USCS INTERNATIONAL INC, 10-K, 1998-03-25

USCS INTERNATIONAL INC
10-K, 1998-03-25
COMPUTER PROGRAMMING SERVICES

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U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549
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FORM 10-K

(Mark one)

/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934.

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: 0-28268
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USCS INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

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

2969 PROSPECT PARK DRIVE
RANCHO CORDOVA, CALIFORNIA 95670-6148
(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code: (916) 636-4500

Securities registered pursuant to Section 12(b) of the Act:

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TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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None None
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Securities registered pursuant to Section 12(g) of the Act:

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COMMON STOCK PAR VALUE $.05 PER SHARE
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(Title of Class)
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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

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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 the 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 Common Stock held by
non-affiliates as of March 10, 1998 was $268,425,630.

Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of March 10, 1998: 23,109,269 shares of $.05 par
value Common Stock.

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DOCUMENTS INCORPORATED BY REFERENCE

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DOCUMENT DESCRIPTION 10-K PART
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Proxy Statement for the 1998 Annual Meeting of Stockholders dated April 17,
1998...................................................................... Part I - Item 4
Pages 1 through 10......................................................... Part III - Item 10, 11, 12, 13
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TABLE OF CONTENTS
PART I

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ITEM PAGE
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1. Business............................................................................................ 3
2. Properties.......................................................................................... 9
3. Legal Proceedings................................................................................... 10
4. Submission of Matters to a Vote of Security Holders................................................. 10

PART II

5. Market for the Registrant's Common Equity and Related Stockholder Matters........................... 10
6. Selected Financial Data............................................................................. 11
7. Management's Discussion and Analysis of Financial Condition and Results of Operations............... 12
8. Financial Statements and Supplementary Data......................................................... 22
9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure................ 40

PART III

10. Directors and Executive Officers of the Registrant.................................................. 40
11. Executive Compensation.............................................................................. 43
12. Security Ownership of Certain Beneficial Owners and Management...................................... 43
13. Certain Relationships and Related Transactions...................................................... 43

PART IV

14. Exhibits, Financial Statement Schedules, and Reports on Form 8K..................................... 43
Signatures.......................................................................................... 46
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PART I

ITEM 1. BUSINESS

The statements that are not historical fact or that are not statements of
current status are forward-looking statements. The Company's future results may
differ significantly from the results and forward-looking statements discussed
in this report. See "Management's Discussion And Analysis Of Financial Condition
And Results Of Operations--Factors That May Affect Future Results."

THE COMPANY

USCS International, Inc. (USCS) is a leading global provider of customer
management software and statement processing to the communications and other
service industries, which serve more than 80 million end-users world-wide. The
Company's software clients include cable television, wireless and wire-line
telephony, direct broadcast satellite (DBS) and multi-service providers in more
than 20 countries. The Company's software solutions enable its clients to manage
mission-critical customer relationship functions, including new account set-up,
order processing, customer support, management reporting and marketing analysis.
The Company also provides complete bill processing services, including
electronic bill presentment, which include generation of customized billing
statements that are produced in sophisticated automated facilities designed to
minimize turnaround time and mailing costs. The Company's bill processing
clients include providers of cable television, telecommunications, financial
services, utilities and other industries requiring high quality, accurate
statement/order processing. USCS also offers a variety of complementary
professional services, including consulting, application development and client
training, as well as statement design and formatting services that allow clients
to use the billing statement as a communication and marketing tool.

USCS has been providing comprehensive customer management and bill
processing software and services to the cable television industry for more than
25 years, and more than five years ago, the Company expanded the scope of its
software and services to address the global communications market. The Company's
software currently supports more than 50% of U.S. cable television subscribers
and is used by a majority of the largest cable television service providers in
the U.S. In recent years, the Company has expanded its customer management
software base to clients in more than 20 countries, as well to providers of
emerging convergence services. The Company provides bill processing services to
clients serving more than 50% of U.S. cable television subscribers, 40% of U.S.
cellular users and 11% of U.S. wire-line telephony customers and to a variety of
other service providers. The Company's bill processing clients include
substantially all of its domestic customer management software clients and other
service providers such as Ameritech, AT&T, Cincinnati Bell Information Systems,
Inc. ("CBIS"), NationsBanc Montgomery Securities and Federal Express. At year
end, the Company's monthly statement production had risen to approximately 75
million bills. The Company is among the largest centralized first class mailers
in the U.S., responsible for generating approximately 1.7% of the total volume
of all U.S. first class mail, including customer remittance volume. Bill
processing services are generally provided to software clients in bundled
contracts and are also sold separately.

In 1993, the Company deployed CableData's Intelecable-Registered Trademark-,
which the Company believes is the first customer management software product
designed for multi-service providers. At year end, there were over 80
Intelecable installations active or pending worldwide. Services supported by
Intelecable include integrated cable/telephony, integrated cable/wireless DBS,
interactive video, telephony-only and cable-only installations.

The Company has expanded its bill processing services by offering technology
licensing, currently being used by AT&T and Bell Atlantic, and consolidated
billing statements that combine data from multiple services, such as wireless
and wire-line telephony, into a single integrated billing statement. In
addition, the Company has introduced electronic bill presentment products which
enable customers to provide electronic statements in place of paper based
statements.

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U.S. Computer Services, the predecessor to USCS International, Inc., was
incorporated in California on November 18, 1969, and was reincorporated as USCS
International, Inc., in Delaware effective May 31, 1996. Unless the context
otherwise requires, all references in this annual report to "USCS" or the
"Company" refer to USCS International, Inc., a Delaware corporation, its
predecessor, U.S. Computer Services, a California corporation, and their
consolidated subsidiaries.

PRODUCTS AND SERVICES

CUSTOMER MANAGEMENT SOFTWARE

The Company's primary customer management software products are Intelecable
and DDP/SQL-TM-. Intelecable is designed to support single and multi-service
providers worldwide. The Company markets DDP/SQL to the traditional North
American cable television provider market. The Company also offers
CableWorks-TM-, a PC-based system for smaller operators. Additionally, a small
number of clients continue to use earlier generations of the Company's software
that are no longer marketed to new clients. Both Intelecable and DDP/SQL are
scaleable, and are available in basic systems with optional modules, including
the Company's new internet-based customer support products, CyberCSR-TM- and
TechConnect-TM-, which allow the service provider to design a customized system
which can effectively manage a growing customer base.

The Company licenses its software products to its clients under multi-year
license agreements. License fees are generally paid monthly based on the number
of subscribers or end-users served by the client. These agreements are typically
subject to periodic renewals and inflation-based license fee adjustments.

INTELECABLE: The Company believes that Intelecable is the world's first
customer management software system designed for multi-service providers in the
global communications marketplace. First installed in 1993, Intelecable is
available on either a standalone or, more recently, on a service bureau basis
and supports a diverse array of communications services, including cable
television, telephony, combined cable/telephony, interactive video and DBS. At
year end, there were over 80 active or pending installations of Intelecable
worldwide. Intelecable is enabled with National Language Support double-byte
capability, which allows operation in a variety of foreign languages, including
Japanese and Chinese. The Company believes that Intelecable is the only customer
management software system currently operational that has multiplatform
capabilities. Initially offered on IBM's AIX (UNIX) operating system,
Intelecable has been ported to Tandem's Integrity NR, Silicon Graphics
Challenge, Group Bull Escala and the Hewlett-Packard 9000.

Intelecable is based on an open systems architecture, which facilitates
customization and interoperability with other information systems. The
Intelecable system has been developed using standard design methodologies and
transaction processing monitor architecture. Intelecable also uses an embedded
standard query language (SQL), which facilitates access to the database by
user-created applications. The design of Intelecable delivers a high-level
programming interface, which allows extensive customization without complex code
changes. Intelecable uses an Oracle relational database, which allows clients to
maintain an integrated database for each service offered by the client.

DDP/SQL: DDP/SQL is the Company's primary software system for cable
television companies in North America. Currently, a majority of the largest
cable television service providers in the U.S. use the DDP/SQL system. DDP/SQL
offers a basic system with optional modules for expanded functionality. DDP/SQL
uses a relational database which allows the user to query logical relationships
without the need to predefine or describe a specific access path to the data.
Information generated by DDP/SQL can be used with the client's internal
information systems and off-the-shelf software programs. This interoperability
allows users, for example, to easily create financial spreadsheets based on
information generated by DDP/SQL.

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The Company offers DDP/SQL on either a stand-alone or a service bureau
basis. Stand-alone systems currently support approximately 80% of the Company's
client subscriber base, while approximately 20% are supported on a service
bureau basis. For stand-alone clients, the Company installs a complete DDP/ SQL
system at the provider's facility, including necessary hardware and peripherals.
Clients using a service bureau arrangement to access the Company's on-line
processors via wide area networks. The Company's Technical Response Center
monitors traffic and network availability to identify and respond to outages in
the system. DDP/SQL runs on massively parallel processing hardware manufactured
by Tandem. The Company is a value-added reseller of Tandem equipment. The
Company also sells to its clients peripheral hardware made by manufacturers
other than Tandem, and generally enters into hardware maintenance agreements
with its clients. The Company also provides lease financing and maintenance
services primarily for companies operating systems on a stand-alone basis. See
"Products And Services--Hardware Leasing and Sales" and "Product And
Services--Client Support and Care."

ENTERPRISE REAL-TIME RATING SYSTEM (ERTRS): In 1997, the Company acquired
CableData Telecommunications, Inc., formerly Lynn-Arthur Associates, a company
specializing in the development and marketing of rating technology for telephony
and other usage based applications. ERTRS is a rating engine designed to rate
cellular, wireline, data and Internet services to provide a complete convergence
rating system for carriers who bundle multiple service offerings to meet
customers' needs. The Company is currently marketing the ERTRS system on a
standalone basis and intends to integrate the ERTRS capability into the
Intelecable product.

CABLEWORKS: The Company markets its CableWorks PC-based customer management
software product to domestic and international cable operators that have lower
transaction volume requirements than operators supported by DDP/SQL or
Intelecable. CableWorks is designed to introduce smaller cable operators to the
Company's products, with the expectation that such operators will migrate to
Intelecable or DDP/SQL as their businesses grow.

PROFESSIONAL SERVICES, TRAINING AND SUPPORT: The Company maintains various
professional services groups to provide global consulting services to its
software customers, including assistance with database definition and
initialization, system operations, network consolidation, and performance and
decision support services. These groups also provide clients with assistance in
developing custom-tailored applications and interfaces that are operable with
the Company's customer management software to enhance client operations. The
Company provides complete product documentation and training services to users
of its software products, including CD-ROM-based product documentation and
training. The Company's ClassROM-Registered Trademark- software provides
interactive instruction and product training on CD-ROM. The Company maintains
training facilities in California and the U.K.

BILL PROCESSING SERVICES

The Company provides bill processing services and solutions in a fully
integrated and automated production environment that rapidly and
cost-effectively transforms electronic data received from the client into
informative, accurate and customized billing statements. Because of its highly
automated production environment, the Company is able to maximize postal savings
while minimizing delivery time for its clients. In addition, the Company's
statement-based marketing services allow clients to use the billing statement as
a marketing tool to reinforce a corporate image, advertise special offers and
features and otherwise market its services to its customers. To address the
needs of multi-service providers, the Company offers billing statements that
combine data from multiple services, such as wireless and wire-line telephony,
into a consolidated billing statement. In addition, the Company has also
introduced an electronic billing capability that enables its clients to offer
their customers either a paper-based or an electronic statement option. Also,
the Company offers its advanced technology on a licensed basis.

BILL PROCESSING: The Company operates two statement production facilities
in the Northern California area. These facilities receive a data stream from the
client's customer management software (whether a

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client's legacy or third party system, a competitor's system or the Company's
software), manipulate the data into a usable format and create cost-effective,
informative, easy-to-read and accurate customized billing statements or
statement images.

Using patented processes and technologies, the Company provides a fully
integrated, computerized and automated production environment that (i)
processes, logs, verifies and authenticates all customer data, (ii) creates
automated production controls for every statement, including form bar codes,
weight and thickness parameters, unique statement tracking numbers, "due out"
dates, address correction, carrier route/delivery point bar codes and postal
processing parameters, (iii) models every production run on-line before printing
or electronic transmission, and (iv) enables postal processing, sorting and
discounting to be performed on-line.

Full real-time automation enables the Company to monitor quality, control
remakes, predict and schedule production loading, verify customer data, forecast
production volumes and maintain production system history on-line. The system is
controlled by an on-line production control system that is based on advanced
client/server architecture and has high-speed data-transmission capabilities. A
local area network links the production equipment to the production control
system. To provide clients with real-time information regarding the progress of
the billing statement production process, the Company has developed its Direct
Access-TM- client information system, which provides a customized view into the
facility to allow clients to monitor the status of their jobs. Direct Access,
which is currently installed in a number of client sites, includes a
client/server architecture and a PC-based graphical user interface that permits
tracing an individual statement from the beginning of statement production until
some period after distribution.

The Company also offers consolidated billing statements for multi-service
providers, which combine data from multiple services, such as wireless and
wire-line telephony, into a single integrated statement. Consolidated statements
can offer clients significant savings both in paper and mailing costs.
Consolidated statements can also be a powerful marketing tool for companies
seeking to establish brand name recognition and sell combined services.

The Company offers a full range of technical support for the Company's bill
processing clients. Customized programming tools have been developed that allow
it to receive electronic information streams from a variety of client systems
without the need to make changes to the customer's system. These tools allow for
rapid and smooth transitions when clients outsource bill processing functions to
the Company.

TECHNOLOGY LICENSING: To attract clients who want to take advantage of the
Company's advanced processing and functions in their own facilities, rather than
on an outsourced basis, the Company has licensed its statement processing
technology. AT&T and Bell Atlantic currently license the Company's statement
processing software. The Company intends to pursue additional technology
licensing opportunities domestically as well as in the international market.

STATEMENT-BASED MARKETING SERVICES: The Company provides statement-based
marketing services that allow its clients to transform regular customer billing
statements into communication tools. The billing statement is often the only
form of regular communication between a service provider and its customers. Many
clients have the opportunity, through the Company's statement-based marketing
and creative design services, to use the paper or electronic billing statement
to reinforce a corporate image, advertise special offers and features, deliver
customer-specific messages and otherwise market their services to their
customers.

ELECTRONIC DELIVERY ALTERNATIVES: The Company's automated information and
technology infrastructure, which electronically prepares and monitors the
statement until final printing, provides the basis for the Company's development
of electronic bill presentment. The proliferation of on-line services and the
Internet provides an opportunity for communications service providers to bill
customers electronically

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through a PC or other device. The Company believes that, as electronic billing
and payment solutions become more accepted, communications service providers,
utilities, financial services and other industries will require electronic
statement presentment capabilities. USCS has developed an electronic statement-
processing product and has announced marketing alliances with several companies
including CyberCash, Checkfree, Microsoft, Intuit, NETdelivery and others to
begin actively marketing an electronic billing alternative. Because of its
existing volume, state-of-the-art processing systems, and client relationships,
the Company believes it is in a unique position to become a one-stop,
full-service supplier of either paper-based or electronically delivered
statements.

HARDWARE LEASING AND SALES

The Company sells computer equipment and provides leasing and maintenance
services to selected software clients that purchase stand-alone systems
primarily in the U.S. Maintenance is typically billed in advance of providing
the service. Revenue from sales of computer hardware and providing associated
maintenance and leasing services has been declining as a percentage of total
revenue. The Company will continue to offer hardware and related services to
current and future clients, but expects the decline to continue.

CLIENTS

The Company provides customer management software and services to clients in
more than 20 countries. In addition to communications service providers, the
Company provides bill processing services to companies in other service
industries requiring high quality, accurate and marketing-oriented statements,
including utilities and financial services. The Company intends to seek
additional non-communications clients as well as pursue international
opportunities for its bill processing services.

Aggregate revenue from the Company's ten largest clients accounted for
approximately two-thirds of total revenue in 1997, 1996 and 1995. Three clients
accounted for 40%, 47% and 46% of total revenue in 1997, 1996 and 1995,
respectively.

Tele-Communications, Inc. ("TCI"), the Company's largest customer, accounted
for $53.1 million or 18%, $55.7 million or 21%, and $47.3 million or 21% of
total revenue in 1997, 1996, and 1995, respectively. TCI has advised the Company
of its plan to migrate its subscribers to a competitor's product by the end of
1998. See "Management's Discussion And Analysis Of Financial Condition And
Results Of Operations-- Revenue."

The Company's largest bill processing client, Ameritech, accounted for $39.3
million or 13%, $41.1 million or 16%, and $38.8 million or 17% of total revenue
in 1997, 1996, and 1995, respectively. Ameritech became a client early in 1994
and has contracts with the Company expiring in 2000 and 2001. Another bill
processing client, CBIS, a client since 1990, accounted for $27.4 million or 9%,
$25.0 million or 10%, and $17.9 million or 8% of total revenue in 1997, 1996 and
1995, respectively. In early 1997, the Company entered into a new contract with
CBIS expiring in 2002. See "Management's Discussion And Analysis Of Financial
Condition And Results Of Operations--Factors That May Affect Future Results"
regarding dependence on certain marketplaces, concentration of client base, and
other factors that may have an impact on the Company's relationship with its
clients and on the Company's future revenue and net income.

CLIENT SUPPORT AND CARE

USCS provides world-wide training and support to its clients. In the U.S.,
client care is divided into product-specific teams, with one team focusing on
customer management software and the other team focusing on bill processing
services. Both teams provide broad-based, 24-hour, 7-day support and technical
assistance. The Company has developed a full range of training products and
documentation including ClassROM-Registered Trademark-, which the Company
believes to be the first CD-ROM-based training product, for its software

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clients. Supplementing the front line software support groups for service bureau
software customers is the Company's Technical Response Center, which monitors
traffic and network availability to identify and respond to outages in the
system. Internationally, Intelecable is supported by teams located in the U.S.
and the U.K. as well as by alliance partners. The Company's customer-management
software support environment has received ISO 9001 Compliance certification. In
early 1998, the Company announced that it would be opening satellite offices in
Brazil and Australia to provide regional support to its rapidly growing world-
wide base of customers.

SALES AND MARKETING

Software and services are sold primarily to cable, DBS and multi-service
providers through direct sales channels and in conjunction with international
alliance partners. In North America, the Company operates a software and
services sales and marketing team, including account management, product
management and technical support teams.

The Company's international sales staff is coordinated by geographic area,
including dedicated account and technical support personnel located in the U.K.,
Brazil and Australia. In addition to direct sales, the Company has contracted
with alliance partners throughout the world who are responsible for sales,
marketing, support and local customization.

The Company believes that sales of separate bill processing services to
telecommunications service providers such as Regional Bell Operating Companies
("RBOCs"), cellular, utility, financial services and other service providers
offer both increased revenue opportunities as well as increased visibility for
the Company. The Company maintains a sales staff, including account management
and technical support teams and significant design resources, to target these
market segments. The Company has begun an international bill processing
marketing effort that seeks to exploit what the Company believes is significant
growth potential in that market. In 1997, the Company entered into a contract
with its first multi-national bill processing client, Global One, and intends to
pursue additional international contract and technology licensing opportunities.
The Company has also entered into alliances with partners such as Xerox, Mellon
Bank, LHS Group, Microsoft, Intuit, CheckFree and CyberCash to jointly market
its bill processing and electronic presentment capabilities.

COMPETITION

The market for the Company's products and services is highly competitive,
and competition is increasing as additional market opportunities arise. The
Company competes with both independent providers and developers of in-house
systems. The Company believes its most significant competitors for software
systems are CBIS and CSG Systems International, Inc. The most significant
competitors for bill processing services are in-house service providers. Other
competitors include Moore Corporation Ltd. and Output Technologies, Inc.

The Company believes that the principal competitive factors in the market
for customer management software include functionality and features of software,
quality of client care and support, type of hardware platform used, quality of
research and development and value. The principal competitive factors for bill
processing services include statement production accuracy, ability to meet
statement production deadlines, product quality and price. The Company believes
that it competes favorably with respect to these factors. However, the Company
believes that to remain competitive it will require significant financial
resources in order to market its existing products and services, to maintain
customer service and support and to invest in research and development. Many of
the Company's existing and potential competitors may have greater resources than
the Company. The Company expects its competitors to continue to improve the
design and performance of their current systems and processes and to introduce
new systems and processes with improved price/performance characteristics. No
assurance can be given that the Company will be able to compete successfully in
the U.S. or internationally.

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RESEARCH AND DEVELOPMENT

The Company's research and development efforts are focused on introducing
new products and services as well as ongoing enhancement of its existing
products and services. The Company believes that its investment in research and
development is critical to maintaining its leadership position. The Company
works closely with international and domestic hardware, software and system
integration partners to enhance its products. The Company's research and
development partnerships typically provide for funding by development partners
and include joint marketing and other arrangements. In software product
development, significant emphasis is placed on compliance with world-wide
development standards and quality benchmarks. The Company's processes used at
its research and development center in El Dorado Hills, California, have
received ISO 9001 Compliance certification, the globally recognized quality
standard. The Company also continually enhances its bill processing services by
developing software and processes that increase production efficiency and aid
clients in accessing bill processing information.

INTELLECTUAL PROPERTY

The Company holds sixteen U.S. patents covering various aspects of its bill
processing services. In addition, the Company has applied for ten additional
U.S. patents. The Company has no foreign patents. The Company believes that
although the patents it holds are valuable, they are not critical to the
Company's success, which depends principally upon its product quality, marketing
and service skills. However, despite patent protection, the Company may be
vulnerable to competitors who attempt to imitate the Company's systems or
processes and manufacturing techniques and processes. In addition, other
companies and inventors may receive patents that contain claims applicable to
the Company's system and processes. The sale of the Company's systems covered by
such patents could require licenses that may not be available on acceptable
terms, if at all. In addition, there can be no assurance that patent
applications will result in issued patents.

Although the Company attempts to protect its intellectual property rights
through patents, copyrights, trade secrets and other measures, there can be no
assurance that the Company will be able to protect its technology adequately.
There can be no assurance that any patent applications that the Company may file
will be issued or that foreign intellectual property laws will protect the
Company's intellectual property rights. There can also be no assurance that
others will not independently develop similar systems, duplicate the Company's
systems or design around the patents licensed by or issued to the Company. See
"Management's Discussion And Analysis Of Financial Condition And Results Of
Operations--Factors That May Affect Future Results."

EMPLOYEES

As of December 31, 1997, the Company had 2,067 employees, of which 2,016
were full-time employees and 51 were part-time employees. None of the Company's
employees are represented by a labor union or covered by a collective bargaining
agreement. The Company considers its employee relations to be good.

ITEM 2. PROPERTIES

The Company owns two buildings in El Dorado Hills, California on
approximately 29 acres. One building of approximately 247,000 square feet is
utilized for statement processing operations and supporting activities, with an
additional 119,000 square feet expansion currently in process. The other
building of approximately 48,000 square feet is the Company's system and
software research and development center. In addition, the Company owns
approximately 278 acres of undeveloped land adjacent to its buildings. The
Company leases a total of approximately 486,000 square feet in Rancho Cordova
and El Dorado Hills, California of which approximately 298,000 square feet is
utilized primarily for statement processing operations and warehousing. The
other 188,000 square feet is utilized primarily for corporate headquarters,
sales and marketing, customer support and research and development.

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The Company leases approximately 15,000 square feet in Norcross, Georgia for
its Eastern Regional Data Center, approximately 2,000 square feet in Harrison,
Arkansas for use by its subsidiary, CableData Desktop Solutions, Inc., formerly
CUO, Inc., and approximately 3,200 square feet in Ann Arbor, Michigan for use by
its subsidiary, CableData Telecommunications, Inc. The Company also leases
approximately 9,600 square feet in the U.K. The leases for these facilities
expire in the years 1998 through 2018.

The Company believes that its facilities are adequate for its proposed needs
through 1998 and that additional suitable space will be available or can be
constructed as required.

ITEM 3. LEGAL PROCEEDINGS

The Company has legal proceedings incidental to its normal business
activities. In the opinion of the Company, the outcome of the proceedings will
not have a material adverse effect on the Company's consolidated financial
position, results of operations or cash flows. However, litigation by its nature
is subject to inherent uncertainties and there can be no assurance that any
ongoing legal proceedings or those that may arise in the future will not have a
material adverse affect on the Company's consolidated financial position,
results of operations or cash flows.

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

Information Regarding Submission Of Matters To A Vote Of Security Holders is
set forth under "Actions Taken Since 1997 Stockholder Meeting" on page 3 of the
Company's Proxy Statement for the 1998 Annual Meeting of Stockholders, dated
April 17, 1998, which page is incorporated herein by reference.

PART II

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

The common stock of USCS International, Inc. is listed and traded on the
Nasdaq National Market under the trading symbol "USCS."

As of March 10, 1998, the number of record holders of USCS International,
Inc. was 226. The table below shows the high and low prices of the Company's
common stock as reported by the Nasdaq National Market for each quarter from the
date of the Company's initial public offering (IPO) on June 20, 1996. The
Company has not paid cash dividends on its common stock to date. The Company
currently intends to retain any future earnings for its business and does not
anticipate paying any cash dividends on its common stock in the foreseeable
future.

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1997 1996
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CALENDAR QUARTER (2ND QUARTER 1996 TO 1ST QUARTER 1998) HIGH LOW HIGH LOW
- ------------------------------------------------------- ----- ----- ----- -----
<S> <C> <C> <C> <C>
1st.................................................... $ 21 $ 16 1/8 $-- $--
2nd.................................................... 33 15 5/8 19 3/4 17
3rd.................................................... 35 1/2 16 3/4 19 7/8 13 1/8
4th.................................................... 22 11/16 14 7/8 18 1/2 14 3/4
1st (through March 10, 1998)........................... 21 3/8 15 1/4
</TABLE>

10
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA

The consolidated statements of operations data presented below for the years
ended December 31, 1997, 1996, 1995, 1994 and 1993, and the consolidated balance
sheet data as of December 31, 1997, 1996, 1995, 1994 and 1993 are derived from
the consolidated financial statements of the Company, which have been audited.
The data set forth below should be read in conjunction with, and are qualified
by reference to, "Management's Discussion And Analysis Of Financial Condition
And Results Of Operations" and the Consolidated Financial Statements and the
Notes thereto included elsewhere herein.

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------------
1997 1996 1995 1994 1993
--------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF OPERATIONS DATA:
Revenue:
Software and services:
Customer management............................................ $ 157,151 $ 138,157 $ 116,855 $ 101,431 $ 95,869
Bill processing................................................ 118,912 102,691 80,427 53,816 20,694
--------- --------- --------- --------- ---------
Total........................................................ 276,063 240,848 197,282 155,247 116,563
Equipment sales and services..................................... 23,283 22,366 31,981 33,558 49,501
--------- --------- --------- --------- ---------
Total revenue................................................ 299,346 263,214 229,263 188,805 166,064
--------- --------- --------- --------- ---------
Cost of revenue:
Software and services:
Customer management............................................ 72,120 73,408 66,465 60,664 56,261
Bill processing................................................ 86,636 74,335 61,237 42,382 16,497
--------- --------- --------- --------- ---------
Total........................................................ 158,756 147,743 127,702 103,046 72,758
Equipment sales and services..................................... 14,192 13,180 19,538 19,476 31,561
--------- --------- --------- --------- ---------
Total cost of revenue........................................ 172,948 160,923 147,240 122,522 104,319
--------- --------- --------- --------- ---------
Gross profit....................................................... 126,398 102,291 82,023 66,283 61,745
--------- --------- --------- --------- ---------
Operating expenses:
Research and development......................................... 30,034 25,140 17,815 16,700 16,007
Selling, general and administrative.............................. 58,340 49,631 42,102 34,160 28,148
Consolidation and relocation..................................... -- -- -- (364) 4,096
--------- --------- --------- --------- ---------
Total operating expenses....................................... 88,374 74,771 59,917 50,496 48,251
--------- --------- --------- --------- ---------
Operating income................................................... 38,024 27,520 22,106 15,787 13,494
Interest expense, net.............................................. 554 3,185 4,966 4,284 4,609
--------- --------- --------- --------- ---------
Income before income taxes and cumulative effect of accounting
change........................................................... 37,470 24,335 17,140 11,503 8,885
Income tax provision............................................... 15,010 9,826 6,770 5,334 4,330
--------- --------- --------- --------- ---------
Income before cumulative effect of accounting change (1)........... 22,460 14,509 10,370 6,169 4,555
Cumulative effect of accounting change (1)......................... -- -- -- -- 2,408
--------- --------- --------- --------- ---------
Net income......................................................... $ 22,460 $ 14,509 $ 10,370 $ 6,169 $ 6,963
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Income before cumulative effect of accounting change per share (2):
Basic............................................................ $ 0.97 $ 0.69 $ 0.53 $ 0.31 $ 0.23
Diluted.......................................................... $ 0.93 $ 0.66 $ 0.51 $ 0.30 $ 0.22
Net income per share (2):
Basic............................................................ $ 0.97 $ 0.69 $ 0.53 $ 0.31 $ 0.35
Diluted.......................................................... $ 0.93 $ 0.66 $ 0.51 $ 0.30 $ 0.33
Shares used in per share computation:
Basic............................................................ 23,164 21,178 19,452 19,798 20,010
Diluted.......................................................... 24,203 22,075 20,159 20,622 20,816
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------------------
1997 1996 1995 1994 1993
--------- --------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEETS DATA:
Cash............................................................... $ 2,787 $ 8,452 $ 6,627 $ 1,966 $ 8,158
Working capital.................................................... 49,709 37,041 23,440 11,454 20,029
Total assets....................................................... 238,619 205,559 180,450 157,331 140,922
Long-term debt less current portion (3)............................ 5,453 5,647 51,155 37,647 40,167
Stockholders' equity............................................... 131,361 115,333 46,590 39,861 35,633
</TABLE>

(FOOTNOTES ON FOLLOWING PAGE)

11
<PAGE>
- ------------------------------
(1) In 1993, the Company adopted SFAS 109, resulting in an accumulated credit to
income for an adjustment in the calculation of income tax expense.

(2) The Company has presented earnings per share in accordance with Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128").
All previously reported amounts were restated to conform to SFAS 128. In
addition, pursuant to Securities and Exchange Commission ("SEC") guidelines,
earnings per share for all periods prior to the IPO have been restated in
accordance with SEC Staff Accounting Bulletin No. 98 (SAB 98). See Notes 2
and 11 of Notes to Consolidated Financial Statements. Prior to the adoption
of SFAS 128 and SAB 98, earnings per share were $0.93, $0.64, $0.49, $0.28
and $0.31 in 1997, 1996, 1995, 1994 and 1993, respectively.

(3) See Note 5 of Notes to Consolidated Financial Statements.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The statements that are not historical fact or that are not statements of
current status are forward-looking statements. The Company's future results may
differ significantly from the results and forward-looking statements discussed
in this Report. See "Factors That May Affect Future Results."

OVERVIEW

Founded in 1969, the Company is a leading global provider of customer
management software and services to the communications and other service
industries. The Company's revenues are derived primarily from providing software
to cable television and multi-service providers world-wide, and bill processing
services to cable television, telecommunications, financial services, utilities
and other service industries. Software and bill processing services are
generally offered to the North American cable television providers under bundled
service arrangements. Outside North America software is generally sold exclusive
of the bill processing. Most of the Company's revenue is based on the number of
subscribers or end-users of the Company's clients, the number of billing
statements mailed and/or the number of images produced under contracts with
terms ranging from three to seven years. Clients are billed monthly, generally
based on the number of end-users they serve. As a result, a significant portion
of the Company's revenue is recurring and increases as the service provider's
customer base grows. In 1997, the Company's revenue totaled $299.3 million, of
which over 70% was generated from companies which have been clients of USCS for
three or more years.

Over the three years ended December 31, 1997, the Company's revenue from
software and services has increased at an average rate of 20% and has grown from
86% of revenue in 1995 to over 92% in 1997. Revenue from selling computer
hardware and providing associated maintenance and leasing services has been
declining as a percentage of total revenue. Revenue from these activities
represented 14% of total revenues in 1995 and had declined to less than 8% of
total revenue in 1997.

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

12
<PAGE>
RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, the Company's
consolidated statements of operations and the percentage of revenue represented
by each line item (dollars in thousands):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------
1997 1996 1995
--------------- --------------- ---------------
Revenue:
<S> <C> <C> <C> <C> <C> <C>
Software and services:
Customer management................. $157,151 52.5% $138,157 52.5% $116,855 51.0%
Bill Processing..................... 118,912 39.7 102,691 39.0 80,427 35.1
-------- ----- -------- ----- -------- -----
Total............................. 276,063 92.2 240,848 91.5 197,282 86.1
Equipment sales and services.......... 23,283 7.8 22,366 8.5 31,981 13.9
-------- ----- -------- ----- -------- -----
Total revenue..................... 299,346 100.0 263,214 100.0 229,263 100.0
-------- ----- -------- ----- -------- -----
Cost of revenue:
Software and services:
Customer management................. 72,120 24.1 73,408 27.9 66,465 29.0
Bill Processing..................... 86,636 28.9 74,335 28.2 61,237 26.7
-------- ----- -------- ----- -------- -----
Total............................. 158,756 53.0 147,743 56.1 127,702 55.7
Equipment sales and services.......... 14,192 4.8 13,180 5.0 19,538 8.5
-------- ----- -------- ----- -------- -----
Total cost of revenue............. 172,948 57.8 160,923 61.1 147,240 64.2
-------- ----- -------- ----- -------- -----
Gross profit............................ 126,398 42.2 102,291 38.9 82,023 35.8
-------- ----- -------- ----- -------- -----
Operating expenses:
Research and development.............. 30,034 10.0 25,140 9.5 17,815 7.8
Selling, general and administrative... 58,340 19.5 49,631 18.9 42,102 18.3
-------- ----- -------- ----- -------- -----
Total operating expenses............ 88,374 29.5 74,771 28.4 59,917 26.1
-------- ----- -------- ----- -------- -----
Operating income........................ 38,024 12.7 27,520 10.5 22,106 9.7
Interest expense, net................... 554 0.2 3,185 1.3 4,966 2.2
-------- ----- -------- ----- -------- -----
Income before income taxes.............. 37,470 12.5 24,335 9.2 17,140 7.5
Income tax provision.................... 15,010 5.0 9,826 3.7 6,770 3.0
-------- ----- -------- ----- -------- -----
Net income.............................. $ 22,460 7.5% $ 14,509 5.5% $ 10,370 4.5%
-------- ----- -------- ----- -------- -----
-------- ----- -------- ----- -------- -----

<CAPTION>
THREE MONTHS ENDED
DECEMBER 31,
------------------------------
1997 1996
-------------- --------------
Revenue:
<S> <C> <C> <C> <C>
Software and services:
Customer management................. $42,071 51.0% $34,789 49.7%
Bill Processing..................... 31,995 38.7 29,709 42.4
------- ----- ------- -----
Total............................. 74,066 89.7 64,498 92.1
Equipment sales and services.......... 8,489 10.3 5,532 7.9
------- ----- ------- -----
Total revenue..................... 82,555 100.0 70,030 100.0
------- ----- ------- -----
Cost of revenue:
Software and services:
Customer management................. 18,450 22.4 18,056 25.8
Bill Processing..................... 23,789 28.8 20,206 28.8
------- ----- ------- -----
Total............................. 42,239 51.2 38,262 54.6
Equipment sales and services.......... 6,130 7.4 3,085 4.4
------- ----- ------- -----
Total cost of revenue............. 48,369 58.6 41,347 59.0
------- ----- ------- -----
Gross profit............................ 34,186 41.4 28,683 41.0
------- ----- ------- -----
Operating expenses:
Research and development.............. 7,980 9.6 6,840 9.8
Selling, general and administrative... 16,079 19.5 13,519 19.3
------- ----- ------- -----
Total operating expenses............ 24,059 29.1 20,359 29.1
------- ----- ------- -----
Operating income........................ 10,127 12.3 8,324 11.9
Interest expense, net................... 90 0.1 79 0.1
------- ----- ------- -----
Income before income taxes.............. 10,037 12.2 8,245 11.8
Income tax provision.................... 4,023 4.9 3,470 5.0
------- ----- ------- -----
Net income.............................. $ 6,014 7.3% $ 4,775 6.8%
------- ----- ------- -----
------- ----- ------- -----
</TABLE>

The following table sets forth revenue and percentage of revenue by line
item exclusive of a discontinued customer, revenue of a discontinued customer
and total revenue (dollars in thousands):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------
1997 1996 1995
--------------- --------------- ---------------
Revenue:
<S> <C> <C> <C> <C> <C> <C>
Software and services:
Customer management................. $113,773 38.0% $ 95,382 36.2% $ 81,069 35.4%
Bill processing..................... 117,186 39.2 100,897 38.4 77,545 33.8
Equipment sales and services.......... 15,285 5.1 11,284 4.3 23,362 10.2
-------- ----- -------- ----- -------- -----
Total............................. 246,244 82.3 207,563 78.9 181,976 79.4
Discontinued customer................. 53,102 17.7 55,651 21.1 47,287 20.6
-------- ----- -------- ----- -------- -----
Total............................. $299,346 100.0% $263,214 100.0% $229,263 100.0%
-------- ----- -------- ----- -------- -----
-------- ----- -------- ----- -------- -----

THREE MONTHS ENDED DECEMBER
31,
------------------------------
1997 1996
-------------- --------------
Revenue:
<S> <C> <C> <C> <C>
Software and services:
Customer management................. $30,817 37.3% $22,347 31.9%
Bill processing..................... 31,317 37.9 29,154 41.7
Equipment sales and services.......... 6,655 8.1 2,473 3.5
------- ----- ------- -----
Total............................. 68,789 83.3 53,974 77.1
Discontinued customer................. 13,766 16.7 16,056 22.9
------- ----- ------- -----
Total............................. $82,555 100.0% $70,030 100.0%
------- ----- ------- -----
------- ----- ------- -----
</TABLE>

13
<PAGE>
REVENUE

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

Total revenue increased by 18% to $82.6 million in the fourth quarter of
1997 from $70.0 million in the comparable quarter in 1996. The 1996 fourth
quarter revenue increased by 10% over 1995 fourth quarter revenue of $63.4
million. The increase in the 1997 fourth quarter was attributable to growth in
revenue from software and services of $9.6 million or 15% and an increase in
equipment sales and services revenue of $3.0 million or 53% over the same period
in 1996.

In 1997, total revenue increased by 14% to $299.3 million from $263.2
million in 1996. The growth was the result of a 15% increase in software and
services revenue and a 4% increase in equipment sales and services. Total
revenue for 1996 increased by 15% to $263.2 million from $229.3 million in 1995.
The growth in 1996 revenue is primarily the result of the increase in software
and services revenue of $43.6 million or 22%, partially offset by a decrease in
equipment sales and services revenue of $9.6 million.

TCI represented approximately 17% and 18% of the Company's revenue in the
fourth quarter and year ended December 31, 1997, respectively, and 23% and 21%
in the same periods in 1996, respectively. More than two years ago, TCI
announced and began development of an in-house system to replace the Company's
customer management software. On August 11, 1997, TCI informed the Company that
it had agreed to sell its partially developed in-house system to a competitor
and was going to enter into an exclusive long-term contract for customer
management software with that competitor. Under the contract between TCI and the
Company, which expires on December 31, 1999, TCI may remove subscribers after
giving ninety days' notice without significant economic penalty. Although TCI
has not provided the Company with a definitive schedule for conversion of the
TCI subscribers to the competitor's software, the conversions have begun and it
is believed that TCI and the competitor wish to complete the transfer by the end
of 1998. Additionally, the Company believes that TCI's contract with the
competitor provides financial incentives to TCI for converting subscribers of
certain TCI affiliates, some of whom are currently clients of the Company, to
the competitor's software. TCI revenue has declined as a percentage of total
revenue to 18% in 1997 from 21% in both 1996 and 1995. Also, it has declined in
absolute dollars from $55.7 million in 1996 to $53.1 million in 1997 or 5%,
primarily from a reduction in the number of subscribers serviced by TCI and in
services purchased by TCI. The Company intends to mitigate the impact of this by
aggressively pursuing other domestic and international opportunities and to
allocate the Company's resources to other existing or new customers. If these
efforts are not fully successful in mitigating the loss of TCI business, the
Company believes that it has sufficient financial resources and borrowing
ability to meet its obligations and fulfill its customer commitments during and
after the conversion period. To the extent the Company is not successful in
generating additional revenue to offset the expected decline in revenue from
TCI, such decline in revenue could have a material adverse effect on the
Company's consolidated financial position, results of operations or cash flows.

14
<PAGE>
Customer management software and services revenue, exclusive of TCI revenue,
increased by 38% to $30.8 million in the fourth quarter of 1997 from $22.3
million in the comparable 1996 quarter. Bill processing revenue as a stand-alone
service increased by 7% to $31.3 million in the fourth quarter of 1997 from
$29.2 million in the comparable quarter of the prior year. Equipment sales and
services revenue increased to $6.7 million in the fourth quarter of 1997 from
$2.5 in the fourth quarter of 1996.

Total revenue in 1997, exclusive of TCI revenue, increased by 19% to $246.2
million from $207.6 million in 1996. Revenue in 1996, exclusive of TCI,
increased by 14% over 1995 revenue of $182.0 million. The increase in 1997 was
attributable to growth in revenue from customer management software and services
of $18.4 million or 19%, bill processing software and services of $16.3 million
or 16%, and an increase in equipment sales and services revenue of $4 million or
35%. Customer management software and services revenue, exclusive of TCI
revenue, increased by 18% to $95.4 million in 1996 from $81.1 million in 1995.
Bill processing software and services revenue increased by 30% to $100.9 million
in 1996 from $77.5 million in 1995. Equipment sales and services revenue
declined to $11.3 million in 1996 from $23.4 million in 1995.

Growth in customer management software and services revenue for the fourth
quarter and the year ended December 31, 1997 compared to the same periods in
1996, exclusive of TCI revenue, came primarily from sales of additional
services, increases in the number of subscribers of existing and new clients in
the U.S. and international markets, increases in prices allowed by existing
contracts, and migration of clients to higher-priced services. Growth in bill
processing revenue was derived primarily from the sale of additional services,
an increase in the volume of statements and images produced because of the
internal growth of customers and the acquisition of new customers. The increase
in equipment sales and services revenue was primarily the result of unusually
high demand for additional equipment in the fourth quarter of 1997.

The increase in revenue in customer management software and services for the
year ended December 31, 1996 compared to the same period in 1995, exclusive of
TCI revenue, was the result of sales of additional services, increases in prices
allowed by existing contracts, migration of clients to higher-priced services
and growth in international revenue. Bill processing software and services
revenue increased in the 1996 year compared to the 1995 year because of an
increase in the volume of statements and images produced due to the internal
growth of existing customers, acquisition of new customers, increases in prices
allowed by existing contracts and the sale of additional services. The decline
in equipment sales and services in 1996 compared to 1995 was expected and was
the result of lower equipment sales as a result of market condition changes.

Three significant clients, including TCI, accounted for $119.8 million,
$121.7 million and $104.0 million or 40%, 47% and 46% of total revenue in 1997,
1996 and 1995, respectively. See "Products And Services--Clients" and "Factors
That May Affect Future Results" regarding these clients and other factors that
may impact future revenue.

COST OF REVENUE AND GROSS PROFIT

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

The Company's gross profit margin of approximately 41% in the fourth quarter
of 1997 was unchanged from the fourth quarter of 1996. Software and services
gross profit margin increased to 43% in the fourth quarter of 1997 from 41%.
Customer management software and services gross profit margin increased to 56%
in the fourth quarter of 1997 from 48%. Bill processing services gross profit
margin decreased to 26% in the fourth quarter of 1997 from 32%. The gross profit
margin on equipment-related revenue decreased to 28% in the fourth quarter of
1997 from 44%.

For the year, the Company's gross profit margin in 1997 increased to
approximately 42% from approximately 39% in 1996. The gross profit margin in
1995 was 36%. Software and services gross profit

15
<PAGE>
margin increased to 42% in 1997 from 39% in 1996 and 35% in 1995. Customer
management software and services gross profit margin increased to 54% in 1997
from 47% in 1996 and 43% in 1995. Bill processing services gross profit margin
slightly declined to approximately 27% in 1997 from 28% in 1996. Bill processing
services gross margin was 24% in 1995. The gross profit margin on equipment
sales and service revenue was 39% in 1997 versus 41% in 1996 and 39% in 1995.

The gross margin increases in customer management software and services are
attributed to economies of scale associated with increased revenue, productivity
improvements as well as cost containment efforts. The decline in 1997 and fourth
quarter of bill processing services gross margin is attributed to costs
associated with facility expansion, the improvement and expansion of certain
bill processing lines and new customer conversions. Gross margins on equipment
sales and services typically vary based on the mix of equipment sales and
services and underlying demand. The decline in the 1997 fourth quarter equipment
gross margin in comparison to the same period in the prior year was primarily
attributable to significant volume discounting.

RESEARCH AND DEVELOPMENT

Research and development costs relate primarily to ongoing product
development and consist of personnel costs, consulting, testing, supplies,
facilities and depreciation expenses. Once the product under development reaches
technological feasibility, the development expenditures are capitalized and
amortized. See Note 2 of Notes to Consolidated Financial Statements.

Research and development expense was $8.0 million or 10% of revenue in the
fourth quarter of 1997 compared to $6.8 million or also 10% of revenue and $5.1
million or 8% of revenue for the same periods in 1996 and 1995, respectively.
For the year ended December 31, 1997, research and development expense was $30.0
million or 10% of revenue compared to $25.1 million or 10% of revenue and $17.8
million or 8% of revenue for the same periods in 1996 and 1995, respectively.
The increased expenditures are attributable to the Company's commitment to the
development of new products and enhancements to existing products.

YEAR 2000 COMPLIANCE

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

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

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

16
<PAGE>
SELLING, GENERAL AND ADMINISTRATIVE

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

Total selling, general and administrative expenses increased by 19% in the
fourth quarter of 1997 in comparison to the fourth quarter of 1996 and 18% for
the 1997 year compared to 1996. Selling and marketing expenditures increased by
30% in the fourth quarter of 1997 compared to the fourth quarter of 1996 and 26%
for the 1997 year compared to 1996. As a percentage of revenue, selling and
marketing expenditures increased by approximately 1% in 1997 compared to 1996.
In 1996, total sales and marketing expenditures increased by 29% in comparison
to 1995 and, as a percentage of revenue, increased by approximately 1%. The
increase in sales and marketing expenditures was primarily because of the
addition of sales and marketing personnel and additional resources to support
increased sales and marketing activities in the international, multi-service and
telecommunications markets as well as the expansion into other service
industries such as financial services and transportation and the introduction of
electronic bill presentment services.

General and administrative expenses for the fourth quarter and year
increased approximately 11% in 1997 compared to 1996. The increase in general
and administrative expenses is attributable to support for the increased selling
and marketing efforts, ongoing expansion into international markets as well as
costs related to general company growth. General and administrative expenses
increased by 11% in 1996 compared to 1995 related to costs to support higher
levels of sales and marketing activity in both the domestic and international
markets, general company expansion, and the costs associated with being a
publicly held entity. As a percentage of revenue, general and administrative
expense in the fourth quarter and years 1997 and 1996 did not change from
comparable prior periods.

INTEREST EXPENSE

Interest expense consists of interest on borrowings under revolving credit
agreements, revenue bonds pertaining to certain of the Company's facilities and
notes and credit agreements related to the Company's leasing subsidiary.

Interest expense for the 1997 year decreased by $2.6 million, or 83%
compared to the same period in 1996. Proceeds of the IPO in 1996 were utilized
to pay down existing debt and resulted in decreased interest expense on a
comparative basis.

INCOME TAXES

The Company's provision for income taxes represents estimated federal, state
and foreign income taxes. The income tax rate for the fourth quarter was 40%,
approximately two percentage points lower than the 1996 comparable quarter. An
additional tax provision was made in the fourth quarter of 1996 resulting in an
annual rate of approximately 40%. The income tax rate was approximately 40% in
1997, 1996 and 1995.

NET INCOME

Net income increased by $1.2 million or 26% in the fourth quarter of 1997
compared to the same quarter in 1996. In 1997, net income increased to $22.5
million or 55% over 1996 net income of $14.5 million. Earnings per share for the
year was $0.93 per share (diluted) in 1997 compared to $0.66 per share (diluted)
in 1996. This represents a 41% increase despite a 10% increase in the number of
shares outstanding in 1997 over 1996. The increase in net income for the fourth
quarter and 1997 year compared to 1996 is attributable to the factors cited
above. Net income and earnings per share increased by 40% and 29%, respectively,
in 1996 compared to 1995 due to higher earnings despite a 10% increase in shares
used

17
<PAGE>
in the calculation. Earnings per share calculations were made in accordance with
recently effective accounting and SEC standards and bulletins. See Note 11 of
Notes to Consolidated Financial Statements.

FINANCIAL CONDITION AND LIQUIDITY

The Company's financial condition and liquidity remained strong in 1997. The
Company continues to reduce its debt and repurchase stock because of positive
operating cash flow. Total long-term debt, including the current portion, was
$9.3 million as of December 31, 1997 compared to $10.4 million at December 31,
1996. Of the debt outstanding at December 31, 1997, $4.6 million pertains to the
Company's leasing subsidiary and is collateralized, without recourse, by rents
receivable. As of December 31, 1997, the Company had an available $50 million
line of credit against which the Company had borrowed $4 million at the end of
1997. Total capital expenditures in 1997 were $32.6 million compared to $29.4
million in 1996. The increase is primarily related to the expansion of the
Company's bill processing facilities. In addition, the Company, in 1997, has
expended approximately $10.2 million for the repurchase of stock. The
repurchases will be used to meet stock issuance obligations under the Company's
incentive stock option, employee stock purchase, and 401(k) retirement plans.

The Company collects from its clients and remits to the U.S. Postal Service
a significant amount of postage. Substantially all contracts allow the Company
to pre-bill and/or require deposits from its clients to mitigate the effect on
cash flow. As of December 31, 1997 and 1996, accounts receivable were $97.7
million and $73.5 million, respectively, including $25.7 million and $21.5
million in amounts due from clients for postage. Accounts receivable, net of
postage, increased in 1997 by approximately $20 million or 38% primarily because
of the increase in revenue and significant fourth quarter equipment sales for
which payments were received after year end.

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

FACTORS THAT MAY AFFECT FUTURE RESULTS

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

CHANGING COMMUNICATIONS MARKET AND DEVELOPMENT OF SOFTWARE AND SERVICES

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

The Company's development projects are subject to all of the risks
associated with the development of new software and other products based on
innovative technologies. The failure of such development

18
<PAGE>
projects could have a material adverse effect on the financial condition and
results of operations of the Company.

DEPENDENCE ON THE CABLE TELEVISION MARKET

Although the Company's current strategy is to address the needs of the
global communications market and other high volume service providers, the
Company is highly dependent on the cable television market. In both 1997 and
1996, more than 60% of the Company's revenue was derived from sales to cable
television service providers. Although the cable television industry outside of
North America is generally expanding, the number of providers of cable
television service in the U.S. has been declining, due to industry
consolidation, resulting in a reduction of the number of potential cable
television clients in the U.S. As the number of companies serving the available
subscriber base decreases, the loss of a single client could have a greater
adverse impact on the Company than in the past. Even if the number of clients
remains the same, a decrease in the number of subscribers served by the
Company's cable television clients would result in lower revenue for the
Company. Furthermore, a decrease in the number of cable subscribers or any
adverse development in the cable television market could have a material adverse
effect on the financial condition and results of operations of the Company.

CONCENTRATION OF CLIENT BASE

Aggregate revenue from the Company's ten largest clients accounted for
approximately 68% of total revenue. Loss of all or a significant part of the
business of any of these clients or a decrease in their respective customer
bases would have a material adverse effect on the financial condition and
results of operations of the Company. Three of the Company's clients represented
approximately 40% and 47% of total revenue in 1997 and 1996, respectively. See
"Business--Clients" regarding these clients and other factors that may impact
future revenue.

VARIABILITY OF QUARTERLY OPERATING RESULTS

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

YEAR 2000 COMPLIANCE

NEW PRODUCTS, RAPID TECHNOLOGICAL CHANGES AND COMPETITION

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

A client that accounted for approximately 6% of total revenue in 1997 orally
advised the Company more than two years ago that it may move to an alternate
solution for its customer management software

19
<PAGE>
requirements. Through 1997, no transfers of this customer's business to an
alternate solution have been made. The Company believes its relations with this
customer, as well as with its other customers, are good.

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

ELECTRONIC BILL PRESENTMENT

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

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

CLIENT FAILURE TO RENEW OR UTILIZE CONTRACTS

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

INTERNATIONAL BUSINESS ACTIVITIES

The Company's strategy to diversify its customer base includes the selling
of its products in a variety of international markets. To date, the Company's
primary customer management software has been installed in more than 20
countries. Generally, the Company operates in U.S. dollars, which reduces but
does not eliminate exposure to the adverse impact of currency fluctuations.
Currently, more than 5% of the Company's customer management software and
services revenue comes from international sources, and the Company is expanding
its international presence, primarily through third party marketing and
distribution alliances. The Company's current and proposed international
business activities are subject to certain inherent risks, including but not
limited to, specific country, regional or global economic conditions, exchange
rate fluctuation and its impact on liquidity, changes in the national priorities
of any given country and cultural differences. There can be no assurance that
such risks will not have a material adverse effect on the Company's future
international sales and, consequently, the Company's business, operating results
and financial condition.

DEPENDENCE ON PROPRIETARY TECHNOLOGY

The Company relies on a combination of patent, trade secret and copyright
laws, nondisclosure agreements, and other contractual and technical measures to
protect its proprietary technology. There can be no assurance that these
provisions will be adequate to protect its proprietary rights. Although the

20
<PAGE>
Company believes that its products and services do not infringe upon the
proprietary rights of third parties, there can be no assurance that third
parties will not assert infringement claims against the Company or the Company's
clients.

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

MANAGEMENT OF GROWTH AND ATTRACTION AND RETENTION OF KEY PERSONNEL

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

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

GOVERNMENT REGULATION

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

VOLATILITY OF STOCK PRICE

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

21
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Consolidated Financial Statements and Financial Statement Schedules

<TABLE>
<CAPTION>
PAGE
-----

<S> <C>
Report of Management....................................................................................... 23

Report of Independent Accountants.......................................................................... 24

Consolidated Balance Sheets as of December 31, 1997 and 1996............................................... 25

Consolidated Statements of Operations for the years ended December 31, 1997, 1996 and 1995................. 26

Consolidated Statements of Stockholders' Equity for the years ended December 31, 1997, 1996 and 1995....... 27

Consolidated Statements of Cash Flows for the years ended December 31, 1997, 1996 and 1995................. 28

Notes to Consolidated Financial Statements................................................................. 29

Quarterly Financial Information (Unaudited)................................................................ 39
</TABLE>

22
<PAGE>
REPORT OF MANAGEMENT

Stockholders of
USCS International, Inc.

The Company's management is responsible for the preparation, integrity and
objectivity of the consolidated financial statements and other financial
information presented in this report. The accompanying financial statements have
been prepared in conformity with generally accepted accounting principles and
reflect the effects of certain estimates and judgments made by management.

Management maintains an effective system of internal control that is
designed to provide reasonable assurance that assets are safeguarded and
transactions are properly recorded and executed in accordance with management's
authorization. The system is continuously monitored by direct management review
and by internal audit. The Company selects and trains qualified people who are
provided with and expected to adhere to the Company's standards of business
conduct. These standards, which set forth the highest principles of business
ethics and conduct, are a key element of the Company's control system. It is
management's responsibility to proactively foster an environment conducive to
these principles.

The Company's consolidated financial statements have been audited by Price
Waterhouse LLP, independent accountants. Their audits were conducted in
accordance with generally accepted auditing standards and included a review of
financial controls and such tests of accounting records and procedures as they
considered necessary in the circumstances. Management made available to them all
of the Company's financial records and data. Management believes that all
representations made to Price Waterhouse LLP were valid.

The Audit Committee of the Board of Directors meets regularly with
management and the independent accountants to review accounting, reporting,
auditing and internal control matters. The committee has direct and private
access to external auditors.

<TABLE>
<S> <C> <C> <C>
By: /s/ JAMES C. CASTLE By: /s/ DOUGLAS L. SHURTLEFF
---------------------------------------- ----------------------------------------
James C. Castle Douglas L. Shurtleff
CHIEF EXECUTIVE OFFICER AND SENIOR VICE PRESIDENT OF FINANCE AND
CHAIRMAN OF THE BOARD OF DIRECTORS CHIEF FINANCIAL OFFICER
(PRINCIPAL EXECUTIVE OFFICER) (PRINCIPAL FINANCIAL OFFICER)
</TABLE>

23
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and
Stockholders of USCS International, Inc.

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of stockholders' equity and of cash flows
present fairly, in all material respects, the financial position of USCS
International, Inc. and its subsidiaries at December 31, 1997 and 1996, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1997, in conformity with generally accepted
accounting principles. 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 of these
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.

/s/ PRICE WATERHOUSE LLP
--------------------------------------
Price Waterhouse LLP

Sacramento, California
February 6, 1998

24
<PAGE>
USCS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1997 1996
---------- ----------
<S> <C> <C>
ASSETS

Current Assets:
Cash.................................................................................... $ 2,787 $ 8,452
Accounts receivable, net................................................................ 97,654 73,458
Current portion of net investment in leases (note 9).................................... 5,892 4,922
Paper products and other inventory...................................................... 4,573 4,418
Other................................................................................... 9,853 8,972
---------- ----------
Total current assets................................................................ 120,759 100,222
Property and equipment, net (note 3)...................................................... 101,631 94,350
Net investment in leases, net of current portion (note 9)................................. 4,686 6,252
Other..................................................................................... 11,543 4,735
---------- ----------
Total assets........................................................................ $ 238,619 $ 205,559
---------- ----------
---------- ----------

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
Accounts payable and accrued expenses (note 3).......................................... $ 62,656 $ 48,975
Current portion of long-term debt (note 5).............................................. 3,865 4,772
Deferred revenue........................................................................ 4,529 9,434
---------- ----------
Total current liabilities........................................................... 71,050 63,181
Long-term debt, net of current portion (note 5)........................................... 5,453 5,647
Customer deposits......................................................................... 18,170 12,752
Other liabilities......................................................................... 12,585 8,646
---------- ----------
Total liabilities................................................................... 107,258 90,226
---------- ----------
---------- ----------
Commitments and Contingencies (note 6)

Stockholders' Equity (note 10):
Preferred Stock, $.05 par value, 10,000,000 shares authorized; no shares issued and
outstanding........................................................................... -- --
Common Stock, $.05 par value
Authorized 40,000,000 shares; 23,427,582 shares issued and 22,947,233 shares
outstanding at December 31, 1997 and 23,068,826 shares issued and outstanding at
December 31, 1996................................................................... 1,171 1,153
Additional paid-in capital.............................................................. 56,504 53,902
Retained earnings....................................................................... 82,897 60,437
Treasury stock.......................................................................... (9,047) --
Foreign currency translation adjustment................................................. (164) (159)
---------- ----------
Total stockholders' equity.......................................................... 131,361 115,333
---------- ----------
Total liabilities and stockholders' equity.......................................... $ 238,619 $ 205,559
---------- ----------
---------- ----------
</TABLE>

The accompanying notes are an integral part of the financial statements.

25
<PAGE>
USCS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Revenue:
Software and services:
Customer management...................................................... $ 157,151 $ 138,157 $ 116,855
Bill processing.......................................................... 118,912 102,691 80,427
---------- ---------- ----------
Total.................................................................. 276,063 240,848 197,282
Equipment sales and services............................................. 23,283 22,366 31,981
---------- ---------- ----------
Total revenue.......................................................... 299,346 263,214 229,263
---------- ---------- ----------

Cost of revenue:
Software and services:
Customer management...................................................... 72,120 73,408 66,465
Bill processing.......................................................... 86,636 74,335 61,237
---------- ---------- ----------
Total.................................................................. 158,756 147,743 127,702
Equipment sales and services............................................... 14,192 13,180 19,538
---------- ---------- ----------
Total cost of revenue.................................................. 172,948 160,923 147,240
---------- ---------- ----------
Gross profit................................................................. 126,398 102,291 82,023
---------- ---------- ----------

Operating expenses:
Research and development................................................... 30,034 25,140 17,815
Selling, general and administrative........................................ 58,340 49,631 42,102
---------- ---------- ----------
Total operating expenses................................................. 88,374 74,771 59,917
---------- ---------- ----------

Operating income............................................................. 38,024 27,520 22,106
Interest expense, net........................................................ 554 3,185 4,966
---------- ---------- ----------
Income before income taxes................................................... 37,470 24,335 17,140
Income tax provision (note 7)................................................ 15,010 9,826 6,770
---------- ---------- ----------
Net income................................................................... $ 22,460 $ 14,509 $ 10,370
---------- ---------- ----------
---------- ---------- ----------

Earnings per share (notes 10 and 11):
Basic...................................................................... $0.97 $0.69 $0.53
Diluted.................................................................... $0.93 $0.66 $0.51

Weighted average common shares and equivalents:
Basic...................................................................... 23,164 21,178 19,452
Diluted.................................................................... 24,203 22,075 20,159
</TABLE>

The accompanying notes are an integral part of the financial statements.

26
<PAGE>
USCS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
COMMON STOCK FOREIGN
------------------ ADDITIONAL CURRENCY
NUMBER OF PAR PAID-IN RETAINED TREASURY TRANSLATION
SHARES VALUE CAPITAL EARNINGS STOCK ADJUSTMENT
---------- ------ ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1995.......................... 19,378,143 $ 969 $ -- $ 39,185 $ -- $(293)
Issuance of common stock........................ 708,393 35 1,608 -- -- --
Repurchase of common stock...................... (1,044,521) (52) (1,608) (3,589) -- --
Translation adjustment.......................... -- -- -- -- -- (35)
Net income...................................... -- -- -- 10,370 -- --
---------- ------ ---------- -------- -------- -----
Balance, December 31, 1995........................ 19,042,015 952 -- 45,966 -- (328)
Issuance of common stock........................ 4,034,240 201 53,902 -- -- --
Repurchase of common stock...................... (7,429) -- -- (38) -- --
Translation adjustment.......................... -- -- -- -- -- 169
Net income...................................... -- -- -- 14,509 -- --
---------- ------ ---------- -------- -------- -----
Balance, December 31, 1996........................ 23,068,826 1,153 53,902 60,437 -- (159)
Issuance of common stock........................ 358,756 18 1,451 -- -- --
Purchase of treasury stock...................... (541,595) -- -- -- (10,237) --
Issuance of treasury stock...................... 61,246 -- (849) -- 1,190 --
Stock option income tax benefit................. -- -- 2,000 -- -- --
Translation adjustment.......................... -- -- -- -- -- (5)
Net income...................................... -- -- -- 22,460 -- --
---------- ------ ---------- -------- -------- -----
Balance, December 31, 1997........................ 22,947,233 $1,171 $56,504 $ 82,897 $ (9,047) $(164)
---------- ------ ---------- -------- -------- -----
---------- ------ ---------- -------- -------- -----
</TABLE>

The accompanying notes are an integral part of the financial statements.

27
<PAGE>
USCS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
-------------------------------
1997 1996 1995
--------- --------- ---------
Cash flows from operating activities:
<S> <C> <C> <C>
Net income................................................... $ 22,460 $ 14,509 $ 10,370
Adjustments to net income:
Depreciation and amortization.............................. 25,060 20,311 16,000
Loss on disposition of assets.............................. 904 583 102
Changes in operating assets and liabilities:
Accounts receivable...................................... (24,023) (13,551) (8,388)
Net investment in leases................................. (8,029) (7,440) (7,230)
Collections on leases.................................... 8,625 10,454 13,745
Inventory and other assets............................... (6,129) (3,782) (1,456)
Customer deposits........................................ 5,418 (745) 1,857
Other liabilities........................................ 15,329 9,526 4,022
--------- --------- ---------
Net cash provided by operating activities.................... 39,615 29,865 29,022
--------- --------- ---------
Cash flows from investing activities:
Capital expenditures, net.................................... (32,579) (29,397) (29,231)
Capitalized software development costs, net.................. (3,127) (293) (2,000)
Purchase of subsidiary....................................... (2,046) -- --
--------- --------- ---------
Net cash used in investing activities........................ (37,752) (29,690) (31,231)
--------- --------- ---------
Cash flows from financing activities:
Net borrowings (paydown) under revolving credit agreements... 4,000 (30,000) 22,000
Proceeds from issuance of long-term debt..................... -- 2,765 4,096
Payments on long-term debt................................... (5,101) (25,180) (15,620)
Proceeds from issuance of common stock less expenses......... 3,469 54,103 1,643
Repurchase of common stock................................... -- (38) (5,249)
Purchase of treasury stock, net.............................. (9,896) -- --
--------- --------- ---------
Net cash (used in) provided by financing activities.......... (7,528) 1,650 6,870
--------- --------- ---------
Net (decrease) increase in cash................................ (5,665) 1,825 4,661
Cash at beginning of year...................................... 8,452 6,627 1,966
--------- --------- ---------
Cash at end of year............................................ $ 2,787 $ 8,452 $ 6,627
--------- --------- ---------
--------- --------- ---------
Supplemental Cash Flow Information:
Cash paid during the year for:
Interest................................................... $ 871 $ 4,595 $ 5,145
Income taxes............................................... 13,106 9,748 4,210
</TABLE>

The accompanying notes are an integral part of the financial statements.

28
<PAGE>
USCS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. GENERAL

USCS International, Inc. (the Company), a Delaware corporation, provides
transaction-based comprehensive customer management software and services and
bill processing services and solutions to the global communications industry and
other high volume services companies and sells, maintains and leases computer
systems primarily in North America. The Company generally provides software and
bill processing services to cable television and multi-service providers under
long-term bundled service contracts. The Company also provides bill processing
services on a stand-alone basis primarily to clients in the telecommunications
market. In June 1996, the Company completed an initial public offering (IPO) of
its common stock.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation--The consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries after elimination of intercompany
accounts and transactions.

Financial Statement Preparation--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 revenue and expenses during
the reporting period. Actual results could differ from those estimates.

Revenue Recognition--The Company recognizes services revenue monthly as the
services are performed. Fixed fees and the present value of minimum fees under
software licenses are recognized as revenue upon installation. Variable software
license fees are a component of fees billed under bundled service contracts and
are recognized as revenue over the life of the license based on usage. Revenue
from equipment sales is recognized as equipment is shipped. Income from
sales-type leases is recognized as revenue at a constant periodic rate of return
on the net investment in the lease. Billing for services in advance of
performance is recorded as deferred revenue.

In November 1997, the AICPA issued Statement of Position No. 97-2 "Software
Revenue Recognition" (SOP 97-2), which is effective for fiscal years beginning
after December 15, 1997. The Company has evaluated the provisions of SOP 97-2
and does not expect the adoption of SOP 97-2 to have a material impact on the
Company's revenue recognition policies.

Concentration of Credit Risk--Financial instruments that potentially subject
the Company to significant concentrations of credit risk consist principally of
trade accounts receivable. A majority of the Company's trade receivables are
derived from sales to the cable television and telecommunications industries.
The Company performs ongoing credit evaluations of its customers' financial
condition and, generally, requires no collateral. The Company maintains an
allowance for doubtful accounts on its receivables based upon expected
collectibility of all accounts receivable. Uncollectible amounts have not been
significant.

Paper Products and Other Inventory--Paper products and other inventory is
stated at the lower of standard cost, which approximates actual cost (determined
on a first-in, first-out basis), or market.

Property and Equipment--Property and equipment is recorded at cost.
Depreciation and amortization expense is recognized on the declining balance and
straight-line methods over useful lives ranging from two to seven years on
equipment and thirty-one to forty years on buildings.

29
<PAGE>
USCS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Research and Development--Research and development costs are expensed as
incurred and consist primarily of software development costs incurred prior to
the achievement of technological feasibility. The Company capitalizes software
development costs after the products reach technological feasibility. These
costs are amortized on a product-by-product basis using the greater of the
amount computed by taking the ratio of current year net revenue to estimated
future net revenue or the amount computed by the straight-line method over the
estimated useful life of the product. No amortization has been recorded to date.
The Company evaluates the net realizable value of capitalized software
development costs on a product-by-product basis in accordance with SFAS 86. The
cost of custom development that is required by a specific client is charged to
cost of revenue.

Customer Deposits--The Company requires postage deposits of its clients
based on long-term contractual arrangements. The Company does not anticipate
repaying in the next year amounts classified as non-current.

Foreign Currency Translation--The functional currency of the Company's
foreign subsidiary is the foreign currency. Adjustments arising from the
translation of balance sheets to U.S. dollars at the year-end exchange rates are
included in stockholders' equity. Income and expenses are translated at the
average prevailing rate during the year.

Earnings Per Share--The Company has presented earnings per share in
accordance with Statement of Financial Accounting Standards No. 128, "Earnings
Per Share" ("SFAS 128"). All previously reported amounts have been restated to
conform to SFAS 128. In addition, pursuant to Securities and Exchange Commission
("SEC") guidelines, earnings per share for all periods prior to the IPO have
been restated in accordance with SEC Staff Accounting Bulletin No. 98 ("SAB
98"). See Note 11.

Stock-Based Compensation--The Company accounts for stock-based compensation
arrangements with employees and directors in accordance with the provisions of
APB No. 25 "Accounting for Stock Issued to Employees," and complies with the
disclosure provisions of SFAS No. 123, "Accounting for Stock-Based
Compensation." Under APB No. 25, compensation cost is recognized based on the
difference, if any, on the date of grant between the fair value of the Company's
stock and the amount an employee or director must pay to acquire the stock.

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

Recent Accounting Pronouncements--In June 1997, Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS 130") and
Statement of Financial Accounting Standard No. 131, "Disclosures about Segments
of an Enterprise and Related Information" ("SFAS 131") were issued. The adoption
of both statements is required for years beginning after December 31, 1997. SFAS
130 requires, in addition to net income, the identification, classification and
presentation of items of comprehensive income, as defined by the statement, in
the Company's financial statements and notes thereto. SFAS 131 requires separate
reporting in the financial statements of certain financial and descriptive
information about operating segments. The Company will report comprehensive
income for the first quarter of 1998 and segment reporting for the year ended
December 31, 1998. The Company does not expect the adoption of the statements to
have a material impact on its consolidated financial statements.

30
<PAGE>
USCS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. BALANCE SHEET COMPONENTS AT DECEMBER 31 (IN THOUSANDS)

Property and equipment, net, consists of the following:

<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Computer and production equipment..................................... $ 122,324 $ 122,105
Plant and property.................................................... 36,222 32,545
Leasehold improvements................................................ 10,834 12,715
Office equipment...................................................... 10,575 8,674
Capital projects-in-progress.......................................... 13,211 5,723
---------- ----------
193,166 181,762
Less accumulated depreciation and amortization........................ 91,535 87,412
---------- ----------
$ 101,631 $ 94,350
---------- ----------
---------- ----------
</TABLE>

Accounts payable and accrued expenses consists of the following:

<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Trade accounts payable................................................ $ 31,177 $ 20,791
Accrued payroll and related expenses.................................. 14,321 13,915
Accrued retirement plan contributions................................. 6,971 5,218
Other accrued expenses................................................ 6,529 3,498
Income taxes payable.................................................. 3,658 5,553
---------- ----------
$ 62,656 $ 48,975
---------- ----------
---------- ----------
</TABLE>

4. BENEFITS PLANS

The Company has an employee savings and pension benefit plan (known as the
401(k) Retirement Plan). This plan covers substantially all employees. The
Company matches employee contributions of up to six percent of compensation at a
rate of fifty percent. The Company is required to make a contribution of 3% of
each eligible employee's annual compensation. Commencing in 1996, under the
plan's profit-sharing element, the Company also contributes 10% of pretax
profits. Prior to 1996, under the plan's profit-sharing element, the Company
could contribute up to 3% of each eligible employee's compensation determined at
the discretion of the Board of Directors. The Company's contribution expense was
$6,737,000, $5,179,000 and $4,204,000 in 1997, 1996 and 1995.

The Company may fund the plan's profit-sharing element either with cash or
with shares of the Company's common stock. The Company intends to fund the 1997
obligation to the 401(k) with shares held in treasury at the fair market value
on the date of contribution.

The Company had two defined contribution stock ownership plans (ESOP)
covering substantially all employees who were employed by the Company as of
February 18, 1993. There were no contributions to the plans in 1997, 1996 and
1995. Under the plans, the Company was obligated, at the employee's option, to
repurchase vested shares at the current fair market value upon termination or
retirement. Substantially all share repurchases in 1996 and prior years resulted
from the repurchase of shares from former employees. The Company's repurchase
obligations under the plans lapsed effective with the IPO. In 1997, the Board of
Directors terminated the Company's ESOP effective January 1, 1997. An initial
distribution from the ESOP trust occurred in August 1997, with a total of
approximately 518,000 shares and cash of

31
<PAGE>
USCS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4. BENEFITS PLANS (CONTINUED)
$579,000 distributed to the participants. In December 1997, the remaining
approximately 2,900,000 shares and cash of $97,000 were distributed.

The Company has non-qualified deferred compensation plans for senior
management and certain highly compensated employees. The plans permit
participants to defer a portion of their compensation and may provide additional
life insurance benefits until termination of their employment at which time
payment of amounts deferred is made in a lump sum or annual installments.
Deferred amounts accrue interest at a rate determined by the Board of Directors
or are credited with deemed gains or losses of the underlying investments. At
December 31, 1997, amounts deferred under the plans and the related accrued
interest were not material.

5. LONG-TERM DEBT

Long-term debt consists of the following at December 31 (dollars in
thousands):

<TABLE>
<CAPTION>
MATURITIES 1997 1996
---------- --------- ---------
<S> <C> <C> <C>
Credit agreement with a finance company, collateralized, without recourse, by 1998 $ 4,559 $ 8,027
minimum rentals receivable of $5,728; principal and interest payable monthly at to
fixed interest rates resulting in a weighted average interest rate of 8.81% at 2000
December 31, 1997...............................................................

Credit line with two banks....................................................... 2001 4,000 --

Bonds payable, with interest (rate of 6.83% at December 31, 1997) and principal 1999 759 2,392
repayable in approximately equal monthly installments, collateralized by first
deeds of trust on building and land with a net book value of $4,716.............
--------- ---------

9,318 10,419
Less current portion............................................................. 3,865 4,772
--------- ---------
Total long-term debt............................................................. $ 5,453 $ 5,647
--------- ---------
--------- ---------
</TABLE>

The Company has an unsecured revolving credit line with two banks in the
amount of $50 million. Borrowings under the agreement bear interest at the
Company's choice of LIBOR (plus a margin ranging from .55% to 1.25%), the bank's
base rate or a quoted rate (rate of 6.94% at December 31, 1997).

Under the borrowing agreements, the Company is required to maintain certain
financial ratios and meet a net worth test. In addition, the Company has four
outstanding standby letters of credit totaling $4,684,000 at December 31, 1997.
Based on the borrowing rates currently available to the Company for credit
facilities and bonds with similar terms and average maturities, the carrying
value of long-term debt at December 31, 1997 is considered to approximate fair
value.

Maturities of long-term debt at December 31, 1997 are as follows (in
thousands):

32
<PAGE>
USCS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. COMMITMENTS AND CONTINGENCIES

The Company leases certain facilities and equipment under operating leases
with terms ranging from one to twenty years. Rental expense was $9,844,000,
$9,594,000 and $8,798,000 in 1997, 1996 and 1995.

Future minimum rental commitments under operating leases are (in thousands):

<TABLE>
<S> <C>
1998................................................................ $ 6,736
1999................................................................ 5,549
2000................................................................ 3,866
2001................................................................ 2,074
2002................................................................ 1,074
Thereafter.......................................................... 3,206
</TABLE>

7. INCOME TAXES

The deferred tax assets and liabilities are comprised of the following at
December 31 (in thousands):

<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Deferred tax assets:
Compensation and employee benefits related items....................... $ 3,132 $ 4,714
Differences in revenue recognition for book and tax purposes........... 665 2,840
Accruals and other non-deductible reserves............................. 3,645 3,542
--------- ---------
Total deferred tax assets............................................ 7,442 11,096
--------- ---------
Deferred tax liabilities:
Tax in excess of book depreciation..................................... 6,102 6,163
Capital leases recorded as operating leases for tax purposes........... 1,523 1,762
Other.................................................................. 1,607 674
--------- ---------
Total deferred tax liabilities....................................... 9,232 8,599
--------- ---------
Net deferred tax liability (asset)....................................... $ 1,790 $ (2,497)
--------- ---------
--------- ---------
</TABLE>

33
<PAGE>
USCS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. INCOME TAXES (CONTINUED)
The income tax provision is comprised of the following for the years ended
December 31 (in thousands):

<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Current:
Federal..................................................... $ 9,029 $ 11,675 $ 4,883
State....................................................... 1,694 1,786 838
--------- --------- ---------
10,723 13,461 5,721
--------- --------- ---------
Deferred:
Federal..................................................... 3,436 (3,311) 924
State....................................................... 851 (324) 125
--------- --------- ---------
4,287 (3,635) 1,049
--------- --------- ---------
$ 15,010 $ 9,826 $ 6,770
--------- --------- ---------
--------- --------- ---------
</TABLE>

The income tax rate varies from amounts computed by applying the U.S.
statutory rate to income before provision for income taxes. The tax rates for
the years ended December 31 are as follows:

<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Income tax computed using U.S. statutory rate......................... 34.3% 34.4% 34.7%
State income taxes, net of federal benefits........................... 6.8 4.4 6.1
Effect of income of foreign subsidiary................................ (1.1) -- --
Other................................................................. -- 1.6 (1.3)
---- ---- ----
Income tax provision.............................................. 40.0% 40.4% 39.5%
---- ---- ----
---- ---- ----
</TABLE>

8. SIGNIFICANT CUSTOMERS AND RELATED PARTY TRANSACTIONS

The Company has three significant customers. Revenue from the largest
customer was $53,101,000, $55,651,000 and $47,287,000 or 18%, 21% and 21% of
total revenue in 1997, 1996 and 1995. This customer is in the process of
transferring its business to another company. Revenue and percentage of total
revenue, respectively, from the other significant customers totaled $39,262,000
or 13% and $27,417,000 or 9% in 1997, $41,066,000 or 16% and $25,013,000 or 10%
in 1996, $38,849,000 or 17% and $17,858,000 or 8% in 1995.

Advisory services were provided to the Company for approximately $400,000 in
1997, 1996 and 1995 by Westar Capital. Three Directors of the Company are
associated with Westar.

34
<PAGE>
USCS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. LEASING ACTIVITIES

LEASES

The net investment in sales-type leases held by the Company and its leasing
subsidiary reflects the gross lease receivable and the estimated residual value
of the leased equipment less unearned income. The net investment in sales-type
leases consists of the following at December 31 (in thousands):

<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Total minimum lease payments receivable................................. $ 12,858 $ 15,516
Estimated unguaranteed residual value of leased property................ 10 8
--------- ---------
Gross investment in leases.............................................. 12,868 15,524
Less unearned income.................................................... 2,290 4,350
--------- ---------
Net investment in leases................................................ 10,578 11,174
Less current portion.................................................... 5,892 4,922
--------- ---------
Non-current portion..................................................... $ 4,686 $ 6,252
--------- ---------
--------- ---------
</TABLE>

Lease transactions which do not meet the criteria of a sales-type lease are
accounted for as operating leases. Leased equipment is recorded at cost and
depreciated on a straight-line basis over the life of the lease term to the
estimated residual value at the expiration of the lease term. Income is
recognized monthly on a straight-line basis over the life of the lease.
Operating leases are non-cancelable. At December 31, 1997, equipment leased to
clients under operating leases had a cost of $7,462,000 and a net book value of
$4,951,000.

Future payments to be received under leases are (in thousands):

<TABLE>
<CAPTION>
SALES-TYPE OPERATING
----------- -----------
<S> <C> <C>
1998................................................................... $ 7,871 $ 2,075
1999................................................................... 3,375 2,062
2000................................................................... 1,612 938
----------- -----------
$ 12,858 $ 5,075
----------- -----------
----------- -----------
</TABLE>

The Company performs ongoing credit evaluations of its clients and generally
maintains a perfected security interest on all equipment leased under sales-type
and operating leases as collateral for lease payments receivable. Substantially
all lease contracts have been pledged and the related receipts have been
assigned to various lenders as collateral for nonrecourse borrowings. The
borrowing agreements provide that the debt is to be satisfied solely from
amounts due under the terms of the lease contracts and the value of the leased
equipment. The lenders' collateral interest in both the lease agreement and the
equipment terminates upon repayment of the debt.

SUBSIDIARY

At December 31, 1997 and 1996, the Company's wholly owned leasing subsidiary
had total assets of $17,061,000 and $16,197,000 and long-term debt of $4,559,000
and $8,027,000, respectively. Net income was $1,794,000, $1,147,000 and
$1,352,000 in 1997, 1996 and 1995.

35
<PAGE>
USCS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. STOCK-BASED COMPENSATION

STOCK OPTION PLANS

The Company has five stock option plans under which shares of the Company's
common stock have been reserved for issuance to directors, officers and key
employees.

Under the 1988, 1990, 1993 and 1996 Stock Option Plans, options may be
granted at prices and with terms and conditions established by the Company's
Board of Directors at the date of grant. Options vest over periods of up to
sixty months and expire ten years after the date of grant.

Under the Director's Stock Option Plan, options may be granted at fair
market value. Options vest annually over three years and expire five years after
the date of grant.

Information regarding the Company's stock option plans is summarized below:

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
NUMBER OF EXERCISE
SHARES PRICE
---------- -----------
<S> <C> <C>
Shares under option:
Outstanding at January 1, 1995....................................... 2,182,887 $ 2.25
Granted.............................................................. 551,775 5.05
Exercised............................................................ (708,393) 1.44
Canceled............................................................. (241,773) 3.00
----------
Outstanding at December 31, 1995..................................... 1,784,496 3.34
Granted.............................................................. 1,229,074 13.20
Exercised............................................................ (538,412) 2.10
Canceled............................................................. (160,603) 6.93
----------
Outstanding at December 31, 1996..................................... 2,314,555 8.62
Granted.............................................................. 666,930 17.46
Exercised............................................................ (406,034) 3.33
Canceled............................................................. (79,935) 11.06
----------
Outstanding at December 31, 1997..................................... 2,495,516 $ 11.76
----------
----------
</TABLE>

At December 31, 1997, 1,962,936 shares were available for future grants
under the stock option plans.

For purposes of the following pro forma disclosures required by SFAS 123,
the estimated fair value of options is amortized to expense over the options'
vesting period. The fair value of each option grant is estimated on the date of
grant using the Black-Scholes option valuation model. The Black-Scholes option
model was developed for use in estimating the fair value of traded options that
have no vesting restrictions and are fully transferable. In addition, option
valuation models, such as the Black-Scholes model, require the input of highly
subjective assumptions, including the expected stock price volatility, which are
subject to change from time to time. For this reason, and because the SFAS 123
fair-value based method of accounting has not been applied to options granted
prior to January 1, 1995, the resulting pro forma compensation costs are not
necessarily indicative of costs to be expected in future years.

36
<PAGE>
USCS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. STOCK-BASED COMPENSATION (CONTINUED)
The following pro forma information has been prepared as if the Company had
accounted for its employee stock options using the fair-value based method of
accounting established by SFAS 123. Earnings per share amounts have been
restated for 1996 and 1995 in accordance with SFAS 128 (see note 12):

<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Net income (in thousands):
As reported................................................ $ 22,460 $ 14,509 $ 10,370
Pro forma.................................................. 21,312 14,036 10,265

Earnings per share:
As reported--Basic......................................... 0.97 0.69 0.53
Pro forma--Basic........................................... 0.92 0.66 0.53

As reported--Diluted....................................... 0.93 0.66 0.51
Pro forma--Diluted......................................... 0.88 0.64 0.51
</TABLE>

SFAS 123 pro forma calculations are based on the following assumptions for
grants in 1997, 1996 and 1995, respectively: risk-free weighted-average interest
rates of 5.9%, 5.7% and 5.9%; volatility factors of the expected market price of
the Company's common stock of 45.1%, 43.3% and 43.3%; and weighted average
expected option lives of 7.1, 7.3 and 6.9 years.

Summary information concerning outstanding and exercisable employee option
as of December 31, 1997 is as follows:

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
REMAINING AVERAGE AVERAGE
NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
RANGE OF EXERCISE PRICES OUTSTANDING LIFE PRICE EXERCISABLE PRICE
- -------------------------------- ----------- --------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
$ .20 - $ 4.35................. 332,657 5.57 $ 3.34 310,166 $ 3.27
5.05 - 7.38................. 389,471 7.57 5.09 125,425 5.07
12.50 ................... 895,389 8.28 12.50 170,268 12.50
13.33 - 17.50................. 523,525 9.61 16.14 34,710 15.69
17.55 - 23.56................. 354,474 8.77 18.66 37,081 17.90
----------- --- ----------- ----------- -----------
$ .20 - $23.56................. 2,495,516 8.16 $ 11.76 677,650 $ 7.36
----------- --- ----------- ----------- -----------
----------- --- ----------- ----------- -----------
</TABLE>

Exercise prices of some options differ from the market price of the stock on
the grant date. During 1997, 1996 and 1995, options for 561,190, 1,229,074 and
551,775 shares of stock were granted at a weighted average exercise price of
$17.45, $13.20 and $5.05 per share, respectively, which equaled the weighted
average fair value on the date of grant.

In addition, during 1997, options to purchase 105,740 shares were granted at
$17.55 per share. The fair value on the date of grant was $16.63 per share. The
optionees are entitled to receive a bonus of $16.55 per share exercised. There
were no grants in 1997, 1996, or 1995 with exercise prices greater than the
market price at the date of grant.

Compensation expense recognized in accordance with APB 25 was not material
in 1997, 1996 and 1995.

37
<PAGE>
USCS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. STOCK-BASED COMPENSATION (CONTINUED)
EMPLOYEE STOCK PURCHASE PLAN

In April 1996, the Company adopted an Employee Stock Purchase Plan (the
"Plan") which was implemented in 1997. Under the Plan, shares are purchased on a
quarterly basis at 95% (90% as of January 1, 1998) of the lower of fair market
value of the Company's common stock on the first or last business day of each
calendar quarter. Shares purchased under the Plan may not be sold or otherwise
transferred for six months after issuance. Common stock purchases under the Plan
totaled approximately 19,000 shares at a weighted average purchase price of
$18.41. The weighted average fair value of the employee purchase rights and
compensation expense, as calculated under SFAS 123 using the Black-Scholes
option valuation model, was immaterial.

11. EARNINGS PER SHARE

The Company has presented earnings per share in accordance with SFAS 128.
Under SFAS 128, basic earnings per share is computed using the weighted average
number of outstanding registered shares. Diluted earnings per share are computed
using weighted average registered shares and common stock equivalents, including
the net shares issuable upon exercise of stock options when dilutive.

Pursuant to SEC guidelines, the Company's earnings per share calculation for
all periods prior to the IPO included additional dilution from certain common
stock and common stock equivalents issued within one year prior to the IPO.
These shares were included in the calculation as if they were outstanding for
all periods prior to their issuance. In February 1998, the SEC issued SAB 98
which amends this treatment and requires all earnings per share calculations
presented to conform with SFAS 128. All earnings per share amounts presented
have been restated to reflect the application of SFAS 128 and SAB 98.

The following table reconciles net income and weighted average shares
outstanding for the basic earnings per share and the diluted earnings per share
computation. Common stock equivalents consist solely of the net shares issuable
upon the exercise of stock options when dilutive.

PER SHARE AMOUNT RECONCILIATION

<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA) 1997 1996 1995
- ------------------------------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
Net Income................................................... $ 22,460 $ 14,509 $ 10,370
--------- --------- ---------
--------- --------- ---------
Weighted average shares outstanding.......................... 23,164 21,178 19,452
Common stock equivalents..................................... 1,039 897 707
--------- --------- ---------
Diluted shares outstanding................................... 24,203 22,075 20,159
--------- --------- ---------
--------- --------- ---------
Basic earnings per share..................................... $ 0.97 $ 0.69 $ 0.53
--------- --------- ---------
--------- --------- ---------
Diluted earnings per share................................... $ 0.93 $ 0.66 $ 0.51
--------- --------- ---------
--------- --------- ---------
</TABLE>

Earnings per share amounts would have been $0.93, $0.64 and $0.49 in 1997,
1996 and 1995, respectively, had the amounts been calculated in accordance with
pronouncements in effect prior to the adoption of SFAS 128 and SAB 98.

38
<PAGE>
USCS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

12. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

<TABLE>
<CAPTION>
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER
----------- ----------- ----------- -----------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1997
Total revenue............................................... $ 70,970 $ 72,698 $ 73,123 $ 82,555
Gross profit................................................ 28,784 31,523 31,905 34,186
Operating income............................................ 8,648 9,466 9,783 10,127
Net income.................................................. 5,053 5,602 5,791 6,014
Basic net income per share.................................. 0.22 0.24 0.25 0.26
Diluted net income per share................................ 0.21 0.23 0.24 0.25

YEAR ENDED DECEMBER 31, 1996
Total revenue............................................... $ 60,255 $ 63,572 $ 69,357 $ 70,030
Gross profit................................................ 22,094 23,801 27,713 28,683
Operating income............................................ 5,443 5,841 7,912 8,324
Net income.................................................. 2,563 2,843 4,328 4,775
Basic net income per share.................................. 0.14 0.15 0.19 0.21
Diluted net income per share................................ 0.13 0.14 0.18 0.20

YEAR ENDED DECEMBER 31, 1995
Total revenue............................................... $ 53,012 $ 56,151 $ 56,677 $ 63,423
Gross profit................................................ 19,498 19,053 20,044 23,428
Operating income............................................ 4,937 5,016 5,965 6,188
Net income.................................................. 2,281 2,287 2,794 3,008
Basic net income per share.................................. 0.12 0.12 0.14 0.16
Diluted net income per share................................ 0.11 0.11 0.14 0.15
</TABLE>

39
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information regarding Directors of the Company who are standing for
reelection is set forth under "Election of Directors" on pages 1 and 2 of the
Company's Proxy Statement for the 1998 Annual Meeting of Stockholders, dated
April 17, 1998, which pages are incorporated herein by reference.

The executive officers and directors of the Company and their ages as of
March 10, 1998 are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY
- ----------------------------------------- --- -----------------------------------------------------------------
<S> <C> <C>
James C. Castle, Ph.D.................... 61 Chairman of the Board and Chief Executive Officer
Michael F. McGrail....................... 50 President of CableData, Inc. and Director
C. Randles Lintecum...................... 53 President of International Billing Services, Inc.
Douglas L. Shurtleff..................... 51 Senior Vice President, Finance and Chief Financial Officer
Claudia D. Coleman....................... 46 Vice President, Corporate Development
George L. Argyros, Sr.(1)(2)............. 61 Director
John W. Clark(1)......................... 53 Director
James L. Hesburgh(2)..................... 64 Director
Daniel R. Hesse(1)....................... 44 Director
Charles D. Martin(2)..................... 61 Director
Thomas A. Page(1)........................ 64 Director
Larry W. Wangberg(2)..................... 55 Director
</TABLE>

- ------------------------

(1) Member of the Audit Committee.

(2) Member of the Compensation Committee.

JAMES C. CASTLE, PH.D. joined the Company as Chairman of the Board and Chief
Executive Officer in August 1992. Prior to joining USCS, Dr. Castle served as
Chief Executive Officer and Director of Teradata Corporation, a manufacturer of
high capacity, high performance parallel processing database systems, from
August 1991 until April 1992. Dr. Castle served as President and Chief Executive
Officer of Infotron Systems Corporation, a manufacturer of data and voice
transmission equipment, from October 1987 until August 1991 and was named
Chairman of the Board in May 1989. Prior to October 1987, Dr. Castle held
various senior management positions with TBG Information Systems, Inc., Memorex
Corporation, Honeywell, Inc. and General Electric. Dr. Castle is also a Director
of PAR Technology Corp., Leasing Solutions, Inc., The PMI Group, Inc. and ADC
Telecommunications, Inc. Dr. Castle received his B.S. from the U.S. Military
Academy at West Point and a M.S.E.E. and Ph.D. in Computer and Information
Sciences from the University of Pennsylvania.

MICHAEL F. MCGRAIL has been President of CableData, Inc., the Company's
wholly owned subsidiary, and a Director of the Company since April 1995. Since
December 1993, Mr. McGrail has been President and Managing Director of CableData
International, Ltd., a wholly owned subsidiary of CableData, Inc. Prior to his
joining CableData, Mr. McGrail served as President of Gandalf International,
Ltd. ("Gandalf"), a wide and local area network communications products company.
He was also Managing Director of Infotron Systems International Ltd., which was
acquired by Gandalf in 1991. Mr. McGrail received a B.Sc. with honors from the
University of Sussex and an M.Sc. in Management from Trinity College, Dublin.

40
<PAGE>
C. RANDLES LINTECUM has been the President of International Billing
Services, Inc. ("IBS"), a wholly owned subsidiary of the Company, since July
1995. From February 1995 to July 1995, Mr. Lintecum was Senior Vice President,
Marketing and Business Development of USCS, and from May 1993 to February 1995
Mr. Lintecum was Vice President, Corporate Development of USCS. From 1989 to May
1993, Mr. Lintecum was Executive Vice President of Corporate Marketing for
Infonet Services Corporation ("Infonet"), an international data network services
company. From 1988 to 1989, Mr. Lintecum was division Vice President of
Marketing for Computer Sciences Corporation, a computer services company. From
1985 to 1987, Mr. Lintecum was division Vice President of New Business
Development for Computer Sciences Corporation. Mr. Lintecum received a B.S. in
Business Administration from the University of Kansas and an M.B.A. from the
University of Missouri.

DOUGLAS L. SHURTLEFF has been Senior Vice President, Finance, and Chief
Financial Officer of the Company since May 1995. From September 1988 to May
1995, Mr. Shurtleff was Vice President, Finance and Administration, and
Treasurer of Infonet. From October 1984 to September 1988, Mr. Shurtleff was
Group Vice President, Finance and Administration, of Computer Sciences
Corporation. Previously, Mr. Shurtleff held various senior management positions
at Pacesetter Systems, Inc., and Deloitte & Touche. Mr. Shurtleff received a
B.S. in Accounting and his M.B.A. from the University of Southern California and
is a certified public accountant.

CLAUDIA D. COLEMAN has been Vice President, Corporate Development, of the
Company since December 1995. From March 1988 to December 1995, Ms. Coleman held
various positions, including Principal, in the investment banking division of
Alex. Brown & Sons ("Alex. Brown"). Prior to joining Alex. Brown, Ms. Coleman
was a Vice President in the investment banking division of Drexel Burnham
Lambert from 1984 to 1988. From 1979 to 1984, Ms. Coleman held various
positions, including Vice President, Corporate Planning, at Bank of America. Ms.
Coleman received a B.A. and a M.B.A. from the University of California.

GEORGE L. ARGYROS, SR. has been a Director of the Company since November
1990. Mr. Argyros is Chairman and Chief Executive Officer of Arnel & Affiliates,
a West Coast diversified investment company. He is a General Partner and the
principal financial partner in Westar Capital, a private investment company. Mr.
Argyros serves as a member on the Boards of First American Financial
Corporation, The Newhall Land and Farming Company, Rockwell International
Corporation, Tecstar Inc., All Post, Inc., and Doskocil Manufacturing Company,
Inc. and is Non-executive Chairman of Apria Healthcare Group. Since 1976 he has
served as Chairman of the Board of Trustees of Chapman University and is a
member of the Board of Trustees of the California Institute of Technology. Mr.
Argyros is Chairman of the Board of Directors of The Beckman Foundation and
Founding Chairman for the Nixon Center for Peace and Freedom in Washington, D.C.
In 1993, he received the Horatio Alger Award of Distinguished Americans and
currently serves as President and CEO of the Washington, D.C. based Horatio
Alger Association.

JOHN W. CLARK became a Director of the Company in January 1998. He is the
Managing Partner of Westar Capital, a private equity firm with a portfolio of
nine companies and a total amount invested in excess of $50 million. Mr. Clark
was founding President and CEO of Valentec International, a producer of metal
and electronic components for military and commercial products that was
ultimately sold to Insilco, a Fortune 500 Company. Mr. Clark was founder and
managing partner of Coyne and Clark, a CPA firm which was merged into Ernst &
Whinney (now Ernst & Young) in 1982, and he served as managing partner of Ernst
& Whinney's Newport Beach, California office. Mr. Clark is a Certified Public
Accountant and a member of World Presidents Organization. He serves on the board
of directors of various Westar portfolio companies and of Amerigon, Inc.

JAMES L. HESBURGH became a Director of the Company in January 1998. He is
President and CEO of James L. Hesburgh International, Inc., an international
consulting and export management company, as well as President and CEO of
Battley, Inc., a subsidiary of a French holding company. He serves as a Director
of both companies and was a Director of Logicon until 1997. Previously, Mr.
Hesburgh was Chairman of the Board of Hiller Aviation, Inc., a manufacturer of
helicopters, and President, Director and

41
<PAGE>
Member of the Executive Committee of Intercole Automation, Inc. Mr. Hesburgh is
a Director of First Federal Bank of California, First Fed Corporation,
Toastmaster Inc., Sinto America, Robert Sinto Corporation, Fremont Funding,
Inc., Chief Executives Organization, Inc. and DocuSource, Inc. He is also a
member of the Business Advisory Council of the University of Notre Dame, and a
director emeritus of Saint John's Health Center Foundation.

DANIEL HESSE joined the Company's Board of Directors in January 1998. He is
the President and Chief Executive Officer of AT&T Wireless Services, the
nation's largest wireless operator with 8 million customers and over $4 billion
in revenues, and serves as an Executive Vice President of AT&T. Previously, Mr.
Hesse served as Vice President and General Manager of Business Development for
AT&T and as Vice President and General Manager for the AT&T Online Services
Group. From 1991 to 1995, he was President and Chief Executive Officer of AT&T
Network Systems International, in which capacity he managed all AT&T Network
Systems activities (now known as Lucent Technologies) in Europe, the Middle East
and Africa. Mr. Hesse serves on the advisory boards of Cornell University and
Cornell's Johnson Graduate School of Management, where he serves as Chairman of
the Dean's Society. He also serves on the advisory board of the University of
Washington School of Business Administration and the University of Notre Dame
College of Business Administration.

CHARLES D. MARTIN has been a Director of the Company since November 1990.
Mr. Martin has been a general partner of Enterprise Partners, a Southern
California-based venture capital firm, since its formation in 1985. He has also
been a general partner of Westar Capital Associates, which is the sole general
partner of Westar, since its formation in 1987. Mr. Martin also serves on the
Board of Directors Tecstar, Inc., All Post, Inc., Doskocil Manufacturing, Inc.,
ObjectAutomation and El Dorado Communications. Mr. Martin also serves as a
Trustee of Chapman University and is Chairman of the Board of Trustees of the
Orange County Museum of Art.

THOMAS A. PAGE became a Director of the Company in February 1998. He
recently retired as Chairman of Enova Corporation and San Diego Gas and Electric
(SDG&E). Enova Corporation is the parent company of SDG&E and six other
U.S.-based subsidiaries involved in energy-related services and investments. He
is the former CEO of SDG&E serving in that capacity from 1981 to 1995 and
continued as chairman of Enova and SDG&E through 1997. Mr. Page will continue as
a Director of Enova and SDG&E until their 1998 annual meetings. Prior to joining
SDG&E in 1978, Mr. Page was executive vice president and a member of the board
of Gulf States Utilities, and treasurer and controller of Wisconsin Power and
Light Company. Mr. Page is currently a Director of Burnham Pacific Properties, a
member of the Board of Overseers at U.C. San Diego and a director of the
California Chamber of Commerce.

LARRY W. WANGBERG has been a Director of the Company since May 1996. Mr.
Wangberg is President and Chief Executive Officer of ZDTV (Ziff-Davis TV). Prior
to joining Ziff-Davis, he was Chairman and CEO of StarSight Telecast, Inc., an
interactive, on-screen TV guide and navigator software service company. Mr.
Wangberg previously served as Chairman and CEO of Times Mirror Cable Television,
Inc., a provider of broadband-based network and cable broadcast services. Mr.
Wangberg simultaneously served as Senior Vice President of the parent The Times
Mirror Company, a major information provider. In 1995 he engineered the merger
of Times Mirror Cable Television into Cox Communications. Mr. Wangberg is a past
chairman of the National Cable Television Association (NCTA), and has served as
vice chairman of the National Academy of Cable Programming. He previously served
on the boards of C-SPAN, Cable Labs and Zilog, Inc.

There are no family relationships between any directors or executive
officers of the Company.

42
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION

Information regarding the Company's compensation of its executive officers
is set forth under "Information Regarding Executive Officers Compensation" on
pages 7 through 9 of the Company's Proxy Statement for the 1998 Annual Meeting
of Stockholders, dated April 17, 1998, which pages are incorporated herein by
reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information regarding security ownership of certain beneficial owners and
management is set forth under "Beneficial Ownership Of Principal Stockholders,
Directors And Management" on pages 4 through 6 of the Company's Proxy Statement
for the 1998 Annual Meeting of Stockholders, dated April 17, 1998, which pages
are incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information regarding certain relationships and related transactions is set
forth under "Certain Relationships And Related Transactions" on page 10 of the
Company's Proxy Statement for the 1998 Annual Meeting of Shareholders, dated
April 17, 1998, which pages are incorporated herein by reference.

PART IV

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

(a) The following documents are filed as part of this report:

1. Financial Statements

Financial Statements and Report of Independent Accountants: See Part
II, Item 8 hereof.

2. Financial Statement Schedule

All Schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are
omitted because such schedules are not required under the related
instructions, are not applicable or the required information is
given in the financial statements.

(b) Reports on Form 8-K

No reports on Form 8-K were filed by the Registrant during the quarter ended
December 31, 1997.

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ----------------------------------------------------------------------------------------------------
<C> <S>
3.1 Second Amended and Restated Certificate of Incorporation of USCS International, Inc. (3)

3.2 Bylaws of the Registrant. (1)

3.3 Certificate of Designation of Rights, Preferences and Privileges of Series A Preferred Stock. (1)

4.1 Reference Exhibit 3.1.

4.2 Stockholder Rights Plan. (1)

10.1 Amended and Restated 1988 Stock Option Plan.

10.2 Amended and Restated 1993 Stock Option Plan.
</TABLE>

43
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ----------------------------------------------------------------------------------------------------
<C> <S>
10.3 Amended and Restated 1990 Stock Option Plan.

10.4 Amended and Restated 1996 Directors' Stock Option Plan.

10.5 Amended and Restated 1996 Stock Option Plan.

10.6 Amended Employee Stock Purchase Plan.

10.7 Deferred Compensation Plan.

10.8 Bonus Deferral Plan. (4)

10.9 Agreement pursuant to Rule 601(b)(4)(iii)(A) to file Trust Indenture dated as of June 30, 1989
between the Registrant and Sun Bank, as Trustee. (1)

10.10 Agreement pursuant to Rule 601(b)(4)(iii)(A) to file Reimbursement Agreement dated as of June 30,
1989 between the Registrant and Sanwa Bank of California. (1)

10.11 Credit Agreement dated as of February 15, 1996 among International Billing Services, Nationsbank of
Texas and the Lender Parties named therein. (1)

10.12 Credit Agreement dated as of February 15, 1996 among the Registrant, Nationsbank of Texas and the
Lender Parties named therein. (1)

10.13 Strategic Business Agreement dated January 19, 1992 between the Registrant and International
Business Machines Corporation and Addendum Number One to Strategic Business Agreement dated June
4, 1993 between the Registrant and International Business Machines Corporation. (1)

10.14 Business Alliance Program Agreement between Oracle Corporation and CableData. (1)

10.15 Amended, Consolidated and Restated Credit Agreement dated as of September 30, 1996 among the
Registrant as borrower and NationsBank, N.A. and Mellon Bank, N.A. as lender. (2)

10.16 On/Line Operating and License Agreement dated June 7, 1996 between CableData, Inc. and TCI Cable
Management Corporation. (1)

10.17 On/Line Operating and Licensing Agreement dated December 17, 1993 between the Registrant dba
CableData and Continental Cablevision. (1)

10.18 Statement Production Services Agreement dated August 20, 1993 between the Registrant dba
International Billing Services and Ameritech Corporation. (1)

10.19 Software License and Service Agreement and Network User License Addendum dated May 18, 1994 between
the Registrant and Oracle Corporation. (1)

10.20 Strategic Business Alliance Agreement dated February 28, 1997 between the Registrant and CBIS. (3)

10.21 Tandem Alliance Agreement dated January 1, 1995 between Tandem and CableData. (1)

10.22 Contract for Computer Software (Postalsoft Software License Agreement) dated February 13, 1996
between IBS and Postalsoft, Inc. (1)

10.23 Employment Agreement dated August 10, 1992 between the Registrant and James C. Castle. (1)

10.24 Employment Agreement dated June 29, 1995 with Michael McGrail. (1)

10.25 Form of Severance Agreement. (1)

10.26 Building Lease for property located at 2969 Prospect Park Drive and 11020 Sun Center Drive between
the Registrant and F.I.A. Profile Fund I dated January 19, 1994. (1)
</TABLE>

44
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ----------------------------------------------------------------------------------------------------
<C> <S>
10.27 Alternate Mailing System Agreement dated March 28, 1996 between the United States Postal Service and
IBS. (1)

10.28 Alternate Mailing Systems Agreement dated April 18, 1996 between the United Postal Service and
International Billing Services, Inc. (1)

10.29 Form of Directors' Indemnification Agreement. (1)

11. Statement re: computation of earnings per share.

21. List of Subsidiaries.

23. Consent of Independent Public Accountants.

24. Power of Attorney. Contained in page 44 of this Annual Report on Form 10-K and incorporated herein
by reference.

27. Financial data schedule.
</TABLE>

- ------------------------

(1) Incorporated by reference to Registrant's Registration Statement on Form
S-1, Registration No. 333-3842, filed pursuant to Section 5 of the
Securities Act of 1933, as amended.

(2) Incorporated by reference to Registrant's Quarterly Report on Form 10-Q for
the quarterly period ended September 30, 1996.

(3) Incorporated by reference to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1996.

(4) Incorporated by reference to Registrant's Registration Statement on Form
S-8, Registration No. 333-34801, filed pursuant to Section 5 of the
Securities Act of 1933, as amended.

45
<PAGE>
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized in the City of Rancho
Cordova, State of California, on the 23rd day of March, 1998.

<TABLE>
<S> <C> <C>
USCS INTERNATIONAL, INC.

By: /s/ DOUGLAS L. SHURTLEFF
-----------------------------------------
Douglas L. Shurtleff
SENIOR VICE-PRESIDENT OF FINANCE AND
CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL OFFICER)
</TABLE>

POWER OF ATTORNEY

Each of the officers and directors of USCS International, Inc. whose
signature appears below hereby constitutes and appoints James C. Castle and
Douglas L. Shurtleff, and each of them, their true and lawful attorneys-in-fact
and agents, with full power of substitution, each with power to act alone, to
sign and execute on behalf of the undersigned any amendment or amendments to
this report and to file the same, with exhibits thereto, and other documents in
connection therewith, and to perform any acts necessary in order to file such
amendment or amendments, exhibits and documents with the Securities and Exchange
Commission, and each of the undersigned does hereby ratify and confirm all that
said attorneys-in-fact and agents, or their or his substitutes, shall do or
cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
NAME TITLE DATE
- ------------------------------------------------ -------------------------------------------- -----------------

<C> <S> <C>
/s/ JAMES C. CASTLE Chief Executive Officer and
-------------------------------------- Chairman of the Board of Directors March 23, 1998
James C. Castle (Principal Executive Officer)

/s/ GEORGE L. ARGYROS, SR.
-------------------------------------- Director March 23, 1998
George L. Argyros, Sr.

/s/ CHARLES D. MARTIN
-------------------------------------- Director March 23, 1998
Charles D. Martin

/s/ MICHAEL F. MCGRAIL
-------------------------------------- Director March 23, 1998
Michael F. McGrail

/s/ LARRY W. WANGBERG
-------------------------------------- Director March 23, 1998
Larry W. Wangberg

/s/ DOUGLAS L. SHURTLEFF Senior Vice-President of Finance and
-------------------------------------- Chief Financial Officer March 23, 1998
Douglas L. Shurtleff (Principal Financial Officer)

/s/ ZAIDA A. KLEIN Vice-President, Controller and
-------------------------------------- Chief Accounting Officer March 23, 1998
Zaida A. Klein (Principal Accounting Officer)
</TABLE>

<PAGE>

USCS INTERNATIONAL, INC. AMENDED AND As amended through 1/98
RESTATED 1988 STOCK OPTION PLAN

88-Q STOCK OPTION PLAN
- -------------------------------------------------------------------------------

1. PURPOSES OF THE PLAN.

This 1988 Stock Option Plan is designed to enable executives and other key
managers of USCS International, Inc., a Delaware corporation, and its
wholly-owned Subsidiaries to acquire or increase a proprietary interest in
the Company and thus to share in the future success of the Company's
business. The Plan is intended as a further means of attracting and
retaining outstanding management personnel. Since the executives and
managers eligible to receive Options under the Plan will be those who are
in positions to make important and direct contributions to the success of
the Company, the directors believe that the grant of Options under the Plan
will be in the Company's interest. Options granted hereunder may be either
Incentive Stock Options or Nonstatutory Stock Options at the discretion of
the Committee.

2. DEFINITIONS.

As used herein, and in any Option granted hereunder, the following
definitions shall apply:
(a) "BOARD" shall mean the Board of Directors of the Company.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(c) "COMMON STOCK" shall mean the Common Stock of the Company.
(d) "COMPANY" shall mean USCS International, Inc., a Delaware corporation.
(e) "COMMITTEE" shall mean the Committee appointed by the Board in
accordance with paragraph (a) of Section 4 of the Plan. If the Board
does not appoint or ceases to maintain a Committee, the term
"Committee" shall refer to the Board.
(f) "CONTINUOUS EMPLOYMENT" shall mean the absence of any interruption or
termination of service as an Employee or Non-Employee Director by the
Company or any Subsidiary. Continuous Employment shall not be
considered interrupted during any period of sick leave, military leave
or any other leave of absence approved by the Board or in the case of
transfers between locations of the Company or between the Company and
any Parent, Subsidiary or successor of the Company.
(g) "DISINTERESTED PERSON" shall mean a person who has not at any time
within one year prior to service as a member of the Committee (or
during such service) been granted or awarded Options or other equity
securities pursuant to the Plan or any other plan of the Company or
any Parent or Subsidiary. Notwithstanding the foregoing, a member of
the Committee shall not fail to be a Disinterested Person merely
because he or she participates in a plan meeting the requirements of
Rule 16b-3(c)(2)(i)(A) or (B) promulgated under the Exchange Act.
(h) "EMPLOYEE" shall mean any person, including officers (whether or not
they are directors), employed by the Company or any Subsidiary.
(i) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
(j) "INCENTIVE STOCK OPTION" shall mean any option granted under this Plan
and any other option granted to an Employee in accordance with the
provisions of Section 422 of the Code, and the regulations promulgated
thereunder.
(k) "NONSTATUTORY STOCK OPTION" shall mean an Option granted under the
Plan that is subject to the provisions of Section 1.83-7 of the
Treasury Regulations promulgated under Section 83 of the Code.
(l) "OPTION" shall mean a stock option granted pursuant to the Plan.
(m) "OPTION AGREEMENT" shall mean a written agreement between the Company
and the Optionee regarding the grant and exercise of Options to
purchase Shares and the terms and conditions thereof as determined by
the Committee pursuant to the Plan.
(n) "OPTIONED SHARES" shall mean the Common Stock subject to an Option.
(o) "OPTIONEE" shall mean an Employee, Non-Employee Director or
Consultant who receives an Option.
(p) "PARENT" shall mean a "parent corporation," whether now or hereafter
existing, as defined by Section 424(e) of the Code.
(q) "PLAN" shall mean this 1988 Stock Option Plan.
(r) "REGISTRATION DATE" shall mean June 21, 1996, the effective date of
the first registration statement filed by the Company pursuant to
Section 12(g) of the Exchange Act with respect to any class of the
Company's equity securities.
- -------------------------------------------------------------------------------
-1-
This plan is subject to amendment; the rights of the patricipant shall be
governed by the Plan as amended from time to time.
<PAGE>

USCS INTERNATIONAL, INC. AMENDED AND As amended through 1/98
RESTATED 1988 STOCK OPTION PLAN

88-Q STOCK OPTION PLAN
- -------------------------------------------------------------------------------

(s) "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
(t) "SHARE" shall mean a share of the Common Stock subject to an Option,
as adjusted in accordance with Section 11 of the Plan.
(u) "SUBSIDIARY" shall mean a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.

3. STOCK SUBJECT TO THE PLAN.

Subject to the provisions of Section 11 of the Plan, the maximum aggregate
number of Shares which may be optioned and sold under the Plan is 945,000
Shares. The Shares may be authorized but unissued or reacquired shares of
Common Stock. If an Option expires or becomes unexercisable for any reason
without having been exercised in full, the Shares which were subject to the
Option but as to which the Option was not exercised shall, unless the Plan
shall have been terminated, become available for other Option grants under
the Plan.

4. ADMINISTRATION OF THE PLAN.

(a) PROCEDURE AFTER REGISTRATION DATE. The Plan shall be administered
either by: (i) the full Board, provided that all members of the Board
are Disinterested Persons; or (ii) a Committee of three (3) or more
directors, each of whom is a Disinterested Person. The Board shall
take all action necessary to administer the Plan in accordance with
the then effective provisions of Rule 16b-3 promulgated under the
Exchange Act, provided that any amendment to the Plan required for
compliance with such provisions shall be made consistent with the
provisions of Section 13 of the Plan, and said regulations.

(b) POWERS OF THE COMMITTEE. Subject to the provisions of the Plan, the
Committee shall have the authority: (i) to determine, upon review of
relevant information, the fair market value of the Common Stock;
(ii) to determine the exercise price of Options to be granted, the
Employees, Directors or consultants to whom and the time or times at
which Options shall be granted, and the number of Shares to be
represented by each Option; (iii) to interpret the Plan; (iv) to
prescribe, amend and rescind rules and regulations relating to the
Plan; (v) to determine the terms and provisions of each Option
granted under the Plan (which need not be identical) and, with the
consent of the holder thereof, to modify or amend any Option; (vi)
to authorize any person to execute on behalf of the Company any
instrument required to effectuate the grant of an Option previously
granted by the Committee; (vii) defer an exercise date of any Option
(with the consent of the Optionee), subject to the provisions of
Section 9(a) of the Plan; (viii) to determine whether Options
granted under the Plan will be Incentive Stock Options or
Nonstatutory Stock Options; (ix) to make all other determinations
deemed necessary or advisable for the administration of the Plan;
and (x) to designate which Options granted under the Plan will be
issued in reliance on Rule 701.

(c) EFFECT OF COMMITTEE'S DECISION. All decisions, determinations and
interpretations of the Committee shall be final and binding on all
potential or actual Optionees, any other holder of an Option or other
equity security of the Company and all other persons.

- -------------------------------------------------------------------------------
-2-
This plan is subject to amendment; the rights of the patricipant shall be
governed by the Plan as amended from time to time.
<PAGE>

USCS INTERNATIONAL, INC. AMENDED AND As amended through 1/98
RESTATED 1988 STOCK OPTION PLAN

88-Q STOCK OPTION PLAN
- -------------------------------------------------------------------------------
5. ELIGIBILITY.

(a) PERSONS ELIGIBLE FOR OPTIONS. Options may be granted under the Plan to
key executives and managers who are Employees of the Company. All
determinations by the Compensation Committee of the persons to whom
Options shall be granted hereunder shall be conclusive. An Employee
who has been granted an Option, if he or she is otherwise eligible,
may be granted an additional Option or Options. However, the
aggregate fair market value (determined in accordance with the
provisions of Section 8(a) of the Plan) of the Shares subject to one
or more Incentive Stock Options grants that are exercisable for the
first time by an Optionee during any calendar year (under all stock
option plans of the Company and its Parents and Subsidiaries) shall
not exceed $100,000 (determined as of the grant date); all grants in
excess of the $100,000 limit shall be designated as Nonstatutory Stock
Option.

(b) NO RIGHT TO CONTINUING EMPLOYMENT. Neither the establishment nor the
operation of the Plan shall confer upon any Optionee or any other
person any right with respect to continuation of employment or other
service with the Company or any Subsidiary, nor shall the Plan
interfere in any way with the right of the Optionee or the right of
the Company (or any Parent or Subsidiary) to terminate such employment
or service at any time.

6. TERM OF PLAN.

The Plan shall become effective as of July 1, 1988 and subject to Section
13 hereof, shall extend for a term of ten (10) years from that date
pursuant to approval of the Plan granted by the holders of a majority of
the outstanding Shares at the annual meeting of Shareholders of the Company
held May 6, 1988.

7. TERM OF OPTION.

Unless the Committee determines otherwise, the term of each Option granted
under the Plan shall be ten (10) years from the date of grant. The term of
the Option shall be set forth in the Option Agreement. No Incentive Stock
Option shall be exercisable after the expiration of ten (10) years from the
date such Option is granted; provided that, no Incentive Stock Option
granted to any Employee who, at the date such Option is granted, owns
(within the meaning of Section 425(d) of the Code) more than ten percent
(10%) of the total combined voting power of all classes of stock of the
Company or any Parent or Subsidiary shall be exercisable after the
expiration of five (5) years from the date such Option is granted.

8. EXERCISE PRICE AND CONSIDERATION.

(b) TEN PERCENT STOCKHOLDERS. No Option shall be granted to any Employee
who, at the date such Option is granted, owns (within the meaning of
Section 424(d) of the Code) more than ten percent

- -------------------------------------------------------------------------------
-3-
This plan is subject to amendment; the rights of the patricipant shall be
governed by the Plan as amended from time to time.
<PAGE>

USCS INTERNATIONAL, INC. AMENDED AND As amended through 1/98
RESTATED 1988 STOCK OPTION PLAN

88-Q STOCK OPTION PLAN
- -------------------------------------------------------------------------------

(10%) of the total combined voting power of all classes of stock of
the Company or any Parent or Subsidiary, unless the exercise price
for the Shares to be issued pursuant to such Option is at least
equal to 110 percent (110%) of the fair market value of such Shares
on the grant date determined by the Committee in the manner set
forth in subsection (a) above.

(c) CONSIDERATION. The consideration to be paid for the Optioned Shares
shall be payment in cash or by check unless payment in some other
manner, including by promissory note, other shares of the Company's
Common Stock or such other consideration and method of payment for the
issuance of Optioned Shares as is authorized by the Committee at the
time of the grant of the Option. Any cash or other property received
by the Company from the sale of Shares pursuant to the Plan shall
constitute part of the general assets of the Company.

9. EXERCISE OF OPTION.

(a) VESTING PERIOD. Any Option granted hereunder shall be exercisable at
such times and under such conditions as determined by the Committee
and as shall be permissible under the terms of the Plan, which shall
be specified in the Option Agreement evidencing the Option. Options
granted under the Plan shall vest at a rate of at least twenty percent
(20%) per year, except for certain options for Vice Presidents and
above granted on or after January 22, 1998, which may vest on such
criteria and rate (including performance) without regard to minimum as
the Committee shall in its sole discretion determine.

(b) EXERCISE PROCEDURES. An Option shall be deemed to be exercised when
written notice of such exercise has been given to the Company in
accordance with the terms of the option agreement evidencing the
Option, and full payment for the Shares with respect to which the
Option is exercised has been received by the Company.

An Option may not be exercised for fractional shares. As soon as
practicable following the exercise of an Option in the manner set
forth above, the Company shall issue or cause its transfer agent to
issue stock certificates representing the Shares purchased. Until the
issuance of such stock certificates (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer
agent of the Company), no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect to the Optioned
Shares notwithstanding the exercise of the Option. No adjustment will
be made for a dividend or other rights for which the record date is
prior to the date of the transfer by the Optionee of the consideration
for the purchase of the Shares, except as provided in Section 11 of
the Plan. After the Registration Date, the exercise of an Option by
any person subject to short-swing trading liability under Section
16(b) of the Exchange Act shall be subject to compliance with all
applicable requirements of Rule 16b-3(d) or (e) promulgated under the
Exchange Act.

(c) DEATH OF OPTIONEE. In the event of the death during the Option period
of an Optionee who is at the time of his death, or was within the
ninety (90)-day period immediately prior thereto, an Employee or Non-
Employee Director, and who was in Continuous Employment as such from
the date of the grant of the Option until the date of death or
termination, the Option may be exercised, at any time prior to the
expiration of the Option period, by the Optionee's estate or by a
person who acquired the right to exercise the Option by bequest or
inheritance, but only to the extent of the accrued right to exercise
at the time of the termination or death, whichever comes first.

(d) DISABILITY OF OPTIONEE. In the event of the disability during the
Option period of an Optionee who is at the time of such disability, or
was within the ninety (90)-day period prior thereto, an Employee or
Non-Employee Director, and who was in Continuous Employment as such
from the date of the grant of the Option until the date of disability
or termination, the Option may be exercised at any time within one (1)
year following the date of disability, but only to the extent of the
accrued right to exercise at the time of the termination or
disability, whichever comes first, subject to the condition that no
option shall be exercised after the expiration of the Option period.

- -------------------------------------------------------------------------------
-4-
This plan is subject to amendment; the rights of the patricipant shall be
governed by the Plan as amended from time to time.
<PAGE>

USCS INTERNATIONAL, INC. AMENDED AND As amended through 1/98
RESTATED 1988 STOCK OPTION PLAN

88-Q STOCK OPTION PLAN
- -------------------------------------------------------------------------------

(f) EXERCISE OF OPTION WITH STOCK AFTER REGISTRATION DATE. After the
Registration Date, the Committee may permit an Optionee to exercise an
Option by delivering shares of the Company's Common Stock. If the
Optionee is so permitted, the option agreement covering such Option
may include provisions authorizing the Optionee to exercise the
Option, in whole or in part, by: (i) delivering whole shares of the
Company's Common Stock previously owned by such Optionee (whether or
not acquired through the prior exercise of a stock option) having a
fair market value equal to the aggregate exercise price for the
Optioned Shares issuable on exercise of the Option; and/or (ii)
directing the Company to withhold from the Shares that would otherwise
be issued upon exercise of the Option that number of whole Shares
having a fair market value equal to the aggregate exercise price for
the Optioned Shares issuable on exercise of the Option. Shares of the
Company's Common Stock so delivered or withheld shall be valued at
their fair market value at the close of the last business day
immediately preceding the date of exercise of the Option, as
determined by the Committee, in accordance with the provisions of
Section 8(a) of the Plan. Any balance of the exercise price shall be
paid in cash. Any shares delivered or withheld in accordance with
this provision shall not again become available for purposes of the
Plan and for Options subsequently granted thereunder.

(g) TAX WITHHOLDING. After the Registration Date, when an Optionee is
required to pay to the Company an amount with respect to tax
withholding obligations in connection with the exercise of an Option
granted under the Plan, the Optionee may elect prior to the date the
amount of such withholding tax is determined (the "Tax Date") to make
such payment, or such increased payment as the Optionee elects to make
up to the maximum federal, state and local marginal tax rates,
including any related FICA obligation, applicable to the Optionee and
the particular transaction, by: (i) delivering cash; (ii) delivering
part or all of the payment in previously owned shares of Common Stock
(whether or not acquired through the prior exercise of an Option);
and/or (iii) irrevocably directing the Company to withhold from the
Shares that would otherwise be issued upon exercise of the Option that
number of whole Shares having a fair market value equal to the amount
of tax required or elected to be withheld (a "Withholding Election").
If an Optionee's Tax Date is deferred beyond the date of exercise and
the Optionee makes a Withholding Election, the Optionee will initially
receive the full amount of Optioned Shares otherwise issuable upon
exercise of the Option, but will be unconditionally obligated to
surrender to the Company on the Tax Date the number of Shares
necessary to satisfy his or her minimum withholding requirements, or
such higher payment as he or she may have elected to make, with
adjustments to be made in cash after the Tax Date.

Any withholding of Optioned Shares with respect to taxes arising in
connection with the exercise of an Option by any person subject to
short-swing trading liability under Section 16(b) of the Exchange Act
shall satisfy the following conditions:

(i) An advance election to withhold Optioned Shares in settlement of a
tax liability must satisfy the requirements of Rule 16b-3(d)(1)(i),
regarding participant-directed transactions;

(ii) Absent such an election, the withholding of Optioned Shares to
settle a tax liability may occur only during the quarterly window
period described in Rule 16b-3(e);

(iii) Absent an advance election or window-period withholding, the
Optionee may deliver shares of Common Stock owned prior to the
exercise of an Option to settle a tax liability arising upon
exercise of the Option, in accordance with Rule 16b-3(f); or

- -------------------------------------------------------------------------------
-5-
This plan is subject to amendment; the rights of the patricipant shall be
governed by the Plan as amended from time to time.
<PAGE>

USCS INTERNATIONAL, INC. AMENDED AND As amended through 1/98
RESTATED 1988 STOCK OPTION PLAN

88-Q STOCK OPTION PLAN
- -------------------------------------------------------------------------------

(iv) The delivery of previously acquired shares of Common Stock (but not
the withholding of newly acquired Shares) will be allowed where an
election under Section 83(b) of the Code accelerates the Tax Date
to a day that occurs less than six (6) months after the advance
election and is not within the quarterly window period described in
Rule 16b-3(e).

Any adverse consequences incurred by an Optionee with respect to
the use of shares of Common Stock to pay any part of the exercise
price or of any tax in connection with the exercise of an Option,
including without limitation any adverse tax consequences arising
as a result of a disqualifying disposition within the meaning of
Section 422 of the Code shall be the sole responsibility of the
Optionee. Shares withheld in accordance with this provision
shall not again become available for purposes of the Plan and for
Options subsequently granted thereunder.

10. NON-TRANSFERABILITY OF OPTIONS.

An Option may not be sold, pledged, assigned, hypothecated, transferred or
disposed of in any manner other than by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined
by the Code or Title I of the Employee Retirement Income Security Act or
the rules thereunder, and may be exercised, during the lifetime of the
Optionee, only by the Optionee.

11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.

Subject to any required action by the stockholders of the Company, the
number of Optioned Shares covered by each outstanding Option, and the per
share exercise price of each such Option, shall be proportionately adjusted
for any increase or decrease in the number of issued shares of Common Stock
resulting from a stock split, reverse stock split, recapitalization,
combination, reclassification, the payment of a stock dividend on the
Common Stock or any other increase or decrease in the number of such shares
of Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the
Company shall not be deemed to have been "effected without receipt of
consideration". Such adjustment shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issue by the Company of shares of
stock of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an
Option.

The Committee may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the number or class of
securities covered by any Option, as well as the price to be paid therefor,
in the event that the Company effects one or more reorganizations,
recapitalizations, rights offerings, or other increases or reductions of
shares of its outstanding Common Stock, and in the event of the Company
being consolidated with or merged into any other corporation.

If the Company dissolves, sells substantially all of its assets, is
acquired in a stock for stock or securities exchange or is party to a
merger or reorganization in which it not the surviving corporation (a
"Change in Control"), then fifty percent (50%) of the unvested portion of
each Option held at least six (6) months prior to the effective date of a
Change of Control shall immediately vest and each Option shall be
exercisable by the holder thereof for a period of not less than thirty (30)
days prior to such Change in Control, provided, however, that the Optionee
shall be given not less than thirty (30) days notice of such Change of
Control and within such time period may exercise his or her Options in
whole or in part. All Options shall terminate in their entirety to the
extent not exercised on or prior to such thirty (30) day period.

12. TIME OF GRANTING OPTIONS.

Unless otherwise specified by the Committee, the date of grant of an Option
under the Plan shall be the date on which the Committee makes the
determination granting such Option. Notice of the

- -------------------------------------------------------------------------------
-6-
This plan is subject to amendment; the rights of the patricipant shall be
governed by the Plan as amended from time to time.
<PAGE>

USCS INTERNATIONAL, INC. AMENDED AND As amended through 1/98
RESTATED 1988 STOCK OPTION PLAN

88-Q STOCK OPTION PLAN
- -------------------------------------------------------------------------------

determination shall be given to each Optionee to whom an Option is so
granted within a reasonable time after the date of such grant.

13. AMENDMENT AND TERMINATION OF THE PLAN.

The Board may amend or terminate the Plan from time to time in such
respects as the Board may deem advisable, except that, without approval of
the holders of a majority of the outstanding capital stock no such revision
or amendment shall change the number of Shares subject to the Plan, change
the designation of the class of employees eligible to receive Options or
add any material benefit to Optionees under the Plan. Any such amendment
or termination of the Plan shall not affect Options already granted, and
such Options shall remain in full force and effect as if the Plan had not
been amended or terminated.

14. CONDITIONS UPON ISSUANCE OF SHARES.

Shares shall not be issued with respect to an Option granted under the Plan
unless the exercise of such Option and the issuance and delivery of such
Shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act, the Exchange Act, the
rules and regulations promulgated thereunder, and the requirements of any
stock exchange upon which the Shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to
such compliance. As a condition to the exercise of an Option, the Company
may require the person exercising such Option to represent and warrant at
the time of any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation
is required by any of the aforementioned relevant provisions of law.

15. RESERVATION OF SHARES.

During the term of this Plan the Company will at all times reserve and keep
available the number of Shares as shall be sufficient to satisfy the
requirements of the Plan. Inability of the Company to obtain from any
regulatory body having jurisdiction and authority deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares
hereunder shall relieve the Company of any liability in respect of the
nonissuance or sale of such Shares as to which such requisite authority
shall not have been obtained.

16. INFORMATION TO OPTIONEE.

During the term of any Option granted under the Plan, the Company shall
provide or otherwise make available to each Optionee a copy of its
financial statements at least annually.

17. OPTION AGREEMENT.

Options granted under the Plan shall be evidenced by Option Agreements.

18. STOCKHOLDER APPROVAL.

The Plan shall be subject to approval by the affirmative vote of the
holders of a majority of the outstanding capital stock of the Company
entitled to vote within twelve (12) months before or after the Plan is
adopted. Any option exercised before stockholder approval is obtained must
be rescinded if stockholder approval is not obtained within twelve (12)
months before or after the Plan is adopted. Shares issued upon the
exercise of such options shall not be counted in determining whether such
approval is obtained. Any amendments to the Plan which require stockholder
approval shall be by the affirmative vote of the holders of a majority of
the outstanding capital stock of the Company entitled to vote.

- -------------------------------------------------------------------------------
-7-
This plan is subject to amendment; the rights of the patricipant shall be
governed by the Plan as amended from time to time.
<PAGE>

USCS INTERNATIONAL, INC. AMENDED AND As amended through 1/98
RESTATED 1988 STOCK OPTION PLAN

88-Q STOCK OPTION PLAN
- -------------------------------------------------------------------------------

--end of plan--

- -------------------------------------------------------------------------------
-8-
This plan is subject to amendment; the rights of the patricipant shall be
governed by the Plan as amended from time to time.

<PAGE>

USCS INTERNATIONAL, INC. AMENDED AND As amended through 1/98
RESTATED 1993 STOCK OPTION PLAN

93-Q STOCK OPTION PLAN
- -------------------------------------------------------------------------------

1. PURPOSES OF THE PLAN.

The purposes of this Stock Option Plan are to reward outstanding
performance and contribution, to provide a means for sharing in the
Company's value growth, and to promote long-term commitment to the Company.
Options granted hereunder may be either Incentive Stock Options or
Nonstatutory Stock Options at the discretion of the Committee.

2. DEFINITIONS.

As used herein, and in any Option granted hereunder, the following
definitions shall apply:
(a) "BOARD" shall mean the Board of Directors of the Company.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(c) "COMMON STOCK" shall mean the Common Stock of the Company.
(d) "COMPANY" shall mean USCS International, Inc., a Delaware corporation.
(e) "COMMITTEE" shall mean the Committee appointed by the Board in
accordance with paragraph (a) of Section 4 of the Plan. If the Board
does not appoint or ceases to maintain a Committee, the term
"Committee" shall refer to the Board.
(f) "CONTINUOUS EMPLOYMENT" shall mean the absence of any interruption or
termination of service as an Employee by the Company or any Subsidiary.
Continuous Employment shall not be considered interrupted during any
period of sick leave, military leave or any other leave of absence
approved by the Board or in the case of transfers between locations of
the Company or between the Company and any Parent, Subsidiary or
successor of the Company.
(g) "DISINTERESTED PERSON" shall mean a person who has not at any time
within one year prior to service as a member of the Committee (or
during such service) been granted or awarded Options or other equity
securities pursuant to the Plan or any other plan of the Company or
any Parent or Subsidiary. Notwithstanding the foregoing, a member of
the Committee shall not fail to be a Disinterested Person merely
because he or she participates in a plan meeting the requirements of
Rule 16b-3(c)(2)(i)(A) or (B) promulgated under the Exchange Act.
(h) "EMPLOYEE" shall mean a person employed by the Company or any
Subsidiary.
(i) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
(j) "INCENTIVE STOCK OPTION" shall mean any option granted under this Plan
and any other option granted to an Employee in accordance with the
provisions of Section 422 of the Code, and the regulations promulgated
thereunder.
(k) "NONSTATUTORY STOCK OPTION" shall mean an Option granted under the Plan
that is subject to the provisions of Section 1.83-7 of the Treasury
Regulations promulgated under Section 83 of the Code.
(l) "OPTION" shall mean a stock option granted pursuant to the Plan.
(m) "OPTION AGREEMENT" shall mean a written agreement between the Company
and the Optionee regarding the grant and exercise of Options to
purchase Shares and the terms and conditions thereof as determined by
the Committee pursuant to the Plan.
(n) "OPTIONED SHARES" shall mean the Common Stock subject to an Option.
(o) "OPTIONEE" shall mean an Employee at the level of vice president or
above who receives an Option.
(p) "PARENT" shall mean a "parent corporation," whether now or hereafter
existing, as defined by Section 424(e) of the Code.
(q) "PLAN" shall mean this 1993 Stock Option Plan.
(r) "REGISTRATION DATE" shall mean June 21, 1996, the effective date of
the first registration statement filed by the Company pursuant to
Section 12(g) of the Exchange Act with respect to any class of the
Company's equity securities.
(s) "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
(t) "SHARE" shall mean a share of the Common Stock subject to an Option,
as adjusted in accordance with Section 11 of the Plan.

- -------------------------------------------------------------------------------
-1-

This plan is subject to amendment; the rights of the participants shall be
governed by the Plan as amended from time to time.

<PAGE>

USCS INTERNATIONAL, INC. AMENDED AND As amended through 1/98
RESTATED 1993 STOCK OPTION PLAN

93-Q STOCK OPTION PLAN
- -------------------------------------------------------------------------------

(u) "SUBSIDIARY" shall mean a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.

3. STOCK SUBJECT TO THE PLAN.

Subject to the provisions of Section 11 of the Plan, The number of Shares
under this Plan shall be, and shall not exceed, an aggregate of 1,260,000
shares of Common voting stock of USCS International, Inc. The Shares may be
authorized but unissued or reacquired shares of Common Stock. If an Option
expires or becomes unexercisable for any reason without having been
exercised in full, the Shares which were subject to the Option but as to
which the Option was not exercised shall, unless the Plan shall have been
terminated, become available for other Option grants under the Plan.

The Company intends that as long as it is not subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act and is not an
investment company registered or required to be registered under the
Investment Company Act of 1940, all offers and sales of Options and Shares
issuable upon exercise of any Option shall be exempt from registration
under the provisions of Section 5 of the Securities Act, and the Plan shall
be administered in such a manner so as to preserve such exemption. The
Company intends that the Plan shall constitute a written compensatory
benefit plan within the meaning of Rule 701(b) of 17 CFR Section 230.701
promulgated by the Securities and Exchange Commission pursuant to such Act.
The Committee shall designate which Options granted under the Plan by the
Company are intended to be granted in reliance on Rule 701.

4. ADMINISTRATION OF THE PLAN.

(a) PROCEDURE. The Plan shall be administered by the Board. The Board
may appoint a Committee consisting of not less than three (3) members
of the Board to administer the Plan, subject to such terms and
conditions as the Board may prescribe. Once appointed, the Committee
shall continue to serve until otherwise directed by the Board. From
time to time, the Board may increase the size of the Committee and
appoint additional members thereof, remove members (with or without
cause) and appoint new members in substitution therefor, fill
vacancies, however caused, and remove all members of the Committee
and, thereafter, directly administer the Plan.

Members of the Board or Committee who are either eligible for Options
or have been granted Options may vote on any matters affecting the
administration of the Plan or the grant of Options pursuant to the
Plan, except that no such member shall act upon the granting of an
Option to himself, but any such member may be counted in determining
the existence of a quorum at any meeting of the Board or the Committee
during which action is taken with respect to the granting of an Option
to him or her.

The Committee shall meet at such times and places and upon such notice
as the Chairperson determines. A majority of the Committee shall
constitute a quorum. Any acts by the Committee may be taken at any
meeting at which a quorum is present and shall be by majority vote of
those members entitled to vote. Additionally, any acts reduced to
writing or approved in writing by all of the members of the Committee
shall be valid acts of the Committee.

(b) PROCEDURE AFTER REGISTRATION DATE. Notwithstanding subsection (a)
above, after the date of registration of the Company's Common Stock on
a national securities exchange or the Registration Date, the Plan
shall be administered either by: (i) the full Board, provided that all
members of the Board are Disinterested Persons; or (ii) a Committee of
three (3) or more directors, each of whom is a Disinterested Person.
After such date, the Board shall take all action necessary to
administer the Plan in accordance with the then effective provisions
of Rule 16b-3 promulgated under the Exchange Act, provided that any
amendment to the Plan

- -------------------------------------------------------------------------------
-2-

This plan is subject to amendment; the rights of the participants shall be
governed by the Plan as amended from time to time.

<PAGE>

USCS INTERNATIONAL, INC. AMENDED AND As amended through 1/98
RESTATED 1993 STOCK OPTION PLAN

93-Q STOCK OPTION PLAN
- -------------------------------------------------------------------------------

required for compliance with such provisions shall be made consistent
with the provisions of Section 13 of the Plan, and said regulations.

(c) POWERS OF THE COMMITTEE. Subject to the provisions of the Plan, the
Committee shall have the authority: (i) to determine, upon review of
relevant information, the fair market value of the Common Stock; (ii)
to determine the exercise price of Options to be granted, the persons
to whom and the time or times at which Options shall be granted, and
the number of Shares to be represented by each Option; (iii) to
interpret the Plan; (iv) to prescribe, amend and rescind rules and
regulations relating to the Plan; (v) to determine the terms and
provisions of each Option granted under the Plan (which need not be
identical) and, with the consent of the holder thereof, to modify or
amend any Option; (vi) to authorize any person to execute on behalf of
the Company any instrument required to effectuate the grant of an
Option previously granted by the Committee; (vii) defer an exercise
date of any Option (with the consent of the Optionee), subject to the
provisions of Section 9(a) of the Plan; (viii) to determine whether
Options granted under the Plan will be Incentive Stock Options or
Nonstatutory Stock Options; (ix) to make all other determinations
deemed necessary or advisable for the administration of the Plan; and
(x) to designate which Options granted under the Plan will be issued
in reliance on Rule 701.

(d) EFFECT OF COMMITTEE'S DECISION. All decisions, determinations and
interpretations of the Committee shall be final and binding on all
potential or actual Optionees, any other holder of an Option or other
equity security of the Company and all other persons.

5. ELIGIBILITY.

(a) PERSONS ELIGIBLE FOR OPTIONS. Options under the Plan may be granted
only to Employees who are vice presidents or above of the Company or
any Subsidiary whom the Committee, in its sole discretion, may
designate from time to time. An Employee who has been granted an
Option, if he or she is otherwise eligible, may be granted an
additional Option or Options. However, the aggregate fair market
value (determined in accordance with the provisions of Section 8(a) of
the Plan) of the Shares subject to one or more Incentive Stock Options
grants that are exercisable for the first time by an Optionee during
any calendar year (under all stock option plans of the Company and its
Parents and Subsidiaries) shall not exceed $100,000 (determined as of
the grant date); all grants in excess of the $100,000 limit are
designated as Nonstatutory Stock Option..

6. TERM OF PLAN.

The Plan shall become effective upon its adoption by the Board or its
approval by vote of the holders of the outstanding shares of the Company
entitled to vote on the adoption of the Plan (in accordance with the
provisions of Section 18 hereof), whichever is earlier. It shall continue
in effect for a term of ten (10) years unless sooner terminated under
Section 13 of the Plan.

7. TERM OF OPTION.

- -------------------------------------------------------------------------------
-3-

This plan is subject to amendment; the rights of the participants shall be
governed by the Plan as amended from time to time.

<PAGE>

USCS INTERNATIONAL, INC. AMENDED AND As amended through 1/98
RESTATED 1993 STOCK OPTION PLAN

93-Q STOCK OPTION PLAN
- -------------------------------------------------------------------------------

owns (within the meaning of Section 425(d) of the Code) more than ten
percent (10%) of the total combined voting power of all classes of stock
of the Company or any Parent or Subsidiary shall be exercisable after the
expiration of five (5) years from the date such Option is granted.

8. EXERCISE PRICE AND CONSIDERATION.

(a) EXERCISE PRICE. Except as provided in subsection (b) below, the
exercise price for the Shares to be issued pursuant to any Option
shall be such price as is determined by the Committee, which shall in
no event be less than, in the case of Incentive Stock Options, the
fair market value of such Shares on the date the Option is granted,
PROVIDED THAT, in the case of any Optionee owning stock possessing
more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or any Parent or Subsidiary of the
Company, the exercise price shall be 110% of fair market value on the
date the Incentive Stock Option is granted. Fair market value of the
Common Stock shall be determined by the Committee, using such criteria
as it deems relevant; provided, however, that if there is a public
market for the Common Stock, the fair market value per Share shall be
the average of the last reported bid and asked prices of the Common
Stock on the date of grant, as reported in THE WALL STREET JOURNAL
(or, if not so reported, as otherwise reported by the National
Association of Securities Dealers Automated Quotation (NASDAQ) System)
or, in the event the Common Stock is listed on a national securities
exchange (within the meaning of Section 6 of the Exchange Act) or on
the NASDAQ National Market System (or any successor national market
system), the fair market value per Share shall be the closing price on
such exchange on the date of grant of the Option, as reported in THE
WALL STREET JOURNAL.
(b) TEN PERCENT STOCKHOLDERS. No Option shall be granted to any Employee
who, at the date such Option is granted, owns (within the meaning of
Section 424(d) of the Code) more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or any
Parent or Subsidiary, unless the exercise price for the Shares to be
issued pursuant to such Option is at least equal to 110 percent (110%)
of the fair market value of such Shares on the grant date determined
by the Committee in the manner set forth in subsection (a) above.
(c) CONSIDERATION. The consideration to be paid for the Optioned Shares
shall be payment in cash or by check unless payment in some other
manner, including by promissory note, other shares of the Company's
Common Stock or such other consideration and method of payment for the
issuance of Optioned Shares as is authorized by the Committee at the
time of the grant of the Option. Any cash or other property received
by the Company from the sale of Shares pursuant to the Plan shall
constitute part of the general assets of the Company.

9. EXERCISE OF OPTION.

- -------------------------------------------------------------------------------
-4-

This plan is subject to amendment; the rights of the participants shall be
governed by the Plan as amended from time to time.

<PAGE>

USCS INTERNATIONAL, INC. AMENDED AND As amended through 1/98
RESTATED 1993 STOCK OPTION PLAN

93-Q STOCK OPTION PLAN
- -------------------------------------------------------------------------------

(c) DEATH OF OPTIONEE. In the event of the death during the Option period
of an Optionee who is at the time of his death, or was within the
ninety (90)-day period immediately prior thereto, an Employee, and who
was in Continuous Employment as such from the date of the grant of the
Option until the date of death or termination, the Option may be
exercised, at any time prior to the expiration of the Option period,
by the Optionee's estate or by a person who acquired the right to
exercise the Option by bequest or inheritance, but only to the extent
of the accrued right to exercise at the time of the termination or
death, whichever comes first.

(d) DISABILITY OF OPTIONEE. In the event of the disability during the
Option period of an Optionee who is at the time of such disability, or
was within the ninety (90)-day period prior thereto, an Employee, and
who was in Continuous Employment as such from the date of the grant of
the Option until the date of disability or termination, the Option may
be exercised at any time within one (1) year following the date of
disability, but only to the extent of the accrued right to exercise at
the time of the termination or disability, whichever comes first,
subject to the condition that no option shall be exercised after the
expiration of the Option period.

(e) TERMINATION OF STATUS AS EMPLOYEE. If an Optionee shall cease to be
an Employee for any reason other than disability or death, the
Optionee may, but only within ninety (90) days (or such other period
of time as is determined by the Committee) after the date he or she
ceases to be an Employee, exercise his or her Option to the extent
that he or she was entitled to exercise it at the date of such
termination, subject to the condition that no option shall be
exercisable after the expiration of the Option period. Upon such
exercise and if so provided in the Restricted Stock Transfer
Agreement, the Company may, but only within ninety (90) days (or such
other period of time as is determined by the Committee) after the date
of such exercise, repurchase from the Optionee the Optionee's Option
Shares at the higher of the original purchase price for the Option
Shares or fair market value (as determined by the Company's Board of
Directors) of the Option Shares on the date of termination of
employment. The right to repurchase shall be exercisable for cash or
cancellation of purchase money indebtedness.

- -------------------------------------------------------------------------------
-5-

This plan is subject to amendment; the rights of the participants shall be
governed by the Plan as amended from time to time.

<PAGE>

USCS INTERNATIONAL, INC. AMENDED AND As amended through 1/98
RESTATED 1993 STOCK OPTION PLAN

93-Q STOCK OPTION PLAN
- -------------------------------------------------------------------------------

price shall be paid in cash. Any shares delivered or withheld in
accordance with this provision shall not again become available for
purposes of the Plan and for Options subsequently granted thereunder.

(i) An advance election to withhold Optioned Shares in settlement of a tax
liability must satisfy the requirements of Rule 16b-3(d)(1)(i),
regarding participant-directed transactions;

(ii) Absent such an election, the withholding of Optioned Shares to settle
a tax liability may occur only during the quarterly window period
described in Rule 16b-3(e);

(iii) Absent an advance election or window-period withholding, the Optionee
may deliver shares of Common Stock owned prior to the exercise of an
Option to settle a tax liability arising upon exercise of the Option,
in accordance with Rule 16b-3(f); or

(iv) The delivery of previously acquired shares of Common Stock (but not
the withholding of newly acquired Shares) will be allowed where an
election under Section 83(b) of the Code accelerates the Tax Date to a
day that occurs less than six (6) months after the advance election
and is not within the quarterly window period described in
Rule 16b-3(e).

Any adverse consequences incurred by an Optionee with respect to
the use of shares of Common Stock to pay any part of the exercise
price or of any tax in connection with the exercise of an Option,
including without limitation any adverse tax consequences arising
as a result of a disqualifying disposition within the meaning of
Section 422 of the Code shall be the sole responsibility of the
Optionee. Shares withheld in accordance with this provision shall
not again become available for purposes of the Plan and for
Options subsequently granted thereunder.

10. NON-TRANSFERABILITY OF OPTIONS.

- -------------------------------------------------------------------------------
-6-

This plan is subject to amendment; the rights of the participants shall be
governed by the Plan as amended from time to time.

<PAGE>

USCS INTERNATIONAL, INC. AMENDED AND As amended through 1/98
RESTATED 1993 STOCK OPTION PLAN

93-Q STOCK OPTION PLAN
- -------------------------------------------------------------------------------

11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.

12. TIME OF GRANTING OPTIONS.

Unless otherwise specified by the Committee, the date of grant of an Option
under the Plan shall be the date on which the Committee makes the
determination granting such Option. Notice of the determination shall be
given to each Optionee to whom an Option is so granted within a reasonable
time after the date of such grant.

13. AMENDMENT AND TERMINATION OF THE PLAN.

The Board may amend or terminate the Plan from time to time in such
respects as the Board may deem advisable, except that, without approval of
the holders of a majority of the outstanding capital stock no such revision
or amendment shall change the number of Shares subject to the Plan, change
the designation of the class of employees eligible to receive Options or
add any material benefit to Optionees under the Plan. Any such amendment
or termination of the Plan shall not affect Options already granted, and
such Options shall remain in full force and effect as if the Plan had not
been amended or terminated.

14. CONDITIONS UPON ISSUANCE OF SHARES.

- -------------------------------------------------------------------------------
-7-

This plan is subject to amendment; the rights of the participants shall be
governed by the Plan as amended from time to time.

<PAGE>

USCS INTERNATIONAL, INC. AMENDED AND As amended through 1/98
RESTATED 1993 STOCK OPTION PLAN

93-Q STOCK OPTION PLAN
- -------------------------------------------------------------------------------

to the exercise of an Option, the Company may require the person exercising
such Option to represent and warrant at the time of any such exercise that
the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel
for the Company, such a representation is required by any of the
aforementioned relevant provisions of law.

15. RESERVATION OF SHARES.

16. INFORMATION TO OPTIONEE.

During the term of any Option granted under the Plan, the Company shall
provide or otherwise make available to each Optionee a copy of its
financial statements at least annually.

17. OPTION AGREEMENT.

Options granted under the Plan shall be evidenced by Option Agreements.

18. STOCKHOLDER APPROVAL.

- -------------------------------------------------------------------------------
-8-

This plan is subject to amendment; the rights of the participants shall be
governed by the Plan as amended from time to time.

<PAGE>

USCS INTERNATIONAL, INC. AMENDED AND AS AMENDED THROUGH 1/98
RESTATED 1990 STOCK OPTION PLAN

90-N STOCK OPTION PLAN
- -------------------------------------------------------------------------------

1. PURPOSES OF THE PLAN.

The purposes of this Stock Option Plan are to attract and retain the best
available personnel for positions of substantial responsibility, to provide
additional incentives to Employees, and to promote the success of the
Company's business. Options granted hereunder may be either Incentive
Stock Options or Nonstatutory Stock Options at the discretion of the
Committee.

2. DEFINITIONS.

As used herein, and in any Option granted hereunder, the following
definitions shall apply:
(a) "BOARD" shall mean the Board of Directors of the Company.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(c) "COMMON STOCK" shall mean the Common Stock of the Company.
(d) "COMPANY" shall mean USCS International, Inc., a Delaware corporation.
(e) "COMMITTEE" shall mean the Committee appointed by the Board in
accordance with paragraph (a) of Section 4 of the Plan. If the Board
does not appoint or ceases to maintain a Committee, the term
"Committee" shall refer to the Board.
(f) "CONTINUOUS EMPLOYMENT" shall mean the absence of any interruption or
termination of service as an Employee or Non-Employee Director by the
Company or any Subsidiary. Continuous Employment shall not be
considered interrupted during any period of sick leave, military leave
or any other leave of absence approved by the Board or in the case of
transfers between locations of the Company or between the Company and
any Parent, Subsidiary or successor of the Company.
(g) "DISINTERESTED PERSON" shall mean a person who has not at any time
within one year prior to service as a member of the Committee (or
during such service) been granted or awarded Options or other equity
securities pursuant to the Plan or any other plan of the Company or
any Parent or Subsidiary. Notwithstanding the foregoing, a member of
the Committee shall not fail to be a Disinterested Person merely
because he or she participates in a plan meeting the requirements of
Rule 16b-3(c)(2)(i)(A) or (B) promulgated under the Exchange Act.
(h) "EMPLOYEE" shall mean any person, including officers (whether or not
they are directors), employed by the Company or any Subsidiary.
(i) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
(j) "INCENTIVE STOCK OPTION" shall mean any option granted under this Plan
and any other option granted to an Employee in accordance with the
provisions of Section 422 of the Code, and the regulations promulgated
thereunder.
(k) "NONSTATUTORY STOCK OPTION" shall mean an Option granted under the
Plan that is subject to the provisions of Section 1.83-7 of the
Treasury Regulations promulgated under Section 83 of the Code.
(l) "OPTION" shall mean a stock option granted pursuant to the Plan.
(m) "OPTION AGREEMENT" shall mean a written agreement between the Company
and the Optionee regarding the grant and exercise of Options to
purchase Shares and the terms and conditions thereof as determined by
the Committee pursuant to the Plan.
(n) "OPTIONED SHARES" shall mean the Common Stock subject to an Option.
(o) "OPTIONEE" shall mean an Employee, Non-Employee Director or
Consultant who receives an Option.
(p) "PARENT" shall mean a "parent corporation," whether now or hereafter
existing, as defined by Section 424(e) of the Code.
(q) "PLAN" shall mean this 1990 Stock Option Plan.
(r) "REGISTRATION DATE" shall mean June 21, 1996, the effective date of
the first registration statement filed by the Company pursuant to
Section 12(g) of the Exchange Act with respect to any class of the
Company's equity securities.
(s) "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
(t) "SHARE" shall mean a share of the Common Stock subject to an Option,
as adjusted in accordance with Section 11 of the Plan.
(u) "SUBSIDIARY" shall mean a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.

3. STOCK SUBJECT TO THE PLAN.

Subject to the provisions of Section 11 of the Plan, the maximum aggregate
number of Shares which may be optioned and sold under the Plan is 1,039,500
Shares. The Shares may be authorized but unissued or reacquired shares of
Common Stock. If an Option expires or becomes unexercisable for any reason
without having been exercised in full, the Shares which were subject to the
Option but as to which the Option was not exercised shall, unless the Plan
shall have been terminated, become available for other Option grants under
the Plan.

- --------------------------------------------------------------------------------
-1-

This plan is subject to amendment; the rights of the participant shall be
governed by the Plan as amended from time to time.

<PAGE>

USCS INTERNATIONAL, INC. AMENDED AND AS AMENDED THROUGH 1/98
RESTATED 1990 STOCK OPTION PLAN

90-N STOCK OPTION PLAN
- --------------------------------------------------------------------------------

offers and sales of Options and Shares issuable upon exercise of any Option
shall be exempt from registration under the provisions of Section 5 of the
Securities Act, and the Plan shall be administered in such a manner so as
to preserve such exemption. The Company intends that the Plan shall
constitute a written compensatory benefit plan within the meaning of Rule
701(b) of 17 CFR Section 230.701 promulgated by the Securities and Exchange
Commission pursuant to such Act. The Committee shall designate which
Options granted under the Plan by the Company are intended to be granted
in reliance on Rule 701.

4. ADMINISTRATION OF THE PLAN.

(c) POWERS OF THE COMMITTEE. Subject to the provisions of the Plan, the
Committee shall have the authority: (i) to determine, upon review of
relevant information, the fair market value of the Common Stock; (ii)
to determine the exercise price of Options to be granted, the
Employees, Directors or consultants to whom and the time or times at
which Options shall be granted, and the number of Shares to be
represented by each Option; (iii) to interpret the Plan; (iv) to
prescribe, amend and rescind rules and regulations relating to the
Plan; (v) to determine the terms and provisions of each Option granted
under the Plan (which need not be identical) and, with the consent of
the holder thereof, to modify or amend any Option; (vi) to authorize
any person to execute on behalf of the Company any instrument required
to effectuate the grant of an Option previously granted by the
Committee; (vii) defer an exercise date of any Option (with the
consent of the Optionee), subject to the provisions of Section 9(a) of
the Plan; (viii) to determine whether Options granted under the Plan
will be Incentive Stock Options or Nonstatutory Stock Options; (ix) to
make all other determinations deemed necessary or advisable for the
administration of the Plan; and (x) to designate which Options granted
under the Plan will be issued in reliance on Rule 701.

- --------------------------------------------------------------------------------
-2-

This plan is subject to amendment; the rights of the participant shall be
governed by the Plan as amended from time to time.

<PAGE>

USCS INTERNATIONAL, INC. AMENDED AND AS AMENDED THROUGH 1/98
RESTATED 1990 STOCK OPTION PLAN

90-N STOCK OPTION PLAN
- --------------------------------------------------------------------------------

5. ELIGIBILITY.

(a) PERSONS ELIGIBLE FOR OPTIONS. Options under the Plan may be granted
only to Employees whom the Committee, in its sole discretion, may
designate from time to time. An Employee who has been granted an
Option, if he or she is otherwise eligible, may be granted an
additional Option or Options. However, the aggregate fair market
value (determined in accordance with the provisions of Section 8(a) of
the Plan) of the Shares subject to one or more Incentive Stock Options
grants that are exercisable for the first time by an Optionee during
any calendar year (under all stock option plans of the Company and its
Parents and Subsidiaries) shall not exceed $100,000 (determined as of
the grant date)); all grants in excess of the $100,000 limit are
designated as Nonstatutory Stock Option.

6. TERM OF PLAN.

7. TERM OF OPTION.

8. EXERCISE PRICE AND CONSIDERATION.

- --------------------------------------------------------------------------------
-3-

This plan is subject to amendment; the rights of the participant shall be
governed by the Plan as amended from time to time.

<PAGE>

USCS INTERNATIONAL, INC. AMENDED AND AS AMENDED THROUGH 1/98
RESTATED 1990 STOCK OPTION PLAN

90-N STOCK OPTION PLAN
- --------------------------------------------------------------------------------

9. EXERCISE OF OPTION.

(c) DEATH OF OPTIONEE. In the event of the death during the Option period
of an Optionee who is at the time of his death, or was within the
ninety (90)-day period immediately prior thereto, an Employee or
Non-Employee Director, and who was in Continuous Employment as such
from the date of the grant of the Option until the date of death or
termination, the Option may be exercised, at any time prior to the
expiration of the Option period, by the Optionee's estate or by a
person who acquired the right to exercise the Option by bequest or
inheritance, but only to the extent of the accrued right to exercise
at the time of the termination or death, whichever comes first.

- --------------------------------------------------------------------------------
-4-

This plan is subject to amendment; the rights of the participant shall be
governed by the Plan as amended from time to time.

<PAGE>

USCS INTERNATIONAL, INC. AMENDED AND AS AMENDED THROUGH 1/98
RESTATED 1990 STOCK OPTION PLAN

90-N STOCK OPTION PLAN
- --------------------------------------------------------------------------------

with the provisions of Section 8(a) of the Plan. Any balance of the
exercise price shall be paid in cash. Any shares delivered or
withheld in accordance with this provision shall not again become
available for purposes of the Plan and for Options subsequently
granted thereunder.

(g) TAX WITHHOLDING. After the Registration Date, when an Optionee is
required to pay to the Company an amount with respect to tax
withholding obligations in connection with the exercise of an Option
granted under the Plan, the Optionee may elect prior to the date the
amount of such withholding tax is determined (the "Tax Date") to make
such payment, or such increased payment as the Optionee elects to
make up to the maximum federal, state and local marginal tax rates,
including any related FICA obligation, applicable to the Optionee and
the particular transaction, by: (i) delivering cash; (ii) delivering
part or all of the payment in previously owned shares of Common Stock
(whether or not acquired through the prior exercise of an Option);
and/or (iii) irrevocably directing the Company to withhold from the
Shares that would otherwise be issued upon exercise of the Option
that number of whole Shares having a fair market value equal to the
amount of tax required or elected to be withheld (a "Withholding
Election"). If an Optionee's Tax Date is deferred beyond the date
of exercise and the Optionee makes a Withholding Election, the
Optionee will initially receive the full amount of Optioned Shares
otherwise issuable upon exercise of the Option, but will be
unconditionally obligated to surrender to the Company on the Tax Date
the number of Shares necessary to satisfy his or her minimum
withholding requirements, or such higher payment as he or she may
have elected to make, with adjustments to be made in cash after the
Tax Date.

(i) An advance election to withhold Optioned Shares in settlement of a
tax liability must satisfy the requirements of Rule 16b-3(d)(1)(i),
regarding participant-directed transactions;

(ii) Absent such an election, the withholding of Optioned Shares to settle
a tax liability may occur only during the quarterly window period
described in Rule 16b-3(e);

(iv) The delivery of previously acquired shares of Common Stock (but not
the withholding of newly acquired Shares) will be allowed where an
election under Section 83(b) of the Code accelerates the Tax Date to
a day that occurs less than six (6) months after the advance election
and is not within the quarterly window period described in
Rule 16b-3(e).

Any adverse consequences incurred by an Optionee with respect to the
use of shares of Common Stock to pay any part of the exercise price
or of any tax in connection with the exercise of an Option, including
without limitation any adverse tax consequences arising as a result
of a disqualifying disposition within the meaning of Section 422 of
the Code shall be the sole responsibility of the Optionee. Shares
withheld in accordance with this provision shall not again become
available for purposes of the Plan and for Options subsequently
granted thereunder.

10. NON-TRANSFERABILITY OF OPTIONS.

11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.

- --------------------------------------------------------------------------------
-5-

This plan is subject to amendment; the rights of the participant shall be
governed by the Plan as amended from time to time.

<PAGE>

USCS INTERNATIONAL, INC. AMENDED AND AS AMENDED THROUGH 1/98
RESTATED 1990 STOCK OPTION PLAN

90-N STOCK OPTION PLAN
- --------------------------------------------------------------------------------

conclusive. Except as expressly provided herein, no issue by the Company
of shares of stock of any class, or securities convertible into shares of
stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock
subject to an Option.

12. TIME OF GRANTING OPTIONS.

13. AMENDMENT AND TERMINATION OF THE PLAN.

The Board may amend or terminate the Plan from time to time in such
respects as the Board may deem advisable, except that, without approval of
the holders of a majority of the outstanding capital stock no such revision
or amendment shall change the number of Shares subject to the Plan, change
the designation of the class of employees eligible to receive Options or
add any material benefit to Optionees under the Plan. Any such amendment
or termination of the Plan shall not affect Options already granted, and
such Options shall remain in full force and effect as if the Plan had not
been amended or terminated.

14. CONDITIONS UPON ISSUANCE OF SHARES.

15. RESERVATION OF SHARES.

16. INFORMATION TO OPTIONEE.

During the term of any Option granted under the Plan, the Company shall
provide or otherwise make available to each Optionee a copy of its
financial statements at least annually.

17. OPTION AGREEMENT.

Options granted under the Plan shall be evidenced by Option Agreements.

- --------------------------------------------------------------------------------
-6-

This plan is subject to amendment; the rights of the participant shall be
governed by the Plan as amended from time to time.

<PAGE>

USCS INTERNATIONAL, INC. AMENDED AND AS AMENDED THROUGH 1/98
RESTATED 1990 STOCK OPTION PLAN

90-N STOCK OPTION PLAN
- --------------------------------------------------------------------------------

18. STOCKHOLDER APPROVAL.

- --------------------------------------------------------------------------------
-7-

This plan is subject to amendment; the rights of the participant shall be
governed by the Plan as amended from time to time.

<PAGE>

USCS INTERNATIONAL, INC. AMENDED AND As amended through 2/98
RESTATED OUTSIDE DIRECTORS' STOCK OPTION PLAN

USCS INTERNATIONAL, INC. OUTSIDE DIRECTORS' STOCK OPTION PLAN
- -------------------------------------------------------------------------------

1. PURPOSES OF THE PLAN.

The purposes of this Directors' Stock Option Plan are to attract and retain
the best available personnel for service as Directors of the Company, to
provide additional incentive to the Outside Directors of the Company to
serve as Directors, and to encourage their continued service on the Board.
All options granted hereunder shall be Nonstatutory Stock Options.

2. DEFINITIONS.

As used herein, and in any Option granted hereunder, the following
definitions shall apply:
(a) BOARD: the Board of Directors of the Company.
(b) CODE: the Internal Revenue Code of 1986, as amended.
(c) COMMON STOCK: the Common Stock of the Company.
(d) COMPANY: USCS International, Inc., a Delaware corporation.
(e) CONTINUOUS STATUS AS A DIRECTOR: the absence of any interruption or
termination of service as a Director.
(f) DIRECTOR: a member of the Board.
(g) DISINTERESTED PERSON: a person classified as a "disinterested person" under
Rule 16b-3, promulgated under the Exchange Act (as defined below).
Notwithstanding the foregoing, a Director shall not fail to be a
Disinterested Person merely because he or she participates in a plan
meeting the requirements of Rule 16b-3(c)(2)(i)(A) or (B).
(h) EFFECTIVE DATE the effective date of the first registration statement filed
by the Company pursuant to Section 12(g) of the Exchange Act (as defined
below) with respect to the Common Stock(1).
(i) EXCHANGE ACT: the Securities Exchange Act of 1934, as amended.
(j) NONSTATUTORY STOCK OPTION: an Option granted under the Plan that is subject
to the provisions of Section 1.83-7 of the Treasury Regulations promulgated
under Section 83 of the Code.
(k) OPTION: a stock option granted pursuant to the Plan.
(l) OPTION AGREEMENT: a written agreement between the Company and the
Optionee regarding the grant and exercise of Options to purchase Shares and
the terms and conditions thereof as determined by the Board pursuant to the
Plan.
(m) OPTIONED SHARES: the Common Stock subject to an Option.
(n) OPTIONEE: an Outside Director who receives an Option.
(o) OUTSIDE DIRECTOR: any non-employee Director.
(p) PARENT: a "parent corporation," whether now or hereafter existing, as
defined by Section 424(e) of the Code.
(q) PLAN: this 1996 Directors' Stock Option Plan.
(r) SECURITIES ACT: the Securities Act of 1933, as amended.
(s) SHARE: a share of the Common Stock subject to an Option, as adjusted in
accordance with Section 11 of the Plan.
(t) SUBSIDIARY: a "subsidiary corporation," whether now or hereafter existing,
as defined in Section 424(f) of the Code.

3. SHARES SUBJECT TO THE PLAN.

Subject to the provisions of Section 11 of the Plan, the maximum aggregate
number of Shares which may be optioned and sold under the Plan is One
Hundred Fifty Thousand (150,000) Shares(2) (the "Pool") of Common Stock.
The Shares may be authorized but unissued or reacquired Common Stock. If
an Option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased shares which were subject
thereto shall, unless the Plan shall have been terminated, be returned to
the Pool and become available for other Option grants under the Plan.

4. ADMINISTRATION OF THE PLAN.

(a) ADMINISTRATION.

The Plan shall be administered by the Board. The Board shall take all
action necessary to administer the Plan in accordance with the then
effective provisions of Rule 16b-3 promulgated under the Exchange Act,
provided that any amendment to the Plan required for compliance with such
provisions shall be made consistent with the provisions of Section 12
hereof, and said regulations. No discretion concerning decisions regarding
the Plan shall be afforded to any person who is not a Disinterested Person.

(b) OPTION GRANTS.

All grants of Options hereunder shall be automatic and non-discretionary
and shall be made strictly in accordance with the following provisions:

(i) No Options shall be granted under the Plan prior to the Effective Date
and until stockholder approval of the Plan has been obtained in accordance
with Section 17 hereof.(3)

(ii) No person shall have any discretion to select which Outside Directors
shall be granted Options or to determine the number of Shares to be covered
by Options granted to Outside Directors.

- ----------
(1) This date was June 20, 1996.
(2) This number was 71,249 prior to stock split on June 20, 1996.
(3) Both these conditions were met on June 20, 1996.

- -------------------------------------------------------------------------------
-1-

This plan is subject to amendment; the rights of the participant shall be
governed by the Plan as amended from time to time.

<PAGE>

USCS INTERNATIONAL, INC. AMENDED AND As amended through 2/98
RESTATED OUTSIDE DIRECTORS' STOCK OPTION PLAN

USCS INTERNATIONAL, INC. OUTSIDE DIRECTORS' STOCK OPTION PLAN
- -------------------------------------------------------------------------------

(iii) Each Outside Director elected or appointed to a three year term shall
be automatically granted an Option to purchase Ten Thousand (10,000)
Shares(4) on the date (on or after the effective date of this Plan) on
which such person first becomes a Director, whether through election by the
stockholders of the Company or appointment by the Board to fill a vacancy;
provided, however, that no Option shall become exercisable until
stockholder approval of the Plan has been obtained in accordance with
Section 17 hereof.

(iv) The TERMS OF EACH OPTION granted hereunder shall be as follows:

(A) the grant date of each Option shall be the date on which it is
automatically granted pursuant to this Section 4(b).
(B) the term of the Option shall be five (5) years.
(C) The Option shall be exercisable only while the Outside Director
remains a Director of the Company, except as set forth in Section 9
hereof.
(D) the exercise price per Share shall be 100% of the fair market value of
a Share on the date of grant of the Option, as determined pursuant to
Section 8(a) hereof.
(E) the Option shall become exercisable cumulatively as to one-third (1/3)
of the Optioned Shares of the last day of the twelfth month in each
twelve month period following the date of grant of the Option for as
long as the Optionee maintains his or her Continuous Status as a
Director.

(v) In the event that any Option granted under the Plan would cause the
number of Shares subject to outstanding Options plus the number of Shares
previously purchased upon exercise of Options to exceed the Pool, then each
such automatic grant shall be for that number of Shares determined by
dividing the total number of Shares remaining available for grant by the
number of Outside Directors entitled to an Option grant on the automatic
grant date. No further grants shall be made until such time, if any, as
additional Shares become available for grant under the Plan through action
of the stockholders to increase the number of Shares which may be issued
under the Plan or through cancellation or expiration of Options previously
granted hereunder.

Subject to the provisions of the Plan, the Board shall have the authority:
(i) to determine, upon review of relevant information and in accordance
with Section 8(a) hereof, the fair market value of the Common Stock; (ii)
to interpret the Plan; (iii) to prescribe, amend and rescind rules and
regulations relating to the Plan; (iv) to authorize any person to execute
on behalf of the Company any instrument required to effectuate the grant of
an Option previously granted by the Board; and (v) to make all other
determinations deemed necessary or advisable for the administration of the
Plan.

(d) EFFECT OF BOARD'S DECISION.

All decisions, determinations and interpretations of the Board shall be
final and binding on all potential or actual Optionees and any other holder
of an Option granted under the Plan or the Optioned Shares acquired upon
the exercise thereof.

5. ELIGIBILITY.

(a) PERSONS ELIGIBLE FOR OPTIONS.

Options under the Plan may be granted only to Outside Directors. All
Options shall be automatically granted in accordance with the terms set
forth in Section 4(b) hereof.

(b) NO RIGHT TO SERVE AS A DIRECTOR.

Neither the establishment nor the operation of the Plan shall confer upon
any Optionee or any other person any right with respect to continuation of
service as a Director or nomination to serve as a Director, with the
Company or any Subsidiary, nor shall the Plan interfere in any way with any
rights which the Director or the Company may have to terminate his or her
directorship at any time.

6. TERM OF PLAN.

The Plan shall become effective upon its approval by the Board of Directors
or its approval by the stockholders of the Company (in accordance with the
provisions of Section 17 hereof), whichever is earlier. It shall continue in
effect for a term of ten (10) years unless sooner terminated under Section 12
hereof.

7. TERM OF OPTION.

The term of each Option granted under the Plan shall be five (5) years from
the date of grant. The term of the Option shall be set forth in the Option
Agreement.

8. OPTION PRICE AND CONSIDERATION.

- ----------
(4) This number was 4,762 prior to the stock split on June 20, 1996.

- -------------------------------------------------------------------------------
-2-

This plan is subject to amendment; the rights of the participant shall be
governed by the Plan as amended from time to time.

<PAGE>

USCS INTERNATIONAL, INC. AMENDED AND As amended through 2/98
RESTATED OUTSIDE DIRECTORS' STOCK OPTION PLAN

USCS INTERNATIONAL, INC. OUTSIDE DIRECTORS' STOCK OPTION PLAN
- -------------------------------------------------------------------------------

(a) OPTION PRICE.

The option price for the Shares to be issued pursuant to any Option
shall in no event be less than the fair market value of such Shares on
the date the Option is granted. Fair market value of the Common Stock
shall be determined in good faith by the Board, using such criteria as
it deems relevant; provided, however, that in the event the Common Stock
is listed on a national securities exchange (within the meaning of
Section 6 of the Exchange Act) or on the NASDAQ National Market System
(or any successor national market system), the fair market value per
Share shall be the closing price on such exchange on the date of grant
of the Option, as reported in THE WALL STREET JOURNAL (or, if not so
reported, as otherwise reported by the National Association of
Securities Dealers Automated Quotation (NASDAQ) System), OR, if there is
a public market for the Common Stock but the Common Stock is not listed
on a national securities exchange, the fair market value per Share shall
be the average of the last reported bid and asked prices of the Common
Stock on the date of grant, as reported in THE WALL STREET JOURNAL.

(b) FORM OF CONSIDERATION.

The consideration to be paid for the Shares to be issued upon exercise of
an Option shall be payment in cash or by check unless payment in some other
manner, including by promissory note, other shares of the Company's Common
Stock, authorization from the Optionee to retain from the total number of
Shares as to which the Option is exercised that number of Shares having a
fair market value on the date of exercise equal to the exercise price for
the total number of Shares as to which the Option is exercised, delivery of
a properly executed exercise notice together with irrevocable instructions
to a broker to promptly deliver to the Company the amount of sale or loan
proceeds required to pay the exercise price, any combination of the
foregoing methods of payment, or such other consideration and method of
payment for the issuance of Shares as may be permitted under Sections 153
of the Delaware General Corporation Law, is authorized by the Board at the
time of the grant of the Option. Any cash or other property received by
the Company from the sale of Shares pursuant to the Plan shall constitute
part of the general assets of the Company.

9. EXERCISE OF OPTION.

(a) PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER.

Any Option granted hereunder shall be exercisable at such times as are set
forth in the option agreement consistent with Section 4(b) hereof;
provided, however, that no Options shall be exercisable until stockholder
approval of the Plan in accordance with Section 17 hereof has been
obtained.

An Option may not be exercised for fractional shares or for less than ten
(10) Shares.

An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of
the Option by the person entitled to exercise the Option and full
payment for the Shares with respect to which the Option is exercised has
been received by the Company. Upon exercise of an Option in the manner
set forth above, the Company shall issue or cause its transfer agent to
issue stock certificates representing the Shares purchased.

Until the issuance of such stock certificates (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or
any other rights as a stockholder shall exist with respect to the
Optioned Shares notwithstanding the exercise of the Option. No
adjustment will be made for a dividend or other rights for which the
record date is prior to the date of the transfer by the Optionee of the
consideration for the purchase of the Shares, except as provided in
Section 11 of the Plan. The exercise of an Option shall be subject to
compliance with all applicable requirements of Rule 16b-3 promulgated
under the Exchange Act or any successor statute thereto; the Option
Agreement shall contain such additional conditions or restrictions as
may be required thereunder to qualify for the maximum exemption from
Section 16 of the Exchange Act with respect to Plan transactions.

(b) TERMINATION OF STATUS AS A DIRECTOR.

If an Optionee ceases to serve as a Director for any reason, including
death or disability, he may, but only within ninety (90) days after the
date he ceases to be a Director of the Company, exercise his Option to the
extent that he was entitled to exercise it at the date of such termination.
Notwithstanding the foregoing, in no event may the Option be exercised
after its five (5)-year term has expired. To the extent that the Optionee
was not entitled to exercise an Option at the date of such termination, or
if he does not exercise such Option (which he was entitled to exercise)
within the same time specified herein, the Option shall terminate.

- -------------------------------------------------------------------------------
-3-

This plan is subject to amendment; the rights of the participant shall be
governed by the Plan as amended from time to time.

<PAGE>

USCS INTERNATIONAL, INC. AMENDED AND As amended through 2/98
RESTATED OUTSIDE DIRECTORS' STOCK OPTION PLAN

USCS INTERNATIONAL, INC. OUTSIDE DIRECTORS' STOCK OPTION PLAN
- -------------------------------------------------------------------------------

The Board may permit an Optionee to exercise an Option by delivering shares
of the Company's Common Stock. If the Optionee is so permitted, the Option
Agreement covering such Option may include provisions authorizing the
Optionee to exercise the Option, in whole or in part, by: (i) delivering
whole shares of the Company's Common Stock previously owned by such
Optionee (whether or not acquired through the prior exercise of a stock
option) having a fair market value equal to the aggregate option price for
the Optioned Shares issuable on exercise of the Option; and/or (ii)
directing the Company to withhold from the Shares that would otherwise be
issued upon exercise of the Option that number of whole Shares having a
fair market value equal to the aggregate option price for the Optioned
Shares issuable on exercise of the Option. Shares of the Company's Common
Stock so delivered or withheld shall be valued at their fair market value
at the close of the last business day immediately preceding the date of
exercise of the Option, as determined by the Board, in accordance with the
provisions of Section 8(a) of the Plan. Any balance of the exercise price
shall be paid in cash. Any shares delivered or withheld in accordance with
this provision shall not again become available for purposes of the Plan
and for Options subsequently granted thereunder.

(d) TAX WITHHOLDING.

When an Optionee is required to pay to the Company an amount with respect
to tax withholding obligations in connection with the exercise of an Option
granted under the Plan, the Optionee may elect prior to the date the amount
of such withholding tax is determined (the "Tax Date") to make such
payment, or such increased payment as the Optionee elects to make up to the
maximum federal, state and local marginal tax rates, including any related
FICA obligation, applicable to the Optionee and the particular transaction,
by: (i) delivering cash; (ii) delivering part or all of the payment in
previously owned shares of Common Stock (whether or not acquired through
the prior exercise of an Option); and/or (iii) irrevocably directing the
Company to withhold from the Shares that would otherwise be issued upon
exercise of the Option that number of whole Shares having a fair market
value equal to the amount of tax required or elected to be withheld (a
"Withholding Election"). If an Optionee's Tax Date is deferred beyond the
date of exercise and the Optionee makes a Withholding Election, the
Optionee will initially receive the full amount of Optioned Shares
otherwise issuable upon exercise of the Option, but will be unconditionally
obligated to surrender to the Company on the Tax Date the number of Shares
necessary to satisfy his or her minimum withholding requirements, or such
higher payment as he or she may have elected to make, with adjustments to
be made in cash after the Tax Date.

Any withholding of Optioned Shares with respect to taxes arising in
connection with the exercise of an Option must comply with the provisions
of Rule 16b-3 under the Exchange Act. Shares withheld in accordance with
this provision shall not again become available for purposes of the Plan
and for Options subsequently granted thereunder.

10. NON-TRANSFERABILITY OF OPTIONS.

An Option may not be sold, pledged, assigned, hypothecated, transferred or
disposed of in any manner other than by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined
by the Code or Title I of the Employee Retirement Income Security Act and the
Rules thereunder, and may be exercised, during the lifetime of the Optionee,
only by the Optionee.

11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.

Subject to any required action by the stockholders of the Company, the number
of shares of Common Stock covered by each outstanding Option, and the per
share price thereof in each such Option, shall be proportionately adjusted
for any increase or decrease in the number of issued shares of Common Stock
resulting from a stock split, reverse stock split, recapitalization,
combination, reclassification, the payment of a stock dividend on the Common
Stock or any other increase or decrease in the number of such shares of
Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the
Company shall not be deemed to have been "effected without receipt of
consideration". Such adjustment shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive. Except
as expressly provided herein, no issue by the Company of shares of stock of
any class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.

- -------------------------------------------------------------------------------
-4-

This plan is subject to amendment; the rights of the participant shall be
governed by the Plan as amended from time to time.

<PAGE>

USCS INTERNATIONAL, INC. AMENDED AND As amended through 2/98
RESTATED OUTSIDE DIRECTORS' STOCK OPTION PLAN

USCS INTERNATIONAL, INC. OUTSIDE DIRECTORS' STOCK OPTION PLAN
- -------------------------------------------------------------------------------

exercisable by the holder thereof for a period of not less than thirty (30)
days prior to such Change in Control, provided, however, that the Optionee
shall be given not less than thirty (30) days notice of such Change of
Control and within such time period may exercise his or her Options in whole
or in part. All Options shall terminate in their entirety to the extent not
exercised on or prior to such thirty (30) day period.

12. AMENDMENT AND TERMINATION OF THE PLAN.

The Board may amend or terminate the Plan from time to time in such respects
as the Board may deem advisable, except that, without approval of the holders
of a majority of the outstanding capital stock (or their unanimous consent if
such approval is obtained in writing), no such revision or amendment shall
change the number of Shares subject to the Plan, change the designation of
the class of employees eligible to receive Options or add any material
benefit to Optionees under the Plan. Any such amendment or termination of
the Plan shall not affect Options already granted and such Options shall
remain in full force and effect as if the Plan had not been amended or
terminated. In addition the Board shall amend the Plan from time to time,
with stockholder approval to the extent necessary, as required to comply with
the provisions of Rule 16b-3 under the Exchange Act as then in effect.

13. CONDITIONS UPON ISSUANCE OF SHARES.

Shares shall not be issued with respect to an Option granted under the Plan
unless the exercise of such Option and the issuance and delivery of such
Shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act, the Exchange Act, the
rules and regulations promulgated thereunder, and the requirements of any
stock exchange upon which the Shares may then be listed, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance. As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant at the
time of any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation
is required by any of the aforementioned relevant provisions of law.

14. RESERVATION OF SHARES.

During the term of this Plan the Company will at all times reserve and keep
available the number of Shares as shall be sufficient to satisfy the
requirements of the Plan.

15. REGISTRATION OF OPTIONS AND OPTIONED SHARES.

Within ninety (90) days after the Effective Date, or as soon thereafter as
may be reasonably practicable, the Company shall use its best efforts to
register the Options and Shares issuable under the Plan pursuant to a
registration statement on SEC Form S-8, or any comparable or successor form
or forms. The Company shall be entitled to determine the timing of such
filing and to take such actions, meet such conditions and make such
adjustments to the number of shares subject to the reoffer prospectus as it
deems reasonably necessary for compliance with the Securities Act, the
Exchange Act and the rules and regulations promulgated thereunder.

16. OPTION AGREEMENT.

Options granted under the Plan shall be evidenced by Option Agreements.

17. STOCKHOLDER APPROVAL.

The Plan shall be subject to approval by the affirmative vote of the holders
of a majority of the outstanding capital stock of the Company entitled to
vote. Such stockholder approval shall be obtained in the degree and manner
required under applicable law.(5)

- --end of Plan--

- ----------
(5) The Plan was approved by shareholders on May 16, 1996.

- -------------------------------------------------------------------------------
-5-

This plan is subject to amendment; the rights of the participant shall be
governed by the Plan as amended from time to time.

<PAGE>

USCS INTERNATIONAL, INC. AS AMENDED THROUGH 1/98
1996 STOCK OPTION PLAN

96-O STOCK OPTION PLAN
- --------------------------------------------------------------------------------

1. PURPOSES OF THE PLAN.

The purposes of this Stock Option Plan are to attract and retain the best
available personnel for positions of substantial responsibility, to provide
additional incentives to Employees, Non-Employee Directors and Consultants
of the Company and its Subsidiaries, and to promote the success of the
Company's business. Options granted hereunder may be either Incentive
Stock Options or Nonstatutory Stock Options at the discretion of the
Committee.

2. DEFINITIONS.

As used herein, and in any Option granted hereunder, the following
definitions shall apply:
(a) "BOARD" shall mean the Board of Directors of the Company.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(c) "COMMON STOCK" shall mean the Common Stock of the Company.
(d) "COMPANY" shall mean USCS International, Inc., a Delaware corporation.
(1)
(e) "COMMITTEE" shall mean the Committee appointed by the Board in
accordance with paragraph (a) of Section 4 of the Plan. If the Board
does not appoint or ceases to maintain a Committee, the term
"Committee" shall refer to the Board.
(f) "CONSULTANT" shall mean any independent contractor retained to perform
services for the Company or any Subsidiary.
(g) "CONTINUOUS EMPLOYMENT" shall mean the absence of any interruption or
termination of service as an Employee or Non-Employee Director by the
Company or any Subsidiary. Continuous Employment shall not be
considered interrupted during any period of sick leave, military leave
or any other leave of absence approved by the Board or in the case of
transfers between locations of the Company or between the Company and
any Parent, Subsidiary or successor of the Company.
(h) "DISINTERESTED PERSON" shall mean a person who has not at any time
within one year prior to service as a member of the Committee (or
during such service) been granted or awarded Options or other equity
securities pursuant to the Plan or any other plan of the Company or
any Parent or Subsidiary. Notwithstanding the foregoing, a member of
the Committee shall not fail to be a Disinterested Person merely
because he or she participates in a plan meeting the requirements of
Rule 16b-3(c)(2)(i)(A) or (B) promulgated under the Exchange Act.
(i) "EMPLOYEE" shall mean any person, including officers (whether or not
they are directors), employed by the Company or any Subsidiary.
(j) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
(k) "INCENTIVE STOCK OPTION" shall mean any option granted under this Plan
and any other option granted to an Employee in accordance with the
provisions of Section 422 of the Code, and the regulations promulgated
thereunder.
(l) "NON-EMPLOYEE DIRECTOR" shall mean any director of the Company or any
Subsidiary who is not employed by the Company or such Subsidiary.
(m) "NONSTATUTORY STOCK OPTION" shall mean an Option granted under the
Plan that is subject to the provisions of Section 1.83-7 of the
Treasury Regulations promulgated under Section 83 of the Code.
(n) "OPTION" shall mean a stock option granted pursuant to the Plan.
(o) "OPTION AGREEMENT" shall mean a written agreement between the Company
and the Optionee regarding the grant and exercise of Options to
purchase Shares and the terms and conditions thereof as determined by
the Committee pursuant to the Plan.
(p) "OPTIONED SHARES" shall mean the Common Stock subject to an Option.
(q) "OPTIONEE" shall mean an Employee, Non-Employee Director or
Consultant who receives an Option.
(r) "PARENT" shall mean a "parent corporation," whether now or hereafter
existing, as defined by Section 424(e) of the Code.
(s) "PLAN" shall mean this 1996 Stock Option Plan.
(t) "REGISTRATION DATE" shall mean the effective date of the first
registration statement filed by the Company pursuant to Section 12(g)
of the Exchange Act with respect to any class of the Company's equity
securities.
(u) "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
(v) "SHARE" shall mean a share of the Common Stock subject to an Option,
as adjusted in accordance with Section 11 of the Plan.
(w) "SUBSIDIARY" shall mean a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.

3. STOCK SUBJECT TO THE PLAN.

Subject to the provisions of Section 11 of the Plan, the maximum aggregate
number of Shares which may be optioned and sold under the Plan is two
million nine

- --------------------------
(1) This plan was originally adopted by U.S. Computer Services, a California
corporation; it has been changed to reflect the merger of U.S. Computer
Services into USCS International, Inc., a Delaware corporation, effective May
31, 1996. This plan was originally abreviated as "9Q-Q/NQ"; the abreviation
was changed to "96-O" to conform to the designation in the Company's option
tracking software.

- --------------------------------------------------------------------------------
-1-

This plan is subject to amendment; the rights of the participant shall be
governed by the Plan as amended from time to time.

<PAGE>

USCS INTERNATIONAL, INC. 1996 STOCK OPTION PLAN REV (2/97)

96-O STOCK OPTION PLAN
- --------------------------------------------------------------------------------

hundred forty thousand (2,940,000) Shares(2). The Shares may be authorized
but unissued or reacquired shares of Common Stock. If an Option expires or
becomes unexercisable for any reason without having been exercised in full,
the Shares which were subject to the Option but as to which the Option was
not exercised shall, unless the Plan shall have been terminated, become
available for other Option grants under the Plan.

4. ADMINISTRATION OF THE PLAN.

(c) POWERS OF THE COMMITTEE. Subject to the provisions of the Plan, the
Committee shall have the authority: (i) to determine, upon review of
relevant information, the fair market value of the Common Stock; (ii)
to determine the exercise price of Options to be granted, the
Employees, Directors or consultants to whom and the time or times at
which Options shall be granted, and the number of Shares to be
represented by each Option; (iii) to interpret the Plan; (iv) to
prescribe, amend and rescind rules and regulations relating to the
Plan; (v) to determine the terms and provisions of each Option granted
under the Plan (which need not be identical) and, with the consent of
the holder thereof, to modify or amend any Option; (vi) to authorize
any person to execute on behalf of the Company any instrument required
to effectuate the grant of an Option previously granted by the
Committee; (vii) defer an exercise date of any Option (with the
consent of the Optionee), subject to the provisions of Section 9(a) of
the Plan; (viii) to determine whether Options granted under the Plan
will be Incentive Stock Options or Nonstatutory Stock Options; (ix) to
make all other determinations deemed necessary or advisable for the
administration of the Plan; and (x) to designate which Options granted
under the Plan will be issued in reliance on Rule 701.

- --------------------------
(2) Original number of shares under this plan was 1,400,000. This has been
adjusted for June 21, 1996; 2.1:1 stock split.

- --------------------------------------------------------------------------------
-2-

This plan is subject to amendment; the rights of the participant shall be
governed by the Plan as amended from time to time.

<PAGE>

USCS INTERNATIONAL, INC. 1996 STOCK OPTION PLAN REV (2/97)

96-O STOCK OPTION PLAN
- --------------------------------------------------------------------------------

5. ELIGIBILITY.

(a) PERSONS ELIGIBLE FOR OPTIONS. Options under the Plan may be granted
only to Employees, Non-Employee Directors or Consultants whom the
Committee, in its sole discretion, may designate from time to time.
Incentive Stock Options may be granted only to Employees. An Employee
who has been granted an Option, if he or she is otherwise eligible,
may be granted an additional Option or Options. However, the
aggregate fair market value (determined in accordance with the
provisions of Section 8(a) of the Plan) of the Shares subject to one
or more Incentive Stock Options grants that are exercisable for the
first time by an Optionee during any calendar year (under all stock
option plans of the Company and its Parents and Subsidiaries) shall
not exceed $100,000 (determined as of the grant date).

6. TERM OF PLAN.

The Plan shall become effective upon its adoption by the Board or its
approval by vote of the holders of the outstanding shares of the Company
entitled to vote on the adoption of the Plan (in accordance with the
provisions of Section 18 hereof), whichever is earlier.(3) It shall
continue in effect for a term of ten (10) years unless sooner terminated
under Section 13 of the Plan.(4)

7. TERM OF OPTION.

8. EXERCISE PRICE AND CONSIDERATION.

(b) TEN PERCENT STOCKHOLDERS. No Option shall be granted to any Employee
who, at the date such Option is granted, owns (within the meaning of
Section 424(d) of the Code) more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or any
Parent or Subsidiary, unless the exercise price for the Shares to be
issued pursuant to such Option is at least equal to 110 percent (110%)
of the fair market value of such Shares on the grant date

- --------------------------
(3) This plan was adopted by the Board of Directors on April 22, 1996 and
was approved by stockholders on May 16, 1996.

(4) Termination date is April 12, 2006.

- --------------------------------------------------------------------------------
-3-

This plan is subject to amendment; the rights of the participant shall be
governed by the Plan as amended from time to time.

<PAGE>

USCS INTERNATIONAL, INC. 1996 STOCK OPTION PLAN REV (2/97)

96-O STOCK OPTION PLAN
- --------------------------------------------------------------------------------

determined by the Committee in the manner set forth in subsection
(a) above.

9. EXERCISE OF OPTION.

(c) DEATH OF OPTIONEE. In the event of the death during the Option period
of an Optionee who is at the time of his death, or was within the
ninety (90)-day period immediately prior thereto, an Employee or
Non-Employee Director, and who was in Continuous Employment as such
from the date of the grant of the Option until the date of death or
termination, the Option may be exercised, at any time prior to the
expiration of the Option period, by the Optionee's estate or by a
person who acquired the right to exercise the Option by bequest or
inheritance, but only to the extent of the accrued right to exercise
at the time of the termination or death, whichever comes first.

(e) TERMINATION OF STATUS AS EMPLOYEE, NON-EMPLOYEE DIRECTOR OR
CONSULTANT. If an Optionee shall cease to be an Employee or
Non-Employee Director for any reason other than disability or death,
or if an Optionee shall cease to be Consultant for any reason, the
Optionee may, but only within ninety (90) days (or such other period
of time as is determined by the Committee) after the date he or she
ceases to be an Employee or Non-Employee Director, exercise his or her
Option to the extent that he or she was entitled to exercise it at the
date of such termination, subject to the condition that no option
shall be exercisable after the expiration of the Option period. Upon
such exercise and if so provided in the Restricted Stock Transfer
Agreement, the Company may, but only within ninety (90) days (or such
other period of time as is determined by the Committee) after the date
of such exercise, repurchase from the Optionee the Optionee's Option
Shares at the higher of the original purchase price for the Option
Shares or fair market value (as determined by the

- --------------------------------------------------------------------------------
-4-

This plan is subject to amendment; the rights of the participant shall be
governed by the Plan as amended from time to time.

<PAGE>

USCS INTERNATIONAL, INC. 1996 STOCK OPTION PLAN REV (2/97)

96-O STOCK OPTION PLAN
- --------------------------------------------------------------------------------

Company's Board of Directors) of the Option Shares on the date of
termination of employment. The right to repurchase shall be
exercisable for cash or cancellation of purchase money indebtedness.

(i) An advance election to withhold Optioned Shares in settlement of a
tax liability must satisfy the requirements of Rule 16b-3(d)(1)(i),
regarding participant-directed transactions;

(ii) Absent such an election, the withholding of Optioned Shares to
settle a tax liability may occur only during the quarterly window
period described in Rule 16b-3(e);

(iv) The delivery of previously acquired shares of Common Stock (but not
the withholding of newly acquired Shares) will be allowed where an
election under Section 83(b) of the Code accelerates the Tax Date to
a day that occurs less than six (6) months after the advance
election and is not within the quarterly window period described in
Rule 16b-3(e).

Any adverse consequences incurred by an Optionee with respect to the
use of shares of Common Stock to pay any part of the exercise price
or of any tax in connection with the exercise of an Option, including
without limitation any adverse tax consequences arising as a result
of a disqualifying disposition within the meaning of Section 422 of
the Code shall be the sole responsibility of the Optionee. Shares
withheld in accordance with this provision shall not again become
available for purposes of the Plan and for Options subsequently
granted thereunder.

10. NON-TRANSFERABILITY OF OPTIONS.

- --------------------------------------------------------------------------------
-5-

This plan is subject to amendment; the rights of the participant shall be
governed by the Plan as amended from time to time.

<PAGE>

USCS INTERNATIONAL, INC. 1996 STOCK OPTION PLAN REV (2/97)

96-O STOCK OPTION PLAN
- --------------------------------------------------------------------------------

11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.

12. TIME OF GRANTING OPTIONS.

13. AMENDMENT AND TERMINATION OF THE PLAN.

The Board may amend or terminate the Plan from time to time in such
respects as the Board may deem advisable, except that, without approval of
the holders of a majority of the outstanding capital stock no such revision
or amendment shall change the number of Shares subject to the Plan, change
the designation of the class of employees eligible to receive Options or
add any material benefit to Optionees under the Plan. Any such amendment
or termination of the Plan shall not affect Options already granted, and
such Options shall remain in full force and effect as if the Plan had not
been amended or terminated.

14. CONDITIONS UPON ISSUANCE OF SHARES.

15. RESERVATION OF SHARES.

- --------------------------------------------------------------------------------
-6-

This plan is subject to amendment; the rights of the participant shall be
governed by the Plan as amended from time to time.

<PAGE>

USCS INTERNATIONAL, INC. 1996 STOCK OPTION PLAN REV (2/97)

96-O STOCK OPTION PLAN
- --------------------------------------------------------------------------------

regulatory body having jurisdiction and authority deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares
hereunder shall relieve the Company of any liability in respect of the
nonissuance or sale of such Shares as to which such requisite authority
shall not have been obtained.

16. INFORMATION TO OPTIONEE.

During the term of any Option granted under the Plan, the Company shall
provide or otherwise make available to each Optionee a copy of its
financial statements at least annually.

17. OPTION AGREEMENT.

Options granted under the Plan shall be evidenced by Option Agreements.

18. STOCKHOLDER APPROVAL.

The Plan shall be subject to approval by the affirmative vote of the
holders of a majority of the outstanding capital stock of the Company
entitled to vote within twelve (12) months before or after the Plan is
adopted.(5) Any option exercised before stockholder approval is obtained
must be rescinded if stockholder approval is not obtained within twelve
(12) months before or after the Plan is adopted. Shares issued upon the
exercise of such options shall not be counted in determining whether such
approval is obtained. Any amendments to the Plan which require stockholder
approval shall be by the affirmative vote of the holders of a majority of
the outstanding capital stock of the Company entitled to vote.

-end of plan-

- --------------------------
(5) This plan was adopted by the Board of Directors on April 12, 1996 and
was approved by stockholders on May 16, 1996.
- --------------------------------------------------------------------------------
-7-

This plan is subject to amendment; the rights of the participant shall be
governed by the Plan as amended from time to time.

<PAGE>

USCS INTERNATIONAL, INC.
EMPLOYEE STOCK PURCHASE PLAN
AS AMENDED THROUGH OCTOBER 1, 1997

The following constitutes the EMPLOYEE STOCK PURCHASE PLAN (the "Plan") of
USCS International, Inc. (the "Company").

1. PURPOSE. The purpose of the Plan is to provide employees of the Company
and its majority-owned subsidiaries(1) with an opportunity to purchase Common
Stock of the Company through payroll deductions. The Plan is intended to
qualify as an "Employee Stock Purchase Plan" under the provisions of Sections
421 and 423 of the Internal Revenue Code of 1986, as amended (the "Code").
It is the intention of the Company that the Plan shall not constitute a plan
for any purpose or provision under the Employee Retirement Income Security
Act of 1974, as amended (29 U.S.C.A. Sections 1001 et seq.).

2. DEFINITIONS.

(a) "COMPENSATION" means(2) total wages and other compensation paid to
an Employee by his Employer during the Plan Year and reportable as
compensation on the Employee's Wage and Tax Statement (W-2), but excluding
bonuses, taxable perquisites, relocation assistance payments, and payments
made to or on behalf of an Employee to reimburse him for additional costs and
expenses associated with working outside the United States, plus the amount
of any elective deferral contributions made in accordance with Code sections
125, 129, 401(k), 402(a)(8), or 402(h) of the Code.

(b) "EMPLOYEE" means(3) any person who (as of the date of payroll
withholding under the Plan), is an employee of the Company (or of its Parent
or Subsidiary if such employees are to be participants in the Plan). A leased
employee, as described in Section 414(n) of the Internal Revenue Code, is not
an Employee for purposes of this Plan.

(c) "PARENT" means any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company if, at the time of the purchase of
shares by a participant in the Plan, each of the corporations other than the
Company owns stock possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.

(d) "SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the time of the
purchase of shares by a participant in the Plan, each of the corporations other
than the last corporation in the unbroken chain owns stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.

3. ELIGIBILITY.

(a) Any employee, as defined in Section 2(b), shall be eligible to
participate in the Plan on the first day of the first month following date of
hire.(4)

- -----------
(1) Sec. 1, 2(b) and 2(d) were amended September 13, 1996 to add "U.S."
before, respectively, "subsidiaries" and "Subsidiary" and to add
"incorporated in one of the United States of America"; and were amended
October 1, 1997 to remove "U.S." before, respectively, "subsidiaries" and
"Subsidiary" and to remove "incorporated in one of the United States of
America";

(2) Sec. 2(a) was amended September 13, 1996, to be consistent with the
definition of "Compensation" in the Company's 401(k) Plan. Prior to
amendment, this definition read as follows: "'Compensation' means regular
straight time earnings including payments for overtime, shift premium,
incentive compensation, bonuses, and commissions."

(3) Sec. 2(b) was amended September 13, 1996 to read as stated. Prior to
amendment, Sec. 2(b) read as follows: "'Employee' means any person who, (as
of the date of purchase of shares under the Plan,) is an employee of the
Company (or of its Parent or Subsidiary if such employees are to be
participants in the Plan) except for employees who have been employed for
less than one (1) year (2) employees whose customary employment is twenty
(20) hours or less per week and (3) employees whose customary employment is
for not more than five (5) months in any calendar year."

(4) Sec. 3(a) was amended September 13, 1996 to delete "who has completed one
(1) year continuous employment with the Company or its Parent or Subsidiary
on the date of his or her participation in the Plan is effective." This
amendment was approved by stockholders holding a majority of the voting
shares as required by Sec.19.

<PAGE>

(b) Notwithstanding any provisions of the Plan to the contrary, no
employee shall be permitted to participate in the Plan: (i) if, immediately
after any purchase of shares under the Plan, such employee would own,
directly or indirectly, shares (including shares issuable upon the exercise
of outstanding options to purchase stock) possessing five percent (5%) or
more of the total combined voting power or value of all classes of shares of
the Company or of its Parent or Subsidiary; or (ii) if such employee's rights
to purchase shares under all employee stock purchase plans of the Company or
of its Parent or Subsidiary will accrue at a rate that exceeds $25,000 of the
fair market value of such shares (determined at the beginning of the purchase
period(5)) for each calendar year in which such right to purchase is
outstanding at any time.

4. PURCHASE PERIODS. The Plan shall be implemented by calendar quarter
purchase periods during the term of the Plan (each, a "Purchase Period").
The Company's Board of Directors shall designate the commencement date of the
initial Purchase Period.(6) Thereafter, each Purchase Period shall
correspond to a calendar quarter until otherwise determined by the Board of
Directors or the committee appointed to administer the Plan in accordance
with Section 13.

5. PARTICIPATION.(7)

(a) An eligible employee may become a participant in the Plan by
completing an ESPP enrollment form authorizing payroll deductions on the form
provided by the Company and filing it with the Company's benefits office not
less than ten (10) days prior to the commencement of any pay day. Once
enrolled, an employee will continue to participate until he withdraws from
the Plan or his participation is terminated, as provided in Section 10.

(b) Payroll deductions for a participant shall commence on the first
pay day following the receipt of the ESPP enrollment form pursuant to Section
5(a) above, and shall end upon the participant's withdrawal from the Plan or
the termination of the participant's participation in the Plan, as provided
in Section 10.

(c) From time to time, as necessary, the Board of Directors of the
Company (or the administrative committee for the Plan) may meet with
representatives of any corporation which becomes a Parent or Subsidiary
subsequent to the Plan's adoption date to determine whether and to what
extent the employees of such Parent or Subsidiary shall be eligible to
participate in the Plan.

6. PAYROLL DEDUCTIONS.(8)

(a) At the time a participant files his ESPP enrollment form, he shall
elect to have payroll deductions in whole percentages made on each payday
during the Purchase Period at a rate not less than two percent (2%) and not
exceeding ten percent (10%) of the compensation which he receives on such
payday, and the aggregate of such payroll deductions during the Purchase
Period shall not exceed ten percent (10%) of his aggregate compensation
during said Purchase Period, excluding the effect of any increase in the rate
of compensation which becomes effective during the Purchase Period.

(b) All payroll deductions made by a participant shall be applied to
purchase shares on the next share purchase date as set forth in Section 8. A
participant may not make any additional payments into the Plan.

- ----------
(5) Sec. 3 (b)(iii) was amended October 1, 1997 to change "at the time such
purchase option is granted" to "at the beginning of the purchase period" to
clarify that the ESPP is not a stock option plan for UK tax purposes.

(6) Sec 4: On September 13, 1996, the Board of Directors of the Company
designated January 1, 1997 as the commencement date of the initial Purchase
Period.

(7) Sec. 5 was amended September 13, 1996 as follows: subsection 5(a)
changed "payroll office" to "benefits office", " 7 days" to "10 days",
"Purchase Period" to "pay day" and deleted "on a quarterly basis" in last
sentence; subsection 5(b) changed " on the first payroll following the
commencement of the first calendar quarter for which the participant's
participation is effective" to "on the first pay day following the receipt of
the ESPP enrollment form pursuant to Section 5(a) above"; deleted subsection
(c) and renumbered subsection (d) as subsection 5(c).

(8) Sec. 6 was amended September 13, 1996 as follows: subsection 6(a)
changed "subscription agreement" to "ESPP enrollment form", added "in whole
percentages", changed "$10.00 per month" to "two percent (2%)" and deleted
the following: "and the aggregate of such payroll deductions during the
Purchase Period shall not exceed ten percent (10%) of his aggregate
compensation during said Purchase Period, excluding the effect of any
increase in the rate of compensation which becomes effective during the
Purchase Period."; subsection 6(b) amended to read as stated; prior to
amendment, 6(b) read as follows: "All payroll deductions made by a
participant shall be credited to his account under the Plan. A participant
may not make any additional payments into such account."; subsection 6(c) to
read as stated; prior to amendment, 6(c) read as follows: "A participant
may discontinue his participation in the Plan as provided in Section 10, or
may lower, but not increase, the rate of his payroll deductions (within the
limitation set forth in subparagraph (a) above) by completing or filing with
the Company a new authorization for payroll deduction. The change in rate
shall be effective within fifteen (15) days following the Company's receipt
of the new authorization"

2
<PAGE>

(c) A participant may discontinue his participation in the Plan as
provided in Section 10, or may change the rate of his payroll deductions
(within the limitation set forth in subparagraph (a) above) by completing or
filing with the Company a new ESPP enrollment form for payroll deduction.

(d) Non-US employees' payroll deduction will be valued at the average
of the exchange rate on the last day of the quarter for the purchase of
shares.(9)

7. PURCHASE PRICE.

(a) Each eligible employee participating in the Plan shall have the
right to purchase (at the per share price set forth below) up to the number
of shares of the Company's Common Stock determined by dividing each
employee's accumulated payroll deductions for the Purchase Period(10) of his
annual compensation as of the date of the commencement of the applicable
Purchase Period) by the lower of ninety percent (90%)(11) of the fair market
value of a share of the Company's Common Stock on (i) the first business day
of such Purchase Period or (ii) the last business day of such Purchase
Period, subject to the limitations set forth in Sections 3(b) and 12. Fair
market value of a share of the Company's Common Stock shall be determined as
provided in subsection (b) below.

(b) The fair market value of the Company's Common Stock on any date
shall be determined by the Company's Board of Directors based upon such
factors as they deem relevant; provided, however, that where there is a
public market for the Common Stock, the fair market value per share shall be
the average of the last reported bid and asked prices of the Common Stock, as
reported in THE WALL STREET JOURNAL (or, if not so reported, as otherwise
reported by the National Association of Securities Dealers Automated
Quotation (NASDAQ) System) or, in the event the Common Stock is listed on a
national securities exchange (within the meaning of Section 6 of the Exchange
Act) or the NASDAQ National Market System, the fair market value per share
shall be the closing price on such exchange, as reported in THE WALL STREET
JOURNAL, on the date of determination.

8. PURCHASE OF SHARES. Unless a participant withdraws from the Plan as
provided in Section 10, his purchase of shares in any Purchase Period will be
automatic as of the first business day of the next Purchase Period and the
maximum number of shares(12) will be purchased for him at the applicable
price with the accumulated payroll deductions in his account. During the
participant's lifetime, only the participant may purchase shares under the
Plan.

9. HOLD PERIOD; DELIVERY OF SHARE CERTIFICATES.(13)

(a) Shares of the Company's Common Stock issued pursuant to this Plan
shall be subject to a six (6) month hold period commencing on the date that
such shares are issued by the Company (the "Hold Period"). No participant
may sell, assign, dispose of by gift or otherwise transfer any shares of the
Company's Common Stock issued pursuant to this Plan prior to the termination
of the Hold Period.

(b) The Company shall maintain a record of all shares issued to
participants in the Plan. Upon the termination of the applicable Hold
Period, a participant in the Plan may request in writing addressed to the
director of benefits of the Company a share certificate for shares of Common
Stock issued to such participant and no longer subject to a Hold Period.
Upon receipt of such written request, the Company shall arrange the delivery
to such participant of a certificate representing the shares purchased by
such participant. The participant will be responsible for paying any
administrative fees for certificate issuance.

- ----------
(9) Sec. 6(d) was added on October 1, 1997.

(10) Sec. 7(a) was amended September 13, 1996 to delete: "(at the rate
designated by such employee, not to exceed an amount equal to ten percent
(10%))"

(11) Sec. 7(a) was amended on October 1, 1997 to change 95% to 90%.

(12) Sec. 8 was amended September 13, 1996, to change "full shares" to
"shares."

(13) Sec. 9 was amended September 13, 1996 as follows: subsection 9(b)
"Secretary" changed to "director of benefits" and added "The participant will
be responsible for paying any administrative fees for certificate issuance";
subsection 9 (c) deleted, which read: "(c) Any cash remaining to the credit
of a participant's account under the Plan after a purchase by him of shares
in any Purchase Period, or which is insufficient to purchase a full share of
Common Stock of the Company, shall be accumulated in the participant's
account and applied to the purchase of shares in the next succeeding Purchase
Period. All such funds shall be delivered to a participant in the Plan upon
such participant's withdrawal from the Plan or termination of employment
pursuant to Section 10."

3
<PAGE>

10. WITHDRAWAL; TERMINATION OF EMPLOYMENT.(14)

(a) A participant may withdraw from the Plan at any time by giving
written notice to the Company. After receipt of his notice of withdrawal, his
participation in the Plan will be automatically terminated, and no further
payroll deductions for the purchase of shares will be made under the Plan.
All of the participant's payroll deductions credited to his account prior to
withdrawal will be used to purchase shares at the next share purchase date
and will not be paid to him in cash.

(b) Upon termination of the participant's employment for any reason,
including retirement or death, his participation in the Plan will be
automatically terminated. All of the participant's payroll deductions
credited to his account prior to such termination will be used to purchase
shares at the next share purchase date and will not be paid in cash.

(c) A participant's withdrawal from the Plan will not have any effect
upon his eligibility to participate in the Plan at a future date or in any
similar plan which may hereafter be adopted by the Company, so long as the
participant is otherwise eligible to participate in such plan.

11. INTEREST. No interest shall accrue on the payroll deductions of a
participant in the Plan.

12. STOCK.

(a) The maximum number of shares of the Company's Common Stock which
shall be made available for sale under the Plan shall be two hundred thousand
(200,000) shares(15), subject to adjustment upon changes in capitalization of
the Company as provided in Section 18. If the total number of shares which
would otherwise be subject to purchase by participants pursuant to Section
7(a) exceeds the number of shares then available under the Plan (after
deduction of all shares which have been purchased under the Plan), the
Company shall make a pro rata allocation of the shares remaining available
for purchase in as uniform a manner as shall be practicable, provided that no
participant shall be permitted to purchase more shares than the maximum
number of shares allowable to such participant as calculated pursuant to the
provisions of Section 7(a) hereof. In such event, the Company shall give
written notice of such reduction of the number of shares available for
purchase to each employee affected thereby and shall similarly reduce the
rate of payroll deductions, if necessary.

(b) The participant will have no interest or voting right in shares to
be purchased by a participant under the Plan until such shares have been
issued by the Company.

(c) Shares to be delivered to a participant under the Plan will be
registered in the name of the participant or in the name of the participant
and his or her spouse.

13. ADMINISTRATION. The Plan shall be administered by the Board of
Directors of the Company or a committee appointed by the Board. The
administration, interpretation or application of the Plan by the Board or its
committee shall be final, conclusive and binding upon all participants.
Members of the Board of Directors or its committee who are eligible employees
are permitted to participate in the Plan.

14. DESIGNATION OF BENEFICIARY.

(a) A participant may file a written designation of a beneficiary who
is to receive any shares and cash, if any, from the participant's account
under the Plan in the event of such participant's death prior to delivery to
him of such shares and cash. In addition, a participant may file a written
designation of a beneficiary who is to receive any cash from the
participant's account under the Plan in the event of such participant's death.

- ----------
(14) Sec. 10(a) and 10(b) were amended September 13, 1996 to read as stated.
Prior to amendment, read as follows: "10(a) A participant may withdraw all,
but not less than all, the payroll deductions credited to his account under
the Plan at any time by giving written notice to the Company. All of the
participant's payroll deductions credited to his account will be paid to him
promptly after receipt of his notice of withdrawal, his participation in the
Plan will be automatically terminated, and no further payroll deductions for
the purchase of shares will be made under the Plan. 10(b) Upon termination
of the participant's employment for any reason, including retirement or
death, the payroll deductions credited to his account will be returned to
him, or, in the case of his death, to the person or persons entitled thereto
under Section 14, and his participation in the Plan will be automatically
terminated"

(15) Sec. 12: The original number of shares authorized for this plan was
95,239; this was adjusted on June 21, 1996 to 200,000 shares because of a
2.1:1 stock split.

4
<PAGE>

(b) Such designation of beneficiary may be changed by the participant
at any time by written notice. In the event of the death of a participant
and in the absence of a beneficiary validly designated under the Plan who is
living at the time of such participant's death, the Company shall deliver
such shares and/or cash to the executor or administrator of the estate of the
participant, or if no such executor or administrator has been appointed (to
the knowledge of the Company), the Company, in its discretion, may deliver
such shares and/or cash to the spouse or to any one or more dependents or
relatives of the participant, or if no spouse, dependent or relative is known
to the Company, then to such other person as the Company may designate.

15. TRANSFERABILITY. Neither payroll deductions credited to a participant's
account nor any rights with regard to the receipt of shares under the Plan
may be assigned, transferred, pledged or otherwise disposed of in any way
(other than by will, the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Code or Title I of the
Employee Retirement Income Security Act, or the rules thereunder or as
provided in Section 14) by the participant. Any such attempt at assignment,
transfer, pledge or other disposition shall be without effect, except that
the Company may treat such act as an election to withdraw funds in accordance
with Section 10.

16. USE OF FUNDS. All payroll deductions received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.

17. REPORTS. Individual accounts will be maintained for each participant in
the Plan. Statements of account will be given to participating employees
periodically.(16)

18. CHANGES IN CAPITALIZATION. If any shares are purchased under this Plan
subsequent to any stock dividend, stock split, spin-off, recapitalization,
merger, combination, reclassification, exchange of shares or the like,
occurring after such shares were purchased but prior to delivery of the stock
certificate therefor, as a result of which shares of any class shall be
issued in respect of the outstanding shares, or shares shall be changed into
the same, whether a different number of the same or another class or classes,
the number of shares to be issued by the Company and the purchase price for
such shares shall be appropriately adjusted by the Company, as necessary to
maintain the equality of rights and privileges afforded participants and
shares issuable under the Plan, provided that, in any transaction described
in Section 424 of the Code, the Plan shall be administered in such a manner
as to satisfy the provisions of Section 424 and the regulations thereunder;
and provided further, that any increase in the aggregate number of shares
subject to the Plan (other than an increase merely reflecting a change in
capitalization such as a stock dividend or stock split) must be approved by
the Company's stockholders in accordance with Section 22 hereof.

19. AMENDMENT OR TERMINATION. The Board of Directors of the Company may at
any time terminate, modify, extend or renew the Plan or any rights to
purchase shares granted hereunder; provided that no such modification,
extension or renewal be made without prior approval of the stockholders of
the Company if such amendment would:

(a) Increase the number of shares reserved under the Plan;

(b) Permit payroll deductions at a rate in excess of ten percent (10%)
of the participant's compensation rate;

(d) Materially increase the benefits which may accrue to participants
under the Plan.

20. NOTICES. All notices or other communications by a participant to the
Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the
location, or by the person, designated by the Company for the

- ----------

(16) Sec. 17 was amended September 13, 1996 by inserting the word
"periodically" in place of "promptly after the end of each Purchase Period,
which statements will set forth the total payroll deductions accumulated, the
per share purchase price, the number of shares purchased and the remaining
cash balance, if any".

5
<PAGE>

receipt thereof.

21. TERM OF PLAN. The Plan shall become effective upon the earlier to occur
of its adoption by the Board of Directors or its approval by the stockholders
of the Company as described in Section 22. It shall continue in effect for a
term of twenty (20) years unless sooner terminated pursuant to Section 19.

APPROVAL OF STOCKHOLDERS. The Plan and any increase in the number of
shares reserved under the Plan must be approved by the stockholders of the
Company within twelve (12) months before or after the date the Plan has been
adopted or an increase in the number of shares reserved under the Plan has
been approved by the Board of Directors. Such stockholder approval shall be
by the affirmative vote of a majority of the capital stock of the Company
present or represented and entitled to vote at a duly held meeting or by the
written consent of the holders of a majority of the outstanding capital stock
of the Company entitled to vote. Any purchases of shares pursuant to the
Plan before stockholder approval is obtained must be rescinded if stockholder
approval is not obtained within twelve (12) months after the Plan is
adopted(17). Such shares shall not be counted in determining whether such
approval is obtained.

- --END OF PLAN--

- ----------
(17) Sec. 22: Stockholder approval of the Plan was granted on May 16, 1996,
within the 12 month period.

<PAGE>

Exhibit 10.7

USCS INTERNATIONAL, INC.

DEFERRED COMPENSATION PLAN

(FORMERLY, U.S. COMPUTER SERVICES DEFERRED COMPENSATION PLAN)

(JANUARY 1, 1998 RESTATEMENT)

<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 1 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . 1

1.1 "AFFILIATE" . . . . . . . . . . . . . . . . . . . . . . 1
1.2 "Beneficiary" . . . . . . . . . . . . . . . . . . . . . 2
1.3 "Board of Directors". . . . . . . . . . . . . . . . . . 2
1.4 "Code". . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 "Committee" . . . . . . . . . . . . . . . . . . . . . . 2
1.6 "Company" . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 "Compensation". . . . . . . . . . . . . . . . . . . . . 2
1.8 "Compensation Deferrals". . . . . . . . . . . . . . . . 3
1.9 "Disability" or "Disabled". . . . . . . . . . . . . . . 3
1.10 "Eligible Employee" . . . . . . . . . . . . . . . . . . 3
1.11 "Employers" . . . . . . . . . . . . . . . . . . . . . . 3
1.12 "ERISA" . . . . . . . . . . . . . . . . . . . . . . . . 3
1.13 "Participant" . . . . . . . . . . . . . . . . . . . . . 4
1.14 "Participant's Account" or "Account". . . . . . . . . . 4
1.15 "Plan". . . . . . . . . . . . . . . . . . . . . . . . . 4
1.16 "Plan Year" . . . . . . . . . . . . . . . . . . . . . . 4

SECTION 2 PARTICIPATION. . . . . . . . . . . . . . . . . . . . . . 4

2.1 Participation . . . . . . . . . . . . . . . . . . . . . 4
2.1.1 Initial Elections by Current Employees . . . . . 4
2.1.2 Initial Elections by New Eligible Employees. . . 5
2.1.3 Elections for Subsequent Plan Years. . . . . . . 5
2.1.4 No Election Changes During Plan Year . . . . . . 5
2.1.5 Specific Timing and Method of Election . . . . . 6
2.2 Hardship Suspension of Participation. . . . . . . . . . 6
2.3 Termination of Participation. . . . . . . . . . . . . . 7

SECTION 3 COMPENSATION DEFERRAL ELECTIONS. . . . . . . . . . . . . 7

3.1 Compensation Deferrals. . . . . . . . . . . . . . . . . 7
3.2 Crediting of Compensation Deferrals . . . . . . . . . .
3.3 Deemed Investment Return on Accounts. . . . . . . . . . 8
3.4 Form of Payment . . . . . . . . . . . . . . . . . . . . 8
3.5 Normal Time for Payment . . . . . . . . . . . . . . . . 9

<PAGE>

3.6 In-Service Withdrawals. . . . . . . . . . . . . . . . . 9

SECTION 4 ACCOUNTING . . . . . . . . . . . . . . . . . . . . . . . 10

4.1 Participants' Accounts. . . . . . . . . . . . . . . . . 10
4.2 Participants Remain Unsecured Creditors . . . . . . . . 10
4.3 Accounting Methods. . . . . . . . . . . . . . . . . . . 10
4.4 Reports . . . . . . . . . . . . . . . . . . . . . . . . 10

SECTION 5 DISTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . 10

5.1 Normal Time for Distribution. . . . . . . . . . . . . . 10
5.1.1 Termination Date . . . . . . . . . . . . . . . . 11
5.1.2 Rules for Installment Payments . . . . . . . . . 11
5.1.3 Special Rule for Disability. . . . . . . . . . . 11
5.2 Death of the Participant. . . . . . . . . . . . . . . . 12
5.3 Beneficiary Designations. . . . . . . . . . . . . . . . 12
5.3.1 Changes. . . . . . . . . . . . . . . . . . . . . 12
5.3.2 Failed Designations. . . . . . . . . . . . . . . 12
5.4 Financial Hardship. . . . . . . . . . . . . . . . . . . 12
5.5 Payments to Incompetents. . . . . . . . . . . . . . . . 13
5.6 Undistributable Accounts. . . . . . . . . . . . . . . . 13
5.7 Committee Discretion. . . . . . . . . . . . . . . . . . 14

SECTION 6 PARTICIPANT'S INTEREST IN ACCOUNT. . . . . . . . . . . . 14

6.1 Compensation Deferral Contributions . . . . . . . . . . 14

SECTION 7 ADMINISTRATION OF THE PLAN . . . . . . . . . . . . . . . 14

7.1 Plan Administrator. . . . . . . . . . . . . . . . . . . 14
7.2 Committee . . . . . . . . . . . . . . . . . . . . . . . 14
7.3 Actions by Committee. . . . . . . . . . . . . . . . . . 14
7.4 Powers of Committee . . . . . . . . . . . . . . . . . . 15
7.5 Decisions of Committee. . . . . . . . . . . . . . . . . 16
7.6 Administrative Expenses . . . . . . . . . . . . . . . . 16
7.7 Eligibility to Participate. . . . . . . . . . . . . . . 17
7.8 Indemnification . . . . . . . . . . . . . . . . . . . . 17

SECTION 8 FUNDING.17

8.1 Unfunded Plan . . . . . . . . . . . . . . . . . . . . . 17

<PAGE>

SECTION 9 MODIFICATION OR TERMINATION OF PLAN. . . . . . . . . . . 17

9.1 Employers' Obligations Limited. . . . . . . . . . . . . 17
9.2 Right to Amend or Terminate . . . . . . . . . . . . . . 18
9.3 Disposition of Affiliates . . . . . . . . . . . . . . . 18
9.4 Effect of Termination . . . . . . . . . . . . . . . . . 18

SECTION 10 GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . 19

10.1 Participation by Affiliates . . . . . . . . . . . . . . 19
10.2 Inalienability. . . . . . . . . . . . . . . . . . . . . 19
10.3 Rights and Duties . . . . . . . . . . . . . . . . . . . 20
10.4 No Enlargement of Employment Rights . . . . . . . . . . 20
10.5 Apportionment of Costs and Duties . . . . . . . . . . . 20
10.6 Compensation Deferrals Not Counted Under Other
Employee Benefit Plans. . . . . . . . . . . . . . . . . 20
10.7 Applicable Law. . . . . . . . . . . . . . . . . . . . . 20
10.8 Severability. . . . . . . . . . . . . . . . . . . . . . 21
10.9 Captions. . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>

iii

<PAGE>

USCS INTERNATIONAL, INC.

DEFERRED COMPENSATION PLAN

(FORMERLY, U.S. COMPUTER SERVICES DEFERRED COMPENSATION PLAN)

(JANUARY 1, 1998 RESTATEMENT)

USCS International, Inc. (formerly, U.S. Computer Services), a
Delaware corporation, having established the USCS International, Inc.
Deferred Compensation Plan (formerly, the U.S. Computer Services Deferred
Compensation Plan), effective September 1, 1994, for the benefit of a select
group of management employees of the Company and its participating
Affiliates, in order to provide such employees with certain deferred
compensation benefits, hereby amends and restates the Plan effective as of
January 1, 1998. The Plan is an unfunded deferred compensation plan that is
intended to qualify for the exemptions provided in sections 201, 301, and 401
of ERISA.

SECTION 1

DEFINITIONS

The following words and phrases shall have the following meanings
unless a different meaning is plainly required by the context:

1.1 "AFFILIATE" shall mean (a) the Company, and (b) each corporation,
trade or business which is, together with any Employer, a member of a
controlled group of corporations or an affiliated service group or under
common control (within the meaning of section 414(b), (c) or (m) of the
Code), but only for the period during which such other entity is so
affiliated with any Employer.

<PAGE>

1.2 "BENEFICIARY" shall mean the person or persons entitled to receive
the balance credited to a Participant's Account under the Plan upon the death
of the Participant, as provided in Section 5.4.

1.3 "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Company, as constituted from time to time.

1.4 "CODE" shall mean the Internal Revenue Code of 1986, as amended.
Reference to a specific section of the Code shall include such section, any
valid regulation promulgated thereunder, and any comparable provision of any
future legislation amending, supplementing or superseding such section.

1.5 "COMMITTEE" shall mean the committee appointed by the Board of
Directors to administer the Plan. The members of the Committee shall serve
at the pleasure of the Board of Directors.

1.6 "COMPANY" shall mean USCS International, Inc. (formerly, U.S.
Computer Services), a Delaware corporation.

1.7 "COMPENSATION" shall mean the base salary (including car allowance)
of a Participant, but reduced by welfare plan contributions and deductions,
elected deferrals and deductions (e.g., 401(k) contributions, 401(k) loan
repayments, Section 125 flexible benefits deductions, and Company cafeteria
charges), and any other amounts required to be withheld for taxes or
otherwise (e.g., pursuant to an order for garnishment). A Participant's
Compensation shall not include any other type of remuneration.

<PAGE>

1.8 "COMPENSATION DEFERRALS" shall mean the amounts credited to
Participants' Accounts under the Plan pursuant to their deferral elections
made in accordance with Section 2.1.

1.9 "DISABILITY" OR "DISABLED" shall mean a physical or mental
impairment that (a) renders a Participant incapable of performing the
functions of his or her position for a period of two years, and (b)
thereafter, based on factors such as the Participant's education and
training, renders him or her incapable of performing work in any capacity. A
Participant shall be Disabled only if he or she is determined to be disabled
by a third party or parties designated from time to time by the Committee.

1.10 "ELIGIBLE EMPLOYEE" shall mean an employee of an Employer who holds
the title of Director or above. Notwithstanding the preceding, the Board of
Directors, in its sole discretion, may (a) change the required title for
purposes of determining eligibility for the Plan, and (b) determine that one
or more otherwise eligible employees of an Employer shall not be Eligible
Employees.

1.11 "EMPLOYERS" shall mean the Company and each of its Affiliates that
adopts the Plan with the approval of the Board of Directors. With respect to
an individual Participant, "Employer" shall mean the Company or its Affiliate
that (a) directly employs such Participant, and (b) has adopted the Plan
(with the approval of the Board of Directors).

1.12 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended. Reference to a specific section of ERISA shall include
such section, any valid regulation promulgated thereunder, and any comparable
provision of any future legislation amending, supplementing or superseding
such section.

<PAGE>

1.13 "PARTICIPANT" shall mean an Eligible Employee who (a) has become a
Participant in the Plan pursuant to Section 2.1 and (b) has not ceased to be
a Participant pursuant to Section 2.3.

1.14 "PARTICIPANT'S ACCOUNT" OR "ACCOUNT" shall mean as to any
Participant the separate account maintained on the books of the Employers in
order to reflect his or her interest under the Plan.

1.15 "PLAN" shall mean the USCS International, Inc. Deferred
Compensation Plan (formerly, the U.S. Computer Services Deferred Compensation
Plan), as set forth in this instrument and as hereafter amended from time to
time.

1.16 "PLAN YEAR" shall mean the calendar year. Notwithstanding the
preceding, the 1994 Plan Year shall be the period September 1, 1994 (the
effective date of the Plan), through December 31, 1994.

SECTION 2

PARTICIPATION

2.1 PARTICIPATION. Each Eligible Employee's decision to become a
Participant shall be entirely voluntary.

2.1.1 INITIAL ELECTIONS BY CURRENT EMPLOYEES. An Eligible
Employee may elect to become a Participant in the Plan by electing, no later
than September 1, 1994, to make Compensation Deferrals under the Plan. An
election under this Section 2.1.1 to make Compensation Deferrals shall be
effective for the Plan Year beginning September 1, 1994, and for the Plan
Year beginning January 1, 1995.

<PAGE>

2.1.2 INITIAL ELECTIONS BY NEW ELIGIBLE EMPLOYEES. Each
employee who becomes an Eligible Employee after January 1, 1998 (whether by
hire or promotion) may elect to become a Participant in the Plan by electing,
within 30 days of the date of his or her hire or promotion (as the case may
be), to make Compensation Deferrals under the Plan. An election under this
Section 2.1.2 to make Compensation Deferrals shall be effective (a) as of the
first day of the first calendar month which begins after the Eligible
Employee has been such for 30 consecutive days, and (b) for the immediately
following Plan Year. Notwithstanding clause (b) of the preceding sentence,
prior to the beginning of such immediately following Plan Year, and pursuant
to such procedures as the Committee may specify from time to time, the
Eligible Employee may increase or decrease the amount of his or her deferral
for such Plan Year, provided that the Participant may not decrease the amount
of his or her deferral below the $5,000 minimum required by Section 3.1 (unless
the Participant ceases making Compensation Deferrals under the plan).

2.1.3 ELECTIONS FOR SUBSEQUENT PLAN YEARS. An Eligible
Employee may elect to become a Participant (or to continue or reinstate his
or her active participation) in the Plan for any subsequent Plan Year by
electing, no later than December 31 of the preceding Plan Year, to make
Compensation Deferrals under the Plan. An election under this Section 2.1.3
to make Compensation Deferrals shall be effective only for the Plan Year with
respect to which the election is made.

2.1.4 NO ELECTION CHANGES DURING PLAN YEAR. A Participant
shall not be permitted to change or revoke his or her election for a Plan
Year after the beginning of such Plan Year, except that (a) pursuant to such
procedures as the Committee may specify from time to time, a Participant may
increase his or her deferrals for the remainder of the Plan Year (but only

<PAGE>

with respect to Compensation that is not yet earned), (b) to the limited
extent provided in Sections 2.1.2 and 2.2, a Participant may change or revoke
his or her election, and (c) if a Participant's job changes to a position
which is ineligible for the Plan, his or her deferrals under the Plan shall
cease.

2.1.5 SPECIFIC TIMING AND METHOD OF ELECTION. Notwithstanding
any contrary provision of this Section 2.1, the Committee, in its sole
discretion, shall determine the manner and deadlines for Participants to make
Compensation Deferral elections. The deadlines prescribed by the Committee
may be earlier than the deadlines specified in Sections 2.1.1, 2.1.2, and
2.1.3, but shall not be later than the deadlines prescribed in such Sections.

2.2 HARDSHIP SUSPENSION OF PARTICIPATION. In the event that a
Participant incurs a "financial hardship" (as defined in this Section 2.2),
the Committee, in its sole discretion, may suspend the Participant's
Compensation Deferrals for the remainder of the Plan Year. However, an
election to make Compensation Deferrals under Section 2.1 shall be
irrevocable as to amounts deferred as of the effective date of any suspension
in accordance with this Section 2.2. For purposes of the Plan, a "financial
hardship" shall mean a severe financial emergency which is caused by a sudden
and unexpected accident, illness or other event beyond the control of the
Participant which would, if no suspension of deferrals (or accelerated
distribution under Section 5.5) were made, result in severe financial burden
to the Participant or a member of his or her immediate family. Also, a
financial hardship does not exist to the extent that the hardship may be
relieved by (a) reimbursement or compensation by insurance, (b) liquidation
of the Participant's other assets (to the extent such liquidation would not
itself cause severe financial hardship), or

<PAGE>

(c) any loan available to the Participant (to the extent the payments on such
loan would not themselves cause severe financial hardship).

2.3 TERMINATION OF PARTICIPATION. An Eligible Employee who has become
a Participant shall remain a Participant until his or her entire vested
Account balance is distributed. However, an Eligible Employee who has become
a Participant may or may not be an active Participant making Compensation
Deferrals for a particular Plan Year, depending upon whether he or she has
elected to make Compensation Deferrals for such Plan Year.

SECTION 3

COMPENSATION DEFERRAL ELECTIONS

3.1 COMPENSATION DEFERRALS. At the times and in the manner prescribed
in Section 2.1, each Eligible Employee may elect to defer portions of his or
her Compensation and to have the amounts of such deferrals credited to his or
her Account under the Plan on the books of the Employer. For each Plan Year,
an Eligible Employee may elect to defer an amount equal to any specific
dollar amount (in whole dollar increments) of the Participant's Compensation,
provided that the percentage or dollar amount elected by the Participant
shall result in an expected deferral of not less than $5,000 of his or her
Compensation. Notwithstanding the preceding sentence, the minimum deferral
amount shall, in such manner as the Committee may determine from time to
time, be prorated (a) for the Plan Year beginning September 1, 1994, and (b)
with respect to each Participant who becomes a Participant under Section
2.1.2, for his or her first year of active participation in the Plan. Also,
notwithstanding any contrary provision of the Plan, the Committee may reduce
a Participant's Compensation Deferrals to the extent necessary to satisfy
applicable withholding tax requirements and employee welfare plan
contributions.

<PAGE>

3.2 CREDITING OF COMPENSATION DEFERRALS. The amounts deferred pursuant
to Section 3.1 shall reduce the Participant's Compensation during the Plan
Year and shall be credited to the Participant's Account as of the date on
which the amounts (but for the deferral) would have been paid to the
Participant. For each Plan Year, the exact dollar amount to be deferred from
each Compensation payment shall be determined by the Committee under such
formulae as it shall adopt from time to time.

3.3 DEEMED INVESTMENT RETURN ON ACCOUNTS. Although no assets will be
segregated or otherwise set aside with respect to a Participant's Account,
effective January 1, 1998, the amount that is ultimately payable to the
Participant with respect to his or her Account shall be determined as if such
Account had been invested in accordance with the Participant's deemed
investment elections (provided that such elections must comply with the
procedures established by the Committee pursuant to this Section 3.3). The
Committee, in its sole discretion shall adopt (and may modify from time to
time) such rules and procedures as it deems necessary or appropriate to
implement and or re-direct the deemed investment of the Participants'
Accounts. Such procedures generally shall provide that a Participant shall
be entitled to make deemed investment elections as to the deemed investment
of his or her Account subject to any limitations determined by the Committee.
Such procedures may differ among Participants or classes of Participants, as
determined by the Committee in its discretion.

3.4 FORM OF PAYMENT. Each Participant shall indicate on his or her
first deferral election made pursuant to Section 3.1 the form of payment for
his or her Account. Effective January 1, 1998, a Participant may elect (a) a
lump sum payment or (b) five annual installment payments. Subject to the
following sentence, each Participant who elected payments in ten annual
installment payments or fifteen annual installment payments with respect to
Compensation Deferrals made prior to January 1, 1998 shall automatically have
a lump sum

<PAGE>

payment as the form of payment for his or her Account, unless such
Participant elected payment in five annual installment payments. On any
subsequent deferral election (i.e., an election for a subsequent Plan Year),
each Participant may choose a different form of payment (from the above
choices); provided, however, that a Participant may not choose a more rapid
form of payment than has previously been elected. A Participant's last
effective election shall apply to all amounts credited to the Participant's
Account, without regard to the Plan Year in which such amounts are credited
(except as provided in Section 3.6).

3.5 NORMAL TIME FOR PAYMENT. Each Participant's Account shall be
distributed at the time(s) provided in Section 5, except as provided in
Section 3.6.

3.6 IN-SERVICE WITHDRAWALS. Notwithstanding any contrary provision of
the Plan, and pursuant to such procedures as the Committee may adopt from
time to time, a Participant may indicate on his or her deferral election
(made pursuant to Section 3.1) the time for payment of all or a portion of
the Compensation Deferrals to be made for the specific Plan Year covered by
such deferral election. Payment of such deferrals (as increased or decreased
by any deemed earnings or losses) will be made in four equal installments,
commencing on the date elected by the Participant. A Participant may elect
to commence receiving payment of such deferrals after any whole number of
calendar years (not less than five) specified by the Participant in his or
her deferral election. A Participant's election as to the time for
commencement of payment shall be irrevocable and shall apply to the elected
portion of the amounts credited to the Participant's Account (as increased or
decreased by any deemed earnings or losses) during the Plan Year with respect
to which the election is made, provided that if the Participant terminates
employment prior to the final scheduled payment under this Section 3.6,
distribution of the entire remaining balance credited to his or her Account
shall instead be made in the time and manner provided in Section 5.

<PAGE>

SECTION 4

ACCOUNTING

4.1 PARTICIPANTS' ACCOUNTS. At the direction of the Committee, there
shall be established and maintained on the books of the Employer a separate
Account for each Participant to which shall be credited all Compensation
Deferrals made by the Participant, and deemed investment, gains or losses on
such Compensation Deferrals.

4.2 PARTICIPANTS REMAIN UNSECURED CREDITORS. All amounts credited to a
Participant's Account under the Plan shall continue for all purposes to be a
part of the general assets of the Employer. Each Participant's interest in
the Plan shall make him or her only a general, unsecured creditor of the
Employer.

4.3 ACCOUNTING METHODS. The accounting methods or formulae to be used
under the Plan for the purpose of maintaining the Participants' Accounts,
including the calculation and crediting of deemed returns, gains and losses,
shall be determined by the Committee, in its sole discretion. The accounting
methods or formulae selected by the Committee may be revised from time to
time.

4.4 REPORTS. Each Participant shall be furnished with periodic
statements of his or her Account, reflecting the status of his or her
interest in the Plan, at least annually.

SECTION 5

DISTRIBUTIONS

5.1 NORMAL TIME FOR DISTRIBUTION. Subject to Sections 3.6, 5.2, and
5.3, distribution of the balance credited to a Participant's Account shall
commence no later than January 15 of the Plan Year following the
Participant's "termination date" (as defined in Section 5.1.1).

<PAGE>

5.1.1 TERMINATION DATE. A Participant's "termination date"
means the date of the Participant's termination of employment with all
Employers and Affiliates for any reason, except as provided in the following
sentence. However, if (a) the Participant's termination of employment with
all Employers and Affiliates occurs on account of the sale of the stock or
assets of the Affiliate employing the Participant, or due to a spin-off,
split-up or other similar change in the capital structure of the Affiliate,
and (b) the Participant continues in employment with the new non-Affiliate
(or its successor), then the Participant's "termination date" means the date
of the Participant's termination of employment for any reason from such
non-Affiliate.

5.1.2 RULES FOR INSTALLMENT PAYMENTS. If, pursuant to Section
3.4, the Participant elected to receive five annual installment payments, his
or her first installment shall be equal to 1/5th of the balance then credited
to his or her Account. Each subsequent annual installment shall be paid to
the Participant as near as administratively practicable to each anniversary
of the first installment payment. The amount of each subsequent installment
shall be equal to the balance then credited to the Participant's Account,
divided by the number of installments remaining to be made. While a
Participant's Account is in installment payout status, the unpaid balance
credited to the Participant's Account shall continue to be credited with
deemed investment returns under Section 3.3.

5.1.3 SPECIAL RULE FOR DISABILITY. If a Participant becomes
Disabled prior to his or her termination of employment with all Employers and
Affiliates, the balance then credited to his or her Account shall be
distributed to him or her at the time specified in Section 5 and in the form
and manner elected under Section 3.4.

<PAGE>

5.2 DEATH OF THE PARTICIPANT. If a Participant dies, the balance then
credited to his or her Account shall be distributed to his or her Beneficiary
or Beneficiaries, in the same form and manner elected by the Participant
under Sections 3.4 and 3.6.

5.3 BENEFICIARY DESIGNATIONS. Each Participant may, pursuant to such
procedures as the Committee may specify, designate one or more Beneficiaries.
Primary and secondary Beneficiaries are permitted.

5.3.1 CHANGES. A Participant may designate different
Beneficiaries (or may revoke a prior Beneficiary designation) at any time by
delivering a new designation (or revocation of a prior designation) in like
manner. Any designation or revocation shall be effective only if it is
received by the Committee. However, when so received, the designation or
revocation shall be effective as of the date the notice is executed (whether
or not the Participant still is living), but without prejudice to the
Committee on account of any payment made before the change is recorded. The
last effective designation received by the Committee shall supersede all
prior designations.

5.3.2 FAILED DESIGNATIONS. If a Participant dies without
having effectively designated a Beneficiary, or if no Beneficiary (primary or
secondary) survives the Participant, the Participant's Account shall be
payable to his or her surviving spouse, or, if the Participant is not
survived by his or her spouse, the Account shall be paid to his or her estate.

5.4 FINANCIAL HARDSHIP. In the event that a Participant incurs a
"financial hardship" (as defined in Section 2.2), the Committee, in its sole
discretion and notwithstanding any contrary provision of the Plan, may
determine that all or part of the Participant's Account shall

<PAGE>

be paid to him or her immediately; provided, however, that the amount paid to
the Participant pursuant to this Section 5.5 shall be limited to the amount
reasonably necessary to alleviate the Participant's hardship. Also, payment
under this Section 5.5 may not be made to the extent that the hardship may be
relieved by suspension of the Participant's Compensation Deferrals in
accordance with Section 2.2.

5.5 PAYMENTS TO INCOMPETENTS. If any individual to whom a benefit is
payable under the Plan is a minor or legally incompetent, the Committee shall
determine whether payment shall be made directly to the individual, any
person acting as his or her custodian or legal guardian under the California
Uniform Transfers to Minors Act, his or her legal representative or a near
relative, or directly for his or her support, maintenance or education.

5.6 UNDISTRIBUTABLE ACCOUNTS. Each Participant and (in the event of
death) his or her Beneficiary shall keep the Committee advised of his or her
current address. If the Committee is unable to locate the Participant or
Beneficiary to whom a Participant's Account is payable under this Section 5,
the Participant's Account shall continue to be credited with deemed
investment returns in accordance with Section 3.3. Accounts that, in
accordance with the preceding sentence, have been undistributable for a
period of 35 months shall be forfeited as of the end of the 35th month. If a
Participant whose Account was forfeited under this Section 5.7 (or his or her
Beneficiary) files a claim for distribution of the Account after the date
that it was forfeited, and if the Committee determines that such claim is
valid, then the forfeited balance shall be paid by the Employer in a lump sum
cash payment as soon as practicable thereafter.

<PAGE>

5.7 COMMITTEE DISCRETION. Within the specific time periods described
in this Section 5, the Committee shall have sole discretion to determine the
specific timing of the payment of any Account balance under the Plan.

SECTION 6

PARTICIPANT'S INTEREST IN ACCOUNT

6.1 COMPENSATION DEFERRAL CONTRIBUTIONS. Subject to Sections 8.1
(relating to creditor status) and 9.2 (relating to amendment and/or
termination of the Plan), a Participant's interest in the balance credited to
his or her Account at all times shall be 100% vested and nonforfeitable.

SECTION 7

ADMINISTRATION OF THE PLAN

7.1 PLAN ADMINISTRATOR. The Company is hereby designated as the
administrator of the Plan (within the meaning of section 3(16)(A) of ERISA).

7.2 COMMITTEE. The Plan shall be administered by the Committee. The
Committee shall have the authority to control and manage the operation and
administration of the Plan. Any member of the Committee may resign at any
time by notice in writing mailed or delivered to the Secretary of the Company.

7.3 ACTIONS BY COMMITTEE. Each decision of a majority of the members
of the Committee then in office shall constitute the final and binding act of
the Committee. The

<PAGE>

Committee may act with or without a meeting being called or held and shall
keep minutes of all meetings held and a record of all actions taken by
written consent.

7.4 POWERS OF COMMITTEE. The Committee shall have all powers and
discretion necessary or appropriate to supervise the administration of the
Plan and to control its operation in accordance with its terms, including,
but not by way of limitation, the following discretionary powers:

(a) To interpret and determine the meaning and validity of the
provisions of the Plan and to determine any question arising under, or in
connection with, the administration, operation or validity of the Plan or
any amendment thereto;

(b) To determine any and all considerations affecting the eligibility
of any employee to become a Participant or remain a Participant in the
Plan;

(d) To cause Compensation Deferrals and deemed gains or losses to be
credited to Participants' Accounts;

(e) To establish and revise an accounting method or formula for the
Plan, as provided in Section 4.3;

(f) To determine the manner and form in which any distribution is to
be made under the Plan;

(g) To determine the status and rights of Participants and their
spouses, Beneficiaries or estates;

<PAGE>

(h) To employ such counsel, agents and advisers, and to obtain such
legal, clerical and other services, as it may deem necessary or appropriate
in carrying out the provisions of the Plan;

(i) To establish, from time to time, rules for the performance of its
powers and duties and for the administration of the Plan;

(j) To arrange for annual distribution to each Participant of a
statement of benefits accrued under the Plan;

(k) To publish a claims and appeal procedure satisfying the minimum
standards of section 503 of ERISA pursuant to which individuals or estates
may claim Plan benefits and appeal denials of such claims;

(l) To delegate to any one or more of its members or to any other
person, severally or jointly, the authority to perform for and on behalf of
the Committee one or more of the functions of the Committee under the Plan;
and

(m) to decide all issues and questions regarding Account balances,
and the time, form, manner and amount of distributions to Participants.

7.5 DECISIONS OF COMMITTEE. All actions, interpretations, and
decisions of the Committee shall be conclusive and binding on all persons,
and shall be given the maximum possible deference allowed by law.

7.6 ADMINISTRATIVE EXPENSES. All expenses incurred in the
administration of the Plan by the Committee, or otherwise, including legal
fees and expenses, shall be paid and borne by the Employers.

<PAGE>

7.7 ELIGIBILITY TO PARTICIPATE. No member of the Committee who is also
an employee of an Employer shall be excluded from participating in the Plan
if otherwise eligible, but he or she shall not be entitled, as a member of
the Committee, to act or pass upon any matters pertaining specifically to his
or her own Account under the Plan.

7.8 INDEMNIFICATION. Each of the Employers shall, and hereby does,
indemnify and hold harmless the members of the Committee, from and against
any and all losses, claims, damages or liabilities (including attorneys' fees
and amounts paid, with the approval of the Board of Directors, in settlement
of any claim) arising out of or resulting from the implementation of a duty,
act or decision with respect to the Plan, so long as such duty, act or
decision does not involve gross negligence or willful misconduct on the part
of any such individual.

SECTION 8

FUNDING

8.1 UNFUNDED PLAN. All amounts credited to a Participant's Account
under the Plan shall continue for all purposes to be a part of the general
assets of the Employer. The interest of the Participant in his or her
Account, including his or her right to distribution thereof, shall be an
unsecured claim against the general assets of the Employer. Nothing
contained in the Plan shall give any Participant or beneficiary any interest
in or claim against any specific assets of the Employer.

SECTION 9

MODIFICATION OR TERMINATION OF PLAN

9.1 EMPLOYERS' OBLIGATIONS LIMITED. The Employers intend to continue
the Plan indefinitely, and to maintain each Participant's Account until it is
scheduled to be paid to him or

<PAGE>

her in accordance with the provisions of the Plan. However, the Plan is
voluntary on the part of the Employers, and the Employers do not guarantee to
continue the Plan. The Company at any time may, by amendment of the Plan,
suspend Compensation Deferrals or may discontinue Compensation Deferrals,
with or without cause. Complete discontinuance of all Compensation Deferrals
shall be deemed a termination of the Plan.

9.2 RIGHT TO AMEND OR TERMINATE. The Board of Directors reserves the
right to alter, amend or terminate the Plan, or any part thereof, in such
manner as it may determine, at any time and for any reason.

9.3 DISPOSITION OF AFFILIATES. Notwithstanding any contrary provision
of the Plan, in the event that one or more Participants transfer employment
to a non-Affiliate pursuant to an agreement regarding the sale of the stock
or assets of an Affiliate, or a spin-off, split-up or other change in the
capital structure of an Affiliate (each, an "affected Participant"), the
Board of Directors, in its sole discretion, may determine that (a) the
liability for amounts credited to an affected Participant's Account shall be
assigned or transferred to such non-Affiliate (or an affiliate thereof), and
upon acceptance by the non-Affiliate (or affiliate thereof) of such
liability, no Employer shall have any liability under the Plan to such
affected Participant, or (b) the amounts credited to an affected
Participant's Account shall be distributed to him or her (in a single lump
sum) no later than January 15 of the Plan Year following the affected
Participant's termination of employment with all Employers and Affiliates.

9.4 EFFECT OF TERMINATION. If the Plan is terminated pursuant to this
Section 9, the balances credited to the Accounts of the affected Participants
shall be distributed to them at the

<PAGE>

time and in the manner set forth in Section 5; provided, however, that the
Committee, in its sole discretion, may authorize accelerated distribution of
Participants' Accounts as of any earlier date.

SECTION 10

GENERAL PROVISIONS

10.1 PARTICIPATION BY AFFILIATES. One or more Affiliates of the Company
may become participating Employers by adopting the Plan and obtaining
approval for such adoption from the Board of Directors. By adopting the
Plan, an Affiliate shall be deemed to agree to all of its terms, including
(but not limited to) the provisions granting exclusive authority (a) to the
Board of Directors to amend the Plan, and (b) to the Committee to administer
and interpret the Plan. Any Affiliate may terminate its participation in the
Plan at any time. The liabilities incurred under the Plan to the
Participants employed by each Employer shall be solely the liabilities of
that Employer, and no other Employer shall be liable for benefits accrued by
a Participant during any period when he or she was not employed by such
Employer. A list of participating Employers, and the effective dates of
their participation, is attached hereto as AppendixA.

10.2 INALIENABILITY. In no event may either a Participant, a former
Participant or his or her Beneficiary, spouse or estate sell, transfer,
anticipate, assign, hypothecate, or otherwise dispose of any right or
interest under the Plan; and such rights and interests shall not at any time
be subject to the claims of creditors nor be liable to attachment, execution
or other legal process. Accordingly, for example, a Participant's interest
in the Plan is not transferable pursuant to a domestic relations order.

<PAGE>

10.3 RIGHTS AND DUTIES. Neither the Employers nor the Committee shall
be subject to any liability or duty under the Plan except as expressly
provided in the Plan, or for any action taken, omitted or suffered in good
faith.

10.4 NO ENLARGEMENT OF EMPLOYMENT RIGHTS. Neither the establishment or
maintenance of the Plan, the making of any Compensation Deferrals nor any
action of any Employer or the Committee, shall be held or construed to confer
upon any individual any right to be continued as an employee of the Employer
nor, upon dismissal, any right or interest in any specific assets of the
Employers other than as provided in the Plan. Each Employer expressly
reserves the right to discharge any employee at any time.

10.5 APPORTIONMENT OF COSTS AND DUTIES. All acts required of the
Employers under the Plan may be performed by the Company for itself and its
Affiliates, and the costs of the Plan may be equitably apportioned by the
Committee among the Company and the other Employers. Whenever an Employer is
permitted or required under the terms of the Plan to do or perform any act,
matter or thing, it shall be done and performed by any officer or employee of
the Employer who is thereunto duly authorized by the board of directors of
the Employer.

10.6 COMPENSATION DEFERRALS NOT COUNTED UNDER OTHER EMPLOYEE BENEFIT
PLANS. Compensation Deferrals under the Plan will not be considered for
purposes of contributions or benefits under any other employee benefit plan
sponsored by the Employers.

10.7 APPLICABLE LAW. The provisions of the Plan shall be construed,
administered and enforced in accordance with ERISA, and to the extent not
preempted by ERISA, with the laws of the State of California.

<PAGE>

10.8 SEVERABILITY. If any provision of the Plan is held invalid or
unenforceable, its invalidity or unenforceability shall not affect any other
provisions of the Plan, and in lieu of each provision which is held invalid
or unenforceable, there shall be added as part of the Plan a provision that
shall be as similar in terms to such invalid or unenforceable provision as
may be possible and be valid, legal, and enforceable.

10.9 CAPTIONS. The captions contained in and the table of contents
prefixed to the Plan are inserted only as a matter of convenience and for
reference and in no way define, limit, enlarge or describe the scope or
intent of the Plan nor in any way shall affect the construction of any
provision of the Plan.

<PAGE>

EXECUTION

IN WITNESS WHEREOF, USCS International, Inc. (formerly, U.S.
Computer Services), by its duly authorized officer, has executed this Plan on
the date indicated below.

USCS INTERNATIONAL, INC.

Dated: March 20, 1998 By: James C. Castle
------------------------- -----------------------------------
Title: Chairman and CEO

/s/ James C. Castle
-----------------------------------
Signature

<PAGE>

APPENDIX A

List of Participating Employers

Employer Effective Date
of Participation
------------------------- -----------------------
1. USCS International, Inc. September 1, 1994
(formerly, U.S. Computer
Services)

A-1

<PAGE>
EXHIBIT 11

USCS INTERNATIONAL, INC.

COMPUTATION OF PER SHARE EARNINGS

(IN THOUSANDS EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
-------------------- --------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Weighted average number of common shares outstanding during the
period............................................................... 23,118 23,060 23,164 21,178
Common stock equivalents considered to be outstanding for the periods
presented............................................................ 803 979 1,039 897
--------- --------- --------- ---------
23,921 24,039 24,203 22,075
--------- --------- --------- ---------
--------- --------- --------- ---------
Net income............................................................ $ 6,014 $ 4,775 $ 22,460 $ 14,509
Earnings per share:
Basic............................................................... $0.26 $0.21 $0.97 $0.69
Diluted............................................................. $0.25 $0.20 $0.93 $0.66
</TABLE>

Note: Earnings per share calculations have been restated to reflect application
of Statement of Financial Accounting Standards No. 128 "Earnings per Share" and
the Securities and Exchange Commission Staff Accounting Bulletin No. 98.

<PAGE>
EXHIBIT 21

LIST OF SUBSIDIARIES

<TABLE>
<CAPTION>
PLACE OF
SUBSIDIARY INCORPORATION
- -------------------------------------------------------------------------------------------- --------------------
<S> <C>
CableData International, Ltd................................................................ England
CableData, Limited.......................................................................... Ontario, Canada
CableData, Inc.............................................................................. California
CableData Desktop Solutions, Inc............................................................ California
CableData Telecommunications, Inc........................................................... Michigan
CableLease, Inc............................................................................. California
International Billing Services, Inc......................................................... California
RPA, Inc.................................................................................... California
</TABLE>

<PAGE>
EXHIBIT 23

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (Nos. 333-15895, 333-16739, 333-17747, 333-19873,
333-34803, 333-34801, and 333-41741) of USCS International, Inc. of our report
dated February 6, 1998 appearing on page 24 of this Form 10-K.

/s/ PRICE WATERHOUSE LLP

Sacramento, California
March 23, 1998

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED
CONSOLIDATED FINANCIAL STATEMENTS OF USCS INTERNATIONAL, INC. AS OF DECEMBER 31,
1997 FOR THE TWELVE MONTHS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 2787
<SECURITIES> 0
<RECEIVABLES> 97654
<ALLOWANCES> 0
<INVENTORY> 4573
<CURRENT-ASSETS> 120759
<PP&E> 193166
<DEPRECIATION> 91535
<TOTAL-ASSETS> 238619
<CURRENT-LIABILITIES> 71050
<BONDS> 5453<F1>
0
0
<COMMON> 1171
<OTHER-SE> 130190<F2>
<TOTAL-LIABILITY-AND-EQUITY> 238619
<SALES> 0
<TOTAL-REVENUES> 299346
<CGS> 0
<TOTAL-COSTS> 172948
<OTHER-EXPENSES> 88374<F3>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 554
<INCOME-PRETAX> 37470
<INCOME-TAX> 15010
<INCOME-CONTINUING> 22460
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22460
<EPS-PRIMARY> .97<F4>
<EPS-DILUTED> .93<F4>
<FN>
<F1>Consists of Notes Payable, Credit Line and Bonds Payable
<F2>Consists of Additional Paid-in Capital, Retained Earnings and Foreign
Currency Translation Adjustments
<F3>Consists of Research and Development and Selling, General Administrative
Expenses
<F4>EPS-Primary and diluted have been calculated in conformity with FAS 128
</FN>

</TABLE>