<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                              ---------------------
                                    FORM 10-K

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

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

                                       OR

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

                        FOR THE TRANSITION PERIOD FROM    TO

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

                 DELAWARE                                75-2560895
      (State or other jurisdiction of                 (I.R.S. Employer
      incorporation or organization)                Identification No.)

  3232 MCKINNEY AVE., SUITE 1000, DALLAS, TEXAS                 75204
    (Address of principal executive offices)                  (zip code)

                                 (214) 953-7555
                         Registrant's telephone number,
                              including area code)

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

                                                     NAME OF EACH EXCHANGE
       TITLE OF EACH CLASS                            ON WHICH REGISTERED
       -------------------                           ---------------------
              None                                            None

          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 28, 2001 was $539,854,083, based on the last sale
price of $33.63 of the Registrant's Common Stock, $.01 par value per share, on
the Nasdaq National Market on February 28, 2001.

     As of February 28, 2001, 16,204,138 shares of the Registrant's Common Stock
were outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE:

Portions of the Proxy Statement for the 2001 Annual Meeting of Stockholders to
be filed with the Securities and Exchange Commission not later than 120 days
after the end of our fiscal year ended December 31, 2000 are incorporated by
reference into Part III of this Form 10-K.

<PAGE>

                               F.Y.I. INCORPORATED

                          2000 FORM 10-K ANNUAL REPORT

                                TABLE OF CONTENTS


<TABLE>
<CAPTION>                                                                                              PAGE
                                     PART I

<S>        <C>                                                                                         <C>
Item 1.    Business.................................................................................     1
Item 2.    Properties...............................................................................    13
Item 3.    Legal Proceedings........................................................................    13
Item 4.    Submission of Matters to a Vote of Security Holders......................................    13

                                     PART II

Item 5.    Market for Registrant's Common Equity and Related Stockholder Matters....................    14

Item 6.    Selected Financial Data..................................................................    14

Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations....    16

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

Item 8.    Financial Statements and Supplementary Data..............................................    22

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.....    42

                                    PART III

Item 10.   Directors and Executive Officers of the Registrant.......................................    43

Item 11.   Executive Compensation...................................................................    43

Item 12.   Security Ownership of Certain Beneficial Owners and Management...........................    43

Item 13.   Certain Relationships and Related Transactions...........................................    43

                                     PART IV

Item 14.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K.........................    44

</TABLE>
<PAGE>

                                     PART I

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

ITEM 1. BUSINESS

GENERAL

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

         As a national, single-source provider, we operate approximately 140
facilities nationwide with over 11,000 employees providing services in 45
states, Washington, D.C., Puerto Rico, Mexico and the Caribbean.

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

         An estimated four trillion documents are generated annually in the
United States. A significant portion of the processing, management and
storage of these documents is outsourced to small service companies. Further,
we believe that the business process 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 that have
greatly facilitated the production and wide distribution of documents.

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

         The business process outsourcing solutions business continues to be
fragmented. We believe that many small business process outsourcing solutions
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

<PAGE>

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

BUSINESS STRATEGY

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

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

         SCOPE AND SCALE. We plan to continue to establish a full range of
business processing outsourcing operations to meet the diverse needs of
customers by implementing a strategy through expansion of existing businesses
and selected acquisitions. We intend to continue to handle large volume
projects.

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

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

         CAPITALIZE ON CROSS-SELLING OPPORTUNITIES. We intend to capitalize on
cross-selling opportunities in two primary ways. First, we intend to continue to
sell our existing clients additional business process outsourcing solutions
provided by our other businesses. Second, we intend to use our knowledge with
respect to specific industry segments to sell such services to new clients.

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

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

         OPERATE WITH BUSINESS SEGMENTS AND LOCAL MANAGEMENT. We have placed all
of operations into four divisions. Under these divisions, we are organized
around business segments focused on providing common services to common customer
bases and achieving synergies and cross-selling opportunities. We believe that
the experienced local management teams of our operating companies have a
valuable understanding of their respective markets and businesses and can
capitalize on their existing client relationships. Accordingly, we are operating
and expect to continue to operate with business segments and local management,
subject to certain corporate approval and oversight guidelines. Because it is
important to maintain a balance between professional leadership and creative
entrepreneurial business, during the past few years we have hired or promoted
experienced executives to manage the business segments. Multiple business
segments are led by Division Presidents, each of which is an outside hire with
experience in leading organizations. Division Presidents report to our Chief
Operating Officer.

                                       2

<PAGE>

ACQUISITION STRATEGY

         We have transitioned to an operating company supported by a strategic
acquisition program. Since our inception, we have acquired 66 companies. We
believe that there are significant opportunities to continue to add the
capabilities and resources of selected additional business process outsourcing
solutions businesses with the intent of providing customers with a single
solution. Accordingly, we are screening companies in conjunction with our
operating management team to acquire those candidates that meet certain
strategic requirements. These criteria include geographic need, additional
technology, added management strength, industry expertise, service expansion to
broaden service offerings and expansion of our customer base.

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

SERVICES OFFERED

         We provide a wide variety of business process outsourcing solutions and
draw upon our available services to develop solutions for our clients based on
their specific needs. The current business process outsourcing solutions that we
provide are generally divided into the following divisions: F.Y.I.
HealthSERVE/Government Services; F.Y.I. LEGAL; F.Y.I. IMAGE; and F.Y.I. DIRECT.

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

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

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

         Our record management services consist primarily of active or open
shelf storage. Active or open shelf storage services involve the storage,
processing (i.e., indexing and formatting), retrieval, delivery and return to
storage of documents on a rapid time frame. Many of these services are provided
electronically. Service fees generally include a monthly fee based on activity
levels and volumes stored, with extra billing for specialized requests. To a
smaller extent, we store inactive documents.

         We have contracts with a large governmental agency and a private
hospital in which we combine many of our services to provide medical records
management, release of information, coding, abstracting, and electronic patient
records services.

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

                                       3


<PAGE>
as high level consulting services ranging from labor discrimination, mortgage
discrimination and forensic analysis to trial support for law firms,
corporations, and utility companies.

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

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

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

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

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

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

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

         Integrated Solutions offer technical services with a specific focus on
document imaging, work flow, COLD (Computer Output to Laser Disk) and document
and information management systems using third party imaging systems.

         Our newest service offering is fyidocs.com, which adds electronic
object storage and Internet-based retrieval capabilities to compliment our
document capture and conversion services. Through this combination of technology
and services, customers can look to us for secure and timely access to digital
documents.

                                       4


<PAGE>

         F.Y.I. DIRECT. We provide direct mail and fulfillment services and
statement processing services. Direct Mail and Fulfillment Services provide
customers with rapid, reliable and cost-effective methods for making large-scale
distributions of items such as corporate advertising, political campaign
literature, consumer notices and annual reports for its customers. The direct
mail service also includes the ability to deliver efficient postal routing to
fulfill consumer requests for specific information. In addition, we have the
ability to send blast e-mail services, including high-level graphics and sound,
to supplement our existing services. Statement Processing Services involve
sending out millions of bills or statements each month.

SALES AND MARKETING

         We have a broad customer base. No customer with recurring revenue
accounted for more than 3% of revenue for the year ended December 31, 2000. Only
two clients' projects accounted for more than 3% (but less than 5%) of revenue
for the year ended December 31, 2000. Historically, our sales efforts have been
implemented on a location-by-location basis and typically have been coordinated
through sales personnel as part of the local management's responsibilities. Our
existing local sales efforts are carried out through local sales representatives
who are in the process of regional and/or national sales training. We continue
to strive to increase our client base by attracting clients away from small,
single business operators as a result of our ability to offer a broader range of
solutions for our clients' needs. In addition, we intend to continue to focus on
increasing revenue from our existing clients by cross-selling our services and
broadening our product offerings. We will continue to augment local sales and
marketing efforts through the implementation of a regional and national
sales/account program.

COMPETITION

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

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

EMPLOYEES

         As of December 31, 2000, we had over 9,000 full-time and 2,000
part-time employees. As of such date, we had approximately 65 employees
represented by labor unions. We consider our relations with our employees to be
good.

                                       5

<PAGE>

OUR EXECUTIVE OFFICERS

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

<TABLE>
<CAPTION>

NAME                                                AGE                 POSITION
----                                                ---                 --------
<S>                                                 <C>                 <C>
Thomas C. Walker.....................................68         Chairman of the Board and Chief
                                                                Development Officer

Ed H. Bowman, Jr.....................................54         President and Chief Executive Officer;
                                                                Director

Barry L. Edwards.....................................53         Executive Vice President and Chief
                                                                Financial Officer

Joe A. Rose..........................................50         Executive Vice President, Chief
                                                                Operating Officer and Director

David M. Byerley.....................................39         Senior Vice President - Corporate
                                                                Development

Charles S. Gilbert...................................34         Vice President, General Counsel
                                                                and Secretary

Michael S. Rupe......................................50         President-Enabling Technologies and
                                                                Services Division

Kerry Walbridge......................................49         President-Conversion and Distribution
                                                                Services Division

Ronald Zazworsky.....................................56         President-HealthSERVE/Government
                                                                Services Division

</TABLE>


         Thomas C. Walker has been our Chairman of the Board since our inception
in September 1994 and has been our Chief Development Officer since November
1995. From September 1994 until November 1995, Mr. Walker held the 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. Mr. Walker has been responsible for the acquisition or divestiture of
several hundred businesses over a 30-year period. Mr. Walker holds a B.S. in
Industrial Engineering from Lafayette College.

         Ed H. Bowman, Jr. has been our President and Chief Executive Officer
and a Director since November 1995. From 1993 to 1995, Mr. Bowman was Executive
Vice President and Chief Operating Officer of the Health Systems Group for 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 a leading healthcare information systems company; responsibilities
included VP - International, VP - Marketing, Senior VP - Customer Services,
Group Senior VP - Research and Development, and last serving as Executive Vice
President and Chief Operating Officer with responsibility for domestic
operations. Prior to 1983, 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. degree 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, privately held high technology companies and has
served on the Board of the Advanced Technology Development Center at Georgia
Tech. Mr. Bowman currently serves on the Advisory Board to the President of
Georgia Tech and on the Advisory Board of the Robinson School of Business at
Georgia State University.

                                       6
<PAGE>

         Barry L. Edwards has been an Executive Vice President and our Chief
Financial Officer since August 2000. From November 1994 to March 2000, Mr.
Edwards was Executive Vice President and Chief Financial Officer for AMRESCO, a
nationwide financial services company. From December 1978 to November 1994, Mr.
Edwards was Vice President and Treasurer of Liberty Corporation, an insurance
and broadcasting holding company based in Greenville, South Carolina. Mr.
Edwards received a Bachelor of Science in Finance and Economics from Lehigh
University in 1969, and an MBA from the University of Virginia Darton School of
Business in 1972. Mr. Edwards is a board member for Ryan's Family Steakhouses
and Robert Harris Homes.

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

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

         Charles S. Gilbert has been a Vice President, Secretary and General
Counsel since August 2000, our Secretary and acting General Counsel since July
2000 and corporate counsel since April 2000. From 1991 until joining us he
practiced law in the corporate securities section of Jackson Walker LLP, Dallas,
where he was elected partner. Mr. Gilbert holds a BS in Physics from The
University of Texas and a J.D. from The University of Texas School of Law.


         Michael S. Rupe has been President of our Enabling Technologies and
Services Division since September 2000. From March 1998 through August 2000, Mr.
Rupe served as President and Chief Executive Officer of Solomon Software, Inc.,
an accounting and business software company that was sold to Great Plains
Software in June 2000. From March 1997 to February 1998, Mr. Rupe served as
Executive Vice President and Chief Financial Officer of Solomon Software, Inc.
From August 1995 through February 1997, Mr. Rupe was Senior Vice President of
Finance and Administration at FormMaker Software, Inc., a document technology
company, which merged with Image Sciences Corp. to form DocuCorp International.
Mr. Rupe holds a B.S. in Accounting from the University of Kentucky.

         Kerry Walbridge has been President of our Conversion and
Distribution Services Division since March 2001. From April 2000 to December
2000, Mr. Walbridge was President and CEO of eMake Corporation, a
first-to-market provider of web hosted ERP software solutions and electronic
supply chain services to the manufacturing market. From August 1998 to April
2000, Mr. Walbridge was Senior Vice President Sales and Marketing for
Outsourcing Solutions, Inc., the nations largest provider of accounts
receivable management services. From November 1991 to June 1993 and from June
1996 to August 1998, Mr. Walbridge was a Division Vice President for
Electronic Data Services (EDS) and from October 1989 to November 1991 Mr.
Walbridge was a Division Vice President for McDonnell Douglas Systems
Integration. Mr. Walbridge received a B.S. in business from St. Louis
University.

         Ronald Zazworsky has been President of our HealthSERVE/Government
Services Division since November 2000. From October 1997 until November 2000,
Mr. Zazworsky was Senior Vice President - HealthSERVE. 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.

                                       7
<PAGE>

                                  RISK FACTORS

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

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

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

WE MAY NOT BE ABLE TO MANAGE OUR RAPID GROWTH

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

WE NEED TO BE ABLE TO ACQUIRE COMPANIES SUCCESSFULLY

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

                                       8

<PAGE>

WE NEED TO FINANCE OUR POTENTIAL GROWTH THROUGH ACQUISITIONS

         We currently intend to finance future acquisitions by using cash and
our common stock for all or a portion of the consideration to be paid. In the
event that our common stock does not maintain sufficient value, or potential
acquisition candidates are unwilling to accept our common stock as consideration
for the sale of their businesses, we may be required to use more cash, if
available, in order to continue our acquisition program. If we do not have
sufficient cash, our growth could be limited unless we are able to obtain
capital through additional debt or equity financings. Under our line of credit
with Paribas and Bank of America Texas, N.A., we and our subsidiaries could
borrow, on a revolving credit basis, loans in an aggregate outstanding principal
amount of $175 million for working capital, general corporate purposes and
acquisitions, subject to certain restrictions in our line of credit. As of
December 31, 2000, the availability under the line of credit was approximately
$42 million. We cannot assure you, however, that funds available under our line
of credit will be sufficient for our needs. We currently are in the process of
trying to establish a new credit facility, anticipated to be in the aggregate
maximum principal amount of $250 to $300 million, which would replace our
existing $175 million credit facility; however, we cannot assure you that such a
new facility will be finalized or if finalized, that funds available thereunder
will be sufficient for our needs.

THE PRICE OF OUR COMMON STOCK MAY BE VOLATILE

         The price of our common stock may be volatile. Our quarterly results of
operations may vary materially as a result of the timing and structure of our
acquisitions, the timing and magnitude of costs related to acquisitions, the
gain or loss of material client relationships and variations in the prices
charged by us for our services. In addition, since a significant portion of our
revenue is generated on a project-by-project basis, the timing or completion of
material projects could result in fluctuations in our results of operations for
particular quarterly periods. Fluctuations in operating results may adversely
affect the market price of our common stock. The market price for our common
stock may also fluctuate in response to material announcements by us or our
significant clients or competitors, changes in the economic or other conditions
impacting our targeted client segments or changes in general economic
conditions. Further, the securities markets have experienced significant price
and volume fluctuations from time to time that have often been unrelated or
disproportionate to the operating performance of particular companies. These
broad fluctuations may adversely affect the market price of our common stock.

WE DEPEND ON CERTAIN CLIENT INDUSTRIES

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

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

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

                                       9


<PAGE>

WE FACE INTENSE COMPETITION

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

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

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

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

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

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

         We and other companies in our industry rely heavily on the use of
intellectual property. We own registrations for and/or use certain trademarks in
connection with the operations of our business. Should any third parties assert
claims that our use of our trademarks infringe said third parties' trademark
rights, we could incur substantial costs to defend these claims and, if any such
third party claims are ultimately successful, we could be enjoined from further
use of certain of our trademarks. After previously receiving a notice from
Identitech, Inc. that our registered trademark "F.Y.I. INCORPORATED" infringed
Identitech's registered trademark "FYI", on April 7, 2000, we filed an action in
the United States District Court for the Northern District of Texas seeking a
declaration that our use of this mark and certain other of our trademarks for
document management services did not infringe Identitech, Inc.'s registered
trademark "FYI" for computer software. Identitech answered the complaint and
brought counterclaims for infringement of its mark by us. In its counterclaim,
Identitech seeks its actual damages, trebling

                                       10

<PAGE>
of these damages and reasonable attorneys' fees and costs. Identitech also
seeks cancellation of our registered "F.Y.I. INCORPORATED" mark and injunctions
preventing us from prosecuting our applications for "F.Y.I." formative marks
and from using our registered "F.Y.I. INCORPORATED" mark. We are strongly
contesting the allegations in Identitech's counterclaims and do not believe
that our business, financial condition and results of operations will be
materially and adversely affected by this claim. However, the outcome cannot
always be predicted and there is no assurance that this will be the case.

         We do not own the majority of the software that we use to run our
business; instead we license this software from a number of vendors. If these
vendors assert claims that we or our clients are infringing on their software or
related intellectual property, we could incur substantial costs to defend these
claims. In addition, if any of our vendors' infringement claims are ultimately
successful, our vendors could require us: (i) to cease selling or using products
or services that incorporate the challenged software or technology; (ii) to
obtain a license or additional licenses from our vendors; or (iii) to redesign
our products and services which rely on the challenged software or technology.
Except as noted above, we are not currently involved in any material
intellectual property litigation, but could be in the future to protect our
trade secrets, trademarks or know-how, or to defend ourselves or our clients
against alleged infringement claims.

WE DEPEND ON OUR PERSONNEL

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

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

WE MAY BE LIABLE FOR BREACH OF CONFIDENTIALITY

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

WE MAY HAVE BUSINESS INTERRUPTIONS

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

GOVERNMENT REGULATIONS MAY HINDER OUR ABILITY TO CHANGE PRICES

         In our medical records release of information business, there is state
legislation from time to time aimed at fixing the price that can be charged for
copying and distributing medical records information. Depending on the

                                       11

<PAGE>

severity of such pricing legislation, there can be significant pressure on the
profit margins associated with providing medical records release services.
Today, some form of pricing legislation exists in many states in the United
States.

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

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

MANAGEMENT EXERCISES SUBSTANTIAL CONTROL OVER OUR AFFAIRS

         As of December 31, 2000, our directors and executive officers owned
approximately 6.7% of the shares of our common stock. Our directors and
executive officers exercise substantial control over our affairs. If these
persons act together, they might be able to elect a sufficient number of
directors to control our Board of Directors and to approve or disapprove any
matter submitted to a vote of our stockholders.

FUTURE SALES OF OUR SHARES MAY ADVERSELY AFFECT OUR STOCK PRICE

         The market price of our common stock could be adversely affected by the
sale of substantial amounts of our common stock in the public market. In
addition, many shares are subject to contractual restrictions on resale, over
some period of time.

         If a significant number of shares of our common stock are issued in
acquisitions that are consummated in close proximity to each other, such shares
could become freely tradable at approximately 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 our common stock could be adversely affected.

WE MAY HAVE ENVIRONMENTAL LIABILITIES IN THE FUTURE

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

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

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

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

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

                                       12

<PAGE>
ITEM 2. PROPERTIES

         As of December 31, 2000, we approximately 140 business process
outsourcing service facilities in 45 states. Except for the two facilities we
own, all of these facilities were leased and were principally used for
operations and general administrative functions. See Note 8 of Notes to
Consolidated Financial Statements of F.Y.I. Incorporated and subsidiaries for
further information relating to these leases.

         As of December 31, 2000, we also operated on-site at customer
locations, primarily in connection with our F.Y.I. HealthSERVE offering at over
1,000 client locations and from time to time at many other client locations for
specific projects.

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

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

ITEM 3. LEGAL PROCEEDINGS

         After previously receiving a notice from Identitech, Inc. that our
registered trademark "F.Y.I. INCORPORATED" infringed Identitech's registered
trademark "FYI", on April 7, 2000, we filed an action in the United States
District Court for the Northern District of Texas seeking a declaration that our
use of this mark and certain other of our trademarks for document management
services did not infringe Identitech, Inc.'s registered trademark "FYI" for
computer software. Identitech answered the complaint and brought counterclaims
for infringement of its mark by us. In its counterclaim, Identitech seeks its
actual damages, trebling of these damages and reasonable attorneys' fees and
costs. Identitech also seeks cancellation of our registered "F.Y.I.
INCORPORATED" mark and injunctions preventing us from prosecuting our
applications for "F.Y.I." formative marks and from using our registered "F.Y.I.
INCORPORATED" mark.

         We are strongly contesting the allegations in Identitech's
counterclaims and do not believe that our business, financial condition or
results of operations will be materially and adversely affected by this claim.

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

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

         During the fourth quarter of the year ended December 31, 2000, no
matters were submitted to a vote of the security holders.

                                       13

<PAGE>

                                     PART II

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

MARKET INFORMATION

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

<TABLE>
<CAPTION>


                                                        HIGH         LOW
                                                        ----         ---
<S>                                                    <C>         <C>
FISCAL YEAR 1999
  First Quarter........................................$39.00      $28.44
  Second Quarter.......................................$32.13      $26.56
  Third Quarter........................................$34.81      $31.63
  Fourth Quarter.......................................$35.75      $31.50

FISCAL YEAR 2000
  First Quarter........................................$35.00      $24.88
  Second Quarter.......................................$34.25      $26.00
  Third Quarter........................................$40.38      $32.88
  Fourth Quarter.......................................$42.13      $29.13

FISCAL YEAR 2001
  First Quarter (through February  28, 2001)...........$36.44      $30.38

</TABLE>

HOLDERS

         On February 28, 2001, the last reported sale price of our common stock
on the Nasdaq Stock Market was $33.63 per share. At February 28, 2001, there
were 128 holders of record of our common stock and 16,204,138 shares
outstanding.

DIVIDENDS

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

ITEM 6. SELECTED FINANCIAL DATA

SELECTED FINANCIAL DATA

         We were founded in September 1994, and we effectively began our
operations on January 26, 1996, following the completion of our initial public
offering ("IPO"). We acquired, simultaneously with and as a condition to the
closing of the IPO, seven Founding Companies (the "Acquisitions"). The
Acquisitions have been accounted for in accordance with generally accepted
accounting principles ("GAAP") as a combination of the Founding Companies at
historical cost. For accounting purposes and for the purposes of the
presentation of the financial data herein, January 31, 1996, has been used as
the effective date of the Acquisitions.

         Since the IPO, and through December 31, 2000, we acquired nine
companies in transactions that were accounted for as poolings-of-interests: (i)
The Rust Consulting Group, Inc. ("Rust") in December 1996; (ii) MAVRICC
Management Systems, Inc. and a related company, MMS Escrow and Transfer Agency,
Inc. (collectively, "MAVRICC") in March 1997; (iii) Input of Texas, Inc.
("Input") in March 1997; (iv) Micro

                                       14

<PAGE>

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

         Subsequent to the IPO and through December 31, 2000, we acquired 50
additional companies in transactions accounted for as purchases. Our results of
operations include the results of these acquisitions from the date of their
respective acquisitions.

         Our Selected Financial Data for the years ended December 31, 1996,
1997, 1998, 1999 and 2000, have been derived from our consolidated financial
statements, which have been audited by Arthur Andersen LLP. Our Selected
Financial Data are based on available information and certain assumptions
described in the footnotes set forth below, all of which we believe are
reasonable.

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

<TABLE>
<CAPTION>

                             SELECTED FINANCIAL DATA
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

                                                         1996         1997         1998          1999         2000
                                                      ----------   ----------   ----------    ----------   ----------
<S>                                                   <C>          <C>         <C>            <C>          <C>


STATEMENT OF OPERATIONS DATA:
Revenue ...........................................   $  106,625   $  177,272   $  240,906    $  350,044   $  457,590
Cost of services ..................................       65,109      112,161      147,964       213,928      272,823
Depreciation ......................................        2,176        3,730        5,889         8,815       13,802
                                                      ----------   ----------   ----------    ----------   ----------
    Gross profit ..................................       39,340       61,381       87,053       127,301      170,965
Selling, general and administrative
  expenses (1)(2)..................................       26,459       37,956       55,594        78,577      100,456
Gain on sale of assets of subsidiary, net (3) .....           --           --       (4,394)           --           --
Amortization (4) ..................................          599        1,835        4,845         4,748        8,554
                                                      ----------   ----------   ----------    ----------   ----------
    Operating income (1) ..........................       12,282       21,590       31,008        43,976       61,955
Interest and other (income) expense, net (5) ......          672        1,176          990         3,975        8,927
                                                      ----------   ----------   ----------    ----------   ----------
Income before income taxes (1) (5) ................       11,610       20,414       30,018        40,001       53,028
Provision for income taxes (6) ....................        4,714        8,266       12,007        16,000       20,927
                                                      ----------   ----------   ----------    ----------   ----------
Net income (1) (5) (6) ............................   $    6,896   $   12,148   $   18,011    $   24,001   $   32,101
                                                      ==========   ==========   ==========    ==========   ==========
Net income per common share
    Basic (1) (5) (6) .............................   $     0.81   $     1.01   $     1.35    $     1.70   $     2.10
    Diluted (1) (5) (6) ...........................   $     0.80   $     1.00   $     1.31    $     1.60   $     2.00
Weighted average common shares outstanding
    Basic .........................................        8,504       12,018       13,370        14,149       15,284
    Diluted .......................................        8,632       12,196       13,731        14,990       16,065

BALANCE SHEET DATA:
Working capital ...................................   $   26,743   $   26,642   $   37,793    $   20,113   $   55,920
Total assets ......................................      113,148      139,106      206,970       369,355      454,709
Long-term obligations, net of current maturities ..        4,911        5,892       31,498        85,172      123,784
Stockholders' equity ..............................       83,254      107,564      138,735       175,009      253,392

</TABLE>

                                       15

<PAGE>

(1)      Gives effect to certain compensation adjustments related to the
         difference between employment agreements and the compensation levels
         prior to the consummation of the Acquisitions for the years ended
         December 31, 1996, 1997 and 1998.
(2)      Selling, general and administrative expenses for the year ended
         December 31, 1998 include charges totaling $2.5 million relating to:
         (i) severance and other costs, $1.7 million; (ii) facilities closing
         costs, $0.5 million; and (iii) other write-downs and impairments, $0.3
         million. See Note 6 of Notes to Consolidated Financial Statements of
         F.Y.I. Incorporated and Subsidiaries.
(3)      Reports the gain on the sale of assets of Leonard Archives Acquisition
         Corp. ("Leonard") for the year ended December 31, 1998. The gain on the
         sale, net of other charges included in (2) and (4), was $145,000 before
         taxes. See Note 6 of Notes to Consolidated Financial Statements of
         F.Y.I. Incorporated and Subsidiaries.
(4)      Amortization for the year ended December 31, 1998 includes acceleration
         of goodwill amortization of $1.8 million. See Note 6 of Notes to
         Consolidated Financial Statements of F.Y.I. Incorporated and
         Subsidiaries.
(5)      Interest expense for the year ended December 31, 1997, includes the
         write-off of approximately $1.2 million ($0.7 million, net of taxes,
         and $0.07 per share) of unamortized debt issuance costs related to our
         Credit Agreement in place at the time.
(6)      Gives effect to certain tax adjustments related to the taxation Pooled
         Companies as S corporations or sole proprietorships prior to the
         consummation of the Acquisitions and the tax impact of the compensation
         difference for the periods ended December 31, 1996, 1997 and 1998. See
         Note 2 of Notes to Consolidated Financial Statements of F.Y.I.
         Incorporated and Subsidiaries.


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

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

INTRODUCTION

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

         Since the IPO, and through December 31, 2000, we acquired nine
companies in transactions that were accounted for as poolings-of-interests: (i)
Rust in December 1996; (ii) MAVRICC in March 1997; (iii) Input in March 1997;
(iv) MPS in December 1997; (v) Lifo in February 1998; (vi) CMI in September
1998; (vii) ERS in October 1998; (viii) TCH in December 1998; and (ix) ADG in
December 1998. Our consolidated financial statements for all periods presented
have been restated to include the accounts of MAVRICC, Input, CMI and ERS. As a
result, we are reporting financial results in periods prior to the date we
effectively began our operations. Our consolidated financial statements were not
restated for the Rust, MPS and Lifo acquisitions for the periods prior to
January 1, 1996, 1997, and 1998, respectively, due to their financial
immateriality. Periods presented were also not restated prior to October 1,
1998, for the acquisitions of TCH and ADG due to their financial immateriality.
We and the Pooled Companies were not under common control or management during
the periods prior to their respective mergers. Our results of operations for the
periods presented may not be indicative of the results in the future because of
(i) the impact of acquisitions recorded as purchases, whose results are only
included subsequent to the purchase date; and (ii) the impact of acquisitions
recorded as poolings-of-interests, whose predecessor companies were not under
common control or management.

         Subsequent to the IPO and through December 31, 2000, we acquired 50
additional companies in transactions accounted for as purchases. Our results of
operations include the results of these acquisitions from the date of their
respective acquisitions.

                                       16

<PAGE>


         Our revenue relates to the following divisions: F.Y.I.
HealthSERVE/Government Services; F.Y.I. LEGAL; F.Y.I. IMAGE; and F.Y.I. DIRECT.
Revenue relates to the following services, by division:

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

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

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

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

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

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

                                       17

<PAGE>




RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>

                                                       YEAR ENDED DECEMBER 31,
                                                    ---------------------------
                                                     1998       1999      2000
                                                    ------     ------    ------

<S>                                                 <C>        <C>        <C>

Revenue .........................................    100.0%     100.0%    100.0%
Cost of services ................................     61.4       61.1      59.6
Depreciation ....................................      2.4        2.5       3.0
                                                    ------     ------    ------
          Gross profit ..........................     36.2       36.4      37.4
Selling, general and administrative expenses  (1)     23.1       22.4      22.0
Gain on sale of assets of subsidiary, net (2) ...     (1.8)        --        --
Amortization (3) ................................      2.0        1.4       1.9
                                                    ------     ------    ------
Operating income ................................     12.9       12.6      13.5
Interest and other expense, net .................      0.4        1.1       1.9
                                                    ------     ------    ------
Income before income taxes ......................     12.5       11.5      11.6
Provision for income taxes (4) ..................      5.0        4.6       4.6
                                                    ------     ------    ------
Net income  (4) .................................      7.5%       6.9%      7.0%
                                                    ======     ======    ======

</TABLE>


(1)  Selling, general and administrative expenses for the year ended December
     31, 1998 include charges totaling 1.0% of revenue. See Note 6 of Notes to
     Consolidated Financial Statements of F.Y.I. Incorporated and Subsidiaries.
(2)  Reports the gain on the sale of Leonard for the year ended December 31,
     1998. The gain on sale, net of other charges included in (2) and (4), was
     0.06% of revenue. See Note 6 of Notes to Consolidated Financial Statements
     of F.Y.I. Incorporated and Subsidiaries.
(3)  Amortization for the year ended December 31, 1998 includes goodwill
     acceleration of 0.7% of revenue. See Note 6 of Notes to Consolidated
     Financial Statements of F.Y.I. Incorporated and Subsidiaries.
(4)  Gives effect to certain tax adjustments in 1998 related to the taxation of
     Pooled Companies as S corporations or sole proprietorships prior to the
     consummation of the Acquisitions. See Note 2 of Notes to Consolidated
     Financial Statements of F.Y.I. Incorporated and Subsidiaries.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

REVENUE

          Revenue increased 30.7%, from $350.0 million for the year ended
December 31, 1999 to $457.6 million for the year ended December 31, 2000. This
increase was largely due to: (i) revenue from the acquisitions completed
subsequent to December 31, 1999; (ii) full-year revenue from 1999 acquisitions;
and (iii) internal growth of 10.1% in revenue. Internal growth was primarily
attributable to: (i) an increase in government services imaging revenue; (ii) an
increase in litigation consulting; (iii) an increase in the government services
revenue in California; and (iv) an increase in healthcare records release
services revenue and conversion revenue due to expansion into additional
healthcare institutions throughout the markets that we serve.

GROSS PROFIT

         Gross profit increased 34.3% from $127.3 million for the year ended
December 31, 1999 to $171.0 million for the year ended December 31, 2000,
largely due to the increases in revenue discussed above. Gross profit as a
percentage of revenue increased from 36.4% for the year ended December 31, 1999
to 37.4% for the year ended December 31, 2000, primarily due to higher gross
profit margins experienced in our litigation consulting and class-action claims
administration companies.

                                       18

<PAGE>

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

         SG&A increased 27.8% from $78.6 million, or 22.4% of revenue, for the
year ended December 31, 1999 to $100.5 million, or 22.0% of revenue, for the
year ended December 31, 2000, primarily due to SG&A associated with the
acquisitions subsequent to December 31, 1999. This decrease as a percentage of
revenue was a result of management emphasis on cost controls. This decrease in
SG&A was partially offset by increased SG&A as a percentage of revenue in our
government services companies.

OPERATING INCOME

         Operating income increased 40.9% from $44.0 million, or 12.6% of
revenue, for the year ended December 31, 1999 to $62.0 million, or 13.5% of
revenue, for the year ended December 31, 2000, largely attributable to the
factors discussed above.

INTEREST AND OTHER EXPENSE

         Interest and other expense increased 124.6% from $4.0 million for the
year ended December 31, 1999 to $8.9 million for the year ended December 31,
2000, primarily due to increased borrowings due to cash paid for acquisitions in
2000 and contingent consideration paid for acquisitions acquired before December
31, 1999. The average interest rate on borrowings increased from 6.4% in 1999 to
7.6% in 2000.

INCOME BEFORE INCOME TAXES AND NET INCOME

         Income before income taxes increased 32.6% from $40.0 million for the
year ended December 31, 1999, to $53.0 million for the year ended December 31,
2000, and net income increased 33.7% from $24.0 million for the year ended
December 31, 1999, to $32.1 million for the year ended December 31, 2000,
largely attributable to the factors discussed above.

         The provision for income taxes was $16.0 million for the year ended
December 31, 1999 and $20.9 million for the year ended December 31, 2000. The
effective tax rate of 40.0% and 39.5% for the years ended December 31, 1999 and
2000, respectively, differs from the statutory federal rate of 35.0% principally
due to state and local taxes and non-deductible goodwill expenses.

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

REVENUE

         Revenue increased 45.3%, from $240.9 million for the year ended
December 31, 1998 to $350.0 million for the year ended December 31, 1999. This
increase was largely due to: (i) revenue from the acquisitions completed
subsequent to December 31, 1998, accounted for under the purchase method of
accounting and their subsequent growth, primarily in the class action claims
processing area; and (ii) internal growth of 13.0% in revenue at the companies
owned greater than one year based on the acquisition anniversary date. This
internal growth was primarily attributable to: (i) an increase in document
conversion services relating to government agencies in the State of New York;
(ii) an increase in healthcare services revenue due to expansion into additional
healthcare institutions throughout the markets we serve; and (iii) an overall
increase in data capture and imaging revenue, partially due to claims processing
services performed.

GROSS PROFIT

         Gross profit increased 46.2%, from $87.1 million for the year ended
December 31, 1998 to $127.3 million for the year ended December 31, 1999,
largely due to the increases in revenue discussed above. Gross profit as a
percentage of revenue increased from 36.2% for the year ended December 31, 1998
to 36.4% for the year ended December 31, 1999.

                                       19

<PAGE>

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

         SG&A increased 41.3%, from $55.6 million, or 23.1% of revenue, for the
year ended December 31, 1998 to $78.6 million, or 22.4% of revenue, for the year
ended December 31, 1999, primarily due to SG&A associated with the acquisitions
subsequent to December 31, 1998. SG&A for the year ended December 31, 1998,
includes the following charges and impairments totaling $2.5 million: (i)
severance payments due on acquisition related employment contracts terminated or
not renewed and other costs, $1.7 million; (ii) facilities closings costs, $0.5
million; and (iii) other write-downs and impairments, $0.3 million. Excluding
these charges, SG&A increased 48.0% from $53.1 million, or 22.0% of revenue, for
the year ended December 31, 1998, to $78.6 million, or 22.4% of revenue, for the
year ended December 31, 1999. This increase as a percentage of revenue was a
result of increased corporate overhead required to manage the consolidated group
of companies. This increase was partially offset by decreased SG&A as a
percentage of revenue in the companies owned greater than one year.

OPERATING INCOME

         Operating income increased 41.8%, from $31.0 million, or 12.9% of
revenue, for the year ended December 31, 1998 to $44.0 million, or 12.6% of
revenue, for the year ended December 31, 1999, largely attributable to the
factors discussed above.

INTEREST AND OTHER EXPENSE

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

INCOME BEFORE INCOME TAXES AND PRO FORMA NET INCOME

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

FLUCTUATIONS IN QUARTERLY RESULTS OF OPERATIONS

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

LIQUIDITY AND CAPITAL RESOURCES

         At December 31, 2000, we had $55.9 million of working capital and $9.5
million of cash. Cash flows provided by operating activities for the year ended
December 31, 2000 were $45.9 million. Net cash provided by operating activities
for the year ended December 31, 2000 was primarily impacted by an increase in
earnings. This increase was offset in part by an increase in accounts receivable
and prepaid expenses, which were attributable to the increase in revenue for the
year. Net cash used in investing activities was $99.1 million for the year ended
December 31, 2000, and consisted primarily of payments of $86.0 million for
acquisitions, net of cash acquired, and the purchase of property, plant and
equipment. Net cash provided by financing activities was $53.4 million, as we
utilized our credit facility to fund our acquisition program. Net borrowings on
the credit facility were $36.9 million for the year.

         At December 31, 1999, we had $20.1 million of working capital and $9.4
million of cash. Cash flows provided by operating activities for the year ended
December 31, 1999 were $26.7 million. Net cash provided by

                                       20

<PAGE>

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

         At December 31, 1998, we had $37.8 million of working capital and
$14.6 million of cash. Cash flows provided by operating activities for the year
ended December 31, 1998 were $19.1 million. Net cash provided by operating
activities for the year ended December 31, 1998 was primarily impacted by (i)
an increase in revenue and a corresponding increase in accounts receivable; and
(ii) an increase in prepaid expenses and other assets. Net cash used in
investing activities was $37.1 million for the year ended December 31, 1998,
and was primarily used for the purchase of property, plant and equipment and
payments of $29.8 million for acquisitions, net of cash acquired. These uses
were partially offset by the $6.6 million received from the sale of the assets
of Leonard. Net cash provided by financing activities was $21.6 million, as we
utilized our credit facility to fund our acquisition program. Net borrowings on
the credit facility were $23.3 million for the year.

         In February 1998, we entered into our line of credit with BNP Paribas
and Bank of America Texas, N.A. (the "1998 Credit Agreement"). Under this
agreement, we initially could borrow on a revolving credit basis loans in an
aggregate outstanding principal amount up to $65.0 million, subject to certain
customary borrowing capacity requirements. In April 1999 and August 1999, the
1998 Credit Agreement was amended to increase the aggregate outstanding
principal limit to $100 million and $125 million, respectively. In November
1999, we further amended the 1998 Credit Agreement, increasing the aggregate
principal limit to $150 million. In May 2000, the 1998 Credit Agreement was
further amended to increase the aggregate principal limit to $175 million from
$150 million. In July 2000, the 1998 Credit Agreement was amended to extend its
revolving term by one year. The availability under the 1998 Credit Agreement as
of February 28, 2001 was $36.2 million for acquisitions, working capital and
general corporate purposes. Depending on the mix of stock and cash used to
execute our acquisition program, we may need to seek additional financing
through the public or private sale of equity or debt securities. There can be no
assurance we could secure such financing if and when it is needed or on terms we
deem acceptable.

         In January 2000, we registered on Form S-4 (Registration No. 333-92981)
3,012,217 shares of common stock for issuance in connection with our acquisition
program (the "Acquisition Shelf"), of which 2,082,556 shares were available as
of December 31, 2000.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company is subject to interest rate risk on its term loans and
revolving credit facility. Interest rates are fixed on the indenture and
capitalized lease obligations. In December, 2000, in order to mitigate
interest rate risk, the Company has entered into an interest rate hedge
agreement in the notional amount of $50 million, whereby the Company has
fixed the interest rate through March 2003 on the notional amount of the
hedge agreement at 5.775% plus the applicable floating spread.

                                       21

<PAGE>




ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>


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

  Report of Independent Public Accountants...........................       23


  Consolidated Balance Sheets........................................       24


  Consolidated Statements of Operations..............................       25


  Consolidated Statements of Stockholders' Equity....................       26


  Consolidated Statements of Cash Flows..............................       27


  Notes to Consolidated Financial Statements.........................       28

</TABLE>

                                       22

<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

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

      We have audited the accompanying consolidated balance sheets of F.Y.I.
Incorporated (a Delaware corporation) and subsidiaries (the "Company") as of
December 31, 1999 and 2000, and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the three years in
the period ended December 31, 2000. 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 auditing standards generally
accepted in the United States. 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 financial statements referred to above present
fairly, in all material respects, the financial position of F.Y.I.
Incorporated and subsidiaries as of December 31, 1999 and 2000, and the
results of their operations and their cash flows for each of the three years
in the period ended December 31, 2000, in conformity with accounting
principles generally accepted in the United States.



                                                     ARTHUR ANDERSEN LLP

Dallas, Texas,
  February 19, 2001

                                       23

<PAGE>

<TABLE>
<CAPTION>

                      F.Y.I. INCORPORATED AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

                                     ASSETS
                                                                                       DECEMBER 31,
                                                                                   1999          2000
                                                                                ----------    ----------

<S>                                                                             <C>           <C>
CURRENT ASSETS:
Cash and cash equivalents ...................................................   $    9,396    $    9,504
Accounts and notes receivable, less allowance for
  doubtful accounts of $8,835 and $14,111, respectively .....................       82,863        93,583
Notes receivable, shareholders ..............................................          269            --
Inventories .................................................................        5,695         5,112
Deferred income taxes .......................................................        2,890         3,935
Prepaid expenses and other current assets ...................................        5,506         6,747
                                                                                ----------    ----------
          Total current assets ..............................................      106,619       118,881

PROPERTY, PLANT AND EQUIPMENT, net ..........................................       46,512        50,341
GOODWILL AND OTHER INTANGIBLES, net of amortization of
  $10,728 and $19,241, respectively .........................................      212,316       278,709
OTHER NONCURRENT ASSETS .....................................................        3,908         6,778
                                                                                ----------    ----------
          Total assets ......................................................   $  369,355    $  454,709
                                                                                ==========    ==========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable and accrued liabilities ....................................   $   78,280    $   57,351
Current maturities of long-term obligations .................................        1,204           851
Income taxes payable ........................................................        7,022         4,759
                                                                                ----------    ----------
          Total current liabilities .........................................       86,506        62,961

LONG-TERM OBLIGATIONS, net of current maturities ............................       85,172       123,784
DEFERRED INCOME TAXES .......................................................        2,017         3,541
OTHER LONG-TERM OBLIGATIONS .................................................       20,651        11,031
                                                                                ----------    ----------
          Total liabilities .................................................      194,346       201,317

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, 1,000,000 shares
  authorized, no shares issued or outstanding ...............................           --            --
Common stock, $.01 par value, 26,000,000 shares authorized,
  14,581,639 and 16,191,416 shares issued and outstanding at
  December 31, 1999 and 2000, respectively ..................................          146           162
Additional paid-in-capital ..................................................      120,179       166,608
Retained earnings ...........................................................       55,185        87,286
                                                                                ----------    ----------
                                                                                   175,510       254,056
Less-- Treasury stock, at cost, 36,670 and 42,605 shares at December 31, 1999
and 2000, respectively ......................................................         (501)         (664)
                                                                                ----------    ----------
          Total stockholders' equity ........................................      175,009       253,392
                                                                                ----------    ----------
          Total liabilities and stockholders' equity ........................   $  369,355    $  454,709
                                                                                ==========    ==========

</TABLE>


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

                                        24
<PAGE>

<TABLE>
<CAPTION>

                      F.Y.I. INCORPORATED AND SUBSIDIARIES

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


                                                              YEAR ENDED DECEMBER 31,
                                                        --------------------------------------
                                                           1998          1999          2000
                                                        ----------    ----------    ----------
                                                        <C>           <C>           <C>
REVENUE .............................................   $  240,906    $  350,044    $  457,590
COST OF SERVICES ....................................      147,964       213,928       272,823
DEPRECIATION ........................................        5,889         8,815        13,802
                                                        ----------    ----------    ----------
  Gross profit ......................................       87,053       127,301       170,965

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Note 6)       55,594        78,577       100,456
GAIN ON SALE OF ASSETS OF SUBSIDIARY (Note 6) .......       (4,394)           --            --
AMORTIZATION (Note 6) ...............................        4,845         4,748         8,554
                                                        ----------    ----------    ----------
  Operating income ..................................       31,008        43,976        61,955

OTHER (INCOME) EXPENSE:
  Interest expense ..................................        1,468         4,246         9,961
  Interest income ...................................         (316)         (423)         (489)
  Other (income) expense, net .......................         (162)          152          (545)
                                                        ----------    ----------    ----------
     Income before income taxes .....................       30,018        40,001        53,028

PROVISION FOR INCOME TAXES ..........................       10,987        16,000        20,927
                                                        ----------    ----------    ----------
NET INCOME ..........................................   $   19,031    $   24,001    $   32,101
                                                        ==========    ==========    ==========

PRO FORMA DATA (Unaudited -- See Note 2):
  Historical net income .............................   $   19,031    $   24,001    $   32,101
  Pro forma provision for income taxes ..............        1,020            --            --
                                                        ----------    ----------    ----------
PRO FORMA NET INCOME ................................   $   18,011    $   24,001    $   32,101
                                                        ==========    ==========    ==========

NET INCOME PER COMMON SHARE
      BASIC .........................................   $     1.42    $     1.70    $     2.10
                                                        ==========    ==========    ==========
      DILUTED .......................................   $     1.39    $     1.60    $     2.00
                                                        ==========    ==========    ==========
PRO FORMA NET INCOME PER COMMON SHARE
      BASIC .........................................   $     1.35    $     1.70    $     2.10
                                                        ==========    ==========    ==========
      DILUTED .......................................   $     1.31    $     1.60    $     2.00
                                                        ==========    ==========    ==========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
      BASIC .........................................       13,370        14,149        15,284
                                                        ==========    ==========    ==========
      DILUTED .......................................       13,731        14,990        16,065
                                                        ==========    ==========    ==========

</TABLE>

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

                                       25
<PAGE>

                      F.Y.I. INCORPORATED AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                        (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>

                                      COMMON STOCK        PREFERRED STOCK      TREASURY STOCK                            TOTAL
                                      ------------        ---------------      --------------
                                   SHARES      AMOUNT    SHARES    AMOUNT    SHARES    AMOUNT       APIC       R/E        S/E
                                   ------      ------    ------    ------    ------    ------       ----       ---        ---
<S>                                <C>         <C>       <C>       <C>       <C>       <C>          <C>        <C>        <C>

Balance, December 31, 1997 ....  12,526,286     $ 125      --       $ --     36,670    $ (501)    $89,979    $17,961   $107,564
Pooling-of-interests
adjustments at January 1,
1998...........................     326,659         3      --         --         --        --       1,548     (2,226)      (675)
Common stock issued in
   connection with acquisitions     634,486         7      --         --         --        --      12,839         --     12,846
Dividends paid to shareholders
   of pooled companies ........          --        --      --         --         --        --          --     (3,499)    (3,499)
Capital contributions by
   shareholders of pooled
   companies ..................          --        --      --         --         --        --          12         --         12
Exercise of options, net ......     142,770         1      --         --         --        --       3,035         --      3,036
Pooling-of-interests
   adjustments at October 1,        416,524         4      --         --         --        --         499        (83)       420
   1998........................
Net income ....................          --        --      --         --         --        --          --     19,031     19,031
                                 ----------     -----    ----       ----     ------      -----    -------     ------    -------

Balance, December 31, 1998 ....  14,046,725       140      --         --     36,670      (501)    107,912     31,184    138,735
Common stock issued in
   connection with acquisitions     279,879         3      --         --         --        --       7,204         --      7,207
Exercise of awards, net .......     255,035         3      --         --         --        --       5,954         --      5,957
S corporation to C corporation
   conversion for pooled
   company ....................          --        --      --         --         --        --        (891)        --       (891)
Net income ....................          --        --      --         --         --        --          --     24,001     24,001
                                 ----------     -----    ----       ----     ------      -----    -------     ------     ------

Balance, December 31, 1999 ....  14,581,639       146      --         --     36,670      (501)    120,179     55,185    175,009
Common stock issued in
   connection with acquisitions     778,017         8      --         --         --        --      25,523         --     25,531
Exercise of awards, net .......     831,760         8      --         --         --        --      20,906         --     20,914
Treasury stock.................          --        --      --         --      5,935      (163)         --         --       (163)
Net income ....................          --        --      --         --         --        --          --     32,101     32,101
                                 ----------     -----    ----       ----     ------      -----    -------    -------    -------

Balance, December 31, 2000 ....  16,191,416     $ 162      --       $ --     42,605   $  (664)  $ 166,608   $ 87,286    253,392
                                 ==========     =====    ====       ====     ======   =======   =========   ========    =======

</TABLE>

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

                                        26
<PAGE>

                      F.Y.I. INCORPORATED AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                   YEAR ENDED DECEMBER 31,
                                                                1998        1999        2000
                                                              --------    --------    --------

<S>                                                           <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ................................................   $ 19,031    $ 24,001    $ 32,101
Adjustments to reconcile net income to net cash provided by
  operating activities:
  Depreciation and amortization ...........................     10,734      13,563      22,356
  Gains from sale of assets of subsidiary .................     (4,394)         --          --
  Deferred tax (provision) benefit ........................      1,454          25        (485)
Change in operating assets and liabilities:
  Accounts receivable and notes receivable ................     (9,964)    (12,436)     (1,415)
  Prepaid expenses and other assets .......................     (3,045)     (1,648)     (5,361)
  Accounts payable and accrued liabilities ................      5,295       3,227      (1,312)
                                                              --------    --------    --------
     Net cash provided by operating activities ............     19,111      26,732      45,884

CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from sale of operating company assets ..........      6,626          --          --
  Purchase of property, plant and equipment ...............    (13,896)    (17,298)    (13,109)
  Cash paid for acquisitions, net of cash acquired ........    (29,834)    (63,113)    (86,026)
                                                              --------    --------    --------
     Net cash used for investing activities ...............    (37,104)    (80,411)    (99,135)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from common stock issuance, net of underwriting
    Discounts and other costs .............................      2,275       4,750      16,621
  Proceeds from long-term obligations .....................     32,000      86,000      90,991
  Principal payments on long-term obligations .............     (8,723)    (41,938)    (54,124)
  Cash paid for debt issuance costs .......................       (450)       (329)       (129)
  Dividends paid to shareholders of pooled companies ......     (3,499)         --          --
                                                              --------    --------    --------
     Net cash provided by financing activities ............     21,603      48,483      53,359

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ......      3,610      (5,196)        108
CASH AND CASH EQUIVALENTS, beginning of period ............     10,982      14,592       9,396
                                                              --------    --------    --------
CASH AND CASH EQUIVALENTS, end of period ..................   $ 14,592    $  9,396    $  9,504
                                                              --------    --------    --------

SUPPLEMENTAL DATA:
  Cash paid for:
    Income taxes ..........................................   $ 10,875    $ 14,959    $ 20,732
    Interest ..............................................   $  1,261    $  4,019    $  9,374
NONCASH FINANCING TRANSACTIONS:
  Debt assumed in acquisitions ............................   $  2,993    $  9,154    $  4,025

</TABLE>

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

                                       27

<PAGE>

                      F.Y.I. INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND BASIS OF PRESENTATION:

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

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

         Subsequent to the IPO and through December 31, 2000, we acquired 50
additional companies in transactions accounted for as purchases. Our results of
operations include the results of these acquisitions from the date of their
respective acquisitions.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

CASH AND CASH EQUIVALENTS

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

FUNCTIONAL CURRENCY AND FOREIGN CURRENCY TRANSACTIONS

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

PROPERTY, PLANT AND EQUIPMENT

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


                                      28
<PAGE>


INTANGIBLE ASSETS

Intangibles consist primarily of goodwill. Based on the historical
profitability of the purchased companies and trends in the legal, healthcare
and other industries regarding the outsourcing of document management
functions in the foreseeable future, goodwill is being amortized over periods
not to exceed 30 years. Management continually evaluates whether events and
circumstances indicate that the remaining estimated useful life of intangible
assets might warrant revisions or that the remaining balance of intangibles
or other long-lived assets may not be recoverable. To make this evaluation,
management compares the estimated undiscounted future cash flows over the
remaining life of the intangibles or other long-lived assets to the carrying
amount of the assets being evaluated. If the expected future cash flows do
not exceed the carrying amount of the assets being evaluated, an impairment
loss is recognized based on the excess of the carrying amount of the impaired
assets over their fair value. No impairments were recorded in 1999 and 2000.
See Note 6 - 1998 Dispositions and Other Charges for 1998 impairments. The
goodwill associated with a majority of our acquisitions is not deductible for
income tax purposes.

REVENUE RECOGNITION

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

INCOME TAXES

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

NET INCOME PER SHARE

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

USE OF ESTIMATES IN FINANCIAL STATEMENTS

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

RECLASSIFICATIONS

         Certain prior year amounts have been reclassified to conform to the
current year presentation.

CONSOLIDATION

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


                                      29
<PAGE>


PRO FORMA NET INCOME (UNAUDITED)

         We acquired the Pooled Companies in transactions that were accounted
for as poolings-of-interests. The Pooled Companies were managed through their
acquisition dates as independent private companies and represent a variety of
tax structures. The unaudited pro forma data presents the incremental provision
for income taxes as if all entities had been subject to federal and state
income taxes.

FAIR VALUE OF FINANCIAL INSTRUMENTS

         The carrying amounts of cash and cash equivalents, accounts and notes
receivable, net, accounts payable and accrued liabilities approximate fair
value due to the short maturities of these instruments. The carrying amount of
long-term debt approximates fair value due to interest rates that approximate
current market rates for instruments of similar size and duration.

RECENT ACCOUNTING PRONOUNCEMENTS

         In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities." This
statement establishes accounting and reporting standards for derivative
instruments, including certain derivatives embedded in other contracts
(collectively referred to as derivatives) and for hedging activities. This
statement, for the Company, is effective January 1, 2001. The Company does not
believe that the adoption of this pronouncement will have a significant impact
on the Company's financial statements.

         The Securities and Exchange Commission (SEC) issued Staff Accounting
Bulletin (SAB) 101, "Revenue Recognition in Financial Statements," in December
1999. This bulletin, for the Company, was effective with the fourth quarter of
2000. This SAB summarizes the SEC staff's views in applying generally accepted
accounting principles to revenue recognition in financial statements. The
Company's revenue recognition policies are consistent with SAB 101.

3. ALLOWANCE FOR DOUBTFUL ACCOUNTS AND NOTES RECEIVABLE:

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

<TABLE>
<CAPTION>
                                              BALANCE AT                 CHARGED TO                BALANCE
                                               BEGINNING      BALANCE     COSTS AND               AT END OF
                                               OF PERIOD     ACQUIRED     EXPENSES    WRITE-OFFS    PERIOD
                                              ----------     --------    ----------   ----------  ---------
<S>                                           <C>            <C>         <C>          <C>         <C>

Twelve months ended December 31, 1998......      $3,356        $  363       $3,262      $2,276     $ 4,705
                                                 ======        ======       ======      ======     =======

Twelve months ended December 31, 1999......      $4,705        $1,660       $6,325      $3,855     $ 8,835
                                                 ======        ======       ======      ======     =======

Twelve months ended December 31, 2000......      $8,835        $  736       $8,725      $4,185     $14,111
                                                 ======        ======       ======      ======     =======

</TABLE>










                                      30
<PAGE>


4. PROPERTY, PLANT AND EQUIPMENT:

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

<TABLE>
<CAPTION>

                                                                 ESTIMATED            DECEMBER 31,
                                                                USEFUL LIVES   -------------------------
                                                                  IN YEARS         1999          2000
                                                                  --------         ----          ----
<S>                                                            <C>             <C>            <C>
Land......................................................          N/A         $     934     $     934
Buildings and improvements................................          7--18           3,991         3,604
Leasehold improvements....................................     Life of lease        3,563         5,345
Vehicles..................................................          5--7            2,500         2,448
Machinery and equipment...................................          5--15          35,367        45,464
Computer equipment and software...........................          3--7           30,596        34,295
Furniture and fixtures....................................          5--15           3,896         4,577
                                                                                ---------     ---------
                                                                                   80,847        96,667
Less-- Accumulated depreciation...........................                         34,335        46,326
                                                                                ---------     ---------
                                                                                $  46,512     $  50,341
                                                                                =========     =========
</TABLE>

5. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES:

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

<TABLE>
<CAPTION>
                                                   DECEMBER 31,
                                               -------------------
                                                 1999       2000
                                                 ----       ----
<S>                                            <C>        <C>
Accounts payable and accrued liabilities....   $ 24,253   $  9,062
Accrued compensation and benefits ..........     12,683     15,850
Customer deposits ..........................      3,327      4,625
Unearned revenue ...........................      8,641     12,260
Accrued liabilities from acquisitions ......     29,017     15,202
Accrued professional fees ..................        359        352
                                               --------   --------
                                               $ 78,280   $ 57,351
                                               ========   ========
</TABLE>

6. BUSINESS COMBINATIONS:

2000 ACQUISITIONS

         During 2000, we acquired five business process outsourcing solution
businesses, which were accounted for as purchases (the "Purchased Companies").
These acquisitions were (i) Mailing and Marketing, Inc., (ii) Global Direct,
Inc., (iii) Pinnacle Legal Copies, Inc. and PLCI, Inc., (iv) Lexicode
Corporation, and (v) RTI Laser Print Services, Inc. The aggregate consideration
paid for the Purchased Companies consisted of $51.0 million in cash and 205,350
shares of common stock. The preliminary allocation of the purchase price is set
forth below (in thousands):

<TABLE>

 <S>                                                                      <C>
 Consideration Paid.....................................................  $56,196
 Estimated Fair Value of Tangible Assets................................   19,000
 Estimated Fair Value of Liabilities....................................   10,624
 Goodwill...............................................................   47,820

</TABLE>

         The weighted average fair market values of the shares of common stock
used in calculating the consideration paid for the Purchased Companies was
$25.44 per share, which represents a 18% discount from the


                                      31
<PAGE>


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 from the final allocations. Certain of the acquisitions
are subject to adjustments in their overall consideration based upon
performance against specified earning targets over one to three year periods.

1999 ACQUISITIONS

         During 1999, we acquired 12 document management businesses, all of
which were accounted for as purchases.  These acquisitions were Northern
Minnesota Medical Records Services, Inc., PMI Imaging Systems, Inc., Quality
Data Conversions, Inc., MSI Imaging Solutions, Inc., Information Management
Services, Inc., Managed Care Professionals, Inc., American Economics Group,
Inc., Data Entry and Informational Services, Inc., Rust Consulting, Inc.,
Newport Beach Data Entry, Inc., Copy Right, Inc. and Exigent Computer Group,
Inc. (the "1999 Acquisitions").  The aggregate consideration paid for the
acquisitions consisted of $66.8 million in cash and 255,626 shares of common
stock. The preliminary allocation of the purchase price is set forth below (in
thousands):

<TABLE>

 <S>                                                                      <C>
 Consideration Paid.....................................................  $73,811
 Estimated Fair Value of Tangible Assets................................   34,069
 Estimated Fair Value of Liabilities....................................   30,603
 Goodwill...............................................................   70,345

</TABLE>

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

         Certain of the acquisitions are subject to adjustments in their
overall consideration based upon performance against specified earning targets
over one to three year periods.

1998 ACQUISITIONS

         During 1998, we acquired 13 document management businesses, eight of
which were accounted for as purchases (the "Purchased Companies") and five of
which were accounted for under the pooling-of-interests method.  The eight
acquisitions accounted for as purchases were Medicopy, Inc. ("Medicopy"),
Associate Record Technician Services, Inc. ("ARTS"), DeBari Associates, Inc.
("DeBari"), ACT Medical Record Services, Inc. ("ACT"), Eagle Legal Services,
Inc. ("Eagle"), Doctex, Inc. ("Doctex"), Copyright, Inc. ("Copyright"), and
certain assets of Olicon Imaging Systems, Inc. ("Radiology").  The aggregate
consideration paid for the Purchased Companies consisted of $18.2 million in
cash and 644,762 shares of common stock. The preliminary allocation of the
purchase price is set forth below (in thousands):

<TABLE>

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

</TABLE>

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

         Certain of the acquisitions are subject to additional consideration
based upon achievement of specified earning targets over a one to three year
period.

         The acquisitions of CMI in September 1998 and ERS in October 1998 for
745,000 and 835,000 shares of common stock, respectively, were accounted for as
poolings-of-interests. The consolidated financial statements for all periods
presented have been restated to include the accounts of CMI and ERS. Pro forma
net income reflects


                                      32
<PAGE>


adjustments for the incremental provision for income taxes as if all entities
had been subject to federal and state income taxes.

         The acquisition of Lifo in February 1998 for 326,659 shares of common
stock was accounted for as a pooling-of-interests. The acquisitions of TCH and
ADG in December 1998 for 416,524 shares of common stock were also accounted for
as poolings-of-interests. Our consolidated financial statements were not
restated for periods prior to October 1, 1998, due to the financial
immateriality of TCH and ADG.

1998 DISPOSITIONS AND OTHER CHARGES

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

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

 CONTINGENT CONSIDERATION

         Certain of our acquisitions are subject to adjustments in their
overall consideration based upon the achievement of specified earning targets
over one to three year periods. During 2000, we paid consideration of $30.8
million in cash and 662,447 of common stock at an average price of $32.09 per
share in relation to contingent consideration agreements that have been
settled. Based upon the evaluation of cumulative earnings through December 31,
2000, against the specified earnings targets, we have accrued aggregate
contingent consideration of approximately $18.6 million, of which $10.4 million
is classified as accounts payable and accrued liabilities and will be settled
in cash and $8.2 million is classified as other long-term obligations and will
be settled in common stock. All of the periods applicable for the earnout
targets have not been completed, and additional amounts may be payable in
future periods under the terms of the agreements.

PRO FORMA FINANCIAL DATA

         Set forth below are unaudited pro forma financial data for the years
ended December 31, 1999 and 2000. The unaudited pro forma data give effect to:
(i) the 2000 Acquisitions and the 1999 acquisitions; and (ii) compensation and
tax adjustments for all transactions as if these transactions had occurred on
January 1, 1999.


                                      33
<PAGE>


<TABLE>
<CAPTION>
                                                            PRO FORMA YEAR ENDED
                                                                DECEMBER 31,
                                                           ----------------------
                                                           1999              2000
                                                           ----              ----
                                                      (UNAUDITED, IN THOUSANDS, EXCEPT
                                                               PER SHARE DATA)

  <S>                                                 <C>                 <C>
  Revenue.......................................         $440,788         $470,341
  Income before income taxes....................           51,417           55,451
  Net income....................................           30,851           33,567

  Net income per common share:
    Basic.......................................         $   2.12         $   2.19
    Diluted.....................................         $   2.01         $   2.08

  Weighted average common shares outstanding:
    Basic.......................................           14,518           15,327
    Diluted.....................................           15,359           16,108

</TABLE>

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

7. LONG-TERM OBLIGATIONS AND CREDIT FACILITIES:

LONG-TERM OBLIGATIONS

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

<TABLE>
<CAPTION>
                                                                               DECEMBER 31,
                                                                           -------------------
                                                                             1999       2000
                                                                             ----       ----
 <S>                                                                       <C>        <C>
 Line of credit, expiring at March 2003, interest at prime or
   the Eurodollar rate plus 0.75%(5.50% to 7.19%) at December 31,
   1999, and interest at prime or the Eurodollar rate plus 1.125%
   (7.19% to 7.94%) at December 31, 2000 ...............................    $82,000   $121,000
 Industrial Revenue Bonds: Variable Rate (3.1% at December 31,
   1999 and 3.7% at December 31, 2000) 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..........................................      2,144      2,044
 All other obligations .................................................      2,232      1,591
                                                                            -------   --------
      Total ............................................................     86,376    124,635
 Less--Current maturities of long-term obligations .....................      1,204        851
                                                                            -------   --------
      Total long-term obligations ......................................    $85,172   $123,784
                                                                            =======   --------
</TABLE>

         In February 1998, we entered into a credit agreement (the "1998 Credit
Agreement") with Paribas and Bank of America Texas, N.A., as co-agents and
lenders named therein. Under the 1998 Credit Agreement, we and our subsidiaries
could borrow on a revolving credit basis loans in an aggregate outstanding
principal amount up to $65.0 million, subject to certain customary borrowing
capacity requirements. In April 1999 and August 1999, the 1998 Credit Agreement
was amended to increase the aggregate outstanding principal limit to $100.0
million and $125.0 million, respectively. In November 1999, we further amended
the 1998 Credit Agreement, increasing the aggregate principal limit to $150.0
million. In May 2000, the 1998 Credit Agreement was further amended to increase
the aggregate principal limit to $175 million from $150 million. In July 2000,
the 1998 Credit Agreement was amended to extend its revolving term by one year.
The 1998 Credit Agreement is secured by the assets and/or stock of our Company
and our subsidiaries. The availability under the 1998 Credit Agreement as of
December 31, 2000, was $41.7 million.

         The commitment to fund revolving credit loans under the 1998 Credit
Agreement expires February 18, 2002. The annual interest rate applicable to
borrowings under this facility is, at our option, (i) the prime rate or (ii)
grid pricing ranging from 0.5% to 1.50% plus the Eurodollar rate based on the
ratio of debt to EBITDA (as defined


                                      34
<PAGE>


in the 1998 Credit Agreement). The 1998 Credit Agreement requires mandatory
prepayments in certain circumstances. The outstanding principal balance of
revolving credit loans is due and payable on March 31, 2003.

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

         The weighted average interest rate on long-term obligations at
December 31, 1999 and 2000, was 6.4% and 7.6%, respectively. The 1998 Credit
Agreement contains certain reporting requirements and financial covenants,
including requirements that we maintain minimum levels of net worth and other
financial ratios. As of December 31, 2000, we are in compliance with all loan
covenants.

In December 2000, in order to mitigate interest rate risk, the Company has
entered into an interest rate hedge agreement in the notional amount of $50
million, whereby the Company has fixed the interest rate through March 2003
on the notional amount of the hedge agreement at 5.775% plus the applicable
floating spread.

MATURITIES OF LONG-TERM OBLIGATIONS

         As of December 31, 2000, maturities of long-term obligations are as
follows (in thousands):

<TABLE>
<CAPTION>

 YEARS ENDING DECEMBER 31,
 -------------------------
 <S>                                                                           <C>
       2001..................................................................  $    851
       2002..................................................................    24,734
       2003..................................................................    97,048
       2004..................................................................       122
       2005..................................................................       123
       Thereafter............................................................     1,757
                                                                               --------
       Total.................................................................  $124,635
                                                                               ========
</TABLE>

8. LEASE COMMITMENTS:

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

<TABLE>
<CAPTION>
                                                                                    YEAR ENDED
                                                                                DECEMBER 31, 2000
                                                                         --------------------------------
                                                                             CAPITAL         OPERATING
 YEARS ENDING DECEMBER 31,                                                   LEASES           LEASES
 -------------------------                                                   -------          ------
 <S>                                                                     <C>                 <C>
      2001.............................................................       $  795         $17,430
      2002.............................................................          440          14,259
      2003.............................................................          132          10,634
      2004.............................................................            0           6,234
      2005.............................................................            0           3,115
      Thereafter.......................................................            0           4,803
                                                                              ------         -------
      Total minimum lease payments.....................................        1,367         $56,475
                                                                                             =======
      Less-- Amounts representing interest.............................           94
                                                                              ------
      Net minimum lease payments.......................................        1,273

      Less-- Current portion of obligations under capital leases.......          731
                                                                              ------

      Long-term portion of obligations under capital leases............       $  542
                                                                              ======
</TABLE>


                                       35
<PAGE>

         Rent expense for all operating leases for the years ended December 31,
1998, 1999 and 2000 was approximately $11.7 million, $15.1 million, and $20.7
million, respectively.

9. INCOME TAXES:

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

<TABLE>
<CAPTION>
                                              YEAR ENDED DECEMBER 31,
                                        ------------------------------------
                                          1998          1999          2000
                                        --------      --------      --------
<S>                                     <C>           <C>           <C>

Federal--
    Current .........................   $ 10,453      $ 13,301      $ 18,476
    Deferred ........................     (1,233)          (21)          392
State--
    Current .........................      1,988         2,724         1,966
    Deferred ........................       (221)           (4)           93
                                        --------      --------      --------
                                        $ 10,987      $ 16,000      $ 20,927
                                        ========      ========      ========
</TABLE>

         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,
                                             ------------------------------------
                                               1998          1999          2000
                                             --------      --------      --------
<S>                                          <C>           <C>           <C>

Tax at statutory rate ..................     $ 10,506      $ 13,970      $ 18,560
  Add (deduct)--
     State income taxes ................        1,148         1,768         1,491
     Nondeductible expenses ............          920           875         1,471
     Loss of S corporations ............       (1,130)         (599)         (115)
     Other .............................         (457)          (14)         (480)
                                             --------      --------      --------
                                             $ 10,987      $ 16,000      $ 20,927
                                             ========      ========      ========
</TABLE>

         The components of deferred income tax liabilities and assets are as
follows (in thousands):

<TABLE>
<CAPTION>
                                                                     DECEMBER 31,
                                                                 --------------------
                                                                   1999        2000
                                                                 --------    --------
<S>                                                              <C>         <C>
Deferred income tax liabilities--
  Tax over book depreciation and amortization ................   $  2,017    $  5,487
  Cash to accrual differences, net ...........................        712         818
  Other, net .................................................        860         242
                                                                 --------    --------
      Total deferred income tax liabilities ..................      3,589       6,547
Deferred income tax assets--
  Allowance for doubtful accounts ............................      3,058       5,223
  Accrued liabilities ........................................      1,369         883
    Other reserves, net ......................................         35         835
                                                                 --------    --------
      Total deferred income tax assets .......................      4,462       6,941
                                                                 --------    --------
Total net deferred income tax (liabilities)/assets ...........   $    873    $    394
                                                                 ========    ========

Current portion of deferred income tax (liabilities)/assets ..   $  2,890    $  3,935
Long-term deferred tax assets/(liabilities) ..................     (2,017)     (3,541)
                                                                 --------    --------
                                                                 $    873    $    394
                                                                 ========    ========
</TABLE>




                                      36
<PAGE>


10. STOCKHOLDERS' EQUITY:

STOCK OPTIONS AND WARRANTS:

         At December 31, 2000, we had one stock-based compensation plan, the
1995 Stock Option Plan, as amended (the "Plan"), which is described below. We
have also issued warrants (the "Warrants") to certain key employees and
employees of our subsidiaries. We refer to these options and warrants
collectively as "Awards." We apply APB Opinion 25 and related interpretations
in accounting for awards. Awards are granted at the market price of the common
stock on the date of grant. Accordingly, no compensation cost has been
recognized for the awards. Had compensation cost been determined based upon the
fair value at grant dates for these awards consistent with the method of SFAS
No. 123, "Accounting for Stock Based Compensation," our net income and earnings
per share would have been as follows (in thousands, except for per share data):

<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                     ------------------------------------
                                                        1998         1999         2000
                                                     ----------   ----------   ----------
<S>                                                  <C>          <C>          <C>
Net income under SFAS 123 ........................   $   16,626   $   20,914   $   28,970
Diluted net income per common share under SFAS 123   $     1.21   $     1.40   $     1.80
Actual net income ................................   $   19,031   $   24,001   $   32,101
Actual diluted net income per common share .......   $     1.39   $     1.60   $     2.00

</TABLE>

         The fair value of the Awards was estimated on the date of the grant
using the Black-Scholes option pricing model with the following assumptions for
1998: risk free interest rate ranging from 4.0% to 5.7%, no dividend yield,
average expected life of three years, and volatility of 40%. The following
assumptions were used for 1999: risk free interest rate ranging from 4.5% to
6.1%, no dividend yield, average expected life of three years, and volatility
of 35%. The following assumptions were used for 2000: risk free interest rate
ranging from 5.0% to 6.8%, no dividend yield, average expected life of three
years, and volatility of 40%.

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

         The maximum number of shares of common stock that may be subject to
outstanding options under the Plan, determined immediately after the grant of
any option, is the greater of 650,000 shares or 16% of the aggregate number of
shares of our common stock outstanding; provided, however, that options to
purchase no more than 650,000 shares of common stock may be granted as ISOs. At
December 31, 1999 and 2000, approximately 417,000 and 1,046,000 shares,
respectively, were available for issuance.







                                      37
<PAGE>


         We had 2,830,410 and 2,598,861 Awards outstanding at December 31,
1999, and 2000, respectively. These Awards, other than those granted to
employee directors, have 10-year expirations and various vesting schedules.

<TABLE>
<CAPTION>
                                                                              AWARDS OUTSTANDING
                                                                    ---------------------------------------
                                                                                         WEIGHTED AVERAGE
                                                                         SHARES           EXERCISE PRICE
                                                                    ----------------     ----------------
                                                                     (IN THOUSANDS)
 <S>                                                                <C>                  <C>
 Balance, December 31, 1997 ................................                   1,814           $19.23
 Granted ...................................................                   1,205           $26.53
 Exercised .................................................                     143           $17.22
 Forfeited .................................................                      62           $21.22
                                                                              ------           ------
 Balance, December 31, 1998 ................................                   2,814           $22.42
 Granted ...................................................                     480           $27.95
 Exercised .................................................                     255           $18.62
 Forfeited .................................................                     209           $23.69
                                                                              ------           ------
 Balance, December 31, 1999 ................................                   2,830           $23.60
 Granted ...................................................                     756           $29.37
 Exercised .................................................                     832           $20.50
 Forfeited .................................................                     155           $24.62
                                                                              ------           ------
 Balance, December 31, 2000 ................................                   2,599           $26.21
                                                                              ------           ------
 Exercisable, December 31, 2000 ............................                   1,127           $23.50
                                                                              ======           ======
</TABLE>

         The following table summarizes information about Awards granted under
the Plan that were outstanding at December 31, 2000:

<TABLE>
<CAPTION>
                                     AWARDS OUTSTANDING                        AWARDS EXERCISABLE
                      ------------------------------------------------  -------------------------------
                         NUMBER      WEIGHTED-AVERAGE     WEIGHTED        NUMBER
      RANGE OF        OUTSTANDING       REMAINING          AVERAGE      EXERCISABLE    WEIGHTED AVERAGE
  EXERCISE PRICES     AT 12/31/00    CONTRACTUAL LIFE   EXERCISE PRICE  AT 12/31/00     EXERCISE PRICE
  ---------------     -----------    ----------------   --------------  -----------     --------------
  <S>                 <C>            <C>                <C>             <C>            <C>
  $10.00-$23.50          694,076            6.32            $20.07         611,046          $19.87
  $23.75-$26.38          620,587            8.27            $25.65         184,926          $24.90
  $26.75-$28.63          790,510            8.04            $27.89         249,320          $28.11
  $28.88-$37.25          493,688            8.80            $32.88          82,187          $33.36

</TABLE>

NET INCOME PER SHARE

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

<TABLE>
<CAPTION>
                                                             YEAR ENDED DECEMBER 31,
                                                       ----------------------------------
                                                         1998         1999         2000
                                                       --------     --------     --------
<S>                                                    <C>          <C>          <C>
Basic weighted average common shares .............       13,370       14,149       15,284
Weighted average options and warrants ............          336          486          407
Other contingent consideration ...................           25          355          374
                                                       --------     --------     --------
Diluted weighted average common shares ...........       13,731       14,990       16,065
                                                       ========     ========     ========
</TABLE>

         At December 31, 2000, approximately 88,000 anti-dilutive options were
not included in the diluted earnings per share calculation. These options may be
dilutive in future earnings per share calculations.



                                      38
<PAGE>


11. EMPLOYEE BENEFIT PLANS:

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

         Certain of the operating companies have separate qualified defined
contribution employee benefit plans (the "Plans"), the majority of which allow
for voluntary pre-tax contributions by employees. The subsidiaries pay all
general and administrative expenses of the Plans and, in some cases, the
subsidiaries make matching and discretionary contributions to the Plans. The
subsidiaries offer no post-employment or post-retirement benefits. The expense
incurred by us related to the Plans was approximately $610,000, $887,000, and
$970,542 for the years ended December 31, 1998, 1999 and 2000 respectively.

12. RELATED PARTY TRANSACTIONS:

LEASING TRANSACTIONS

         Certain of our operating companies lease their operating facilities,
along with certain equipment, from selling parties who remained our employees
or directors. These leases are for various lengths and annual amounts. The
rental expense for these operating leases for the years ended December 31,
1998, 1999 and 2000 was approximately $647,000, $1,362,348 and $1,113,209,
respectively.

NOTES RECEIVABLE

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

13. COMMITMENTS AND CONTINGENCIES:

LITIGATION

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

CONCENTRATION OF CREDIT RISK

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


                                      39
<PAGE>


14. SEGMENT REPORTING:

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

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

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

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

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

         We have a broad client base. We had two clients' projects that
accounted for approximately $33.6 million, or 7.3%, of our revenue for the year
ended December 31, 2000.












                                      40
<PAGE>


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

<TABLE>
<CAPTION>
                          Year ended December 31, 2000

                                                           F.Y.I. HealthSERVE/
                         F.Y.I. IMAGE   F.Y.I. LEGAL       GOVERNMENT SERVICES       F.Y.I. DIRECT       CONSOLIDATED
                         ------------   ------------      ---------------------      -------------       ------------
<S>                      <C>            <C>               <C>                        <C>                 <C>
Revenue                    $147,296        $87,811               $139,651                $82,832           $457,590
Depreciation and
 amortization                 7,225          4,230                  7,086                  3,815             22,356
Operating income             21,246         13,115                 20,234                  7,360             61,955
Interest expense              3,236          1,895                  2,991                  1,839              9,961
Income before income
   taxes                     17,988         11,325                 17,352                  6,363             53,028
Total assets                156,682         83,303                150,737                 63,987            454,709

                        Year ended December 31, 1999 (1)

<CAPTION>

                                                           F.Y.I. HealthSERVE/
                         F.Y.I. IMAGE   F.Y.I. LEGAL       GOVERNMENT SERVICES       F.Y.I. DIRECT      CONSOLIDATED
                         ------------   ------------       -------------------       -------------      ------------
Revenue
                           $115,552        $82,473               $104,427                $47,592          $350,044
Depreciation and
 amortization                 4,960          2,823                  4,722                  1,058            13,563
Operating income             17,593          9,621                 13,312                  3,450            43,976
Interest expense              1,669            888                  1,196                    493             4,246
Income before income
   taxes                     15,919          8,826                 12,201                  3,055            40,001
Total assets               $133,734        $77,542               $129,134                $28,945          $369,355

                                          Year ended December 31, 1998 (1)

<CAPTION>

                                                           F.Y.I. HealthSERVE/
                         F.Y.I. IMAGE   F.Y.I. LEGAL       GOVERNMENT SERVICES       F.Y.I. DIRECT      CONSOLIDATED
                         ------------   ------------       -------------------       -------------      ------------

Revenue                     $48,897        $78,580                $82,649                $30,780           $240,906
Depreciation and
 amortization                 2,679          2,865                  3,613                  1,577             10,734
Operating income              7,265         11,252                  8,718                  3,773             31,008
Interest expense                279            491                    379                    319              1,468
Income before income
   taxes                      7,261         10,907                  8,124                  3,726             30,018
Total assets                $34,875        $73,147                $78,126                $20,822           $206,970

 (1) The 1999 and 1998 segments have been reclassified to conform to our 2000
presentation.

</TABLE>







                                                        41
<PAGE>


15. QUARTERLY INFORMATION (UNAUDITED):

<TABLE>
<CAPTION>
                                                                F.Y.I. INCORPORATED
                                 --------------------------------------------------------------------------------------------------

                                           1999 Quarter Ended                           2000 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 ...............    $ 69,494     $ 79,466     $ 95,592     $105,492     $107,765     $114,400     $118,384    $117,041
Gross profit ................      25,600       29,707       34,321       37,673       38,976       42,689       44,478      44,822
Income before income taxes ..       8,789        9,561       10,627       11,024       11,937       13,108       13,816      14,167
Net income ..................       5,273        5,737        6,376        6,615        7,162        7,865        8,290       8,784

Net income per common share -
  Basic .....................    $   0.38     $   0.41     $   0.45     $   0.46     $   0.49     $   0.52     $   0.54    $   0.55
  Diluted ...................    $   0.36     $   0.39     $   0.42     $   0.43     $   0.46     $   0.50     $   0.51    $   0.53
Weighted average common
   shares outstanding-
  Basic .....................      13,940       14,028       14,277       14,350       14,564       15,050       15,471      16,050
  Diluted ...................      14,579       14,710       15,190       15,482       15,520       15,715       16,368      16,656

</TABLE>

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

         None.


















                                                                 42
<PAGE>


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         Information called for by Item 10 will be set forth under the caption
"Election of Directors" in our 2001 Proxy Statement, which will be filed not
later than 120 days after the end of our fiscal year ended December 31, 2000,
and which is incorporated herein by this reference.

ITEM 11. EXECUTIVE COMPENSATION

         Information called for by Item 11 will be set forth under the caption
"Executive Compensation" in our 2001 Proxy Statement, which will be filed not
later than 120 days after the end of our fiscal year ended December 31, 2000,
and which is incorporated herein by this reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         Information called for by Item 12 will be set forth under the caption
"Security Ownership of Certain Beneficial Owners and Management" in our 2001
Proxy Statement, which will be filed not later than 120 days after the end of
our fiscal year ended December 31, 2000, and which is incorporated herein by
this reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Information called for by Item 13 will be set forth under the caption
"Certain Relationships and Related Transactions" in our 2001 Proxy Statement,
which will be filed not later than 120 days after the end of our fiscal year
ended December 31, 2000, and which is incorporated herein by this reference.



















                                      43
<PAGE>


                                     PART IV

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

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

         (a)(1) Consolidated Financial Statements

         See Index to Consolidated Financial Statements on page 22.

         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.

           EXHIBIT
           NUMBER                              DESCRIPTION
           -------                             -----------

               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)


                                      44
<PAGE>


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

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

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

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

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

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

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

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


                                      45
<PAGE>


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

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

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

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

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

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

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

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

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

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


                                      46
<PAGE>

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

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

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

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

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

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

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

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

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

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

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


                                      47
<PAGE>


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

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

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

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

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

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

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

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

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

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

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


                                      48
<PAGE>


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

               10.77*         -- Amended and Restated Employment Agreement
                              between F.Y.I. Incorporated and Jonathan B. Shaw

               10.78          -- Fifth Amendment to Amended and Restated Credit
                              Agreement dated April 13, 2000, by and among
                              F.Y.I. Incorporated, Paribas, Bank of America
                              N.A., and Bank One, Texas N.A. and the Lenders
                              named therein.

               10.79          -- Sixth Amendment to Amended and Restated Credit
                              Agreement, dated as of July 14, 2000, by and among
                              F.Y.I. Incorporated, BNP Paribas, Bank of America
                              N.A., Bank One, Texas N.A. and the Lenders named
                              therein.


                                      49
<PAGE>


               10.80*         -- Employment Agreement between F.Y.I.
                              Incorporated and Barry L. Edwards

               10.81*         -- Letter agreement, dated July 25, 2000, between
                              Timothy J. Barker and F.Y.I. Incorporated
                              regarding modifications to Employment Agreement.

               10.82*         -- Employment Agreement dated as of August 1, 2000
                              between F.Y.I. Incorporated and Charles S.
                              Gilbert.

               10.83*         -- Employment Agreement, dated as of September 5,
                              2000, between F.Y.I. Incorporated and Michael S.
                              Rupe.

               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)

               * Compensatory plan or arrangement

          (b) Reports on Form 8-K:

We did not file any Form 8-K Current Reports during the last quarter of the
fiscal year ended December 31, 2000.

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                            F.Y.I. INCORPORATED

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

Date: March 29, 2001

                                POWER OF ATTORNEY

         Each person whose signature appears below hereby authorizes and
constitutes Ed H. Bowman, Jr. and Charles S. Gilbert, 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 as of March 29, 2001 by the following persons
on behalf of the Registrant and in the capacities indicated.


                                      50
<PAGE>


SIGNATURE                           CAPACITY IN WHICH SIGNED
---------                           ------------------------


/s/ Thomas C. Walker
----------------------              Chairman of the Board and
Thomas C. Walker                    Chief Development Officer

/s/ Ed H. Bowman, Jr.
----------------------              Director, President and Chief
Ed H. Bowman, Jr.                   Executive Officer (Principal
                                    Executive Officer)

/s/ David Lowenstein
----------------------              Director and Founder
David Lowenstein

/s/ Joe A. Rose
----------------------              Director, Executive Vice
Joe A. Rose                         President and Chief Operating
                                    Officer

/s/ Barry L. Edwards
----------------------              Executive Vice President and
Barry L. Edwards                    Chief Financial Officer
                                    (Principal Financial and Accounting
                                    Officer)

/s/ Michael J. Bradley
----------------------              Director
Michael J. Bradley

/s/ Donald F. Moorehead, Jr.
----------------------              Director
Donald F. Moorehead, Jr.

/s/ Hon. Edward M. Rowell
----------------------              Director
Hon. Edward M. Rowell

/s/ Jonathan B. Shaw
----------------------              Director
Jonathan B. Shaw



















                                      51