<PAGE>   1
 
================================================================================
 
                       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, 1997
                                       OR
 
[ ]         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
 
             FOR THE TRANSITION PERIOD FROM           TO
 
                         COMMISSION FILE NUMBER 0-27444
 
                              F.Y.I. INCORPORATED
             (Exact name of Registrant as specified in its charter)
 
<TABLE>
<S>                                                    <C>
                      DELAWARE                                              75-2560895
           (State or other jurisdiction of                               (I.R.S. Employer
           incorporation or organization)                               Identification No.)
    3232 MCKINNEY AVE., SUITE 900, DALLAS, TEXAS                               75204
      (Address of principal executive offices)                              (zip code)
</TABLE>
 
                                 (214) 953-7555
                        (Registrant's telephone number,
                              including area code)
 
          SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
 
<TABLE>
<CAPTION>
                                                                       NAME OF EACH EXCHANGE
                 TITLE OF EACH CLASS                                    ON WHICH REGISTERED
                 -------------------                                   ---------------------
<S>                                                    <C>
                        None                                                   None
</TABLE>
 
          Securities registered pursuant to Section 12(g) of the Act:
 
                     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 19, 1998 was $241,718,354, based on the last sale
price ($25.125) of the Registrant's Common Stock, $.01 par value per share, on
the Nasdaq National Market on February 19, 1998.
 
     As of February 19, 1998, 11,377,332 shares of the Registrant's Common Stock
were outstanding.
 
                      DOCUMENTS INCORPORATED BY REFERENCE:
 
     Portions of the Proxy Statement for the 1998 Annual Meeting of Stockholders
to be filed with the Securities and Exchange Commission not later than 120 days
after the end of the Company's fiscal year ended December 31, 1997 are
incorporated by reference into Part III of this Form 10-K.
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<PAGE>   2
 
                              F.Y.I. INCORPORATED
 
                          1997 FORM 10-K ANNUAL REPORT
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                                          PAGE
                                                                          ----
<S>         <C>                                                           <C>
            PART I
Item 1.     Business....................................................    3
Item 2.     Properties..................................................   14
Item 3.     Legal Proceedings...........................................   14
Item 4.     Submission of Matters to a Vote of Security Holders.........   14
            PART II
Item 5.     Market for Registrant's Common Equity and Related
            Stockholder Matters.........................................   15
Item 6.     Selected Financial Data.....................................   16
Item 7.     Management's Discussion and Analysis of Financial Condition
            and Results of Operations...................................   18
Item 8.     Financial Statements and Supplementary Data.................   23
Item 9.     Changes in and Disagreements with Accountants on Accounting
            and Financial Disclosure....................................   43
            PART III
Item 10.    Directors and Executive Officers of the Registrant..........   44
Item 11.    Executive Compensation......................................   44
Item 12.    Security Ownership of Certain Beneficial Owners and
            Management..................................................   44
Item 13.    Certain Relationships and Related Transactions..............   44
            PART IV
Item 14.    Exhibits, Financial Statements Schedules, and Reports on
            Form 8-K....................................................   44
</TABLE>
 
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                                     PART I
 
ITEM 1. BUSINESS
 
                                    GENERAL
 
     F.Y.I. Incorporated ("F.Y.I." or the "Company") 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, manufacturing and
government. The Company's primary strategy is to acquire, integrate and operate
companies in the highly fragmented document and information outsourcing
solutions industry. In January 1996, F.Y.I. acquired, simultaneously with the
closing of its initial public offering (the "IPO"), seven document management
services businesses (the "Founding Companies"). Since the IPO, and through
December 31, 1997, the Company acquired 29 additional companies (the "Subsequent
Acquisitions"). Since December 31, 1997, the Company has acquired five
additional companies, for a total of 41 acquisitions since the Company's
inception. The Company intends to continue to aggressively pursue strategic
acquisitions in existing and new markets, cross-sell its full range of services
to its current customer base and expand the marketing of its services to new
customers.
 
     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, the Company
believes 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.
 
     The Company's target clients generate large volumes of documents and
require specialized processing, distribution, storage and retrieval of these
documents and the information they contain. The Company believes that these
clients will continue to increase their outsourcing of document and information
management 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 such technologies.
 
     The document and information outsourcing solutions business is highly
fragmented. The Company believes that many small document management services
businesses: (i) have insufficient capital for expansion; (ii) cannot keep
abreast of rapidly changing technologies; (iii) lack effective marketing
programs; and (iv) are unable to meet the needs of large, geographically
dispersed clients. In addition, there are a limited number of options for owners
of such businesses to obtain liquidity by selling their businesses. As a result,
the Company believes that many owners of such businesses will continue to be
receptive to its acquisition program.
 
BUSINESS STRATEGY
 
     The Company's goal is to become a national, single source provider of
document and information outsourcing solutions to information and document
intensive industries, including: healthcare, law, banking, insurance, retailing,
manufacturing and government. In order to achieve this goal, the Company is
implementing its focused business strategy based on the following key
principles:
 
     Establish Full Service Operations in Multiple Metropolitan Areas. The
Company intends to establish a full range of document management operations to
meet the diverse needs of targeted metropolitan areas by implementing its
"fill-in-the-grid" strategy through selected acquisitions and expansion of
existing businesses. Ultimately, the Company will seek to achieve a national
scope of coverage so that it can implement a national sales and service policy.
 
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<PAGE>   4
 
     Capitalize on Cross-Selling Opportunities. The Company intends to continue
to cross-sell in two primary ways. First, the Company intends to sell its
existing clients additional document and information solutions provided by the
Company's other businesses. Second, the Company intends to use its knowledge
with respect to specific industry segments to sell such services to new clients.
 
     Achieve Cost Savings Through Consolidation and Economies of Scale. The
Company believes that it will be able to achieve significant savings by
combining a number of general and administrative functions at the corporate
level, by reducing or eliminating redundant functions and facilities, and by
implementing corporate purchasing programs. For example, the Company has
implemented an insurance plan, employee benefits programs and purchasing plans
for certain items, such as paper, microfilm and storage racks for the Company
and its subsidiaries, on a combined basis. To the extent that the Company is
able to expand through the acquisition of additional document and information
management businesses, the Company believes that such cost savings will continue
to accrue.
 
     Operate With a Decentralized Management Strategy. The Company believes that
the experienced local management teams of its acquired businesses have a
valuable understanding of their respective markets and businesses and have
existing client relationships upon which they may capitalize. Accordingly, the
Company is operating and expects to continue to operate with a decentralized
management strategy. 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 the
Company intends to have local management operate with a high degree of autonomy,
the Company believes that regular communication between the individual
businesses and the Company's executive management team will be integral to
realizing the benefits afforded by the consolidation of these businesses into a
single company. The Company is organized around strategic business units
focusing on common services to common customer bases enabling synergies and
cross-selling opportunities.
 
ACQUISITION STRATEGY
 
     Since the Company's inception, it has acquired 41 companies. The Company
believes that there are significant opportunities to consolidate the
capabilities and resources of a number of additional existing document and
information outsourcing solutions businesses with the intent of providing
customers with a single source document and information outsourcing solution.
Accordingly, the Company is pursuing a "fill-in-the-grid" strategy aimed at
providing comprehensive document and information outsourcing solutions services
based on the demands of the given geographical market. The Company has
implemented an aggressive, three-tiered acquisition program consisting of
"beachhead acquisitions" to enter additional geographic markets, "service
expansion acquisitions" to acquire additional service capabilities within such
markets and "tuck-in" acquisitions to gain market share.
 
     In order to enter a new geographic market, the Company makes "beachhead"
acquisitions of leading document and information outsourcing solutions companies
with strong market positions. In analyzing beachhead acquisition candidates, the
Company focuses on acquiring businesses that have one or more of the following
characteristics: (i) experienced and high quality management; (ii) multiple
locations, preferably with operations in two to three contiguous markets; (iii)
a strong customer franchise; and (iv) a history of profitability.
 
     The second tier of the Company's acquisition program involves the
acquisition of related document and information outsourcing solutions services
companies that will increase the Company's offered services in a particular
region. In making such "service expansion" acquisitions, the Company assesses
the services required by the specific market's customer base and then seeks to
acquire leading providers of such services within that geographic area.
 
     Finally, in order to increase its market share and realize economies of
scale, the third tier of the Company's acquisition program is the acquisition of
smaller "tuck-in" businesses that can be easily assimilated into the operations
of the Company's existing businesses. Such tuck-in businesses are intended to
enable the Company to benefit from the operating leverage of its existing
businesses by acquiring additional market share and revenue while eliminating or
reducing certain general, administrative and operating costs
 
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<PAGE>   5
 
previously associated with such revenue. Accordingly, the Company targets
tuck-in businesses with strong customer relationships.
 
     The Company believes that it will continue to be a successful acquiror of
other document and information outsourcing solutions companies due to its
strategy of retaining selected owners and management of acquired companies, its
access to growth capital and its ability to offer sellers cash for their
business as well as an ongoing equity stake in the Company. Nevertheless, there
are numerous risks associated with the Company's acquisition program. See
"-- Risk Factors -- Acquisition Strategy," "-- Reliance on Key Personnel" and
"-- Need for Additional Financing to Continue Acquisition Strategy."
 
SERVICES OFFERED
 
     The Company provides a wide variety of document and information outsourcing
solutions and draws upon its available services to develop solutions for its
clients based on their specific needs. The current document and information
outsourcing solutions that are provided in certain geographic locations include:
 
  Document Management and Related Services
 
     Document and Data Conversion Services include electronic imaging services
and micrographic services.
 
     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 disks, such as compact disks. 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. Electronic imaging services are typically billed on a
job-by-job basis, based on the number of images and complexity of the retrieval
applications.
 
     Micrographics 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: (i) as a
cost-competitive technology to reduce the physical size of stored records; (ii)
for their long-term (over 100 years) archival capabilities; and (iii) as an
intermediate step in certain imaging or reprographic applications.
 
     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.
 
     Direct Mail includes direct mail and fulfillment services. Direct mail and
fulfillment services provide customers with rapid, reliable and cost-effective
methods for making large-scale distributions of statements, reports and letters
to consumers and other target audiences.
 
     Records Management Services consist of active or open shelf storage and
archival storage of inactive documents. 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 such
services are provided electronically. Representative uses for open shelf storage
include active medical and legal case 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.
 
     The archiving of inactive documents involves storage for extended periods
of time with a lesser emphasis on service or accessibility to stored documents.
Typical uses for archival storage of inactive documents include
 
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storage of closed files for professional services firms and documents that may
be required by law to be maintained by hospitals, other healthcare institutions
and financial institutions for extended periods. Service fees generally include
billing for storage space, plus activity charges for each retrieval, delivery
and return to storage, and ultimately for document destruction.
 
  Industry Specific Services
 
     The Company has developed industry specific services in order to address
the document and information management needs of its particular clients. These
industry specific services include:
 
     Healthcare Services. Healthcare 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,
and document and data conversion. Recently, the Company acquired companies which
provide attending physician statements (APS) for life and health insurance
underwriting and image processing services for handling state government
disability and workers' compensation claims.
 
     Litigation Support. Litigation often involves the production (i.e.,
delivery to opposing counsel) and management of thousands of pages of documents,
extracted in their current working form from the offices and files of litigating
parties and their experts, advisors and legal counsel. Litigation support
services include managing the logistics of high volume document production,
microfilming and/or electronic imaging, document coding, computer indexing,
automated document retrieval and high speed, multiple-set reproduction of
documents. Additional litigation support services include subpoena of business
documents and service of process, deposition reporting services, discovery
assistance, document coding, forensic analysis and other trial support services
to law firms, corporations and regulated entities. These clients typically look
to litigation support companies to augment their internal operations and
capabilities on an as-needed, job-by-job basis. Clients are generally billed on
a per unit basis.
 
     Employee and Investor Services. Employee and investor services include
administration, record keeping and information processing services. Our services
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 turn-key outsourced
administration of employee stock purchase plans and employee stock option plans;
and (iii) banks and broker/dealers to provide complete record keeping and
administration services for additional brokerage and IRA accounts.
 
  Product Sales
 
     The Company acts as a distributor of a wide range of microfilm and business
imaging supplies as well as filing and shelving supplies, software, and earns
commissions on the sales of imaging systems and equipment.
 
  Material Contract. In February 1998, the Company was preliminarily awarded a
five year, $30 million contract by New York State to provide document imaging
services to the New York Workers' Compensation Board in support of processing
workers' compensation claims for the entire State. There can be no assurance
that New York State will approve the final contract.
 
SALES AND MARKETING
 
     The Company has a broad customer base, and none of the Company's customers
accounted for more than 5.0% of revenue for the year ended December 31, 1997.
Historically, the Company's 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.
The Company's existing local sales efforts
 
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are supplemented through local sales representatives. The Company strives to
increase its client base by attracting customers away from small, single
business operators as a result of its ability to offer a broader range of
solutions for its clients' document management needs. In addition, the Company
intends to continue to focus on increasing revenue from its existing clients by
cross-selling its services and broadening its product offerings. Once the
Company gains critical mass in a number of metropolitan areas, it will seek to
augment local sales and marketing efforts through the implementation of a
national sales/account program.
 
COMPETITION
 
     The document and information outsourcing solutions businesses in which the
Company competes and expects to compete are highly competitive. A significant
source of competition is the in-house document handling capability of the
Company's target client base. There can be no assurance that these businesses
will outsource more of their document management needs or that such businesses
will not bring in-house services that they currently outsource. In addition,
certain of the Company's competitors are larger businesses and have greater
financial resources than the Company. Certain of these competitors operate in
broader geographic areas than the Company, and others may choose to enter the
Company's areas of operation in the future. In addition, the Company intends to
continue to enter new geographic areas through internal growth and by acquiring
existing companies and expects to encounter significant competition from
established competitors in each of such new areas. As a result of this highly
competitive environment, the Company may lose customers or have difficulty in
acquiring new customers and new companies and its results of operations may be
adversely affected.
 
     The Company believes 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. The Company
competes primarily on the basis of quality of service and client segment
specific knowledge, and believes that it competes favorably with respect to
these factors.
 
EMPLOYEES
 
     As of December 31, 1997, the Company had approximately 2,900 full-time and
990 part-time employees. As of such date, the Company had approximately 160
employees represented by labor unions. The Company considers its relations with
its employees to be good.
 
EXECUTIVE OFFICERS OF THE COMPANY
 
     The following table sets forth certain information concerning each of the
executive officers of the Company:
 
<TABLE>
<CAPTION>
             NAME                AGE                      POSITION
             ----                ---                      --------
<S>                              <C>   <C>
Thomas C. Walker...............  65    Chairman of the Board and Chief Development
                                         Officer
Ed H. Bowman, Jr...............  51    President and Chief Executive Officer;
                                       Director
David Lowenstein...............  36    Executive Vice President -- Corporate
                                       Development and Treasurer; Director
Timothy J. Barker..............  35    Senior Vice President and Chief Financial
                                       Officer
Gregory R. Melanson............  44    Senior Vice President and Director
Joe A. Rose....................  47    Senior Vice President
Ronald Zazworsky...............  53    Senior Vice President
John D. Kearney, Sr............  44    Vice President -- Corporate Development
Margot T. Lebenberg............  30    Vice President, General Counsel and Secretary
Gary Patton....................  44    Vice President of Human Resources & Director
                                       of Corporate Programs
</TABLE>
 
     Thomas C. Walker has been Chairman of the Board of F.Y.I. since its
inception in September 1994 and has been Chief Development Officer of F.Y.I.
since November 1995. From September 1994 until Novem-
 
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ber 1995, Mr. Walker held the positions of 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. From May 1989 until he
joined Laidlaw Waste Systems, Inc., Mr. Walker was President of Thomas C. Walker
Associates, Inc., a company providing merger, acquisition and financial
consulting services focusing on the waste management industry. During his
career, Mr. Walker has been responsible for the acquisition or divestiture of
over 150 businesses over a 30-year period. Mr. Walker holds a B.S. in Industrial
Engineering from Lafayette College.
 
     In May 1989, Mr. Walker resigned from a senior executive position with a
former employer and received a severance payment under the terms of his
employment agreement. In July 1989, such employer commenced a proceeding in
bankruptcy, and, after emerging from such proceeding and in connection with its
liquidation, sought to recover Mr. Walker's severance payment as a preference
claim. Mr. Walker litigated this claim but ultimately entered into a judgment
requiring him to make significant payments to his former employer. In April
1993, Mr. Walker filed a voluntary petition in bankruptcy in order to discharge
such judgment and two mortgage notes relating to two condominiums in Dallas, the
holders of which were unwilling to renegotiate the terms of the mortgages. Mr.
Walker did not seek any other relief from creditors, and the bankruptcy was
discharged in February 1994.
 
     Ed H. Bowman, Jr. has been President and Chief Executive Officer and a
Director of F.Y.I. 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 HBO & Co. ("HBO"), 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 of the Star Business Unit with responsibility for domestic operations.
Prior to joining HBO, 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 an investor and former board member of several
early-stage, high-technology companies.
 
     David Lowenstein has been Executive Vice President -- Corporate Development
and Acquisitions and a Director of F.Y.I. since February 1995. In November 1997,
Mr. Lowenstein was named Treasurer. From July 1996 through November 1997, Mr.
Lowenstein held the additional position of Chief Financial Officer. Prior to
joining the Company, Mr. Lowenstein served, since February 1994, as Vice
President, Business Development of Laidlaw Waste Systems, Inc., with overall
responsibility for Laidlaw Waste System's acquisition and divestiture program in
North America. From April 1990 until February 1994, Mr. Lowenstein served in a
variety of capacities, including Director -- Corporate Development, for Laidlaw,
Inc. From November 1988 to March 1990, he served as a business analyst for
Tricil, Ltd., a solid and hazardous waste company that was acquired by Laidlaw,
Inc. in 1990. Mr. Lowenstein has been responsible for the acquisition or
divestiture of over 75 businesses in North America and Europe. Mr. Lowenstein
holds a B.A. in Economics from Sir Wilfred Laurier University and an M.S. in
Public and Business Administration from Carnegie Mellon University. Mr.
Lowenstein is a citizen of the Dominion of Canada residing in the United States.
 
     Timothy J. Barker has been Senior Vice President and Chief Financial
Officer of F.Y.I. since November 1997. From November 1995 to November 1997, Mr.
Barker held the positions of Chief Accounting Officer and Controller of F.Y.I.
Prior to joining F.Y.I. 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 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.
 
     Greg Melanson has been Senior Vice President since February 1998 and a
Director of the Company and the Chairman of the Board, President and Chief
Executive Officer of Researchers Acquisition Corp.
 
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("Researchers"), a wholly-owned subsidiary of the Company, since the closing of
the IPO. Prior to the IPO and since 1978, Mr. Melanson held such offices with
the predecessor of Researchers. Mr. Melanson has been in the litigation support
services business since 1975. Mr. Melanson holds a B.A. from the University of
Southern California.
 
     Joe A. Rose has been Senior Vice President of F.Y.I. since July 1997. From
May 1995 through January 1997, Mr. Rose was President and CEO of FormMaker
Software, Inc. From May 1993 through May 1995, Mr. Rose was Corporate Vice
President with John H. Harland Company and President and CEO of its subsidiary,
Formation Technology, Inc. From July 1988 through May 1993, Mr. Rose served as
Executive Vice President with National Data Corporation. Mr. Rose holds a B.A.
from Texas Tech University.
 
     Ronald Zazworsky has been Senior Vice President of F.Y.I. 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.
 
     John D. Kearney, Sr. has been Vice President of Corporate Development of
F.Y.I. since January 1998. From July 1995 until joining the Company, Mr. Kearney
was a Managing Director and Senior Vice President of Corporate Finance at
Rauscher Pierce Refsnes, Inc. where he directed the firm's information
technology investment banking team. From September 1991 until July 1995, Mr.
Kearney was a Senior Vice President of Corporate Finance at Raymond James &
Associates, Inc. Mr. Kearney holds a B.A. in Political Science from the State
University of New York at Oneonta and a J.D. and M.B.A. from Duke University.
 
     Margot T. Lebenberg has been Vice President, General Counsel and Secretary
of F.Y.I. since May 1996. From 1992 until joining the Company, Ms. Lebenberg was
an attorney with Morgan, Lewis & Bockius LLP in New York, where she practiced
law primarily in the areas of securities and mergers and acquisitions,
specializing in consolidation transactions. 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.
 
     Gary Patton has been Vice President of Human Resources and Director of
Corporate Programs of F.Y.I. since November 1997 and Director of Corporate
Programs since October 1996. From 1992 until joining the Company, Mr. Patton was
Vice President of Human Resources at Sunbelt Corporation. From 1987 until 1992,
Mr. Patton was Vice President of Human Resources at International Claim Service
Corporation. Mr. Patton holds a B.A. degree from University of North Texas.
 
                                        9
<PAGE>   10
 
                                  RISK FACTORS
 
LIMITED OPERATING HISTORY; RISKS OF INTEGRATION; ABILITY TO MANAGE GROWTH
 
     F.Y.I. was founded in September 1994 and conducted no operations prior to
the consummation of the IPO. F.Y.I. acquired the Founding Companies
simultaneously with the closing of the IPO and has acquired 34 additional
companies since that time (together with the Founding Companies, the "Operating
Companies"). Prior to their acquisition, the Operating Companies operated as
separate independent entities. Currently, the Company has a decentralized
financial reporting system and relies on the existing reporting systems of the
Operating Companies. The success of the Company will depend, in part, on the
Company's ability to integrate the operations of the Operating Companies,
including centralizing certain functions to achieve cost savings and developing
programs and processes that will promote cooperation and the sharing of
opportunities and resources. There can be no assurance that the management group
will effectively be able to oversee the combined entity and implement the
Company's operating or growth strategies. The resulting growth of the
acquisition strategy of the Company places significant demands on management and
on the Company's internal systems and controls. There can be no assurance that
the management group will effectively be able to direct the Company through
periods of significant growth. In addition, no assurance can be given that the
Company's current systems will be adequate for its future needs or that the
Company will be successful in implementing new systems.
 
     A number of the Operating Companies offer different services, utilize
different capabilities and technologies and target different geographic markets
and client segments. While the Company believes that there are substantial
opportunities in integrating these businesses, these differences increase the
risk inherent in successfully completing such integration. Further, there can be
no assurance that the Company's strategy to establish a single source provider
for document management services will be successful, or that the Company's
target client segments will accept the Company as a provider of such services.
In addition, there can be no assurance that the operating results of the Company
will match or exceed the combined individual operating results achieved by the
Operating Companies prior to their acquisition.
 
ACQUISITION STRATEGY
 
     The Company's primary growth strategy is the acquisition of additional
document and information outsourcing solutions businesses that will complement
its existing businesses. There can be no assurance that the Company will be able
to identify or reach mutually agreeable terms with acquisition candidates and
their owners, or that the Company will be able to profitably manage additional
businesses or successfully integrate such additional businesses into the Company
without substantial costs, delays or other problems. Acquisitions may involve a
number of special risks including: (i) adverse short-term effects on the
Company's reported operating results; (ii) diversion of management's attention;
(iii) dependence on retention, hiring and training of key personnel; (iv) risks
associated with unanticipated problems or legal liabilities; and (v)
amortization of acquired intangible assets. Some or all of these risks could
have a material adverse effect on the Company's operations and financial
performance. In addition, to the extent that consolidation becomes more
prevalent in the industry, the prices for attractive acquisition candidates may
be bid up to higher levels. In any event, there can be no assurance that
businesses acquired in the future will achieve sales and profitability that
justify the investment therein. Unfavorable developments at an acquired company
could have a material adverse impact on the reputation and business of the
Company as a whole.
 
     The Company is regularly in discussions with additional acquisition
candidates and may from time to time enter into letters of intent with respect
to the acquisition of such businesses. No assurance can be given, however, that
the Company will acquire any additional businesses.
 
NEED FOR ADDITIONAL FINANCING TO CONTINUE ACQUISITION STRATEGY
 
     The Company currently intends to finance future acquisitions by using cash
and its Common Stock for all or a portion of the consideration to be paid. The
Company's Registration Statement on Form S-4 (Registration No. 333-24015) (the
"Acquisition Shelf") relates to the offering of 2,500,000 shares of
 
                                       10
<PAGE>   11
 
Common Stock to be used as consideration for acquisitions by the Company, of
which 1,810,437 shares remained available as of December 31, 1997. In the event
that the Company's Common Stock does not maintain sufficient value, or potential
acquisition candidates are unwilling to accept the Company's Common Stock as
consideration for the sale of their businesses, the Company may be required to
utilize more of its cash resources, if available, in order to continue its
acquisition program. If the Company does not have sufficient cash resources, its
growth could be limited unless it is able to obtain capital through additional
debt or equity financings. Under the Company's amended and restated line of
credit with Banque Paribas and Bank of America Texas, N.A., as co-agents and the
lenders named therein, (the "1998 Credit Agreement"), the Company and its
subsidiaries can borrow, on a revolving credit basis, loans in an aggregate
outstanding principal amount of $50 million for acquisitions, working capital
and general corporate purposes subject to certain restrictions in the 1998
Credit Agreement. As of February 19, 1998, the availability under the 1998
Credit Agreement was $31.2 million. There can be no assurance, however, that
funds available under the 1998 Credit Agreement will be sufficient for the
Company's needs.
 
EFFECT OF POTENTIAL FLUCTUATIONS IN OPERATING RESULTS ON PRICE OF COMMON STOCK;
VOLATILITY OF STOCK PRICE
 
     Results for any quarter are not necessarily indicative of the results that
the Company may achieve for any subsequent quarter or a full fiscal year.
Quarterly results may vary materially as a result of the timing and structure of
acquisitions, the timing and magnitude of costs related to such acquisitions,
the gain or loss of material client relationships and variations in the prices
charged by the Company for the services it provides. In addition, since a
significant portion of the Company's revenue is generated on a
project-by-project basis, the timing or completion of material projects could
result in fluctuations in the Company's results of operations for particular
quarterly periods. Such fluctuations in operating results may adversely affect
the market price of the Company's Common Stock. The market price for the
Company's shares may also fluctuate in response to material announcements by the
Company or significant clients or competitors of the Company, changes in the
economic or other conditions impacting the Company's 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 the Common Stock.
 
DEPENDENCE ON CERTAIN CLIENT SEGMENTS AND TECHNOLOGY
 
     The Company derives its revenue primarily from information and document
intensive industries. Fundamental changes in the business practices of any of
these client segments, whether due to regulatory, technological or other
developments, could cause a material reduction in demand by such clients for the
services offered by the Company. Any such reduction in demand would have a
material adverse effect on the results of operations of the Company. The
document and information outsourcing solutions industry is characterized by
technological change, evolving customer needs and emerging technical standards.
Although the Company believes that it will be able to continue to offer services
based on the newest technologies, there can be no assurance that the Company
will be able to obtain the rights to use any such technologies, that it will be
able to effectively implement such technologies on a cost-effective or timely
basis or that such technologies will not render obsolete the Company's role as a
third party provider of document management services.
 
COMPETITION
 
     The document and information outsourcing solutions businesses in which the
Company competes and expects to compete are highly competitive. A significant
source of competition is the in-house document handling capability of the
Company's targeted client base. There can be no assurance that these businesses
will outsource more of their document and information needs or that such
businesses will not bring in-house, services that they currently outsource. In
addition, certain of the Company's competitors are larger businesses and have
greater financial resources than the Company. Certain of these competitors
operate in broader geographic areas than the Company, and others may choose to
enter the Company's areas of operation in the future. In addition, the Company
intends to enter new geographic areas through internal growth and
 
                                       11
<PAGE>   12
 
acquisitions and expects to encounter significant competition from established
competitors in each of such new areas. As a result of this highly competitive
environment, the Company may lose customers or have difficulty in acquiring new
customers and new companies, and its results of operations may be adversely
affected.
 
RELIANCE ON KEY PERSONNEL
 
     The Company's operations are dependent on the continued efforts of its
executive officers and on senior management of the Operating Companies.
Furthermore, the Company will likely depend on the senior management of
businesses acquired in the future. If any of these people is unable or unwilling
to continue in his or her present role, or if the Company is unable to attract
and retain other skilled employees, the Company's business could be adversely
affected. The Company does not currently have key person life insurance covering
any of its executive officers or other members of senior management.
 
POTENTIAL LIABILITY FOR BREACH OF CONFIDENTIALITY
 
     A substantial portion of the Company's business involves the handling of
documents containing confidential and other sensitive information. Although the
Company has established procedures intended to prevent any unauthorized
disclosure of confidential information and, in some cases, has contractually
limited its potential liability for unauthorized disclosure of such information,
there can be no assurance that unauthorized disclosures will not result in
material liability to the Company.
 
CASUALTY; RISK OF BUSINESS INTERRUPTIONS
 
     The Company believes that its future results of operations will be
dependent in large part upon its ability to provide prompt and efficient
services to its customers. Certain of the Company's operations are performed at
a single location and are dependent on continuous computer, electrical and
telephone service. As a result, any disruption of the Company's day-to-day
operations could have a material adverse effect upon the Company. There can be
no assurance that a fire, flood, earthquake, power loss, telephone service loss
or other event affecting one or more of the Company's facilities would not
disable these services. Any significant damage to any such facility or other
failure that causes significant interruptions in the Company's operations may
not be covered by insurance. Any uninsured or underinsured loss could have a
material adverse effect on the Company's business, financial condition or
results of operations.
 
PUBLIC SECTOR MARKET AND CONTRACTING RISKS
 
     A portion of the Company's present business involves public sector
contracts, and the Company anticipates a growing portion of its business coming
from local, state and federal government agencies. Public sector contracts are
subject to detailed regulatory requirements and public policies, as well as to
funding priorities. Contracts with public sector customers may be conditioned
upon the continuing availability of public funds, which in turn depends upon
lengthy and complex budgetary procedures, and may be subject to certain pricing
constraints. Moreover, public sector contracts may generally be terminated for a
variety of factors, including when it is in the best interests of the respective
governmental entity. There can be no assurance that these factors or others
unique to contracts with governmental entities will not have a material adverse
effect on the Company's future business, financial condition and results of
operations.
 
CONTROL BY MANAGEMENT
 
     As of February 19, 1998, the directors and executive officers of the
Company beneficially owned approximately 18.6% of the outstanding shares of
Common Stock and exercise substantial control over the Company's affairs. These
stockholders acting together would likely be able to elect a sufficient number
of directors to control the Board of Directors and to approve or disapprove any
matter submitted to a vote of stockholders.
 
                                       12
<PAGE>   13
 
POTENTIAL EFFECT OF SHARES ELIGIBLE FOR FUTURE SALE ON PRICE OF COMMON STOCK
 
     The market price of the Common Stock of the Company could be adversely
affected by the sale of substantial amounts of Common Stock of the Company 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.
 
     The Company has an aggressive acquisition program under which it recently
completed, and expects to continue to pursue, acquisitions that are accounted
for under the pooling-of-interests method of accounting. Under the
pooling-of-interests method of accounting, the affiliates of the acquired
companies, which are generally all of the stockholders of the companies acquired
by the Company, must be free to sell or otherwise transfer shares of the Common
Stock received in the acquisition, subject to their compliance with federal
securities laws, as soon as the Company releases results of operations that
reflect the combined operations of the Company and the acquired company for a
minimum of 30 days. If a significant number of shares of 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
are sold by stockholders in the market as soon as their shares became freely
transferable, the price of the Common Stock could be adversely affected.
 
     The Company has reserved for issuance under the Company's 1995 Stock Option
Plan (the "Plan") an aggregate of 650,000 shares of Common Stock, or 16% of the
aggregate number of shares of the Common Stock outstanding, whichever is
greater. The Company has registered the shares issuable upon exercise of options
granted under the Plan, and such shares will be eligible for resale in the
public market. As of February 19, 1998, the Company had options to purchase
1,578,291 shares of Common Stock outstanding under the Plan.
 
IMPACT OF THE YEAR 2000 ISSUE
 
     The "Year 2000 Issue" describes the use of two digits rather than four
digits to define the applicable year in certain computer programs. With the
coming millennium, any of the Company's computer programs that have two digit
date-sensitive software may interpret a date of "00" as the year 1900 rather
than the year 2000. This could result in a system failure or miscalculations
causing disruptions of operations, including, among other things, a temporary
inability to process transactions, send invoices or engage in similar normal
business activities.
 
     Management is in the process of evaluating the effect of the Year 2000
Issue on the Company. Based on preliminary findings, the total cost of
addressing the Year 2000 Issue is not expected to have a material adverse effect
on the Company's business, financial condition or results of operations.
However, management is in the process of completing its assessment of the
potential impact of the Year 2000 Issue on the Company and the potential
exposure of the Company to related problems of its customers and suppliers.
There can be no assurance that such exposure or the costs of remediating any
problems associated therewith will not materially adversely affect the Company's
future business, financial condition or results of operations.
 
ENVIRONMENTAL MATTERS
 
     The Company is subject to regulations and ordinances that govern activities
or operations that may have adverse environmental effects, such as discharges to
air and water.
 
     The Company is 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 the business, financial condition or
results of operations of the Company. However, there can be no assurance that
environmental liabilities in the future will not have a material adverse effect
on the business, financial condition or results of operations of the Company.
 
                                       13
<PAGE>   14
 
EFFECT OF CERTAIN CHARTER PROVISIONS
 
     The Board of Directors of the Company 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 the Company
by means of a tender offer, merger, proxy contest or otherwise.
 
RISKS ASSOCIATED WITH FORWARD-LOOKING STATEMENTS
 
     This Report contains certain forward-looking statements such as the
Company's or management's intentions, hopes, beliefs, expectations, strategies,
predictions or any other variation thereof or comparable phraseology of the
Company's future activities or other future events or conditions within the
meaning of Section 27A of the Securities 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 the Company's stock price,
development by competitors of new or superior products or services, or entry
into the market of new competitors, the sufficiency of the Company's working
capital and the ability of the Company to realize benefits from consolidating
certain general and administrative functions, to assimilate and integrate
acquisitions, to continue its aggressive acquisition program, to retain
management, to implement its focused business strategy to expand its document
management services geographically, to retain customers or attract customers
from other businesses, to increase revenue by cross-selling services and to
successfully defend itself in ongoing and future litigation. Although the
Company believes 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 the
Company or any other person that the objectives and plans of the Company will be
achieved.
 
ITEM 2. PROPERTIES
 
     As of December 31, 1997, the Company operated in excess of 110 document
management service facilities in 32 states. Except for the two facilities owned
by the Company, these facilities are leased and are 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. In March 1996, the Company moved
into its current corporate headquarters in Dallas, Texas.
 
     As of December 31, 1997, the Company also operated on-site at over 450
client locations and from time to time at many other client locations for
specific projects.
 
     In order to secure its obligations under the 1998 Credit Agreement, the
Company granted to Banque Paribas and Bank of America Texas, N.A., as co-agents
for the Company's lenders, a lien on substantially all of the Company's
properties and other assets. See "Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
 
     The Company believes that its properties are generally well maintained, in
good condition and adequate for its present needs. Furthermore, the Company
believes that suitable additional or replacement space will be available when
required.
 
ITEM 3. LEGAL PROCEEDINGS
 
     The Company is, from time to time, a party to litigation arising in the
normal course of its business. Management believes that none of these actions
will have a material adverse effect on the financial condition or results of
operations of the Company.
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
     During the fourth quarter of the year ended December 31, 1997, no matters
were submitted to a vote of the security holders.
 
                                       14
<PAGE>   15
 
                                    PART II
 
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
 
MARKET INFORMATION
 
     The Company's Common Stock trades on The Nasdaq Stock Market under the
symbol "FYII." The Company completed its IPO in January 1996 at a price of
$13.00 per share. The following table sets forth, for the Company's fiscal
periods indicated, the range of high and low last reported sale prices for the
Common Stock.
 
<TABLE>
<CAPTION>
                                                               HIGH        LOW
                                                              ------      ------
<S>                                                           <C>         <C>
FISCAL YEAR 1996
  First Quarter (from January 23, 1996).....................  $20.00      $13.00(1)
  Second Quarter............................................  $22.00      $16.00
  Third Quarter.............................................  $23.00      $17.00
  Fourth Quarter............................................  $23.00      $20.00
FISCAL YEAR 1997
  First Quarter.............................................  $26.25      $20.63
  Second Quarter............................................  $25.31      $16.75
  Third Quarter.............................................  $26.25      $23.00
  Fourth Quarter............................................  $26.25      $21.75
FISCAL YEAR 1998
  First Quarter (through February 19, 1998).................  $26.25      $24.00
</TABLE>
 
---------------
 
(1) Represents the initial public offering price.
 
HOLDERS
 
     On February 19, 1998, the last reported sale price of the Common Stock on
The Nasdaq Stock Market was $25.125 per share. At February 19, 1998, there were
121 holders of record of the Company's Common Stock, although the Company
believes the number of beneficial holders is substantially greater.
 
DIVIDENDS
 
     The Company does not anticipate paying any cash dividends on its Common
Stock in the foreseeable future and intends to retain its earnings, if any, to
finance the expansion of its business and for general corporate purposes. Any
payment of future dividends will be at the discretion of the Board of Directors
and will depend upon, among other things, the Company's earnings, financial
condition, capital requirements, level of indebtedness, contractual restrictions
and other factors that the Company's Board of Directors deems relevant.
 
                                       15
<PAGE>   16
 
ITEM 6. SELECTED FINANCIAL DATA
 
                            SELECTED FINANCIAL DATA
 
     F.Y.I. was founded in September 1994 and effectively began its operations
on February 1, 1996 following the completion of the IPO. F.Y.I. acquired,
simultaneously with and as a condition to the closing of the IPO, the 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, 1997, the Company acquired four
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; and (iv) Micro Publishing Systems, Inc. ("MPS") in
December 1997 (collectively, the "Pooled Companies"). The consolidated financial
statements for all periods presented have been restated to include the accounts
of MAVRICC and Input. As a result, F.Y.I. is reporting financial results in
periods prior to the Company's inception. The consolidated financial statements
of the Company were not restated for the Rust and MPS acquisitions for the
periods prior to January 1, 1996 and 1997, respectively, due to their financial
immateriality. The Pooled Companies and the 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, 1997, the Company acquired
25 additional companies in transactions accounted for as purchases. The
Company's results of operations include the results of these acquisitions from
the date of their respective acquisition.
 
     The Selected Financial Data for the years ended December 31, 1995, 1996 and
1997 have been derived from the Consolidated Financial Statements of F.Y.I.
Incorporated and Subsidiaries that have been audited by Arthur Andersen LLP and
that appear elsewhere in this Report. The Selected Financial Data for the years
ended December 31, 1993 and 1994 have been derived from financial statements of
MAVRICC and Input not included elsewhere in this Report. The Selected Financial
Data are based on available information and certain assumptions described in the
footnotes set forth below, all of which the Company believes are reasonable.
 
     The Selected Financial Data provided below should be read in conjunction
with the historical financial statements of F.Y.I., 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.
 
                                       16
<PAGE>   17
 
                            SELECTED FINANCIAL DATA
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 
<TABLE>
<CAPTION>
                                                 1993(1)    1994     1995      1996       1997
                                                 -------   ------   ------   --------   --------
<S>                                              <C>       <C>      <C>      <C>        <C>
STATEMENT OF OPERATIONS DATA:
Service revenue................................  $6,752    $7,548   $9,040   $ 81,775   $145,824
Product and other revenue......................      --        --       --      7,043      8,318
                                                 ------    ------   ------   --------   --------
          Total revenue........................   6,752     7,548    9,040     88,818    154,142
Cost of services...............................   4,005     4,487    5,369     50,672     92,194
Cost of products sold..........................      --        --       --      4,898      5,949
Depreciation...................................     152       111      145      1,766      3,269
                                                 ------    ------   ------   --------   --------
          Gross profit.........................   2,595     2,950    3,526     31,482     52,730
Selling, general and administrative
  expenses(2)..................................   1,556     2,402    2,000     20,653     33,379
Amortization...................................      --        --       --        599      1,835
                                                 ------    ------   ------   --------   --------
          Operating income(2)..................   1,039       548    1,526     10,230     17,516
Interest and other expense (income), net(3)....     (29)       18      (31)       782      1,382
                                                 ------    ------   ------   --------   --------
Income before income taxes(2)(3)...............   1,068       530    1,557      9,448     16,134
Provision for income taxes(4)..................     530       248      530      3,849      6,554
                                                 ------    ------   ------   --------   --------
Net income(2)(3)(4)............................  $  538    $  282   $1,027   $  5,599   $  9,580
                                                 ======    ======   ======   ========   ========
Net income per common share
  Basic (2)(3)(4)..............................  $ 0.32    $ 0.17   $ 0.60   $   0.81   $   0.92
  Diluted (2)(3)(4)............................    0.32      0.17   $ 0.60   $   0.79   $   0.90
Weighted average common shares outstanding
  Basic........................................   1,687     1,687    1,717      6,924     10,438
  Diluted......................................   1,687     1,687    1,717      7,052     10,616
BALANCE SHEET DATA:
Working capital................................  $  150    $  548   $ (904)  $ 21,928   $ 22,105
Total assets...................................   1,458     2,680    4,530    102,119    126,238
Long-term obligations, net of current
  maturities...................................      15         6      443      4,662      5,692
Stockholders' equity...........................     452     1,059    1,280     76,541    100,516
</TABLE>
 
---------------
 
(1) Input previously reported on a fiscal year ending March 31. The results of
    Input for the fiscal year ending March 31, 1994 have been combined with the
    results of MAVRICC for the year ended December 31, 1993. The results of
    Input for all other years presented have been restated to reflect a calendar
    year.
 
(2) Gives effect to the Compensation Differential. See Note 2 of Notes to
    Consolidated Financial Statements of F.Y.I. Incorporated and Subsidiaries.
 
(3) 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 the Company's 1996
    Credit Agreement. See Note 7 of Notes to Consolidated Financial Statements
    of F.Y.I. Incorporated and Subsidiaries.
 
(4) 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.
 
                                       17
<PAGE>   18
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
 
     The following discussion should be read in conjunction with the financial
statements of the Company 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
 
     F.Y.I. was founded in September 1994 to create a national, single source
provider of document and information outsourcing solutions. In January 1996,
F.Y.I. acquired, simultaneously with the closing of the IPO, the Founding
Companies. The Acquisitions have been accounted for in accordance with GAAP as a
combination of the Founding Companies at historical cost, and January 31, 1996
has been used as the effective date of the Acquisitions. Between September 1994
and the consummation of the IPO, F.Y.I. did not conduct any operations.
Accordingly, the actual operating results of the Company included in the
Statement of Operations for the year ended December 31, 1996 include the 11
months of operations subsequent to the consummation of the Acquisitions and the
IPO. During the period prior to the IPO, F.Y.I. incurred various legal,
accounting, marketing, travel and other costs in connection with the
Acquisitions and the IPO which were funded by the issuance of equity securities.
Additional costs associated with the Acquisitions and the IPO were paid with
proceeds of the IPO.
 
     Since the IPO and through December 31, 1997, the Company acquired four
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;
and (iv) MPS in December 1997. The consolidated financial statements for all
periods presented have been restated to include the accounts of MAVRICC and
Input. As a result, F.Y.I. is reporting financial results in periods prior to
the Company's inception. The consolidated financial statements of the Company
were not restated for the Rust and MPS acquisitions for the periods prior to
January 1, 1996 and 1997, respectively, due to their financial immateriality.
The Pooled Companies and the 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, 1997, the Company acquired
25 additional companies in transactions accounted for as purchases. In
accordance with GAAP, the Company's results of operations include the results of
these acquisitions from the date of their respective acquisition.
 
     The Company's revenue is classified as service revenue and product and
other revenue. Service revenue relates to the following document management
services: (i) document and data conversion services; (ii) data capture services;
(iii) direct marketing services; (iv) records management services; (v)
healthcare services; (vi) litigation support services; and (vi) employee and
investor services. Product revenue and other revenue represents sales of
micrographic and business imaging supplies and equipment, primarily in
conjunction with film processing and other micrographic services, sales of
filing supplies, shelving and software, commissions on the sales of imaging
systems and equipment and franchising fees.
 
     Cost of services consists primarily of compensation and benefits to
non-administrative employees, occupancy costs, equipment costs and supplies.
Cost of products sold relates to micrographics and business imaging supplies and
equipment, filing supplies, shelving and software.
 
     Selling, general and administrative expenses ("SG&A") consist primarily of:
(i) compensation and related benefits to the sales and marketing, executive
management, accounting, human resources and other administrative employees of
the Company; (ii) other sales and marketing costs; (iii) communications costs;
(iv) insurance costs; and (v) legal and accounting professional fees and
expenses.
 
                                       18
<PAGE>   19
 
RESULTS OF OPERATIONS
 
     The following table sets forth certain items expressed as a percentage of
total revenue for the periods indicated:
 
<TABLE>
<CAPTION>
                                                             YEAR ENDED DECEMBER 31,
                                                            -------------------------
                                                            1995      1996      1997
                                                            -----     -----     -----
<S>                                                         <C>       <C>       <C>
Service revenue...........................................  100.0%     92.1%     94.6%
Product and other revenue.................................    0.0       7.9       5.4
                                                            -----     -----     -----
          Total revenue...................................  100.0     100.0     100.0
Cost of services..........................................   59.4      57.1      59.8
Cost of products sold.....................................    0.0       5.5       3.9
Depreciation..............................................    1.6       2.0       2.1
                                                            -----     -----     -----
          Gross profit....................................   39.0      35.4      34.2
Selling, general and administrative expenses(1)...........   22.1      23.3      21.6
Amortization..............................................    0.0       0.6       1.2
                                                            -----     -----     -----
          Pro forma operating income(1)...................   16.9      11.5      11.4
Interest and other expense (income), net(2)...............   (0.3)      0.9       0.9
                                                            -----     -----     -----
Income before income taxes(1)(2)..........................   17.2      10.6      10.5
Provision for income taxes(3).............................    5.8       4.3       4.3
                                                            -----     -----     -----
Net income(1)(2)(3).......................................   11.4%      6.3%      6.2%
                                                            =====     =====     =====
</TABLE>
 
---------------
 
(1) Adjusted for the Compensation Differential. See Note 2 of Notes to
    Consolidated Financial Statements of F.Y.I. Incorporated and Subsidiaries.
 
(2) Includes the write off of unamortized debt issuance costs of 0.8% of total
    revenue, or 0.5% net of the associated income tax effect. See Note 7 of
    Notes to Consolidated Financial Statements of F.Y.I. Incorporated and
    Subsidiaries.
 
(3) 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, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996
 
  Revenue
 
     Total revenue. Total revenue increased 73.5%, from $88.8 million for the
year ended December 31, 1996 to $154.1 million for the year ended December 31,
1997. This increase was comprised of a 78.3% increase in service revenue and a
18.1% increase in product and other revenue.
 
     Service revenue. Service revenue increased $64.0 million, from $81.8
million for the year ended December 31, 1996 to $145.8 million for the year
ended December 31, 1997. This increase was largely due to: (i) revenue from the
acquisitions completed subsequent to December 31, 1996 accounted for under the
purchase method of accounting; (ii) internal growth of 9.0% in service revenue
at the Founding Companies and the companies acquired and accounted for under the
purchase method of accounting consummated prior to December 31, 1996; and (iii)
internal growth of 6.3% at the Pooled Companies acquired prior to December 1997.
The internal growth of the Founding Companies and purchased companies was
primarily attributable to: (i) an increase in medical records release revenue of
$1.9 million, primarily attributable to the expansion into 28 additional
healthcare institutions in the Eastern United States and Texas during 1997 and
due to increased production volumes at facilities contracted during 1996; (ii)
an increase in litigation support revenue of $3.0 million primarily due to
increased overnight document production and increased medical records subpoena
and service of process requests; and (iii) an increase in records management
revenue of
 
                                       19
<PAGE>   20
 
$2.3 million due to expansion into additional healthcare institutions in
California and storage facilities in Michigan.
 
     Product and other revenue. Product and other revenue increased
approximately $1.3 million, from $7.0 million for the year ended December 31,
1996 to $8.3 million for the year ended December 31, 1997. This increase
primarily resulted from increased sales of filing and shelving supplies
associated with the acquisition of Information Management Corporation in June
1997. This increase in product revenue was partially offset by: (i) a decline in
commissions on the sales of micrographics equipment; (ii) a decline in franchise
fee revenue; and (iii) a decrease in software sales.
 
  Gross profit
 
     Gross profit increased 67.5%, from $31.5 million for the year ended
December 31, 1996 to $52.7 million for the year ended December 31, 1997, largely
due to the increases in revenue discussed above. Gross profit as a percentage of
revenue decreased from 35.4% for the year ended December 31, 1996 to 34.2% for
the year ended December 31, 1997, primarily due to a reduction in the percentage
of revenue from the Pooled Companies from 1996 to 1997.
 
  Selling, general and administrative expenses
 
     SG&A increased 43.8%, from $23.9 million, or 27.0% of revenue, for the year
ended December 31, 1996 to $34.4 million, or 22.3% of revenue, for the year
ended December 31, 1997, primarily due to SG&A associated with the acquisitions
subsequent to December 31, 1996. After giving effect to the Compensation
Differential in each period, SG&A increased 61.6%, from $20.7 million, or 23.3%
of revenue, for the year ended December 31, 1996 to $33.4 million, or 21.6% of
revenue, for the year ended December 31, 1997. This decrease as a percentage of
revenue was a result of a decrease in SG&A as a percentage of revenue at the
Founding and Pooled Companies from 21.4% for the year ended December 31, 1996 to
18.7% for the year ended December 31, 1997, primarily due to spreading the
companies' fixed costs over a larger revenue base.
 
  Pro forma operating income
 
     Pro forma operating income adjusted for the Compensation Differential
increased 71.2%, from $10.2 million, or 11.5% of revenue, for the year ended
December 31, 1996 to $17.5 million, or 11.4% of revenue, for the year ended
December 31, 1997.
 
  Interest Expense
 
     Interest expense increased 60.1% from $1.2 million for the year ended
December 31, 1996 to $1.9 million for the year ended December 31, 1997,
primarily due to the write-off of unamortized debt issue costs related to the
Company's credit agreement entered into in April 1996, with Banque Paribas, as
agent, and the lenders named therein (the "1996 Credit Agreement"). Interest on
borrowings decreased $0.5 million, from $0.9 million in 1996 to $0.4 million in
1997, as the Company entered 1997 with minimal debt and $21.4 million in cash.
 
  Pro forma income before income taxes and pro forma net income
 
     Pro forma income before income taxes adjusted for the Compensation
Differential increased 70.8%, from $9.4 million for the year ended December 31,
1996 to $16.1 million for the year ended December 31, 1997, and pro forma net
income adjusted for both the Compensation Differential and pro forma provision
for taxes increased 71.1%, from $5.6 million for the year ended December 31,
1996 to $9.6 million for the year ended December 31, 1997, largely attributable
to the factors discussed above.
 
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
 
     For the year ended December 31, 1996, revenue increased from $9.0 million
for the year ended December 31, 1995 to $88.8 million for the year ended
December 31, 1996. Gross profit increased from
 
                                       20
<PAGE>   21
 
$3.5 million for the year ended December 31, 1995 to $31.5 million for the year
ended December 31, 1996. Operating income increased from $(59,000) for the year
ended December 31, 1995 to $6.9 million for the year ended December 31, 1996.
Net income increased from $30,000 for the year ended December 31, 1995, to $3.3
million for the year ended December 31, 1996. As previously mentioned, the
financial statements for 1995 have been restated to include the accounts of
MAVRICC and Input, two companies acquired in transactions accounted for as
poolings-of-interests. The Pooled Companies and the Company were not under
common control or management during the periods presented prior to their
respective mergers. The Company acquired 25 companies in 1996, including the
Founding Companies, whose results were included in the Company's results for the
period after the effective date of the respective acquisition, thereby resulting
in the increases discussed above. For further discussion of the 1996 operations
versus the operations of the Founding Companies for 1995, see the Company's 1996
Annual Report on Form 10-K.
 
FLUCTUATIONS IN QUARTERLY RESULTS OF OPERATIONS
 
     Revenue from the Company's services shows no significant seasonal
variations. However, service revenue can vary from period to period due to the
impact of specific projects, primarily in litigation support and data capture
and document and data conversion. 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, 1997, the Company had $22.1 million of working capital and
$6.9 million of cash. Cash flows provided by operating activities for the year
ended December 31, 1997 were $6.6 million. Net cash provided by operating
activities for the year ended December 31, 1997 was primarily impacted by: (i)
an increase in revenue and a corresponding increase in accounts receivable; and
(ii) a decrease in accounts payable and accrued liabilities associated primarily
with the payment of 1996 income taxes and 1997 estimated taxes. Net cash used in
investing activities was $14.6 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 $6.4 million, as the Company assumed and
subsequently retired $8.0 million of debt in acquisitions and paid $2.3 million
for other long-term obligations. These uses were offset in part by proceeds from
employee stock option exercises and an advance in the fourth quarter from the
Company's line of credit.
 
     During the year ended December 31, 1996, net cash provided by operating
activities was $5.5 million. Net cash used for investing activities was $40.6
million, as the Company paid $37.2 million for acquisitions, net of cash
acquired. Net cash provided by financing activities was $56.4 million, primarily
due to the Company's IPO in January 1996 and the follow-on public offering in
December 1996 (the "December Offering"), which raised $68.2 million, net of
underwriting discounts and other costs associated with the offerings. The
Company assumed $8.5 million of debt in the acquisitions of the Founding
Companies, of which $7.7 million was subsequently retired with the proceeds of
the IPO. In April 1996, the Company entered into a $35.0 million Line of Credit
(the "1996 Credit Agreement"). During the year ended December 31, 1996, the
Company borrowed $22.8 million under the 1996 Credit Agreement to help fund the
acquisition program, all of which was subsequently repaid with cash from
operations and the proceeds of the December Offering. As of December 31, 1997,
no proceeds were remaining from the December Offering. The Company assumed $4.0
million of debt in other 1996 acquisitions, of which $1.0 million was retired.
 
     The Company anticipates that cash on hand, cash from operations, additional
bank financing available under the 1998 Credit Agreement and shares of Common
Stock available under the Acquisition Shelf (as defined below) will provide
sufficient liquidity to execute the Company's acquisition and internal growth
plans for approximately the next 12 months. In February 1998, F.Y.I. entered
into the 1998 Credit Agreement. Under the 1998 Credit Agreement, the Company and
its subsidiaries can borrow on a revolving credit basis loans in an aggregate
outstanding principal amount up to $50.0 million, subject to certain customary
borrowing capacity requirements. The availability under the 1998 Credit
Agreement as of February 19, 1998 was $31.2 million for acquisitions, working
capital and general corporate purposes. Should the Company accelerate its
acquisition program, the Company may need to seek additional financing through
the public or private sale
 
                                       21
<PAGE>   22
 
of equity or debt securities. There can be no assurance that the Company could
secure such financing if and when it is needed or on terms the Company deems
acceptable. As of December 31, 1997, 1,810,437 shares were available on the
Company's Acquisition Shelf.
 
IMPACT OF THE YEAR 2000 ISSUE
 
     The "Year 2000 Issue" describes the use of two digits rather than four
digits to define the applicable year in certain computer programs. With the
coming millennium, any of the Company's computer programs that have two digit
date-sensitive software may interpret a date of "00" as the year 1900 rather
than the year 2000. This could result in a system failure or miscalculations
causing disruptions of operations, including, among other things, a temporary
inability to process transactions, send invoices or engage in similar normal
business activities.
 
     Management is in the process of evaluating the effect of the Year 2000
Issue on the Company. Based on preliminary findings, the total cost of
addressing the Year 2000 Issue is not expected to have a material adverse effect
on the Company's business, financial condition or results of operations.
However, management is in the process of completing its assessment of the
potential impact of the Year 2000 Issue on the Company and the potential
exposure of the Company to related problems of its customers and suppliers.
There can be no assurance that such exposure or the costs of remediating any
problems associated therewith will not materially adversely affect the Company's
future business, financial condition or results of operations.
 
                                       22
<PAGE>   23
 
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
F.Y.I. INCORPORATED AND SUBSIDIARIES
  Report of Independent Public Accountants..................   24
  Consolidated Balance Sheets...............................   25
  Consolidated Statements of Operations.....................   26
  Consolidated Statements of Stockholders' Equity...........   27
  Consolidated Statements of Cash Flows.....................   28
  Notes to Consolidated Financial Statements................   29
</TABLE>
 
                                       23
<PAGE>   24
 
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To 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, 1996 and 1997 and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the three years in
the period ended December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
     In our opinion, the 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, 1996 and 1997, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1997 in conformity with generally accepted
accounting principles.
 
Dallas, Texas,                              ARTHUR ANDERSEN LLP
February 20, 1998
 
                                       24
<PAGE>   25
 
                      F.Y.I. INCORPORATED AND SUBSIDIARIES
 
                          CONSOLIDATED BALANCE SHEETS
                       (IN THOUSANDS, EXCEPT SHARE DATA)
 
                                     ASSETS
 
<TABLE>
<CAPTION>
                                                                  DECEMBER 31,
                                                              --------------------
                                                                1996        1997
                                                              --------    --------
<S>                                                           <C>         <C>
CURRENT ASSETS:
Cash and cash equivalents...................................  $ 21,352    $  6,926
Accounts receivable and notes receivable, less allowance for
  doubtful accounts of $1,240 and $3,122, respectively......    19,665      29,468
Inventory...................................................       522       1,675
Notes receivable, shareholders -- short term................        30         351
Prepaid expenses and other current assets...................       924       2,134
                                                              --------    --------
          Total current assets..............................    42,493      40,554
PROPERTY, PLANT AND EQUIPMENT, net..........................    13,303      19,888
GOODWILL AND OTHER INTANGIBLES, net of amortization of $690
  and $2,530, respectively..................................    43,235      64,278
NOTES RECEIVABLE, SHAREHOLDERS -- LONG TERM.................       643         321
OTHER NONCURRENT ASSETS.....................................     2,445       1,197
                                                              --------    --------
          Total assets......................................  $102,119    $126,238
                                                              ========    ========
                       LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities....................  $ 15,219    $ 12,962
Short-term obligations......................................       250          --
Current maturities of long-term obligations.................       585         856
Unearned revenue............................................     1,087       1,991
Income taxes payable........................................     2,665       1,660
Current portion of deferred income taxes....................       759         980
                                                              --------    --------
          Total current liabilities.........................    20,565      18,449
LONG-TERM OBLIGATIONS, net of current maturities............     4,662       5,692
DEFERRED INCOME TAXES, net of current portion...............       351         874
OTHER LONG-TERM OBLIGATIONS.................................        --         707
                                                              --------    --------
          Total liabilities.................................    25,578      25,722
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,
  9,728,726 and 10,946,286 shares issued and outstanding at
  December 31, 1996 and December 31, 1997, respectively.....        97         109
Additional paid-in-capital..................................    74,191      89,541
Retained earnings...........................................     2,754      11,367
                                                              --------    --------
                                                                77,042     101,017
Less -- Treasury stock, $.01 par value, 36,670 shares at
  December 31, 1996 and 1997................................      (501)       (501)
                                                              --------    --------
          Total stockholders' equity........................    76,541     100,516
                                                              --------    --------
          Total liabilities and stockholders' equity........  $102,119    $126,238
                                                              ========    ========
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                       25
<PAGE>   26
 
                      F.Y.I. INCORPORATED AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 
<TABLE>
<CAPTION>
                                                                YEAR ENDED DECEMBER 31,
                                                              ---------------------------
                                                               1995     1996       1997
                                                              ------   -------   --------
<S>                                                           <C>      <C>       <C>
REVENUE:
  Service revenue...........................................  $9,040   $81,775   $145,824
  Product and other revenue.................................      --     7,043      8,318
                                                              ------   -------   --------
     Total revenue..........................................   9,040    88,818    154,142
COST OF SERVICES............................................   5,369    50,672     92,194
COST OF PRODUCTS SOLD.......................................      --     4,898      5,949
DEPRECIATION................................................     145     1,766      3,269
                                                              ------   -------   --------
  Gross profit..............................................   3,526    31,482     52,730
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES................   3,585    23,941     34,423
AMORTIZATION................................................      --       599      1,835
                                                              ------   -------   --------
  Operating (loss) income...................................     (59)    6,942     16,472
OTHER (INCOME) EXPENSE:
  Interest expense..........................................     163     1,156      1,851
  Interest income...........................................     (11)     (286)      (508)
  Other (income) expense, net...............................    (183)      (88)        39
                                                              ------   -------   --------
     (Loss) income before income taxes......................     (28)    6,160     15,090
(BENEFIT) PROVISION FOR INCOME TAXES........................     (58)    2,865      6,083
                                                              ------   -------   --------
NET INCOME..................................................  $   30   $ 3,295   $  9,007
                                                              ======   =======   ========
PRO FORMA DATA (Unaudited -- See Note 2):
  Historical net income.....................................  $   30   $ 3,295   $  9,007
  Pro forma compensation differential.......................   1,585     3,288      1,044
  Pro forma provision for income taxes......................     588       984        471
                                                              ------   -------   --------
PRO FORMA NET INCOME........................................  $1,027   $ 5,599   $  9,580
                                                              ======   =======   ========
NET INCOME PER COMMON SHARE
  BASIC.....................................................  $ 0.02   $  0.48   $   0.86
                                                              ======   =======   ========
  DILUTED...................................................  $ 0.02   $  0.47   $   0.85
                                                              ======   =======   ========
PRO FORMA NET INCOME PER COMMON SHARE
  BASIC.....................................................  $ 0.60   $  0.81   $   0.92
                                                              ======   =======   ========
  DILUTED...................................................  $ 0.60   $  0.79   $   0.90
                                                              ======   =======   ========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
  BASIC.....................................................   1,717     6,924     10,438
                                                              ======   =======   ========
  DILUTED...................................................   1,717     7,052     10,616
                                                              ======   =======   ========
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                       26
<PAGE>   27
 
                      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, 1994...   1,686,477    $ 17     9,000    $ --        --   $  --    $   901   $   141   $  1,059
Stock offering...............      39,185       1                --        --      --        322        --        323
Stock issued in exchange for
  services...................      21,099      --        --      --        --      --         35        --         35
Dividends to shareholders of
  pooled companies...........          --      --        --      --        --      --         --      (167)      (167)
Net income...................          --      --        --      --        --      --         --        30         30
                               ----------    ----    ------    ----    ------   -----    -------   -------   --------
Balance, December 31, 1995...   1,746,761      18     9,000      --        --      --      1,258         4      1,280
Pooling-of-interests
  adjustments at January 1,
  1996.......................     110,000       1        --      --        --      --        242        83        326
Initial public offering, net
  of costs...................   2,185,000      22        --      --        --      --     21,830        --     21,852
Conversion of preferred stock
  into common stock..........     542,557       5    (9,000)     --        --      --         (5)       --         --
Issuance of common stock for
  Founding Companies.........   1,878,933      19        --      --        --      --     (4,586)       --     (4,567)
S corporation to C
  corporation conversion for
  Founding Companies.........          --      --        --      --        --      --       (691)       --       (691)
Common stock issued in
  connection with
  acquisitions...............     856,735       9        --      --        --      --     11,827        --     11,836
Treasury stock re-acquired in
  connection with
  acquisitions...............          --      --        --      --    36,670    (501)        --        --       (501)
Exercise of options, net.....      45,740      --        --      --        --      --        711        --        711
Secondary offering, net of
  costs......................   2,363,000      23        --      --        --      --     43,605        --     43,628
Dividends to shareholders of
  pooled companies...........          --      --        --      --        --      --         --      (628)      (628)
Net income...................          --      --        --      --        --      --         --     3,295      3,295
                               ----------    ----    ------    ----    ------   -----    -------   -------   --------
Balance, December 31, 1996...   9,728,726      97        --      --    36,670    (501)    74,191     2,754     76,541
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 to shareholders of
  pooled companies...........          --      --        --      --        --      --         --      (100)      (100)
Exercise of options, net.....      86,926       1        --      --        --      --      1,533        --      1,534
Net income...................          --      --        --      --        --      --         --     9,007      9,007
                               ----------    ----    ------    ----    ------   -----    -------   -------   --------
Balance, December 31, 1997...  10,946,286    $109        --    $ --    36,670   $(501)   $89,541   $11,367   $100,516
                               ==========    ====    ======    ====    ======   =====    =======   =======   ========
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                       27
<PAGE>   28
 
                      F.Y.I. INCORPORATED AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                  YEAR ENDED DECEMBER 31,
                                                              -------------------------------
                                                               1995        1996        1997
                                                              -------    --------    --------
<S>                                                           <C>        <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income..................................................  $    30    $  3,295    $  9,007
Adjustments to reconcile net income to net cash provided by
  operating activities:
  Depreciation and amortization.............................      145       2,365       5,104
  Deferred tax (benefit) provision..........................      (18)       (219)        289
Change in operating assets and liabilities:
  Accounts receivable and notes receivable..................     (239)       (639)     (4,915)
  Inventory.................................................       --           4        (427)
  Prepaid expenses and other assets.........................      (91)       (642)        953
  Accounts payable and accrued liabilities..................      163         893      (4,063)
  Unearned revenue..........................................       --         414         681
                                                              -------    --------    --------
          Net cash (used in) provided by operating
            activities......................................      (10)      5,471       6,629
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property, plant and equipment.................     (172)     (3,534)     (6,723)
  Distribution from partnership.............................       --          86          60
  Cash paid for acquisitions, net of cash acquired..........       --     (37,200)     (7,956)
                                                              -------    --------    --------
          Net cash used for investing activities............     (172)    (40,648)    (14,619)
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from common stock issuance, net of underwriting
     discounts and other costs..............................     (741)     68,227         814
  Proceeds from preferred stock issuance....................      135          --          --
  Proceeds from short-term obligations......................    1,990       7,808         446
  Proceeds from long-term obligations.......................      936      19,133       3,000
  Cash paid for debt issuance costs.........................       --      (1,627)         --
  Dividends paid to shareholders of pooled companies........     (167)       (100)       (100)
  Principal payments on short-term obligations..............   (2,163)     (9,568)       (262)
  Principal payments on long-term obligations...............     (398)    (27,516)    (10,334)
                                                              -------    --------    --------
          Net cash (used in) provided by financing
            activities......................................     (408)     56,357      (6,436)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS........     (590)     21,180     (14,426)
CASH AND CASH EQUIVALENTS, beginning of period..............      762         172      21,352
                                                              -------    --------    --------
CASH AND CASH EQUIVALENTS, end of period....................  $   172    $ 21,352    $  6,926
                                                              =======    ========    ========
SUPPLEMENTAL DATA:
Cash paid for:
  Income taxes..............................................  $    --    $  1,731    $  7,106
  Interest..................................................  $   150    $    934    $    400
NONCASH FINANCING TRANSACTIONS:
  Debt assumed in acquisitions..............................  $    --    $ 12,485    $  8,030
  Equipment acquired via capital lease......................  $    --    $    863    $    171
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                       28
<PAGE>   29
 
                      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, manufacturing and
government. In January 1996, F.Y.I. acquired (the "Acquisitions") simultaneously
with the closing of its initial public offering (the "IPO") on January 26, 1996,
seven document management services businesses (the "Founding Companies"). The
consideration for the Founding Companies consisted of a combination of cash and
common stock (the "Common Stock") of F.Y.I.
 
     Between September 1994 and the consummation of the IPO and the
Acquisitions, F.Y.I. did not conduct any operations. For accounting purposes and
for the purposes of the presentation of the financial statements herein, January
31, 1996 has been used as the effective date of the Acquisitions. Accordingly,
the actual operating results of the Company included in the Statement of
Operations for the twelve months ended December 31, 1996 include the eleven
months of operations subsequent to the consummation of the Acquisitions.
 
     Since the IPO, the Company acquired four 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; and (iv) Micro
Publishing Systems, Inc. ("MPS") in December 1997 (collectively, the "Pooled
Companies"). The consolidated financial statements for all periods presented
have been restated to include the accounts of MAVRICC and Input. As a result,
F.Y.I. is reporting financial results in periods prior to the Company's
inception. The consolidated financial statements of the Company were not
restated for the Rust and MPS acquisitions for the periods prior to January 1,
1996 and 1997, respectively, due to their financial immateriality. The Pooled
Companies and the 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.
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
 
  Cash and Cash Equivalents
 
     The Company considers 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.
 
  Inventory
 
     Inventory is stated at the lower of cost or market with cost determined on
a first-in, first-out (FIFO) basis.
 
  Property, Plant and Equipment
 
     Property, plant and equipment are recorded at cost. Depreciation is
computed using straight-line and accelerated methods 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.
 
                                       29
<PAGE>   30
                      F.Y.I. INCORPORATED AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
  Intangible Assets
 
     Intangible assets consist primarily of excess purchase price over net
assets, which are amortized over 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," the Company's
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
shipped, to the Company's customers. Microfilm processing revenue is recognized
on a percentage-of-completion basis. Unearned revenue represents customer
storage and certain services which are billed in advance.
 
  Income Taxes
 
     Income taxes are provided based upon the provisions of SFAS No. 109,
"Accounting for Income Taxes," which requires recognition of deferred income
taxes under the asset and liability method.
 
     Deferred income taxes are provided for temporary differences in the
recognition of revenue and expenses for tax and financial reporting purposes.
Temporary differences result primarily from accelerated depreciation and
amortization for tax purposes, deferred contract revenue being taxed when
billed, and various accruals and reserves being deductible for tax purposes in
different periods.
 
  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
net income by the weighted average number of common shares outstanding for the
period. Diluted net income per share has been computed by dividing net income by
the weighted average number of common shares and common stock equivalents
outstanding for the period. Net income per share has been restated for all
periods presented in accordance with SFAS No. 128.
 
  Use of Estimates in Financial Statements
 
     The preparation of financial statements in conformity with generally
accepted accounting principles ("GAAP") requires 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 its
subsidiaries, which consist of the results of: (i) F.Y.I. Incorporated; (ii) the
Founding Companies acquired simultaneously with the closing of F.Y.I.'s IPO on
January 23, 1996
 
                                       30
<PAGE>   31
                      F.Y.I. INCORPORATED AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
based on an effective date of January 31, 1996; (iii) the companies acquired in
business combinations accounted for under the purchase method of accounting from
their respective acquisition dates; and (iv) the companies acquired in business
combinations accounted for under the pooling-of-interests method of accounting
for all periods presented. All significant intercompany balances and
transactions have been eliminated.
 
  Recent Accounting Pronouncements
 
     In June 1997, the Financial Accounting Standards Board issued two new
statements: SFAS No. 130, "Reporting Comprehensive Income," which requires
enterprises to report, by major component and in total, all changes in equity
from nonowner sources; and SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," which establishes annual and interim
reporting standards for a public company's operating segments and related
disclosures about its products, services, geographic areas, and major customers.
Both statements are effective for the Company's fiscal year ended December 31,
1998, with earlier application permitted. The effect of adoption of these
statements will be limited to the form and content of the Company's disclosures
and will not impact the Company's results of operations, cash flow or financial
position.
 
  Pro Forma Net Income (Unaudited)
 
     The Company acquired Rust in December 1996, MAVRICC in March 1997, Input in
March 1997, and MPS in December 1997, all 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 acquisition, the owners have entered into employment agreements that provide
for 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 present 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 AT
                                         BEGINNING    BALANCE    COSTS AND                   END OF
                                         OF PERIOD    ACQUIRED    EXPENSES    WRITE-OFFS     PERIOD
                                         ----------   --------   ----------   ----------   ----------
<S>                                      <C>          <C>        <C>          <C>          <C>
Twelve months ended December 31,
  1996.................................    $   22      $1,038      $1,017       $  837       $1,240
                                           ======      ======      ======       ======       ======
Twelve months ended December 31,
  1997.................................    $1,240      $2,046      $1,631       $1,795       $3,122
                                           ======      ======      ======       ======       ======
</TABLE>
 
                                       31
<PAGE>   32
                      F.Y.I. INCORPORATED AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
4. PROPERTY, PLANT AND EQUIPMENT:
 
     Property, plant and equipment consist of the following (in thousands):
 
<TABLE>
<CAPTION>
                                                          ESTIMATED       DECEMBER 31,
                                                         USEFUL LIVES   -----------------
                                                            YEARS        1996      1997
                                                         ------------   -------   -------
<S>                                                      <C>            <C>       <C>
Land...................................................    N/A          $   602   $   602
Buildings and improvements.............................   7--18           2,335     2,691
Leasehold improvements.................................   5--10             792     1,194
Vehicles...............................................    5--7           1,253     1,990
Machinery and equipment................................   5--15          14,705    18,062
Computer equipment.....................................    3--7           3,769     9,320
Furniture and fixtures.................................   5--15             999     2,493
                                                                        -------   -------
                                                                         24,455    36,352
Less -- Accumulated depreciation and amortization......                  11,152    16,464
                                                                        -------   -------
                                                                        $13,303   $19,888
                                                                        =======   =======
</TABLE>
 
5. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES:
 
     Accounts payable and accrued liabilities consist of the following (in
thousands):
 
<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                              ------------------
                                                               1996       1997
                                                              -------    -------
<S>                                                           <C>        <C>
Accounts payable and accrued liabilities....................  $ 4,968    $ 5,182
Accrued compensation and benefits...........................    2,819      4,698
Customer deposits...........................................      883      1,129
Accrued liabilities from acquisitions.......................    5,211      1,344
Accrued professional fees...................................    1,035        176
Other.......................................................      303        433
                                                              -------    -------
                                                              $15,219    $12,962
                                                              =======    =======
</TABLE>
 
6. BUSINESS COMBINATIONS:
 
  1997 Acquisitions
 
     During 1997, the Company acquired 11 additional document management
businesses, eight of which were accounted for as purchases (the "Purchased
Companies") and three of which were accounted for under the pooling-of-interests
method. The eight acquisitions accounted for as purchases were Acadian
Consultants, Inc. ("Acadian"), Computer Central Corporation ("CCC"), Deliverex
of San Francisco ("Deliverex San Francisco"), Information Management Corporation
("IMC"), Major Legal Services ("Major"), Quality Copy Service, QCSInet, Inc. and
affiliates (collectively, "QCS"), APS Services ("APS"), and ZipShred, Inc. and
ZipShred of America, LLC (collectively, "ZipShred"). The aggregate consideration
paid for the Purchased Companies consisted of $5.8 million in cash and 724,572
shares of Common Stock. The preliminary allocation of the purchase price is set
forth below (in thousands):
 
<TABLE>
<CAPTION>
 
<S>                                                           <C>
Consideration Paid..........................................  $17,950
Estimated Fair Value of Tangible Assets.....................    8,153
Estimated Fair Value of Liabilities.........................   11,772
Goodwill....................................................   21,569
</TABLE>
 
                                       32
<PAGE>   33
                      F.Y.I. INCORPORATED AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     The weighted average fair market values of the shares of Common Stock used
in calculating the consideration paid was $16.79, which represents a 30% to 35%
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 or
two year period.
 
     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
separate and combined results of F.Y.I., MAVRICC and Input for the periods
preceding the acquisition were as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                  F.Y.I.    MAVRICC   INPUT    CONSOLIDATED
                                                  -------   -------   ------   ------------
<S>                                               <C>       <C>       <C>      <C>
Year ended December 31, 1995:
  Total revenue.................................  $    --   $6,456    $2,584     $ 9,040
  Net income (loss).............................       --      177      (147)         30
  Pro forma net income..........................       --    1,049       (22)      1,027
  Diluted weighted average common shares........      633      820       264       1,717
Year ended December 31, 1996:
  Total revenue.................................   75,722    8,793     4,303      88,818
  Net income (loss).............................    4,031     (829)       93       3,295
  Pro forma net income..........................    4,172    1,028       399       5,599
  Diluted weighted average common shares........    5,968      820       264       7,052
</TABLE>
 
     The acquisition of MPS in December 1997 for 326,506 shares of Common Stock
was accounted for as a pooling-of-interests. The consolidated financial
statements of the Company were not restated for periods prior to January 1, 1997
due to the financial immateriality of MPS. The interim results of the Company
for the period from January 1, 1997 through September 30, 1997 have been
restated for the MPS acquisition. Restated total revenue, net income, pro forma
net income and weighted average shares outstanding after giving effect to the
pooling-of-interests with MPS are summarized below. Pro forma net income
reflects adjustments for the Compensation Differential and the related income
tax effect.
 
<TABLE>
<CAPTION>
                                                                   NINE MONTHS ENDED
                                                                   SEPTEMBER 30, 1997
                                                              ----------------------------
                                                                             AS PREVIOUSLY
                                                              AS RESTATED      REPORTED
                                                              -----------    -------------
                                                               (IN THOUSANDS, EXCEPT PER
                                                                      SHARE DATA)
<S>                                                           <C>            <C>
Total revenue...............................................   $109,893        $105,176
Net income..................................................      6,645           6,843
Net income per common share(1)..............................   $   0.63        $   0.67
Pro forma net income........................................      7,202           6,920
Pro forma net income per common share(1)....................   $   0.69        $   0.68
Weighted average common shares outstanding(1)...............     10,486          10,159
</TABLE>
 
---------------
 
(1)  Net income per common share has been restated in accordance with SFAS 128.
 
                                       33
<PAGE>   34
                      F.Y.I. INCORPORATED AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
  1996 Acquisitions
 
     Since the IPO and through December 31, 1996, the Company acquired 18
additional businesses (the "1996 Acquisitions") that provide document management
services, of which 17 were accounted for as purchases and one was accounted for
as a pooling-of-interests. The 1996 Acquisitions consist of: Sacramento Valley
Records Management, Inc. ("Sacramento"); Microfilm Associates, Ltd.
("Microfilm"); B&B Information and Image Management, Inc. ("B&B"); Premier
Document Management, Inc. and PDM Services, Inc. ("Premier"); Robert A. Cook and
Staff, Inc. and RAC Services, Inc. ("Cook"); Octo, Inc. ("Octo"); Domor Data
Processing ("Domor"); Index Record Management ("Index"); Rushmore Legal Support
("Rushmore"); C.M.R.S. Incorporated ("CMRS"), Minnesota Medical Record Service,
Inc. ("Minnesota Medical Record"), and Texas Medical Record Service, Inc.
("Texas Medical Record") (collectively "Medical Record"); ZIA Information
Analysis Group ("ZIA"); Carton Hodgson, Inc. and CH Direct, Inc. (collectively
"Carton"); Data Input Services Corporation ("DISC"); Deliverex of Seattle
("Deliverex Seattle"); Researchers Litigation Support, L.L.C. ("Researchers
LLC"); and Rust. The aggregate consideration paid for the 17 acquisitions
accounted for as purchases consisted of $32.3 million in cash, 820,065 shares of
Common Stock net of stock repurchased by the Company, and future contingent
payment estimates of $2,664,000 to be paid in cash and stock. The preliminary
allocation of the purchase price is set forth below (in thousands):
 
<TABLE>
<S>                                                             <C>
Consideration Paid..........................................    $46,523
Estimated Fair Value of Tangible Assets.....................     15,134
Estimated Fair Value of Liabilities.........................     12,994
Goodwill....................................................     44,383
</TABLE>
 
     The fair market value of the shares of Common Stock used in calculating the
consideration paid ranged from $13.65 to $16.35, which is based on approximately
a 20-39% discount from the average trading price of the Common Stock based on
the length and type of stock resale restrictions outlined in the purchase
agreements.
 
     The acquisition of Rust in December 1996 for 110,000 shares of Common Stock
was accounted for as a pooling-of-interests. The consolidated financial
statements of the Company were not restated for periods prior to January 1, 1996
due to the financial immateriality of Rust.
 
  Acquisitions of the Founding Companies
 
     Simultaneously with the closing of the IPO, the Company acquired the
Founding Companies. The aggregate consideration paid by F.Y.I. to acquire the
Founding Companies was approximately $35 million, consisting of: (i) $7,059,000
in cash; (ii) 1,878,933 shares of Common Stock; (iii) the assumption and
repayment of approximately $191,000 of indebtedness owed by a Founding Company
stockholder; and (iv) the distribution of cash and certain receivables to
certain Founding Company stockholders of S corporations in the amount of
$3,450,000, representing the undistributed retained earnings of S corporations,
upon which taxes have been paid by the stockholders.
 
     The Acquisitions have been accounted for in accordance with GAAP as a
combination of F.Y.I. and the Founding Companies at historical cost, because:
(i) the Founding Companies' stockholders transferred assets to F.Y.I. in
exchange for Common Stock and cash simultaneously, with the IPO; (ii) the nature
of future operations of the Company will be substantially identical to the
combined operations of the Founding Companies; and (iii) no former stockholder
group of any of the Founding Companies obtained a majority of the outstanding
voting shares of the Company.
 
                                       34
<PAGE>   35
                      F.Y.I. INCORPORATED AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
  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 a period of 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 the B&B, Premier, Medical
Record, ZIA, Carton, DISC, Acadian, CCC, Deliverex San Francisco, IMC, Major,
QCS and APS 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, 1996 and December 31, 1997. The unaudited pro forma data give
effect to: (i) the acquisitions of B&B, Premier, Cook, Medical Record, ZIA,
Carton, DISC, Acadian, CCC, IMC, Major, QCS, APS and MPS; (ii) the acquisitions
of the Founding Companies; and (iii) compensation and tax adjustments for all
transactions as if these transactions had occurred on January 1, 1996. The
acquisitions of Sacramento, Microfilm, Octo, Domor, Rushmore, Index, Deliverex
Seattle, Researchers LLC, Deliverex San Francisco and ZipShred have not been
included in the pro forma financial statements for periods prior to their
acquisition date as the effect is immaterial.
 
<TABLE>
<CAPTION>
                                                                   PRO FORMA YEAR ENDED
                                                                       DECEMBER 31,
                                                                --------------------------
                                                                   1996           1997
                                                                -----------    -----------
                                                                (UNAUDITED, IN THOUSANDS,
                                                                  EXCEPT PER SHARE DATA)
<S>                                                             <C>            <C>
Revenue.....................................................     $162,677       $176,128
Income before income taxes..................................       10,328         15,969
Net income..................................................        6,197          9,581
Net income per common share
  Basic.....................................................     $   0.75       $   0.88
  Diluted...................................................     $   0.74       $   0.87
Weighted average common shares outstanding
  Basic.....................................................        8,298         10,839
  Diluted...................................................        8,426         11,017
</TABLE>
 
     The pro forma financial data are provided for informational purposes only
and do not purport to present the results of operations of the Company 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.
 
     Subsequent to December 31, 1997, the Company acquired five additional
businesses.
 
                                       35
<PAGE>   36
                      F.Y.I. INCORPORATED AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
7. CREDIT FACILITIES:
 
  Short-Term Obligations
 
     Short-term obligations consist of the following (in thousands):
 
<TABLE>
<CAPTION>
                                                                DECEMBER 31,
                                                                ------------
                                                                1996    1997
                                                                ----    ----
<S>                                                             <C>     <C>
Line of credit, expiring at December 1997, interest at prime
  plus 0.5% (8.75% at December 31, 1996 and 9.0% at December
  31, 1997).................................................    $250    $ --
                                                                ----    ----
Total short-term obligations................................    $250    $ --
                                                                ====    ====
</TABLE>
 
  Long-term Obligations
 
     Long-term obligations consist of the following (in thousands):
 
<TABLE>
<CAPTION>
                                                                DECEMBER 31,
                                                              ----------------
                                                               1996      1997
                                                              ------    ------
<S>                                                           <C>       <C>
Line of credit, expiring at February 18, 2001, interest at
  prime plus 1.5% or the Eurodollar rate plus 3% (8.75% to
  9.75% at December 31, 1996 and 8.94% to 10% at December
  31, 1997).................................................  $   --     2,000
Industrial Revenue Bonds: Variable Rate (3.5% at December
  31, 1996 and 3.3% at December 31, 1997) 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...............................................   2,346     2,296
Note payable -- Small Business Administration, monthly
  payment of $3,000, including principal and interest at 4%,
  maturing November 17, 2014, secured by deed of trust on
  real estate and non-real estate assets of the Company,
  guaranteed by a stockholder and the stockholder's wife....     395       376
Notes payable -- Small Business Administration, monthly
  payment of $10,077, including principal and interest at
  prime plus 2.75% (11% at December 31, 1996 and 11.25% at
  December 31, 1997), maturing August 21, 2003 and December
  12, 2003, secured by all equipment and tangible property
  of the Company, guaranteed by a stockholder...............     585        --
Notes payable - Affiliates, due on demand with interest
  ranging from 1% to 8% above prime (9.25% to 16.25% at
  December 31, 1996 and 9.5% to 16.5% at December 31, 1997),
  unsecured.................................................      56        --
Capital lease obligations...................................   1,431     1,306
All other obligations.......................................     434       570
                                                              ------    ------
          Total.............................................   5,247     6,548
Less -- Current maturities of long-term obligations.........     585       856
                                                              ------    ------
          Total long-term obligations.......................  $4,662     5,692
                                                              ======    ======
</TABLE>
 
     In April 1996, the Company and its subsidiaries entered into a credit
agreement, as amended (the "1996 Credit Agreement"), with Banque Paribas, as
agent, and the lenders named therein. In February 1998, F.Y.I. entered into a
new credit agreement (the "1998 Credit Agreement") with Banque Paribas and Bank
of America Texas, N.A., as co-agents and lenders named therein. Under the 1998
Credit Agreement, the Company and its subsidiaries can borrow on a revolving
credit basis loans in an aggregate outstanding principal
 
                                       36
<PAGE>   37
                      F.Y.I. INCORPORATED AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
amount up to $50.0 million, subject to certain customary borrowing capacity
requirements. The 1998 Credit Agreement is secured by the assets and/or stock of
F.Y.I. and its subsidiaries.
 
     The commitment to fund revolving credit loans under the 1998 Credit
Agreement expires February 17, 2001. The annual interest rate applicable to
borrowings under this facility is, at the option of the Company, (i) the prime
rate or (ii) grid pricing ranging from 0.5% to 1.5% 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.
 
     The Company also has outstanding an irrevocable letter of credit in the
amount of approximately $2.4 million to serve as a guarantee for periodic
principal and interest payments related to the Industrial Revenue Bonds. In
January 1998, the Company entered into a letter of credit in the amount of
$10,000,000 to serve as a guarantee for performance under a preliminary contract
with the New York State Workers Compensation Board.
 
     The Company capitalized certain costs associated with the 1996 Credit
Agreement. The unamortized costs of approximately $1.2 million were expensed in
the fourth quarter of 1997 when the Company agreed to terms on the 1998 Credit
Agreement.
 
     The weighted average interest rate on short and long-term obligations at
December 31, 1997 and 1996 was 7.34% and 6.81%, respectively. The 1996 and 1998
Credit Agreements contain certain reporting requirements and financial
covenants, including requirements that the Company maintain minimum levels of
net worth and other financial ratios. As of December 31, 1997 and 1996, the
Company has complied with all loan covenants.
 
  Maturities of Long-Term Obligations
 
     As of December 31, 1997, maturities of long-term obligations are as follows
(in thousands):
 
<TABLE>
<CAPTION>
                 YEARS ENDING DECEMBER 31,
                 -------------------------
<S>                                                           <C>
1998........................................................  $  856
1999........................................................     566
2000........................................................     501
2001........................................................   2,293
2002........................................................     151
Thereafter..................................................   2,181
                                                              ------
Total.......................................................  $6,548
                                                              ======
</TABLE>
 
                                       37
<PAGE>   38
                      F.Y.I. INCORPORATED AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
8. LEASE COMMITMENTS:
 
     The operating companies lease various office buildings, machinery,
equipment, and vehicles. Future minimum lease payments under capital leases and
noncancellable operating leases are as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                                   YEAR ENDED
                                                               DECEMBER 31, 1997
                                                              --------------------
                                                              CAPITAL    OPERATING
                 YEARS ENDING DECEMBER 31,                    LEASES      LEASES
                 -------------------------                    -------    ---------
<S>                                                           <C>        <C>
1998........................................................  $  635      $ 7,087
1999........................................................     424        6,178
2000........................................................     263        4,194
2001........................................................     187        3,337
2002........................................................      33        2,350
Thereafter..................................................       8        6,059
                                                              ------      -------
Total minimum lease payments................................  $1,550      $29,205
                                                                          =======
Less -- Amounts representing interest.......................     244
                                                              ------
Net minimum lease payments..................................   1,306
Less -- Current portion of obligations under capital
  leases....................................................     516
                                                              ------
Long-term portion of obligations under capital leases.......  $  790
                                                              ======
</TABLE>
 
     Rent expense for all operating leases for the years ended December 31,
1995, 1996, and 1997 was approximately $275,000, $4,145,000, and $7,871,000,
respectively.
 
     Certain operating companies sublease a portion of their office facilities
under noncancellable lease agreements which expire at various dates to three
businesses. Future minimum sublease rental income as of December 31, 1997 for
the remainder of the term and in the aggregate are as follows (in thousands):
 
<TABLE>
<CAPTION>
                 YEARS ENDING DECEMBER 31,
                 -------------------------
<S>                                                           <C>
1998........................................................  $ 97
1999........................................................    90
2000........................................................    78
2001........................................................    11
                                                              ----
                                                              $276
                                                              ====
</TABLE>
 
9. INCOME TAXES:
 
     The provision for federal and state income taxes consists of the following
(in thousands):
 
<TABLE>
<CAPTION>
                                                             YEAR ENDED DECEMBER 31,
                                                             ------------------------
                                                             1995     1996      1997
                                                             ----    ------    ------
<S>                                                          <C>     <C>       <C>
Current
  Federal..................................................  $(18)   $2,523    $4,987
  State....................................................    --       547       807
Deferred
  Federal..................................................   (40)     (165)      249
  State....................................................    --       (40)       40
                                                             ----    ------    ------
                                                             $(58)   $2,865    $6,083
                                                             ====    ======    ======
</TABLE>
 
                                       38
<PAGE>   39
                      F.Y.I. INCORPORATED AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     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,
                                                             ------------------------
                                                             1995     1996      1997
                                                             ----    ------    ------
<S>                                                          <C>     <C>       <C>
Tax at statutory rate......................................  $(10)   $2,094    $5,131
Add (deduct):
  State income taxes.......................................    --       339       559
  (Income) loss of S Corporations..........................   (60)      282       (66)
  Nondeductible expenses...................................    12       150       459
                                                             ----    ------    ------
                                                             $(58)   $2,865    $6,083
                                                             ====    ======    ======
</TABLE>
 
     The components of deferred income tax liabilities and assets are as follows
(in thousands):
 
<TABLE>
<CAPTION>
                                                                DECEMBER 31,
                                                              ----------------
                                                               1996      1997
                                                              ------    ------
<S>                                                           <C>       <C>
Deferred income tax liabilities --
  Tax over book depreciation and amortization...............  $  441    $  874
  Accrual to cash differences, net..........................   1,067       974
  Accounts receivable.......................................      --       340
  Other, net................................................       7        --
                                                              ------    ------
          Total deferred income tax liabilities.............   1,515     2,188
Deferred income tax assets --
  Allowance for doubtful accounts...........................     305       266
  Other, net................................................     100        68
                                                              ------    ------
          Total deferred income tax assets..................     405       334
                                                              ------    ------
Total net deferred income tax liabilities...................  $1,110    $1,854
                                                              ======    ======
Current portion of deferred income tax liabilities..........     759       980
Long-term deferred tax liabilities..........................     351       874
                                                              ------    ------
                                                              $1,110    $1,854
                                                              ======    ======
</TABLE>
 
10. STOCKHOLDERS' EQUITY:
 
  Initial Public Offering and December Public Stock Offering:
 
     On January 26, 1996, the Company completed the IPO of 2,185,000 shares of
Common Stock (including the exercise of the underwriters' over-allotment option)
at $13.00 per share. Proceeds from the IPO, net of underwriting commissions and
offering costs, were approximately $22.9 million.
 
     Upon the closing of the IPO, the Company converted the 9,000 shares of
Series A Preferred Stock then outstanding into 542,557 shares of Common Stock.
 
     On December 17, 1996, the Company completed a follow-on public offering
(the "December Offering") of 2,363,000 shares of Common Stock (including the
exercise of the underwriters' over-allotment option) at $20.00 per share.
Proceeds from the December Offering, net of underwriting commissions and
offering costs, were approximately $43.6 million.
 
                                       39
<PAGE>   40
                      F.Y.I. INCORPORATED AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
  Stock Options and Warrants:
 
     At December 31, 1997, the Company had one stock-based compensation plan,
the 1995 Stock Option Plan ("the Plan"), which is described below. The Company
applies APB Opinion 25 and related Interpretations in accounting for the Plan.
Accordingly, no compensation cost has been recognized for the Plan. Had
compensation cost for the Plan been determined based upon the fair value at
grant dates for awards under the Plan consistent with the method of SFAS No.
123, "Accounting for Stock Based Compensation," the Company's net income and
earnings per share would have been as follows (in thousands, except for per
share data):
 
<TABLE>
<CAPTION>
                                                                DECEMBER 31,
                                                              ----------------
                                                               1996      1997
                                                              ------    ------
<S>                                                           <C>       <C>
Net income under SFAS 123...................................  $2,708    $7,476
Diluted net income per common share under SFAS 123..........    0.46      0.70
Actual net income...........................................   3,295     9,007
Actual diluted net income per common share..................    0.47      0.85
</TABLE>
 
     The fair value of each option grant was estimated on the date of the grant
using the Black-Scholes option pricing model with the following assumptions for
1996: risk free interest rate ranging from 5.4% to 6.9%, no dividend yield,
expected life of three years, and volatility of 36%. The following assumptions
were used for 1997: risk free interest rate ranging from 5.7% to 6.6%, no
dividend yield, expected life of three years, and volatility of 33%.
 
     In October 1995, the Board of Directors and F.Y.I.'s 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 the Company or its 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, determined immediately after the grant of any option, is
the greater of 650,000 shares or 16% of the aggregate number of shares of the
Company's 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, 1997 and 1996, approximately 189,000 and 1,037,000 shares, respectively,
were available for issuance.
 
     The Company had options to purchase 1,561,981 and 690,370 shares
outstanding at December 31, 1997 and 1996, respectively. These options, other
than those granted to employee directors, have 10 year expirations
 
                                       40
<PAGE>   41
                      F.Y.I. INCORPORATED AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
and various vesting schedules. Options are granted at the market price of the
Common Stock on the date of grant.
 
<TABLE>
<CAPTION>
                                                               OPTIONS OUTSTANDING
                                                       ------------------------------------
                                                                           WEIGHTED AVERAGE
                                                           SHARES           EXERCISE PRICE
                                                       --------------      ----------------
                                                       (IN THOUSANDS)
<S>                                                    <C>                 <C>
Balance at inception.................................         --                    --
Granted..............................................        473                $13.00
                                                           -----                ------
Balance, December 31, 1995...........................        473                $13.00
Granted..............................................        316                $19.58
Exercised............................................         46                $13.00
Forfeited............................................         53                $13.28
                                                           -----                ------
Balance, December 31, 1996...........................        690                $15.99
Granted..............................................        982                $21.95
Exercised............................................         87                $14.28
Forfeited............................................         23                $18.09
                                                           -----                ------
Balance, December 31, 1997...........................      1,562                $19.80
                                                           =====                ======
Exercisable, December 31, 1997.......................        453                $17.48
                                                           =====                ======
</TABLE>
 
     The following table summarizes information about stock options granted
under the Plan that were outstanding at December 31, 1997:
 
<TABLE>
<CAPTION>
                                 OPTIONS OUTSTANDING                        OPTIONS EXERCISABLE
                  -------------------------------------------------   -------------------------------
                    NUMBER      WEIGHTED-AVERAGE                         NUMBER
   RANGE OF       OUTSTANDING      REMAINING       WEIGHTED-AVERAGE   EXERCISABLE    WEIGHTED-AVERAGE
EXERCISE PRICES   AT 12/31/97   CONTRACTUAL LIFE    EXERCISE PRICE    AT 12/31/97     EXERCISE PRICE
---------------   -----------   ----------------   ----------------   ------------   ----------------
<S>               <C>           <C>                <C>                <C>            <C>
 $       13.00      307,011           7.4               $13.00          170,931           $13.00
 $16.00-$20.00      261,120           8.9               $18.73          170,300           $19.10
 $20.38-$25.31      993,850           9.5               $22.18          111,630           $21.86
</TABLE>
 
  Warrants to Purchase Common Stock
 
     In November 1995, the Company granted to executive officers warrants to
purchase 115,000 shares of common stock with an exercise price of $10.00 per
share. The warrants are exercisable as to 50% of the underlying shares on March
31, 1997, and as to the remaining 50% on January 26, 1998. In May 1996, the
Company granted to the Chief Executive Officer an additional warrant to purchase
50,000 shares of Common Stock at an exercise price of $20.00 per share. The
additional warrant is exercisable as to 50% of the underlying shares on May 21,
1997 and as to the remaining 50% on May 21, 1998.
 
                                       41
<PAGE>   42
                      F.Y.I. INCORPORATED AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
  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,
                                                             ------------------------
                                                             1995     1996      1997
                                                             -----    -----    ------
<S>                                                          <C>      <C>      <C>
Basic weighted average common shares.......................  1,717    6,924    10,438
Weighted average options and warrants......................     --      128       178
                                                             -----    -----    ------
Diluted weighted average common shares.....................  1,717    7,052    10,616
                                                             =====    =====    ======
</TABLE>
 
11. EMPLOYEE BENEFIT PLANS:
 
     The Company established a defined contribution plan (the "401(k) plan") in
January 1997. The 401(k) plan covers employees of the Company and some of its
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, the Company established a non-qualified plan in December 1996. The
non-qualified compensation plan permits eligible officers 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. The Company may make
contributions to either or both plans at the discretion of the Company's Board
of Directors. No contributions were made to the 401(k) plan or the non-qualified
compensation plan by F.Y.I. for the years ended December 31, 1997 or 1996.
F.Y.I. offers no post-employment or post-retirement benefits.
 
     Certain of the subsidiaries 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 related to the
Plans by the subsidiaries was approximately $33,000, $131,000, and $140,000 for
the years ended December 31, 1995, 1996, and 1997, respectively.
 
12. RELATED-PARTY TRANSACTIONS:
 
  Leasing Transactions
 
     Certain of the Founding Companies lease their operating facilities, along
with certain equipment, from selling parties who remained employees or directors
of the Company. These leases are for various lengths and annual amounts. The
rental expense for these operating leases for the years ended December 31, 1997
and 1996 was approximately $834,000 and $487,000, respectively.
 
  Notes Receivable
 
     In the Acquisitions, the Company acquired $642,000 of notes receivable from
two Founding Company stockholders. At the time of the Merger, the stockholders
entered into new notes receivable with a stated interest rate (5%) and principal
payment schedules. Interest is payable on a semi-annual basis, and principal is
due as follows: 1998 -- $321,000; and 1999 -- $321,000.
 
  Other Transactions
 
     A subsidiary purchased digital coding services from an entity in which an
F.Y.I. stockholder and director had a controlling interest. Effective December
1, 1996, the Company purchased this entity from the stockholder for $2,700,000.
The expense incurred to the entity for the 11 months ended November 30, 1996
 
                                       42
<PAGE>   43
                      F.Y.I. INCORPORATED AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
was $32,000, and billings to the entity were $49,000. Additionally, the Company
charged the entity a management fee for accounting services. Management fees
were $25,000 for the eleven months ended November 30, 1996.
 
13. COMMITMENTS AND CONTINGENCIES:
 
  Litigation
 
     The Company is, from time to time, a party to litigation arising in the
normal course of its business. Management believes that none of these actions
will have a material adverse effect on the financial position or results of
operations of the Company.
 
  Concentration of Credit Risk
 
     Financial instruments that potentially subject the Company 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 the Company's customer base and their
dispersion across many industries and geographic areas.
 
14. QUARTERLY INFORMATION (UNAUDITED):
 
<TABLE>
<CAPTION>
                                                            F.Y.I. INCORPORATED
                               ------------------------------------------------------------------------------
                                        1996 QUARTER ENDED                       1997 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................  $12,221   $20,281   $25,938   $30,378    $33,488   $35,896   $40,509   $44,249
Gross profit.................    4,090     6,939     9,453    11,000     11,383    12,316    13,672    15,359
Earnings before taxes........      771     1,897     1,970     1,522      3,577     4,100     3,504     3,909
Net income...................      469     1,182     1,243       401      2,163     2,380     2,102     2,362
Pro forma earnings before
  taxes......................    1,105     2,275     2,968     3,100      3,820     4,127     4,250     3,937
Pro forma net income.........      664     1,359     1,773     1,803      2,256     2,396     2,550     2,378
Net income per common share
  Basic......................  $  0.07   $  0.18   $  0.18   $  0.05    $  0.21   $  0.23   $  0.20   $  0.22
  Diluted....................  $  0.07   $  0.17   $  0.18   $  0.05    $  0.21   $  0.23   $  0.20   $  0.21
Pro forma net income per
  common share
  Basic......................  $  0.10   $  0.20   $  0.25   $  0.24    $  0.22   $  0.23   $  0.24   $  0.22
  Diluted....................  $  0.10   $  0.20   $  0.25   $  0.23    $  0.22   $  0.23   $  0.24   $  0.22
Weighted average common
  shares outstanding
  Basic......................    6,463     6,632     6,962     7,639     10,129    10,281    10,533    10,810
  Diluted....................    6,578     6,763     7,084     7,784     10,295    10,424    10,739    11,007
</TABLE>
 
Amounts reported differ from amounts previously reported due to the
pooling-of-interests with MPS discussed in Note 7.
 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
 
     None.
 
                                       43
<PAGE>   44
                      F.Y.I. INCORPORATED AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
                                    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 the Company's 1998 Proxy Statement, which will be
filed not later than 120 days after the end of the Company's fiscal year end
December 31, 1997 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 the Company's 1998 Proxy Statement, which will be
filed not later than 120 days after the end of the Company's fiscal year end
December 31, 1997 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 the
Company's 1998 Proxy Statement, which will be filed not later than 120 days
after the end of the Company's fiscal year end December 31, 1997 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 the Company's 1998 Proxy
Statement, which will be filed not later than 120 days after the end of the
Company's fiscal year end December 31, 1997 and which is incorporated herein by
this reference.
 
                                    PART IV
 
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS 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 23.
 
                                       44
<PAGE>   45
 
     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
        -------                                  -----------
<C>                      <S>
          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)
          2.6            -- 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 2.6 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)
</TABLE>
 
                                       45
<PAGE>   46
 
<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                                  DESCRIPTION
        -------                                  -----------
<C>                      <S>
          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 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)
</TABLE>
 
                                       46
<PAGE>   47
 
<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                                  DESCRIPTION
        -------                                  -----------
<C>                      <S>
          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            -- 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)
         10.2*           -- Employment Agreement between F.Y.I. Incorporated and
                            Thomas C. Walker (Incorporated by reference to Exhibit
                            10.2 to Amendment No. 1 to the Company's Registration
                            Statement on Form S-1 (Registration No. 33-98608)
                            effective January 12, 1996)
         10.3*           -- Employment Agreement between F.Y.I. Incorporated and
                            David Lowenstein (Incorporated by reference to Exhibit
                            10.3 to Amendment No. 1 to the Company's Registration
                            Statement on Form S-1 (Registration No. 33-98608)
                            effective January 12, 1996)
         10.4*           -- Employment Agreement between F.Y.I. Incorporated and
                            Jerry F. Leonard, Jr. (Incorporated by reference to
                            Exhibit 10.4 to Amendment No. 1 to the Company's
                            Registration Statement on Form S-1 (Registration No.
                            33-98608) effective January 12, 1996)
         10.5*           -- Employment Agreement between F.Y.I. Incorporated and Greg
                            Melanson (Incorporated by reference to Exhibit 10.5 to
                            Amendment No. 1 to the Company's Registration Statement
                            on Form S-1 (Registration No. 33-98608) effective January
                            12, 1996)
         10.6*           -- Employment Agreement between F.Y.I. Incorporated and
                            Jonathan B. Shaw (Incorporated by reference to Exhibit
                            10.6 to Amendment No. 1 to the Company's Registration
                            Statement on Form S-1 (Registration No. 33-98608)
                            effective January 12, 1996)
</TABLE>
 
                                       47
<PAGE>   48
 
<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                                  DESCRIPTION
        -------                                  -----------
<C>                      <S>
         10.7*           -- Employment Agreement between F.Y.I. Incorporated and G.
                            Michael Bellenghi (Incorporated by reference to Exhibit
                            10.7 to Amendment No. 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)
         10.9*           -- Employment Agreement between F.Y.I. Incorporated and Ed
                            H. Bowman, Jr. (Incorporated by reference to Exhibit 10.9
                            to Amendment No. 1 to the 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)
         10.11*          -- Warrant issued to Ed H. Bowman, Jr. (Incorporated by
                            reference to Exhibit 10.11 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)
         10.13*          -- Employment Agreement between F.Y.I. Incorporated and
                            Robert C. Irvine (Incorporated by reference to Exhibit
                            10.13 to the Company's Registration Statement on Form S-1
                            (Registration No. 333-1084) effective February 16, 1996)
         10.14           -- Credit Agreement, dated as of April 18, 1996, by and
                            among F.Y.I. Incorporated and its subsidiaries and Banque
                            Paribas, IBJ Schroder Bank & Trust, and First Source
                            Financial LLP (Incorporated by reference to Exhibit 10.14
                            to Post-Effective Amendment No. 1 to the Company's
                            Registration Statement on Form S-1 (Registration No.
                            333-1084) effective April 30, 1996)
         10.15           -- 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)
         10.16*          -- Employment Agreement between F.Y.I. Incorporated and
                            Margot T. Lebenberg (Incorporated by reference to Exhibit
                            10.16 to Post-Effective Amendment No. 2 to the Company's
                            Registration Statement on Form S-1 (Registration No.
                            333-1084) effective July 11, 1996)
         10.17           -- First Amendment to Credit Agreement, dated as of June 26,
                            1996, by and among F.Y.I. Incorporated and its
                            subsidiaries and Banque Paribas, IBJ Schroder Bank &
                            Trust, and First Source Financial LLP (Incorporated by
                            reference to Exhibit 10.20 to Post-Effective Amendment
                            No. 2 to the Company's Registration Statement on Form S-1
                            (Registration No. 333-1084) effective July 11, 1996)
         10.18*          -- Warrant issued to Ed H. Bowman, Jr. (Incorporated by
                            reference to Exhibit 10.21 to Post-Effective Amendment
                            No. 2 to the Company's Registration Statement on Form S-1
                            (Registration No. 333-1084) effective July 11, 1996)
</TABLE>
 
                                       48
<PAGE>   49
 
<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                                  DESCRIPTION
        -------                                  -----------
<C>                      <S>
         10.19*          -- Warrant issued to Robert C. Irvine (Incorporated by
                            reference to Exhibit 10.22 to Post-Effective Amendment
                            No. 2 to the Company's Registration Statement on Form S-1
                            (Registration No. 333-1084) effective July 11, 1996)
         10.20*          -- Employment Agreement between F.Y.I. Incorporated and
                            Timothy J. Barker (Incorporated by reference to Exhibit 2
                            to Post-Effective Amendment No. 3 to the Company's
                            Registration Statement on Form S-1 (Registration No.
                            333-1084) effective July 11, 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)
         10.22*          -- Warrant issued to Timothy J. Barker (Incorporated by
                            reference to Exhibit 10.22 to the Company's Registration
                            Statement on Form S-1 (Registration No. 333-16057)
                            effective December 11, 1996)
         10.23           -- Second Amendment to Credit Agreement, dated as of August
                            30, 1996, by and among F.Y.I. Incorporated and its
                            subsidiaries and Banque Paribas, IBJ Schroder Bank &
                            Trust, and First Source Financial LLP (Incorporated by
                            reference to Exhibit 10.23 to the Company's Registration
                            Statement on Form S-1 (Registration No. 333-16057)
                            effective December 11, 1996)
         10.24           -- Third Amendment to Credit Agreement, dated as of December
                            18, 1996, by and among F.Y.I. Incorporated and its
                            subsidiaries and Banque Paribas, IBJ Schroder Bank &
                            Trust and First Source Financial LLP (Incorporated by
                            reference to Exhibit 10.24 to the Company's Annual Report
                            on Form 10-K filed on March 11, 1997).
         10.25*          -- Amended and Restated Employment Agreement between F.Y.I.
                            Incorporated and Ed H. Bowman, Jr. (Incorporated by
                            reference to Exhibit 10.25 to the Company's Current
                            Report on Form 8-K filed on April 9, 1997)
         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)
         10.29*          -- Employment Agreement between F.Y.I. Incorporated and Joe
                            A. Rose (Incorporated by reference to Exhibit 10.29 to
                            the Company's Form 10-Q filed on August 8, 1997)
         10.30*          -- Amended and Restated Employment Agreement between F.Y.I.
                            Incorporated and Joe A. Rose (Incorporated by reference
                            to Exhibit 10.30 to the Company's Form 10-Q filed on
                            November 10, 1997)
         10.31           -- Fourth Amendment to Credit Agreement, dated as of
                            November 21, 1997, by and among F.Y.I. Incorporated and
                            its subsidiaries and Banque Paribas, IBJ Schroder Bank &
                            Trust and First Source Financial LLP
         10.32           -- Fifth Amendment to Credit Agreement, dated as of January
                            1, 1998, by and among F.Y.I. Incorporated and its
                            subsidiaries and Banque Paribas, IBJ Schroder Bank &
                            Trust and First Source Financial LLP
</TABLE>
 
                                       49
<PAGE>   50
 
<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                                  DESCRIPTION
        -------                                  -----------
<C>                      <S>
         10.33*          -- Employment Agreement between F.Y.I. Incorporated and
                            Ronald Zazworsky
         10.34*          -- Employment Agreement between F.Y.I. Incorporated and
                            Thomas C. Walker
         10.35*          -- Employment Agreement between F.Y.I. Incorporated and
                            David Lowenstein
         10.36*          -- Employment Agreement between F.Y.I. Incorporated and John
                            D. (Jack) Kearney
         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
         10.38           -- Form of Agreement between the New York State Workers'
                            Compensation Board and QCSinet Acquisition Corp.
         10.39*          -- First Amendment to the Amended and Restated Employment
                            Agreement between F.Y.I. Incorporated and Ed H. Bowman,
                            Jr.
         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              -- Financial Data Schedule
</TABLE>
 
     (b) Reports on Form 8-K:
 
     The Company did not file any Form 8-K Current Reports during the last
quarter of the fiscal year ended December 31, 1997.
 
                                       50
<PAGE>   51
 
                                   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.,
                                                 Chief Executive Officer and
                                                          President
 
Date: March 11, 1998
 
                               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
                      ---------                             ------------------------           ----
<C>                                                      <S>                              <C>
 
                /s/ ED H. BOWMAN, JR.                    Director, President and Chief    March 11, 1998
-----------------------------------------------------      Executive Officer (Principal
                  Ed H. Bowman, Jr.                        Executive Officer)
 
                /s/ TIMOTHY J. BARKER                    Senior Vice President and Chief  March 11, 1998
-----------------------------------------------------      Financial Officer (Principal
                  Timothy J. Barker                        Accounting Officer)
 
                /s/ THOMAS C. WALKER                     Chairman of the Board and Chief  March 11, 1998
-----------------------------------------------------      Development Officer
                  Thomas C. Walker
 
                /s/ DAVID LOWENSTEIN                     Director, Executive Vice         March 11, 1998
-----------------------------------------------------      President Corporate
                  David Lowenstein                         Development and Treasurer
 
            /s/ DONALD F. MOOREHEAD, JR.                 Director                         March 11, 1998
-----------------------------------------------------
              Donald F. Moorehead, Jr.
 
              /s/ G. MICHAEL BELLENGHI                   Director                         March 11, 1998
-----------------------------------------------------
                G. Michael Bellenghi
 
              /s/ JERRY F. LEONARD, JR.                  Director                         March 11, 1998
-----------------------------------------------------
                Jerry F. Leonard, Jr.
 
               /s/ GREGORY R. MELANSON                   Director and Senior Vice         March 11, 1998
-----------------------------------------------------      President
                 Gregory R. Melanson
</TABLE>
 
                                       51
<PAGE>   52
 
<TABLE>
<CAPTION>
                      SIGNATURE                             CAPACITY IN WHICH SIGNED           DATE
                      ---------                             ------------------------           ----
<C>                                                      <S>                              <C>
                /s/ JONATHAN B. SHAW                     Director                         March 11, 1998
-----------------------------------------------------
                  Jonathan B. Shaw
 
               /s/ MICHAEL J. BRADLEY                    Director                         March 11, 1998
-----------------------------------------------------
                 Michael J. Bradley
 
              /s/ HON. EDWARD M. ROWELL                  Director                         March 11, 1998
-----------------------------------------------------
                Hon. Edward M. Rowell
 
                 /s/ KYLE C. KERBAWY                     Director                         March 11, 1998
-----------------------------------------------------
                   Kyle C. Kerbawy
</TABLE>
 
                                       52
<PAGE>   53
 
                                 EXHIBIT INDEX
 
<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                                  DESCRIPTION
        -------                                  -----------
<C>                      <S>
 
          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)
          2.6            -- 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 2.6 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)
          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)
</TABLE>
<PAGE>   54
 
<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                                  DESCRIPTION
        -------                                  -----------
<C>                      <S>
          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 Infor-
                            mation 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 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)
</TABLE>
<PAGE>   55
 
<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                                  DESCRIPTION
        -------                                  -----------
<C>                      <S>
          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            -- 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)
         10.2*           -- Employment Agreement between F.Y.I. Incorporated and
                            Thomas C. Walker (Incorporated by reference to Exhibit
                            10.2 to Amendment No. 1 to the Company's Registration
                            Statement on Form S-1 (Registration No. 33-98608)
                            effective January 12, 1996)
         10.3*           -- Employment Agreement between F.Y.I. Incorporated and
                            David Lowenstein (Incorporated by reference to Exhibit
                            10.3 to Amendment No. 1 to the Company's Registration
                            Statement on Form S-1 (Registration No. 33-98608)
                            effective January 12, 1996)
         10.4*           -- Employment Agreement between F.Y.I. Incorporated and
                            Jerry F. Leonard, Jr. (Incorporated by reference to
                            Exhibit 10.4 to Amendment No. 1 to the Company's
                            Registration Statement on Form S-1 (Registration No.
                            33-98608) effective January 12, 1996)
         10.5*           -- Employment Agreement between F.Y.I. Incorporated and Greg
                            Melanson (Incorporated by reference to Exhibit 10.5 to
                            Amendment No. 1 to the Company's Registration Statement
                            on Form S-1 (Registration No. 33-98608) effective Janu-
                            ary 12, 1996)
         10.6*           -- Employment Agreement between F.Y.I. Incorporated and
                            Jonathan B. Shaw (Incorporated by reference to Exhibit
                            10.6 to Amendment No. 1 to the Company's Registration
                            Statement on Form S-1 (Registration No. 33-98608)
                            effective January 12, 1996)
         10.7*           -- Employment Agreement between F.Y.I. Incorporated and G.
                            Michael Bellenghi (Incorporated by reference to Exhibit
                            10.7 to Amendment No. 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)
</TABLE>
<PAGE>   56
 
<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                                  DESCRIPTION
        -------                                  -----------
<C>                      <S>
         10.9*           -- Employment Agreement between F.Y.I. Incorporated and Ed
                            H. Bowman, Jr. (Incorporated by reference to Exhibit 10.9
                            to Amendment No. 1 to the 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 Com-
                            pany's Registration Statement on Form S-1 (Registration
                            No. 33-98608) effective January 12, 1996)
         10.11*          -- Warrant issued to Ed H. Bowman, Jr. (Incorporated by
                            reference to Exhibit 10.11 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)
         10.13*          -- Employment Agreement between F.Y.I. Incorporated and
                            Robert C. Irvine (Incorporated by reference to Exhibit
                            10.13 to the Company's Registration Statement on Form S-1
                            (Registration No. 333-1084) effective February 16, 1996)
         10.14           -- Credit Agreement, dated as of April 18, 1996, by and
                            among F.Y.I. Incorporated and its subsidiaries and Banque
                            Paribas, IBJ Schroder Bank & Trust, and First Source
                            Financial LLP (Incorporated by reference to Exhibit 10.14
                            to Post-Effective Amendment No. 1 to the Company's
                            Registration Statement on Form S-1 (Registration No.
                            333-1084) effective April 30, 1996)
         10.15           -- 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)
         10.16*          -- Employment Agreement between F.Y.I. Incorporated and
                            Margot T. Lebenberg (Incorporated by reference to Exhibit
                            10.16 to Post-Effective Amendment No. 2 to the Company's
                            Registration Statement on Form S-1 (Registration No.
                            333-1084) effective July 11, 1996)
         10.17           -- First Amendment to Credit Agreement, dated as of June 26,
                            1996, by and among F.Y.I. Incorporated and its
                            subsidiaries and Banque Paribas, IBJ Schroder Bank &
                            Trust, and First Source Financial LLP (Incorporated by
                            reference to Exhibit 10.20 to Post-Effective Amendment
                            No. 2 to the Company's Registration Statement on Form S-1
                            (Registration No. 333-1084) effective July 11, 1996)
         10.18*          -- Warrant issued to Ed H. Bowman, Jr. (Incorporated by
                            reference to Exhibit 10.21 to Post-Effective Amendment
                            No. 2 to the Company's Registration Statement on Form S-1
                            (Registration No. 333-1084) effective July 11, 1996)
         10.19*          -- Warrant issued to Robert C. Irvine (Incorporated by
                            reference to Exhibit 10.22 to Post-Effective Amendment
                            No. 2 to the Company's Registration Statement on Form S-1
                            (Registration No. 333-1084) effective July 11, 1996)
         10.20*          -- Employment Agreement between F.Y.I. Incorporated and
                            Timothy J. Barker (Incorporated by reference to Exhibit 2
                            to Post-Effective Amendment No. 3 to the Company's
                            Registration Statement on Form S-1 (Registration No.
                            333-1084) effective July 11, 1996)
</TABLE>
<PAGE>   57
 
<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                                  DESCRIPTION
        -------                                  -----------
<C>                      <S>
         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)
         10.22*          -- Warrant issued to Timothy J. Barker (Incorporated by
                            reference to Exhibit 10.22 to the Company's Registration
                            Statement on Form S-1 (Registration No. 333-16057)
                            effective December 11, 1996)
         10.23           -- Second Amendment to Credit Agreement, dated as of August
                            30, 1996, by and among F.Y.I. Incorporated and its
                            subsidiaries and Banque Paribas, IBJ Schroder Bank &
                            Trust, and First Source Financial LLP (Incorporated by
                            reference to Exhibit 10.23 to the Company's Registration
                            Statement on Form S-1 (Registration No. 333-16057)
                            effective December 11, 1996)
         10.24           -- Third Amendment to Credit Agreement, dated as of December
                            18, 1996, by and among F.Y.I. Incorporated and its
                            subsidiaries and Banque Paribas, IBJ Schroder Bank &
                            Trust and First Source Financial LLP (Incorporated by
                            reference to Exhibit 10.24 to the Company's Annual Report
                            on Form 10-K filed on March 11, 1997).
         10.25*          -- Amended and Restated Employment Agreement between F.Y.I.
                            Incorporated and Ed H. Bowman, Jr. (Incorporated by
                            reference to Exhibit 10.25 to the Company's Current
                            Report on Form 8-K filed on April 9, 1997)
         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)
         10.29*          -- Employment Agreement between F.Y.I. Incorporated and Joe
                            A. Rose (Incorporated by reference to Exhibit 10.29 to
                            the Company's Form 10-Q filed on August 8, 1997)
         10.30*          -- Amended and Restated Employment Agreement between F.Y.I.
                            Incorporated and Joe A. Rose (Incorporated by reference
                            to Exhibit 10.30 to the Company's Form 10-Q filed on
                            November 10, 1997)
         10.31           -- Fourth Amendment to Credit Agreement, dated as of
                            November 21, 1997, by and among F.Y.I. Incorporated and
                            its subsidiaries and Banque Paribas, IBJ Schroder Bank &
                            Trust and First Source Financial LLP
         10.32           -- Fifth Amendment to Credit Agreement, dated as of January
                            1, 1998, by and among F.Y.I. Incorporated and its
                            subsidiaries and Banque Paribas, IBJ Schroder Bank &
                            Trust and First Source Financial LLP
         10.33*          -- Employment Agreement between F.Y.I. Incorporated and
                            Ronald Zazworsky
         10.34*          -- Employment Agreement between F.Y.I. Incorporated and
                            Thomas C. Walker
         10.35*          -- Employment Agreement between F.Y.I. Incorporated and
                            David Lowenstein
         10.36*          -- Employment Agreement between F.Y.I. Incorporated and John
                            D. (Jack) Kearney
</TABLE>
<PAGE>   58
 
<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                                  DESCRIPTION
        -------                                  -----------
<C>                      <S>
         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
         10.38           -- Form of Agreement between the New York State Workers'
                            Compensation Board and QCSinet Acquisition Corp.
         10.39*          -- First Amendment to the Amended and Restated Employment
                            Agreement between F.Y.I. Incorporated and Ed H. Bowman,
                            Jr.
         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              -- Financial Data Schedule
</TABLE>