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                                    FORM 10-K

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

[X]  ANNUAL  REPORT  PURSUANT  TO  SECTION  13 OR 15 (d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1998

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES 
     EXCHANGE ACT OF 1934 For the transition period from -------- to --------.

         Commission File Number 0-15997

                               FILENET CORPORATION
             (Exact name of Registrant as specified in its charter)

         Delaware                                     95-3757924
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
of incorporation or organization)

               3565 Harbor Boulevard, Costa Mesa, California 92626
               (Address of principal executive office) (Zip code)

Registrant's telephone number, including area code:   (714) 966-3400


Securities  registered  pursuant to Section  12(b) of the Act:  None  Securities
registered pursuant to Section 12(g) of the Act:

         Title of each class         Name of each exchange which registered
   Common stock,  $0.01 par value                   Nasdaq


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports)  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days: Yes [X] No [ ]

Indicate by check mark whether the 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 [X]

Based on the closing sale price of March 22, 1999, the aggregate market value of
the 31,623,336 shares of voting stock of the Registrant held by nonaffiliates of
the Registrant on such date was $243,183,454.  For purposes of such calculation,
only executive officers, board members and beneficial owners of more than 10% of
the Company's outstanding common stock are deemed to be affiliates.

The number of shares outstanding of the Registrant's common stock was 31,934,143
at March 22, 1999.


                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of Registrant's  definitive proxy statement for its 1999 Annual Meeting
are  incorporated  by reference  into Part III as set forth herein.  Portions of
Registrant's  Annual Report to  Stockholders  for the fiscal year ended December
31, 1998 are  incorporated  by reference  into Parts II, III and IV as set forth
herein.

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                                Index to Exhibits
Exhibit
No.      Description
-------  -----------------------------------------------------------------------
3.1*     Restated Certificate of Incorporation, as amended (filed as Exhibit 3.1
         to Form S-4 filed on January 26, 1996; Registration No. 333-00676).

3.1.1*   Certificate  of  Amendment  of  Restated  Certificate  of Incorporation
         (filed  as  Exhibit  3.1.1  to  Form S-4  filed  on  January 26,  1996,
         Registration No. 333-00676).

3.2*     Bylaws (filed as Exhibit 3.2 of the Registrant's registration statement
         on Form S-1, Registration No. 33-15004 (the "Form S-1")).

4.1*     Form of  certificate  evidencing  Common Stock (filed as Exhibit 4.1 to
         the Form S-1, Registration No. 33-15004).

4.2*     Rights   Agreement,  dated   as  of   November 4, 1988 between  FileNET
         Corporation and the First National Bank of Boston,  which  includes the
         form of Rights Certificate  as  Exhibit A and the  Summary of Rights to
         Purchase  Common Shares as Exhibit B (filed as Exhibit  4.2 to Form S-4
         filed on January 26, 1996; Registration No. 333-00676).

4.3*     Amendment One dated July 31, 1998 and  Amendment Two dated  November 9,
         1998 to Rights Agreements between  FileNET Corporation  and  BANKBOSTON
         N.A.  formerly  known  as  The First National Bank of Boston  (filed as
         Exhibit 4.3 to Form 10-Q for the quarter ended September 30, 1998).

10.1*    Second Amended  and Restated Credit Agreement  (Multicurrency)  by  and
         among  the  Registrant and  Bank of America  National Trust and Savings
         Association  dated  June 25, 1997,   effective  June 1,1997   (filed as
         Exhibit 10.1 to Form 10-Q for the quarter ended June 30, 1997).

10.2*    Business Alliance Program Agreement between the  Registrant  and Oracle
         Corporation  dated  July 1, 1996,  as amended  by Amendment One thereto
         (filed as  Exhibit 10.4  to  Form 10-QA for the  quarter ended June 30,
         1996).

10.3*    Runtime   Sublicense   Addendum   between  the   Registrant and  Oracle
         Corporation  dated July 1, 1996,  as amended  by  Amendment One thereto
         (filed  as  Exhibit 10.4  to  Form 10-QA for the quarter ended June 30,
         1996).

10.3.1*  Runtime   Sublicense   Addendum   between  the  Registrant  and  Oracle
         Corporation  dated July 1, 1996; as  amended by  Amendments Two through
         Six thereto (filed  as  Exhibit  10.3.1  to Form  10-Q for the  quarter
         ended September 30, 1998).

10.4*    Full Use and  Deployment  Sublicense  Addendum  between the  Registrant
         and Oracle  Corporation dated July 1, 1996, as amended by Amendment One
         thereto  (filed as  Exhibit 10.4  to Form 10-QA  for the  quarter ended
         June 30, 1996).

10.5*    Lease  between  the  Registrant  and  C.  J. Segerstrom &  Sons for the
         headquarters  of the  Company,  dated April 30, 1987  (filed as Exhibit
         10.19 to the Form S-1).

10.6*    Third   Amendment  to  the   Lease  between the  Registrant  and  C. J.
         Segerstrom & Sons dated April 30, 1987, for  additional  facilities  at
         the  headquarters  of  the  Company,  dated  October 1, 1992  (filed as
         exhibit  10.7 to Form 10-K filed on April 4, 1997).

10.7*    Fifth   Amendment to the   Lease   between the   Registrant  and  C. J.
         Segerstrom & Sons dated April 30, 1987,  for the extension  of the term
         of the lease, dated March 28, 1997 (filed as exhibit  10.8 to Form 10-Q
         for the quarter ended March 31, 1997).

10.8*    1989   Stock   Option   Plan  for  Non-Employee  Directors  of  FileNET
         Corporation, as  amended  by the  First  Amendment,  Second  Amendment,
         Third  Amendment thereto  (filed as  Exhibit  10.9 to Form S-4 filed on
         January  26,  1996; Registration No. 333-00676).

10.9*    Amended and  Restated  1995  Stock  Option  Plan of  FileNET  (filed as
         Exhibit  99.1   to  Form S-8  filed on  November 9, 1998;  Registration
         No. 333-66997).

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* Incorporated herein by reference

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Exhibit
No.      Description
-------  -----------------------------------------------------------------------

10.10*   Second  Amended and Restated  Stock Option Plan of FileNET Corporation,
         together with the forms  of  Incentive   Stock  Option   Agreement  and
         Non-Qualified Stock Option Agreements (filed as Exhibits 4(a), 4(b) and
         4(c), respectively, to the Registrant's  Registration Statement on Form
         S-8,  Registration No. 33-48499), and  an  Amendment  thereto (filed as
         Exhibit 4(d) to the  Registrant's  Registration  Statement on Form S-8,
         Registration No. 33-69920),  and the Second  Amendment  thereto  (filed
         as Appendix A to the Registrant's Proxy Statement for the  Registrant's
         1994 Annual Meeting of Stockholders, filed on April 29, 1994).

10.11*   Non-Statutory  Stock  Option  Agreement (with  Notice of Grant of Stock
         Option and  Special Addendum)  between  Registrant  and Mr. Lee Roberts
         (filed as exhibit 99.17 to Form S-8 on August 20, 1997).

10.12*   Non-Statutory  Stock  Option  Agreement (with  Notice of Grant of Stock
         Option  and   Special   Addendum)   between   Registrant  and   Mr. Ron
         Ercanbrack (filed as exhibit 99.19 to Form S-8 on August 20, 1997).

10.13*  Agreement  for the  Purchase  of IBM  products  dated  December 20, 1991
        (filed on May 5, 1992 with the Form 8  amending the Company's  Form 10-K
        for the fiscal year ended December 31, 1991).

10.14*  Amendment  #A1011-941003-01  dated September 30, 1994, to the  Agreement
        for the  Purchase  of IBM  products  dated  December  20, 1991 (filed as
        exhibit 10.12 to form 10-K for the fiscal year ended December 31, 1996).

10.15*  Development and Initial  Supply  Agreement  between the  Registrant  and
        Quintar Company dated August 20, 1992 (filed as Exhibit 10.21 to Form
        10-K for the year ended January 3, 1993).

10.16*  Amendment dated December 22, 1992 to the Development and  Initial Supply
        Agreement between the  Registrant and Quintar Company  dated  August 20,
        1992 (filed as Exhibit 10.22 to Form 10-K for the  year ended January 3,
        1993).

10.17   Amendment 2 dated  December 18, 1998 to the  Product  License  Agreement
        between the Registrant and Novell, Inc. dated May 16, 1995.

10.18*  Agreement  and Plan of  Merger  between  the  Registrant  and  Watermark
        Software Inc.  dated July 18, 1995  (filed as Exhibit 10.27 to Form 10-Q
        for the quarter ended July 2, 1995).

10.19*  Agreement  and  Plan  of  Merger   between  the   Registrant  and  Saros
        Corporation, as amended, dated  January 17, 1996 (filed as Exhibits 2.1,
        2.2, 2.3, and 2.4 to Form 8-K on March 13, 1996).

10.20*  Stock  Purchase  Agreement  by  and  Among  FileNET   Corporation,   IFS
        Acquisition Corporation,  Jawaid Khan and  Juergen Goersch dated January
        17, 1996 and Amendment 1 to  Stock Purchase Agreement dated  January 30,
        1996 (filed as Exhibit 10.2 to form 10-K for the year ended December 31,
        1995).

10.21*  Amended and Restated  FileNET  Corporation 1998 Employee  Stock Purchase
        Plan  (filed as Exhibit 99.15 to Form S-8,  filed on  November 9,  1998;
        Registration No. 333-66997).

10.22*  FileNET Corporation  International  Employee Stock Purchase Plan. (filed
        as Exhibit  99.16 to  Form S-8, filed on  November 9, 1998; Registration
        No. 333-66997).

13.1    Market for the Registrant's Common Stock and Related Stockholder Matters
        incorporated by reference to page 48 of the 1998 Annual Report.

13.2    Management's Discussion and Analysis of Financial Condition and Results
        of Operations  incorporated by  reference to  pages 16 through 26 of the
        1998 Annual Report.

13.3    Financial Statements incorporated by reference to pages 27 through 46 of
        the 1998 Annual Report. 

13.4    Certain Relationships and Related Transactions incorporated by reference
        to page 44 of the 1998 Annual Report.

21.1    List  of  subsidiaries  of  Registrant   (filed  as FileNET  Corporation
        Subsidiary Information).

23.1    Consent  of  Deloitte  &  Touche  LLP  (filed  as  Independent Auditors'
        Consent).

27      Financial Data Schedule.

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* Incorporated herein by reference

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                              Signatures

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

                                     FILENET CORPORATION



Date: March 30, 1999      By:      /s/     Lee D. Roberts
                                   ------- ------------------------------------
                                           Lee D. Roberts
                                           President and Chief Executive Officer

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.


Date: March 30, 1999       By:     /s/     Lee D. Roberts
                                   ------- ------------------------------------
                                           Lee D. Roberts
                                           President and Chief Executive Officer
                                           (Principal Executive Officer) 
                                           Director

Date: March 30, 1999       By:     /s/     Mark S. St. Clare
                                   ------- ------------------------------------
                                           Mark S. St. Clare
                                           Chief Financial Officer and
                                           Sr. Vice President, Finance
                                           (Principal Financial Officer)

Date: March 30, 1999       By:     /s/     Brian A. Colbeck
                                   ------- ------------------------------------
                                           Brian A. Colbeck
                                           Controller and 
                                           Chief Accounting Officer

Date: March 30, 1999       By:     /s/     Theodore J. Smith
                                   ------- ------------------------------------
                                           Theodore J. Smith
                                           Chairman of the Board

Date: March 30, 1999       By:     /s/     L. George Klaus
                                   ------- ------------------------------------
                                           L. George Klaus
                                           Director

Date: March 30, 1999       By:     /s/     William P. Lyons
                                   ------- ------------------------------------
                                           William P. Lyons
                                           Director

Date: March 30, 1999       By:     /s/     John C. Savage
                                   ------- ------------------------------------
                                           John C. Savage
                                           Director

Date: March 30, 1999       By:     /s/     Roger S. Siboni
                                   ------- ------------------------------------
                                           Roger S. Siboni
                                           Director

Date: March 30, 1999        By:    /s/     Carolyn M. Ticknor
                                  ------- -------------------------------------
                                           Carolyn M. Ticknor
                                           Director

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