<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                              ---------------------
                                    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, 1999

                                       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 0-27444
                              ---------------------
                               F.Y.I. INCORPORATED
             (Exact name of Registrant as specified in its charter)

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                   DELAWARE                                75-2560895
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        (State or other jurisdiction of                 (I.R.S. Employer
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        incorporation or organization)                Identification No.)
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 3232 MCKINNEY AVE., SUITE 900, DALLAS, TEXAS                 75204
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   (Address of principal executive offices)                 (zip code)
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                               (214) 953-7555
                        Registrant's telephone number,
                             including area code)
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          Securities registered pursuant to Section 12(b) of the Act:
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                                                NAME OF EACH EXCHANGE
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         TITLE OF EACH CLASS                     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 $.01 PER SHARE
                                (Title of Class)
                              ---------------------

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

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. Yes /X/ No / /

     The aggregate market value of voting stock held by non-affiliates of the
Registrant as of February 18, 2000 was $438,439,593, based on the last sale
price of $31.63 of the Registrant's Common Stock, $.01 par value per share, on
the Nasdaq National Market on February 18, 2000.

     As of February 18, 2000, 14,589,769 shares of the Registrant's Common Stock
were outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE:

Portions of the Proxy Statement for the 2000 Annual Meeting of Stockholders to
be filed with the Securities and Exchange Commission not later than 120 days
after the end of our fiscal year ended December 31, 1999 are incorporated by
reference into Part III of this Form 10-K.

<PAGE>

                               F.Y.I. INCORPORATED

                          1999 FORM 10-K ANNUAL REPORT

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                             PAGE
                                                                             ----
<S>                                                                          <C>
                                     PART I

Item 1.    Business..........................................................   1
Item 2.    Properties........................................................  12
Item 3.    Legal Proceedings.................................................  12
Item 4.    Submission of Matters to a Vote of Security Holders...............  12

                                     PART II

Item 5.    Market for Registrant's Common Equity and Related
           Stockholder Matters...............................................  13

Item 6.    Selected Financial Data...........................................  13

Item 7.    Management's Discussion and Analysis of Financial Condition
           and Results of Operations.........................................  15

Item 7A.   Quantitative and Qualitative Disclosures About Market Risk........  21

Item 8.    Financial Statements and Supplementary Data.......................  21

Item 9.    Changes in and Disagreements with Accountants on Accounting
           and Financial Disclosure..........................................  40

                                    PART III

Item 10.   Directors and Executive Officers of the Registrant................  41

Item 11.   Executive Compensation............................................  41

Item 12.   Security Ownership of Certain Beneficial Owners and
           Management........................................................  41

Item 13.   Certain Relationships and Related Transactions....................  41

                                     PART IV

Item 14.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K..  42
</TABLE>

<PAGE>

                                     PART I

         This Report contains certain forward-looking statements such as our
intentions, hopes, beliefs, expectations, strategies, predictions or any other
variation thereof or comparable phraseology of our future activities or other
future events or conditions within the meaning of Section 27A of the Securities
Act of 1993, as amended (the "Act"), and Section 21E of the Securities Exchange
Act of 1934, as amended, which are intended to be covered by the safe harbors
created thereby. Investors are cautioned that all forward-looking statements
involve risks and uncertainty, including, without limitation, variations in
quarterly results, volatility of our stock price, development by competitors of
new or superior products or services, the entry into the market by new
competitors, the sufficiency of our working capital and our ability to realize
benefits from consolidating certain general and administrative functions, to
assimilate and integrate acquisitions, to continue our acquisition program, to
retain management, to implement our focused business strategy to expand our
document and information management services geographically, to attract and
retain customers, to increase revenue by cross-selling services and to
successfully defend our company in ongoing and future litigation. Although we
believe that the assumptions underlying the forward-looking statements contained
herein are reasonable, any of the assumptions could be inaccurate, and,
therefore, there can be no assurance that the forward-looking statements
included in this Report will prove to be accurate. In light of the significant
uncertainties inherent in the forward-looking statements included herein, the
inclusion of such information should not be regarded as a representation by us
or any other person that our objectives and plans will be achieved.

ITEM 1. BUSINESS

GENERAL

         We are a market leader in document and information outsourcing
solutions. We offer customers in information-intensive industries - such as
healthcare, law, banking, insurance, retailing, high tech, manufacturing and
government - the solutions to manage their document and information needs,
enabling these organizations to concentrate on their core competencies.

         As a national, single-source provider, we operate approximately 120
facilities nationwide with approximately 10,500 employees providing services in
43 states, Washington, D.C., Puerto Rico, Mexico and the Caribbean.

         We serve a diverse and high-profile client base, delivering the
resources of a strong national company through relationships, on which clients
have come to rely. Since multiple document and information management functions
can be outsourced to us, companies no longer have to deal with a multitude of
vendors. As a full-service alternative, our clients can rely on us to be a
single point of accountability.

         An estimated four trillion documents are generated annually in the
United States. A significant portion of the processing, management and storage
of these documents is outsourced to small service companies. Further, we believe
that the document and information outsourcing solutions market is growing due to
several factors, including: (i) government regulations that require lengthy
document retention periods and rapid accessibility for many types of records;
(ii) increased customer expectations of low cost access to records on short
notice and, in many instances, at disparate locations; (iii) the increasing
litigiousness of society, necessitating access to relevant documents and records
for extended periods; and (iv) continuing advancements in computer, networking,
facsimile, printing and other technologies which have greatly facilitated the
production and wide distribution of documents.

         Our target clients generate large volumes of documents and information
that require specialized processing, distribution, storage and retrieval of
these documents and the information they contain. We believe that these clients
will continue to increase their outsourcing of document and information
management needs in order to maintain their focus on core operating competencies
and revenue generating activities; reduce fixed costs, including labor and
equipment costs; and gain access to new technologies without incurring the
expense and risk of near-term obsolescence of technologies.

         The document and information outsourcing solutions business
continues to be fragmented. We believe that many small document management
and information services businesses: (i) have insufficient capital for
expansion; (ii) cannot keep abreast of rapidly changing technologies; (iii)
lack effective marketing programs; and (iv) are

<PAGE>

unable to meet the needs of large, geographically dispersed clients. In
addition, there are a limited number of options for owners of these
businesses to obtain liquidity by selling their businesses. As a result, we
believe that many owners of these businesses will continue to be receptive to
our acquisition program which will selectively focus on specific companies
that we believe will add significant synergies to our existing operating base.

BUSINESS STRATEGY

         Our goal is to become the leading national, single source provider of
document and information outsourcing solutions to information and document
intensive industries, including: healthcare, law, banking, insurance, retailing,
high tech, manufacturing and government. In order to achieve this goal, we have
implemented the following focused business strategy which we believe will
attract and retain clients:

         ECONOMIES AND EFFICIENCIES. We intend to deliver better services,
cheaper and faster than our competitors.

         SCOPE AND SCALE. We plan to continue to establish a full range of
document management operations to meet the diverse needs of targeted
metropolitan areas by implementing a "fill-in-the-grid" strategy through
expansion of existing businesses and selected acquisitions. We intend to
continue to handle large volume projects.

         FLEXIBLE SERVICE DELIVERY. We intend to continue to provide systems
integration, outsourced service bureaus, on-site facility management and
dedicated operations.

         INFORMATION AND TECHNOLOGY LIFECYCLES. We intend to continue to be
involved during the stages of the information lifecycle from data capture,
conversion and storage to analysis and output processing. In addition, we expect
to continue to be involved in the technology lifecycles from analog and
electronic to web-based technology.

         CAPITALIZE ON CROSS-SELLING OPPORTUNITIES. We intend to capitalize on
cross-selling opportunities in two primary ways. First, we intend to continue to
sell our existing clients additional document and information solutions provided
by our other businesses. Second, we intend to use our knowledge with respect to
specific industry segments to sell such services to new clients. We provide
services along the information lifecycle from data capture, conversion, storage
to analysis and output processing, such as print and mail.

         ACHIEVE COST SAVINGS THROUGH CONSOLIDATION AND ECONOMIES OF SCALE. We
believe that we will continue to achieve significant savings by combining a
number of general and administrative functions at the corporate level, such as
accounting, tax, human resources and legal, by reducing or eliminating redundant
functions and facilities, and by implementing corporate purchasing programs. For
example, we have implemented an insurance plan, employee benefits programs and
purchasing plans for certain items, such as paper, microfilm, storage racks,
long distance services, computer equipment and overnight delivery for us and our
subsidiaries, on a combined basis. To the extent that we are able to expand
through the acquisition of additional document and information management
businesses, we believe that these cost savings will continue to improve.

         INTERNET. We intend to continue to utilize web-based technologies. Our
plans include business-to-business e-commerce enabler products to provide
critical back office functions to traditional bricks and mortar companies and
new e-commerce entities. Our e-business strategy revolves around five areas; (i)
order entry and status; (ii) transfer of data; (iii) web conversion services;
(iv) web storage and retrieval; and (v) implementation of web-based solutions.

         OPERATE WITH STRATEGIC BUSINESS UNITS AND LOCAL MANAGEMENT. We
believe that the experienced local management teams of our operating
companies have a valuable understanding of their respective markets and
businesses and can capitalize on their existing client relationships.
Accordingly, we are operating and expect to continue to operate with
strategic business units and local management. Subject to certain corporate
approval and oversight guidelines, local management will remain empowered to
make most of the day-to-day operating decisions at each location and will be
primarily responsible for the profitability and growth of that location.
Although we intend to have local management operate with a high degree of
autonomy, we believe that regular communication between the individual
businesses and our executive management team or business unit leader is
integral to realizing the benefits afforded by the consolidation of these
businesses into a single company. We are organized around strategic business
units focused on providing common services to common customer bases and
achieving synergies and cross-selling opportunities. Because it is important
to maintain a balance between professional leadership and


2
<PAGE>

creative entrepreneurial business, during the past few years we have hired or
promoted experienced executives to manage the business units. Recently, we
created the position of Chief Operating Officer to oversee and professionally
manage the business unit leaders that manage our operating companies.

ACQUISITION STRATEGY

         We have transitioned to an operating company with a strategic
acquisition focus. Since our inception, we have acquired 63 companies. We
believe that there are significant opportunities to continue to add the
capabilities and resources of selected additional document and information
outsourcing solutions businesses with the intent of providing customers with a
single source document and information outsourcing solution. Accordingly, we are
screening companies in conjunction with our operating management team to acquire
those candidates that meet certain strategic requirements. These criteria
include geographic need, additional technology, added management strength,
industry expertise, service expansion to broaden service offerings and the
expansion of our customer base.

         We believe that we will continue to be a successful acquirer of other
document and information outsourcing solutions companies due to our strategy of
retaining selected owners and management of acquired companies, our access to
growth capital and our ability to offer sellers cash for their business as well
as an ongoing equity stake in our company. Nevertheless, there are numerous
risks associated with our acquisition program. See "Risk Factors."

SERVICES OFFERED

         We provide a wide variety of document and information outsourcing
solutions and draw upon our available services to develop solutions for our
clients based on their specific needs. The current document and information
outsourcing solutions that we provide are generally divided into the following
strategic business units: F.Y.I. HealthSERVE; F.Y.I. Legal; F.Y.I. Image; and
F.Y.I. Direct.

         F.Y.I. HEALTHSERVE. Our services include medical records release
services or processing a request for a patient's medical records from a
physician, insurance company, attorney, healthcare institution or individual.
The medical records release service provider initially verifies that the
release is properly authorized, coordinates the retrieval of the record,
determines the relevant parts of the record to be copied and delivers the
copied records (or portions thereof) to the requesting party. Medical records
release services are provided on-site and off-site pursuant to contracts with
hospitals, other large healthcare institutions and insurance companies. The
medical records release service provider bills the recipient directly and
sometimes pays a fee to the hospital.

         Additional services include archival records storage and management,
document and data conversion, archiving and imaging services to hospital
radiology departments, temporary staffing services for hospital information
management departments, and managed care payment compliance reviews.

         We also provide services for retrieval of attending physician
statements (APS) for life and health insurance underwriting, which includes
the capability of receiving Internet requests. Additionally, services are
offered to state governments to generate digital images of medical record
information and facilitate image processing for several state agencies.

         Our record management services consist primarily of active or open
shelf storage. Active or open shelf storage services involve the storage,
processing (i.e., indexing and formatting), retrieval, delivery and return to
storage of documents on a rapid time frame. Many of these services are
provided electronically. Representative uses for open shelf storage include
active files. In many instances, open shelf storage is offered as an
outsourced file room service, where documents are requested and retrieved
frequently and, often, transmitted via facsimile or electronically due to the
urgency of the request. Service fees generally include a monthly fee based on
activity levels and volumes stored, with extra billing for specialized
requests. To a smaller extent, we store inactive documents.

         F.Y.I. LEGAL. We supply a broad range of services to the legal
industry. Litigation often involves the production and management of
thousands of pages of documents, extracted in their original working form
from the offices and files of litigating parties and their experts, advisors
and legal counsel. Legal services include managing the logistics of high
volume document production, microfilming and/or electronic imaging, document
coding,


3
<PAGE>

computer indexing, automated document retrieval and high speed, multiple-set
reproduction of documents, as well as high level consulting services ranging
from labor discrimination, mortgage discrimination and forensic analysis to
trial support for law firms, corporations, and utility companies.

         Additional legal services include subpoena of business documents and
service of process, deposition reporting services, discovery assistance, and
other trial support services to law firms, corporations and regulated
entities. These clients typically look to legal services companies to
supplement their internal operations and capabilities on an as-needed,
job-by-job basis.

         Also included in F.Y.I. Legal is employee and investor services
which provides administration, record-keeping and information processing
services. We maintain detailed employee and/or investor records on behalf of
(i) general partners to service their investors in limited partnerships,
REITs and master limited partnerships; (ii) corporations to provide turnkey
outsourced administration of employee stock purchase plans and employee stock
option plans; and (iii) banks and broker/dealers to provide complete
record-keeping and administrative services for additional brokerage and IRA
accounts.

         F.Y.I. IMAGE. Our group offers comprehensive information solutions
including electronic imaging, analog services, data capture and database
management, claims processing, as well as integrated solutions to customers
in a wide range of industries, including financial services, retail,
insurance and government.

         Electronic Imaging Services involve the conversion of paper or
microfilm documents into digitized information through optical scanners.
Digitized information can be stored as an image or converted to code through
optical character recognition (OCR) or digital imaging storage and retrieval
technologies. Conversion to code provides additional processing capabilities,
such as manipulation of data. In both cases, the digitized information can be
stored on either a magnetic medium, such as a computer diskette, or on
optical laser discs, such as compact discs. Electronic imaging is generally
used because of the storage media's high speed of retrieval, its multiple
indexing and text search formatting capabilities and its ability to be used
to distribute output to multiple locations. Additionally, images may be
stored and accessed via internet-based repositories. Electronic imaging
services are typically billed on a job-by-job basis, based on the number of
images and complexity of the retrieval applications.

         Analog Services involve: (i) the conversion of paper documents into
microfilm images; (ii) film processing; and (iii) computer-based indexing and
formatting. Typically, customers select micrographic services as a
cost-competitive technology to reduce the physical size of stored records,
for their long-term (over 100 years) archival capabilities and as an
intermediate step in certain imaging or reprographic applications. We also
act as distributor of a wide range of microfilm and business imaging supplies.

         Data Capture and Database Management Services involve data capture
(manually or through scanning or other electronic media), data consolidation
and elimination, storage, maintenance, formatting and report creation. Data
capture includes the conversion of text and handwritten paper media into
digital files. An advantage of digital files is the ability to manipulate
large amounts of data quickly and efficiently. In some cases, database
services include statistical analysis of data.

        Claims Processing Services include the compiling of databases, mail
campaigns and call centers. We identify and notify members of a class action
lawsuit or other group, answer questions, track and record contact with class
action or other group members, process claims and distribute settlement
funds. This specialized service gives us the ability to extend relationships
beyond legal settlements.

         Integrated solutions offer technical services with a specific focus
on document imaging, work flow, COLD and document and information management
systems using third party imaging systems.

         F.Y.I. DIRECT. This group provides (i) direct mail and fulfillment
services; (ii) printing services; and (iii) statement processing.

         Direct Mail and Fulfillment Services provide customers with rapid,
reliable and cost-effective methods for making large-scale distributions of
items such as corporate advertising, political campaign literature, consumer


4
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notices and annual reports for its customers. The direct mail service also
includes the ability to deliver efficient postal routing to fulfill consumer
requests for specific information. In addition, we have the ability to send
blast e-mail services, including high level graphics and sound to supplement
our existing services.

         Full Service Commercial Printing involves a broad range of printing
and related services including complete electronic prepress services, such as
large format image setting, full-color annual report production, flyers and
catalogs.

         Statement Processing Services involve sending out millions of bills
or statements each month. We are currently offering electronic bill
presentation and payment services that allow our customers to send out
invoices using either traditional mail or e-mail based delivery that allows
their customers the option to pay the bill immediately on-line.

         Material Contracts. We have been awarded several contracts by
government agencies in the state of New York to provide document imaging
services to various state agencies.

SALES AND MARKETING

         We have a broad customer base. Only one of our clients accounted for
more than 3.0% (but less than 5%) of revenue for the year ended December 31,
1999. Historically, our sales efforts have been implemented on a
location-by-location basis and typically have been coordinated either through
separate sales personnel or as part of the local management's responsibilities.
Our existing local sales efforts are supplemented through local sales
representatives who are in the process of regional and/or national sales
training. We continue to strive to increase our client base by attracting
clients away from small, single business operators as a result of our ability to
offer a broader range of solutions for our clients' document management needs.
In addition, we intend to continue to focus on increasing revenue from our
existing clients by cross-selling our services and broadening our product
offerings. We will continue to augment local sales and marketing efforts through
the implementation of a national sales/account program. We intend to continue to
focus on national sales and marketing efforts in 2000 and have created a large
account management program or LAMP to focus on such opportunities.

COMPETITION

         The document and information outsourcing solutions businesses in which
we compete and expect to compete are highly competitive. A significant source of
competition is the in-house document handling capability of our target client
base. There can be no assurance that these businesses will outsource more of
their document management needs or that they will not bring in-house services
that they currently outsource. In addition, certain of our competitors are
larger businesses and have greater financial resources than we do. Certain of
these competitors operate in broader geographic areas than we do, and others may
choose to enter our areas of operation in the future. In addition, we intend to
continue to enter new geographic areas through internal growth and acquisition
and expect to encounter significant competition from established competitors in
each of such areas. As a result of this highly competitive environment, we may
lose clients or have difficulty in acquiring new customers and new companies and
our results of operations may be adversely affected.

         We believe that the principal competitive factors in document and
information outsourcing solutions services include accuracy, reliability and
security of service, client segment specific knowledge and price. We compete
primarily on the basis of quality of service and client segment specific
knowledge as well as our ability to handle large volumes and projects, and
believe that we compete favorably with respect to these factors.

EMPLOYEES

         As of December 31, 1999, we had approximately 8,000 full-time and 2,500
part-time employees. As of such date, we had approximately 185 employees
represented by labor unions. We consider our relations with our employees to be
good.


5
<PAGE>

OUR EXECUTIVE OFFICERS

         The following table sets forth certain information concerning each of
our executive officers:

<TABLE>
<CAPTION>

NAME                                AGE               POSITION
----                                ---               --------
<S>                                 <C>       <C>
Thomas C. Walker.....................67       Chairman of the Board and Chief
                                              Development Officer

Ed H. Bowman, Jr.....................53       President and Chief Executive Officer;
                                              Director

Timothy J. Barker....................37       Executive Vice President and Chief
                                              Financial Officer

Joe A. Rose..........................49       Executive Vice President, Chief
                                              Operating Officer and Director

David M. Byerley.....................38       Senior Vice President - Corporate
                                              Development

Margot T. Lebenberg..................32       Senior Vice President, General Counsel
                                              and Secretary

Ronald Zazworsky.....................55       Senior Vice President - HealthSERVE
</TABLE>

         THOMAS C. WALKER has been our Chairman of the Board since our inception
in September 1994 and has been our Chief Development Officer since November
1995. From September 1994 until November 1995, Mr. Walker held the position of
our President and Chief Executive Officer. From August 1991 to December 1994,
Mr. Walker was Vice President, Corporate Development, of Laidlaw Waste Systems,
Inc., a subsidiary of Laidlaw, Inc., a waste management company, where he was
responsible for its acquisition and divestiture program in the United States and
Mexico. During his career, Mr. Walker has been responsible for the acquisition
or divestiture of several hundred businesses over a 30-year period. Mr. Walker
holds a B.S. in Industrial Engineering from Lafayette College.

     ED H. BOWMAN, JR. has been our President and Chief Executive Officer and a
Director since November 1995. From May 1993 to June 1995, Mr. Bowman was
Executive Vice President and Chief Operating Officer of the Health Systems Group
of First Data Corporation, a financial services company. Mr. Bowman was
responsible for the day-to-day operations of research and development, marketing
and customer service. From 1983 to 1993, Mr. Bowman served in a number of
executive positions with HBOC, including VP -- International, VP -- Marketing,
Senior VP -- Customer Services, Group Senior VP -- Research and Development, and
last serving as Executive Vice President and Chief Operating Officer with
responsibility for domestic operations. Prior to joining HBOC, Mr. Bowman was
with Andersen Consulting for 10 years, where he was elected a Partner. Mr.
Bowman became a C.P.A. in 1973 and holds an M.S. from Georgia Institute of
Technology and a B.B.A. from Georgia State University. Mr. Bowman is a board
member of 711.Net, an Internet company, and he is an investor and former board
member of several early-stage, high-technology companies.

     TIMOTHY J. BARKER has been an Executive Vice President since January
2000 and a Senior Vice President and Chief Financial Officer since November
1997. From November 1995 to November 1997, Mr. Barker held the positions of
Chief Accounting Officer and Controller. Prior to joining us as a full-time
consultant in June 1995, Mr. Barker was a manager with Arthur Andersen LLP,
where he served in various capacities over a nine-year period. Mr. Barker
served as Vice President of Financial Planning and Analysis for Sunbelt
National Mortgage Corporation


6
<PAGE>

from June 1993 to October 1994. Mr. Barker holds a B.A. in Accounting from
Texas Tech University and has been a C.P.A. since 1985.

     JOE A. ROSE has been a Director since March 2000 and our Chief Operating
Officer since January 2000. From August 1999 through December 1999, Mr. Rose was
an Executive Vice President. From June 1997 through August 1999, Joe was a
Senior Vice President. From May 1995 through January 1997, Mr. Rose was
President and CEO of FormMaker Software, Inc., a document technology company
which merged with Image Sciences Corp. to form Docucorp International. From May
1993 through May 1995, Mr. Rose was Corporate Vice President of John H. Harland
Company, a financial services company, and President and CEO of its subsidiary,
Formation Technology, Inc. From July 1988 through May 1993, Mr. Rose served as
Executive Vice President of National Data Corporation where he was responsible
for the credit card and cash management divisions. Mr. Rose began his
information services career at EDS in sales. Mr. Rose holds a B.A. from Texas
Tech University.

     DAVID M. BYERLEY has been our Senior Vice President - Corporate Development
since November 1998. From August 1996 until October 1998, Mr. Byerley was
Executive Vice President of IKON's Business Information Services Division. From
February 1995 until August 1996, Mr. Byerley was Senior Vice President of
Product Development and Marketing with Dataplex Corporation, a wholly-owned
subsidiary of Affiliated Computer Services. From August 1994 until February
1995, Mr. Byerley was employed by Eastman Kodak. Mr. Byerley holds a B.S. degree
from Dickinson College, a M.S. degree from Temple University, and a J.D. from
Temple University Law School.

     MARGOT T. LEBENBERG has been our Senior Vice President, General Counsel,
and Secretary since October 1998. From May 1996 until October 1998, Ms.
Lebenberg held the positions of Vice President, General Counsel, and Secretary.
From 1992 until joining us, Ms. Lebenberg was an attorney with Morgan, Lewis &
Bockius LLP in New York, where she practiced law in the business and finance
group primarily in the areas of securities and mergers and acquisitions. Ms.
Lebenberg holds a B.A. in Economics and History from the State University of New
York at Binghamton and a J.D. from Fordham University School of Law.

     RONALD ZAZWORSKY has been our Senior Vice President - HealthSERVE since
October 1997. From February 1994 until July 1997, Mr. Zazworsky was Senior Vice
President at Medaphis Corporation. From April 1992 to February 1994, Mr.
Zazworsky was President and CEO at Habersham Banking Solutions, Inc. Prior to
1992, Mr. Zazworsky was employed at HBO as Regional Vice President for eight
years. Previously, Mr. Zazworsky held various sales, marketing and management
positions at IBM. Mr. Zazworsky holds a B.A. from Gettysburg College and an
M.B.A. from Emory University.

                                 RISK FACTORS

YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS BEFORE MAKING AN
INVESTMENT DECISION. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS,
FINANCIAL CONDITION OR RESULTS OF OPERATIONS COULD BE HURT, THE PRICE OF OUR
SECURITIES COULD DECLINE, WE MAY NOT BE ABLE TO REPAY OUR DEBT SECURITIES, AND
YOU MAY LOSE ALL OR PART OF YOUR INVESTMENT. YOU SHOULD ALSO REFER TO THE OTHER
INFORMATION CONTAINED IN THIS REPORT AND INCORPORATED IN THIS REPORT BY
REFERENCE, INCLUDING OUR CONSOLIDATED FINANCIAL STATEMENTS AND THE RELATED
NOTES.

WE MAY NOT BE ABLE TO CONTINUE TO EFFECTIVELY INTEGRATE ALL OF OUR OPERATING
COMPANIES

         Our growth and future financial performance depend on our ability to
continue to integrate all of our operating companies. We may not achieve
integration unless we effectively combine the operations of all our operating
companies. A number of our operating companies offer different services, use
different capabilities and technologies and target different geographic markets
and client segments. These differences increase the risk in successfully
completing the integration of our operating companies. We need to centralize
certain functions to achieve cost savings and develop programs and processes
that will promote cooperation and the sharing of opportunities and resources.
Any difficulties we encounter in the integration process could adversely affect
us; and


7
<PAGE>

we cannot assure you that our operating results will match or exceed the
combined individual operating results achieved by our operating companies
prior to their acquisition.

WE MAY NOT BE ABLE TO MANAGE OUR RAPID GROWTH

         We cannot be sure that our management group will effectively be able
to oversee us and implement our operating or growth strategies. Further, to
the extent that we are able to implement our acquisition strategy, our growth
will continue to place significant demands on management and on our internal
systems and controls. We cannot assure you that our management group will
effectively be able to direct us through a continued period of significant
growth. In addition, we cannot assure you that our current systems will be
adequate for our future needs or that we will be successful in implementing
new systems or converting existing systems. If we fail to implement these
systems, procedures and controls on a timely basis, we may not be able to
service our clients' needs, hire and retain new employees, pursue new
business, complete future acquisitions or operate our business effectively.
We could also trigger contractual credits to clients. Failure to properly
integrate acquired operations with vendors' systems could result in increased
cost. As a result of any of these problems associated with expansion, our
business, financial condition and results of operations could be materially
and adversely affected.

WE NEED TO BE ABLE TO ACQUIRE COMPANIES SUCCESSFULLY

         An element of our growth strategy is the acquisition of additional
companies that will complement our existing businesses. We cannot assure you
that we will be able to identify or reach mutually agreeable terms with
acquisition candidates and their owners, or that we will be able to profitably
manage additional businesses or successfully integrate such additional
businesses into us without substantial costs, delays or other problems.
Acquisitions may involve a number of special risks including: (a) adverse
short-term effects on our reported operating results; (b) diversion of
management's attention; (c) dependence on retention, hiring and training of key
personnel; (d) departure of key clients; (e) risks associated with unanticipated
problems or legal liabilities; and (f) amortization of acquired intangible
assets. Some or all of these risks could have a material adverse effect on our
operations and financial performance. In addition, to the extent that
consolidation becomes more prevalent in the industry, the prices for attractive
acquisition candidates may continue to be bid up to higher levels. In addition,
we may find that there will be fewer suitable acquisition candidates at
acceptable prices. In any event, we cannot assure you that businesses acquired
in the future will achieve sales and profitability that justify the investment
therein. Governmental and regulatory constraints could prevent acquisitions in
the future. We cannot assure you that any acquisitions, if consummated, will be
advantageous to us. Without additional acquisitions, we may not be able to grow
at historical rates. If our acquisition strategy fails, our business, financial
condition and results of operations could be materially and adversely affected.

WE NEED TO FINANCE OUR POTENTIAL GROWTH THROUGH ACQUISITIONS

         We currently intend to finance future acquisitions by using cash and
our common stock for all or a portion of the consideration to be paid. In the
event that our common stock does not maintain sufficient value, or potential
acquisition candidates are unwilling to accept our common stock as consideration
for the sale of their businesses, we may be required to use more cash, if
available, in order to continue our acquisition program. If we do not have
sufficient cash, our growth could be limited unless we are able to obtain
capital through additional debt or equity financings. Under our line of credit
with Paribas, we and our subsidiaries could borrow, on a revolving credit basis,
loans in an aggregate outstanding principal amount of $150.0 million for working
capital, general corporate purposes and acquisitions, subject to certain
restrictions in our line of credit. As of December 31, 1999, the availability
under the line of credit was approximately $55.7 million. We cannot assure you,
however, that funds available under our line of credit will be sufficient for
our needs.

THE PRICE OF OUR COMMON STOCK MAY BE VOLATILE

         The price of our common stock may be volatile. Our quarterly results of
operations may vary materially as a result of the timing and structure of our
acquisitions, the timing and magnitude of costs related to acquisitions, the
gain or loss of material client relationships and variations in the prices
charged by us for our services. In addition, since a significant portion of our
revenue is generated on a project-by-project basis, the timing or completion of
material projects could result in fluctuations in our results of operations for
particular quarterly periods. Fluctuations


8

<PAGE>

in operating results may adversely affect the market price of our common
stock. The market price for our common stock may also fluctuate in response
to material announcements by us or our significant clients or competitors,
changes in the economic or other conditions impacting our targeted client
segments or changes in general economic conditions. Further, the securities
markets have experienced significant price and volume fluctuations from time
to time that have often been unrelated or disproportionate to the operating
performance of particular companies. These broad fluctuations may adversely
affect the market price of our common stock.

WE DEPEND ON CERTAIN CLIENT INDUSTRIES

         We derive our revenue primarily from document and information intensive
industries. Fundamental changes in the business practices of any of these client
industries, whether due to regulatory, technological, the internet or other
developments, could cause a material reduction in demand by our clients for the
services offered by us. Any reduction in demand would have a material adverse
effect on our results of operations. The document and information management
services industry is characterized by technological change, evolving client
needs and emerging technical standards. Although we believe that we will be able
to continue to offer services based on the newest technologies, we cannot assure
you that we will be able to obtain any of these technologies, that we will be
able to effectively implement these technologies on a cost-effective or timely
basis or that such technologies will not render obsolete our role as a third
party provider of document and information management services.

         Our success depends substantially upon retaining our significant
clients. Generally, we may lose clients due to a merger or acquisition, business
failure, contract expiration, conversion to a competitor or conversion to an
in-house system. We cannot guarantee that we will be able to retain long-term
relationships or secure renewals of short-term relationships with our
significant clients in the future.

         We incur a high level of fixed costs related to our technology
outsourcing and business process outsourcing clients. These fixed costs result
from significant investments, including computer hardware platforms, computer
software, facilities, and client service infrastructure. The loss of any one of
our significant clients could leave us with a significantly higher level of
fixed costs than is necessary to serve our remaining clients, thereby reducing
our profitability.

WE FACE INTENSE COMPETITION

         The document and information management services industry is highly
competitive. We cannot guarantee that we will be able to compete successfully in
the future. A significant source of competition is the in-house document
handling capability of our targeted client base. We cannot assure you that these
businesses will outsource more of their document and information management
needs or that such businesses will not bring in-house, services that they
currently outsource. In addition, certain of our competitors are larger
businesses and have greater financial resources than we do. Certain of these
competitors operate in broader geographic areas than we do, and others may
choose to enter our areas of operation in the future. In addition, we intend to
enter new geographic areas through internal growth and acquisitions and expect
to encounter significant competition from established competitors in each new
area. Many of our competitors have a greater international presence than us and
offer a broader range of services in certain segments. As a result of this
highly competitive environment, we may lose clients or have difficulty in
acquiring new clients and new companies, and our results of operations may be
adversely affected. In addition, we may be forced to lower our pricing or if
demand for our services decreases our business, financial condition and results
of operations will be materially and adversely affected.

WE HAVE SIGNIFICANT INVESTMENTS IN SOME CLIENT CONTRACTS WHICH EXPOSE US TO THE
RISK OF THESE CLIENTS' FINANCIAL CONDITIONS

         We must make significant capital investments in order to attract and
retain large outsourcing agreements. We sometimes must purchase assets such as
computing equipment and software, assume financial obligations such as computer
lease and software maintenance obligations or property leases, incur capital
expenditures or incur expenses necessary to provide outsourcing services to a
client. If any of these agreements were to terminate, we may not be able to
realize a return on the assets and investments acquired or financial obligations
assumed.


9
<PAGE>

OUR ABILITY TO MEET CHANGES IN TECHNOLOGY COULD BE EXPENSIVE AND, IF WE DO NOT
KEEP UP WITH THESE CHANGES, WE COULD LOSE EXISTING CLIENTS AND BE UNABLE TO
ATTRACT CLIENTS

         The markets for our document and information technology services are
subject to rapid technological changes and rapid changes in client requirements.
To compete, we commit substantial resources to operating multiple hardware
platforms, to customizing third-party software programs and to training client
personnel and our personnel in the use of new technologies. Future hardware,
software and other products may be able to manipulate large amounts of documents
and information more cost effectively than existing products which we use.
Information processing is shifting toward client-server and web-based systems,
in which individual computers or groups of personal computers and mid-range
systems replace older systems. This trend could adversely affect our business
and financial results and result in us losing clients and being unable to
attract clients. We have committed substantial resources to developing
outsourcing solutions for these distributed computing environments. We cannot
guarantee that we will be successful in customizing products and services that
incorporate new technology on a timely basis. We also cannot guarantee that we
will continue to be able to deliver the services and products demanded by the
marketplace. Technology costs have also dropped significantly in recent years
due in large part to hardware technology advances.

INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS COULD REQUIRE US TO INCUR SUBSTANTIAL
COSTS TO DEFEND THE CLAIMS, CHANGE OUR SERVICES, CHANGE THE TRADEMARKS UNDER
WHICH OUR SERVICES ARE PROVIDED, PURCHASE NEW LICENSES OR REDESIGN OUR USE OF
CHALLENGED TECHNOLOGY

         We and other companies in our industry rely heavily on the use of
intellectual property. We own registrations for and/or use certain trademarks in
connection with the operations of our business. Should any third parties assert
claims that our use of our trademarks infringe said third parties' trademark
rights, we could incur substantial costs to defend these claims and, if any such
third party claims are ultimately successful, we could be enjoined from further
use of certain of our trademarks. We have received notice from one such third
party that our registered trademark F.Y.I. INCORPORATED infringes certain of
said third party's trademark rights. We do not believe that our business,
financial condition and results of operations will be materially and adversely
affected by this claim. However, the outcome cannot always be predicted and
there is no assurance that this will be the case. We do not own the majority of
the software that we use to run our business; instead we license this software
from a number of vendors. If these vendors assert claims that we or our clients
are infringing on their software or related intellectual property, we could
incur substantial costs to defend these claims. In addition, if any of our
vendors' infringement claims are ultimately successful, our vendors could
require us (i) to cease selling or using products or services that incorporate
the challenged software or technology; (ii) to obtain a license or additional
licenses from our vendors; or (iii) to redesign our products and services which
rely on the challenged software or technology. We are not currently involved in
any material intellectual property litigation, but could be in the future to
protect our trade secrets, trademarks or know-how, or to defend ourselves or our
clients against alleged infringement claims.

WE DEPEND ON OUR PERSONNEL

         Our operations are dependent on the continued efforts of our
executive officers and on senior management of our operating companies. Also,
we will likely depend on the senior management of businesses acquired in the
future. If any of these people are unable or unwilling to continue in their
present role, or if we are unable to attract and retain additional managers
and skilled employees, our business could be adversely affected. We do not
currently have key person life insurance covering any of our executive
officers.

         Our success depends, to a significant extent, upon our ability to
attract, retain and motivate highly skilled and qualified personnel. If we fail
to attract, train, and retain sufficient numbers of these technically-skilled
people, our business, financial condition, and results of operations will be
materially and adversely affected. Competition for personnel is intense in the
document and information services industry, and recruiting and training
personnel require substantial resources. We must continue to grow internally by
hiring and training technically-skilled people in order to perform services
under our existing and future contracts. We have to pay an increasing amount to
hire and retain a skilled workforce. Our business also experiences significant
turnover of technically-skilled people.


10
<PAGE>

WE MAY BE LIABLE FOR BREACH OF CONFIDENTIALITY

         A substantial portion of our business involves the handling of
documents containing confidential and other sensitive information. Although
we have established procedures intended to prevent any unauthorized
disclosure of confidential information and, in some cases, have contractually
limited our potential liability for unauthorized disclosure of such
information, we cannot assure you that unauthorized disclosures will not
result in material liability to us.

WE MAY HAVE BUSINESS INTERRUPTIONS

         Certain of our operations are performed at a single location and are
dependent on continuous computer, electrical, and telephone service. As a
result, any disruption of our day-to-day operations could have a material
adverse effect upon us. We cannot assure you that a fire, flood, earthquake,
power loss, telephone service loss, problems caused by computer or technology
issues or other event affecting one or more of our facilities would not
disable these services. Any significant damage to any facility or other
failure that causes significant interruptions in our operations may not be
covered by insurance. Any uninsured or underinsured loss could have a
material adverse effect on our business, financial condition or results of
operations.

GOVERNMENT REGULATIONS MAY HINDER OUR ABILITY TO CHANGE PRICES

         In our medical records release of information business, there is state
legislation from time to time aimed at fixing the price which can be charged for
copying and distributing medical records information. Depending on the severity
of such pricing legislation, there can be significant pressure on the profit
margins associated with providing medical records release services. Today, some
form of pricing legislation exists in many states in the United States.

OUR CONTRACTS CONTAIN TERMINATION PROVISIONS AND PRICING RISKS THAT CREATE
UNCERTAIN REVENUE STREAMS AND COULD DECREASE OUR REVENUES AND PROFITABILITY

         Some of our contracts with clients permit termination in the event our
performance is not consistent with service levels specified in those contracts.
Some of our government and other clients can terminate their contracts for any
reason or no reason. In addition, public sector contracts are subject to
detailed regulatory requirements and public policies, as well as to funding
priorities. Our clients' ability to terminate contracts creates an uncertain
revenue stream. If clients are not satisfied with our level of performance, our
reputation in the industry may suffer, which could also materially and adversely
affect our business, financial condition, and results of operations. Some of our
contracts contain pricing provisions that require the client to pay a set fee
for our services regardless of whether our costs to perform these services
exceed the amount of the set fee. Many of our document and information
outsourcing contracts provide for credits for our clients if we fail to achieve
specific contract standards. Some of our contracts contain re-pricing provisions
which can result in reductions of our fees for performing our services. In these
situations, we could incur significant unforeseen costs or financial penalties
in performing the contract.

MANAGEMENT EXERCISES SUBSTANTIAL CONTROL OVER OUR AFFAIRS

         As of December 31, 1999, our directors and executive officers owned
approximately 11.0% of the shares of our common stock. Our directors and
executive officers exercise substantial control over our affairs. If these
persons act together, they might be able to elect a sufficient number of
directors to control our Board of Directors and to approve or disapprove any
matter submitted to a vote of our stockholders.

FUTURE SALES OF OUR SHARES MAY ADVERSELY AFFECT OUR STOCK PRICE

         The market price of our common stock could be adversely affected by the
sale of substantial amounts of our common stock in the public market. In
addition, many shares are subject to contractual restrictions on resale which
generally expire two years from the date of issuance.

         If a significant number of shares of our common stock are issued in
acquisitions that are consummated in close proximity to each other, such shares
will become freely tradable at the same time. If a large number of shares


11
<PAGE>

are sold by stockholders in the market as soon as their shares became freely
transferable, the price of our common stock could be adversely affected.

WE MAY HAVE ENVIRONMENTAL LIABILITIES IN THE FUTURE

         We are subject to regulations and ordinances that govern activities
or operations that may have adverse environmental effects, such as discharges
to air and water. We are not aware of any environmental conditions relating
to present or past waste generation at or from these facilities that would be
likely to have a material adverse effect on our business, financial condition
or results of operations. However, we cannot assure you that environmental
liabilities in the future will not have a material adverse effect on our
business, financial condition or results of operations.

OUR BOARD OF DIRECTORS MAY BE ABLE TO DELAY OR PREVENT TAKEOVERS

         Our Board of Directors is empowered to issue preferred stock without
stockholder action. The existence of this "blank-check" preferred could render
more difficult or discourage an attempt to obtain control of us by means of a
tender offer, merger, proxy contest or otherwise.

OTHER RISKS, UNKNOWN OR IMMATERIAL TODAY, MAY BECOME KNOWN OR MATERIAL IN THE
FUTURE

         We have attempted to identify material risk factors currently affecting
us. However, additional risks that we do not yet know of, or that we currently
think are immaterial, may occur or become material. These risks could impair our
business operations or adversely affect revenues or profitability.

ITEM 2. PROPERTIES

         As of December 31, 1999, we operated in excess of 120 document and
information management service facilities in 24 states. Except for the two
facilities we own, all of these facilities were leased and were principally used
for operations and general administrative functions. See Note 8 of Notes to
Consolidated Financial Statements of F.Y.I. Incorporated and Subsidiaries for
further information relating to these leases.

         As of December 31, 1999, we also operated on-site at over 690 client
locations and from time to time at many other client locations for specific
projects.

     In order to secure our obligations under our current line of credit with
Paribas, we granted to Paribas and Bank of America Texas, N.A., as co-agents for
our lenders, a lien on substantially all of our properties and other assets. See
"Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations -- Liquidity and Capital Resources."

         We believe that our properties are generally well maintained, in good
condition and adequate for our present needs. Furthermore, we believe that
suitable additional or replacement space will be available when required.

ITEM 3. LEGAL PROCEEDINGS

         We are, from time to time, a party to litigation. We believe that none
of these actions will have a material adverse effect on our business, financial
condition or results of operations.

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

         During the fourth quarter of the year ended December 31, 1999, no
matters were submitted to a vote of the security holders.


12

<PAGE>

                                     PART II

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

MARKET INFORMATION

         Our common stock trades on The Nasdaq Stock Market under the symbol
"FYII." The following table sets forth, for our fiscal periods indicated, the
range of high and low last reported sale prices for our common stock.

<TABLE>
<CAPTION>

                                                              HIGH                      LOW
<S>                                                           <C>                       <C>
FISCAL YEAR 1998
  First Quarter...............................................$27.38                     $24.00
  Second Quarter..............................................$29.50                     $25.00
  Third Quarter...............................................$35.75                     $23.50
  Fourth Quarter..............................................$32.06                     $24.13

FISCAL YEAR 1999
  First Quarter...............................................$39.00                     $28.44
  Second Quarter..............................................$32.13                     $26.56
  Third Quarter...............................................$34.81                     $31.63
  Fourth Quarter..............................................$35.75                     $31.50

FISCAL YEAR 2000
  First Quarter (through February 18, 2000)...................$35.00                     $29.25
</TABLE>
HOLDERS

     On February 18, 2000, the last reported sale price of our common stock on
the Nasdaq Stock Market was $31.63 per share. At February 18, 2000, there were
170 holders of record of our common stock and 14,589,769 shares outstanding.

DIVIDENDS

         We have not declared any cash dividends on our common stock. We do not
anticipate paying any cash dividends on our common stock in the foreseeable
future and intend to retain our earnings, if any, to finance the expansion of
our business and for general corporate purposes. Any payment of future dividends
will be at the discretion of our Board of Directors and will depend upon, among
other things, our earnings, financial condition, capital requirements, level of
indebtedness, contractual restrictions and other factors that our Board of
Directors deems relevant.

ITEM 6. SELECTED FINANCIAL DATA

SELECTED FINANCIAL DATA

         We were founded in September 1994, and we effectively began our
operations on February 1, 1996, following the completion of our initial public
offering ("IPO"). We acquired, simultaneously with and as a condition to the
closing of the IPO, seven Founding Companies (the "Acquisitions"). The
Acquisitions have been accounted for in accordance with generally accepted
accounting principles ("GAAP") as a combination of the Founding Companies at
historical cost. For accounting purposes and for the purposes of the
presentation of the financial data herein, January 31, 1996, has been used as
the effective date of the Acquisitions.

         Since the IPO, and through December 31, 1999, we acquired nine
companies in transactions that were accounted for as poolings-of-interests: (i)
The Rust Consulting Group, Inc. ("Rust") in December 1996; (ii) MAVRICC
Management Systems, Inc. and a related company, MMS Escrow and Transfer Agency,
Inc. (collectively, "MAVRICC") in March 1997; (iii) Input of Texas, Inc.
("Input") in March 1997; (iv) Micro Publishing Systems ("MPS") in December 1997;
(v) Lifo Systems, Inc. ("Lifo") in February 1998; (vi) Creative


13

<PAGE>

Mailings, Inc. ("CMI") in September 1998; (vii) Economic Research Services,
Inc. ("ERS") in October 1998; (viii) TCH Mailhouse, Inc. and G&W Enterprise,
Inc. (collectively, "TCH") in December 1998; and (ix) Advanced Digital
Graphics, Inc. ("ADG") in December 1998 (collectively, the "Pooled
Companies"). Our consolidated financial statements for all periods presented
have been restated to include the accounts of MAVRICC, Input, CMI, and ERS.
As a result, we are reporting financial results in periods prior to the date
we effectively began operations. Our consolidated financial statements were
not restated for the Rust, MPS, and Lifo acquisitions for the periods prior
to January 1, 1996, 1997, and 1998, respectively, due to their financial
immateriality. The financial results for periods presented were also not
restated prior to October 1, 1998, for the acquisitions of TCH and ADG due to
their financial immateriality. We and the Pooled Companies were not under
common control or management during the periods prior to their respective
mergers. Our results of operations for the periods presented may not be
indicative of the results in the future because of (i) the impact of
acquisitions recorded as purchases, whose results are only included
subsequent to the purchase date; and (ii) the impact of acquisitions recorded
as poolings-of-interests, whose predecessor companies were not under common
control or management.

         Subsequent to the IPO and through December 31, 1999, we acquired 45
additional companies in transactions accounted for as purchases. Our results of
operations include the results of these acquisitions from the date of their
respective acquisitions.

         Our Selected Financial Data for the years ended December 31, 1996,
1997, 1998, and 1999, have been derived from our consolidated financial
statements which have been audited by Arthur Andersen LLP. Our Selected
Financial Data for the year ended December 31, 1995, has been derived from
our audited financial statements plus the financial statements of CMI and
ERS. Our Selected Financial Data are based on available information and
certain assumptions described in the footnotes set forth below, all of which
we believe are reasonable.

         Our Selected Financial Data provided below should be read in
conjunction with our historical financial statements, including the related
notes thereto, and "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations" that appear elsewhere in this Report.

                             SELECTED FINANCIAL DATA
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
                                                         1995          1996           1997          1998          1999
                                                         ----          ----           ----          ----          ----
<S>                                                 <C>            <C>            <C>           <C>           <C>
STATEMENT OF OPERATIONS DATA:
Revenue..........................................   $  26,583      $106,625       $177,272      $247,462      $354,811
Cost of services.................................      14,841        65,109        112,161       153,815       218,695
Depreciation.....................................         494         2,176          3,730         5,889         8,815
                                                    ------------  -----------    -----------   -----------   -----------
    Gross profit.................................      11,248        39,340         61,381        87,758       127,301
Selling, general and administrative expenses (1)        6,127        26,459         37,956        56,299        78,577
(2)
Gain on sale of assets of subsidiary, net (3)....          --            --             --        (4,394)           --
Amortization (4).................................          --           599          1,835         4,845         4,748
                                                    --------------------------   -----------   -----------   -----------
    Operating income (1).........................       5,121        12,282         21,590        31,008        43,976
Interest and other (income) expense, net (5).....         (29)          672          1,176           990         3,975
                                                    ----------    ------------   -----------   ------------  -----------
Income before income taxes (1) (5)...............       5,150        11,610         20,414        30,018        40,001
Provision for income taxes (6)...................       1,960         4,714          8,266        12,007        16,000
                                                    -----------   -----------    -----------   ----------    ----------
Net income (1) (5) (6)...........................   $   3,190     $   6,896       $ 12,148      $ 18,011     $  24,001
                                                    ===========   ==========      =========     =========     =========
Net income per common share......................
    Basic (1) (5) (6)............................   $    0.97     $    0.81       $   1.01      $   1.35     $    1.70
    Diluted (1) (5) (6)..........................   $    0.97     $    0.80       $   1.00      $   1.31     $    1.60
Weighted average common shares outstanding.......
    Basic........................................       3,297         8,504         12,018        13,370        14,149
    Diluted......................................       3,297         8,632         12,196        13,731        14,990

BALANCE SHEET DATA:
Working capital..................................   $   2,835     $  26,743       $ 26,642      $ 37,793     $  20,113
Total assets.....................................      15,411       113,148        139,106       206,970       369,355
Long-term obligations, net of current maturities.         914         4,911          5,892        31,498        85,172
Stockholders' equity.............................       7,000        83,254        107,564       138,735       175,009
</TABLE>


14
<PAGE>

(1)      Gives effect to the Compensation  Differential.  See Note 2 of Notes to
         Consolidated  Financial Statements of F.Y.I. Incorporated and
         Subsidiaries.
(2)      Selling, general and administrative expenses for the year ended
         December 31, 1998 include charges totaling $2.5 million relating to:
         (i) severance and other costs, $1.7 million; (ii) facilities closing
         costs, $0.5 million; and (iii) other write-downs and impairments, $0.3
         million. See Note 6 of Notes to Consolidated Financial Statements of
         F.Y.I. Incorporated and Subsidiaries.
(3)      Reports the gain on the sale of assets of Leonard Archives Acquisition
         Corp. ("Leonard"). The gain on the sale, net of other charges included
         in (2) and (4), was $145,000 before taxes. See Note 6 of Notes to
         Consolidated Financial Statements of F.Y.I. Incorporated and
         Subsidiaries.
(4)      Amortization for the year ended December 31, 1998 includes acceleration
         of goodwill amortization of $1.8 million. See Note 6 of Notes to
         Consolidated Financial Statements of F.Y.I. Incorporated and
         Subsidiaries.
(5)      Interest expense for the year ended December 31, 1997, includes the
         write-off of approximately $1.2 million ($0.7 million, net of taxes,
         and $0.07 per share) of unamortized debt issuance costs related to our
         Credit Agreement in place at the time. See Note 7 to Consolidated
         Financial Statements of F.Y.I. Incorporated and Subsidiaries.
(6)      Gives effect to certain tax adjustments related to the taxation of
         certain Founding and Pooled Companies as S corporations or sole
         proprietorships prior to the consummation of the Acquisitions and the
         tax impact of the Compensation Differential in each period. See Note 2
         of Notes to Consolidated Financial Statements of F.Y.I. Incorporated
         and Subsidiaries.

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

         The following discussion should be read in conjunction with our
financial statements and the related notes thereto and "Item 6. Selected
Financial Data" appearing elsewhere in this Report. Additional information
concerning factors that could cause results to differ materially from those in
the forward-looking statements is contained under "Item 1. Business -- Risk
Factors."

INTRODUCTION

         We were founded in September 1994, to create a national, single source
provider of document and information outsourcing solutions to document and
information intensive industries, including: healthcare, law, banking,
insurance, retailing, high tech manufacturing and government. We acquired seven
document management services businesses (the "Founding Companies")
simultaneously with the closing of our initial public offering (the "IPO") on
January 26, 1996, and effectively began operations at that time. The
consideration for the Founding Companies consisted of a combination of cash and
common stock (the "Common Stock") of our Company.

         Since the IPO, and through December 31, 1999, we acquired nine
companies in transactions that were accounted for as poolings-of-interests:
(i) Rust in December 1996; (ii) MAVRICC in March 1997; (iii) Input in March
1997; (iv) MPS in December 1997; (v) Lifo in February 1998; (vi) CMI in
September 1998; (vii) ERS in October 1998; (viii) TCH in December 1998; and
(ix) ADG in December 1998. Our consolidated financial statements for all
periods presented have been restated to include the accounts of MAVRICC,
Input, CMI and ERS. As a result, we are reporting financial results in
periods prior to the date we effectively began our operations. Our
consolidated financial statements were not restated for the Rust, MPS and
Lifo acquisitions for the periods prior to January 1, 1996, 1997, and 1998,
respectively, due to their financial immateriality. Periods presented were
also not restated prior to October 1, 1998, for the acquisitions of TCH and
ADG due to their financial immateriality. We and the Pooled Companies were
not under common control or management during the periods prior to their
respective mergers. Our results of operations for the periods presented may
not be indicative of the results in the future because of (i) the impact of
acquisitions recorded as purchases, whose results are only included
subsequent to the purchase date; and (ii) the impact of acquisitions recorded
as poolings-of-interests, whose predecessor companies were not under common
control or management.

         Subsequent to the IPO and through December 31, 1999, we acquired 45
additional companies in transactions accounted for as purchases. Our results of
operations include the results of these acquisitions from the date of their
respective acquisitions.


15
<PAGE>

     Our revenue relates to the following segments: F.Y.I. HealthSERVE;
F.Y.I. Legal; F.Y.I. Image; and F.Y.I. Direct. Revenue relates to the
following services, by segment:

                  F.Y.I. HEALTHSERVE: (i) processing a request for a patient's
         medical records from a physician, insurance company, attorney,
         healthcare institution or individual; (ii) off-site active storage of a
         healthcare institutions medical records; (iii) online delivery of
         images of selected medical records for healthcare institutions; (iv)
         document and data conversion services for healthcare institutions; (v)
         document conversion services for state government disability,
         workers compensation claims and other government agencies; (vi)
         temporary staffing services; (vii) providing attending physicians'
         statements for life and health insurance underwriting; and (viii)
         managed care compliance reviews.

               F.Y.I. LEGAL: (i) automated litigation support, including
          document conversion, computer indexing and automated document
          retrieval; (ii) litigation consulting services such as discovery
          assistance, labor discrimination, forensic analysis and other trial
          support services; (iii) high-speed, multiple-set reproduction of
          documents; (iv) records acquisition in the form of subpoena of
          business documents service of process; and (v) employee and investor
          services which provides administration, record keeping and information
          processing services.

               F.Y.I. IMAGE: (i) electronic imaging services, involving the
          conversion of paper or microfilm documents into digitized information,
          database management and indexing; (ii) analog services involving the
          conversion of paper documents into microfilm images, film processing
          and computer based indexing and formatting; (iii) data capture and
          database management services involving data capture, data
          consolidation and elimination, storage, maintenance, formatting and
          report creation; (iv) claims processing; and (v) integrated solutions,
          which deliver technical services with a focus on document imaging,
          work flow, COLD and document information management systems using
          third party imaging systems.

               F.Y.I. DIRECT: (i) direct mail, which includes direct mail and
          fulfillment services to clients who need rapid, reliable and
          cost-effective methods for making large scale distributions of
          advertising, literature and other information; (ii) full service
          commercial printing, including printing and related services such as
          electronic prepress services, full-color report production of annual
          reports, flyers and catalogs; and (iii) statement processing.

         Cost of services consists primarily of compensation and benefits to
employees providing goods and services to our clients, occupancy costs,
equipment costs and supplies. Our cost of services also includes the cost of
products sold for micrographics supplies and equipment, computer hardware and
software and business imaging supplies and equipment.

         Selling, general and administrative expenses ("SG&A") consist primarily
of: (i) compensation and related benefits to sales and marketing, executive
management, accounting, human resources and other administrative employees; (ii)
other sales and marketing costs; (iii) communications costs; (iv) insurance
costs; and (v) legal and accounting professional fees and expenses.


16
<PAGE>



RESULTS OF OPERATIONS

         The following table sets forth certain items as shown in "Item 6.
Selected Financial Data" expressed as a percentage of total revenue for the
periods indicated:

<TABLE>
<CAPTION>
                                                                                        YEAR ENDED DECEMBER 31,
                                                                                  ------------------------------------
                                                                                     1997        1998        1999
                                                                                     ----        ----        ----
<S>                                                                               <C>            <C>         <C>
Revenue..................................................................            100.0%        100.0%      100.0%
Cost of services.........................................................             63.3          62.1        61.6
Depreciation ............................................................              2.1           2.4         2.5
                                                                                  ----------   --------    --------
          Gross profit...................................................             34.6          35.5        35.9
Selling, general and administrative expenses (1) (2).....................             21.4          22.8        22.2
Gain on sale of assets of subsidiary, net (3)............................              --           (1.8)       --
Amortization (4).........................................................              1.0           2.0         1.3
                                                                                  ----------    --------    --------
Operating income (1) ....................................................             12.2          12.5        12.4
Interest and other expense, net (5)......................................              0.7           0.4         1.1
                                                                                  ----------    --------    --------
Income before income taxes (1) (5).......................................             11.5          12.1        11.3
Provision for income taxes (6)...........................................              4.6           4.8         4.5
                                                                                  ----------    --------    --------
Net income (1) (5) (6)...................................................              6.9%          7.3%        6.8%
                                                                                   =======      ========    ========
</TABLE>


(1)  Gives effect to the  Compensation  Differential.  See Note 2 to
     Consolidated  Financial  Statements of F.Y.I.Incorporated and Subsidiaries.
(2)  Selling, general and administrative expenses for the year ended December
     31, 1998 include charges totaling 1.0% of revenue. See Note 6 of Notes to
     Consolidated Financial Statements of F.Y.I. Incorporated and Subsidiaries.
(3)  Reports the gain on the sale of Leonard. The gain on sale, net of other
     charges included in (2) and (4), was 0.06% of revenue. See Note 6 of Notes
     to Consolidated Financial Statements of F.Y.I. Incorporated and
     Subsidiaries.
(4)  Amortization for the year ended December 31, 1998 includes goodwill
     acceleration of 0.7% of revenue. See Note 6 of Notes to Consolidated
     Financial Statements of F.Y.I. Incorporated and Subsidiaries.
(5)  Interest expense for the year ended December 31, 1997 includes the
     write-off of unamortized debt issuance costs of 0.7% of revenue, or 0.4%
     net of the associated income tax effect. See Note 7 of Notes to
     Consolidated Financial Statements of F.Y.I. Incorporated and Subsidiaries.
(6)  Gives effect to certain tax adjustments related to the taxation of certain
     Founding Companies and Pooled Companies as S corporations or sole
     proprietorships prior to the consummation of the Acquisitions and the tax
     impact of the Compensation Differential in each period. See Note 2 of Notes
     to Consolidated Financial Statements of F.Y.I. Incorporated and
     Subsidiaries.


YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

REVENUE

         Revenue increased 43.4%, from $247.5 million for the year ended
December 31, 1998 to $354.8 million for the year ended December 31, 1999.
This increase was largely due to: (i) revenue from the acquisitions completed
subsequent to December 31, 1998, accounted for under the purchase method of
accounting and their subsequent growth, primarily in the class action claims
processing area; and (ii) internal growth of 13.0% in revenue at the
companies owned greater than one year based on the acquisition anniversary
date. This internal growth was primarily attributable to: (i) an increase in
document conversion services relating to government agencies in the state of
New York; (ii) an increase in healthcare services revenue due to expansion
into additional healthcare institutions throughout the markets we serve; and
(iii) an overall increase in data capture and imaging revenue, partially due
to claims processing services performed.

GROSS PROFIT

         Gross profit increased 45.1%, from $87.8 million for the year ended
December 31, 1998 to $127.3 million for the year ended December 31, 1999,
largely due to the increases in revenue discussed above. Gross profit as a
percentage of revenue increased from 35.5% for the year ended December 31, 1998
to 35.9% for the year ended December 31, 1999.


17

<PAGE>

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

         SG&A increased 39.6%, from $56.3 million, or 22.8% of revenue, for the
year ended December 31, 1998 to $78.6 million, or 22.2% of revenue, for the year
ended December 31, 1999, primarily due to SG&A associated with the acquisitions
subsequent to December 31, 1998. SG&A for the year ended December 31, 1998,
includes the following charges and impairments totaling $2.5 million: (i)
severance payments due on acquisition related employment contracts terminated or
not renewed and other costs, $1.7 million; (ii) facilities closings costs, $0.5
million; and (iii) other write-downs and impairments, $0.3 million. Excluding
these charges, and after giving effect to the Compensation Differential in 1998,
SG&A increased 45.9% from $53.8 million, or 21.8% of revenue, for the year ended
December 31, 1998, to $78.6 million, or 22.2% of revenue, for the year ended
December 31, 1999. This increase as a percentage of revenue was a result of
increased corporate overhead required to manage the consolidated group of
companies. This increase was partially offset by decreased SG&A as a percentage
of revenue in the companies owned greater than one year.

OPERATING INCOME

         Operating income increased 41.8%, from $31.0 million, or 12.5% of
revenue, for the year ended December 31, 1998 to $44.0 million, or 12.4% of
revenue, for the year ended December 31, 1999, largely attributable to the
factors discussed above.

INTEREST AND OTHER EXPENSE

         Interest expense increased 302%, from $1.0 million for the year ended
December 31, 1998 to $4.0 million for the year ended December 31, 1999,
due to the higher outstanding balance related to our credit agreement entered
into in April 1996, with Paribas, as agent, and the lenders named therein (the
"1998 Credit Agreement") in 1999. The outstanding balance on the credit
agreement increased due to cash paid for acquisitions in 1999. The average
interest rate on borrowings decreased from 6.5% in 1998 to 6.4% in 1999.

INCOME BEFORE INCOME TAXES AND PRO FORMA NET INCOME

         Income before income taxes increased 33.3% from $30.0 million for the
year ended December 31, 1998 to $40.0 million for the year ended December 31,
1999, and pro forma net income adjusted for pro forma provision for taxes
increased 33.3% from $18.0 million for the year ended December 31, 1998 to $24.0
million for the year ended December 31, 1999, largely attributable to the
factors discussed above.


YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

REVENUE

          Revenue increased 39.6%, from $177.3 million for the year ended
December 31, 1997 to $247.5 million for the year ended December 31, 1998. This
increase was largely due to: (i) revenue from the acquisitions completed
subsequent to December 31, 1997 accounted for under the purchase method of
accounting; (ii) internal growth of 9.3% in revenue at the companies owned
greater than one year based on the acquisition anniversary date; and (iii)
growth at the companies owned less than one year as reflected in pro forma
internal revenue growth of 14.7% assuming all companies were owned as of January
1, 1997. Internal growth at the companies owned greater than one year was
primarily attributable to: (i) an increase in government services revenue
related to the State of New York document imaging contract; (ii) an increase in
litigation consulting and imaging revenue in California; and (iii) an increase
in healthcare records release services revenue due to expansion into additional
healthcare institutions throughout the markets that we serve.

GROSS PROFIT

         Gross profit increased 43.0% from $61.4 million for the year ended
December 31, 1997 to $87.8 million for the year ended December 31, 1998, largely
due to the increases in revenue discussed above. Gross profit as a


18
<PAGE>

percentage of revenue increased from 34.6% for the year ended December 31,
1997 to 35.5% for the year ended December 31, 1998, primarily due to higher
gross profit margins experienced in the acquisitions accounted for under the
purchase method of accounting added in 1998.

GAIN ON SALE OF ASSETS OF SUBSIDIARY

         In October 1998, we entered into an agreement to exchange certain
assets and related liabilities of Leonard for cash and certain assets and
related liabilities of Copyright, Inc., a Philadelphia-based provider of
healthcare release of information services. The divestiture of Leonard, which
primarily offered archival records storage, was consistent with our strategic
objective of focusing our activities on higher value-added document and
information management and outsourcing solutions. The book value of the net
assets disposed was approximately $4.1 million, and we recorded a gain before
taxes of $4.4 million on the transaction, net of costs associated with the
transaction.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

         SG&A increased 44.4% from $39.0 million, or 22.0% of revenue, for the
year ended December 31, 1997 to $56.3 million, or 22.8% of revenue, for the year
ended December 31, 1998, primarily due to SG&A associated with the acquisitions
subsequent to December 31, 1997. SG&A for the year ended December 31, 1998,
includes the following charges and impairments totaling $2.5 million: (i)
severance payments due on acquisition related employment contracts terminated or
not renewed and other costs, $1.7 million; (ii) facilities closings costs, $0.5
million; and (iii) other write-downs and impairments, $0.3 million. Excluding
these charges, and after giving effect to the Compensation Differential in each
period, SG&A increased 42.0% from $38.0 million, or 21.4% of revenue, for the
year ended December 31, 1997 to $53.8 million, or 21.7% of revenue, for the year
ended December 31, 1998. This increase as a percentage of revenue was a result
of: (i) higher SG&A expenses associated with the acquisitions accounted for
under the purchase method of accounting added in 1998; (ii) increased corporate
overhead required to manage the consolidated group of companies; and (iii) deal
costs related to the acquisition of the Pooled Companies. These increases in
SG&A were partially offset by decreased SG&A as a percentage of revenue in the
companies owned greater than one year.

OPERATING INCOME

         Operating income adjusted for the Compensation Differential increased
43.6% from $21.6 million, or 12.2% of revenue, for the year ended December 31,
1997 to $31.0 million, or 12.5% of revenue, for the year ended December 31,
1998, largely attributable to the factors discussed above.

INTEREST AND OTHER EXPENSE

         Interest expense decreased 15.8% from $1.2 million for the year ended
December 31, 1997 to $1.0 million for the year ended December 31, 1998,
primarily due to the write-off of unamortized debt issue costs related to our
credit agreement in place during 1997. Interest on borrowings increased $0.9
million from $0.5 million in 1997 to $1.4 million in 1998, as our debt levels
increased due to cash paid for acquisitions in 1998. The average interest rate
on borrowings decreased from 8.1% in 1997 to 6.5% in 1998, as we negotiated more
favorable interest terms in early 1998.

INCOME BEFORE INCOME TAXES AND NET INCOME

         Income before income taxes adjusted for the Compensation Differential
increased 47.0% from $20.4 million for the year ended December 31, 1997, to
$30.0 million for the year ended December 31, 1998, and net income adjusted for
both the Compensation Differential and provision for income taxes increased
48.3% from $12.1 million for the year ended December 31, 1997, to $18.0 million
for the year ended December 31, 1998, largely attributable to the factors
discussed above.


19

<PAGE>

FLUCTUATIONS IN QUARTERLY RESULTS OF OPERATIONS

         Revenue from our services shows no significant seasonal variations.
However, service revenue can vary from period to period due to the impact of
specific projects, primarily in the F.Y.I. Legal and F.Y.I. Image segments.
Quarterly results may also vary as a result of the timing of acquisitions and
the timing and magnitude of costs related to such acquisitions.

LIQUIDITY AND CAPITAL RESOURCES

         At December 31, 1999, we had $20.1 million of working capital and $9.4
million of cash. Cash flows provided by operating activities for the year ended
December 31, 1999 were $26.7 million. Net cash provided by operating activities
for the year ended December 31, 1999 was primarily impacted by an increase in
earnings and an increase in accounts payable and accrued liabilities. These
increases were offset in part by an increase in accounts receivable which was
attributable to the increase in revenue for the year. Net cash used in investing
activities was $80.4 million for the year ended December 31, 1999, and consisted
primarily of payments of $63.1 million for acquisitions, net of cash acquired,
and the purchase of property, plant and equipment. Net cash provided by
financing activities was $48.5 million, as we utilized our credit facility to
fund our acquisition program. Net borrowings on the credit facility were $44.0
million for the year.

         At December 31, 1998, we had $37.8 million of working capital and $14.6
million of cash. Cash flows provided by operating activities for the year ended
December 31, 1998 were $19.1 million. Net cash provided by operating activities
for the year ended December 31, 1998 was primarily impacted by (i) an increase
in revenue and a corresponding increase in accounts receivable; and (ii) an
increase in prepaid expenses and other assets. Net cash used in investing
activities was $37.1 million for the year ended December 31, 1998, and was
primarily used for the purchase of property, plant and equipment and payments of
$29.8 million for acquisitions, net of cash acquired. These uses were partially
offset by the $6.6 million received from the sale of the assets of Leonard. Net
cash provided by financing activities was $21.6 million, as we utilized our
credit facility to fund our acquisition program. Net borrowings on the credit
facility were $26.0 million for the year.

         Cash flows provided by operating activities for the year ended December
31, 1997, were $10.0 million. Net cash used in investing activities was $14.5
million for the year ended December 31, 1997, and was primarily used for the
purchase of property, plant and equipment and payments of $8.0 million for
acquisitions, net of cash acquired. Net cash used in financing activities was
$10.1 million.

         In February 1998, we entered into our line of credit with Paribas
(the "1998 Credit Agreement"). Under the 1998 Credit Agreement, we could
borrow on a revolving credit basis loans in an aggregate outstanding
principal amount up to $65.0 million, subject to certain customary borrowing
capacity requirements. In April 1999 and August 1999, the 1998 Credit
Agreement was amended to increase the aggregate outstanding principal limit
to $100.0 million and $125.0 million, respectively. In November 1999, we
further amended the 1998 Credit Agreement, increasing the aggregate principal
limit to $150.0 million. The availability under the 1998 Credit Agreement as
of February 18, 2000 was $46.7 million for acquisitions, working capital and
general corporate purposes. Depending on the mix of stock and cash used to
execute our acquisition program, we may need to seek additional financing
through the public or private sale of equity or debt securities. There can be
no assurance we could secure such financing if and when it is needed or on
terms we deem acceptable. In January 2000, we registered on Form S-4
(Registration No. 333-92981) 3,012,217 shares of common stock for issuance in
our acquisition program (the "Acquisition Shelf") of which all shares were
available at December 31, 1999.

IMPACT OF THE YEAR 2000 ISSUE

         We are aware of the issues associated with the programming code in many
existing computer systems and devices with embedded technology. The "Year 2000"
issue concerns the inability of the information and technology-based operating
systems to properly recognize and process date-sensitive information beyond
December 31, 1999. The conversion from calendar year 1999 to calendar year 2000
occurred without any material disruption to our operations or business systems.
We will continue to monitor any Year 2000 issues, both internally and with third
party dependencies with respect to vendors, suppliers, customers and other
significant business relationships. Such monitoring will be ongoing and
encompassed in normal operations. The total cost incurred to date in the


20
<PAGE>

assessment, evaluation and remediation of the Year 2000 matters was
approximately $4.3 million. We do not anticipate any further material costs
to be incurred related to the Year 2000 problem.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         We do not ordinarily use financial instruments, such as derivatives, to
manage the impact of interest rate changes or other market risks in our
business.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                                           INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>

                                                                                                   PAGE
                                                                                                   ----
<S>                                                                                                <C>
F.Y.I. INCORPORATED AND SUBSIDIARIES

  Report of Independent Public Accountants.....................................................     22


  Consolidated Balance Sheets..................................................................     23


  Consolidated Statements of Operations........................................................     24


  Consolidated Statements of Stockholders' Equity..............................................     25


  Consolidated Statements of Cash Flows........................................................     26


  Notes to Consolidated Financial Statements...................................................     27

</TABLE>
21

<PAGE>



                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders of F.Y.I. Incorporated:

      We have audited the accompanying consolidated balance sheets of F.Y.I.
Incorporated (a Delaware corporation) and subsidiaries (the "Company") as of
December 31, 1998 and 1999, and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the three years in
the period ended December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

      In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
F.Y.I. Incorporated and subsidiaries as of December 31, 1998 and 1999, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1999, in conformity with generally accepted
accounting principles.



                               ARTHUR ANDERSEN LLP

Dallas, Texas,
February 11, 2000

22
<PAGE>



                      F.Y.I. INCORPORATED AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                         ASSETS
                                                                                          DECEMBER 31,
                                                                                     ---------------------
                                                                                       1998           1999
                                                                                       ----           ----
<S>                                                                                  <C>          <C>
CURRENT ASSETS:
Cash and cash equivalents.................................................           $ 14,592     $   9,396
Accounts receivable and notes receivable, less allowance for
  doubtful accounts of $4,705 and $8,835, respectively....................             51,683        82,863
Notes receivable, shareholders-- short term...............................                479           269
Current portion of deferred tax asset.....................................                 --         2,890
Inventories...............................................................              2,408         5,695
Prepaid expenses and other current assets.................................              3,079         5,506
                                                                                   ----------     ---------
          Total current assets............................................             72,241       106,619

PROPERTY, PLANT AND EQUIPMENT, net........................................             29,372        46,512
GOODWILL AND OTHER INTANGIBLES, net of amortization of
  $5,980 and $10,728 respectively.........................................             96,652       212,316
OTHER NONCURRENT ASSETS...................................................              8,705         3,908
                                                                                   ----------     ---------
          Total assets....................................................           $206,970      $369,355
                                                                                     ========      ========

                                     LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable and accrued liabilities..................................           $ 30,095      $ 78,280
Current maturities of long-term obligations...............................              1,258         1,204
Income taxes payable......................................................              2,881         7,022
Current portion of deferred income taxes..................................                214            --
                                                                                   ----------     ---------
          Total current liabilities.......................................             34,448        86,506

LONG-TERM OBLIGATIONS, net of current maturities..........................             31,498        85,172
DEFERRED INCOME TAXES, net of current portion.............................              1,479         2,017
OTHER LONG-TERM OBLIGATIONS...............................................                810        20,651
                                                                                   ----------     ---------
          Total liabilities...............................................             68,235       194,346

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, 1,000,000 shares                                          --            --
  authorized, 0 shares issued and outstanding.............................
Common stock, $.01 par value, 26,000,000 shares authorized, 14,046,725 and
  14,581,639 shares issued and outstanding at
  December 31, 1998 and 1999, respectively................................                140           146
Additional paid-in-capital................................................            107,912       120,179
Retained earnings.........................................................             31,184        55,185
                                                                                   ----------     ---------
                                                                                      139,236       175,510
Less -- Treasury stock, $.01 par value, 36,670 shares at December 31,
  1998 and 1999...........................................................               (501)         (501)
                                                                                   ----------     ---------
          Total stockholders' equity......................................            138,735       175,009
                                                                                   ----------     ---------
          Total liabilities and stockholders' equity......................           $206,970      $369,355
                                                                                     ========      ========
</TABLE>

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

23
<PAGE>

                                          F.Y.I. INCORPORATED AND SUBSIDIARIES

                                          CONSOLIDATED STATEMENTS OF OPERATIONS
                                          (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                                             YEAR ENDED DECEMBER 31,
                                                                                      --------------------------------------
                                                                                         1997         1998         1999
                                                                                         ----         ----         ----
<S>                                                                                   <C>           <C>          <C>
REVENUE.........................................................................        $177,272     $247,462    $354,811
COST OF SERVICES................................................................         112,161      153,815     218,695
DEPRECIATION ...................................................................           3,730        5,889       8,815
                                                                                        --------     --------    --------
  Gross profit..................................................................          61,381       87,758     127,301

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Note 6)...........................          39,000       56,299      78,577
GAIN ON SALE OF ASSETS OF SUBSIDIARY (Note 6)...................................              --       (4,394)         --
AMORTIZATION (Note 6)...........................................................           1,835        4,845       4,748
                                                                                        --------     --------    --------
  Operating income..............................................................          20,546       31,008      43,976

OTHER (INCOME) EXPENSE:
  Interest expense..............................................................           1,919        1,468       4,246
  Interest income...............................................................            (660)        (316)       (423)
  Other (income) expense, net...................................................             (83)        (162)        152
                                                                                        --------     --------    --------

     Income before income taxes.................................................          19,370       30,018      40,001

PROVISION FOR INCOME TAXES......................................................           6,507       10,987      16,000
                                                                                         -------      -------     -------
NET INCOME......................................................................         $12,863      $19,031     $24,001
                                                                                         =======      =======     =======

PRO FORMA DATA (Unaudited -- See Note 2):
  Historical net income.........................................................         $12,863      $19,031     $24,001
  Pro forma compensation differential...........................................           1,044           --          --
  Pro forma provision for income taxes..........................................           1,759        1,020          --
                                                                                         -------      -------     -------
PRO FORMA NET INCOME............................................................         $12,148      $18,011     $24,001
                                                                                         =======      =======     =======

NET INCOME PER COMMON SHARE.....................................................
      BASIC.....................................................................       $    1.07    $    1.42    $    1.70
                                                                                       =========    =========    =========
      DILUTED...................................................................       $    1.05    $    1.39    $    1.60
                                                                                       =========    =========    =========
PRO FORMA NET INCOME PER COMMON SHARE...........................................
      BASIC.....................................................................       $    1.01    $    1.35    $    1.70
                                                                                       =========    =========    =========
      DILUTED...................................................................       $    1.00    $    1.31    $    1.60
                                                                                       =========    =========    =========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING......................................
      BASIC.....................................................................          12,018       13,370       14,149
                                                                                       =========    =========    =========
      DILUTED...................................................................          12,196       13,731       14,990
                                                                                       =========    =========    =========
</TABLE>
     The accompanying notes are an integral part of these consolidated financial
statements.

24
<PAGE>



                            F.Y.I. INCORPORATED AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                               (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                      COMMON STOCK        PREFERRED STOCK      TREASURY STOCK
                                   ------------------    ----------------    ----------------                            TOTAL
                                   SHARES      AMOUNT    SHARES    AMOUNT    SHARES    AMOUNT       APIC       R/E        S/E
                                   ------      ------    ------    ------    ------    ------       ----       ---        --
<S>                              <C>          <C>        <C>      <C>        <C>      <C>        <C>         <C>        <C>
Balance, December 31, 1996...    11,308,726   $   113        --   $    --    36,670   $  (501)   $  74,570   $  9,072   $ 83,254
Pooling-of-interests
   adjustments at January 1,
   1997......................       326,506         3        --        --        --        --          608       (294)       317
Common stock issued in
   connection with
   acquisitions..............       804,128         8        --        --        --        --       13,209         --     13,217
Dividends declared to
   shareholders of pooled
   companies.................            --        --        --        --        --        --           --     (3,680)    (3,680)
Exercise of options, net.....        86,926         1        --        --        --        --        1,533         --      1,534
Capital contributions by
   shareholders of pooled
   companies.................            --        --        --        --        --        --           59         --         59
Net income...................            --        --        --        --        --        --           --     12,863     12,863
                                 ----------   --------   ------   -------    ------   -------     --------    -------   --------
Balance, December 31, 1997...    12,526,286       125        --        --    36,670      (501)      89,979     17,961    107,564
Pooling-of-interests
   adjustments at January 1,
   1998......................       326,659         3        --        --        --        --        1,548     (2,226)      (675)
Common stock issued in
   connection with
   acquisitions..............       634,486         7        --        --        --        --       12,839         --     12,846
Dividends paid to
   shareholders of pooled
   companies.................            --        --        --        --        --        --           --     (3,499)    (3,499)

Capital contributions by
   shareholders of pooled
   companies.................            --        --        --        --        --        --           12         --         12
Exercise of options, net.....       142,770         1        --        --        --        --        3,035         --      3,036
Pooling-of-interests
   adjustments at October 1,
   1998......................       416,524         4        --        --        --        --          499        (83)       420
Net income...................            --        --        --        --                  --           --     19,031     19,031
                                 ----------   --------   ------   -------    ------   -------     --------    -------   --------
Balance, December 31, 1998...    14,046,725       140         --       --    36,670      (501)     107,912     31,184    138,735
Common stock issued in
   connection with
   acquisitions....                 279,879         3        --        --        --        --        7,204         --      7,207
Exercise of awards, net......       255,035         3        --        --        --        --        5,954         --      5,957
S corporation to C
   corporation conversion
  for pooled company.........            --        --        --        --        --        --         (891)        --       (891)
Net income...................            --        --        --        --        --        --           --     24,001     24,001
                                 ----------   --------   ------   -------    ------   -------     --------    -------   --------
Balance, December 31, 1999       14,581,639   $    146       --   $    --    36,670   $  (501)    $120,179    $55,185   $175,009
                                 ==========   ========   ======   =======    ======   =======     ========    =======   ========
</TABLE>

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


25
<PAGE>

                      F.Y.I. INCORPORATED AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                         YEAR ENDED DECEMBER 31,
                                                                                  -----------------------------------
                                                                                     1997         1998         1999
                                                                                     ----         ----         ----
<S>                                                                               <C>            <C>          <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income...................................................................       $12,863      $19,031      $24,001
Adjustments to reconcile net income to net cash provided by
  operating activities:
  Depreciation and amortization..............................................         5,565       10,734       13,563
  Gains from sale of assets of subsidiary....................................            --       (4,394)          --
  Deferred tax (provision) benefit...........................................          (944)       1,454           25
Change in operating assets and liabilities:
  Accounts receivable and notes receivable...................................        (7,324)      (9,964)     (12,436)
  Prepaid expenses and other assets..........................................           477       (3,045)      (1,648)
  Accounts payable and accrued liabilities...................................          (596)       5,295        3,227
                                                                                   --------     --------     --------
     Net cash provided by operating activities...............................        10,041       19,111       26,732

CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from sale of operating company assets.............................            --        6,626           --
  Purchase of property, plant and equipment..................................        (7,637)     (13,896)     (17,298)
  Proceeds from maturity of marketable security..............................           984           --           --
  Distribution from partnership..............................................            60           --           --
  Cash paid for acquisitions, net of cash acquired...........................        (7,956)     (29,834)     (63,113)
                                                                                   ---------     --------     --------
     Net cash used for investing activities..................................       (14,549)     (37,104)     (80,411)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from common stock issuance, net of underwriting
    discounts and other costs................................................           814        2,275        4,750
  Proceeds from short-term obligations.......................................           446           --           --
  Proceeds from long-term obligations........................................         3,000       32,000       86,000
  Cash paid for debt issuance costs..........................................            --         (450)        (329)
  Dividends paid to shareholders of pooled companies.........................        (3,680)      (3,499)          --
  Principal payments on short-term obligations...............................          (262)          --           --
  Principal payments on long-term obligations................................       (10,382)      (8,723)     (41,938)
                                                                                   --------     --------     --------
     Net cash (used in) provided by financing activities.....................       (10,064)      21,603       48,483
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS.........................       (14,572)       3,610       (5,196)
CASH AND CASH EQUIVALENTS, beginning of period...............................        25,554       10,982       14,592
                                                                                   --------     --------     --------
CASH AND CASH EQUIVALENTS, end of period.....................................       $10,982      $14,592     $  9,396
                                                                                   ========     ========     ========
SUPPLEMENTAL DATA:
  Cash paid for:
    Income taxes.............................................................       $ 7,565      $10,875      $14,959
    Interest.................................................................       $   468      $ 1,261      $ 4,019
NONCASH FINANCING TRANSACTIONS:
  Debt assumed in acquisitions...............................................       $ 8,030      $ 2,993      $ 9,154

</TABLE>

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


26
<PAGE>



                      F.Y.I. INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND BASIS OF PRESENTATION:

         F.Y.I. Incorporated (the "Company" or "F.Y.I.") was founded in
September 1994, to create a national, single source provider of document and
information outsourcing solutions to document and information intensive
industries, including: healthcare, law, banking, insurance, retailing, high tech
manufacturing and government. We acquired seven document management services
businesses (the "Founding Companies") simultaneously with the closing of our
initial public offering (the "IPO") on January 26, 1996, and effectively began
operations at that time. The consideration for the Founding Companies consisted
of a combination of cash and common stock (the "Common Stock") of our Company.

         Since the IPO, we acquired nine companies in transactions that were
accounted for as poolings-of-interests: (i) The Rust Consulting Group, Inc.
("Rust") in December 1996; (ii) MAVRICC Management Systems, Inc. and a related
company, MMS Escrow and Transfer Agency, Inc. (collectively, "MAVRICC") in March
1997; (iii) Input of Texas, Inc. ("Input") in March 1997; (iv) Micro Publishing
Systems, Inc. ("MPS") in December 1997; (v) Lifo Systems, Inc. ("Lifo") in
February 1998; (vi) Creative Mailings, Inc. ("CMI") in September 1998; (vii)
Economic Research Services ("ERS") in October 1998; (viii) TCH Mailhouse, Inc.
and G&W Enterprise, Inc. (collectively, "TCH"); in December 1998; and (ix)
Advanced Digital Graphics, Inc. ("ADG") in December 1998 (collectively, the
"Pooled Companies"). The consolidated financial statements for all periods
presented have been restated to include the accounts of MAVRICC, Input, CMI and
ERS. Our consolidated financial statements were not restated for the Rust, MPS,
and Lifo acquisitions for the periods prior to January 1, 1996, 1997 and 1998,
respectively, due to their financial immateriality. Periods presented were also
not restated prior to October 1, 1998, for the acquisitions of TCH and ADG due
to their financial immateriality. The Pooled Companies and our Company were not
under common control or management during the periods prior to their respective
mergers. The results of operations for the periods presented may not be
indicative of the results in the future because of (i) the impact of
acquisitions recorded as purchases, whose results are only included subsequent
to the purchase date; and (ii) the impact of acquisitions recorded as
poolings-of-interests, whose predecessor companies were not under common control
or management.

         Subsequent to the IPO and through December 31, 1999, we acquired 45
additional companies in transactions accounted for as purchases. Our results of
operations include the results of these acquisitions from the date of their
respective acquisitions.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

CASH AND CASH EQUIVALENTS

         We consider highly liquid investments with original maturities of three
months or less to be cash equivalents. Cash equivalents are carried at cost,
which approximates market value.

FUNCTIONAL CURRENCY AND FOREIGN CURRENCY TRANSACTIONS

         Our functional currency and that of all of our operating companies is
the U.S. dollar. Certain of our operating companies conduct transactions in
foreign currencies. Foreign currency transaction gains and losses are recorded
as other income and expense on the income statement.

PROPERTY, PLANT AND EQUIPMENT

         Property, plant and equipment are recorded at cost. Depreciation is
computed using the straight-line method over the estimated useful lives of the
assets. Leasehold improvements are depreciated over the lesser of the estimated
useful life or the term of the lease.


27

<PAGE>

INTANGIBLE ASSETS

         Intangible assets consist primarily of excess purchase price over net
assets, which are amortized over periods not to exceed 30 years. In conformance
with Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of," our management continually evaluates whether events and circumstances
indicate the remaining estimated useful life of intangible assets may warrant
revisions or that the remaining balance of intangibles or other long-lived
assets may not be recoverable. To make this evaluation, management uses an
estimate of undiscounted net income over the remaining life of the intangibles
or other long-lived assets.

REVENUE RECOGNITION

         Revenue is recognized when the services are rendered, or products are
delivered to our customers. Unearned revenue represents certain services which
are billed in advance.

INCOME TAXES

         Income taxes are accounted for using the asset and liability method
pursuant to SFAS No. 109, "Accounting for Income Taxes." Deferred taxes are
recognized for tax consequences of temporary differences by applying enacted
statutory tax rates applicable in future years to differences between the
financial statement carrying amounts and the tax bases of existing assets and
liabilities.

NET INCOME PER SHARE

         Net income per common share has been computed in accordance with SFAS
No. 128, "Earnings Per Share," which requires the disclosure of basic and
diluted net income per share. Basic net income per share has been computed by
dividing income by the weighted average number of common shares outstanding for
the period. Diluted net income per share has been computed by dividing income by
the weighted average number of common shares and common stock equivalents
outstanding for the period.

USE OF ESTIMATES IN FINANCIAL STATEMENTS

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

RECLASSIFICATIONS

         Certain prior year amounts have been reclassified to make their
presentation consistent with the current year.

CONSOLIDATION

         The accompanying financial statements and related notes to consolidated
financial statements include the accounts of F.Y.I. Incorporated and our
subsidiaries. All significant intercompany balances and transactions have been
eliminated.

PRO FORMA NET INCOME (UNAUDITED)

         We acquired the Pooled Companies in transactions that were accounted
for as poolings-of-interests. The Pooled Companies were managed through their
acquisition dates as independent private companies and represent a variety of
tax structures. Therefore, selling, general and administrative expenses for the
historical periods reflect compensation and related benefits that the former
owners have received from the business during those periods. In connection with
the acquisitions, the owners may have entered into employment agreements that
provide for

28

<PAGE>

compensation and benefits at levels lower than the historical amounts (the
"Compensation Differential"). The unaudited pro forma data present
compensation at the level the owners have agreed to receive subsequent to the
acquisition. In addition, the pro forma data presents the incremental
provision for income taxes as if all entities had been subject to federal and
state income taxes and the related income tax impact of the Compensation
Differential discussed above.

3. ALLOWANCE FOR DOUBTFUL ACCOUNTS AND NOTES RECEIVABLE:

       The activity in the allowance for doubtful accounts and notes receivable
is as follows (in thousands):

<TABLE>
<CAPTION>

                                              BALANCE AT                 CHARGED TO                  BALANCE
                                               BEGINNING      BALANCE     COSTS AND                 AT END OF
                                               OF PERIOD     ACQUIRED     EXPENSES    WRITE-OFFS     PERIOD
                                             -----------     --------    ----------   ----------    ---------
<S>                                          <C>             <C>         <C>          <C>           <C>
Twelve months ended December 31, 1997......    $  1,531      $  2,046     $  1,647    $  1,868      $  3,356
                                               ========      ========     ========    ========      ========
Twelve months ended December 31, 1998......    $  3,356      $    363     $  3,262    $  2,276      $  4,705
                                               ========     =========     ========    ========      ========
Twelve months ended December 31, 1999......    $  4,705      $  1,660     $  6,325    $  3,855      $  8,835
                                               ========      ========     ========    ========      ========

</TABLE>

4. PROPERTY, PLANT AND EQUIPMENT:

       Property, plant and equipment consist of the following (in thousands):

<TABLE>
<CAPTION>


                                                                 ESTIMATED                DECEMBER 31,
                                                                USEFUL LIVES       -------------------
                                                                  IN YEARS         1998          1999
                                                                  --------         ----          ----
<S>                                                             <C>               <C>        <C>
Land......................................................          N/A             $934     $      934
Buildings and improvements................................          7--18          3,172          3,991
Leasehold improvements....................................     Life of lease       2,830          3,563
Vehicles..................................................          5--7           2,022          2,500
Machinery and equipment...................................          5--15         25,371         35,367
Computer equipment and software...........................          3--7          18,671         30,596
Furniture and fixtures....................................          5--15          2,485          3,896
                                                                                --------     ----------
                                                                                  55,485         80,847
Less-- Accumulated depreciation and amortization..........                        26,113         34,335
                                                                                --------      ---------
                                                                                 $29,372       $ 46,512
                                                                                 =======       ========
</TABLE>


5. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES:

         Accounts payable and accrued liabilities consist of the following (in
thousands):

<TABLE>
<CAPTION>

                                                                               DECEMBER 31,
                                                                         -----------------------
                                                                               1998         1999
                                                                         ----------     --------
<S>                                                                      <C>            <C>
 Accounts payable and accrued liabilities...............................    $11,254     $ 24,253
 Accrued compensation and benefits......................................      9,338       12,683
 Customer deposits......................................................      4,234        3,327
 Unearned revenue.......................................................      1,968        8,641
 Accrued liabilities from acquisitions..................................      2,858       29,017
 Accrued professional fees..............................................        443          359
                                                                         ----------      -------
                                                                            $30,095      $78,280
                                                                         ==========      =======
</TABLE>


29
<PAGE>

6. BUSINESS COMBINATIONS:

1999 ACQUISITIONS

     During 1999, we acquired 12 document management businesses, all of which
were accounted for as purchases. These acquisitions were Northern Minnesota
Medical Records Services, Inc., PMI Imaging Systems, Inc., Quality Data
Conversions, Inc., MSI Imaging Solutions, Inc., Information Management Services,
Inc., Managed Care Professionals, Inc., American Economics Group, Inc., Data
Entry and Informational Services, Inc., Rust Consulting, Inc., Newport Beach
Data Entry, Inc., Copy Right, Inc. and Exigent Computer Group, Inc. (the "1999
Acquisitions"). The aggregate consideration paid for the acquisitions consisted
of $66.8 million in cash and 255,626 shares of common stock. The preliminary
allocation of the purchase price is set forth below (in thousands):
<TABLE>
<S>                                                                                <C>
 Consideration Paid.....................................................           $73,811
 Estimated Fair Value of Tangible Assets................................            34,069
 Estimated Fair Value of Liabilities....................................            30,603
 Goodwill...............................................................            70,345
</TABLE>

         The weighted average fair market values of the shares of common stock
used in calculating the consideration paid was $25.28 per share, which
represents a 20% discount from the average trading price of the common stock
based on the length and type of restrictions in the purchase agreements.

         The estimated fair market values reflected above are based on
preliminary estimates and assumptions and are subject to revision. In
management's opinion, the preliminary allocations are not expected to be
materially different than the final allocations. Certain of the acquisitions are
subject to adjustments in their overall consideration based upon performance
against specified earning targets over one to three year periods.


1998 ACQUISITIONS

     During 1998, we acquired 13 document management businesses, eight of which
were accounted for as purchases (the "Purchased Companies") and five of which
were accounted for under the pooling-of-interests method. The eight acquisitions
accounted for as purchases were Medicopy, Inc. ("Medicopy"), Associate Record
Technician Services, Inc. ("ARTS"), DeBari Associates, Inc. ("DeBari"), ACT
Medical Record Services, Inc. ("ACT"), Eagle Legal Services, Inc. ("Eagle"),
Doctex, Inc. ("Doctex"), Copyright, Inc. ("Copyright"), and certain assets of
Olicon Imaging Systems, Inc. ("Radiology"). The aggregate consideration paid
for the Purchased Companies consisted of $187.2 million in cash and 644,762
shares of common stock. The preliminary allocation of the purchase price is
set forth below (in thousands):

<TABLE>
<S>                                                                           <C>
Consideration Paid...................................................         $ 32,855
Estimated Fair Value of Tangible Assets..............................            7,925
Estimated Fair Value of Liabilities..................................            8,754
Goodwill.............................................................           33,684
</TABLE>

         The weighted average fair market values of the shares of common stock
used in calculating the consideration paid was $20.28 per share which
represented a 20% discount from the average trading price of the common stock
based on the length and type of restrictions in the purchase agreements.

         The estimated fair market values reflected above are based on
preliminary estimates and assumptions and are subject to revision. In
management's opinion, the preliminary allocations are not expected to be
materially different than the final allocations. Certain of the acquisitions are
subject to additional consideration based upon achievement of specified earning
targets over a one to three year period.

         The acquisitions of CMI in September 1998 and ERS in October 1998
for 745,000 and 835,000 shares of common stock, respectively, were accounted
for as poolings-of-interests. The consolidated financial statements for all
periods presented have been restated to include the accounts of CMI and ERS.
Pro forma net income reflects adjustments for the Compensation Differential
and the related income tax effect and the incremental provision for income
taxes as if all entities had been subject to federal and state income taxes.


30
<PAGE>

         The acquisition of Lifo in February 1998 for 326,659 shares of common
stock was accounted for as a pooling-of-interests. Our consolidated financial
statements were not restated for periods prior to January 1, 1998, due to the
financial immateriality of Lifo.

         The acquisitions of TCH and ADG in December 1998 for 416,524 shares of
common stock were accounted for as poolings-of-interests. Our consolidated
financial statements were not restated for periods prior to October 1, 1998, due
to the financial immateriality of TCH and ADG.

1998 DISPOSITIONS AND OTHER CHARGES

         In October 1998, we entered into an agreement to exchange certain
assets and related liabilities of Leonard Archives Acquisition Corp.
("Leonard") for cash and certain assets and related liabilities of Copyright,
Inc., a Philadelphia-based provider of healthcare release of information
services. The divestiture of Leonard, which primarily offered archival records
storage, was consistent with our strategic objective of focusing our activities
on higher value-added document and information management and outsourcing
solutions. The book value of the net assets disposed was approximately $4.1
million, and we recorded a gain of $4.4 million on the transaction, net of costs
associated with the transaction.

         Also in the fourth quarter, we recorded the write-down of certain
intangible and fixed assets and recorded severance and other costs. The goodwill
impairments related to the Computer Central Corporation, Microfilm Associates,
Ltd. and Octo, Inc. acquisitions and a customer list associated with a Founding
Company acquisition in which the customer base associated with the intangible
asset had deteriorated to the extent that the assets were considered impaired
under SFAS 121. The severance represented payments due on acquisition-related
employment contracts terminated or not renewed. The charges totaling $4.3
million are presented in the consolidated statement of operations as follows:
(i) acceleration of goodwill amortization, $1.8 million; (ii) accrual for
severance and other costs, $1.7 million; (iii) facilities closings costs, $0.5
million; and (iv) other write-downs and impairments, $0.3 million. The gain on
sale of the assets of Leonard, net of the above charges, was $145,000 before
taxes.

1997 ACQUISITIONS

         During 1997, we acquired 11 document management businesses, eight of
which were accounted for as purchases and three of which were accounted for
under the pooling-of-interests method. The eight acquisitions accounted for as
purchases were Acadian Consultants, Inc., Computer Central Corporation,
Deliverex of San Francisco, Information Management Corporation, Major Legal
Services, Quality Copy Service, QCSInet, Inc. and affiliates, APS Services, and
ZipShred, Inc. and ZipShred of America, LLC . The aggregate consideration paid
for these eight acquisitions consisted of $9.5 million in cash and 737,935
shares of common stock. The preliminary allocation of the purchase price is set
forth below (in thousands):
<TABLE>
<S>                                                                          <C>
 Consideration Paid.......................................................   $21,248
 Estimated Fair Value of Tangible Assets..................................     8,153
 Estimated Fair Value of Liabilities......................................    11,932
 Goodwill.................................................................    25,027
</TABLE>

         The weighted average fair market values of the shares of common stock
used in calculating the consideration paid was $16.79 per share which
represented a 30-35% discount from the average trading price of the common stock
based on the length and type of restrictions in the purchase agreements.

         The acquisitions of MAVRICC and Input in March 1997, for 820,000 and
263,636 shares of common stock, respectively, were accounted for as
poolings-of-interests. The consolidated financial statements for all periods
presented have been restated to include the accounts of MAVRICC and Input.

         The acquisition of MPS in December 1997, for 326,506 shares of common
stock was accounted for as a pooling-of-interests. Our consolidated financial
statements were not restated for periods prior to January 1, 1997, due to the
financial immateriality of MPS.


31
<PAGE>

CONTINGENT CONSIDERATION

         Certain of our acquisitions are subject to adjustments in their
overall consideration based upon the achievement of specified earning targets
over one to three year periods. During 1999, we paid consideration of $0.6
million in cash and 24,740 shares of common stock at an average price of
$30.36 per share in relation to contingent consideration agreements that have
been settled. Based upon the evaluation of cumulative earnings through
December 31, 1999, against the specified earnings targets, we have accrued
aggregate contingent consideration of approximately $44.4 million, of which
$25.1 million is classified as accounts payable and accrued liabilities on
our balance sheet; the remaining $19.3 million is classified as other
long-term obligations. All of the periods applicable for the earnout targets
have not been completed, and the amounts paid at the conclusion are likely to
be different from amounts presently accrued.

INTANGIBLE ASSETS

         All intangibles are considered enterprise goodwill. Based on the
historical profitability of the purchased companies and trends in the legal,
healthcare and other industries to outsource document management functions in
the foreseeable future, the enterprise goodwill is being amortized over periods
not to exceed 30 years. Management continually evaluates whether events and
circumstances indicate that the remaining estimated useful life of intangible
assets may warrant revisions or that the remaining balance of intangibles or
other long-lived assets may not be recoverable. To make this evaluation,
management uses an estimate of undiscounted net income over the remaining life
of the intangibles or other long-lived assets. The goodwill associated with a
majority of our acquisitions is not deductible for income tax purposes.

PRO FORMA FINANCIAL DATA

         Set forth below are unaudited pro forma financial data for the years
ended December 31, 1998 and 1999. The unaudited pro forma data give effect to:
(i) the 1999 Acquisitions and the 1998 acquisitions of ACT, Medicopy, ARTS,
DeBari, Eagle, Doctex, Copyright, Radiology, TCH and ADG; and (ii) compensation
and tax adjustments for all transactions as if these transactions had occurred
on January 1, 1998.

<TABLE>
<CAPTION>
                                                            PRO FORMA YEAR ENDED
                                                            --------------------
                                                                DECEMBER 31,
                                                                ------------
                                                           1998              1999
                                                           ----              ----
                                                      (UNAUDITED, IN THOUSANDS, EXCEPT
                                                               PER SHARE DATA)
  <S>                                                   <C>              <C>
  Revenue.......................................        $ 346,938        $ 396,465
  Income before income taxes....................           40,161           47,799
  Net income....................................           24,097           28,680

  Net income per common share:
    Basic.......................................        $    1.75        $    1.99
    Diluted.....................................        $    1.71        $    1.88

  Weighted average common shares outstanding:
    Basic.......................................           13,751           14,403
    Diluted.....................................           14,112           15,244
</TABLE>

         The pro forma information is provided for informational purposes only
and does not purport to present our results of operations had the transactions
assumed therein occurred on or as of the dates indicated, nor are they
necessarily indicative of the results of operations which may be achieved in the
future.


32
<PAGE>

7. CREDIT FACILITIES:

LONG-TERM OBLIGATIONS

         Long-term obligations consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                                                      DECEMBER 31,
                                                                                   ---------------------
                                                                                   1998             1999
                                                                                   ----             ----
<S>                                                                                <C>            <C>
     Line of credit, expiring at March 2003, interest at prime or the
        Eurodollar rate plus 0.5% (5.56% to 7.75%) at December 31,
        1998, and interest at prime  or the Eurodollar rate plus
        0.75% (5.50% to 7.19%) at December 31, 1999......................          $28,000        $82,000
    Industrial Revenue Bonds: Variable Rate (3.4% at December 31, 1998 and 3.1%
       at December 31, 1999) Demand/Fixed Rate Revenue Bonds, Prince George's
       County, Maryland; due beginning in 1996 through 2014 secured by all real
       estate equipment and other tangible property of a subsidiary of the
       Company...........................................................            2,244          2,144

    All other obligations.................................................           2,512          2,232
                                                                                   -------        -------
          Total...........................................................          32,756         86,376
    Less-- Current maturities of long-term obligations....................           1,258          1,204
                                                                                   -------        -------
          Total long-term obligations.....................................         $31,498        $85,172
                                                                                   =======        =======
</TABLE>

         In February 1998, we entered into a credit agreement (the "1998 Credit
Agreement") with Paribas and Bank of America Texas, N.A., as co-agents and
lenders named therein. Under the 1998 Credit Agreement, we and our subsidiaries
could borrow on a revolving credit basis loans in an aggregate outstanding
principal amount up to $65.0 million, subject to certain customary borrowing
capacity requirements. In April 1999 and August 1999, the 1998 Credit Agreement
was amended to increase the aggregate outstanding principal limit to $100.0
million and $125.0 million, respectively. In November 1999, we further amended
the 1998 Credit Agreement, increasing the aggregate principal limit to $150.0
million. The 1998 Credit Agreement is secured by the assets and/or stock of our
Company and our subsidiaries. The availability under the 1998 Credit Agreement
as of December 31, 1999, was $55.7 million.

         The commitment to fund revolving credit loans under the 1998 Credit
Agreement expires February 18, 2001. The annual interest rate applicable to
borrowings under this facility is, at our option, (i) the prime rate or (ii)
grid pricing ranging from 0.5% to 1.50% plus the Eurodollar rate based on the
ratio of debt to EBITDA (as defined in the 1998 Credit Agreement). The 1998
Credit Agreement requires mandatory prepayments in certain circumstances. The
outstanding principal balance of revolving credit loans is due and payable on
March 31, 2003.

         We also have outstanding an irrevocable letter of credit in the amount
of approximately $2.3 million to serve as guarantee for periodic principal and
interest payments related to the Industrial Revenue Bonds. In January 1998, we
entered into a letter of credit in the amount of $10.0 million to serve as a
guarantee for performance under a contract with New York State Workers
Compensation Board. In April 1999, the amount of the letter of credit was
reduced to $5.0 million. Additionally, in November 1999, we entered into a
letter of credit in the amount of $5.0 million to serve as a guarantee for
performance under a contract with the New York State Teachers' Retirement
System.

         We capitalized certain costs associated with our 1996 Credit Agreement.
The unamortized costs of approximately $1.2 million were expensed in the fourth
quarter of 1997 when we agreed to terms on the 1998 Credit Agreement.

         The weighted average interest rate on long-term obligations at December
31, 1998 and 1999, was 6.0% and 6.4%, respectively. The 1998 Credit Agreement
contains certain reporting requirements and financial covenants, including
requirements that we maintain minimum levels of net worth and other financial
ratios. As of December 31, 1998, we had complied with all loan covenants. In the
fourth quarter of 1999 we exceeded our covenant for allowable capital
expenditures. We received a waiver for this covenant for the period ended
December 31, 1999.


33
<PAGE>

MATURITIES OF LONG-TERM OBLIGATIONS

         As of December 31, 1999, maturities of long-term obligations are as
follows (in thousands):

<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31,
<S>                                                                                 <C>
      2000..................................................................        $  1,204
      2001..................................................................          19,344
      2002..................................................................          14,428
      2003..................................................................          49,334
      2004..................................................................             122
      Thereafter............................................................           1,944
                                                                                   ---------
      Total.................................................................        $ 86,376
                                                                                    ========
</TABLE>

8. LEASE COMMITMENTS:

         Our operating companies lease various office buildings, machinery,
equipment and vehicles. Future minimum lease payments under capital leases and
noncancelable operating leases are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                    YEAR ENDED
                                                                                DECEMBER 31, 1999
                                                                          ----------------------------
                                                                             CAPITAL         OPERATING
 YEARS ENDING DECEMBER 31,                                                   LEASES           LEASES
 -------------------------                                                ----------       -----------
<S>                                                                       <C>              <C>
      2000.............................................................   $    1,059       $  13,518
      2001.............................................................          539          11,512
      2002.............................................................          217           9,008
      2003.............................................................           91           6,156
      2004.............................................................            0           3,918
      Thereafter.......................................................            0           5,054
                                                                         -----------       ---------
      Total minimum lease payments.....................................        1,906       $  49,166
                                                                                           =========
      Less-- Amounts representing interest.............................          242
                                                                         -----------
      Net minimum lease payments.......................................        1,664
      Less-- Current portion of obligations under capital leases.......          939
                                                                         -----------
      Long-term portion of obligations under capital leases............  $       725
                                                                         ===========
</TABLE>

         Rent  expense  for all  operating  leases  for the  years  ended
December  31,  1997,  1998  and 1999 was approximately $8.7 million, $11.7
million, and $15.1 million, respectively.

9. INCOME TAXES:

         The provision for federal and state income taxes consists of the
following (in thousands):

<TABLE>
<CAPTION>
                                                                       YEAR ENDED DECEMBER 31,
                                                        ------------------------------------------------------
                                                               1997              1998              1999
                                                               ----              ----              ----
<S>                                                        <C>               <C>               <C>
Federal --
    Current.......................................         $  5,314          $  10,453         $  13,301
    Deferred......................................              902             (1,233)              (21)
State --
    Current.......................................              249              1,988             2,724
    Deferred......................................               42               (221)               (4)
                                                           --------          ---------         ---------
                                                           $  6,507          $  10,987         $  16,000
                                                           ========          =========         =========
</TABLE>


34
<PAGE>

         The differences in income taxes provided and the amounts determined by
applying the federal statutory tax rate to income before income taxes result
from the following (in thousands):

<TABLE>
<CAPTION>
                                                                      YEAR ENDED DECEMBER 31,
                                                             -----------------------------------------
                                                             1997               1998              1999
                                                             ----               ----              ----
<S>                                                          <C>               <C>             <C>
Tax at statutory rate....................                     $6,586           $10,506         $13,970
  Add (deduct)--
     State income taxes..................                        623             1,148           1,768
     Nondeductible expenses..............                        459               920             875
     Income (loss) of S corporations.....                     (1,161)           (1,130)           (599)
     Other...............................                         --              (457)            (14)
                                                              ------           -------         -------
                                                              $6,507           $10,987         $16,000
                                                              ======           =======         =======
</TABLE>
         The components of deferred income tax liabilities and assets are as
follows (in thousands):

<TABLE>
<CAPTION>
                                                                          DECEMBER 31,
                                                                  ----------------------------
                                                                      1998           1999
                                                                      ----           ----
<S>                                                               <C>             <C>
Deferred income tax liabilities --
  Tax over book depreciation and amortization...............          $1,479      $ 2,017
  Cash to accrual differences, net..........................           1,280          712
  Other, net................................................             947          860
                                                                     -------      -------
      Total deferred income tax liabilities.................           3,706        3,589
Deferred income tax assets--
  Allowance for doubtful accounts...........................           1,723        3,058
  Accrued liabilities.......................................             277        1,369
    Other reserves, net.....................................              13           35
                                                                     -------      -------
      Total deferred income tax assets......................           2,013        4,462
                                                                     -------      -------

Total net deferred income tax (liabilities)/assets..........         $(1,693)     $   873
                                                                     =======      =======

Current portion of deferred income tax (liabilities)/assets.         $  (214)     $ 2,890
Long-term deferred tax assets/(liabilities).................          (1,479)      (2,017)
                                                                     -------      -------
                                                                     $(1,693)     $   873
                                                                     =======      =======
</TABLE>

10. STOCKHOLDERS' EQUITY:

STOCK OPTIONS AND WARRANTS:

         At December 31, 1999, we had one stock-based compensation plan, the
1995 Stock Option Plan, as amended (the "Plan"), which is described below. We
have also issued warrants (the "Warrants") to certain key employees and
employees of our subsidiaries. We refer to these options and warrants
collectively as "Awards." We apply APB Opinion 25 and related interpretations
in accounting for awards. Awards are granted at the market price of the
common stock on the date of grant. Accordingly, no compensation cost has been
recognized for the awards. Had compensation cost been determined based upon
the fair value at grant dates for these awards consistent with the method of
SFAS No. 123, "Accounting for Stock Based Compensation," our net income and
earnings per share would have been as follows (in thousands, except for per
share data):

<TABLE>
<CAPTION>
                                                                            DECEMBER 31,
                                                                ------------------------------------
                                                                 1997           1998           1999
                                                                 ----           ----           ----
<S>                                                             <C>            <C>            <C>
Net income under SFAS 123............................           $11,439        $16,626        $20,914
Diluted net income per common share under SFAS 123...             $0.94          $1.21          $1.40
Actual net income....................................           $12,863        $19,031        $24,001
Actual diluted net income per common share...........             $1.05          $1.39         $1.60
</TABLE>

         The fair value of the Awards was estimated on the date of the grant
using the Black-Scholes option pricing model with the following assumptions for
1997: risk free interest rate ranging from 5.7% to 6.6%, no dividend yield,


35
<PAGE>

expected life of three years, and volatility of 33%. The following
assumptions were used for 1998: risk free interest rate ranging from 4.0% to
5.7%, no dividend yield, average expected life of three years, and volatility
of 40%. The following assumptions were used for 1999: risk free interest rate
ranging from 4.5% to 6.1%, no dividend yield, average expected life of three
years, and volatility of 35%.

         In October 1995, our Board of Directors and our stockholders approved
the Plan, which became effective on the date of the IPO. The Plan provides
awards of options to purchase common stock and may include incentive stock
options ("ISOs") and/or non-qualified stock options.

         The Plan also provides for automatic option grants to directors who are
not otherwise employed by us or our subsidiaries. Upon commencement of service
(or upon agreeing to serve in the case of the initial non-employee directors), a
non-employee director will receive a non-qualified option to purchase 10,000
shares of common stock, and continuing non-employee directors will receive
annual options to purchase 5,000 shares of common stock. Options granted to
non-employee directors become exercisable one-third on the date of grant and
one-third on each of the next two anniversaries of the date of grant.
Non-employee directors' options have a term of five years from the date of
grant.

         The maximum number of shares of common stock that may be subject to
outstanding options under the Plan, determined immediately after the grant of
any option, is the greater of 650,000 shares or 16% of the aggregate number of
shares of our common stock outstanding provided, however, that options to
purchase no more than 650,000 shares of common stock may be granted as ISOs. At
December 31, 1998 and 1999, approximately 144,000 and 417,000 shares,
respectively, were available for issuance.

         We had 2,814,284 and 2,830,410 Awards outstanding at December 31, 1998,
and 1999, respectively. These Awards, other than those granted to employee
directors, have 10-year expirations and various vesting schedules.

<TABLE>
<CAPTION>
                                                                              AWARDS OUTSTANDING
                                                                    ---------------------------------------
                                                                                         WEIGHTED AVERAGE
                                                                           SHARES         EXERCISE PRICE
                                                                    ---------------        ------------
                                                                      (IN THOUSANDS)
<S>                                                                 <C>                  <C>
 Balance, December 31, 1996...................................                  856        $      15.41
 Granted......................................................                1,087        $      21.85
 Exercised....................................................                   87        $       14.28
 Forfeited....................................................                   42        $      19.20
                                                                    ---------------        ------------
 Balance, December 31, 1997...................................                1,814        $      19.23
 Granted......................................................                1,205        $      26.53
 Exercised....................................................                  143        $      17.22
 Forfeited....................................................                   62        $      21.22
                                                                    ---------------        ------------
 Balance, December 31, 1998...................................                2,814        $      22.42
 Granted......................................................                  480        $      27.95
 Exercised....................................................                  255        $      18.62
 Forfeited....................................................                  209        $      23.69
                                                                    ---------------        ------------
 Balance, December 31, 1999...................................                2,830        $      23.60
                                                                    ---------------        ------------
 Exercisable, December 31, 1999...............................                1,278        $      20.74
                                                                    ===============        ============
</TABLE>


36
<PAGE>

         The following table summarizes information about Awards granted under
the Plan that were outstanding at December 31, 1999:

<TABLE>
<CAPTION>
                                    AWARDS OUTSTANDING                          AWARDS EXERCISABLE
                      -----------------------------------------------   -------------------------------
                         NUMBER      WEIGHTED-AVERAGE      WEIGHTED        NUMBER
      RANGE OF        OUTSTANDING       REMAINING          AVERAGE      EXERCISABLE    WEIGHTED AVERAGE
  EXERCISE PRICES     AT 12/31/99    CONTRACTUAL LIFE   EXERCISE PRICE  AT 12/31/99     EXERCISE PRICE
  ---------------     -----------    ----------------   --------------  -----------    ---------------
<S>                   <C>            <C>                <C>             <C>            <C>
  $10.00-$21.00          679,000            5.71            $16.67         512,640          $15.44
  $21.50-$23.50          811,997            8.22            $22.54         450,716          $22.19
  $23.75-$28.00          652,425            8.83            $25.83         177,995          $25.27
  $28.50-$35.75          686,988            8.88            $29.60         136,638          $29.88
</TABLE>

NET INCOME PER SHARE

         Basic and diluted net income per share were computed in accordance with
SFAS No. 128, "Earnings Per Share." The differences between basic weighted
average common shares and diluted weighted average common shares and common
stock equivalents are as follows (in thousands):
<TABLE>
<CAPTION>

                                                                  YEAR ENDED DECEMBER 31,
                                               --------------------------------------------------------------
                                                      1997                 1998               1999
                                                      ----                 ----               ----
<S>                                                 <C>                   <C>               <C>
Basic weighted average common shares....             12,018                13,370            14,149
Weighted average options and warrants...                178                   336               486
Other contingent consideration..........                 --                    25               355
                                                     ------                ------            ------
Diluted weighted average common shares..             12,196                13,731            14,990
                                                     ======                ======            ======
</TABLE>

11. EMPLOYEE BENEFIT PLANS:

         We established a defined contribution plan (the "401(k) plan") in
January 1997. The 401(k) plan covers our employees and the employees of some
of our subsidiaries. The employees must be at least 21 years of age and work
at least 1,000 hours per year with one year of service to be eligible for the
plan. In addition, we established a non-qualified plan in December 1996. The
non-qualified compensation plan permits eligible officers and certain highly
compensated employees to defer a portion of their compensation. Contributions
to both the 401(k) plan and the non-qualified compensation plan consist of
employee pre-tax contributions determined as a percentage of each
participating employee's compensation. We may make contributions to either or
both plans at the discretion of our Board of Directors. We have not made any
contributions to the 401(k) plan or the deferred compensation plan. We offer
no post-employment or post-retirement benefits.

         Certain of the operating companies have qualified defined contribution
employee benefit plans (the "Plans"), the majority of which allow for voluntary
pre-tax contributions by employees. The subsidiaries pay all general and
administrative expenses of the Plans and, in some cases, the subsidiaries make
matching and discretionary contributions to the Plans. The subsidiaries offer no
post-employment or post-retirement benefits. The expense incurred by us related
to the Plans was approximately $449,000, $610,000, and $887,000 for the years
ended December 31, 1997, 1998 and 1999 respectively.

12. RELATED PARTY TRANSACTIONS:

LEASING TRANSACTIONS

         Certain of our operating companies lease their operating facilities,
along with certain equipment, from selling parties who remained our employees or
directors. These leases are for various lengths and annual amounts. The rental
expense for these operating leases for the years ended December 31, 1997, 1998
and 1999 was approximately $834,000, $647,000 and $1,362,348, respectively.


37
<PAGE>

NOTES RECEIVABLE

         In the acquisition of the Founding Companies, we acquired $642,000 of
notes receivable from two Founding Company shareholders. When we effectively
began our operations, the shareholders entered into new notes receivable with a
stated interest rate (5%) and principal payment schedules. Principal and
interest were paid in full by the shareholders in 1999 and early 2000.

13. COMMITMENTS AND CONTINGENCIES:

LITIGATION

         We are, from time to time, a party to litigation. Our management
believes that none of these actions will have a material adverse effect on our
business, financial condition or results of operations.

CONCENTRATION OF CREDIT RISK

         Financial instruments that potentially subject us to concentration of
credit risk consist primarily of cash and cash equivalents and trade
receivables. The Company maintains cash and cash equivalents and certain other
financial instruments at various major financial institutions across many
geographic areas. Credit risk on trade receivables is minimized as a result of
the large number of entities comprising our client base and their dispersion
across many industries and geographic areas.

14. SEGMENT REPORTING:

         We and our subsidiaries are principally engaged in document and
information outsourcing services. We have identified segments based on
management responsibility as follows:

         F.Y.I. IMAGE: (i) electronic imaging services, involving the
conversion of paper or microfilm documents into digitized information,
database management and indexing; (ii) analog services involving the
conversion of paper documents into microfilm images, film processing and
computer based indexing and formatting; (iii) data capture and database
management services involving data capture, data consolidation and
elimination, storage, maintenance, formatting and report creation; (iv)
claims processing; and (v) integrated solutions, which deliver technical
services with a focus on document imaging, work flow, COLD and document
information management systems using third party imaging systems.

         F.Y.I. LEGAL: (i) automated litigation support, including document
conversion, computer indexing and automated document retrieval; (ii)
litigation consulting services such as discovery assistance, labor
discrimination, forensic analysis and other trial support services; (iii)
high-speed, multiple-set reproduction of documents; (iv) records acquisition
in the form of subpoena of business documents service of process; and (v)
employee and investor services which provides administration, record keeping
and information processing services.

         F.Y.I. HEALTHSERVE: (i) processing a request for a patient's medical
records from a physician, insurance company, attorney, healthcare institution
or individual; (ii) off-site active storage of a healthcare institutions
medical records; (iii) online delivery of images of selected medical records
for healthcare institutions; (iv) document and data conversion services for
healthcare institutions; (v) document conversion services for state
government disability, workers compensation claims and other government
agencies; (vi) temporary staffing services; (vii) providing attending
physicians' statements for life and health insurance underwriting; and (viii)
managed care compliance reviews.

         F.Y.I. DIRECT: (i) direct mail, which includes direct mail and
fulfillment services to clients who need rapid, reliable and cost-effective
methods for making large scale distributions of advertising, literature and
other information; (ii) full service commercial printing, including printing
and related services such as electronic prepress services, full-color report
production of annual reports, flyers and catalogs; and (iii) statement
processing.


38
<PAGE>

         We have a broad client base. One of our clients accounted for
approximately $12.8 million, or 3.6%, of our revenue for the year ended December
31, 1999. No other clients accounted for more than 3.0% of revenue for the year
then ended.

         We measure segment profit as earnings before taxes. Information on
segments follows (in thousands):

<TABLE>
<CAPTION>
                                         Year ended December 31, 1999

                         F.Y.I. IMAGE   F.Y.I. LEGAL     F.Y.I. HEALTHSERVE    F.Y.I. DIRECT  CONSOLIDATED
                         ------------  --------------    ------------------    -------------  ------------
<S>                      <C>           <C>               <C>                  <C>             <C>
Revenue                    $115,792      $ 82,500           $108,912          $ 47,607        $354,811
Depreciation and
  amortization                4,960         2,823              4,722             1,058          13,563
Operating income             17,593         9,621             13,312             3,450          43,976
Interest expense              1,669           888              1,196               493           4,246
Income before income         15,919         8,826             12,201             3,055          40,001
   taxes
Total assets               $133,734      $ 77,542           $129,134          $ 28,945        $369,355

</TABLE>

<TABLE>
<CAPTION>
                                       Year ended December 31, 1998 (1)

                         F.Y.I. IMAGE   F.Y.I. LEGAL    F.Y.I. HEALTHSERVE   F.Y.I. DIRECT  CONSOLIDATED
                         ------------  --------------   ------------------   -------------  ------------
<S>                      <C>           <C>              <C>                  <C>            <C>
Revenue                   $  48,897      $ 80,036           $ 87,749         $  30,780       $247,462
Depreciation and
  amortization                2,679         2,865              3,613             1,577         10,734
Operating income              7,265        11,252              8,718             3,773         31,008
Interest expense                279           491                379               319          1,468
Income before income          7,261        10,907              8,124             3,726         30,018
   taxes
Total assets               $ 34,875      $ 73,147           $ 78,126          $ 20,822       $206,970

</TABLE>


<TABLE>
<CAPTION>
                                          Year ended December 31, 1997 (1)

                         F.Y.I. IMAGE   F.Y.I. LEGAL     F.Y.I. HEALTHSERVE   F.Y.I. DIRECT  CONSOLIDATED
                         ------------  --------------    ------------------   -------------  ------------
<S>                      <C>           <C>               <C>                  <C>             <C>
Revenue                  $  42,325        $ 60,972           $ 52,821          $ 21,154       $177,272
Depreciation and
  amortization               1,164           1,685              2,122               594          5,565
Operating income             3,453          10,334              5,451             1,308         20,546
Interest expense               392             875                482               170          1,919
Income before income         3,133           9,807              5,166             1,264         19,370
   taxes
Total assets              $ 27,363        $ 44,120           $ 53,135          $ 14,488       $139,106

</TABLE>

(1)  The 1998 and 1997 segments have been reclassified to conform to our 1999
segment structure.


39

<PAGE>

15. QUARTERLY INFORMATION (UNAUDITED):

<TABLE>
<CAPTION>
                                                               F.Y.I. INCORPORATED
                               -------------------------------------------------------------------------------------
                                           1998 Quarter Ended                        1999 Quarter Ended
                                          --------------------                      --------------------
                                MAR 31     JUN 30     SEP 30    DEC 31     MAR 31    JUN 30     SEP 30    DEC 31
                                ------     ------     ------    ------     ------    ------     ------    ------
<S>                             <C>        <C>        <C>       <C>        <C>       <C>        <C>       <C>
Total revenue...........         $56,504   $61,055    $63,264   $66,639    $71,612   $81,587    $96,940   $104,672
Gross profit............          19,538    21,677     23,204    23,339     25,600    29,707     34,321     37,673
Income before income taxes         6,487     7,465      8,030     8,036      8,789     9,561     10,627     11,024
Net income .............           4,095     4,868      5,247     4,821      5,273     5,737      6,376      6,615
Pro forma earnings
  before taxes..........           6,487     7,465      8,030     8,036      8,789     9,561     10,627     11,024
Pro forma net
  Income................           3,894     4,478      4,818     4,821      5,273     5,737      6,376      6,615

Net income per common share -
  Basic.............              $ 0.31    $ 0.36     $ 0.39    $ 0.36     $ 0.38    $ 0.41     $ 0.45     $ 0.46
  Diluted...........              $ 0.30    $ 0.35     $ 0.38    $ 0.35     $ 0.36    $ 0.39     $ 0.42     $ 0.43
Pro forma net income per
   common share -
  Basic.............              $ 0.30    $ 0.33     $ 0.36    $ 0.36     $ 0.38    $ 0.41     $ 0.45     $ 0.46
  Diluted...........              $ 0.29    $ 0.33     $ 0.35    $ 0.35     $ 0.36    $ 0.39     $ 0.42     $ 0.43
Weighted average common
   shares outstanding-
  Basic.............              13,189    13,385     13,505    13,401     13,940    14,028     14,277     14,350
  Diluted...........              13,477    13,717     13,881    13,850     14,579    14,710     15,190     15,482

</TABLE>

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

         Not applicable.


40
<PAGE>

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         Information called for by Item 10 will be set forth under the caption
"Election of Directors" in our 2000 Proxy Statement, which will be filed not
later than 120 days after the end of our fiscal year ended December 31, 1999,
and which is incorporated herein by this reference.

ITEM 11. EXECUTIVE COMPENSATION

         Information called for by Item 11 will be set forth under the caption
"Executive Compensation" in our 2000 Proxy Statement, which will be filed not
later than 120 days after the end of our fiscal year ended December 31, 1999,
and which is incorporated herein by this reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         Information called for by Item 12 will be set forth under the caption
"Security Ownership of Certain Beneficial Owners and Management" in our 2000
Proxy Statement, which will be filed not later than 120 days after the end of
our fiscal year ended December 31, 1999, and which is incorporated herein by
this reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Information called for by Item 13 will be set forth under the caption
"Certain Relationships and Related Transactions" in our 2000 Proxy Statement,
which will be filed not later than 120 days after the end of our fiscal year
ended December 31, 1999, and which is incorporated herein by this reference.

41
<PAGE>

                                     PART IV

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

         The following documents are being filed as part of this Report:

         (a)(1) Consolidated Financial Statements

         See Index to Consolidated Financial Statements on page 21.

         All other schedules are omitted because they are not applicable, not
required or the required information is in the Financial Statements or the
Notes thereto.

         (a)(3) The following Exhibits are filed as part of this Report as
required by Item 601 of Regulation S-K. The Exhibits designated by an
asterisk are management contracts and compensatory plans and arrangements
required to be filed as Exhibits to this Report.

<TABLE>
<CAPTION>
                EXHIBIT
                NUMBER                         DESCRIPTION
                -------                        -----------
                <S>        <C>
                  2.1      -- Agreement and Plan of Reorganization, dated as of
                           October 25, 1995, by and among F.Y.I., Incorporated,
                           Deliverex, Incorporated, ASK Record Management, Inc.,
                           Deliverex Acquisition Corp., and the Stockholders
                           named therein (Incorporated by reference to Exhibit
                           2.1 to Amendment No. 1 to the Company's Registration
                           Statement on Form S-1 (Registration No. 33-98608)
                           effective January 12, 1996)

                  2.2      -- Agreement and Plan of Reorganization, dated as of
                           October 25, 1995, by and among F.Y.I. Incorporated,
                           C. & T. Management Services, Inc., Qualidata, Inc.,
                           DPAS Acquisition Corp., and the Stockholders named
                           therein (Incorporated by reference to Exhibit 2.2 to
                           Amendment No. 1 to the Company's Registration
                           Statement on Form S-1 (Registration No. 33-98608)
                           effective January 12, 1996)

                  2.3      -- Agreement and Plan of Reorganization, dated as of
                           October 25, 1995, by and among F.Y.I. Incorporated,
                           Melanson & Associates, Inc., Bay Area Micrographics,
                           Researchers Acquisition Corp., and the Stockholders
                           named therein (Incorporated by reference to Exhibit
                           2.3 to Amendment No. 1 to the Company's Registration
                           Statement on Form S-1 (Registration No. 33-98608)
                           effective January 12, 1996)

                  2.4      -- Agreement and Plan of Reorganization, dated as of
                           October 25, 1995, by and among F.Y.I. Incorporated,
                           Paragon Management Group, Inc., Recordex Acquisition
                           Corp., Recordex Services, Inc., and the Stockholders
                           named therein (Incorporated by reference to Exhibit
                           2.4 to Amendment No. 1 to the Company's Registration
                           Statement on Form S-1 (Registration No. 33-98608)
                           effective January 12, 1996)

                  2.5      -- Agreement and Plan of Reorganization, dated as of
                           October 25, 1995, by and among F.Y.I. Incorporated,
                           Permanent Records Inc., Permanent Records Acquisition
                           Corp., and the Stockholders named therein
                           (Incorporated by reference to Exhibit 2.5 to
                           Amendment No. 1 to the Company's Registration
                           Statement on Form S-1 (Registration No.
                           33-98608) effective January 12, 1996)


42
<PAGE>

                  2.7      -- Agreement and Plan of Reorganization, dated as of
                           October 25, 1995, by and among Imagent Corporation,
                           Imagent Acquisition Corp. and the Stockholders named
                           therein (Incorporated by reference to Exhibit 2.7 to
                           Amendment No. 1 to the Company's Registration
                           Statement on Form S-1 (Registration No. 33-98608)
                           effective January 12, 1996)

                  2.8      -- Agreement and Plan of Reorganization dated as of
                           October 25, 1995, by and among Mobile Information
                           Services Corporation, Inc., Imagent Acquisition Corp.
                           and the Stockholders named therein (Incorporated by
                           reference to Exhibit 2.8 to Amendment No. 1 to the
                           Company's Registration Statement on Form S-1
                           (Registration No. 33-98608) effective January 12,
                           1996)

                  2.9      -- First Amendment to Agreement and Plan of
                           Reorganization, dated as of October 25, 1995, by and
                           among F.Y.I. Incorporated, Leonard Archives Inc.,
                           Leonard Acquisition Corp. and the Stockholders named
                           therein (Incorporated by reference to Exhibit 2.9 to
                           Amendment No. 1 to the Company's Registration
                           Statement on Form S-1 (Registration No.
                           33-98608) effective January 12, 1996)

                  2.10     -- First Amendment to Agreement and Plan of
                           Reorganization, dated as of November 14, 1995, by
                           and among F.Y.I. Incorporated, C. & T. Management
                           Services, Inc., Qualidata, Inc., DPAS Acquisition
                           Corp., and the Stockholders named therein
                           (Incorporated by reference to Exhibit 2.10 to
                           Amendment No. 1 to the Company's Registration
                           Statement on Form S-1 (Registration No. 33-98608)
                           effective January 12, 1996)

                  2.11     -- Agreement and Plan of Reorganization, dated as
                           of May 31, 1996, by and among F.Y.I. Incorporated,
                           B&B (Baltimore-Washington) Acquisition Corp., B&B
                           Information and Image Management, Inc. and Charles
                           J. Bauer, Jr. (Incorporated by reference to
                           Exhibit 10.17 to Post-Effective Amendment No. 2 to
                           the Company's Registration Statement on Form S-1
                           (Registration No. 333-1084) effective July 11,
                           1996)

                  2.12     -- Agreement and Plan of Reorganization, dated as
                           of May 31, 1996, by and among F.Y.I. Incorporated,
                           Premier Acquisition Corp., Premier Document
                           Management, Inc., PDM Services, Inc., Brian E.
                           Whiteside, Christopher S. Moore, Lynnette C.
                           Pomerville and Gary T. Sievert (Incorporated by
                           reference to Exhibit 10.18 to Post-Effective
                           Amendment No. 2 to the Company's Registration
                           Statement on Form S-1 (Registration No. 333-1084)
                           effective July 11, 1996)

                  2.13     -- Asset Purchase Agreement, dated as of June 28,
                           1996, by and among F.Y.I. Incorporated, Robert A.
                           Cook Acquisition Corp., Robert A. Cook and Staff,
                           Inc. and RAC Services, Inc., Robert A. Cook and
                           Robert A. Cook and Anna M. Cook, as Co-Trustees of
                           the Cook 1993 Living Trust (Incorporated by
                           reference to Exhibit 10.19 to Post-Effective
                           Amendment No. 2 to the Company's Registration
                           Statement on Form S-1 (Registration No. 333-1084)
                           effective July 11, 1996)

                  2.14     -- Agreement and Plan of Reorganization, dated as of
                           August 30, 1996, by and among F.Y.I. Incorporated,
                           California Medical Record Service Acquisition Corp.,
                           C.M.R.S. Incorporated and Alan Simon


43
<PAGE>

                           (Incorporated by reference to Exhibit 2.14  to
                           Post-Effective Amendment No. 3 to the Company's
                           Registration Statement on Form S-1
                           (Registration No. 333-1084) effective September 11,
                           1996)

                  2.15     -- Agreement and Plan of Reorganization, dated as of
                           August 30, 1996, by and among F.Y.I. Incorporated,
                           Texas Medical Record Service Acquisition Corp., Texas
                           Medical Record Service, Inc., California Medical
                           Record Service Acquisition Corp. and Karen Jill Simon
                           (Incorporated by reference to Exhibit 2.15 to
                           Post-Effective Amendment No. 3 to the Company's
                           Registration Statement on Form S-1 (Registration No.
                           333-1084) effective September 11, 1996)

                  2.16     -- Agreement and Plan of Reorganization, dated as
                           of August 30, 1996, by and among F.Y.I.
                           Incorporated, Minnesota Medical Record Service
                           Acquisition Corp., Minnesota Medical Record
                           Service, Inc. and Alan Simon (Incorporated by
                           reference to Exhibit 2.16 to Post-Effective
                           Amendment No. 3 to the Company's Registration
                           Statement on Form S-1 (Registration No. 333-1084)
                           effective September 11, 1996)

                  2.17     -- Agreement and Plan of Reorganization, dated as of
                           August 30, 1996, by and among F.Y.I. Incorporated,
                           ZIA Acquisition Corp., ZIA Information Analysis Group
                           and the shareholders named therein (Incorporated by
                           reference to Exhibit 2.17 to Post-Effective Amendment
                           No. 3 to the Company's Registration Statement on Form
                           S-1 (Registration No. 333-1084) effective September
                           11, 1996)

                  2.18     -- Agreement and Plan of Reorganization, dated as of
                           March 27, 1997, by and among F.Y.I. Incorporated,
                           MAVRICC Acquisition Corp., MAVRICC Management
                           Systems, Inc., F.Y.I. Incorporated, Craig F. Moncher
                           and Kyle C. Kerbawy (Incorporated by reference to
                           Exhibit 2.18 to the Company's Current Report on Form
                           8-K filed on April 9, 1997)

                  2.19     -- Agreement and Plan of Reorganization, dated as of
                           March 27, 1997, by and among F.Y.I. Incorporated, MMS
                           Escrow Acquisition Corp., MMS Escrow and Transfer
                           Agency, Inc., Craig F. Moncher and Kyle C. Kerbawy
                           (Incorporated by reference to Exhibit 2.19 to the
                           Company's Current Report Form 8-K filed on April 9,
                           1997)

                  3.1      -- Amended and Restated Certificate of
                           Incorporation of F.Y.I. Incorporated (Incorporated
                           by reference to Exhibit 3.1 to the Company's
                           Registration Statement on Form S-1 (Registration
                           No. 33-98608) effective January 12, 1996)

                  3.2      -- First Amendment to Amended and Restated By-Laws of
                           F.Y.I. Incorporated (Incorporated by reference to
                           Exhibit 3.2 to the Company's Form 10-Q filed on
                           August 8, 1997)

                  4        -- Form of certificate evidencing ownership of
                           Common Stock of F.Y.I. Incorporated (Incorporated
                           by reference to Exhibit 4.2 to Amendment No. 1 to
                           the  Company's  Registration  Statement  on Form
                           S-1 (Registration No. 33-98608) effective January
                           12, 1996)

                  10.1*    -- F.Y.I. Incorporated 1995 Stock Option Plan
                           (Incorporated by reference to Exhibit 10.1 to the
                           Company's Registration Statement on Form S-1
                           (Registration No. 33-98608) effective January 12,
                           1996)


44
<PAGE>

                  10.8     -- Form of Indemnification Agreement between F.Y.I.
                           and each director (Incorporated by reference to
                           Exhibit 10.8 to Company's Registration Statement on
                           Form S-1 (Registration No. 33-98608) effective
                           January 12, 1996)

                  10.10    -- Form of Registration Rights Agreement, dated as of
                           November 14, 1995, by and among Thomas C. Walker,
                           David Lowenstein and the persons named therein
                           (Incorporated by reference to Exhibit 10.10 to
                           Amendment No. 1 to the Company's Registration
                           Statement on Form S-1 (Registration No. 33-98608)
                           effective January 12, 1996)

                  10.12    -- Five Year Media Purchase Agreement, dated as of
                           August 9, 1994, between Eastman Kodak Company and
                           Jonathan B. Shaw (Incorporated by reference to
                           Exhibit 10.12 to Amendment No. 1 to the Company's
                           Registration Statement on Form S-1 (Registration No.
                           33-98608) effective January 12, 1996)

                  10.15    -- Lease Agreement between F.Y.I. Incorporated and
                           One McKinney Plaza,  Inc.  (Incorporated  by
                           reference to Exhibit  10.15 to Post-Effective
                           Amendment No. 1 to the  Company's  Registration
                           Statement on Form S-1 (Registration No. 333-1084)
                           effective April 30, 1996)

                  10.21    -- Separation Agreement, dated July 17, 1996, by and
                           between F.Y.I. Incorporated and Robert C. Irvine
                           (Incorporated by reference to Exhibit 10.21 to the
                           Company's Registration Statement on Form S-1
                           (Registration No. 333-16057) effective December 11,
                           1996)

                  10.26*   -- Amended and Restated Warrant issued by F.Y.I.
                           Incorporated to Ed H. Bowman, Jr. (Incorporated by
                           reference to Exhibit 10.26 to the Company's Current
                           Report on Form 8-K filed on April 9, 1997)

                  10.27*   -- Amended and Restated Warrant issued by F.Y.I.
                           Incorporated to Ed H. Bowman, Jr. (Incorporated by
                           reference to Exhibit 10.27 to the Company's Current
                           Report on Form 8-K filed on April 9, 1997)

                  10.28*   -- Amended and Restated Warrant issued by F.Y.I.
                           Incorporated to Timothy J. Barker (Incorporated by
                           reference to Exhibit 10.28 to the Company's Current
                           Report on Form 8-K filed on April 9, 1997)

                  10.37    -- Amended and Restated Credit Agreement, dated as of
                           February 17, 1998, by and among F.Y.I. Incorporated,
                           Banque Paribas, Bank of America Texas, N.A. and the
                           Lenders named therein (Incorporated by referenced to
                           Exhibit 10.37 to the Company's Form 10-K filed on
                           March 11, 1998)

                  10.38    -- Agreement between New York State Workers'
                           Compensation Board and QCSInet Acquisition Corp.,
                           dated January 21, 1998 (Incorporated by reference to
                           Exhibit 10.38 to the Company's Form 8-K filed on
                           March 20, 1998)

                  10.47*   -- Amended and Restated Employment Agreement
                           between  F.Y.I. Incorporated and Jonathan B. Shaw
                           (Incorporated by reference to Exhibit 10.47 of the
                           Company's Form 10-K filed on March 17, 1999)


45
<PAGE>

                  10.48    -- First Amendment to Amended and Restated Credit
                           Agreement, dated August 3, 1998, by and among F.Y.I.
                           Incorporated, Banque Paribas, Bank of America Texas,
                           N.A. and the Lenders named therein (Incorporated
                           by reference to Exhibit 10.48 of the Company's
                           Form 10-K filed on March 17, 1999)

                  10.49    -- Second Amendment to Amended and Restated Credit
                           Agreement, dated April 13, 1999, by and among F.Y.I.
                           Incorporated, Banque Paribas, Nations Bank, N.A.
                           d/b/a Bank of America National Association, and Bank
                           One, Texas, N.A. and the Lenders named therein.
                           (Incorporated by reference to Exhibit 10.49 of the
                           Company's Form 10-Q filed on May 13, 1999)

                  10.51    -- Third Amendment to Amended and Restated Credit
                           Agreement, dated August 13, 1999, by and among F.Y.I.
                           Incorporated and Paribas, Nations Bank, N.A. d/b/a
                           Bank of America National Association, and Bank One,
                           Texas, N.A. and the Lenders named therein.
                           (Incorporated by reference to Exhibit 10.51 of the
                           Company's Form 8-K filed on August 20, 1999)

                  10.53    -- Fourth Amendment, dated November 10, 1999, to the
                           Amended and Restated Credit Agreement by and among
                           F.Y.I. Incorporated, Paribas, Nations Bank, N.A.
                           d/b/a Bank of America National Association, and Bank
                           One, Texas, N.A. and the Lenders named therein
                           (Incorporated by reference to Exhibit 10.53 to the
                           Company's Form 10-Q filed on November 11, 1999)

                  10.54*   -- Warrant issued to Joe A. Rose, dated May 19, 1999
                           (Incorporated by reference to Exhibit 4.3 of the
                           Company's Form 10-Q filed on November 11, 1999)

                  10.55*   -- Warrant issued to Ronald Zazworsky, dated May 19,
                           1999 (Incorporated by reference to Exhibit 4.4 of the
                           Company's Form 10-Q filed on November 11, 1999)

                  10.56*   -- Warrant issued to Timothy J. Barker, dated May 19,
                           1999 (Incorporated by reference to Exhibit 4.5 of the
                           Company's Form 10-Q filed on November 11, 1999)

                  10.57*   -- Warrant issued to Margot T. Lebenberg, dated May
                           19, 1999 (Incorporated by reference to Exhibit 4.6 of
                           the Company's Form 10-Q filed on November 11, 1999)

                  10.58*   -- Warrant issued to Gary Patton, dated May 19, 1999
                           (Incorporated by reference to Exhibit 4.7 of the
                           Company's Form 10-Q filed on November 11, 1999)

                  10.59*   -- Warrant issued to Thomas C. Walker, dated May 19,
                           1999 (Incorporated by reference to Exhibit 4.8 of the
                           Company's Form 10-Q filed on November 11, 1999)

                  10.60*   -- Warrant issued to Ed H. Bowman, Jr. dated May
                           19, 1999 (Incorporated by reference to Exhibit 4.9
                           of the Company's Form 10-Q filed on November 11,
                           1999)

                  10.61*   -- Special Warrant issued to Joe A. Rose, dated May
                           19, 1999 (Incorporated by reference to Exhibit 5.0 of
                           the Company's Form 10-Q filed on November 11, 1999)


46
<PAGE>

                  10.62*   -- Special Warrant issued to Timothy J. Barker, dated
                           May 19, 1999 (Incorporated by reference to Exhibit
                           5.1 of the Company's Form 10-Q filed on November 11,
                           1999)

                  10.63*   -- Amended and Restated Employment Agreement
                           between F.Y.I. Incorporated and Ed H. Bowman, Jr.

                  10.64*   -- Amended and Restated Employment Agreement
                           between F.Y.I Incorporated and Thomas C. Walker

                  10.65*   -- Consulting Agreement between F.Y.I.
                           Incorporated and David Lowenstein

                  10.66*   -- Amended and Restated Employment Agreement
                           between F.Y.I Incorporated and Margot Lebenberg

                  10.67*   -- Amended and Restated Employment Agreement
                           between F.Y.I. Incorporated and Ron Zazworsky

                  10.68*   -- Amended and Restated Employment Agreement
                           between F.Y.I. Incorporated and Joe A. Rose

                  10.69*   -- Amended and Restated Employment Agreement
                           between F.Y.I. Incorporated and Timothy J. Barker

                  10.70*   -- Amended and Restated Employment Agreement
                           between F.Y.I Incorporated and David Byerley

                  10.71*   -- Warrant issued to Margot T. Lebenberg, dated
                           March 16, 2000

                  10.72*   -- Warrant issued to Ron Zazworsky, dated March 16,
                           2000

                  10.73*   -- Warrant issued to Timothy J. Barker, dated
                           March 16, 2000

                  10.74*   -- Warrant issued to Joe A. Rose, dated March 16,
                           2000

                  10.75*   -- Warrant issued to David Byerley, dated March 16,
                           2000

                  10.76*   -- Warrant issued to Jonathan Shaw, dated March 16, 2000

                  21       -- List of subsidiaries of F.Y.I. Incorporated

                  23.1     -- Consent of Arthur Andersen LLP

                  24       -- Power of Attorney (included with the signature
                           page hereof)

                  27.1     -- Financial Data Schedule

                  27.2     -- Restated 1998 Financial Data Schedule

                  27.3     -- Restated 1997 Financial Data Schedule
</TABLE>


47
<PAGE>

          (b) Reports on Form 8-K:

We did not file any Form 8-K Current Reports during the last quarter of the
fiscal year ended December 31, 1999.


                                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.

                            F.Y.I. INCORPORATED

                          By: /s/ ED H. BOWMAN, JR.
                           ----------------------------
                              Ed H. Bowman, Jr.,
                     President and Chief Executive Officer

Date: March 23, 2000

                              POWER OF ATTORNEY

         Each person whose signature appears below hereby authorizes and
constitutes Ed H. Bowman, Jr. and Margot T. Lebenberg, and each of them
singly, his true and lawful attorneys-in-fact with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities to sign and file any and all amendments to this report with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, and he hereby ratifies and confirms all
that said attorneys-in-fact or any of them, or their substitutes, may
lawfully 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 date indicated.

<TABLE>
<CAPTION>
SIGNATURE                           CAPACITY IN WHICH SIGNED                    DATE
---------                           ------------------------                    ----
<S>                              <C>                                        <C>
/s/ THOMAS C. WALKER                Chairman of the Board and                   March 23, 2000
--------------------                Chief Development Officer
Thomas C. Walker

/s/ ED H. BOWMAN, JR.               Director, President and Chief               March 23, 2000
---------------------               Executive Officer (Principal
Ed H. Bowman, Jr.                   Executive Officer)

/s/ DAVID LOWENSTEIN                Director and Founder                        March 23, 2000
--------------------
David Lowenstein

/s/ JOE A. ROSE                     Director , Executive Vice                   March 23, 2000
------------------                  President and Chief Operating
Joe A. Rose                         Officer

/s/ TIMOTHY J. BARKER               Executive Vice President and                March 23, 2000
---------------------               Chief Financial Officer
Timothy J. Barker                   Principal Financial and Accounting
                                    Officer)
</TABLE>

48

<PAGE>
<TABLE>

<S>                                 <C>                                         <C>
/s/ G. MICHAEL BELLENGHI            Director                                    March 23, 2000
------------------------
G. Michael Bellenghi

/s/ MICHAEL J. BRADLEY              Director                                    March 23, 2000
----------------------
Michael J. Bradley

/s/ GREGORY R. MELANSON             Director                                    March 23, 2000
-----------------------
Gregory R. Melanson

/s/ DONALD F. MOOREHEAD, JR.        Director                                    March 23, 2000
----------------------------
Donald F. Moorehead, Jr.

/s/ HON. EDWARD M. ROWELL           Director                                    March 23, 2000
--------------------------
Hon. Edward M. Rowell

/s/ JONATHAN B. SHAW                Director                                    March 23, 2000
--------------------
Jonathan B. Shaw
</TABLE>


49

<PAGE>

                                              EXHIBIT INDEX

<TABLE>
<CAPTION>
                EXHIBIT
                NUMBER                         DESCRIPTION
                -------                        -----------
                <S>        <C>
                  2.1      -- Agreement and Plan of Reorganization, dated as of
                           October 25, 1995, by and among F.Y.I., Incorporated,
                           Deliverex, Incorporated, ASK Record Management, Inc.,
                           Deliverex Acquisition Corp., and the Stockholders
                           named therein (Incorporated by reference to Exhibit
                           2.1 to Amendment No. 1 to the Company's Registration
                           Statement on Form S-1 (Registration No. 33-98608)
                           effective January 12, 1996)

                  2.2      -- Agreement and Plan of Reorganization, dated as of
                           October 25, 1995, by and among F.Y.I. Incorporated,
                           C. & T. Management Services, Inc., Qualidata, Inc.,
                           DPAS Acquisition Corp., and the Stockholders named
                           therein (Incorporated by reference to Exhibit 2.2 to
                           Amendment No. 1 to the Company's Registration
                           Statement on Form S-1 (Registration No. 33-98608)
                           effective January 12, 1996)

                  2.3      -- Agreement and Plan of Reorganization, dated as of
                           October 25, 1995, by and among F.Y.I. Incorporated,
                           Melanson & Associates, Inc., Bay Area Micrographics,
                           Researchers Acquisition Corp., and the Stockholders
                           named therein (Incorporated by reference to Exhibit
                           2.3 to Amendment No. 1 to the Company's Registration
                           Statement on Form S-1 (Registration No. 33-98608)
                           effective January 12, 1996)

                  2.4      -- Agreement and Plan of Reorganization, dated as of
                           October 25, 1995, by and among F.Y.I. Incorporated,
                           Paragon Management Group, Inc., Recordex Acquisition
                           Corp., Recordex Services, Inc., and the Stockholders
                           named therein (Incorporated by reference to Exhibit
                           2.4 to Amendment No. 1 to the Company's Registration
                           Statement on Form S-1 (Registration No. 33-98608)
                           effective January 12, 1996)

                  2.5      -- Agreement and Plan of Reorganization, dated as of
                           October 25, 1995, by and among F.Y.I. Incorporated,
                           Permanent Records Inc., Permanent Records Acquisition
                           Corp., and the Stockholders named therein
                           (Incorporated by reference to Exhibit 2.5 to
                           Amendment No. 1 to the Company's Registration
                           Statement on Form S-1 (Registration No.
                           33-98608) effective January 12, 1996)

                  2.7      -- Agreement and Plan of Reorganization, dated as of
                           October 25, 1995, by and among Imagent Corporation,
                           Imagent Acquisition Corp. and the Stockholders named
                           therein (Incorporated by reference to Exhibit 2.7 to
                           Amendment No. 1 to the Company's Registration
                           Statement on Form S-1 (Registration No. 33-98608)
                           effective January 12, 1996)

                  2.8      -- Agreement and Plan of Reorganization dated as of
                           October 25, 1995, by and among Mobile Information
                           Services Corporation, Inc., Imagent Acquisition Corp.
                           and the Stockholders named therein (Incorporated by
                           reference to Exhibit 2.8 to Amendment No. 1 to the
                           Company's Registration Statement on Form S-1
                           (Registration No. 33-98608) effective January 12,
                           1996)


50
<PAGE>


                  2.9      -- First Amendment to Agreement and Plan of
                           Reorganization, dated as of October 25, 1995, by and
                           among F.Y.I. Incorporated, Leonard Archives Inc.,
                           Leonard Acquisition Corp. and the Stockholders named
                           therein (Incorporated by reference to Exhibit 2.9 to
                           Amendment No. 1 to the Company's Registration
                           Statement on Form S-1 (Registration No.
                           33-98608) effective January 12, 1996)

                  2.10     -- First Amendment to Agreement and Plan of
                           Reorganization, dated as of November 14, 1995, by
                           and among F.Y.I. Incorporated, C. & T. Management
                           Services, Inc., Qualidata, Inc., DPAS Acquisition
                           Corp., and the Stockholders named therein
                           (Incorporated by reference to Exhibit 2.10 to
                           Amendment No. 1 to the Company's Registration
                           Statement on Form S-1 (Registration No. 33-98608)
                           effective January 12, 1996)

                  2.11     -- Agreement and Plan of Reorganization, dated as
                           of May 31, 1996, by and among F.Y.I. Incorporated,
                           B&B (Baltimore-Washington) Acquisition Corp., B&B
                           Information and Image Management, Inc. and Charles
                           J. Bauer, Jr. (Incorporated by reference to
                           Exhibit 10.17 to Post-Effective Amendment No. 2 to
                           the Company's Registration Statement on Form S-1
                           (Registration No. 333-1084) effective July 11,
                           1996)

                  2.12     -- Agreement and Plan of Reorganization, dated as
                           of May 31, 1996, by and among F.Y.I. Incorporated,
                           Premier Acquisition Corp., Premier Document
                           Management, Inc., PDM Services, Inc., Brian E.
                           Whiteside, Christopher S. Moore, Lynnette C.
                           Pomerville and Gary T. Sievert (Incorporated by
                           reference to Exhibit 10.18 to Post-Effective
                           Amendment No. 2 to the Company's Registration
                           Statement on Form S-1 (Registration No. 333-1084)
                           effective July 11, 1996)

                  2.13     -- Asset Purchase  Agreement,  dated as of June
                           28, 1996, by and among F.Y.I. Incorporated,
                           Robert A. Cook Acquisition Corp., Robert A. Cook
                           and Staff,  Inc. and RAC Services,  Inc., Robert
                           A. Cook and Robert A. Cook and Anna M. Cook,  as
                           Co-Trustees  of the Cook 1993 Living Trust
                           (Incorporated by  reference  to  Exhibit  10.19
                           to   Post-Effective Amendment  No. 2 to the
                           Company's  Registration  Statement on Form S-1
                           (Registration No. 333-1084) effective July 11,
                           1996)

                  2.14     -- Agreement and Plan of Reorganization, dated as of
                           August 30, 1996, by and among F.Y.I. Incorporated,
                           California Medical Record Service Acquisition Corp.,
                           C.M.R.S. Incorporated and Alan Simon (Incorporated by
                           reference to Exhibit 2.14 to Post-Effective Amendment
                           No. 3 to the Company's Registration Statement on Form
                           S-1 (Registration No. 333-1084) effective September
                           11, 1996)

                  2.15     -- Agreement and Plan of Reorganization, dated as of
                           August 30, 1996, by and among F.Y.I. Incorporated,
                           Texas Medical Record Service Acquisition Corp., Texas
                           Medical Record Service, Inc., California Medical
                           Record Service Acquisition Corp. and Karen Jill Simon
                           (Incorporated by reference to Exhibit 2.15 to
                           Post-Effective Amendment No. 3 to the Company's
                           Registration Statement on Form S-1 (Registration No.
                           333-1084) effective September 11, 1996)

                  2.16     -- Agreement and Plan of Reorganization,  dated as
                           of August 30, 1996, by and among F.Y.I.
                           Incorporated,  Minnesota  Medical  Record Service


51
<PAGE>

                           Acquisition  Corp.,  Minnesota  Medical Record
                           Service,  Inc. and Alan Simon  (Incorporated  by
                           reference  to Exhibit 2.16 to  Post-Effective
                           Amendment  No. 3 to the Company's  Registration
                           Statement on Form S-1 (Registration No. 333-1084)
                           effective September 11, 1996)

                  2.17     -- Agreement and Plan of Reorganization, dated as of
                           August 30, 1996, by and among F.Y.I. Incorporated,
                           ZIA Acquisition Corp., ZIA Information Analysis Group
                           and the shareholders named therein (Incorporated by
                           reference to Exhibit 2.17 to Post-Effective Amendment
                           No. 3 to the Company's Registration Statement on Form
                           S-1 (Registration No. 333-1084) effective September
                           11, 1996)

                  2.18     -- Agreement and Plan of Reorganization, dated as of
                           March 27, 1997, by and among F.Y.I. Incorporated,
                           MAVRICC Acquisition Corp., MAVRICC Management
                           Systems, Inc., F.Y.I. Incorporated, Craig F. Moncher
                           and Kyle C. Kerbawy (Incorporated by reference to
                           Exhibit 2.18 to the Company's Current Report on Form
                           8-K filed on April 9, 1997)

                  2.19     -- Agreement and Plan of Reorganization, dated as of
                           March 27, 1997, by and among F.Y.I. Incorporated, MMS
                           Escrow Acquisition Corp., MMS Escrow and Transfer
                           Agency, Inc., Craig F. Moncher and Kyle C. Kerbawy
                           (Incorporated by reference to Exhibit 2.19 to the
                           Company's Current Report Form 8-K filed on April 9,
                           1997)

                  3.1      -- Amended and Restated Certificate of Incorporation
                           of F.Y.I. Incorporated (Incorporated by reference to
                           Exhibit 3.1 to the Company's Registration Statement
                           on Form S-1 (Registration No. 33-98608) effective
                           January 12, 1996)

                  3.2      -- First Amendment to Amended and Restated By-Laws of
                           F.Y.I. Incorporated (Incorporated by reference to
                           Exhibit 3.2 to the Company's Form 10-Q filed on
                           August 8, 1997)

                  4        -- Form of certificate evidencing ownership of
                           Common Stock of F.Y.I. Incorporated (Incorporated
                           by reference to Exhibit 4.2 to Amendment No. 1 to
                           the Company's Registration Statement on Form S-1
                           (Registration No. 33-98608) effective January 12,
                           1996)

                  10.1*    -- F.Y.I. Incorporated 1995 Stock Option Plan
                           (Incorporated by reference to Exhibit 10.1 to the
                           Company's Registration Statement on Form S-1
                           (Registration No. 33-98608) effective January 12,
                           1996)

                  10.8     -- Form of Indemnification Agreement between F.Y.I.
                           and each director (Incorporated by reference to
                           Exhibit 10.8 to Company's Registration Statement on
                           Form S-1 (Registration No. 33-98608) effective
                           January 12, 1996)

                  10.10    -- Form of Registration Rights Agreement, dated as of
                           November 14, 1995, by and among Thomas C. Walker,
                           David Lowenstein and the persons named therein
                           (Incorporated by reference to Exhibit 10.10 to
                           Amendment No. 1 to the Company's Registration
                           Statement on Form S-1 (Registration No. 33-98608)
                           effective January 12, 1996)

                  10.12    -- Five Year Media Purchase Agreement, dated as of
                           August 9, 1994, between Eastman Kodak Company and
                           Jonathan B. Shaw


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<PAGE>


                           (Incorporated by reference to Exhibit 10.12 to
                           Amendment No. 1 to the Company's Registration
                           Statement on Form S-1 (Registration No. 33-98608)
                           effective January 12, 1996)

                  10.15    -- Lease Agreement between F.Y.I. Incorporated and
                           One McKinney Plaza, Inc. (Incorporated by
                           reference to Exhibit 10.15 to Post-Effective
                           Amendment No. 1 to the Company's Registration
                           Statement on Form S-1 (Registration No. 333-1084)
                           effective April 30, 1996)

                  10.21    -- Separation Agreement, dated July 17, 1996, by
                           and between F.Y.I. Incorporated and Robert C.
                           Irvine (Incorporated by reference to Exhibit 10.21
                           to the Company's Registration Statement on Form
                           S-1 (Registration No. 333-16057) effective
                           December 11, 1996)

                  10.26*   -- Amended and Restated Warrant issued by F.Y.I.
                           Incorporated to Ed H. Bowman, Jr. (Incorporated by
                           reference to Exhibit 10.26 to the Company's Current
                           Report on Form 8-K filed on April 9, 1997)

                  10.27*   -- Amended and Restated Warrant issued by F.Y.I.
                           Incorporated to Ed H. Bowman, Jr. (Incorporated by
                           reference to Exhibit 10.27 to the Company's Current
                           Report on Form 8-K filed on April 9, 1997)

                  10.28*   -- Amended and Restated Warrant issued by F.Y.I.
                           Incorporated to Timothy J. Barker (Incorporated by
                           reference to Exhibit 10.28 to the Company's Current
                           Report on Form 8-K filed on April 9, 1997)

                  10.37    -- Amended and Restated Credit Agreement, dated as of
                           February 17, 1998, by and among F.Y.I. Incorporated,
                           Banque Paribas, Bank of America Texas, N.A. and the
                           Lenders named therein (Incorporated by referenced to
                           Exhibit 10.37 to the Company's Form 10-K filed on
                           March 11, 1998)

                  10.38    -- Agreement between New York State Workers'
                           Compensation Board and QCSInet Acquisition Corp.,
                           dated January 21, 1998 (Incorporated by reference to
                           Exhibit 10.38 to the Company's Form 8-K filed on
                           March 20, 1998)

                  10.47*   --  Amended and Restated Employment Agreement
                           between F.Y.I. Incorporated and Jonathan B. Shaw
                           (Incorporated by reference to Exhibit 10.47 of the
                           Company's Form 10-K filed on March 17, 1999)

                  10.48    -- First Amendment to Amended and Restated Credit
                           Agreement, dated August 3, 1998, by and among F.Y.I.
                           Incorporated, Banque Paribas, Bank of America Texas,
                           N.A. and the Lenders named therein (Incorporated
                           by reference to Exhibit 10.48 of the Company's
                           Form 10-K filed on March 17, 1999)

                  10.49    -- Second Amendment to Amended and Restated Credit
                           Agreement, dated April 13, 1999, by and among F.Y.I.
                           Incorporated, Banque Paribas, Nations Bank, N.A.
                           d/b/a Bank of America National Association, and Bank
                           One, Texas, N.A. and the Lenders named therein.
                           (Incorporated by reference to Exhibit 10.49 of the
                           Company's Form 10-Q filed on May 13, 1999)

                  10.51    -- Third Amendment to Amended and Restated Credit
                           Agreement, dated August 13, 1999, by and among F.Y.I.
                           Incorporated and Paribas, Nations Bank, N.A. d/b/a
                           Bank of America National Association, and Bank One,
                           Texas, N.A. and the Lenders named therein.
                           (Incorporated


53
<PAGE>

                           by reference to Exhibit 10.51 of the Company's
                           Form 8-K filed on August 20, 1999)

                  10.53    -- Fourth Amendment, dated November 10, 1999, to the
                           Amended and Restated Credit Agreement by and among
                           F.Y.I. Incorporated, Paribas, Nations Bank, N.A.
                           d/b/a Bank of America National Association, and Bank
                           One, Texas, N.A. and the Lenders named therein
                           (Incorporated by reference to Exhibit 10.53 to the
                           Company's Form 10-Q filed on November 11, 1999)

                  10.54*   -- Warrant issued to Joe A. Rose, dated May 19, 1999
                           (Incorporated by reference to Exhibit 4.3 of the
                           Company's Form 10-Q filed on November 11, 1999)

                  10.55*   -- Warrant issued to Ronald Zazworsky, dated May 19,
                           1999 (Incorporated by reference to Exhibit 4.4 of the
                           Company's Form 10-Q filed on November 11, 1999)

                  10.56*   -- Warrant issued to Timothy J. Barker, dated May 19,
                           1999 (Incorporated by reference to Exhibit 4.5 of the
                           Company's Form 10-Q filed on November 11, 1999)

                  10.57*   -- Warrant issued to Margot T. Lebenberg, dated May
                           19, 1999 (Incorporated by reference to Exhibit 4.6 of
                           the Company's Form 10-Q filed on November 11, 1999)

                  10.58*   -- Warrant issued to Gary Patton, dated May 19, 1999
                           (Incorporated by reference to Exhibit 4.7 of the
                           Company's Form 10-Q filed on November 11, 1999)

                  10.59*   -- Warrant issued to Thomas C. Walker, dated May 19,
                           1999 (Incorporated by reference to Exhibit 4.8 of the
                           Company's Form 10-Q filed on November 11, 1999)

                  10.60*   --  Warrant   issued  to  Ed  H.  Bowman,   Jr.
                           dated  May  19,  1999 (Incorporated  by reference
                           to Exhibit 4.9 of the Company's  Form 10-Q filed
                           on November 11, 1999)

                  10.61*   -- Special Warrant issued to Joe A. Rose, dated May
                           19, 1999 (Incorporated by reference to Exhibit 5.0 of
                           the Company's Form 10-Q filed on November 11, 1999)

                  10.62*   -- Special Warrant issued to Timothy J. Barker, dated
                           May 19, 1999 (Incorporated by reference to Exhibit
                           5.1 of the Company's Form 10-Q filed on November 11,
                           1999)

                  10.63*   --  Amended  and  Restated   Employment
                           Agreement   between   F.Y.I. Incorporated and Ed
                           H. Bowman, Jr.

                  10.64*   --  Amended  and   Restated   Employment
                           Agreement   between   F.Y.I Incorporated and
                           Thomas C. Walker

                  10.65*   --  Consulting   Agreement  between  F.Y.I.
                           Incorporated  and  David Lowenstein


54
<PAGE>


                  10.66*   --  Amended  and   Restated   Employment
                           Agreement   between   F.Y.I Incorporated and
                           Margot Lebenberg

                  10.67*   --  Amended  and  Restated   Employment
                           Agreement   between   F.Y.I. Incorporated and Ron
                           Zazworsky

                  10.68*   --  Amended  and  Restated   Employment
                           Agreement   between   F.Y.I. Incorporated and Joe
                           A. Rose

                  10.69*   --  Amended  and  Restated   Employment
                           Agreement   between   F.Y.I. Incorporated and
                           Timothy J. Barker

                  10.70*   --  Amended  and   Restated   Employment
                           Agreement   between   F.Y.I Incorporated and David
                           Byerley

                  10.71*   -- Warrant issued to Margot T. Lebenberg, dated
                           March 16, 2000

                  10.72*   -- Warrant issued to Ron Zazworsky, dated March 16,
                           2000

                  10.73*   -- Warrant issued to Timothy J. Barker, dated
                           March 16, 2000

                  10.74*   -- Warrant issued to Joe A. Rose, dated March 16,
                           2000

                  10.75*   -- Warrant issued to David Byerley, dated March 16,
                           2000

                  10.76*   -- Warrant issued to Jonathan Shaw, dated March 16, 2000

                  21       -- List of subsidiaries of F.Y.I. Incorporated

                  23.1     -- Consent of Arthur Andersen LLP

                  24       -- Power of Attorney (included with the signature
                           page hereof)

                  27.1     -- Financial Data Schedule

                  27.2     -- Restated 1998 Financial Data Schedule

                  27.3     -- Restated 1997 Financial Data Schedule
</TABLE>

55
<PAGE>

<TABLE>
<CAPTION>
BOARD OF DIRECTORS                                            CORPORATE OFFICERS
<S>                                                 <C>
Thomas C. Walker                                     Thomas C. Walker
Chairman of the Board and Chief                      Chairman of the Board and Chief Development
Officer                                              Development Officer
F.Y.I.
                                                     Ed H. Bowman, Jr.
Ed H. Bowman, Jr.                                    President and Chief Executive Officer
President and Chief Executive Officer
F.Y.I.                                               Timothy J. Barker
                                                     Executive Vice President and Chief
David Lowenstein                                     Financial Officer
Founder and Consultant
F.Y.I.                                               Joe A. Rose
                                                     Executive Vice President and Chief
G. Michael Bellenghi                                 Operating Officer
Former Chief Executive Officer
Recordex                                             David M. Byerley
                                                     Senior Vice President--Corporate
Michael J. Bradley                                   Development
Executive Associate to the President
MCP Hahnemann University                             Margot T. Lebenberg
Vice-Chairman and Director of Republic Bancorp Inc.  Senior Vice President, General
Former Executive Vice President                      Counsel and Secretary
Mercy Health Corporation of Southwest Pennsylvania
                                                     Ronald Zazworsky
Gregory R. Melanson                                  Senior Vice President--F.Y.I.
Former Senior Vice President F.Y.I.                  HealthSERVE
Former President and Chief Executive Officer
Researchers                                          Gary R. Patton
                                                     Vice President--Human Resources and
Donald F. Moorehead, Jr.                             Corporate Programs
Chairman of the Board and Chief Executive Officer
EarthCare

The Hon. Edward M. Rowell
Former U.S. Ambassador, President,
Association for Diplomatic Studies
And Training and
Senior Associate, Global Business Access, Ltd.

Jonathan B. Shaw
Group Vice President of F.Y.I. IMAGE
Former Chief Executive Officer
Imagent

Joe A. Rose
Executive Vice President and Chief
Operating Officer
F.Y.I.

</TABLE>

56