FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

(Mark One)

|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
ACT OF 1934

For the quarterly period ended March 31, 2000

                                       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.)
  incorporation or organization)

                   3565 Harbor Boulevard, Costa Mesa, CA 92626
--------------------------------------------------------------------------------
               (Address of principal executive offices) (Zip code)

                                 (714) 327-3400
--------------------------------------------------------------------------------
               (Registrant's telephone number including area code)


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 |_|

As of May 1, 2000, there were 34,222,977 shares of the Registrant's common stock
outstanding.



<PAGE>


                               FILENET CORPORATION
                                      Index


                                                                         Page
                                                                        Number
-------------------- ------------------------------------------------ ----------

PART I.   FINANCIAL INFORMATION

Item 1.   Consolidated Balance Sheets
          as of  March 31, 2000 (unaudited) and December 31, 1999.........   3

          Consolidated Statements of Operations (unaudited)
          for the three month periods ended March 31, 2000 and 1999.......   4

          Consolidated Statements of Comprehensive Operations (unaudited)
          for the three month periods ended March 31, 2000 and 1999.......   5

          Consolidated Statements of Cash Flows (unaudited)
          for the three month periods ended March 31, 2000 and 1999.......   6

          Notes to Consolidated Financial Statements (unaudited)..........   7

Item 2.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations.......................................  10

PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings...............................................  17

Item 6.   Exhibits and Reports on Form 8-K................................  17

          SIGNATURE.......................................................  18

          INDEX TO EXHIBITS...............................................  19


                                       2
<PAGE>


PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

                                    FILENET CORPORATION
                                CONSOLIDATED BALANCE SHEETS
                           (In thousands, except share amounts)

                                                     March 31,      December 31,
                                                       2000            1999
                                                  ---------------   ------------
                                                   (Unaudited)
 ASSETS
 Current assets:
   Cash and cash equivalents                          $   84,913     $   71,528
   Short-term investments                                 41,755         31,581
   Accounts receivable, net                               76,166         72,736
   Inventories, net                                        2,605          3,399
   Prepaid expenses and other current assets               8,165          8,080
   Deferred income taxes                                     976            938
                                                     ------------   ------------
   Total current assets                                  214,580        188,262

 Property, net                                            39,499         40,593
 Long-term investments                                     2,898          5,542
 Deferred income taxes                                     4,757          4,752
 Other assets                                              1,707          1,743
                                                     ------------   ------------
     Total assets                                     $  263,441     $  240,892
                                                     ============   ============

 LIABILITIES AND STOCKHOLDERS' EQUITY
 Current liabilities:
   Acounts payable                                    $   12,896     $   16,642
   Accrued compensation and benefits                      22,447         24,079
   Unearned maintenance revenue                           21,987         16,286
   Income taxes payable                                    8,287          7,808
   Other accrued liabilities                              21,384         21,670
                                                     ------------   ------------
   Total current liabilities                              87,001         86,485

 Unearned maintenance revenue                              6,555          3,949

 Stockholders' equity:
   Preferred stock - $.10 par value; 7,000,000
     shares authorized; none issued and outstanding
   Common stock - $.01 par value; 100,000,000 shares
     authorized; 35,130,962 and 33,578,642 shares
     outstanding at March 31, 2000 and December 31,
     1999, respectively                                  164,440        149,779
   Retained earnings                                      29,449         22,981
   Accumulated other comprehensive operations             (9,437)        (7,735)
                                                     ------------   ------------
                                                         184,452
                                                                        165,025
   Treasury stock, at cost; 1,098,000 shares at
     March 31, 2000 and December 31, 1999,
     respectively                                        (14,567)       (14,567)
                                                     ------------   ------------
   Total stockholders' equity                            169,885        150,458
                                                     ------------   ------------

     Total liabilities and stockholders' equity       $  263,441     $  240,892
                                                     ============   ============
See accompanying notes to consolidated financial statements.

                                       3
<PAGE>



                               FILENET CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)


                                                Three Months Ended March 31,
                                           -------------------------------------
                                                  2000                 1999
                                           -----------------    ----------------
                                              (Unaudited)          (Unaudited)
        Revenue:
          Software                            $    48,112          $    41,984
          Service                                  39,482               33,427
          Hardware                                  5,208                6,031
                                              ------------         ------------
          Total revenue                            92,002               81,442

        Costs and expenses:
          Cost of software revenue                  4,289                3,961
          Cost of service revenue                  23,105               20,304
          Cost of hardware revenue                  2,891                3,166
          Research and development                 14,138               13,102
          Selling, general and
             administrative                        40,946               39,445
                                              ------------         ------------
          Total costs and expenses                 85,369               79,978
                                              ------------         ------------

        Operating income                            7,423                1,464

        Other income, net                           1,192                1,461
                                              ------------         ------------

        Income  before income taxes                 8,625                2,925

        Provision  for income taxes                 2,156                  877
                                              ------------         ------------

        Net income                             $    6,469           $    2,048
                                              ============         ============

        Earnings  per share:
          Basic                                $     0.19           $     0.06
          Diluted                              $     0.18           $     0.06

        Weighted average shares
         outstanding:
          Basic                                    33,344               31,915
          Diluted                                  36,858               32,554

See accompanying notes to consolidated financial statements.

                                       4
<PAGE>


                               FILENET CORPORATION
               CONSOLIDATED STATEMENTS OF COMPREHENSIVE OPERATIONS
                                 (In thousands)



                                                 Three Months Ended March 31,
                                               ---------------------------------
                                                      2000              1999
                                               ----------------   --------------
                                                   (Unaudited)      (Unaudited)

Net income                                        $    6,469       $     2,048

Other comprehensive income (loss):
  Foreign currency translation adjustments
      (net of tax benefit of $(1,130)
       and $(1,769) in 2000 and 1999,
       respectively                                   (1,695)           (2,653)
  Unrealized losses on securities:
  Unrealized holding losses arising
       during period (net of tax effect of
       $(5) and $(11) in 2000 and 1999,
       respectively                                       (7)              (16)
                                                  ------------    --------------
Total other comprehensive loss                        (1,702)           (2,669)
                                                  ------------    --------------

Comprehensive income (loss)                       $    4,767       $      (621)
                                                  ============    ==============

   See accompanying notes to consolidated financial statements.


                                       5
<PAGE>



                               FILENET CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
<TABLE>
<CAPTION>
                                                          Three Months Ended March 31,
                                                      ----------------------------------
                                                          2000                 1999
                                                      ---------------    ---------------
                                                       (Unaudited)          (Unaudited)
<S>                                                     <C>              <C>
Cash flows from operating activities:
 Net income                                             $    6,469       $    2,048
 Adjustments to reconcile net loss to net cash
   provided by operating activities:
     Depreciation and amortization
                                                             4,311            4,323
     Provision for doubtful accounts
                                                                63               43
     Deferred income taxes                                      43               15
     Changes in operating assets and liabilities,
      net of acquisition:
       Accounts receivable                                  (4,833)            (492)
       Inventories
                                                               794              703
       Prepaid expenses and other current assets
                                                             (133)              911
       Accounts payable
                                                           (3,659)           (8,039)
       Accrued compensation and benefits
                                                           (1,457)           (3,720)
       Unearned maintenance revenue
                                                             8,405            2,474
       Income taxes payable
                                                               524            1,333
       Other
                                                             1,037            6,835
                                                    ---------------    -------------
 Net cash provided by operating activities
                                                            11,564            6,434
                                                    ---------------    -------------

Cash flows from investing activities:
 Capital expenditures
                                                           (3,862)           (4,220)
 Proceeds from sale of property                                411               37
 Purchases of marketable securities
                                                          (13,028)          (16,844)
 Proceeds from sales and maturities of
   marketable securities                                    4,300             5,500
                                                    ---------------------------------
 Net cash used in investing activities                    (12,179)          (15,527)
                                                    ---------------------------------

 Cash flows from financing activities:
 Proceeds from issuance of common stock
                                                            14,660              738
                                                    ---------------    --------------
 Net cash provided by financing activities                  14,660              738
                                                    ---------------    --------------

 Effect of exchange rate changes on cash and
   cash equivalents                                           (660)          (1,246)
                                                    ---------------    --------------

 Net increase (decrease) in cash and cash
   equivalents                                              13,385           (9,601)
 Cash and cash equivalents, beginning of year               71,528           55,820
                                                    ---------------    --------------
 Cash and cash equivalents, end of period            $      84,913      $    46,219
                                                    ===============    ==============

 Supplemental cash flow information:
 Interest paid                                       $        11        $         6
 Income taxes paid (refunded)                        $     1,736        $      (438)

See accompanying notes to consolidated financial statements.
</TABLE>

                                       6
<PAGE>

                               FILENET CORPORATION
                   Notes To Consolidated Financial Statements
                                   (Unaudited)

1.   In the opinion of the management of FileNET  Corporation  ("the  Company"),
     the  accompanying   unaudited  consolidated  financial  statements  reflect
     adjustments  (consisting  of normal  recurring  adjustments)  necessary  to
     present fairly the financial  position of the Company at March 31, 2000 and
     the results of its operations,  its  comprehensive  operations and its cash
     flows for the three month  periods  ended March 31, 2000 and 1999.  Certain
     information  and  footnote   disclosures  normally  included  in  financial
     statements have been condensed or omitted pursuant to rules and regulations
     of the Securities  and Exchange  Commission  ("SEC"),  although the Company
     believes that the disclosures in the consolidated  financial statements are
     adequate  to ensure the  information  presented  is not  misleading.  These
     consolidated  financial  statements  should be read in conjunction with the
     consolidated  financial  statements  and notes  thereto,  and  Management's
     Discussion  and Analysis of Financial  Condition  and Results of Operations
     contained in the  Company's  Annual Report on Form 10-K for the fiscal year
     ended  December  31,  1999 filed by the  Company  with the SEC on March 30,
     2000. The results of operations for the interim periods are not necessarily
     indicative of the operating results for the year.

2.   Certain  reclassifications  have been made to the prior year's consolidated
     financial statements to conform with the current year's presentation.

3.   The following table is a  reconciliation  of the earnings and share amounts
     used in the  calculation of basic  earnings per share and diluted  earnings
     per share for the three months ended March 31, 2000.

<TABLE>
<CAPTION>
                                                            Three Months ended March 31,

     (In thousands, except per share amounts)                  2000             1999
                                                           -------------   --------------
     <S>                                                    <C>             <C>
     Net Income                                             $     6,469     $      2,048
                                                           =============   ==============

       Weighted average basic shares outstanding                 33,344           31,915
         Effect of dilutive stock options                         3,514              639
                                                           -------------   --------------
       Weighted average diluted shares outstanding               36,858           32,554
                                                           =============   ==============
       Basic earnings per share                             $      0.19     $       0.06
       Diluted earnings per share                           $      0.18     $       0.06
</TABLE>

4.   In June 1997,  the  Financial  Accounting  Standards  Board  (FASB)  issued
     Statement  of  Financial  Accounting  Standard  (SFAS) No. 130,  "Reporting
     Comprehensive   Income."  SFAS  No.  130  requires  enterprises  to  report
     comprehensive  income  and  its  components  in  general-purpose  financial
     statements. SFAS No. 130 was effective for the Company beginning January 1,
     1998.  Accordingly,  the Company has prepared  Statements of  Comprehensive
     Operations  for the three month period  ended March 31,  2000.  Accumulated
     other  comprehensive  operations  as of March 31, 2000 is  comprised of the
     following:

                                                                     Accumulated
                            Foreign Currency        Unrealized             Other
                                 Translation           Holding     Comprehensive
(In thousands)                    Adjustment     Gains (Losses)       Operations
                               --------------  -----------------  --------------
 Balance, December 31, 1999     $    (7,638)    $          (97)    $     (7,735)
 Current period changes              (1,695)                (7)          (1,702)
                               --------------  -----------------  --------------
 Balance, March 31, 2000        $    (9,333)    $         (104)    $     (9,437)
                               ==============  =================  ==============

5.   The Company has prepared  operating segment  information in accordance with
     SFAS  131,  "Disclosures  about  Segments  of  an  Enterprise  and  Related
     Information",  to report  components  that are  evaluated  regularly by the
     Company's chief  operating  decision-maker,  or decision making groups,  in
     deciding  how to  allocate  resources  and in  assessing  performance.  The
     operating segments are managed separately because each segment represents a
     strategic  business unit that offers  different  products or services.  The
     results of the segments reflect  allocation of certain  functional  expense
     categories  consistent with its internal reporting which is not the same as
     GAAP reporting.

                                       7
<PAGE>

     Operating  segments  data for the three month  periods ended March 31, 2000
     and 1999 is as follows:


                                             Three Months Ended March 31,
                                          --------------------------------
      In thousands                             2000                1999
                                          -------------     --------------
     Software
       Revenue                             $    48,112        $    41,984
       Loss before other income                  (280)            (3,664)

     Customer Support
       Revenue                             $    24,846        $    19,893
       Income before other income                7,262              4,377

     Professional Services and education
       Revenue                             $    13,402        $    11,394
       Income (loss) before other income          (57)                 64

     Hardware
       Revenue                             $     5,208        $     6,031
       Income before other income                  407                522

     Other
       Revenue                             $     1,234        $     2,140
       Income before other income                  101                165

     Total
       Revenue                             $    92,802        $    81,442
       Income before other income          $     7,433        $     1,464

     Included in software  revenue is $13.4 million related to Web based product
     for the three months period ended March 31, 2000.

6.   In October 1994, Wang Laboratories,  Inc. ("Wang") filed a complaint in the
     United States  District  Court for the District of  Massachusetts  alleging
     that the  Company is  infringing  five  patents  held by Wang (the  FileNET
     Case).  On June  23,  1995,  Wang  amended  its  complaint  to  include  an
     additional  related patent.  On July 2, 1996, Wang filed a complaint in the
     same court alleging that Watermark Software,  Inc., formerly a wholly owned
     subsidiary  that was merged into the Company,  is  infringing  three of the
     same patents  asserted in the initial  complaint (the Watermark  Case).  On
     October 9, 1996,  Wang  withdrew  its claim in the FileNET Case that one of
     the patents it initially asserted is infringed.

     In March 1997,  Eastman Kodak Company ("Kodak")  purchased the Wang imaging
     business  unit that has  responsibility  for this  litigation.  On July 30,
     1997,  the Court  permitted  Eastman  and Kodak  Limited  of  England to be
     substituted in the litigation in place of Wang.

     The Company has moved for summary judgment on noninfringement as to each of
     the five patents in the suit, and for summary  judgment of invalidity as to
     one of the patents.  Eastman moved for summary judgment as to the Company's
     unenforceability  defense  on  one  of  the  patents.  In  July  1998,  the
     Magistrate Judge assigned to the case heard oral arguments on the Company's
     motion for summary judgment that U.S. Patent 4,918,588 is not infringed and
     is invalid.  The Magistrate  Judge has not yet decided these  motions.  The
     Company  believes  that after he has ruled on these  motions,  he will hear
     oral arguments in the remaining  motions in the sequence in which they were
     filed. A trial date has not yet been set.

     If it should be determined  that the patents at issue in the litigation are
     valid  and  are  infringed  by  any of the  Company's  products,  including
     Watermark products,  the Company will,  depending on the product,  redesign
     the infringing products or seek to obtain a license to market the products.
     There can be no  assurance  that the Company  will be able to  successfully
     redesign the infringing  products or obtain a license on acceptable  terms.
     Based on the Company's  analysis of these patents and their respective file
     histories,  the Company believes that it has meritorious  defenses to these
     claims;  however,  the ultimate  outcome or any  resulting  potential  loss
     cannot be determined at this time.

                                       8
<PAGE>

     Subsequent to December 31, 1998, the former  shareholders  of Saros filed a
     demand for  mandatory  arbitration  to release  approximately  two  hundred
     thousand  shares of FileNET stock which were held in escrow pursuant to the
     Agreement  and  Plan of  Merger  dated  January  17,  1996,  among  FileNET
     Corporation,  FileNET Acquisition Corporation,  and Saros, and for damages.
     The Company and the  Shareholders'  Agent had agreed to mediate the matter,
     but the Saros  Shareholders'  Agent  canceled  the  mediation  prior to the
     scheduled  date and renewed  their demand for  mandatory  arbitration.  The
     Company  believes  that it has  meritorious  reasons for not  releasing the
     shares and other  defenses  to the  claims;  however,  the  ultimate or any
     resulting potential loss cannot be presently determined.

     In the normal  course of business,  the Company is subject to various other
     legal  matters.  While the  results  of  litigation  and  claims  cannot be
     predicted with  certainty,  the Company  believes that the final outcome of
     these  other  matters  will  not  have a  material  adverse  effect  on the
     Company's consolidated results of operations or financial condition.

                                       9
<PAGE>

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations


The following  should be read in  conjunction  with the  unaudited  consolidated
financial  statements  and notes thereto  included in Part I--Item 1 and Factors
That May Affect Future Results in Item 2 of this Quarterly Report,  and with the
audited  consolidated  financial  statements and notes thereto, and Management's
Discussion  and  Analysis  of  Financial  Condition  and  Results of  Operations
contained in our Annual  Report on Form 10-K for the fiscal year ended  December
31, 1999.


Results of Operations

Revenue
<TABLE>
<CAPTION>
                                                               Three Months Ended
                                                                   March 31,
                                                         -----------------------------
   (Dollars in millions)                                      2000            1999         Change
                                                        -------------   -------------   ----------
   <S>                                                       <C>            <C>            <C>
   Software revenue
     Domestic                                                $   31.9       $   26.8        19%
     International                                               16.2           15.2         7%
                                                             ---------      ----------
     Total software revenue                                  $   48.1       $   42.0        15%
                                                             ---------      ----------
       Percentage of total revenue                                52%            52%

   Customer support revenue
     Domestic                                                $   19.2       $   15.8        22%
     International                                                5.7            4.1        39%
                                                             ---------      ----------
     Total customer support reven                            $   24.9       $   19.9        25%
                                                             ---------      ----------
       Percentage of total revenue                                27%            24%

   Professional Services and education revenue
     Domestic                                                $   10.3       $    7.8        32%
     International                                                3.1            3.5       (11%)
                                                             ---------     ----------
     Total professional services and education               $   13.4       $   11.3        19%
       revenue                                               ---------     ----------
       Percentage of total revenue                                14%            14%

   Hardware revenue
     Domestic                                                $    4.3       $    4.8       (10%)
     International                                                0.9            1.2       (25%)
                                                             ---------     ----------
     Total hardware revenue                                  $    5.2       $    6.0       (13%)
                                                             ---------     ----------
       Percentage of total revenue                                 6%             7%

   Other revenue
     Domestic                                                $    1.1       $    1.8       (39%)
     International                                                0.1            0.4       (75%)
                                                             ---------     ----------
     Total other revenue                                     $    1.2       $    2.2       (45%)
                                                             ---------     ----------
       Percentage of total revenue                                 1%             3%

   Total revenue
     Domestic                                                $   66.8       $   57.0        17%
     International                                               26.0           24.4         7%
                                                             ---------     ----------
     Total revenue                                           $   92.8       $   81.4        14%
                                                             ---------     ----------
</TABLE>

Software revenue from the licensing of our software  products  increased 15% for
the quarter  ended March 31, 2000 over the  comparable  period of 1999 due to an
increase  in the  volume  of  web  content  management  product  shipments  both
domestically and internationally.

                                       10
<PAGE>

Customer support revenue consists of revenue from maintenance contracts and "fee
for service"  revenues.  Customer support revenue  increased 25% for the quarter
ended  March 31,  2000 over the same period of 1999  attributable  to  increased
maintenance  revenue  due to the  growth of our  installed  licenses  along with
renewals from the existing customer base.

Professional   services  and  education  revenue  is  generated  primarily  from
consulting  and  implementation  services  provided to end users of our software
products,  technical consulting services provided to our resellers, and training
services.  Such services are primarily  performed on a time and material  basis.
Professional  services and education revenue increased 19% for the quarter ended
March 31,  2000 over the same  period of 1999 and is a result of our  efforts to
build our professional  services  capabilities to support our  solution-oriented
strategy as well as increased demand for our expanded services offerings.

Hardware revenue is generated primarily from the sale of 12-inch optical storage
and  retrieval  libraries  (OSAR).  Hardware  revenue  decreased  by 13% for the
quarter ended March 31, 2000 from the comparable  period of 1999 due to expected
decreases in new orders  attributable to our continued focus on software-related
revenues. Hardware revenue is expected to continue to decline as a percentage of
total revenue.

Other  revenue is  generated  from the sale of spare  parts,  supplies and third
party products. Other revenue decreased 45% for the quarter ended March 31, 2000
from the  comparable  period of 1999  with  diminished  demand  for  spares  and
expected decreased orders for third party product.

International  revenue  represented 28% and 30% of total revenues in the quarter
ended  March  31,  2000  and  1999,   respectively.   Management   expects  that
international  operations will continue to account for a significant  portion of
total  revenues.  However,  international  revenues are subject to certain risks
including  but not limited to political  and economic  instability  and currency
fluctuation.

Cost of Revenue
<TABLE>
<CAPTION>
                                                                    Three Months Ended March 31,
                                                            ------------------------------------------
 (Dollars in millions)                                          2000          1999         Change
                                                            ------------- ------------- --------------
<S>                                                             <C>           <C>              <C>
 Cost of software revenue                                       $    4.3      $    3.9          10%
  Percentage of software revenue                                      9%            9%
 Cost of customer support revenue                               $   10.6      $    8.9          19%
  Percentage of customer support revenue                             43%           45%
 Cost of professional services and education revenue            $   11.5      $    9.6          20%
  Percentage of professional services and education revenue          86%           85%
 Cost of hardware revenue                                       $    2.9      $    3.2          (9%)
  Percentage of hardware and other revenue                           56%           53%
 Cost of other revenue                                          $    1.0      $    1.8         (44%)
  Percentage of other revenue                                        83%           82%
 Total cost of revenue                                          $   30.3      $   27.4          11%
  Percentage of total revenue                                        33%           34%
</TABLE>

The cost of software  revenue  includes  royalties paid to third parties and the
cost of software  distribution.  The cost of software revenue as a percentage of
software revenue  remained  constant at 9% for the quarters ended March 31, 2000
and 1999.

The cost of  customer  support  revenue  includes  customer  support  personnel,
supplies, and the cost of third party hardware maintenance. The cost of customer
support  revenue as a  percentage  of customer  support  revenue for the quarter
ended March 31, 2000  decreased to 43% from 45% in the same period of 1999.  The
decrease is attributable to increased  revenue with no proportional  increase in
cost.

The cost of professional  services and education  revenue consists  primarily of
professional services personnel, training personnel and third party contractors.
The cost of  professional  services and  education  revenue as a  percentage  of
professional services and education revenue for the quarter ended March 31, 2000
increased  to 86%  from  85% in the same  period  of 1999  due to the  continued
investment not completely offset by increased revenue.

                                       11
<PAGE>

The cost of hardware revenue  includes the cost of manufacturing  OSARs, and the
cost of  hardware  integration  personnel.  The cost of  hardware  revenue  as a
percentage of hardware revenue for the quarter ended March 31, 2000 increased to
56% from 53% for the  comparable  period of 1999.  The  increase is due to lower
revenue without a proportional decrease in manufacturing costs.

The cost of other revenue  includes the cost of supplies,  spare parts and third
party  product.  The cost of other  revenue as a percentage of other revenue for
the three  months  ended  March 31, 2000  increased  to 83% from 82% in the same
period of 1999 due to the low margin nature of this business segment.

Operating Expenses
                                               Three Months Ended March 31,
                                        ----------------------------------------
 (Dollars in millions)                       2000          1999         Change
                                        -------------  ------------  -----------
 Research and development                 $   14.1       $   13.1          8%
  Percentage of total revenue                  15%            16%
 Selling, general and administrative      $   41.0       $   39.4          4%
  Percentage of total revenue                  44%            48%

Research and development expenses increased 8% for the first quarter of 2000 due
to a general increase in compensation of technical personnel. As a percentage of
total revenue, research and development expenses were at 15% for the three-month
period ended March 31, 2000 as compared to 16% for the same period in 1999.

We expect that competition for qualified technical personnel will remain intense
for the  foreseeable  future  and may  result in higher  levels of  compensation
expense.  We believe  that  research  and  development  expenditures,  including
compensation   of  technical   personnel,   are  essential  to  maintaining  our
competitive  position  and  expect  these  costs to  continue  to  constitute  a
significant percentage of revenues.

Selling,  general and administrative expenses increased 4% for the first quarter
of 2000.  The increase was  primarily due to overall  increases in  compensation
partially offset by reduced spending in all other expense areas. As a percentage
of total revenue,  selling, general and administrative expenses decreased to 44%
in the first quarter of 2000 from 48% in the same quarter of 1999 due to expense
levels growing at a lower rate than revenue.

Provision  for Income  Taxes.  The combined  federal,  state and foreign  annual
effective  tax rate for the quarter ended March 31, 2000 was 25% compared to 30%
for the comparable  period in 1999. The decrease in the rate is  attributable to
an increase in the taxable income generated in lower tax  jurisdictions  outside
of North America along with the utilization of net operating loss carryforwards.

Foreign Currency Fluctuations and Inflation.  Our performance can be affected by
changes in foreign  currency  values  relative to the U.S. dollar in relation to
the  Company's  revenue and  operating  expenses.  The impact to net income from
foreign  exchange  transactions  and hedging  activities is  immaterial  for all
periods  reported.  As of March 31,  2000,  we had  forward  exchange  contracts
outstanding  totaling  approximately $2.4 million in 9 currencies.  All of these
contracts mature in three months.

Other  comprehensive  loss for the three months ended March 31, 2000 reflects an
increase of $1.7 in the  unrealized  loss due to foreign  currency  translation.
This increase was primarily  attributable to unrealized  losses  associated with
the weakening of the Euro currency against the U.S. dollar during the period.

Management  believes  that  inflation  has not had a  significant  impact on the
prices of its products, the cost of its materials,  or its operating results for
the three months ended March 31, 2000 and 1999.

Other Financial Instruments. We enter into forward foreign exchange contracts as
a hedge against the effects of fluctuating  currency  exchange rates on monetary
assets and  liabilities  denominated  in  currencies  other than the  functional
currency of the  relevant  entity.  We are exposed to market risk on the forward
exchange  contracts as a result of changes in foreign  exchange rates;  however,
the market risk should be offset by changes in the  valuation of the  underlying
exposures.  Gains and  losses on these  contracts,  which  equal the  difference
between the forward  contract  rate and the  prevailing  market spot rate at the
time of valuation,  are recognized in the consolidated  statement of operations.
The counterparties to these contracts are major financial  institutions.  We use
commercial rating agencies to evaluate the credit quality of the counterparties.
We do not  anticipate a material loss resulting from any credit risks related to
any of these institutions.

                                       12
<PAGE>

Liquidity and Capital Resources

At March 31, 2000,  combined cash,  cash  equivalents  and  investments  totaled
$129.6 million, an increase of $20.9 million from the end of 1999. Cash provided
by  operating  activities  during the three  months ended March 31, 2000 totaled
$11.6 million and resulted  primarily  from net income;  an increase in unearned
maintenance revenue related to prepaid maintenance  contracts;  and additions to
net income for  depreciation  and  amortization  expense  offset by decreases in
accounts  payable and increases in accounts  receivable.  Cash used in investing
activities  totaled $12.2 million and was a result of capital  expenditures  and
purchases of marketable  securities offset by sales and maturities of marketable
securities.  Cash provided by financing activities totaled $14.7 million and was
a result of proceeds received from the exercise of employee stock options.

Accounts  receivable  increased  to $76.2  million at March 31,  2000 from $72.7
million at December 31, 1999. Days sales outstanding  increased to 75 days as of
March  31,  2000  from 70 days as of  December  31,  1999.  Current  liabilities
increased to $87.0  million at March 31, 2000 from $86.5 million at December 31,
1999. The increase in current  liabilities is primarily a result of increases in
unearned  maintenance  revenue and income taxes payable,  offset by decreases in
accounts payable, and accrued compensation and benefits.

We have a $20  million  commercial  line of credit  that  expires  in June 2001.
Borrowings  under the arrangement are unsecured and bear interest at one hundred
basis points over the London Interbank Offered Rate. A commitment fee of fifteen
basis  points is assessed  against any undrawn  amounts.  As of March 31,  2000,
there were no borrowings outstanding against the credit line.

We anticipate that our present cash balances together with internally  generated
funds and credit  lines  will be  sufficient  to meet our  working  capital  and
capital expenditure needs for at least the next twelve months.

Recent Accounting Pronouncements

In March 1998, the American Institute of Certified Public Accountants issued SOP
No. 98-1,  "Accounting for Costs of Computer Software  Developed or Obtained for
Internal  Use".  We  adopted  SOP No.  98-1  effective  January  1, 1999 with no
significant effect on our results of operations and financial condition.

In June 1998, the Financial Accounting Standards Board ("FASB") issued, SFAS No.
133, "Accounting for Derivative  Instruments and Hedging  Activities".  SFAS No.
133 as amended,  is effective for fiscal years beginning after June 15, 2000 and
will require us to record all  derivatives  on the balance  sheet at fair value.
For derivatives  that are hedges,  changes in the fair value of derivatives will
be offset by the change in fair value of the hedged assets, liabilities, or firm
commitments.  We  believe  the  impact of  adopting  this  standard  will not be
material to our results of operations or equity.

Other Matters

Year 2000. In 1997, we implemented a year 2000 Integrity  Program to ensure that
our computer  software  products and internal  business  systems would  function
properly  in year  2000  and  thereafter.  Since  January  1,  2000 we have  not
experienced any problems with our software products or internal business systems
to  properly  manage and  manipulate  data  related  to the year  2000.  All new
generations of our software products are released as year 2000 compliant.

The EURO Conversion.  On January 1, 1999, eleven of the fifteen member countries
of the European Union  established fixed conversion rates between their existing
sovereign currencies and the EURO. These countries have agreed to adopt the EURO
as their  common  legal  currency  from that date.  The EURO  trades on currency
exchanges and is available for non-cash transactions. These countries will issue
sovereign debt exclusively in EURO and will re-denominate  outstanding sovereign
debt.  Effective  on this date,  these  countries  no longer  control  their own
monetary  policies  by  directing  independent  interest  rates  for the  legacy
currencies.  Instead,  the authority to direct monetary policy,  including money
supply  and  official  interest  rates for the  EURO,  is  exercised  by the new
European Central Bank.

The legacy currencies are scheduled to remain legal tender in these countries as
a  denomination  of the EURO  between  January 1, 1999 and  January 1, 2002 (the
"transition  period").  During the transition period, public and private parties
may pay for goods and  services  using either the EURO or the  country's  legacy
currency on a "no compulsion,  no prohibition" basis. However,  conversion rates

                                       13
<PAGE>

no longer  will be  computed  directly  from one  legacy  currency  to  another.
Instead, a "triangulation" process will be applied whereby an amount denominated
in one legacy  currency  first will be converted  into an amount  denominated in
EURO,  and the resultant  EURO-denominated  amount is converted  into the second
legacy currency.

We have made the necessary  changes to our internal  business systems to support
transactions  denominated in the EURO,  including  establishing EURO price lists
for effected countries.  We have evaluated the impact the conversion to the EURO
will have on our financial  condition and results of  operations.  Based on this
evaluation  to date,  we  currently do not believe that there will be a material
impact on our  financial  condition or results of  operations as a result of the
EURO conversion, except that we cannot currently assess the impact that a common
EURO-based  price list will have on how we market our products in Europe nor the
impact, if any, on revenues generated in Europe.

Environmental  Matters.  We are not aware of any issues related to environmental
matters that have, or are expected to have, a material affect on our business.

Factors That May Affect Future Results

Our  business,  financial  condition,  operating  results and  prospects  can be
impacted  by a number of factors,  including  but not limited to those set forth
below and  elsewhere  in this  report,  any one of which  could cause our actual
results to differ materially from recent results or from our anticipated  future
results.

Rapid Technological Change; Product Development. The market for our software and
services is characterized by rapid technological developments, evolving industry
standards,   changes  in  customer   requirements   and   frequent  new  product
introductions and enhancements. Our continued success will be dependent upon our
ability to continue to enhance our existing  software  and  services  offerings,
develop and introduce,  in a timely manner, new software products  incorporating
technological  advances  and respond to customer  requirements.  There can be no
assurance  that we will be successful  in developing  and marketing new software
products and services  offerings or enhancements  to our existing  software on a
timely basis or that any new or enhanced  software and services  offerings  will
adequately  address the changing needs of the  marketplace.  If we are unable to
develop and introduce new software and enhancements or new service offerings, in
a  timely  manner  in  response  to  changing  market   conditions  or  customer
requirements,  our business and operating  results could be adversely  affected.
From time to time,  we or our  competitors  may announce new software  products,
capabilities or  technologies  that have the potential to replace or shorten the
life cycles of our existing  software  products.  There can be no assurance that
announcements of currently planned or other new software products will not cause
customers to delay their  purchasing  decisions in anticipation of such software
products,  which  could  have a  material  adverse  effect on our  business  and
operating results.

Uncertainty of Future  Operating  Results;  Fluctuations in Quarterly  Operating
Results.  Prior growth  rates in our revenue and  operating  results  should not
necessarily  be considered  indicative  of future  growth or operating  results.
Future operating results will depend upon many factors, including the demand for
our products; the level of software product and price competition; the length of
our sales cycle; variations in the productivity of our sales force;  seasonality
of  individual  customer  buying  patterns;  the size and  timing of  individual
transactions;  the delay or  deferral of  customer  implementations;  the budget
cycles of our customers;  the timing of new software  introductions and software
enhancements by us and our competitors;  the mix of sales by products, software,
services and distribution channels;  levels of international sales; acquisitions
by competitors;  changes in foreign currency exchange rates,  impact of the EURO
currency;  our ability to develop and market new  software  products and control
costs; and general domestic and international economic and political conditions.

As a result of these factors, revenues and operating results for any quarter are
subject to variation  and are not  predictable  with any  significant  degree of
accuracy. Therefore, we believe that period-to-period comparisons of our results
of operations  are not  necessarily  meaningful and should not be relied upon as
indications  of future  performance.  Moreover,  such  factors  could  cause our
operating  results  in a given  quarter to be below the  expectations  of public
market  analysts and  investors.  In either case,  the price of our common stock
could be materially adversely affected.

Competition.  The  Web  content  management,   integrated  document  management,
imaging,  workflow,  computer  output  to  laser  disk and  electronic  document
management  software  markets  are  highly  competitive,  and there are  certain

                                       14
<PAGE>

competitors of ours with substantially greater sales, marketing, development and
financial  resources.  We believe that the  competitive  factors  affecting  the
market for our  software  products  and  services  include  vendor  and  product
reputation; product quality, performance and price; the availability of software
products on multiple platforms;  product  scalability;  product integration with
other enterprise  applications;  software  functionality and features;  software
ease of use; and the quality of professional services, customer support services
and training.  The relative importance of each of these factors depends upon the
specific  customer  involved.  While we believe we compete  favorably in each of
these areas, there can be no assurance that we will continue to do so. Moreover,
our  present  or future  competitors  may be able to develop  software  products
comparable  or superior to those  offered by us,  offer lower price  products or
adapt  more  quickly  than  we do  to  new  technologies  or  evolving  customer
requirements. Competition is expected to intensify. In order to be successful in
the future, we must respond to technological  change,  customer requirements and
competitors'  current  software  products  and  innovations.  There  can  be  no
assurance that we will be able to continue to compete  effectively in our market
or that  future  competition  will not have a  material  adverse  effect  on our
business, financial condition or results of operations. In addition, current and
potential   competitors   have   established   or  may   establish   cooperative
relationships  among themselves or with third parties to increase the ability of
their products to address the needs of the markets served by us. Accordingly, it
is possible that new competitors or alliances  among  competitors may emerge and
rapidly acquire  significant market share.  Increased  competition may result in
price  reductions,  reduced gross margins and loss of market share, any of which
could have a material  adverse  effect on our business,  financial  condition or
results of operations.

Intellectual  Property and other  Proprietary  Rights.  Our success depends,  in
part, on our ability to protect our proprietary  rights to the technologies used
in our principal products.  We rely on a combination of copyrights,  trademarks,
trade secrets,  confidentiality procedures and contractual provisions to protect
our proprietary rights in our software products.  There can be no assurance that
our  existing  or  future  copyrights,   trademarks,   trade  secrets  or  other
intellectual  property rights will be of sufficient scope or strength to provide
meaningful  protection  or a  commercial  advantage  to us. We have no  software
patents.  In  addition,  the laws of some  foreign  countries do not protect our
proprietary rights to the same extent as do the laws of the United States. There
can be no assurance  that such factors would not have a material  adverse effect
on our business,  financial condition or results of operations.  In addition, we
also rely on certain  software  that we license  from third  parties,  including
software  that is  integrated  with  internally  developed  software used in our
products to perform key  functions.  There can be no  assurance  that such third
parties  will  remain in  business,  that they will  continue  to support  their
software products, or that their software products will otherwise continue to be
available  to us on  commercially  reasonable  terms.  The loss or  inability to
maintain any of these software  licenses could result in delays or reductions in
software  shipments  until  equivalent  software can be  developed,  identified,
licensed and integrated,  which could adversely  affect our business,  financial
condition or results of operations.

We may, from time to time, be notified that we are infringing  certain patent or
intellectual  property  rights of others.  Combinations  of technology  acquired
through past or future  acquisitions and our technology will create new software
products and technology that may give rise to claims of  infringement.  While no
actions  other than those  discussed  in Item I, Note 7, herein,  are  currently
pending  against us for  infringement of patent or other  proprietary  rights of
third  parties,  there can be no assurance  that third parties will not initiate
infringement  actions against us in the future.  Infringement actions can result
in  substantial  cost to,  and  diversion  of,  resources.  If we were  found to
infringe  upon the rights of  others,  no  assurance  can be given that we could
redesign the infringing products or could obtain licenses on acceptable terms or
at all, that significant  damages for past infringement would not be assessed or
that further litigation  relative to any such licenses or usage would not occur.
The failure to successfully defend any claims or redesign our products or obtain
necessary  licenses or other rights,  the ultimate  disposition of any claims or
the advent of litigation arising out of any claims of infringement, could have a
material  adverse  effect on our  business,  financial  condition  or results of
operations.

Dependence  on  Certain  Relationships.  We have  entered  into a number  of key
relationships  with other  companies such as Microsoft  Corporation,  IBM Global
Services,   Siebel  Systems  Inc,  SAP  AG,  Hewlett-Packard  Company,  and  Sun
Microsystems,  Inc.  There can be no  assurance  that these  companies  will not
reduce or  discontinue  their  relationships  with,  or  support  of, us and our
products.

Dependence on Key Management and Technical  Personnel.  Our success depends to a
significant  degree  upon the  continued  contributions  of our key  management,
marketing,  technical and operational  personnel.  In general, we do not utilize
employment agreements for our key employees.  The loss of the services of one or
more key  employees  could  have a  material  adverse  effect  on our  operating
results.  We also believe our future  success will depend in large part upon our
ability to attract and retain additional highly skilled  management,  technical,

                                       15
<PAGE>

marketing,   product   development,   operational   personnel  and  consultants.
Competition for such personnel,  particularly software developers,  professional
service consultants and other technical personnel, is intense, and pay scales in
the software industry have  significantly  increased.  There can be no assurance
that we will be successful in attracting and retaining such personnel.

International Sales. Historically,  we have derived approximately thirty percent
of our total  revenues  from  international  sales.  International  business  is
subject to certain risks  including  varying  technical  standards;  tariffs and
trade  barriers;  political and economic  instability;  reduced  protection  for
intellectual property rights in certain countries;  difficulties in staffing and
maintaining foreign operations;  difficulties in managing foreign  distributors;
varying   requirements   for  localized   products;   potentially   adverse  tax
consequences;  currency  exchange  fluctuations  including  those related to the
EURO;  the burden of  complying  with a wide  variety of complex  foreign  laws,
regulations  and treaties;  and the  possibility of  difficulties  in collecting
accounts  receivable.  There can be no assurance  that any of these factors will
not have a material  adverse  effect on our  business,  financial  condition  or
results of operations.

Product  Liability.  Software  and  products  as complex as those sold by us are
susceptible to errors or failures,  especially when first introduced or when new
versions  are  released.  Our software  products  are often  intended for use in
applications  that are  critical  to a  customer's  business.  As a result,  our
customers  may rely on the  effective  performance  of the software to a greater
extent than the market for software  products  generally.  We conduct  extensive
software  testing to ensure that our software is free of significant  errors and
defects.  In addition,  we have designed and tested the most current versions of
our software products to be year 2000 compliant.  However, some of our customers
are running earlier software products that are not year 2000 compliant. Although
we have been encouraging such customers to migrate to current software versions,
no assurance can be given that all of them will do so. Moreover, we also rely on
certain software that we license from third parties,  including software that is
integrated  with  internally  developed  software and is used in our products to
perform key functions.  There can be no assurance that such third party software
will be free of errors and defects or be year 2000  compliant.  Although we have
not experienced any material  product  liability claims to date, there can be no
assurance that errors or defects, whether associated with year 2000 functions or
otherwise, will not result in product liability claims against us in the future.
A successful  product  liability  claim brought against us could have a material
adverse effect upon our business, operating results and financial condition. Our
license agreements with customers typically contain provisions designed to limit
our exposure to potential product liability claims. However, it is possible that
such  limitation of liability  provisions may not be effective under the laws of
certain jurisdictions.

Stock Price  Volatility.  We believe  that a variety of factors  could cause the
trading price of our common stock to fluctuate, perhaps substantially, including
quarter-to-quarter   variations   in   operating   results;   announcements   of
developments related to our business;  fluctuations in our order levels; general
conditions in the technology sector or the worldwide  economy;  announcements of
technological  innovations,  new software products or product enhancements by us
or our  competitors;  key  management  changes;  changes in joint  marketing and
development  programs;  developments  relating to patents or other  intellectual
property  rights or disputes;  and  developments in our  relationships  with our
customers,  resellers  and  suppliers.  In  addition,  in recent years the stock
market in  general,  and the  market  for  shares of  high-technology  stocks in
particular,  have experienced  extreme price  fluctuations  that have often been
unrelated to the operating performance of affected companies.  Such fluctuations
could adversely affect the trading price of our common stock.

                                       16
<PAGE>

PART II.  OTHER INFORMATION

Item 1. Legal Proceedings

See Notes to Consolidated Financial Statements.

Item 6. Exhibits and Reports on Form 8-K

     (a)  Exhibits - The list of exhibits contained in the accompanying Index to
          Exhibits is herein incorporated by reference.

     (b)  No reports on Form 8-K were filed during the first quarter of 2000.


                                       17
<PAGE>


                                    SIGNATURE

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


                               FILENET CORPORATION

May 15, 2000                       By:______________/s/_______________________
-------------
Date                                   Lee D. Roberts, President and Chief
                                       Executive Officer
                                       (Principal Executive Officer)





                                       18
<PAGE>
                                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 30,  1999,  effective  June 30, 1999 (filed
             as Exhibit 10.1 to Form 10-Q for the quarter ended June 30, 1999).

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  October 29, 1999; Registration
             No. 333-89983).

----------------------------------------------
* Incorporated herein by reference
                                       19
<PAGE>



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).

10.18*        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 a nd 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
              October 29, 1999; Registration No. 333-89983).

10.22*        FileNET  Corporation  International  Employee Stock Purchase Plan.
              (filed as  Exhibit 99.16 to  Form S-8,  filed on October 29, 1999;
              Registration No. 333-89983).

10.23*        Lease between  the Registrant  and C. J. Segerstrom & Sons for the
              headquarters of the Company,  dated   September 1, 1999  (filed as
              Exhibit 10.23  to  Form 10Q for the  quarter  ended  September 30,
              1999).

27            Financial Data Schedule.

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* Incorporated herein by reference

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