
financial position or results of operations; however, due to the inherent
uncertainty of litigation, there can be no assurance that the resolution of any
particular claim or proceeding would not have a material adverse effect on the
Company's results of operations for the fiscal period in which such resolution
occurred.

      The Company is obligated to pay certain local telephone companies a total
of approximately $6.9 million, $5.7 million, $4.2 million, $4.1 million, $4.1
million and $11.0 million during fiscal 1998, 1999, 2000, 2001, 2002 and
thereafter, respectively, for minimum usage charges under billing and
collection agreements that, unless automatically renewed, expire at varying
dates through the end of fiscal 2005. The billing and collection agreements do
not provide for any penalties other than payment of the obligation should the
usage levels not be met. The Company has met all such volume commitments in the
past and anticipates exceeding the minimum usage volumes with all of these
vendors.

      The Distribution Agreement (see Note 12) provides the Company will only
assume liabilities and obligations for claims and litigation that arose from
the ordinary course of the Company's business. The Company will not assume any
liabilities that relate to the direct dial long distance and operator service
businesses of USLD. The Company is obligated as a guarantor of USLD's equipment
financing agreements with certain lenders. The aggregate unpaid principal
amount of indebtedness under such agreements at September 30, 1997 was
approximately $7.2 million, due in varying amounts through October 2000.





                                       41
<PAGE>   42
NOTE 12. RELATED PARTIES

      The Company and USLD shared a common individual on their respective
boards of directors through June 2, 1997.  Therefore, USLD was considered a
related party for purposes of financial disclosure through this date. The
Company provides billing and information management services for USLD and
purchases telecommunications services from USLD.  Transactions under the
agreements for these services have been reflected in the accompanying
consolidated financial statements at market prices. Related party transactions
between the Company and USLD are summarized as follows:

<TABLE>
<CAPTION>
                                                                                           YEAR ENDED SEPTEMBER 30,
                                                                                           ------------------------
                                                                                          1997       1996      1995
                                                                                          ----       ----      ----
                                                                                                (IN THOUSANDS)
   <S>                                                                                     <C>       <C>        <C>
   Sales to USLD   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       $3,166    $5,347     $5,322
   Purchases from USLD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        1,705     3,332      1,729
</TABLE>

      In addition, at September 30, 1996, the Company's accounts receivable
balance included $998,000 and the billing customers accounts payable balance
included $1,337,000 related to billing services performed for USLD. The Company
also had $1,288,000 payable to USLD included in accrued liabilities and
$1,034,000 payable to USLD included in long-term debt at September 30, 1996.

      From time to time, the Company has made advances to or was owed amounts
from certain officers of the Company. The highest aggregate amount outstanding
of advances to officers during the year ended September 30, 1997, was $1.7
million and no amounts were outstanding at September 30, 1997. The Company also
had a $50,000 note bearing interest at 7.50% payable to a certain officer of
the Company at September 30, 1997.

      For purposes of governing certain ongoing relationships between the
Company and USLD after the Distribution and to provide for an orderly
transition, the Company and USLD entered into certain agreements. Such
agreements include: (i) the Distribution Agreement, providing for, among other
things, the Distribution and the division between the Company and USLD of
certain assets and liabilities and material indemnification provisions; (ii)
the Benefit Plans and Employment Matters Allocation Agreement, providing for
certain allocations of responsibilities with respect to benefit plans, employee
compensation, and labor and employment matters; (iii) the Tax Sharing
Agreement, pursuant to which the Company and USLD agreed to allocate tax
liabilities that relate to periods prior to and after the Distribution Date;
(iv) the Transitional Services and Sublease Agreement, pursuant to which USLD
will provide certain services on a temporary basis and sublease certain office
space to the Company and the Company will provide certain services to USLD on a
temporary basis; (v) the Zero Plus - Zero Minus Billing and Information
Management Services Agreement and the One Plus Billing and Information
Management Services Agreement, pursuant to which the Company will provide
billing clearinghouse and information management services to USLD for an
initial period of three years; and (vi) the Telecommunications Agreement,
pursuant to which USLD will provide long distance telecommunications services
to the Company for an initial period of three years. It is the intention of
USLD and the Company that the Transitional Services and Sublease Agreement, the
Zero Plus - Zero Minus Billing and Information Management Services Agreement,
the One Plus Billing and Information Management Services Agreement, and the
Telecommunications Agreement reflect terms and conditions similar to those that
would have been arrived at by independent parties bargaining at arm's length;
however, there can be no assurances that such agreements are on terms at least
as favorable as could have been obtained from unaffiliated third parties.





                                       42
<PAGE>   43
NOTE 13. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

      In thousands, except per share amounts

<TABLE>
<CAPTION>
                                                                                      QUARTER ENDED
                                                                   -------------------------------------------------------
                                                                   SEPTEMBER 30,   JUNE 30,       MARCH 31,   DECEMBER 31,
                                                                        1997         1997          1997          1996
                                                                        ----         ----          ----          ----
  <S>                                                                 <C>           <C>           <C>           <C>
  Operating revenues  . . . . . . . . . . . . . . . . . . . . .       $35,742       $31,894       $27,382       $27,818
  Income (loss) from operations . . . . . . . . . . . . . . . .         9,836       (12,453)        8,195         7,861
  Net income (loss) . . . . . . . . . . . . . . . . . . . . . .         6,261       (12,622)        5,157         4,911
  Net income (loss) per common share - primary  . . . . . . . .         $0.37        $(0.81)        $0.32         $0.30
  Net income (loss) per common share - fully diluted  . . . . .         $0.37        $(0.81)        $0.32         $0.30
</TABLE>

<TABLE>
<CAPTION>
                                                                                      QUARTER ENDED
                                                                 -------------------------------------------------------
                                                                 SEPTEMBER 30,   JUNE 30,       MARCH 31,   DECEMBER 31,
                                                                      1996         1996          1996          1995
                                                                      ----         ----          ----          ----
  <S>                                                                 <C>            <C>          <C>           <C>
  Operating revenues  . . . . . . . . . . . . . . . . . . . . .       $27,854        $25,729      $26,947       $23,354
  Income from operations  . . . . . . . . . . . . . . . . . . .         7,545          6,866        7,967         6,263
  Net income  . . . . . . . . . . . . . . . . . . . . . . . . .         4,566          4,317        5,021         3,948
  Pro forma net income per common share - primary . . . . . . .         $0.29          $0.27        $0.33         $0.27
  Pro forma net income per common share - fully diluted . . . .         $0.29          $0.27        $0.33         $0.26
</TABLE>

Per share data is shown on a pro forma basis for fiscal year 1996 as BIC had no
publicly held common stock outstanding prior to August 2, 1996 (see Note 2).

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
      ON ACCOUNTING AND FINANCIAL DISCLOSURE

      The information required by this item is not applicable.





                                       43
<PAGE>   44
                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS

      The information required by this item is incorporated herein by reference
from the information under the captions "Election of Directors' (Item 1 on
proxy), "Management - Directors and Executive Officers," and "Section 16(a)
Reporting" of the Company's definitive proxy statement to be filed pursuant to
Regulation 14A with the Securities and Exchange Commission relating to its
Annual Meeting of Stockholders to be held on February 26, 1998 (the "Definitive
Proxy Statement").

ITEM 11. EXECUTIVE COMPENSATION

      The information required by this item is incorporated herein by reference
from the information under the caption "Management - Committees, Meetings and
Compensation of the Board of Directors - Directors' Fees" and from the
information under the caption "Executive Compensation" of the Company's
Definitive Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The information required by this item is incorporated herein by reference
from the information under the caption "Voting Securities and Principal
Stockholders" of the Company's Definitive Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      The information required by this item is incorporated herein by reference
from the information under the caption "Certain Transactions" of the Company's
Definitive Proxy Statement.





                                       44
<PAGE>   45
                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
      AND REPORTS ON FORM 8-K

      (a)  Documents Filed as Part of Report

      1.   Financial Statements:

           The Consolidated Financial Statements of the Company and the related
      report of the Company's independent public accountants thereon have been
      filed under Item 8 hereof.

      2.   Financial Statement Schedules:

           The information required by this item is not applicable.

      3.   Exhibits:

           The exhibits listed below are filed as part of or incorporated by
      reference in this report. Where such filing is made by incorporation by
      reference to a previously filed document, such document is identified in
      parentheses.  See the Index of Exhibits included with the exhibits filed
      as a part of this report.

<TABLE>
<CAPTION>
  EXHIBIT                                         DESCRIPTION OF EXHIBITS
  NUMBER                                          -----------------------
  ------
   <S>         <C>
    2.1     -  Plan of Merger and  Acquisition Agreement among the Company, CRM  Acquisition Corp., Computer
               Resources  Management,  Inc.,  and  Michael  A.  Harrelson  dated   effective  June  1,  1997
               (incorporated by reference from Exhibit 2.1 to June 30, 1997, Form 10-Q)
    3.1     -  Amended  and Restated Certificate of Incorporation of Billing (incorporated by reference from
               Exhibit  3.1 to  the Amendment  No. 1 to  the Company's  Registration Statement  on Form 10/A
               dated July 11, 1996)
    3.2     -  Certificate of Designation of Series A Junior  Participating Preferred Stock (incorporated by
               reference from Exhibit 3.2 to the Amendment  No. 1 to the Company's Registration Statement on
               Form 10/A dated July 11, 1996)
    3.3     -  Bylaws of Billing (incorporated  by reference from Exhibit 3.3 to the  Amendment No. 1 to the
               Company's Registration Statement on Form 10/A dated July 11, 1996)
    4.1     -  Form of Stock Certificate of Common Stock (incorporated by  reference from Exhibit 4.1 to the
               Amendment No. 1 to the Company's Registration Statement on Form 10/A dated July 11, 1996)
    8.1     -  Tax  Opinion  of Arter &  Hadden (incorporated  by  reference from  Exhibit 8.1  to  the Post
               Effective Amendment  No. 2 to the Company's Registration  Statement on Form 10/A dated August
               1, 1996)
   10.1     -  Distribution Agreement between USLD and  Billing (incorporated by reference from Exhibit 10.1
               to the  Post Effective Amendment No. 2  to the Company's Registration  Statement on Form 10/A
               dated August 1, 1996)
   10.2     -  Tax Sharing Agreement between USLD and  Billing (incorporated by reference from Exhibit  10.2
               to the  Amendment No. 1 to the  Company's Registration Statement on  Form 10/A dated July 11,
               1996)
   10.3     -  Benefit  Plans   and  Employment  Matters  Allocation  Agreement  between  USLD  and  Billing
               (incorporated by  reference from Exhibit  10.3 to the  Post Effective Amendment No.  2 to the
               Company's Registration Statement on Form 10/A dated August 1, 1996)
</TABLE>





                                       45
<PAGE>   46
<TABLE>
   <S>         <C>
   10.4     -  Transitional Services  and  Sublease Agreement  between  USLD  and Billing  (incorporated  by
               reference  from Exhibit 10.4 to  the Amendment No. 1 to  the Company's Registration Statement
               on Form 10/A dated July 11, 1996)
   10.5     -  Zero Plus -  Zero Minus Billing  and Information Management  Services Agreement between  USLD
               and Billing (incorporated by reference from Exhibit 10.5  to the Post Effective Amendment No.
               1 to the Company's Registration Statement on Form 10/A dated July 22, 1996)
   10.6     -  Expense Sharing Agreement between  USLD and Billing  (incorporated by reference from  Exhibit
               10.6 to the Amendment No. 1 to the  Company's Registration Statement on Form 10/A dated  July
               11, 1996)
   10.7     -  Telecommunications  Agreement  between  USLD  and Billing  (incorporated  by  reference  from
               Exhibit 10.7 to  the Post Effective Amendment  No. 1 to the  Company's Registration Statement
               on Form 10/A dated July 22, 1996)
   10.8     -  Billing's 1996  Employee Comprehensive  Stock Plan  (incorporated by  reference from  Exhibit
               10.8 to the Amendment  No. 1 to the Company's Registration  Statement on Form 10/A dated July
               11, 1996)
   10.9     -  Amended and Restated 1996 Non-Employee Director Plan of Billing (incorporated by reference from 
               Exhibit 10.9 to September 30, 1996, Form 10-K)
   10.10    -  Billing's 1996 Employee Stock Purchase Plan (incorporated  by reference from Exhibit 10.10 to
               the Amendment  No. 1  to the  Company's Registration  Statement on  Form 10/A dated July  11,
               1996)
   10.11    -  Billing's 401(k) Retirement  Plan (incorporated by  reference from  Exhibit 4.5 to  Billing's
               Registration Statement on Form S-8, File No. 333-08303, filed on July 17, 1996)
   10.12    -  Billing's Executive  Compensation Deferral Plan (incorporated by reference from Exhibit 10.12
               to the Post  Effective Amendment No. 2  to the Company's Registration Statement  on Form 10/A
               dated August 1, 1996)
   10.13    -  Billing's Director Compensation Deferral Plan  (incorporated by reference from  Exhibit 10.13
               to the Post Effective  Amendment No. 2 to  the Company's Registration Statement on  Form 10/A
               dated August 1, 1996)
   10.14    -  Billing's Executive Qualified Disability Plan  (incorporated by reference from  Exhibit 10.14
               to the Amendment No.  1 to the Company's Registration  Statement on Form 10/A dated  July 11,
               1996)
   10.15    -  Employment  Agreement  to  be  entered   into  between  Billing  and  Parris  H. Holmes,  Jr.
               (incorporated by  reference  from Exhibit  10.15  to the  Amendment No.  1  to the  Company's
               Registration Statement on Form 10/A dated July 11, 1996)
   10.16    -  Employment Agreement to  be entered into  between Billing and Alan W.  Saltzman (incorporated
               by  reference from  Exhibit  10.16 to  the  Amendment  No. 1  to  the Company's  Registration
               Statement on Form 10/A dated July 11, 1996)
   10.17    -  Employment Agreement to  be entered into between  Billing and Kelly E.  Simmons (incorporated
               by reference  from  Exhibit 10.17  to  the Amendment  No.  1  to the  Company's  Registration
               Statement on Form 10/A dated July 11, 1996)
</TABLE>





                                      46
<PAGE>   47
<TABLE>
   <S>         <C>
   10.18    -  Amended  and  Restated Loan  and  Security Agreement  dated  May 22, 1991  between  Zero Plus
               Dialing Inc.  ("ZPDI"), U.S. Long Distance, Inc. ("USLDI"), U.S. Long Distance Corp. ("USLD")
               and  Bell  Atlantic Capital  Corp.  (f/k/a Bell  Atlantic -  Tricon  Leasing Corporation  and
               currently FINOVA  Capital Corporation) ("Lender");  Revolving Credit Note  dated May 24, 1991
               payable by ZPDI to  the order of Lender; Replacement Term Note  dated May 24, 1991 payable by
               USLDI to the order  of Lender; First Amendment and Joinder  to Amended and Restated  Loan and
               Security Agreement  dated  December 28, 1992  among  ZPDI,  USLD, USLDI,  U.S. Billing,  Inc.
               ("USBI") and  Lender; Second Amendment  to Amended and  Restated Loan and  Security Agreement
               dated April 2, 1993 among ZPDI, USLD, USLDI, USBI and  Lender; Third Amendment to Amended and
               Restated Loan and  Security Agreement dated  October 15, 1993 among  ZPDI, USLD, USLDI,  USBI
               and Lender; Fourth Amendment and Joinder to Amended and Restated Loan and  Security Agreement
               dated  October 1, 1993 among  ZPDI, USLD, USLDI,  USBI, USLD Acquisition  Corp. ("USAcq") and
               Lender; Fifth  Amendment and  Joinder to  Amended and  Restated Loan  and Security  Agreement
               dated November 16, 1993  among ZPDI, USLD, USLDI,  USBI, USAcq, STS  Telecommunications, Inc.
               ("STS") and  Lender; Sixth  Amendment to  Amended and  Restated Loan  and Security  Agreement
               dated  December 7, 1993  among  ZPDI,  USLD, USLDI,  USBI,  USAcq,  STS and  Lender;  Seventh
               Amendment to  Amended and  Restated Loan and  Security Agreement  dated March 17, 1994  among
               ZPDI, USLD,  USLDI, USBI,  USAcq, STS, Enhanced  Services Billing, Inc.  ("ESBI"), California
               Acquisition Corp. ("CAC") and Lender; Corporate Guaranty dated May 24, 1991 executed  by USLD
               for  the benefit of Lender;  Corporate Guaranty dated May 24, 1991  executed by USLDI for the
               benefit  of Lender; Corporate Guaranty dated May 24, 1991 executed by ZPDI for the benefit of
               Lender; Corporate Guaranty  dated May 24, 1991  executed by USLD  for the benefit of  Lender;
               Corporate Guaranty dated October 1993 executed by USAcq  for the benefit of Lender; Corporate
               Guaranty dated November  1993 executed by STS  for the benefit of  Lender; Corporate Guaranty
               executed by Telecom Acquisition Corp. for the benefit of Lender; Corporate  Guaranty executed
               by ESBI  for the benefit  of Lender; Corporate  Guaranty executed by  CAC for the  benefit of
               Lender; Escrow  and Disbursing  Agreement dated  May 24, 1991  among ZPDI,  Lender and  Texas
               Commerce  Bank,  N.A.  (incorporated  by  reference  from  Exhibit  10.18  to  the  Company's
               Registration Statement on Form 10 dated May 26, 1996)
   10.19    -  Master Loan and Security  Agreement dated December 31, 1993 between U.S.  Long Distance, Inc.
               and BOT  Financial  Corporation,  Continuing  Corporate  Guaranty  dated  December  31,  1993
               executed by U.S. Long  Distance Corp., Promissory Notes, dated  December 31, 1993, March  31,
               1994, April 28, 1994 and March 29, 1995, Supplemental Security  Agreements dated December 31,
               1993, April  28, 1994,  March 24, 1995,  Promissory Note  dated June  28, 1995,  Supplemental
               Security  Agreement  dated  June   28,  1995,  Promissory  Note  dated  September  29,  1995,
               Supplemental Security  Agreement dated September  29, 1995 and  Form of  Continuing Corporate
               Guaranty to be executed by Billing (incorporated by reference from Exhibit 10.19 to  the Post
               Effective  Amendment No. 1  to the Company's  Registration Statement on  Form 10/A dated July
               22, 1996)
   10.20    -  Software  License Agreement  dated  June 28,  1996  between Saville  Systems  U.S., Inc.  and
               Billing Information Concepts,  Inc. (incorporated by reference from Exhibit 10.20 to the Post
               Effective Amendment  No. 2 to the Company's Registration  Statement on Form 10/A dated August
               1, 1996; confidential treatment is being sought for portions of Exhibit 10.20)
   10.21    -  Office Building Lease Agreement dated July 12, 1996 between Medical Plaza Partners, Ltd.  and
               Billing Information Concepts, Inc. (incorporated by reference from Exhibit 10.21 to  the Post
               Effective Amendment  No. 1 to  the Company's Registration  Statement on Form 10/A  dated July
               22, 1996)
</TABLE>





                                      47
<PAGE>   48
<TABLE>
   <S>         <C>
   10.22    -  Credit Agreement  dated December  20,  1996, among  Billing Information  Concepts, Inc.,  The
               Frost National  Bank and The Boatmen's National Bank of  St. Louis (incorporated by reference
               from Exhibit 10.1 to December 31, 1996, Form 10-Q)
   10.23    -  Parent Guaranty  dated December 20, 1996, between Billing  Information Concepts Corp. and The
               Frost  National Bank  (incorporated by  reference from  Exhibit  10.3 to  December 31,  1996,
               Form 10-Q)
   10.24    -  Affiliate Guaranty  dated December 20, 1996, between Enhanced  Services Billing, Inc. and The
               Frost  National Bank  (incorporated by  reference from  Exhibit  10.4 to  December 31,  1996,
               Form 10-Q)
   10.25    -  Promissory Note  dated December 20, 1996, between Billing  Information Concepts, Inc. and The
               Boatmen's  National Bank  of  St.  Louis (incorporated  by  reference  from Exhibit  10.5  to
               December 31, 1996, Form 10-Q)
   10.26    -  Promissory Note  dated December 20, 1996, between Billing  Information Concepts, Inc. and The
               Frost  National Bank  (incorporated by  reference from  Exhibit  10.6 to  December 31,  1996,
               Form 10-Q)
   10.27    -  Stock Pledge Agreement  dated December 20, 1996,  between Billing Information Concepts  Corp.
               and The  Frost National Bank  (incorporated by reference  from Exhibit  10.7 to December  31,
               1996, Form 10-Q)
   10.28    -  Security Agreement  dated December 20, 1996,  between Billing Information  Concepts, Inc. and
               The Frost National Bank  (incorporated by reference from Exhibit  10.8 to December 31,  1996,
               Form 10-Q)
   10.29    -  Put Option Agreement  between the Company  and Michael A.  Harrelson dated effective June  1,
               1997 (incorporated by reference from Exhibit 10.1 to June 30, 1997, Form 10-Q)
   10.30    -  Employment  Agreement between  the  Company  and Michael  A.  Harrelson  dated June  4,  1997
               (incorporated by reference from Exhibit 10.2 to June 30, 1997, Form 10-Q)
   11.1     -  Computation of Earnings Per Share (filed herewith)
   21.1     -  Amended List of  Subsidiaries (incorporated by reference  from Exhibit 21.1 to  the Amendment
               No. 1 to the  Company's Registration Statement on Form 10/A dated  July 11, 1996), as amended
               (filed herewith)
   23.1     -  Consent of Arthur Andersen LLP (filed herewith)
   27.1     -  Financial Data Schedule (filed herewith)
</TABLE>


      (b)  Reports on Form 8-K

           None.





                                      48
<PAGE>   49
                                   SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

                                        BILLING INFORMATION CONCEPTS CORP.

                                        By:  /s/  PARRIS H. HOLMES, JR.   
                                             -----------------------------
                                        Parris H. Holmes, Jr.
                                        Chairman of the Board and
                                        Chief Executive Officer

Date: December 18, 1997

      Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf
of the registrant and in the capacities indicated on the 18th day of December,
1997.

<TABLE>
<CAPTION>
                     SIGNATURE                                                        TITLE
                     ---------                                                        -----
            <S>                                                 <C>
            /s/  PARRIS H. HOLMES, JR.                              Chairman of the Board and Chief Executive
            --------------------------                                Officer (Principal Executive Officer)  
               Parris H. Holmes, Jr.                                                                       

               /s/  ALAN W. SALTZMAN                                  President and Chief Operating Officer
            --------------------------                                                                     
                 Alan W. Saltzman

               /s/  KELLY E. SIMMONS                            Senior Vice President and Chief Financial Officer
            --------------------------                             (Principal Financial and Accounting Officer)  
                 Kelly E. Simmons                                                                              

                  /s/  LEE COOKE                                                     Director
            --------------------------                                                       
                     Lee Cooke

               /s/  JAMES E. SOWELL                                                  Director
            --------------------------                                                       
                  James E. Sowell

              /s/  THOMAS G. LOEFFLER                                                Director
            --------------------------                                                       
                Thomas G. Loeffler
</TABLE>





                                       49
<PAGE>   50
                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
                                                  DESCRIPTION OF EXHIBITS
                                                  -----------------------
  EXHIBIT
  NUMBER
  ------
   <S>         <C>
    2.1     -  Plan of  Merger and Acquisition Agreement among the  Company, CRM Acquisition Corp., Computer
               Resources  Management,  Inc.,  and  Michael  A.  Harrelson  dated   effective  June  1,  1997
               (incorporated by reference from Exhibit 2.1 to June 30, 1997, Form 10-Q)
    3.1     -  Amended  and Restated Certificate of Incorporation of Billing (incorporated by reference from
               Exhibit 3.1  to the  Amendment No.  1 to  the Company's  Registration Statement  on Form 10/A
               dated July 11, 1996)
    3.2     -  Certificate of Designation of Series A Junior  Participating Preferred Stock (incorporated by
               reference from Exhibit  3.2 to the Amendment No. 1 to the Company's Registration Statement on
               Form 10/A dated July 11, 1996)
    3.3     -  Bylaws of Billing (incorporated by reference  from Exhibit 3.3 to the Amendment No. 1  to the
               Company's Registration Statement on Form 10/A dated July 11, 1996)
    4.1     -  Form of Stock Certificate of  Common Stock (incorporated by reference from Exhibit 4.1 to the
               Amendment No. 1 to the Company's Registration Statement on Form 10/A dated July 11, 1996)
    8.1     -  Tax  Opinion of  Arter & Hadden  (incorporated  by reference  from  Exhibit 8.1  to the  Post
               Effective Amendment No. 2 to the  Company's Registration Statement on Form 10/A dated  August
               1, 1996)
   10.1     -  Distribution Agreement between USLD and  Billing (incorporated by reference from Exhibit 10.1
               to  the Post Effective Amendment  No. 2 to the  Company's Registration Statement on Form 10/A
               dated August 1, 1996)
   10.2     -  Tax Sharing Agreement between  USLD and Billing (incorporated by reference  from Exhibit 10.2
               to the Amendment  No. 1 to the  Company's Registration Statement on Form 10/A  dated July 11,
               1996)
   10.3     -  Benefit  Plans   and  Employment  Matters  Allocation  Agreement  between  USLD  and  Billing
               (incorporated  by reference from  Exhibit 10.3 to the  Post Effective Amendment No.  2 to the
               Company's Registration Statement on Form 10/A dated August 1, 1996)
</TABLE>
<PAGE>   51
<TABLE>
   <S>         <C>
   10.4     -  Transitional Services  and  Sublease Agreement  between  USLD  and Billing  (incorporated  by
               reference  from Exhibit 10.4 to  the Amendment No. 1 to  the Company's Registration Statement
               on Form 10/A dated July 11, 1996)
   10.5     -  Zero Plus -  Zero Minus Billing  and Information Management  Services Agreement between  USLD
               and Billing (incorporated by reference from Exhibit 10.5  to the Post Effective Amendment No.
               1 to the Company's Registration Statement on Form 10/A dated July 22, 1996)
   10.6     -  Expense Sharing Agreement between  USLD and Billing  (incorporated by reference from  Exhibit
               10.6 to the Amendment No. 1 to the  Company's Registration Statement on Form 10/A dated  July
               11, 1996)
   10.7     -  Telecommunications  Agreement  between  USLD  and Billing  (incorporated  by  reference  from
               Exhibit 10.7 to  the Post Effective Amendment  No. 1 to the  Company's Registration Statement
               on Form 10/A dated July 22, 1996)
   10.8     -  Billing's 1996  Employee Comprehensive  Stock Plan  (incorporated by  reference from  Exhibit
               10.8 to the Amendment  No. 1 to the Company's Registration  Statement on Form 10/A dated July
               11, 1996)
   10.9     -  Amended and Restated 1996 Non-Employee Director Plan of Billing (incorporated by reference from 
               Exhibit 10.9 to September 30, 1996, Form 10-K)
   10.10    -  Billing's 1996 Employee Stock Purchase Plan (incorporated  by reference from Exhibit 10.10 to
               the Amendment  No. 1  to the  Company's Registration  Statement on  Form 10/A dated July  11,
               1996)
   10.11    -  Billing's 401(k) Retirement  Plan (incorporated by  reference from  Exhibit 4.5 to  Billing's
               Registration Statement on Form S-8, File No. 333-08303, filed on July 17, 1996)
   10.12    -  Billing's Executive  Compensation Deferral Plan (incorporated by reference from Exhibit 10.12
               to the Post  Effective Amendment No. 2  to the Company's Registration Statement  on Form 10/A
               dated August 1, 1996)
   10.13    -  Billing's Director Compensation Deferral Plan  (incorporated by reference from  Exhibit 10.13
               to the Post Effective  Amendment No. 2 to  the Company's Registration Statement on  Form 10/A
               dated August 1, 1996)
   10.14    -  Billing's Executive Qualified Disability Plan  (incorporated by reference from  Exhibit 10.14
               to the Amendment No.  1 to the Company's Registration  Statement on Form 10/A dated  July 11,
               1996)
   10.15    -  Employment  Agreement  to  be  entered   into  between  Billing  and  Parris  H. Holmes,  Jr.
               (incorporated by  reference  from Exhibit  10.15  to the  Amendment No.  1  to the  Company's
               Registration Statement on Form 10/A dated July 11, 1996)
   10.16    -  Employment Agreement to  be entered into  between Billing and Alan W.  Saltzman (incorporated
               by  reference from  Exhibit  10.16 to  the  Amendment  No. 1  to  the Company's  Registration
               Statement on Form 10/A dated July 11, 1996)
   10.17    -  Employment Agreement to  be entered into between  Billing and Kelly E.  Simmons (incorporated
               by reference  from  Exhibit 10.17  to  the Amendment  No.  1  to the  Company's  Registration
               Statement on Form 10/A dated July 11, 1996)
</TABLE>
<PAGE>   52
<TABLE>
   <S>         <C>
   10.18    -  Amended  and  Restated Loan  and  Security Agreement  dated  May 22, 1991  between  Zero Plus
               Dialing Inc.  ("ZPDI"), U.S. Long Distance, Inc. ("USLDI"), U.S. Long Distance Corp. ("USLD")
               and  Bell  Atlantic Capital  Corp.  (f/k/a Bell  Atlantic -  Tricon  Leasing Corporation  and
               currently FINOVA  Capital Corporation) ("Lender");  Revolving Credit Note  dated May 24, 1991
               payable by ZPDI to  the order of Lender; Replacement Term Note  dated May 24, 1991 payable by
               USLDI to the order  of Lender; First Amendment and Joinder  to Amended and Restated  Loan and
               Security Agreement  dated  December 28, 1992  among  ZPDI,  USLD, USLDI,  U.S. Billing,  Inc.
               ("USBI") and  Lender; Second Amendment  to Amended and  Restated Loan and  Security Agreement
               dated April 2, 1993 among ZPDI, USLD, USLDI, USBI and  Lender; Third Amendment to Amended and
               Restated Loan and  Security Agreement dated  October 15, 1993 among  ZPDI, USLD, USLDI,  USBI
               and Lender; Fourth Amendment and Joinder to Amended and Restated Loan and  Security Agreement
               dated  October 1, 1993 among  ZPDI, USLD, USLDI,  USBI, USLD Acquisition  Corp. ("USAcq") and
               Lender; Fifth  Amendment and  Joinder to  Amended and  Restated Loan  and Security  Agreement
               dated November 16, 1993  among ZPDI, USLD, USLDI,  USBI, USAcq, STS  Telecommunications, Inc.
               ("STS") and  Lender; Sixth  Amendment to  Amended and  Restated Loan  and Security  Agreement
               dated  December 7, 1993  among  ZPDI,  USLD, USLDI,  USBI,  USAcq,  STS and  Lender;  Seventh
               Amendment to  Amended and  Restated Loan and  Security Agreement  dated March 17, 1994  among
               ZPDI, USLD,  USLDI, USBI,  USAcq, STS, Enhanced  Services Billing, Inc.  ("ESBI"), California
               Acquisition Corp. ("CAC") and Lender; Corporate Guaranty dated May 24, 1991 executed  by USLD
               for  the benefit of Lender;  Corporate Guaranty dated May 24, 1991  executed by USLDI for the
               benefit  of Lender; Corporate Guaranty dated May 24, 1991 executed by ZPDI for the benefit of
               Lender; Corporate Guaranty  dated May 24, 1991  executed by USLD  for the benefit of  Lender;
               Corporate Guaranty dated October 1993 executed by USAcq  for the benefit of Lender; Corporate
               Guaranty dated November  1993 executed by STS  for the benefit of  Lender; Corporate Guaranty
               executed by Telecom Acquisition Corp. for the benefit of Lender; Corporate  Guaranty executed
               by ESBI  for the benefit  of Lender; Corporate  Guaranty executed by  CAC for the  benefit of
               Lender; Escrow  and Disbursing  Agreement dated  May 24, 1991  among ZPDI,  Lender and  Texas
               Commerce  Bank,  N.A.  (incorporated  by  reference  from  Exhibit  10.18  to  the  Company's
               Registration Statement on Form 10 dated May 26, 1996)
   10.19    -  Master Loan and Security  Agreement dated December 31, 1993 between U.S.  Long Distance, Inc.
               and BOT  Financial  Corporation,  Continuing  Corporate  Guaranty  dated  December  31,  1993
               executed by U.S. Long  Distance Corp., Promissory Notes, dated  December 31, 1993, March  31,
               1994, April 28, 1994 and March 29, 1995, Supplemental Security  Agreements dated December 31,
               1993, April  28, 1994,  March 24, 1995,  Promissory Note  dated June  28, 1995,  Supplemental
               Security  Agreement  dated  June   28,  1995,  Promissory  Note  dated  September  29,  1995,
               Supplemental Security  Agreement dated September  29, 1995 and  Form of  Continuing Corporate
               Guaranty to be executed by Billing (incorporated by reference from Exhibit 10.19 to  the Post
               Effective  Amendment No. 1  to the Company's  Registration Statement on  Form 10/A dated July
               22, 1996)
   10.20    -  Software  License Agreement  dated  June 28,  1996  between Saville  Systems  U.S., Inc.  and
               Billing Information Concepts,  Inc. (incorporated by reference from Exhibit 10.20 to the Post
               Effective Amendment  No. 2 to the Company's Registration  Statement on Form 10/A dated August
               1, 1996; confidential treatment is being sought for portions of Exhibit 10.20)
   10.21    -  Office Building Lease Agreement dated July 12, 1996 between Medical Plaza Partners, Ltd.  and
               Billing Information Concepts, Inc. (incorporated by reference from Exhibit 10.21 to  the Post
               Effective Amendment  No. 1 to  the Company's Registration  Statement on Form 10/A  dated July
               22, 1996)
</TABLE>
<PAGE>   53
<TABLE>
   <S>         <C>
   10.22    -  Credit Agreement  dated December  20,  1996, among  Billing Information  Concepts, Inc.,  The
               Frost National  Bank and The Boatmen's National Bank of  St. Louis (incorporated by reference
               from Exhibit 10.1 to December 31, 1996, Form 10-Q)
   10.23    -  Parent Guaranty  dated December 20, 1996, between Billing  Information Concepts Corp. and The
               Frost  National Bank  (incorporated by  reference from  Exhibit  10.3 to  December 31,  1996,
               Form 10-Q)
   10.24    -  Affiliate Guaranty  dated December 20, 1996, between Enhanced  Services Billing, Inc. and The
               Frost  National Bank  (incorporated by  reference from  Exhibit  10.4 to  December 31,  1996,
               Form 10-Q)
   10.25    -  Promissory Note  dated December 20, 1996, between Billing  Information Concepts, Inc. and The
               Boatmen's  National Bank  of  St.  Louis (incorporated  by  reference  from Exhibit  10.5  to
               December 31, 1996, Form 10-Q)
   10.26    -  Promissory Note  dated December 20, 1996, between Billing  Information Concepts, Inc. and The
               Frost  National Bank  (incorporated by  reference from  Exhibit  10.6 to  December 31,  1996,
               Form 10-Q)
   10.27    -  Stock Pledge Agreement  dated December 20, 1996,  between Billing Information Concepts  Corp.
               and The  Frost National Bank  (incorporated by reference  from Exhibit  10.7 to December  31,
               1996, Form 10-Q)
   10.28    -  Security Agreement  dated December 20, 1996,  between Billing Information  Concepts, Inc. and
               The Frost National Bank  (incorporated by reference from Exhibit  10.8 to December 31,  1996,
               Form 10-Q)
   10.29    -  Put Option Agreement  between the Company  and Michael A.  Harrelson dated effective June  1,
               1997 (incorporated by reference from Exhibit 10.1 to June 30, 1997, Form 10-Q)
   10.30    -  Employment  Agreement between  the  Company  and Michael  A.  Harrelson  dated June  4,  1997
               (incorporated by reference from Exhibit 10.2 to June 30, 1997, Form 10-Q)
   11.1     -  Computation of Earnings Per Share (filed herewith)
   21.1     -  Amended List of  Subsidiaries (incorporated by reference  from Exhibit 21.1 to  the Amendment
               No. 1 to the  Company's Registration Statement on Form 10/A dated  July 11, 1996), as amended
               (filed herewith)
   23.1     -  Consent of Arthur Andersen LLP (filed herewith)
   27.1     -  Financial Data Schedule (filed herewith)
</TABLE>


      (b)  Reports on Form 8-K

           None.