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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-K
              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

                        COMMISSION FILE NUMBER: 0-28491

                              XPEDIOR INCORPORATED
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                            <C>
                   DELAWARE                                      76-0556713
           (State of incorporation)                 (I.R.S. Employer Identification No.)
   ONE NORTH FRANKLIN, SUITE 1500, CHICAGO,                        60606
                    ILLINOIS
   (Address of Principal Executive Offices)                      (Zip Code)
</TABLE>

       Registrant's telephone number, including area code: (800) 462-6301

        Securities registered pursuant to section 12(b) of the Act: NONE

          Securities registered pursuant to section 12(g) of the Act:

                     COMMON STOCK, PAR VALUE $.01 PER SHARE
                             ---------------------

     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.   [ ]

     As of March 24, 2000, there were 50,000,000 shares of common stock
outstanding. The aggregate market value on such date of the voting stock of the
Registrant held by non-affiliates was an estimated $245 million based upon the
closing price of $25 per share on March 24, 2000.

                      DOCUMENTS INCORPORATED BY REFERENCE

     Items 11, 12 and 13 and certain parts of Item 10 of Part III have been
omitted from this Annual Report since the Registrant will file with the
Securities and Exchange Commission, not later than 120 days after the close of
its fiscal year, a definitive proxy statement, pursuant to Regulation 14A, which
involves the election of directors. The information required by Items 10, 11, 12
and 13 of Part III of this Annual Report, which will appear in the definitive
proxy statement, is incorporated by reference into this Annual Report.

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                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                        PAGE
                                                                        ----
<S>       <C>                                                           <C>
                                   PART I
Item 1.   Business....................................................    1
            General...................................................    1
            The Xpedior Solution......................................    2
            Services..................................................    3
            Sales and Marketing.......................................    5
            Employees.................................................    5
            Retention, Recruiting and Training........................    5
            Competition...............................................    6
            Executive Officers........................................    6
            Relationship with Metamor.................................    7
            Risks Related to our Business.............................    8
            Risks Related to our Relationship with Metamor............   14
            Risks Related to the eBusiness Industry...................   16
Item 2.   Properties..................................................   17
Item 3.   Legal Proceedings...........................................   17
Item 4.   Submission of Matters to a Vote of Security Holders.........   18
                                  PART II
Item 5.   Market for Registrant's Common Equity and Related
            Stockholder Matters.......................................   19
Item 6.   Selected Financial Data.....................................   20
Item 7.   Management's Discussion and Analysis of Financial Condition
            and Results of Operations.................................   21
            Introduction..............................................   21
            Results of Operations.....................................   23
            Liquidity and Capital Resources...........................   26
            Year 2000 Update..........................................   28
            Recent Accounting Pronouncements..........................   28
Item 7a.  Quantitative and Qualitative Disclosures about Market
            Risk......................................................   28
Item 8.   Financial Statements and Supplementary Data.................   29
Item 9.   Changes in and Disagreements with Accountants on Accounting
            and Financial Disclosure..................................   29
                                  PART III
Item 10.  Directors and Executive Officers of the Registrant..........   29
Item 11.  Executive Compensation......................................   29
Item 12.  Security Ownership of Certain Beneficial Owners and
            Management................................................   29
Item 13.  Certain Relationships and Related Transactions..............   29
                                  PART IV
Item 14.  Exhibits, Financial Statement Schedules and Reports on Form
            8-K.......................................................   29
</TABLE>

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                                     PART I

ITEM 1. BUSINESS

GENERAL

     Xpedior Incorporated provides innovative and comprehensive eBusiness
solutions to Global 2000 companies and emerging Internet businesses that conduct
eBusiness -- the transaction of traditional business over the Internet. We use
our Xpedior Process and our reusable solutions, or Xpediators, to deliver a
broad range of services designed to help our clients succeed in the emerging
networked economy. We combine extensive technical expertise with strategy
consulting and creative design services to enable our clients to capitalize on
the communications power and transaction efficiency of the Internet. Our
eBusiness solutions integrate one or more of the following services, customized
to fit a client's needs:

     - Digital Business Strategy

     - Electronic Commerce

     - Digital Branding and User Experience Design

     - eBusiness Applications and Integration

     - eBusiness Technology Management

     - eBusiness Networks

     - eBusiness Intelligence

     - Enterprise Portals and Knowledge Management

     We were formed by Metamor Worldwide, Inc. in December 1997 to be the
holding company for its eBusiness solutions unit. Metamor commenced operations
of this unit with the acquisition of Metamor Technologies, Ltd., our predecessor
company, on March 27, 1997, and acquired six additional companies in 1998 that
became a part of the eBusiness solutions unit. Effective April 30, 1999, Metamor
contributed to us all the outstanding capital stock of the seven companies
comprising its eBusiness solutions unit. In September 1999, we acquired
Kinderhook Systems, Inc. Metamor continues to hold 80% of our outstanding common
stock. These companies have brought complementary skills, customer relationships
and geographic coverage to our business.

     The emergence of eBusiness has created a new competitive environment for
businesses, one in which many traditional barriers to competition no longer
exist. The Internet has enabled organizations of all types and sizes to create
new sales opportunities, enhance customer service, improve efficiencies, reduce
costs and improve communication. Buyers are now able to choose products and
services by electronically researching data from a wide spectrum of vendors,
often without regard to geographic location.

     A substantial amount of capital is being invested to make businesses more
efficient and competitive through the use of the Internet and electronic
communications. Competition in virtually all industries is increasing, often
from the emergence of companies with radical new business models that challenge
established industry players. These traditional businesses must redefine or
refocus their businesses to succeed in this new economy or risk being overtaken
by upstart competitors. To respond with sufficient speed to these new
competitive pressures, both established companies and industry upstarts
increasingly find it necessary to turn to outside services organizations such as
Xpedior to provide insight and scarce expertise or to complement their internal
capabilities.

     Xpedior Incorporated was incorporated in the State of Delaware in December
1997. The Company's principal executive offices are located at One North
Franklin, Suite 1500, Chicago, Illinois 60606 (telephone number is (800)
462-6301).

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THE XPEDIOR SOLUTION

     We have developed the Xpedior Solution to execute our engagements and meet
our clients' needs for rapid implementation of reliable, scaleable and
sustainable eBusinesses. The core of the Xpedior Solution is the five-stage
Xpedior Process, which we leverage through the use of our solution centers, our
Xpediators and our knowledge management systems.

  The Xpedior Process

     The Xpedior Process is our five-stage methodology for developing reliable,
innovative eBusiness solutions for our clients. The Xpedior Process is the
result of our extensive experience and helps to ensure quality delivery of our
services to our clients. We customize the Xpedior Process to meet each client's
particular needs and support each of our service lines, which span the
strategic, technical and creative disciplines. The process is highly iterative.
It is designed to be used initially as a basis for constructing a robust,
expandable eBusiness platform for a client. Thereafter, it can serve as a
framework for continued evolution of that platform. Unlike other processes,
which often rely almost exclusively on written specifications, the Xpedior
Process makes extensive use of interactive workshops and visualization
techniques such as storyboards and prototypes. We use the information learned
through our client engagements to update and improve our process.

     The Xpedior Process is comprised of the following stages:

     - Imagine. In the imagine stage, our professionals work extensively with
       our client's senior business and technical personnel to explore the
       possible opportunities and impacts of the emerging networked economy on
       the client's business. During the imagine stage, we quickly develop
       eBusiness strategies for our clients and identify potential solutions
       that can be developed to implement those strategies.

     - Define. In the define stage, we continue to work closely with our
       client's business and technical personnel to further define one or more
       of the solutions identified in the imagine stage. Alternatively, in some
       instances our clients will come to us with a specific solution in mind.
       In those circumstances, our process begins with the define stage. In
       either case, during this stage we define the user experience of the
       system using prototypes and storyboards and identify the functionality to
       be implemented.

     - Architect. In the architect stage, our professionals work closely with
       our client's technical personnel to define the technical environment that
       will support the client's eBusiness. This includes understanding the
       client's existing technology infrastructure in an effort to maximize its
       use and ensure that new eBusiness applications are compatible with the
       client's existing infrastructure. In addition, our professionals evaluate
       the suitability of our Xpediators, as well as third-party software, for
       construction of the client's solution.

        At the end of the define and architect stages, which may be undertaken
        concurrently, the client is presented with a blueprint of the solution.
        Typically, we then construct the solution at one of our solution centers
        or at the client's facilities.

     - Build. During the build stage, the client's eBusiness solution is
       constructed and extensively tested. This process consists of a series of
       planned iterations during which the solution blueprint is programmed and
       refined. Upon completion of numerous iterations, the system goes through
       a final system test to ensure that the developed solution meets the
       requirements of the client that were identified in the define stage. The
       result of the build stage is a complete eBusiness computing platform that
       meets the client's specifications and will serve as a platform for
       continued evolution of the client's eBusiness.

     - Deliver. During the deliver stage, we implement the solution and
       transition the ongoing operation, maintenance and support of the solution
       to the client. Delivering the solution typically entails installation of
       hardware and software systems, managing business process changes,
       educating system users and implementing a support structure for the
       client. Alternatively, we can assume responsibility for these functions
       through our eBusiness outsourcing practice.

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        Typically, upon completion of the deliver stage, Xpedior is retained to
        evolve the delivered eBusiness solution to meet changing business needs
        and capitalize on technological advances. To accomplish this, we repeat
        the Xpedior Process, progressing through each stage as necessary.

  eBusiness Xpediators

     Our Xpediators are reusable solutions that we leverage to reduce the time
required to deliver solutions to our clients, while simultaneously providing
increased quality due to their proven nature. We devote significant resources to
our Xpediators, including maintaining a full-time team dedicated to their
development and promoting and supporting their use throughout the company. Our
Xpediators are grouped into three categories:

     - Xpediator Frameworks. Our Xpediator Frameworks are comprehensive software
       architectures for developing large-scale eBusiness applications that
       complement leading application server environments such as the
       Sun-Netscape Alliance's Application Server, BEA's Web Logic Server,
       SilverStream and the Forte Application Development Environment. Xpediator
       Frameworks provide robust, scaleable and extendible software architecture
       that serves as a base for evolution of a client's eBusiness systems.

     - Xpediator Components. Our Xpediator Components are reusable software
       components used to implement common eBusiness functions, such as shopping
       cart and credit card processing. Our components provide functionality for
       eBusiness areas such as payment processing and high volume eBusiness
       transaction processing.

     - Xpediator Solutions. Our Xpediator Solutions are comprehensive
       applications for specific eBusiness functions such as interactive user
       interface systems that provide access to information and knowledge across
       entire enterprises and care management systems that control judicial
       dockets using the Internet. Xpediator Solutions are typically solutions
       that we developed in conjunction with specific clients and retained the
       rights to use in connection with future client engagements.

  Knowledge Management

     We employ knowledge management systems that we intend to consolidate and
expand throughout the organization, allowing us to continue our commitment to
sharing best practices throughout the company. We have found that while each
engagement has certain unique elements, most solutions employ information and
processes that can be used in other solutions. Our experience with particular
industries, business processes and technologies generates institutional
intellectual capital that can be reused to continuously improve the solutions we
provide to our clients and sharpen the effectiveness of our professionals. This
intellectual capital includes the products of each stage of the Xpedior Process,
including strategies, technical and functional designs and plans, and reusable
source code to which Xpedior has retained the intellectual property rights.

     An important factor in leveraging the power of the knowledge management
system is the establishment of a culture that encourages and rewards
contribution to and use of the system. To this end, use of and contribution to
the knowledge management systems will be a key element of the professional
advancement criteria for all Xpedior professionals.

SERVICES

     Our eBusiness solutions include one or more of the following services,
customized to fit our clients' needs.

  Digital Business Strategy

     We help our clients create competitive advantage through the development of
clear, innovative and executable eBusiness strategies. We do this by helping
them to imagine how the emerging networked economy provides opportunities for,
or potentially threatens, their existing businesses. We then deliver digital
business plans, retool business processes for the digital economy and develop
executable action plans for our clients' businesses. Our capabilities are based
upon our industry knowledge, our broad experience in the digital economy and our
commitment to our clients' success.
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  Electronic Commerce

     We work with our clients to implement electronic commerce applications and
systems that enable them to create new revenue streams, reduce costs and compete
more effectively. The applications we build include business-to-business
applications which enable our customers to work more effectively with their
partners, suppliers and customers, as well as business-to-consumer applications
enabling retailers to sell directly to consumers. We specialize on applications
for personalized selling and marketing as well as high volume and high
availability transaction processing systems.

  Digital Branding and User Experience Design

     We design online brands for our clients through our experienced team of
creative visual designers and interactive marketing experts, and by managing the
branding and design process in partnership with third party designers. In
addition, our team of experts works to extend our customers' existing brand
identities into the online and interactive mediums like the Internet. Our user
experience design group also works closely with each of our practice areas to
apply their skills in interactive design, information architecture and creative
design to enhance the user experience.

  eBusiness Applications and Integration

     We integrate the eBusiness systems we build with the client's existing back
office and front office infrastructure, and develop systems that enable our
customers to capitalize on digital business strategies. We do this by:

     - extending our clients' enterprise resource management systems to trading
       partners over the Internet;

     - integrating their front office systems, such as customer care, with
       web-based eBusiness facilities; and

     - extending to the Internet business-to-business or business-to-consumer
       transactions that execute in their traditional systems.

  eBusiness Technology Management

     We provide a wide range of eBusiness technology management services
including managing private networks, operating data warehousing facilities and
managing complex eBusiness applications, as well as the outsourcing of a
client's entire technology environment. We perform these services by providing
teams that manage and execute our clients' technical eBusiness functions.

  eBusiness Networks

     We provide a broad complement of networking services including local and
wide area network design, server and application infrastructure support and
network rollout and support. We leverage our experience in managing nationwide
private networks, and our alliances with leading Internet service providers,
hosting companies and equipment providers, to deliver sophisticated networking
services.

  eBusiness Intelligence

     We provide eBusiness intelligence services focused on the design and
development of solutions for the collection, retention and use of valuable
customer and market data. These services include building data warehouses,
decision support systems, one-to-one marketing facilities and permission-based
marketing systems. As more and more of our clients' interaction with their
customers takes place in the digital domain, the ability to manage and
capitalize on the vast amounts of data generated by eBusiness is increasingly a
key element of our eBusiness solutions.

  Enterprise Portals and Knowledge Management

     We provide services that allow our clients to capture, consolidate and
redeploy institutional knowledge stored throughout their digital enterprise and
use that knowledge to their competitive advantage. We do this
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through the design, construction and installation of a broad range of knowledge
management services. We develop systems that allow our clients to collaborate
more efficiently with their employees, customers and partners to reduce
time-to-market for their products and improve quality.

SALES AND MARKETING

     Through our sales force and marketing organization, we market and sell our
services to Global 2000 companies and emerging Internet businesses. Each of our
offices has its own sales representatives who sell our services to the clients
and prospective clients located in their geographic region. These local
representatives report to a regional vice president. Our commission-based sales
representatives work closely with our senior professionals to tailor our sales
efforts and manage client relationships. In addition, our sales representatives
work closely with our alliance partners to extend our sales and marketing
efforts.

     Our marketing efforts are intended to promote Xpedior as a leading provider
of innovative and reliable eBusiness solutions to an audience of senior business
and technology executives at Global 2000 companies and emerging Internet
businesses.

     We also pursue strategic alliances with leaders in the technology industry
to generate incremental sales opportunities and leverage current product
knowledge. We choose our alliance partners based on their leadership in a
particular product or service category and our ability to obtain preferential
access to new technologies created by these companies.

EMPLOYEES

     As of December 31, 1999, we had 1,317 full-time employees, comprised of
1,045 professionals and 272 administrative and support employees. None of our
employees are represented by unions and, except for senior management and
certain other employees, our employees are retained on an at-will basis. We
believe our relations with our employees are good.

RETENTION, RECRUITING AND TRAINING

     Our ongoing success depends upon our continued ability to recruit and
retain professionals with outstanding skills and abilities. To attract qualified
candidates, we maintain a recruiting organization consisting of 20 professionals
as of December 31, 1999. In addition, we reward our employees for referring
candidates through our employee referral programs, which represents a major
source for employee candidates. Additional sources for employee candidates
include advertising, college recruiting, employment placement firms and
applications received over the internet.

     To retain employees, we provide competitive salaries, as well as other
awards for performance and achievement. In addition to cash compensation, we
have recently instituted a stock option program that we anticipate will have a
positive impact on our ability to attract and retain professionals. All of our
employees receive stock options and are eligible to receive additional stock
options based on performance.

     We have also established a culture that fosters innovation and professional
development, and rewards both individual accomplishment and collaborative
contributions. We provide career advancement opportunities for individuals based
primarily on merit, rather than tenure, which we believe provides an attractive
environment for individuals who are committed to succeeding.

     Our educational and professional development programs are designed to
advance the skills of our professionals. Our employees routinely receive
feedback on their professional advancement so that decisions on project
assignments and educational opportunities can be made. Our education programs
begin with company orientation as well as a variety of technical, industry and
professional training.

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COMPETITION

     Competition in the eBusiness services market and its component markets is
intense. Our current competitors include:

     - emerging web consulting firms, including Proxicom, Razorfish, Scient,
       USWeb and Viant, which are focused on Internet-based, electronic business
       and digital business solutions;

     - systems integrators, including Andersen Consulting, Ernst & Young,
       PricewaterhouseCoopers and Sapient;

     - strategy and management consulting firms, including Bain, Boston
       Consulting Group and Diamond Technology Partners;

     - regional specialized information technology firms;

     - vendor-based services organizations of companies, including IBM and
       Oracle; and

     - internal management and information technology departments of current and
       future client organizations.

     There are relatively low barriers to entry in the eBusiness services
market. In addition, we do not own any patented technology that stops
competitors from entering the eBusiness services market or providing services
similar to ours. Therefore, we expect that competition will continue to
intensify and increase in the future. In fact, some large information technology
consulting firms have announced that they will focus more resources on eBusiness
opportunities. Because we contract with our clients on an
engagement-by-engagement basis, there is no guarantee that we will be retained
by our existing or future clients on later stages of work.

EXECUTIVE OFFICERS

     The following table sets forth certain information as of March 24, 2000,
concerning each of our executive officers and key employees:

<TABLE>
<CAPTION>
NAME                                     AGE                  POSITION
----                                     ---                  --------
<S>                                      <C>   <C>
David N. Campbell......................  58    President and Chief Executive Officer
                                               and Director
J. Brian Farrar........................  36    Executive Vice President and Chief
                                                 Operating Officer and Director
Eugene Rooney..........................  34    Executive Vice President and Director
Steven M. Isaacson.....................  45    Senior Vice President and Chief
                                               Financial Officer
Caesar J. Belbel.......................  40    Senior Vice President, General Counsel
                                               and Secretary
</TABLE>

     David N. Campbell has served as our President and Chief Executive Officer
since joining us in September 1999 and is a director of the company. From
January 1999 to September 1999, Mr. Campbell was President of GTE Technology
Organization, the centralized technology unit of GTE. From 1995 to January 1999,
he served as President of BBN Technologies, the Internet technology development
and services organization of BBN Corporation, which was acquired by GTE in 1997.
Prior to that time, he served as Chairman and Chief Executive Officer of
Computer Task Group, Inc., an international integrated information technology
services company. Mr. Campbell is also a director of Tektronix, Inc. and
Gibraltar Steel, Inc., and was appointed by President Clinton to the Advisory
Board of the President's Commission on Critical Infrastructure Protection. He
holds a Bachelor of Science degree from Niagara University and a Master of
Science degree from State University of New York at Buffalo.

     J. Brian Farrar has served as our Executive Vice President and Chief
Operating Officer since July 1999 and is a director of the company. Since March
1998, Mr. Farrar has served as President of Metamor

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Technologies, Ltd., a subsidiary of Xpedior which was acquired by it in March
1997. From October 1994 until March 1998, Mr. Farrar was a Vice President and
Principal of Metamor Technologies eBusiness services. Mr. Farrar has published
numerous books on Internet and technology-related topics translated into a
variety of languages around the world. He holds a Master of Business
Administration degree from Indiana University and a Bachelor of Arts degree from
Wabash College.

     Eugene Rooney has served as our Executive Vice President since October 1999
and is a director of the company. Since 1994, Mr. Rooney has been the President
of Sage I.T. Partners, Inc., a subsidiary of Xpedior which was acquired by it in
January 1998. Prior to that time, he served as Vice President of Product
Development for Metropolis Software, a leading vendor of field sales automation
software. Mr. Rooney is also a director of Medical-Records.com. He received a
Bachelor of Science degree in Management from Rensselaer Polytechnic Institute
in Troy, New York.

     Steven M. Isaacson has served as our Chief Financial Officer since April
1998 and as a Senior Vice President since October 1999. Mr. Isaacson has served
as Chief Operating Officer and Chief Financial Officer of Metamor Technologies,
Ltd. since June 1996. Prior to that time, he served as Executive Vice President
and Chief Financial Officer of American Classic Voyages Co., a cruise line with
operations in North America. Mr. Isaacson is a Certified Public Accountant. He
holds a Bachelor of Science degree in Accounting from the University of Illinois
and Master of Science degree in Taxation from DePaul University in Chicago,
Illinois.

     Caesar J. Belbel has served as our Senior Vice President, General Counsel
and Secretary since joining us in March 2000. From October 1997 to December
1999, Mr. Belbel was General Counsel of Programart Corporation, an international
vendor of application performance management software which was acquired by
Compuware Corporation in September 1999. From March 1997 to October 1997, Mr.
Belbel was a Corporate Partner with the Boston office of McDermott, Will &
Emery, and from May 1993 to March 1997 was Vice President and General Counsel of
Astea International Inc., an international vendor of field service, help desk,
and sales force automation software. He holds a Bachelor of Arts degree from
Columbia University and a Juris Doctor degree from Boston College.

RELATIONSHIP WITH METAMOR

     We are currently a subsidiary of Metamor, who holds 80% of our outstanding
common stock. Metamor had previously announced that in 2000 it planned to
distribute all of its remaining shares of Xpedior common stock to its
stockholders. However, Metamor recently announced that it has entered into an
Agreement and Plan of Merger with PSINet Inc. pursuant to which Metamor would
exchange each Metamor share for 0.9 of a share of PSINet common stock upon
completion of the merger. Upon completion of the merger, PSINet has agreed to
invest $50 million in 8.5% convertible preferred stock of Xpedior which is
convertible into shares of Xpedior common stock at a conversion price of $37.50
per share. The merger is not expected to be completed until mid-2000. Xpedior
would then be ultimately controlled by PSINet. In the event the merger is not
completed, Metamor intends to seek a private letter ruling from the IRS that the
distribution of its shares of Xpedior common stock to its stockholders would be
tax-free to Metamor and its stockholders for U.S. federal income tax purposes.
If Metamor does not receive a favorable ruling, it may not complete the
distribution of our common stock, which may prevent us from achieving the
benefits we believe will result from the separation. Metamor has the sole
discretion to determine the timing and structure of the distribution, if it
occurs.

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RISKS RELATED TO OUR BUSINESS

  OUR QUARTERLY REVENUES AND OPERATING RESULTS ARE VOLATILE AND MAY CAUSE OUR
  STOCK PRICE TO FLUCTUATE SIGNIFICANTLY

     Our quarterly operating results have varied in the past and are likely to
vary significantly from quarter to quarter in the future. As a result, we
believe that period-to-period comparisons of our results of operations are not a
good indication of our future performance. A number of factors are likely to
cause these variations, including:

     - our ability to obtain new client engagements and continue existing
       engagements;

     - seasonality in revenues relating to the number of billable days in a
       given quarter and the budget cycles and budgeting decisions of our
       clients;

     - our ability to attract, train and retain skilled management, strategic,
       technical, design, sales, marketing and support professionals;

     - our employee utilization rate, including our ability to move
       professionals quickly from completed projects to new engagements;

     - the introduction of new services by us or our competitors;

     - changes in our pricing policies or those of our competitors;

     - our ability to manage costs, including personnel costs and support
       services costs; and

     - costs related to the expected opening or expansion of our offices.

     These quarterly variations may cause our stock price to fluctuate
significantly.

  IF WE CANNOT ATTRACT, TRAIN AND RETAIN QUALIFIED EMPLOYEES, WE MAY LOSE
  CLIENTS AND RELATED REVENUES

     Our future success depends in large part on our ability to hire, train and
retain project and engagement managers, technical architects, strategists,
engineers, design professionals, other technical professionals, and sales and
marketing and other management personnel. Any inability to hire, train and
retain a sufficient number of qualified employees could hinder the growth of our
business. Skilled personnel are in short supply, and this shortage is likely to
continue for some time. As a result, competition for these people is intense,
and the industry turnover rate for them is high. Consequently, we may have
difficulty hiring our desired numbers of qualified employees. Moreover, even if
we are able to expand our employee base, the resources required to attract and
retain employees may adversely affect our operating margins by increasing
expenses associated with our employees.

  WE MAY BE SUED BY OUR EMPLOYEES' FORMER EMPLOYERS, WHICH COULD RESULT IN
  SIGNIFICANT COSTS AND DIVERT MANAGEMENT'S ATTENTION AWAY FROM OUR BUSINESS

     Some companies have adopted a strategy of suing or threatening to sue
former employees and their new employers. By adopting this strategy, these
companies are attempting to discourage their current employees from seeking
employment with their competitors and their competitors from recruiting their
current employees. As we hire new employees from our current or potential
competitors we are likely to become a party to one or more lawsuits involving
the former employment of our employees. Any future litigation against us or our
employees, regardless of the outcome, may result in substantial costs and
expenses to us and may divert management's attention away from the operation of
our business.

  OUR ABILITY TO OBTAIN AND MAINTAIN CLIENT ENGAGEMENTS DEPENDS LARGELY UPON THE
  RETENTION OF KEY PERSONNEL, THE LOSS OF WHOM WOULD PROBABLY CAUSE US TO LOSE
  CLIENTS AND/OR NEW BUSINESS OPPORTUNITIES

     We believe that our success will depend in part on the continued employment
of our senior management team and key technical personnel. This dependence is
particularly important to our business because personal

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relationships are a critical element of obtaining and maintaining client
engagements. Accordingly, the loss of any member of our senior management team
or key technical personnel could have a direct, adverse impact on our business.
In addition, if any of these key employees joins a competitor or forms a
competing company, some of our clients might choose to use the services of that
competitor or new company instead of our own. Furthermore, clients or other
companies seeking to develop in-house eBusiness capabilities may hire away some
of our key employees. This would not only result in the loss of key employees
but could also result in the loss of a client relationship or a new business
opportunity. Any losses of client relationships could seriously harm our
business.

  WE HAVE A LIMITED HISTORY AS A COMBINED COMPANY SO NEITHER OUR HISTORICAL
  RESULTS OF OPERATIONS NOR OUR PRO FORMA FINANCIAL INFORMATION MAY BE AN
  ACCURATE INDICATOR OF OUR FUTURE RESULTS OR PROSPECTS

     We commenced operations in March 1997 with the acquisition of Metamor
Technologies, Ltd. We acquired six other companies in 1998 and one additional
company, Kinderhook Systems, Inc., in September 1999. Although Sage I.T.
Partners, Inc., one of our acquired companies, began operations in 1994, our
limited operating history as a combined company makes an evaluation of our
business and prospects very difficult. The pro forma financial information
included in this Annual Report is based on the separate pre-acquisition
financial information of the eight companies. As a result, our historical
results of operations and pro forma financial information may not give you an
accurate indication of what our actual results would have been if the
acquisitions had been completed at the beginning of the periods presented or of
our future results of operations or prospects.

  IF WE FAIL TO INTEGRATE THE OPERATIONS OF THE COMPANIES WE HAVE ACQUIRED OR
  ANY THAT WE MAY ACQUIRE IN THE FUTURE, OUR FUTURE EARNINGS MAY SUFFER AS A
  RESULT OF OPERATING INEFFICIENCIES

     Although we have commenced the process of integrating the operations of our
acquired companies, our operations are not fully integrated. To date, we have
integrated most of our back office functions and initiated the creation of a
unified brand identity. We are still in the process of integrating our sales,
marketing and human resources functions, our knowledge management systems, the
Xpedior Process and our Xpediators. Our future earnings will depend heavily on
our continued ability to integrate the operations and manage our acquired
companies. Failure to successfully integrate any of the companies we have
acquired may cause significant operating inefficiencies and adversely affect our
earnings.

     Although we may continue to grow our business through strategic
acquisitions from time to time in the future, we have no immediate plans or
current agreements to acquire any additional companies or businesses. If we
acquire additional companies in the future, however, we will face integration
risks similar to those described above.

  COMPETITION FROM BIGGER, MORE ESTABLISHED COMPETITORS WHO HAVE GREATER
  FINANCIAL RESOURCES PLACES US AT A COMPETITIVE DISADVANTAGE AND COULD RESULT
  IN PRICE REDUCTIONS, REDUCED PROFITABILITY AND LOSS OF MARKET SHARE

     Some of our current competitors have longer operating histories, a larger
client base, larger professional staffs, greater brand recognition and greater
financial, technical, marketing and other resources than we do. This may place
us at a disadvantage in responding to our competitors' pricing strategies,
technological advances, advertising campaigns, strategic partnerships and other
initiatives. As a result, our competitors may be able to devote more resources
to the development, promotion and sale of their services than we can.
Competitors that offer more standardized or less customized services than we do
may have a substantial cost advantage, which could force us to lower our prices,
adversely affecting our operating margins.

     Current and potential competitors also have established or may establish
cooperative relationships among themselves or with third parties to increase
their ability to address customer needs. Accordingly, it is possible that new
competitors or alliances among competitors may emerge and rapidly acquire
significant market share. In addition, some of our competitors may develop
services that are superior to, or have greater market acceptance than, the
services that we offer.

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<PAGE>   12

  OUR RAPID GROWTH HAS PLACED A STRAIN ON OUR MANAGEMENT AND OUR BUSINESS
  SYSTEMS AND WE MAY HAVE TO EXPEND SIGNIFICANT MANAGEMENT AND FINANCIAL
  RESOURCES TO ACCOMMODATE THIS GROWTH

     We have grown rapidly and expect to continue to grow rapidly both by hiring
new employees and serving new business and geographic markets. Our growth has
placed, and will continue to place, a significant strain on our management and
our operating and financial systems to integrate these new personnel. Our
project personnel, or professional headcount, grew from 166 at December 31, 1997
to 695 at December 31, 1998 and 1,045 at December 31, 1999.

     Our personnel, systems, procedures and controls may be inadequate to
support our future operations. In order to accommodate the increased number of
engagements, the increased number of clients and the increased size of our
operations, we will need to hire, train and retain sufficient personnel to
manage our operations. We will also need to continually improve our financial
and management controls, reporting systems and operating systems as the size of
our company increases. We may encounter difficulties in developing and
implementing such controls and other systems. If we encounter such difficulties,
we may not be able to successfully focus on serving our clients' needs and our
financial results will suffer.

  WE ARE EXPENDING SUBSTANTIAL RESOURCES TO DEVELOP BRAND AWARENESS OF OUR
  SERVICES, BUT THESE EFFORTS MAY NOT BE SUCCESSFUL IF WE CHANGE OR FAIL TO
  MAINTAIN OUR BRAND OR OUR CLIENTS ARE NOT SUCCESSFUL

     An important element of our business strategy is to develop and maintain
widespread awareness of our brand name. To promote our brand name, beginning in
the third quarter of fiscal 1999, we substantially increased our marketing
expenses, which may cause our operating margins to decline. We are currently a
defendant in a law suit filed by Expedia, Inc., a subsidiary of Microsoft
Corporation, that alleges our Xpedior trademark infringes on their Expedia
trademarks. This lawsuit could cause us to develop a new trademark and lose a
substantial portion of the benefits of our recent branding efforts. Moreover,
our brand or any brand that we develop in the future may be closely associated
with the business success or failure of some of our high-profile clients, some
of whom are pursuing unproven business models in competitive markets. As a
result, the failure or difficulties of one of our high-profile clients may
damage our brand. If we fail to successfully promote and maintain our brand name
or incur significant additional expenses in developing or defending our brand
name or developing or defending any additional brand names, our operating
margins and our growth may decline. See "Legal Proceedings."

  OUR EXPANSION INTO INTERNATIONAL MARKETS WILL REQUIRE SIGNIFICANT MANAGEMENT
  AND FINANCIAL RESOURCES AND MAY NOT BE SUCCESSFUL DESPITE OUR EFFORTS BECAUSE
  OF OUR LIMITED EXPERIENCE OPERATING IN FOREIGN COUNTRIES

     We plan to expand our operations internationally but may be unable to
successfully market, sell, deliver and support our services in international
markets. If we are unable to expand our international operations successfully,
our business, financial condition and operating results could be seriously
harmed because of the costs associated with international expansion and the
diversion of management's attention. We will need to devote significant
management and financial resources to our international expansion. In
particular, we will have to attract and retain experienced management,
strategic, technical, design, sales, marketing and support personnel for our
international offices. Competition for such personnel is intense, and we may be
unable to attract and retain qualified personnel.

     We have limited experience in marketing, selling and supporting our
services in foreign countries. Development of these skills may be more difficult
or take longer than we anticipate, especially due to language barriers, currency
exchange risks and the fact that the Internet infrastructure in foreign
countries may be less advanced than the United States' Internet infrastructure.
We intend to expand our operations internationally in future periods by opening
additional international offices, hiring additional international management,
strategic, technical, design, sales, marketing and support personnel, and will
consider entering through acquisitions.

                                       10
<PAGE>   13

     International markets, however, may also be affected by additional risks
that could impact the timing and degree of our international expansion plans.
These risks include the following:

     - the establishment of a market for eBusiness internationally;

     - longer payment cycles and problems collecting accounts receivable;

     - reduced protection for intellectual property and proprietary rights in
       some countries; and

     - seasonal declines in business activity in certain international regions.

  OUR INABILITY TO ACCURATELY PREDICT FUTURE REVENUES BECAUSE OF THE SHORT-TERM
  NATURE OF OUR ENGAGEMENTS MAY RESULT IN DECREASED PROFITABILITY AND
  UNDERUTILIZATION OF OUR EMPLOYEES

     Our clients generally retain us on an engagement-by-engagement basis,
rather than under long-term contracts. As a result, our revenues are difficult
to predict. Our operating expenses are relatively fixed and cannot be reduced on
short notice to compensate for unanticipated variations in the number or size of
engagements in progress. Because we incur costs based on our expectations of
future revenues, our failure to predict our revenues accurately may seriously
harm our financial condition and results of operations. Since large client
projects involve multiple engagements or stages, there is a risk that a client
may choose not to retain us for additional stages of a project or that the
client will cancel or delay additional planned projects. These cancellations or
delays could result from factors unrelated to our work product or the progress
of the project, but could be related to general business or financial conditions
of the client. Nevertheless, if a client defers, modifies or cancels an
engagement or chooses not to retain us for additional phases of a project, we
must be able to rapidly move our employees to other engagements to limit
underutilization of our employees and the resulting harm to our operating
results. The underutilization of our employees negatively impacts our
profitability because the expenses associated with our employees are fixed while
the revenues generated by our employees vary by the level of their utilization.

  OUR USE OF FIXED FEE CONTRACTS MAY CAUSE US TO LOSE MONEY ON CLIENT
  ENGAGEMENTS

     We received approximately 12% of our pro forma revenues in 1999 from
fixed-fee contracts, and this percentage may increase in the future. Fixed-fee
contracts involve estimating the resources necessary to perform the engagement
and have a significantly greater risk of generating a loss than
time-and-materials contracts. If we miscalculate the resources or time we need
to complete engagements with capped or fixed fees, our operating results could
be seriously harmed. The risk of these miscalculations for us is high because we
work with complex technologies in short timeframes. As a result, it is difficult
to judge the time and resources necessary to complete a project. If we fail to
accurately price these fixed-fee contracts or underestimate the resources
necessary to complete our projects, our profitability could be adversely
affected.

  OUR AGREEMENTS NOT TO PERFORM SERVICES FOR OUR CLIENTS' COMPETITORS LIMIT OUR
  ABILITY TO SERVICE ADDITIONAL PROSPECTIVE CLIENTS

     We sometimes agree not to perform services for competitors of our clients
for limited periods of time. These non-compete agreements reduce the number of
our prospective clients and the number of potential sources of revenue. In
addition, these agreements increase the significance of our client selection
process because many of our clients compete in markets where only a limited
number of players gain meaningful market share. If we agree not to perform
services for a particular client's competitors and our client fails to capture a
significant portion of its market, we are unlikely to receive future revenues in
that particular market.

                                       11
<PAGE>   14

  OUR FAILURE TO MEET CLIENT EXPECTATIONS OR DELIVER ERROR-FREE SERVICES COULD
  CAUSE US TO LOSE CLIENTS AND RESULT IN NEGATIVE PUBLICITY

     We create, implement and maintain eBusiness systems and other applications
that are often critical to our clients' businesses. Any defects or errors in
these applications or failure to meet clients' expectations could result in:

     - delayed or lost revenues due to adverse client reaction;

     - requirements to provide additional services to a client at no charge;

     - negative publicity regarding us and our services, which could adversely
       affect our ability to attract or retain clients; and

     - claims for substantial damages against us, regardless of our
       responsibility.

     Our contracts generally limit our liability for damages that may arise from
negligent acts, errors, mistakes or omissions in rendering services to our
clients. However, we cannot be sure that these contractual provisions will
protect us from liability for damages if we are sued. Furthermore, our general
liability insurance coverage may not continue to be available on reasonable
terms or in sufficient amounts to cover one or more large claims, or the insurer
may disclaim coverage as to any future claim. The successful assertion of any
large claim against us could seriously harm our business, financial condition
and operating results. Even if not successful, these claims could result in
significant legal or other costs and may be a distraction to management.

  WE MAY INCUR SIGNIFICANT COSTS TO DEFEND OR ESTABLISH OUR INTELLECTUAL
  PROPERTY AND PROPRIETARY RIGHTS

     We cannot guarantee that the steps we have taken to protect our proprietary
rights will be adequate to deter misappropriation of our intellectual property
and we may need to spend additional resources in the future to protect our
rights. The loss of revenue associated with any infringement or misappropriation
of our trade secrets, copyrights, trademarks or other proprietary information
could seriously harm our business. In addition, although we believe that our
intellectual property and proprietary rights do not infringe the intellectual
property rights of others, other parties may assert infringement claims against
us or claim that we have violated their intellectual property rights. These
claims could result in significant legal and other costs and may be a
distraction to management. Any claims relating to our use of our trademarks
could result in significant costs to defend our use or in establishing
replacement trademarks and associated branding efforts.

     Our business often involves the development of software applications for
specific client engagements. We often retain the right to use any intellectual
property that is developed during a client engagement that is of general
applicability and is not specific to the client's project. We also develop
software applications for our own internal use and we retain ownership of these
applications. We cannot assure you that clients will not demand assignment of
ownership or restrictions on our use of the work that we produce for clients in
the future. Issues relating to the ownership of and rights to use software can
be complicated, and there can be no assurance that disputes will not arise that
affect our ability to reuse this software, which could harm our business
results.

     We are a defendant in a law suit filed by Expedia, Inc. that alleges our
Xpedior trademark infringes on their Expedia trademarks. See "Legal
Proceedings."

  WE HAVE AGREED TO PAY ADDITIONAL CASH CONSIDERATION IN THE FIRST HALF OF 2000
  TO THE FORMER OWNERS OF THE COMPANIES WE HAVE ACQUIRED, WHICH AMOUNTS MAY
  DEPLETE OUR CASH RESOURCES OR REQUIRE US TO BORROW FUNDS

     Under the terms of an acquisition agreement, the former owners of one of
our acquired companies, NDC Group Inc., has the right to receive additional cash
consideration upon satisfaction of financial and operational conditions. Payment
of these obligations may substantially deplete our cash reserves or require us
to borrow funds. The additional consideration will create additional goodwill
and increase the related amortization expense. On March 24, 2000, the aggregate
maximum amount of the remaining contingent payments is approximately $11.4
million. In addition, we have assumed liabilities associated with a guarantee of
the value

                                       12
<PAGE>   15

of approximately 308,000 shares of Metamor common stock issued in connection
with the NDC Group acquisition. In the event the fair market value of these
shares is less than $14.0 million based upon the average market price during the
20 trading days preceding April 16, 2000, we will be obligated to pay the
difference. We expect that approximately one-half of our contingent payment
obligation to NDC Group and one-half of any payments to settle the stock
guarantee will be paid in Metamor common stock. Metamor has agreed to contribute
to the capital of Xpedior the fair value of any common stock it issues to
satisfy these contingent obligations. Based on the last reported market price of
Metamor common stock on March 24, 2000, our obligation under this guarantee
would have been approximately $4.6 million.

  OUR WORKING CAPITAL REQUIREMENTS MAY CAUSE US TO SEEK ADDITIONAL FINANCING IN
  THE NEAR-TERM AND, IF SUCH FINANCING IS UNAVAILABLE, MAY PREVENT US FROM
  GROWING OUR COMPANY

     Our working capital requirements and cash flow provided by operating
activities can vary greatly from quarter to quarter, depending on the volume of
business during the period and the payment terms with our customers. We expect
that the availability of borrowings under our proposed credit facility will be
sufficient to meet our working capital and capital expenditure needs for the
foreseeable future. After that, we may need to raise additional funds or sell
equity and/or debt securities, and we cannot assure you that we will be able to
obtain additional financing or sell securities on favorable terms or at all. We
will not be able to issue a significant amount of common stock prior to our
separation from Metamor. Although Metamor has agreed to provide additional
funding for our working capital requirements of between $25-30 million until a
credit facility is in place, we may not be able to attract lenders for an
appropriate credit facility on terms acceptable to us. If we need additional
capital and cannot raise it on acceptable terms and Metamor is unwilling to
provide additional capital, we may not be able to:

     - open new offices, in the United States or internationally;

     - create additional market-specific business units;

     - enhance our infrastructure and leveragable assets;

     - hire, train and retain professionals;

     - respond to competitive pressures or unanticipated requirements; or

     - pursue acquisition opportunities.

     Our failure to do any of these things could seriously harm our financial
condition by preventing us from being able to take advantage of new business
opportunities.

  THE INDEMNIFICATION PROVISIONS OF THE ACQUISITION AGREEMENTS MAY NOT FULLY
  PROTECT US AND MAY RESULT IN UNEXPECTED LIABILITIES

     Some of the former owners of each acquired company are required to
indemnify us against liabilities related to the operation of their company
before we acquired it. The acquisition agreements include provisions for the
indemnification of Xpedior by the former owners of each company for breaches of
their representations and warranties in the acquisition agreements. In some
cases, these former owners may not have the financial ability to meet their
indemnification responsibilities. If this occurs, we may incur unexpected
liabilities.

  WE HAVE VARIOUS MECHANISMS IN PLACE TO DISCOURAGE TAKEOVER ATTEMPTS, WHICH MAY
  REDUCE OR ELIMINATE YOUR ABILITY TO SELL YOUR SHARES FOR A PREMIUM IN A CHANGE
  OF CONTROL TRANSACTION

     Even if Metamor's ownership is reduced to a level where it no longer
controls Xpedior, various provisions of our certificate of incorporation and
bylaws may still discourage, delay or prevent a change in control of Xpedior
that a stockholder may consider favorable. These provisions include:

     - authorizing the issuance of "blank check" preferred stock that could be
       issued by our board of directors to increase the number of outstanding
       shares and thwart a takeover attempt;

                                       13
<PAGE>   16

     - establishing a classified board of directors with staggered, three-year
       terms, which may lengthen the time required to gain control of our board
       of directors;

     - prohibiting cumulative voting in the election of directors, which would
       otherwise allow less than a majority of stockholders to elect director
       candidates;

     - requiring super-majority voting for certain amendments to our certificate
       of incorporation and bylaws;

     - limiting who may call special meetings of stockholders;

     - prohibiting stockholder action by written consent, which requires all
       actions to be taken at a meeting of the stockholders; and

     - establishing advance notice requirements for nominations of candidates
       for election to the board of directors or for proposing matters that can
       be acted upon by stockholders at stockholder meetings.

     In addition, our stock incentive plans may discourage, delay or prevent a
change in control of Xpedior.

  IF WE HAVE TO WRITE-OFF A SIGNIFICANT AMOUNT OF GOODWILL, OUR EARNINGS WILL BE
  NEGATIVELY IMPACTED

     Because we have grown in large part through acquisitions, acquired
intangible assets, commonly called goodwill, represent a substantial portion of
our assets. As of December 31, 1999, goodwill comprised 56% of our total assets
and 74% of total stockholders' equity. If we make additional acquisitions, it is
likely that additional goodwill will be recorded on our books. A determination
that a significant impairment in value of our unamortized goodwill has occurred
would require us to write-off a substantial portion of our assets. This
write-off would negatively affect our earnings. In addition, it could reduce our
ability to obtain necessary capital for our business and seriously harm our
stock price.

RISKS RELATED TO OUR RELATIONSHIP WITH METAMOR

  METAMOR WILL CONTROL THE OUTCOME OF STOCKHOLDER VOTING AND MAY EXERCISE ITS
  VOTING POWER IN A MANNER ADVERSE TO YOU

     Metamor currently owns 80% of our outstanding common stock. To date,
Metamor has appointed two of our directors. As long as Metamor owns a majority
of our outstanding voting stock, Metamor will have the ability to elect or
replace all of our directors. As a result, Metamor will continue to have the
ability to control the policies, management and affairs of Xpedior and will
control the outcome of corporate actions requiring stockholder approval,
including the approval of transactions involving a change in control of Xpedior.
Metamor's interests may differ from those of our other stockholders. As a
result, Metamor may vote its Xpedior common stock in a manner adverse to our
other stockholders.

  FAILURE OF METAMOR TO COMPLETE THE DISTRIBUTION OF OUR COMMON STOCK WILL
  PREVENT US FROM OPERATING AS AN INDEPENDENT COMPANY

     If the proposed merger between PSINet and Metamor is not consummated or
Metamor fails to complete the distribution of our common stock within the time
contemplated, our business may be adversely affected. Specifically, we would
likely not have the ability to operate as an independent company not controlled
by Metamor. Although Metamor has advised us that it currently plans to complete
its divestiture of our company in 2000 if the merger with PSINet is not
completed, it is not obligated to do so and we cannot assure you as to whether
or when the divestiture will occur. This means that we cannot assure you when,
or even if, we will become an independent company without a controlling
ownership by Metamor. In addition, if the merger between Metamor and PSINet is
consummated, PSINet will have a controlling interest in our company and there
may be potential conflict of interest between our company and PSINet.

                                       14
<PAGE>   17

  BECAUSE TWO OF OUR DIRECTORS ARE AFFILIATES OF METAMOR, THEY MAY HAVE
  CONFLICTS OF INTEREST THAT NEGATIVELY IMPACT XPEDIOR

     Peter T. Dameris, President, Chief Executive Officer and Chairman of the
Board of Metamor and Robert K. Hatcher, Managing Director -- Corporate Strategy
and Development for Metamor are also currently directors of Xpedior. These
relationships may create conflicts of interest. The directors and officers of
Metamor have fiduciary duties to manage Metamor, including its investments in
subsidiaries and affiliates such as Xpedior, in a manner beneficial to Metamor
and its stockholders. Similarly, our directors and officers have fiduciary
duties to manage Xpedior in a manner beneficial to Xpedior and its stockholders.
The duties of these affiliates of Metamor may conflict with their duties as
directors of Xpedior. In addition, other conflicts of interest exist and may
arise in the future as a result of the extensive relationships between Metamor
and Xpedior. Until Metamor completes the distribution of our common stock, the
risks relating to Metamor's control of our company, the potential business
conflicts of interest between our company and Metamor and the potential
conflicts of interest that may arise as a result of our common board member will
continue to be relevant to our stockholders.

  WE MAY LOSE BUSINESS OPPORTUNITIES AS A RESULT OF CONFLICTS OF INTEREST WITH
  METAMOR

     Unless and until Metamor completes its divestiture of our common stock, it
will continue to be our controlling stockholder. As a result, conflicts of
interest may arise between us and Metamor in the following areas:

     - business opportunities that may be attractive to both Metamor and our
       company;

     - tax and other matters arising from the separation of our company from
       Metamor;

     - the incurrence of debt by our company;

     - sales or distributions by Metamor of all or any portion of its ownership
       interest in our company; and

     - Metamor's ability to control the management and affairs of our company.

     We cannot assure you that we will be able to resolve any potential
conflicts or that, if resolved, we would not be able to receive more favorable
resolution if we were dealing with an unaffiliated party.

  OUR COSTS RELATED TO CORPORATE SERVICES COULD INCREASE AS OUR RELATIONSHIP
  WITH METAMOR CHANGES IN THE FUTURE

     We have entered into an agreement with Metamor under which Metamor provides
corporate support services to us. We also may use Metamor's legal, tax, risk and
cash management departments. In addition, Xpedior will continue to participate
in Metamor's corporate insurance program. Our agreement with Metamor is for a
one year term, but may be terminated on 60 days' notice by us. Further,
following Metamor's distribution of our common stock, we would expect to
terminate this agreement after some interim transitional period. If the
agreement is terminated, we expect that we would be able to arrange alternate
suppliers for all the services important to our business. We expect that these
services would be available from third parties at costs similar to those we pay
Metamor. However, if we have to replicate facilities, services or employees that
we are not using full time, our costs would increase. It is not possible to
predict the specific areas where our costs would increase, as that depends on
the growth and needs of our business at the time the agreement is terminated.

  WE MAY INCUR MATERIAL TAX LIABILITIES IN CONNECTION WITH OUR SEPARATION FROM
  METAMOR

     We may incur costs and expenses, potentially including additional taxes and
employee costs, greater than those we have planned for in connection with our
separation from Metamor. In this regard, if 50% or more of the stock of Xpedior
or Metamor is acquired within two years of the separation, it is possible that a
significant tax liability could result. We cannot assure you that these costs
will not be material to our business.

                                       15
<PAGE>   18

  OUR HISTORICAL FINANCIAL INFORMATION MAY NOT BE REPRESENTATIVE OF OUR RESULTS
  AS A SEPARATE COMPANY BECAUSE OUR ACTUAL COST MAY DIFFER FROM THE ALLOCATIONS
  AND ADJUSTMENTS MADE IN OUR FINANCIAL STATEMENTS

     The historical financial information we have included in this Annual Report
may not reflect what our results of operations, financial position and cash
flows would have been had we been a separate, stand-alone entity during the
periods presented or what our results of operations, financial position and cash
flows will be in the future. This is because:

     - Metamor did not account for us as, and we were not operated as, a single
       stand-alone business for all periods presented and we have made
       adjustments and allocations to our financial information to take this
       fact into account; and

     - the information does not reflect many significant changes that will occur
       in our funding and operations as a result of our separation from Metamor,
       including employee and tax matters.

     We cannot assure you that the adjustments and allocations we have made in
preparing our historical consolidated financial statements have produced
financial statements accurately reflecting what our operations would have been
during this period if we had in fact operated as a stand-alone entity. In
addition, we cannot assure you that our historical results of operations are
indicative of our future operating or financial performance.

RISKS RELATED TO THE EBUSINESS INDUSTRY

  OUR FUTURE SUCCESS AND THE CONTINUED GROWTH OF OUR COMPANY DEPENDS ON
  INCREASED ADOPTION OF THE INTERNET BY BUSINESSES AND CONSUMERS

     The widespread acceptance and adoption of the Internet for conducting
business is likely only if the Internet provides businesses and consumers with
greater efficiencies and other advantages. If commerce on the Internet does not
continue to grow, or grows more slowly than expected, our growth rate would
decline and our business would be seriously harmed. Consumers and businesses may
reject the Internet as a viable commercial medium for a number of reasons,
including:

     - potentially inadequate network infrastructure;

     - delay in the development of Internet-enabling technologies and
       performance improvements;

     - delay in the development or adoption of new standards and protocols
       required to handle increased levels of Internet activity;

     - delay in the development of security and authentication technology
       necessary for the secure transmission of confidential information;

     - change in, or insufficient availability of, telecommunications services
       to support the Internet; and

     - failure of companies to meet their customers' expectations in delivering
       goods and services over the Internet.

  INCREASING GOVERNMENT REGULATION COULD INCREASE OUR CLIENTS' COST OF DOING
  BUSINESS OVER THE INTERNET AND SLOW THE GROWTH OF OUR BUSINESS

     We are subject not only to regulations applicable to businesses generally,
but also to laws and regulations directly applicable to electronic commerce.
Although there are currently few of these laws and regulations, both state,
federal and foreign governments may adopt more of these laws and regulations.
Any legislation or regulations of this type could dampen the growth of the
Internet and decrease its acceptance as a communications and commercial medium.
If this decline occurs, companies may decide in the future not to use our
services to create an electronic business channel. This decrease in the demand
for our services would seriously harm our business and operating results.

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<PAGE>   19

     Any new laws and regulations may govern or restrict any of the following
issues:

     - user privacy;

     - the pricing and taxation of goods and services offered over the Internet;

     - the content of web sites;

     - consumer protection; and

     - the characteristics and quality of products and services offered over the
       Internet.

     For example, the Telecommunications Act of 1996 prohibits the transmission
of some types of information over the Internet. The scope of the Act's
prohibition is currently unsettled. In addition, although courts recently held
unconstitutional substantial portions of the Communications Decency Act, federal
or state governments may enact, and courts may uphold, similar legislation in
the future.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     Some of the statements in this Annual Report constitute forward-looking
statements. All projections contained in this Annual Report, including those set
forth in "Management's Discussion and Analysis of Financial Condition and
Results of Operations," are forward-looking statements. These statements involve
known and unknown risks, uncertainties and other factors that may cause our or
our industry's actual results, levels of activity, performance or achievements
to be materially different from any future results, levels of activity,
performance or achievements expressed or implied by these forward-looking
statements.

     Forward-looking statements relate to future events or our future financial
performance. In some cases, you can identify forward-looking statements by
terminology like "may," "will," "should," "expects," "plans," "projected,"
"anticipates," "believes," "estimates," "predicts," "potential" or "continue" or
the negative of these terms or other comparable terminology. These statements
are only predictions. Actual events or results may differ materially. In
evaluating these statements, you should specifically consider various factors,
including the risks outlined under "Risk Factors." These factors may cause our
actual results to differ materially from any forward-looking statement.

     Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Moreover, neither we nor any other person
assumes responsibility for the accuracy and completeness of these statements. We
are under no duty to update any of the forward-looking statements after the date
of this Annual Report to conform these statements to actual results and do not
intend to do so.

ITEM 2. PROPERTIES

     Our headquarters are located in Chicago, Illinois. Our solution centers are
located in Chicago, Illinois; San Francisco, California; Dallas, Texas; New
York, New York; and Alexandria, Virginia. In addition to our solution centers
and headquarters ,which are leased, we lease offices in the following locations:
Houston, Texas; Landover and Germantown, Maryland; El Segundo, California;
Bedford and Portsmith, New Hampshire; Jacksonville, Florida; Downers Grove,
Illinois; Englewood, Colorado; Troy, Michigan; Boston, Massachusetts; London,
England; Perth, Australia and Toronto, Ontario. We anticipate that we will
continue to expand our offices and open offices in new locations as business
conditions require. We expect that we will need additional space as we expand
our business and believe that we will be able to obtain suitable space as
needed.

ITEM 3. LEGAL PROCEEDINGS

     On December 7, 1999, Expedia, Inc., a subsidiary of Microsoft Corporation,
filed a trademark infringement lawsuit against us in the United States District
Court for the Central District of California. The lawsuit alleges that our use
of the Xpedior trademark infringes on the Expedia trademark. The suit also
alleges that uses of the Xpedior mark are likely to cause confusion and dilution
of the marks held by Expedia. The
                                       17
<PAGE>   20

lawsuit further alleges that Xpedior engaged in unfair competition and unlawful
or unfair business practices in violation of the California Business and
Professions Code. The suit seeks:

     - unspecified damages, including treble damages and profits;

     - an injunction against further alleged infringement; and

     - costs of the suit and attorneys' fees.

     We do not believe that Expedia's claims have merit; however, we are in
discussions with Expedia to explore the possibility of a mutually amicable
solution to this lawsuit. We cannot provide any assurance that our discussions
will result in a satisfactory solution or that they will continue. In the event
a mutually satisfactory resolution is not reached, we intend to vigorously
defend ourselves in this lawsuit and do not expect the outcome of this lawsuit
to have a material adverse effect on our business. However, since the lawsuit
was recently filed, we are not presently able to estimate the likelihood of an
adverse result or the range of possible loss relating to this matter. In the
event of an adverse result, we could be required to do one or more of the
following:

     - pay damages, including treble damages and profits;

     - permanently cease use of our Xpedior trademark and related trademarks and
       logos; and/or

     - develop new trademarks.

     NDC Group, Inc., one of our subsidiaries, along with Metamor, filed suit in
May 1999 against some former officers and shareholders of NDC and other parties
in the Circuit Court of the City of Alexandria, Virginia for several causes of
action, including breaches of fiduciary duties and numerous covenants and
agreements. In this suit, NDC and Metamor are seeking monetary and injunctive
relief against the defendants. Some of the defendants have filed Cross-Bills
alleging breach of employment and other agreements and duties of good faith and
fair dealings and other tort claims against NDC, Metamor and Xpedior.
Additionally, some of these same defendants have filed similar claims in the
United States District Court for the Eastern District of Virginia. The
defendants that filed the Cross-Bills and the complaint in district court are
seeking indeterminable monetary damages.

     The Eastern District of Virginia action has been stayed in deference to the
Circuit Court proceeding. A trial in the Circuit Court is currently anticipated
to begin in June 2000. We believe that Xpedior, NDC and Metamor have strong
cases in these matters and strong defenses against each of the complaints.
However, Xpedior, NDC and Metamor may not prevail in this litigation.

     We are also, from time to time, a party to ordinary, routine litigation
incidental to our business, including discrimination, wrongful termination,
harassment and other similar claims.

     The principal risks that we insure against are personal injury, property
damage, professional malpractice, errors and omissions and fidelity losses. We
maintain insurance in such amounts and with such coverages and deductibles as
management believes are reasonable and prudent. In the opinion of management,
the ultimate resolution of all pending legal proceedings, including the Expedia
and Virginia litigation, will not have a material adverse effect on the
Company's financial condition.

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

     No matters were submitted to a vote of the security holders of the Company
during the fourth quarter of fiscal year 1999.

                                       18
<PAGE>   21

                                    PART II

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

     Xpedior's common stock is traded on the Nasdaq National Market under the
symbol "XPDR." The following table sets forth the range of the low and high
closing prices of the common stock as reported on the Nasdaq National Market
since December 16, 1999, the date it was first publicly traded.

<TABLE>
<CAPTION>
                                                              LOW   HIGH
                                                              ---   ----
<S>                                                           <C>   <C>
YEAR ENDED DECEMBER 31, 1999
Fourth Quarter (December 16 to December 31).................  $19   $32 1/16
</TABLE>

     There were 22 holders of record of common stock and an estimated 11,500
beneficial owners as of March 24, 2000. The Company has not paid any cash
dividends on its common stock and does not anticipate doing so in the
foreseeable future. The Company currently intends to retain any earnings to fund
the expansion and development of its business. Any future determination as to
the payment of dividends will be made at the discretion of the Board of
Directors of the Company and will depend upon the Company's operating results,
financial condition, capital requirements and such other factors as the Board of
Directors deems relevant.

                                       19
<PAGE>   22

ITEM 6. SELECTED FINANCIAL DATA

     The following selected consolidated financial data are derived from our
consolidated financial statements and from the financial statements of Metamor
Technologies, Ltd., our predecessor company. This data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and is qualified by reference to the consolidated
financial statements and related notes appearing elsewhere in this Annual
Report. The selected financial data as of and for the year ended December 31,
1995 has been derived from the unaudited financial statements of the
predecessor. The selected financial data as of and for the year ended December
31, 1996 has been derived from the audited financial statements of the
predecessor. The selected financial data for the period January 1, 1997 to March
26, 1997 has been derived from the audited financial statements of the
predecessor included elsewhere in this Annual Report. The selected consolidated
financial data as of December 31, 1997, 1998 and 1999, for the period from
inception (March 27, 1997) to December 31, 1997, and for the years ended
December 31, 1998 and 1999 have been derived from our audited consolidated
financial statements included elsewhere in this Annual Report.

<TABLE>
<CAPTION>
                                       PREDECESSOR COMPANY(A)                        XPEDIOR INCORPORATED
                                    ----------------------------   ---------------------------------------------------------
                                                        PERIOD                        YEAR ENDED             YEAR ENDED
                                                         FROM       INCEPTION        DECEMBER 31,           DECEMBER 31,
                                      YEAR ENDED      JANUARY 1,    (MARCH 27,    -------------------   --------------------
                                     DECEMBER 31,      1997 TO       1997) TO
                                    ---------------   MARCH 26,    DECEMBER 31,   ACTUAL    PRO FORMA    ACTUAL    PRO FORMA
                                     1995     1996       1997          1997        1998       1998        1999       1999
                                    ------   ------   ----------   ------------   -------   ---------   --------   ---------
                                                             (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                 <C>      <C>      <C>          <C>            <C>       <C>         <C>        <C>
STATEMENT OF OPERATIONS DATA:
Revenues..........................  $4,081   $6,605    $ 2,578       $12,588      $72,267   $100,500    $133,912   $143,299
Cost of services..................   3,719    4,256      1,853         8,174       41,930     57,642      75,215     80,016
                                    ------   ------    -------       -------      -------   --------    --------   --------
Gross profit......................     362    2,349        725         4,414       30,337     42,858      58,697     63,283
Operating costs and expenses:
Selling, general and
  administrative..................     704    1,825        404         4,904       20,558     29,660      47,703     51,557
Stock compensation................      --       --      6,328            --           --     30,809       3,744      3,744
Depreciation and amortization.....      96      133        105           745        4,272      6,624       8,784      9,610
                                    ------   ------    -------       -------      -------   --------    --------   --------
Total operating costs and
  expenses........................     800    1,958      6,837         5,649       24,830     67,093      60,231     64,911
Operating income (loss)...........    (438)     391     (6,112)       (1,235)       5,507    (24,235)     (1,534)    (1,628)
Other expense.....................      49       34          7         1,228        5,537      9,395      11,740     12,108
                                    ------   ------    -------       -------      -------   --------    --------   --------
Income (loss) from continuing
  operations before income
  taxes...........................    (487)     357     (6,119)       (2,463)         (30)   (33,630)    (13,274)   (13,736)
Provision (benefit) for income
  taxes...........................     (42)       8          7          (965)         551     (1,402)     (3,281)    (3,470)
                                    ------   ------    -------       -------      -------   --------    --------   --------
Income (loss) from continuing
  operations......................  $ (445)  $  349    $(6,126)      $(1,498)     $  (581)  $(32,228)   $ (9,993)  $(10,266)
                                    ======   ======    =======       =======      =======   ========    ========   ========
Loss from continuing operations
  per share (diluted).............                                   $ (0.04)     $ (0.01)  $  (0.78)   $  (0.24)  $  (0.25)
Number of shares used in computing
  diluted loss per share(b).......                                    41,285       41,285     41,285      41,697     41,697
</TABLE>

<TABLE>
<CAPTION>
                                                                PREDECESSOR
                                                                COMPANY(A)
                                                              ---------------        XPEDIOR INCORPORATED
                                                                   AS OF        ------------------------------
                                                               DECEMBER 31,           AS OF DECEMBER 31,
                                                              ---------------   ------------------------------
                                                               1995     1996      1997       1998       1999
                                                              ------   ------   --------   --------   --------
                                                                               (IN THOUSANDS)
<S>                                                           <C>      <C>      <C>        <C>        <C>
BALANCE SHEET DATA:
Cash........................................................  $   --   $  245   $      2   $    191   $ 49,718
Working Capital (includes amounts due to Metamor)...........     486    1,338    (25,332)   (95,229)    46,348
Total Assets................................................   1,468    3,771     34,267    138,192    261,465
Amounts due Metamor.........................................      --       --     16,253     77,929     18,891
Long-term debt, net of current maturities...................      --       --         --         --      9,066
Stockholders' equity........................................   1,053    2,399      2,828     17,776    196,873
</TABLE>

---------------

(a)  On March 27, 1997, Metamor acquired Metamor Technologies, Ltd., our
     predecessor company. Metamor contributed the stock of this company to us on
     April 30, 1999.

(b)  Reflects a 41,285-for-1 stock split. See Note 2 to our consolidated
     financial statements included elsewhere in this Annual Report.

                                       20
<PAGE>   23

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

     The following discussion should be read in conjunction with the "Selected
Consolidated Financial Data" and the Company's Consolidated Financial Statements
included elsewhere in this Annual Report. This discussion and analysis contains
forward-looking statements that involve risks and uncertainties. Examples of
forward-looking statements include statements regarding our future financial
results, operating results, market positions, product and services successes,
business strategies, projected costs, future products, competitive positions and
plans and objectives of management for future operations. Our actual results may
differ materially from those anticipated in these forward-looking statements as
a result of risks and uncertainties and other important factors, including those
set forth under "Risk Factors" included elsewhere in this Annual Report.

INTRODUCTION

     We were formed by Metamor to be the holding company for its eBusiness
solutions unit. Metamor commenced operations of this unit with the acquisition
of Metamor Technologies, Ltd., our predecessor company, on March 27, 1997, and
acquired six additional companies in 1998 as part of the eBusiness solutions
unit. Effective April 30, 1999, Metamor contributed to Xpedior all the
outstanding capital stock of the seven companies comprising its eBusiness
solutions unit. All seven companies were wholly owned subsidiaries of Metamor.
As the entities were under common control, the contribution has been accounted
for at historical cost in a manner similar to a pooling of interests. In
September 1999, we acquired one additional company, Kinderhook Systems, Inc.

     Effective October 1, 1999, we distributed to Metamor a segment of our
business that provided non-eBusiness outsourcing services. This segment was a
services unit of Metamor Technologies. This segment has been reflected as
discontinued operations in our financial statements. Revenues from discontinued
operations were $13.2 million for the period from inception (March 27, 1997) to
December 31, 1997, $22.7 million and $15.6 million for the years ended December
31, 1998 and 1999, respectively.

     In December 1999, we completed our initial public offering of 9.8 million
shares of common stock. Net proceeds from the offering totaled $169.0 million
and were used to repay amounts due to Metamor and for general working capital
purposes of Xpedior. Of this amount, $122.6 million was paid to Metamor, which
was applied to repay debt of $100 million and to redeem 1,280,250 of its common
shares owned by Metamor.

     All of the eBusiness unit companies were acquired in transactions that were
accounted for using the purchase method. The accompanying financial statements
reflect Metamor's purchase accounting adjustments to the acquired eBusiness
companies and include the results of operations of each of the companies from
the date of their acquisition. Our historical consolidated operating results
have been significantly affected by the number, timing, and size of the
acquisitions. Accordingly, pro forma financial data are provided in this report
to provide a more meaningful period-to-period comparison of our operating
results. The pro forma financial data have been prepared and included in this
report to illustrate the impact of the acquisitions as if they occurred at the
beginning of the periods presented.

     The pro forma financial data are not necessarily indicative of results of
operations that would have occurred had the acquisitions of the eBusiness
companies been consummated as of the beginning of the periods presented or that
might be attained in the future.

     Before Metamor acquired them, our eBusiness unit companies were managed as
independent, private companies. As a consequence, their operating procedures and
results reflected different financial objectives, business practices, service
offerings and tax structures (S corporations and C corporations), which
influenced their historical operations, client base and compensation levels.
Since mid-1998, we have been integrating our eBusiness companies to implement a
collective corporate strategy. The major initiative of our integration process
has been to leverage the success of our eBusiness companies by sharing our
expertise and practices over a unified platform. The Xpedior Process and our
best practices and procedures have been refined and are being implemented
throughout our company. We have also analyzed and reviewed our internally
developed solutions to develop our Xpediators. This integration of methodologies
and reusable solutions from the best

                                       21
<PAGE>   24

practices found within our organization may present opportunities to increase
revenues and reduce costs, but may also necessitate additional costs and
expenditures for corporate administration, including expenses necessary to
continue to train our professionals and implement our unified Xpedior Process.
These various costs and possible cost-saving and revenue enhancements may make
historical operating results difficult to compare with, and not indicative of,
future performance.

     We contract on the basis that best fits our clients' needs. Our primary
form of offering services is on a time-and-materials basis. In this form of
contracting, we get paid at an agreed upon hourly rate for the time that we
expend on our clients' projects, and revenues are recorded at the time services
are performed. We also offer our services on a fixed-fee basis. This form of
contracting represented approximately 12% of our total pro forma revenues for
the year ended December 31, 1999. When we contract on a fixed-fee basis, we
realize revenues on a percentage of completion basis. Payments on our fixed-fee
contracts usually require an advance payment from the client with additional
payments due on either a milestone or a predetermined schedule. Payments billed
in excess of revenues earned are recorded as deferred revenues. Revenues earned
but not yet billed are recorded as work in process.

     During the year ended December 31, 1999, our largest ten clients
represented approximately 30% of our pro forma revenues. Our largest 50 clients
during the year ended December 31, 1999 represented approximately 63% of our pro
forma revenues. Historically, we begin a client relationship with a single
project and, as our relationship grows, we increase both the number of projects
that we perform for a particular client and the size of the engagement.

     Our most significant expense is cost of services, which consists primarily
of project personnel salaries, benefits and non-reimbursed direct expenses
incurred to complete projects. The number of professionals assigned to a project
will vary according to the size, complexity, duration and demands of the
project. An unanticipated termination of a significant project could also cause
us to experience lower revenues and gross profit.

     To sustain our growth and improve profitability, we have made and continue
to make substantial investments in the infrastructure of our business. These
investments include the addition of senior management, administrative personnel,
business development managers, facilities and recruiting capabilities. Selling,
general and administrative expenses include the costs of recruiting, training,
marketing, facilities, as well as administrative and executive compensation
consisting of salaries, bonuses and benefits.

     Stock compensation charges consist of non-cash compensation expenses
incurred in connection with the issuances, exchanges or cancellations of stock
options and other stock awards. Compensation expense has been recognized for
options granted under our stock option plan that were granted at prices below
the fair value of our common stock at the date of issuance. This difference
results in a compensation charge of $20.8 million, which is being recognized
over the three-year vesting period. A compensation charge of $2.2 million was
recognized during the year ended December 31, 1999.

     In September 1999, we issued 50,000 shares of restricted stock, which are
subject to forfeiture upon the holder's termination of employment. We have
recorded as deferred compensation $0.6 million which is being amortized over the
48-month vesting period.

     We also sold 129,702 shares of restricted stock for $7.71 per share. This
arrangement was accounted for as a variable compensation plan through the date
of our initial public offering due to certain put features and compensation
expense was recognized for the difference between the fair market value and the
carrying amount. During the year ended December 31, 1999, compensation expense
of $1.5 million was recognized on this arrangement.

                                       22
<PAGE>   25

RESULTS OF OPERATIONS

  Year Ended December 31, 1999 compared with the Year Ended December 31, 1998

<TABLE>
<CAPTION>
                                                  HISTORICAL            PRO FORMA
                                                  YEAR ENDED           YEAR ENDED
                                                 DECEMBER 31,         DECEMBER 31,
                                              ------------------   -------------------
                                               1998       1999       1998       1999
                                              -------   --------   --------   --------
                                                       (DOLLARS IN THOUSANDS)
<S>                                           <C>       <C>        <C>        <C>
STATEMENT OF OPERATIONS DATA:
Revenues....................................  $72,267   $133,912   $100,500   $143,299
Cost of services............................   41,930     75,215     57,642     80,016
                                              -------   --------   --------   --------
Gross profit................................   30,337     58,697     42,858     63,283
Operating costs and expenses:
  Selling, general and administrative.......   20,558     47,703     29,660     51,557
  Stock compensation........................       --      3,744     30,809      3,744
  Depreciation and amortization.............    4,272      8,784      6,624      9,610
                                              -------   --------   --------   --------
          Total operating costs and
            expenses........................   24,830     60,231     67,093     64,911
                                              -------   --------   --------   --------
Operating income (loss).....................    5,507     (1,534)   (24,235)    (1,628)
Other expense...............................    5,537     11,740      9,395     12,108
Provision (benefit) for income taxes........      551     (3,281)    (1,402)    (3,470)
                                              -------   --------   --------   --------
Loss from continuing operations.............  $  (581)  $ (9,993)  $(32,228)  $(10,266)
                                              =======   ========   ========   ========
AS A PERCENTAGE OF REVENUES:
Revenues....................................    100.0%     100.0%     100.0%     100.0%
Cost of services............................     58.0       56.2       57.4       55.8
                                              -------   --------   --------   --------
Gross profit................................     42.0       43.8       42.6       44.2
Operating costs and expenses:
  Selling, general and administrative.......     28.4       35.6       29.5       36.0
  Stock compensation........................       --        2.8       30.7        2.6
  Depreciation and amortization.............      5.9        6.6        6.6        6.7
                                              -------   --------   --------   --------
Operating income (loss).....................      7.6       (1.1)     (24.1)      (1.1)
</TABLE>

  Historical Operating Results for the Year Ended December 31, 1999 compared
  with the Year Ended December 31, 1998

     Revenues. Revenues increased 85.3% to $133.9 million for the year ended
December 31, 1999 from $72.3 million for the year ended December 31, 1998. The
increase in revenues was primarily a result of the increase in project
personnel. This growth was primarily a result of the acquisition of the seven
businesses and the growth in headcount post-acquisition. Headcount at December
31, 1999 was 1,045 compared with 695 at December 31, 1998. Headcount for the
year ended December 31, 1999 included the full benefit of headcount added
through the acquisitions of six companies during 1998, whereas the year ended
December 31, 1998 included only the benefit of those acquisitions from the date
of their acquisition. Average billing rates and utilization rates were
comparable during the two periods.

     Cost of Services. Cost of services increased 79.4% to $75.2 million for the
year ended December 31, 1999 from $41.9 million for the year ended December 31,
1998. The increase in cost of services was primarily a result of the growth in
headcount noted above.

     Operating Costs and Expenses. Selling, general and administrative expenses
increased 132.0% to $47.7 million for the year ended December 31, 1999 from
$20.6 million for the year ended December 31, 1998. This increase primarily
related to $10.1 million in incremental expenses of the businesses acquired in
1998 and investments in infrastructure necessary to support growth of the
business including significant expenditures in marketing and branding expenses
incurred to introduce the Xpedior brand. The 1999 period includes expenses for
the full period for acquisitions made in 1998, whereas the 1998 period includes
the

                                       23
<PAGE>   26

expenses of the acquired businesses from the date of their acquisitions.
Selling, general and administrative expenses increased as a percentage of
revenues to 35.6% for the year ended December 31, 1999 from 28.4% for the year
ended December 31, 1998. During the year ended December 31, 1999, we incurred a
non-cash stock compensation charge totaling $3.7 million related to stock option
and other equity issuances below fair value.

     Depreciation increased to $2.5 million for the year ended December 31, 1999
from $1.3 million for the year ended December 31, 1998. The increase in
depreciation primarily related to the fixed assets of the businesses acquired
and, to a lesser extent, depreciation on capital expenditures made
post-acquisition. Amortization increased to $6.3 million for the year ended
December 31, 1999 from $3.0 million for the year ended December 31, 1998. The
increase in amortization related to amortization of intangible assets of the
acquired businesses. Depreciation and amortization increased as a percentage of
revenues to 6.6% for the year ended December 31, 1999 from 5.9% for the year
ended December 31, 1998.

     Other Expense. Interest expense increased 112.8% to $11.8 million for the
year ended December 31, 1999 from $5.6 million for the year ended December 31,
1998. The increase in interest expense related to borrowings from Metamor to
fund the purchase of the acquired companies and the payments of the post-
closing contingent consideration, or earnouts, paid to the sellers of the
acquired companies and our working capital requirements.

     Provision (Benefit) for Income Taxes. The benefit for income taxes for the
year ended December 31, 1999 was $3.3 million, compared with a provision of $0.6
million for the year ended December 31, 1998. Our effective tax rate includes
the effects of state income taxes, net of the benefit for federal taxes, and
permanent differences related to the portion of goodwill amortization, business
meals, entertainment and stock compensation charges not deductible for federal
income tax purposes. The tax effect of these permanent differences totaled $1.4
million and $0.6 million after tax for the year ended December 31, 1999 and
1998, respectively.

  Pro Forma Operating Results for the Year Ended December 31, 1999 compared with
  the Year Ended December 31, 1998

     Revenues. Revenues increased 42.6% to $143.3 million for the year ended
December 31, 1999 from $100.5 million for the year ended December 31, 1998. The
increase in revenues primarily related to the increase in project personnel
headcount and, to a lesser extent, increases in billing rates. Headcount
increased 37.3% to 1,045 at December 31, 1999 from 761 at December 31, 1998.

     Cost of Services. Cost of services increased 38.8% to $80.0 million for the
year ended December 31, 1999 from $57.6 million for the year ended December 31,
1998. The increase in cost of services was primarily a result of the growth in
headcount noted above. Cost of services decreased as a percentage of revenues to
55.8% for the year ended December 31, 1999 from 57.4% for the year ended
December 31, 1998.

     Operating Costs and Expenses. Selling, general and administrative expenses
increased 73.8% to $51.6 million for the year ended December 31, 1999 from $29.7
million for the year ended December 31, 1998. The increase in selling, general
and administrative expenses primarily resulted from investments in
infrastructure and ongoing expenses necessary to support growth of the business.
Selling, general and administrative expenses increased as a percentage of
revenues to 36.0% for the year ended December 31, 1999 from 29.5% for the year
ended December 31, 1998. The increase in selling, general and administrative
expenses as a percentage of revenues primarily resulted from investments in
infrastructure necessary to support growth of the business and position it as a
free-standing, publicly held company. During the year ended December 31, 1999,
we incurred a non-cash stock compensation charge of $3.7 million related to
stock option and other equity issuances below fair value. During the same period
in 1998, three constituent companies incurred pre-acquisition stock compensation
charges totaling $30.8 million.

     Depreciation increased to $2.6 million for year ended December 31, 1999
from $1.6 million for the year ended December 31, 1998. The increase in
depreciation related to the increased capital expenditures necessary to support
growth in the business. Amortization increased to $7.0 million for the year
ended December 31, 1999 from $5.0 million for the year ended December 31, 1998.
The increase in amortization related to

                                       24
<PAGE>   27

amortization of intangible assets of the acquired businesses. Depreciation and
amortization as a percentage of revenues increased to 6.7% for the year ended
December 31, 1999 from 6.6% for the year ended December 31, 1998.

     Other Expense. Interest expense increased 28.9% to $12.1 million for the
year ended December 31, 1999 from $9.4 million for the year ended December 31,
1998. The increase in interest expense related to borrowings from Metamor to
fund earnouts of the acquired companies and our working capital requirements
during the year ended December 31, 1999.

     Provision (Benefit) for Income Taxes. The benefit for income taxes for the
year ended December 31, 1999 was $3.5 million compared with a benefit of $1.4
million for the year ended December 31, 1998. Our effective tax rate includes
the effects of permanent differences related to state income taxes, net of the
federal income tax benefit, and the portion of goodwill amortization, business
meals and entertainment and the stock compensation charges not deductible for
federal income tax purposes. The tax effect of these permanent differences
totaled $2.2 million and $29.1 million after tax for the year ended December 31,
1999 and 1998, respectively.

  Year Ended December 31, 1998 compared with the Year Ended December 31, 1997

     The historical statement of operations data for the year ended December 31,
1997 was derived by combining the predecessor's results of operations for the
period from January 1, 1997 to March 26, 1997 with Xpedior's results of
operations from inception (March 27, 1997) to December 31, 1997. The results of
operations for the period from inception (March 27, 1997) to December 31, 1997
reflect Metamor's purchase accounting adjustments. These results are not
necessarily indicative of operations that would have occurred had the
acquisition occurred as of the beginning of the period presented.

<TABLE>
<CAPTION>
                                                               HISTORICAL YEAR ENDED
                                                                   DECEMBER 31,
                                                              -----------------------
                                                                 1997         1998
                                                              ----------   ----------
                                                              (DOLLARS IN THOUSANDS)
<S>                                                           <C>          <C>
STATEMENT OF OPERATIONS DATA:
Revenues....................................................   $15,166      $72,267
Cost of services............................................    10,027       41,930
                                                               -------      -------
Gross profit................................................     5,139       30,337
Operating costs and expenses:
Selling, general and administrative.........................     5,308       20,558
Stock compensation..........................................     6,328           --
Depreciation and amortization...............................       850        4,272
                                                               -------      -------
          Total operating costs and expenses................    12,486       24,830
Operating income (loss).....................................    (7,347)       5,507
Other expense...............................................     1,235        5,537
Provision (benefit) for income taxes........................      (958)         551
                                                               -------      -------
Loss from continuing operations.............................   $(7,624)     $  (581)
                                                               =======      =======
AS A PERCENTAGE OF REVENUES:
Revenues....................................................     100.0%       100.0%
Cost of services............................................      66.1         58.0
                                                               -------      -------
Gross profit................................................      33.9         42.0
Operating costs and expenses:
Selling, general and administrative.........................      35.0         28.4
Stock compensation..........................................      41.7           --
Depreciation and amortization...............................       5.6          5.9
                                                               -------      -------
Operating income (loss).....................................     (48.4)         7.6
</TABLE>

                                       25
<PAGE>   28

  Historical Operating Results for the Year Ended December 31, 1998 compared
  with the Historical Combined Operating Results for the Year Ended December 31,
  1997

     Revenues. Revenues increased 376.5% to $72.3 million for the year ended
December 31, 1998 from $15.2 million for the year ended December 31, 1997. The
increase in revenues was primarily a result of a 318.7% increase in project
personnel to 695 at December 31, 1998 from 166 at December 31, 1997. The growth
in headcount was primarily a result of the acquisition of the six businesses
acquired in 1998.

     Cost of Services. Cost of services increased 318.2% to $41.9 million for
the year ended December 31, 1998 from $10.0 million for the year ended December
31, 1997. The increase in cost of services was primarily a result of the growth
in headcount noted above. Cost of services decreased as a percentage of revenues
to 58.0% for the year ended December 31, 1998 from 66.1% for the year ended
December 31, 1997. This improvement primarily related to: (1) the higher gross
margins of the businesses acquired in 1998 compared with the gross margins of
the predecessor in 1997 and (2) expansion in the gross margins of the
predecessor primarily due to improved utilization and billing rate increases.

     Operating Costs and Expenses. Selling, general and administrative expenses
increased 287.3% to $20.6 million for the year ended December 31, 1998 from $5.3
million for the year ended December 31, 1997. This increase primarily related to
$11.7 million in incremental expenses of the acquired businesses and, to a
lesser extent, investments in infrastructure necessary to support growth of the
business. Selling, general and administrative expenses decreased as a percentage
of revenues to 28.4% for the year ended December 31, 1998 from 35.0% for the
year ended December 31, 1997. The decrease in selling, general and
administrative expenses as a percentage of revenues primarily resulted from (1)
acquisitions of businesses that had lower selling, general and administrative
expense margins and (2) our improved operating leverage. During 1997, our
predecessor incurred pre-acquisition stock compensation charges totaling $6.3
million.

     Depreciation increased to $1.3 million for the year ended December 31, 1998
from $0.4 million for the year ended December 31, 1997. The increase in
depreciation primarily related to the fixed assets of the businesses acquired
and, to a lesser extent, depreciation on capital expenditures made
post-acquisition. Amortization increased to $3.0 million for the year ended
December 31, 1998 from $0.4 million for the year ended December 31, 1997. The
increase in amortization related to amortization of intangible assets of the
acquired businesses. Depreciation and amortization increased as a percentage of
revenues to 5.9% for the year ended December 31, 1998 from 5.6% for the year
ended December 31, 1997.

     Other Expense. Interest expense increased 351.8% to $5.6 million for the
year ended December 31, 1998 from $1.2 million for the year ended December 31,
1997. The increase in interest expense related to borrowings from Metamor to
fund the purchase of the acquired companies, including earnouts, and our working
capital requirements.

     Provision (Benefit) for Income Taxes. The provision for income taxes for
the year ended December 31, 1998 was $0.6 million, compared with a benefit of
$1.0 million for the year ended December 31, 1997. Our effective tax rate
includes the effects of permanent differences related to state income taxes, net
of the federal income tax benefit, and the portion of goodwill amortization and
business meals and entertainment not deductible for federal income tax purposes.
The tax effect of these permanent differences totaled $0.5 million after tax for
the year ended December 31, 1998. The effective tax rate for 1997 includes the
pre-acquisition period of the predecessor, which was an S corporation and
therefore not required to pay federal income tax.

LIQUIDITY AND CAPITAL RESOURCES

     Our capital requirements have principally related to the acquisitions of
businesses, working capital and capital expenditures. These requirements have
been met primarily through funds provided by Metamor and cash flows from
operations.

     On December 21, 1999, the Company completed an initial public offering of
9.8 million shares at $19 per share. Net proceeds totaled $169.0 million, net of
underwriting fees and offering expenses. Of this amount, $122.6 million was paid
to Metamor, which was applied to repay debt of $100 million and to redeem
1,280,250 of its common shares owned by Metamor.
                                       26
<PAGE>   29

     As of December 31, 1999, we had outstanding borrowings from Metamor of
$18.9 million at an interest rate of 8.75%. These borrowings relate to IPO costs
advanced by Metamor on our behalf, and working capital requirements. In
addition, at September 30, 1999, we assigned approximately $9.2 million in
accounts receivable to Metamor. We paid Metamor for amounts collected on these
receivables in January 2000.

     Metamor allocates its corporate overhead to its operating units based on
revenues of the units. This allocation includes costs associated with services
Metamor provides to the business units such as mergers and acquisitions, legal,
tax, risk and cash management. The overhead allocation from Metamor is included
in our selling, general and administrative expenses and totaled $1.4 million for
the year ended December 31, 1998 and $2.5 million for the year ended December
31, 1999. Following the completion of the public offering, Metamor continued to
provide us with these services. However, it ceased making a general allocation
of its overhead to us and allocated only those expenses related to actual
services provided.

     For the year ended December 31, 1998, and 1999, cash paid for acquisitions
and related earnouts totaled $61.7 million and $48.1 million respectively. Total
cash paid for acquisitions since inception was $125.8 million, all of which was
paid by Metamor. Of this amount, Xpedior issued notes to Metamor for $86.8
million, which was repaid with proceeds from the public offering.

     We had working capital, excluding amounts due to Metamor, of $65.2 million
at December 31, 1999. Our operating cash flows and working capital requirements
are significantly affected by the timing of payroll and the receipt of payment
from our clients. Generally, we pay our professionals semi-monthly and receive
payments from our clients at the December 31, 1999 average of 95 days from the
date services were performed. Cash flows provided by (used in) operating
activities were ($24.9) million and $6.7 million for the years ended December
31, 1999 and 1998 respectively. The use of cash in operations in 1999 reflected
investments in working capital (principally accounts receivable) related to our
growth during this period.

     Over the next twelve months, we anticipate that we will spend:

     - approximately $15.0 - $20.0 million in incremental branding and marketing
       expenses;

     - approximately $25.0 million in earnouts that have been fixed, which are
       payable in March 2000; and

     - approximately $18.0 - $25.0 million in capital expenditures to support
       the growth of the business.

     In addition, we have contingent liabilities of up to $11.4 million related
to earnouts that are based on the performance of one of the acquired companies,
NDC Group, Inc. We expect that approximately one-half of the NDC earnout, if
earned and payable, will be paid in Metamor common stock, for which Metamor has
agreed to contribute that payment to our capital and not require repayment by
us. We also have assumed the cash portion of any future settlement associated
with a guarantee of the value of approximately 308,000 shares of Metamor common
stock issued in connection with the acquisition of NDC. If the fair market value
of these shares is less than $14.0 million based upon the average market price
for the 20 trading days preceding April 16, 2000, we will be obligated to pay
the difference to the former NDC shareholders. We expect that the settlement of
this guarantee, if triggered, will be paid one-half in cash, which we have
assumed, and one-half in Metamor common stock. Metamor has agreed to contribute
to our capital the stock it issues for the non-cash portion of the settlement
and not require repayment by us. Based on the last reported sale price of
Metamor common stock of $30.4375 on March 24, 2000, our obligation under the
guarantee would have been approximately $4.6 million.

     Xpedior issued approximately $9.1 million aggregate principal amount of 7%
Convertible Subordinated Promissory Notes due 2002 that are convertible into
shares of Xpedior at $19.00 per share in connection with the acquisition of
Kinderhook Systems, Inc. Xpedior may also redeem the notes under certain
circumstances. The notes are guaranteed by Metamor. The holders of the notes
have certain registration rights with respect to the shares of Xpedior stock to
be issued upon conversion of the notes. Xpedior also issued a 7% Convertible
Subordinated Promissory Note due 2002 in the principal amount of $1,850,000 in
connection with the acquisition of the assets of NewTHINK, Inc.

                                       27
<PAGE>   30

     We are currently in preliminary discussions with commercial banks for a
credit facility to fund our working capital requirements over the next twelve
months. We expect to have a credit facility in place during the second quarter
of 2000. In the interim, Metamor has agreed to provide funding for our working
capital requirements and to reduce the interest rate on our outstanding
intercompany indebtedness to its incremental borrowing rate, which at December
31, 1999 was 8.75%.

     We believe that the cash proceeds from the IPO, the availability of
borrowings from Metamor of between $25-30 million, borrowings under our proposed
credit facility and cash flow from operating activities will be sufficient to
meet our working capital and capital expenditure requirements for at least the
next twelve months. However, we could elect, or we could be required, to raise
additional funds during that period and we may need to raise additional capital
in the future. Additional capital may not be available at all, or may not be
available on terms favorable to us. We may also issue equity or equity-related
securities for acquisitions from time to time in the future. Any additional
issuance of equity or equity-related securities will be dilutive to our
stockholders.

YEAR 2000 UPDATE

     In prior years, the Company discussed the nature and progress of its plans
to become Year 2000 ready. In late 1999, the Company completed its remediation
and testing of systems. As a result of those planning and implementation
efforts, the Company experienced no significant disruptions in mission critical
information technology and non-information technology systems and believes those
systems successfully responded to the Year 2000 date change. The Company is not
aware of any material problems resulting from Year 2000 issues, either with our
products, our internal systems, or the products and services of third parties.
The Company will continue to monitor its missions critical computer applications
and those of its suppliers and vendors throughout the year 2000 to ensure that
any latent Year 2000 matters that may arise are addressed promptly.

RECENT ACCOUNTING PRONOUNCEMENTS

     In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities," which establishes accounting and reporting standards of
derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. The Company is required to adopt
the statement effective January 1, 2001. The Company has not entered into any
derivative financial instruments and does not believe that the adoption of
Financial Accounting Standards No. 133 will have a significant impact on its
results of operations, financial position or cash flows.

     In December of 1999, the SEC issued Staff Accounting Bulletin 101 (SAB
101), Revenue Recognition, which the Company is required to adopt in the first
quarter of 2000. In March 2000, the SEC issued SAB 101A which temporarily
delayed the adoption of SAB 101. SAB 101 clarifies how existing revenue
recognition rules should be applied. The Company is currently evaluating their
revenue recognition policies and the effect of adopting this Bulletin.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We currently are exposed to market risks related to changes in interest
rates. The proceeds from the initial public offering have been invested short
term in financial instruments. The value of these financial instruments would be
affected by fluctuations in interest rates and could fall in value if interest
rates rise Additionally, our future borrowings will have a variable component
that will fluctuate as interest rates change. If market interest rates were to
increase immediately and uniformly by 10%, there would not be a material impact
on the results of operations or on our balance sheet.

                                       28
<PAGE>   31

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The Financial Statements and Supplementary Data required hereunder are
included in this Annual Report as set forth in Item 14(a) hereof.

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

     None.

                                    PART III

     Items 10 (except for Executive Officers which is included in Part I of this
Annual Report), 11, 12 and 13 of Part III are incorporated by reference from the
Company's Proxy Statement for its 2000 Annual Meeting of Stockholders, which is
expected to be filed with the Commission no later than April 10, 2000.

                                    PART IV

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

     (a) The following documents are filed as part of this Annual Report or
incorporated by reference:

     1. Financial Statements

          As to financial statements, reference is made to the Index to
     Financial Statements on page F-1 of this Annual Report.

     2. Financial Statement Schedules

          All schedules for which provision is made in the applicable accounting
     regulations of the Securities and Exchange Commission are not required
     under the related instructions or are inapplicable, and therefore have been
     omitted.

     3. Exhibits

     (a) Exhibits

          The following exhibits are filed as part of this Annual Report.

<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                                  DESCRIPTION
        -------                                  -----------
<C>                      <S>
          2.1*           -- Merger Agreement dated as of March 26, 1997 by and among
                            Irvin M. Shapiro, the Irvin M. Shapiro Children's Trust,
                            Metamor Technologies, Ltd. and CORESTAFF, Inc. and
                            CORESTAFF Acquisition Sub #9, Inc. (Form S-1, Reg. No.
                            333-89239)
          2.2*           -- Agreement and Plan of Merger dated as of December 23,
                            1997 by and among CORESTAFF, Inc., CORESTAFF Acquisition
                            Sub #12, Inc., Sage I.T. Partners, Inc. and the
                            Shareholders of Sage I.T. Partners, Inc. (Form S-1, Reg.
                            No. 333-89239)
          2.3*           -- Stock Purchase Agreement dated as of December 31, 1997 by
                            and among CORESTAFF, Inc., Workgroup Productivity
                            Corporation, and the Shareholders of Workgroup
                            Productivity Corporation (Form S-1, Reg. No. 333-89239)
          2.4*           -- Agreement and Plan of Merger dated as of April 16, 1998
                            by and among Metamor Worldwide, Inc., CORESTAFF
                            Acquisition Sub #13, Inc., NDC Group, Inc. and the
                            Stockholders of NDC Group, Inc. (Form S-1, Reg. No.
                            333-89239)
</TABLE>

                                       29
<PAGE>   32

<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                                  DESCRIPTION
        -------                                  -----------
<C>                      <S>
          2.5*           -- Stock Purchase Agreement dated as of June 17, 1998 by and
                            among Metamor Worldwide, Inc., Informix Corporation and
                            the Sellers (Form S-1, Reg. No. 333-89239)
          2.6*           -- Stock Purchase Agreement dated as of July 16, 1998 by and
                            among Metamor Worldwide, Inc., Advanced Information
                            Solutions, Inc. and the Sellers (Form S-1, Reg. No.
                            333-89239)
          2.7*           -- Asset Purchase Agreement dated as of November 12, 1998 by
                            and among Metamor Worldwide, Inc., Metamor Technologies,
                            Ltd., New Technology Partners, Inc. and the Shareholders
                            of New Technology Partners, Inc. (Form S-1, Reg. No.
                            333-89239)
          2.8*           -- Stock Purchase Agreement dated as of September 17, 1999
                            by and among Xpedior Incorporated, Kinderhook Systems,
                            Inc. and the Sellers (Form S-1, Reg. No. 333-89239)
          3.1*           -- Form of Amended and Restated Certificate of Incorporation
                            (Form S-1, Reg. No. 333-89239)
          3.2            -- Amended and Restated Bylaws
          4.1*           -- Form of Common Stock Certificate (Form S-1, Reg. No.
                            333-89239)
         10.1*           -- Employment Agreement between Xpedior Incorporated and
                            David N. Campbell (Form S-1, Reg. No. 333-89239)
         10.2*           -- Employment Agreement between Xpedior Incorporated and J.
                            Brian Farrar (Form S-1, Reg. No. 333-89239)
         10.3*           -- Form of Indemnification Agreement (Form S-1, Reg. No.
                            333-89239)
         10.4*           -- Form of Registration Rights Agreement (Form S-1, Reg. No.
                            333-89239)
         10.5*           -- Form of Services Agreement (Form S-1, Reg. No. 333-89239)
         21.1            -- Subsidiaries of the Company (Form S-1, Reg. No.
                            333-89239)
         24.1            -- Power of Attorney (included on the signature page of this
                            registration statement) (Form S-1, Reg. No. 333-89239)
         27.1            -- Financial Data Schedule
</TABLE>

---------------

 *  Incorporated by reference

     (b) Reports on Form 8-K.

          None.

                                       30
<PAGE>   33

                              XPEDIOR INCORPORATED

                         INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
XPEDIOR INCORPORATED AND SUBSIDIARIES
Consolidated Financial Statements:
Report of Independent Auditors..............................   F-2
Consolidated Balance Sheets.................................   F-3
Consolidated Statements of Operations.......................   F-4
Consolidated Statements of Stockholder's Equity.............   F-5
Consolidated Statements of Cash Flows.......................   F-6
Notes to Consolidated Financial Statements..................   F-7
METAMOR TECHNOLOGIES, LTD.
Report of Independent Auditors..............................  F-19
Statements of Operations....................................  F-20
Statements of Stockholders' Equity..........................  F-21
Statements of Cash Flows....................................  F-22
Notes to Financial Statements...............................  F-23
</TABLE>

                                       F-1
<PAGE>   34

                         REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders
Xpedior Incorporated

     We have audited the accompanying consolidated balance sheets of Xpedior
Incorporated and subsidiaries (the "Company") as of December 31, 1998 and 1999,
and the related consolidated statements of operations, stockholders' equity and
cash flows for the period from inception (March 27, 1997) to December 31, 1997
and for each of the two years in the period ended December 31, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

     We conducted our audits in accordance with 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 consolidated financial position of Xpedior
Incorporated and subsidiaries at December 31, 1998 and 1999 and the consolidated
results of their operations and their cash flows for the period from inception
(March 27, 1997) to December 31, 1997 and for each of the two years in the
period ended December 31, 1998 and 1999, in conformity with accounting
principles generally accepted in the United States.

                                            ERNST & YOUNG LLP

Houston, Texas
February 8, 2000

                                       F-2
<PAGE>   35

                     XPEDIOR INCORPORATED AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                              -------------------
                                                                1998       1999
                                                              --------   --------
<S>                                                           <C>        <C>
                                     ASSETS

Current Assets:
  Cash and cash equivalents.................................  $    191   $ 49,718
  Accounts receivable, net of allowance of $560 and $971....    22,161     43,000
  Work in process...........................................     1,409      3,295
  Prepaid expenses and other................................       921      4,012
                                                              --------   --------
          Total current assets..............................    24,682    100,025
Net Assets of Discontinued Operations.......................       731         --
Fixed Assets, net...........................................     7,747     15,496
Intangible Assets, net of accumulated amortization of $3,477
  and $9,716................................................   104,520    145,157
Other.......................................................       512        787
                                                              --------   --------
          Total Assets......................................  $138,192   $261,465
                                                              ========   ========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Amounts due to Parent.....................................  $ 77,929   $ 18,891
  Accounts payable..........................................     1,447      3,517
  Payroll and related taxes.................................     3,677      5,045
  Other accrued liabilities.................................     3,509      3,908
  Amounts due sellers of acquired companies.................    29,651     19,836
  Deferred revenues.........................................     3,698      2,480
                                                              --------   --------
          Total current liabilities.........................   119,911     53,677
Deferred Income Taxes and Other.............................       505      1,849
Convertible Subordinated Notes..............................        --      9,066
Commitments and Contingencies
Stockholders' Equity:
  Preferred stock, par value $.01; 5,000,000 shares
     authorized, none outstanding...........................        --         --
  Common stock, par value $.01; 100,000,000 shares
     authorized, 41,285,298 and 50,000,000 shares issued and
     outstanding............................................       413        500
Additional paid-in capital..................................    15,253    204,224
Retained earnings (deficit).................................     2,110     (6,278)
                                                              --------   --------
                                                                17,776    198,446
                                                              --------   --------
  Less -- receivable from stockholder.......................        --     (1,000)
  Less -- deferred compensation.............................        --       (573)
                                                              --------   --------
          Total stockholders' equity........................    17,776    196,873
                                                              --------   --------
          Total Liabilities and Stockholders' Equity........  $138,192   $261,465
                                                              ========   ========
</TABLE>

                See notes to consolidated financial statements.

                                       F-3
<PAGE>   36

                     XPEDIOR INCORPORATED AND SUBSIDIARIES

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

<TABLE>
<CAPTION>
                                                             PERIOD FROM
                                                              INCEPTION           YEAR ENDED
                                                           (MARCH 27, 1997)      DECEMBER 31,
                                                           TO DECEMBER 31,    ------------------
                                                                 1997          1998       1999
                                                           ----------------   -------   --------
<S>                                                        <C>                <C>       <C>
Revenues.................................................      $12,588        $72,267   $133,912
Cost of services.........................................        8,174         41,930     75,215
                                                               -------        -------   --------
Gross profit.............................................        4,414         30,337     58,697
Operating costs and expenses:
  Selling, general and administrative....................        4,904         20,558     47,703
  Stock compensation.....................................           --             --      3,744
  Depreciation and amortization..........................          745          4,272      8,784
                                                               -------        -------   --------
                                                                 5,649         24,830     60,231
                                                               -------        -------   --------
Operating income (loss)..................................       (1,235)         5,507     (1,534)
Other income (expense):
  Interest expense.......................................       (1,231)        (5,562)   (11,835)
  Other, net.............................................            3             25         95
                                                               -------        -------   --------
                                                                (1,228)        (5,537)   (11,740)
                                                               -------        -------   --------
Loss from continuing operations before income taxes......       (2,463)           (30)   (13,274)
Provision (benefit) for income taxes.....................         (965)           551     (3,281)
                                                               -------        -------   --------
Loss from continuing operations..........................       (1,498)          (581)    (9,993)
Income from discontinued operations, net of income taxes
  of $1,095, $1,669, and $1,059, respectively............        1,659          2,530      1,605
                                                               -------        -------   --------
Net income (loss)........................................      $   161        $ 1,949   $ (8,388)
                                                               =======        =======   ========
Earnings (loss) per share (basic and diluted):
  Loss from continuing operations........................      $ (0.04)       $ (0.01)  $  (0.24)
  Income from discontinued operations....................         0.04           0.06       0.04
                                                               -------        -------   --------
          Net income (loss)..............................      $  0.00        $  0.05   $  (0.20)
                                                               =======        =======   ========
</TABLE>

                See notes to consolidated financial statements.

                                       F-4
<PAGE>   37

                     XPEDIOR INCORPORATED AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                  ADDITIONAL   RETAINED     RECEIVABLE                       TOTAL
                                         COMMON    PAID-IN     EARNINGS        FROM         DEFERRED     STOCKHOLDERS'
                                         STOCK     CAPITAL     (DEFICIT)   STOCKHOLDERS   COMPENSATION      EQUITY
                                         ------   ----------   ---------   ------------   ------------   -------------
<S>                                      <C>      <C>          <C>         <C>            <C>            <C>
INITIAL CAPITALIZATION OF XPEDIOR --
  Issuance of 41,285,298 shares of
     common stock to Parent and
     contribution
     from Parent.......................   $413     $  2,254     $    --      $    --         $  --         $  2,667
  Net income...........................     --           --         161           --            --              161
                                          ----     --------     -------      -------         -----         --------
BALANCE AT DECEMBER 31, 1997...........    413        2,254         161           --            --            2,828
  Contribution from Parent.............     --       12,999          --           --            --           12,999
  Net income...........................     --           --       1,949           --            --            1,949
                                          ----     --------     -------      -------         -----         --------
BALANCE AT DECEMBER 31, 1998...........    413       15,253       2,110           --            --           17,776
  Contribution from Parent.............     --       38,649          --           --            --           38,649
  Issuance of 50,000 shares of
     restricted stock, net.............      1          624          --           --          (625)              --
  Sale of 129,702 shares of common
     stock.............................      1          999          --       (1,000)           --               --
  Sale of 9,815,250 shares of common
     stock, net of offering costs......     85      168,890          --           --            --          168,975
  Redemption of and retirement of
     1,280,250 shares from Parent......     --      (22,622)         --           --            --          (22,622)
  Distribution of net assets of
     discontinued operations...........     --       (1,261)         --           --            --           (1,261)
  Stock compensation charge for:
     Sale of common stock..............     --        1,464          --           --            --            1,464
     Issuance of stock options.........     --        2,228          --           --            --            2,228
  Amortization of deferred
     compensation......................     --           --          --           --            52               52
  Net loss.............................     --           --      (8,388)          --            --           (8,388)
                                          ----     --------     -------      -------         -----         --------
BALANCE AT DECEMBER 31, 1999...........   $500     $204,224     $(6,278)     $(1,000)        $(573)        $196,873
                                          ====     ========     =======      =======         =====         ========
</TABLE>

                See notes to consolidated financial statements.

                                       F-5
<PAGE>   38

                     XPEDIOR INCORPORATED AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                             PERIOD FROM
                                                              INCEPTION           YEAR ENDED
                                                           (MARCH 27, 1997)      DECEMBER 31,
                                                           TO DECEMBER 31,    ------------------
                                                                 1997          1998       1999
                                                           ----------------   -------   --------
<S>                                                        <C>                <C>       <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)......................................      $   161        $ 1,949   $ (8,388)
  Adjustments to reconcile net income (loss) to net cash
     provided by (used in) operating activities:
     Depreciation and amortization.......................        1,014          4,673      9,542
     Deferred income tax provision (benefit).............         (200)           491       (245)
     Stock compensation..................................           --             --      3,744
     Provision for doubtful accounts.....................           27            513        411
     Changes in assets and liabilities net of effects of
       acquisitions:
       Accounts receivable and work in process...........       (3,520)        (9,268)   (29,959)
       Prepaid expenses and other........................         (164)         1,392     (3,366)
       Accounts payable..................................         (951)          (843)     1,736
       Accrued liabilities...............................        2,482          7,813      1,595
                                                               -------        -------   --------
          Net cash provided by (used in) operating
            activities...................................       (1,151)         6,720    (24,930)
                                                               -------        -------   --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures...................................       (1,774)        (5,261)   (10,892)
  Other..................................................            7           (358)      (530)
                                                               -------        -------   --------
          Net cash used in investing activities..........       (1,767)        (5,619)   (11,422)
                                                               -------        -------   --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Payment on acquisition notes to Parent.................           --             --    (86,811)
     Working capital advances from (payments to) Parent,
       net...............................................        2,920           (912)    26,337
     Redemption of shares from Parent....................           --             --    (22,622)
     Proceeds from IPO, net of costs.....................           --             --    168,975
                                                               -------        -------   --------
          Net cash provided by (used in) financing
            activities...................................        2,920           (912)    85,879
                                                               -------        -------   --------
Net increase in cash.....................................            2            189     49,527
Cash, beginning of period................................           --              2        191
                                                               -------        -------   --------
Cash, end of period......................................      $     2        $   191   $ 49,718
                                                               =======        =======   ========
</TABLE>

                See notes to consolidated financial statements.

                                       F-6
<PAGE>   39

                     XPEDIOR INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. FORMATION AND OPERATIONS

     Xpedior Incorporated ("Xpedior" or the "Company") was formed by Metamor
Worldwide, Inc. ("Metamor" or the "Parent") to be the holding company for its
eBusiness solutions unit. Metamor commenced operations of this unit with the
acquisition of Metamor Technologies, Ltd. on March 27, 1997 and acquired six
additional companies in 1998 (see note 3). Effective April 30, 1999, Metamor
contributed to Xpedior all the outstanding capital stock of the seven companies
comprising its eBusiness solutions unit (the "Acquired Companies"), all of which
were wholly owned subsidiaries of Metamor. As the entities were under common
control, the contribution has been accounted for at historical cost in a manner
similar to a pooling of interest. On September 24, 1999, Xpedior acquired an
eBusiness solutions company. The cash portion of the purchase price was paid by
Metamor and contributed to Xpedior's capital.

     Xpedior provides eBusiness solutions to clients in the following service
areas: (i) digital business strategy; (ii) electronic commerce; (iii) digital
branding and user experience design; (iv) eBusiness systems and integration; (v)
eBusiness technology management; (vi) network design and security; (vii)
eBusiness intelligence; and (viii) enterprise portals, collaboration and
knowledge management.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Basis of Presentation

     The accompanying financial statements present on a consolidated basis the
accounts of Xpedior and its subsidiaries. All significant intercompany
transactions have been eliminated.

     The Acquired Companies were all acquired by Metamor in transactions that
were accounted for using the purchase method. The accompanying financial
statements reflect the "push down" of Metamor's purchase accounting adjustments
to the Acquired Companies and include the results of operations of the Acquired
Companies from the date of acquisition.

     Effective October 1, 1999, the Company distributed to Metamor a segment
that provided non-eBusiness outsourcing services. This segment was a services
unit of Metamor Technologies, Ltd., which was acquired in March 1997. This
segment is reflected as discontinued operations in the accompanying financial
statements. Revenues from discontinued operations were $13.2 million for the
period from inception (March 27, 1997) to December 31, 1997, $22.7 million and
$15.6 million for the years ended December 31, 1998 and 1999, respectively. Net
assets from discontinued operations distributed to Metamor consisted primarily
of accounts receivables, fixed assets and liabilities.

  Fixed Assets

     Fixed assets, which consist primarily of computer equipment and furniture
and fixtures, are recorded at cost. Depreciation is computed on a straight-line
basis over the estimated useful lives of the assets, which range from 3 to 7
years. Amortization of leasehold improvements is computed on a straight-line
basis over the useful life of the asset or lease term, whichever is shorter.
Accumulated depreciation and amortization was $3.9 million and $7.2 million at
December 31, 1998 and 1999, respectively. Fixed asset depreciation and
amortization expense was $0.3 million for the period from inception (March 27,
1997) to December 31, 1997, $1.3 million and $2.5 million for the years ended
December 31, 1998 and 1999, respectively. The Company believes all fixed assets
are fully realizable.

  Cash and Cash Equivalents

     All short-term investments with an original maturity of 90 days or less are
considered cash equivalents.

                                       F-7
<PAGE>   40
                     XPEDIOR INCORPORATED AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  Intangible Assets

     Intangible assets primarily consist of goodwill associated with the
acquired businesses. Goodwill is amortized on a straight-line basis over 20
years. In the event that facts and circumstances indicate intangible or other
long-lived assets may be impaired, the Company evaluates the recoverability of
such assets. The estimated future undiscounted cash flows associated with the
asset are compared to the asset's carrying amount to determine if a write-down
to fair value or discounted cash flow value is necessary. The Company believes
all intangible assets are fully realizable.

  Revenue Recognition

     Revenues are recorded at the time services are performed, except for
fixed-price contracts, which are accounted for using the
percentage-of-completion method. Estimated losses on fixed-price contracts are
recorded in the period the losses are determinable. Amounts received prior to
performance of the related services are recorded as deferred revenue and
recognized at the time services are performed. Revenue recognized in excess of
amounts billed are classified as current assets under work in progress.

  Income Taxes

     The Company and its subsidiaries are included in the consolidated federal
income tax return of Metamor. Income taxes for Xpedior have been calculated as
if it had filed a separate consolidated return with its subsidiaries.

     The Company follows the liability method of accounting for income taxes.
Under this method, deferred income tax assets and liabilities are determined
based on differences between the financial statement and income tax bases of
assets and liabilities using enacted tax rates in effect for the year in which
the differences are expected to reverse. Benefits from operating losses have
been utilized by the Parent in its consolidated return and have been recorded as
a reduction in the amounts due to Parent. The Company's interim provisions for
income taxes were computed using its estimated effective tax rate for the year.

  Use of Estimates

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

  Stock Split

     Effective August 26, 1999, the Company's common stock was split
41,285,298-for-1. The Company's common share amounts have been restated to give
effect to the split.

  Reclassifications

     Certain reclassifications have been made to the prior years' consolidated
financial statements to conform with current year presentations.

  New Accounting Pronouncements

     In June 1998, the FASB issued Statement No. 133, Accounting for Derivative
Instruments and Hedging Activities ("FAS 133"). The Company is required to adopt
FAS 133 effective January 1, 2001. The Statement will require the Company to
recognize all derivatives on the balance sheet at fair value. The Company does
not anticipate that the adoption of this Statement will have a significant
effect on its results of operations or financial position.

                                       F-8
<PAGE>   41
                     XPEDIOR INCORPORATED AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     In December of 1999, the SEC issued Staff Accounting Bulletin 101 (SAB
101), Revenue Recognition, which the Company is required to adopt in the first
quarter of 2000. In March 2000, the SEC issued SAB 101A which temporarily
delayed the adoption of SAB 101. SAB 101 clarifies how existing revenue
recognition rules should be applied. The Company is currently evaluating their
revenue recognition policies and the effect of adopting this Bulletin.

3. ACQUISITIONS

     Xpedior is comprised of eight eBusiness solutions companies that were
acquired in transactions accounted for using the purchase method. The effects of
the seven acquisitions made by Metamor have been pushed down to Xpedior (See
notes 1 and 2). The results of operations of the acquired companies are included
in the Company's consolidated results of operations from the date of
acquisition. Summary information of the acquired companies follows:

<TABLE>
<CAPTION>
                                                          PERIOD FROM
                                                           INCEPTION        YEAR ENDED
                                                        (MARCH 27, 1997)   DECEMBER 31,
                                                        TO DECEMBER 31,    -------------
                                                              1997         1998    1999
                                                        ----------------   -----   -----
<S>                                                     <C>                <C>     <C>
Acquisitions completed:...............................           1             6       1
                                                             =====         =====   =====
  Purchase consideration (in millions):
     Cash paid, net of amounts previously accrued.....       $16.1         $50.9   $18.4
     Fair value of Metamor common stock issued........          --          13.9     1.6
     Fair value of Xpedior convertible notes issued...          --            --     9.1
     Amounts due sellers of acquired companies........        12.1          29.7    19.8
     Liabilities assumed..............................         3.9           5.4     1.0
                                                             -----         -----   -----
     Fair value of assets acquired (including
       intangible assets).............................       $32.1         $99.9   $49.9
                                                             =====         =====   =====
  Purchase allocations (in millions):
     Tangible assets acquired.........................       $ 7.1         $16.9   $ 3.9
     Intangible assets (all goodwill).................        25.0          83.0    46.0
                                                             -----         -----   -----
     Fair value at assets acquired....................       $32.1         $99.9   $49.9
                                                             =====         =====   =====
</TABLE>

     On March 27, 1997, Metamor acquired Metamor Technologies, Ltd., an
Illinois-based eBusiness solutions company. Purchase consideration totaled $37.0
million in cash, which included purchase consideration paid after closing based
on the increase in earnings before interest and taxes ("EBIT"), as defined
("Earnouts"). The sellers are not entitled to any additional purchase
consideration.

     On January 2, 1998, Metamor acquired Workgroup Productivity Corp., an
Illinois-based eBusiness solutions company. Purchase consideration totaled $10.0
million in cash, which included Earnouts for 1998. In August 1999, the sellers
entered into an agreement with Metamor whereby all future Earnouts were fixed at
$4.8 million. This obligation, which is payable in March 2000, and resulting
goodwill were recorded as of the effective date of the agreement.

     On January 7, 1998, Metamor acquired Sage IT Partners, Inc., a
California-based eBusiness solutions company. Purchase consideration totaled
$16.6 million in cash, which included Earnouts for 1998. In July 1999, the
sellers entered into an agreement with Metamor whereby all future Earnouts were
fixed at $8.8 million. This obligation, which is payable in March 2000, and the
resulting goodwill were recorded as of the effective date of the agreement.

     On April 16, 1998, Metamor acquired NDC Group, Inc. ("NDC"), a
Virginia-based eBusiness solutions company, for $18.3 million in cash and 0.4
million shares of Metamor's common stock valued at $15.5 million,

                                       F-9
<PAGE>   42
                     XPEDIOR INCORPORATED AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

0.3 million shares which are subject to a price guarantee (the "Issued Stock").
The purchase consideration included Earnouts for 1998.

     The guarantee on the Issued Stock provides that the fair market value, as
defined, will not be less than $14.0 million as of April 16, 2000. In the event
that the fair market value of the Issued Stock is less than $14.0 million, the
Company may be obligated to pay the sellers for the difference. The guarantee
will be adjusted for any Issued Stock sold prior to the measurement date. The
sellers are also entitled to future Earnouts of up to $15.0 million based on the
increase in EBIT as defined. Up to one-half of any payments to settle the
guarantee and the remaining Earnouts are expected to be paid in Metamor common
stock. Metamor has agreed to contribute to the capital of Xpedior the fair value
of any common stock it issues to satisfy these contingent obligations. No
Earnouts have been accrued at December 31, 1999, as the Company and NDC are
involved in litigation against the former officers and shareholders of NDC. See
Note 7 for further discussion.

     On June 17, 1998, Metamor acquired Virtual Solutions, Inc., a Texas-based
eBusiness solutions company. Purchase consideration totaled $15.0 million in
cash, which included Earnouts for 1998. In August 1999, the sellers entered into
an agreement with Metamor whereby all future Earnouts were fixed at $6.3
million. This obligation, which is payable in March 2000, and resulting goodwill
were recorded as of the effective date of the agreement.

     On July 15, 1998, Metamor acquired Advanced Information Solutions, Inc., an
Illinois-based eBusiness solutions company. Purchase consideration totaled $7.5
million in cash.

     On November 12, 1998, Metamor acquired New Technology Partners Consulting,
a Massachusetts-based eBusiness solutions company. Purchase consideration
totaled $7.8 million in cash and the sellers are entitled to Earnouts of up to
$1.5 million.

     On September 24, 1999, the Company acquired Kinderhook Systems, Inc., a New
York-based eBusiness solutions business for $14.9 million in cash and $9.1
million of 7% subordinated convertible notes of the Company due in September
2002. The cash portion of the purchase price was paid by Metamor, which
contributed an equal amount to the capital of Xpedior. These notes are
convertible at the option of the holders into common stock of the Company at the
initial public offering price during a 30-day period after the earlier of the
distribution of Xpedior stock by Metamor or the second anniversary of an initial
public offering.

     Earnouts are accrued in the period they become probable and can be
reasonably estimated. The accrual of Earnouts increases the amount of goodwill
related to an acquisition.

     The following unaudited results of operations have been prepared assuming
all acquisitions consummated on or before December 31, 1999 had occurred as of
the beginning of the periods presented. These results are not necessarily
indicative of results of future operations nor of results that would have
occurred had the acquisitions been consummated as of the beginning of the
periods presented.

<TABLE>
<CAPTION>
                                                             YEARS ENDED DECEMBER 31,
                                                     -----------------------------------------
                                                        1997           1998           1999
                                                     -----------    -----------    -----------
                                                     (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                                  <C>            <C>            <C>
Revenues...........................................   $ 61,088       $100,500       $143,299
Net loss...........................................   $(12,453)      $(32,228)      $ (8,661)
Loss per share (basic and diluted).................   $  (0.30)      $  (0.78)      $  (0.21)
</TABLE>

4. INITIAL PUBLIC OFFERING

     On December 21, 1999, the Company completed an initial public offering
(IPO) of 9.8 million shares of common stock. Net proceeds from the offering
totaled $169.0 million after deducting underwriting fees and offering expenses.
Of this amount, $122.6 million was paid to Metamor and applied to repay debt of

                                      F-10
<PAGE>   43
                     XPEDIOR INCORPORATED AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

$100 million and to redeem and retire 1,280,350 of its common shares owned by
Metamor at a price of $19 per share which amounted to $22.6 million, net of
underwriting fees.

5. AMOUNTS DUE TO PARENT AND TRANSACTIONS WITH PARENT

     Amounts due to Parent consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                                DECEMBER 31,
                                                        -----------------------------
                                                         1997       1998       1999
                                                        -------    -------    -------
<S>                                                     <C>        <C>        <C>
Notes payable, interest at bank's base rate (8.75% at
  December 31, 1999), payable on demand:
  Acquisition notes..................................   $13,333    $75,921    $    --
  Advances for working capital.......................     2,920      2,008     18,891
                                                        -------    -------    -------
          Total......................................   $16,253    $77,929    $18,891
                                                        =======    =======    =======
</TABLE>

     The acquisition notes were issued to Metamor by Xpedior in connection with
(i) the initial capitalization of each of the Acquired Companies, and (ii) the
subsequent payment of Earnouts by Metamor. Effective July 31, 1999, Metamor
contributed $17.0 million of this indebtedness to the capital of Xpedior.

     Advances for working capital relate to net cash transfers between Xpedior
and Metamor, expense allocations from Metamor (including income taxes) and
interest on intercompany indebtedness with Metamor. All the interest expense of
Xpedior was charged by Metamor and included in the advances for working capital.
Interest expense allocated by Metamor totaled $1.2 million in 1997, $5.6 million
in 1998 and $11.8 million for 1999. In addition, at September 30, 1999, Xpedior
assigned approximately $9.2 million in accounts receivable to Metamor. Xpedior
paid Metamor for amounts collected on these receivables in January, 2000.

     Included in the net cash transfers between Xpedior and Metamor are
receivables collected by Metamor on Xpedior's behalf totaling $0.9 million for
the period from inception to December 31, 1997, $0.2 million for the year ended
December 31, 1998 and $.3 million for the year ended December 31, 1999.

     Xpedior is currently working to obtain a separate credit facility. Until
this facility is obtained, Metamor has agreed to fund Xpedior's cash
requirements. Following the offering, Metamor has reduced the interest rate on
outstanding intercompany indebtedness with Xpedior, if any, to its incremental
borrowing rate under its senior credit agreement.

     The Company participates in the centralized cash management program of
Metamor. Under this program, the Company's cash balances are transferred daily
to Metamor accounts and its daily cash requirements are funded by Metamor. The
advances for working capital are adjusted for the net cash transfers between the
two companies. Metamor allocates to Xpedior a portion of the expenses that are
charged by the commercial banks for operating the program.

     Metamor allocates its corporate overhead to its operating units in a
reasonable manner based on revenues of the units. This allocation includes costs
associated with services Metamor provides to the business units such as mergers
and acquisitions, legal, tax, risk and cash management. The overhead allocation
from Metamor is included in selling, general and administrative expenses of
Xpedior and totaled $1.0 million for the period from inception to December 31,
1997, $1.4 million and $2.5 million for the years ended December 31, 1998 and
1999, respectively. Following completion of Xpedior's initial public offering,
Metamor has ceased making a general allocation of its overhead to Xpedior and
allocates only those expenses related to actual services provided.

                                      F-11
<PAGE>   44
                     XPEDIOR INCORPORATED AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Xpedior participates in Metamor's long-term incentive plan and its employee
stock purchase plan. Xpedior's share of costs of those programs is included in
the expense allocations from Metamor. Upon a distribution of Xpedior stock to
Metamor Stockholders, employees of Xpedior would cease participation in
Metamor's long-term incentive plan. Stock options in Metamor held by Xpedior
employees may be converted into Xpedior stock options. Xpedior's employees would
also cease participation in Metamor's employee stock purchase plan.

6. INCOME TAXES

     The provision (benefit) for income taxes from continuing operations
consisted of the following (in thousands):

<TABLE>
<CAPTION>
                                                                             YEAR ENDED
                                                   PERIOD FROM INCEPTION    DECEMBER 31,
                                                     (MARCH 27, 1997)      ---------------
                                                   TO DECEMBER 31, 1997    1998     1999
                                                   ---------------------   -----   -------
<S>                                                <C>                     <C>     <C>
Current:
  Federal........................................          $(673)          $ 433   $(2,662)
  State..........................................            (92)           (373)     (374)
                                                           -----           -----   -------
                                                            (765)             60    (3,036)
                                                           -----           -----   -------
Deferred:
  Federal........................................           (176)             36      (186)
  State..........................................            (24)            455       (59)
                                                           -----           -----   -------
                                                            (200)            491      (245)
                                                           -----           -----   -------
                                                           $(965)          $ 551   $(3,281)
                                                           =====           =====   =======
</TABLE>

     The differences between income taxes computed at the federal statutory
income tax rate and the provision for income taxes follows (in thousands):

<TABLE>
<CAPTION>
                                                                               YEAR ENDED
                                                     PERIOD FROM INCEPTION    DECEMBER 31,
                                                       (MARCH 27, 1997)      --------------
                                                     TO DECEMBER 31, 1997    1998    1999
                                                     ---------------------   ----   -------
<S>                                                  <C>                     <C>    <C>
Income tax benefit computed at federal statutory
  income tax rate..................................          $(862)          $(11)  $(4,646)
State income tax expense (benefit), net of federal
  (benefit)........................................           (116)            52      (433)
Non-deductible portion of business meals,
  entertainment and other..........................             13             69       193
Non-deductible portion of stock compensation.......             --             --       512
Amortization of nondeductible goodwill.............             --            441     1,093
                                                             -----           ----   -------
Provision (benefit) for income taxes...............          $(965)          $551   $(3,281)
                                                             =====           ====   =======
</TABLE>

     The net current and noncurrent components of deferred income taxes
reflected in the consolidated balance sheets follows (in thousands):

<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                              ------------------
                                                              1998        1999
                                                              -----      -------
<S>                                                           <C>        <C>
Net current asset (liability)...............................  $(204)     $   756
Net noncurrent liability....................................   (471)      (1,849)
                                                              -----      -------
Net liability...............................................  $(675)     $(1,093)
                                                              =====      =======
</TABLE>

                                      F-12
<PAGE>   45
                     XPEDIOR INCORPORATED AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Deferred tax assets and liabilities were comprised of the following (in
thousands):

<TABLE>
<CAPTION>
                                                                DECEMBER 31,
                                                              ----------------
                                                               1998     1999
                                                              ------   -------
<S>                                                           <C>      <C>
Deferred tax assets:
  Accrued vacation..........................................  $  486   $   733
  Deferred compensation.....................................     263       135
  Bad debt..................................................     190       549
  Other.....................................................     394       185
                                                              ------   -------
          Total deferred tax assets.........................   1,333     1,602
                                                              ------   -------
Deferred tax liabilities:
  Goodwill..................................................     442     1,258
  Excess financial over tax basis of acquisitions...........     958        --
  Other.....................................................     608     1,437
                                                              ------   -------
          Total deferred tax liabilities....................   2,008     2,695
                                                              ------   -------
          Net deferred tax liability........................  $ (675)  $(1,093)
                                                              ======   =======
</TABLE>

7. COMMITMENTS AND CONTINGENCIES

     The Company leases various office space and equipment under noncancelable
operating leases expiring through 2006. Rent expense was $194,991 for the period
from inception (March 27, 1997) through December 31, 1997, $1,370,404 for the
year ended December 31, 1998 and $3,865,056 for the year ended December 31,
1999. The related future minimum lease payments as of December 31, 1999 are as
follows (in thousands):

<TABLE>
<S>                                                       <C>
YEAR ENDING:
2000....................................................    4,721,066
2001....................................................    4,741,326
2002....................................................    4,495,350
2003....................................................    3,946,570
2004....................................................    3,207,327
Thereafter..............................................    2,756,676
                                                          -----------
                                                          $23,868,315
                                                          ===========
</TABLE>

     Certain of the Company's executives are covered by employment agreements
covering, among other things, base compensation, incentive-bonus determinations
and payments in the event of termination or a change in control of the Company.

     Under terms of certain acquisitions, Metamor is required to make additional
payments to sellers generally to the extent future earnings, as defined, exceed
certain stipulated levels. These obligations have been transferred by Metamor to
Xpedior in connection with the contribution of those acquired companies to
Xpedior. The provisions of these contingent payments (Earnouts) are described in
Note 3.

     Xpedior has agreed to provide its president and CEO the benefits under a
non-competition agreement between him and a former employer, in the event the
former employer ceases to make the payments. Under this agreement, the CEO is
entitled to monthly payments aggregating $255,000 per year through November
2002, thereafter reduced to $165,000 per year until his death. The CEO is also
entitled to receive benefits under the former employer's benefit plan and
through November 2002, reimbursement for medical premiums and payment of
premiums for a life insurance policy.

                                      F-13
<PAGE>   46
                     XPEDIOR INCORPORATED AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     In September 1999, the former employer terminated all of the benefits owed
to the executive, including those which Xpedior has agreed to undertake. Xpedior
believes that the agreement has not been breached by its president and CEO and
that the former employer is obligated to make the required payments. Although
Xpedior plans to pursue this matter vigorously and believes that it has strong
legal defenses, there can be no assurance as to the outcome of this matter.

     Metamor and NDC filed suit in May 1999 against some former officers and
shareholders of NDC and other parties for several causes of action, including
breaches of fiduciary duties and numerous covenants and agreements. Metamor and
NDC are seeking monetary and injunctive relief against the defendants. Some of
the defendants have filed Cross-Bills alleging breach of employment and other
agreements and duties of good faith and fair dealings and other tort claims
against NDC, Metamor and Xpedior. Additionally, some of these same defendants
have filed similar claims in the United States District Court for the Eastern
District of Virginia. The defendants that filed the Cross-Bills and the
complaint in District Court are seeking indeterminable damages.

     A trial of these actions is currently anticipated to begin in June 2000.
Management believes that Xpedior, NDC and Metamor have strong cases in these
matters and strong defenses against each of the complaints. However, NDC and
Metamor may not prevail in this litigation because litigation is subject to
inherent uncertainties.

     On December 7, 1999, Expedia, Inc., a subsidiary of Microsoft Corporation,
filed a trademark infringement lawsuit against us in the United States District
Court for the Central District of California. The lawsuit alleges that our use
of the Xpedior trademark infringes on the Expedia trademark. The suit also
alleges that uses of the Xpedior mark are likely to cause confusion and dilution
of the marks held by Expedia. The lawsuit further alleges that Xpedior engaged
in unfair competition and unlawful or unfair business practices in violation of
the California Business and Professions Code.

     We do not believe that Expedia's claims have merit, however, we are in
discussions with Expedia to explore the possibility of a mutually amicable
solution to this lawsuit. However, since the lawsuit was recently filed, we are
not presently able to estimate the likelihood of an adverse result or the range
of possible loss relating to this matter.

     Both Metamor and the Company are defendants in various other lawsuits and
claims arising in the normal course of business. Management believes it has
valid defenses in these cases and is defending them vigorously. While the
results of litigation cannot be predicted with certainty, management believes
the final outcome of such litigation will not have a material effect on the
financial position or results of operations of the Company.

     Metamor's senior credit agreement is secured by a pledge of the common
stock of its material subsidiaries, including Xpedior, which is considered a
material subsidiary. Shares of Xpedior not held by Metamor, including those to
be sold to the public or issued under Xpedior's incentive programs, are not
subject to the pledge. Metamor's senior credit agreement contains covenants,
which among other things, limit total indebtedness of Metamor to 4.5 times
earnings before interest, taxes, depreciation and amortization, limit the
payment of dividends and require the maintenance of certain financial ratios. As
of December 31, 1999, Metamor was in compliance with the terms of this
agreement.

                                      F-14
<PAGE>   47
                     XPEDIOR INCORPORATED AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. SUPPLEMENTAL CASH FLOW INFORMATION

     The Acquired Companies comprising Xpedior were all acquired by Metamor in
all cash transactions, except for NDC in which Metamor issued a combination of
cash and its common stock (see note 3). In pushing down the effects of these
acquisitions to Xpedior, Metamor made a capital contribution to Xpedior for a
portion of the purchase consideration and Xpedior issued notes to Metamor for
the remainder (see note 4). Metamor also paid the cash portion of the purchase
consideration for Kinderhook (see note 3) and contributed an equal amount to the
capital of Xpedior. These non-cash transactions of Xpedior are summarized below
(in thousands):

<TABLE>
<CAPTION>
                                                      PERIOD FROM
                                                       INCEPTION          YEAR ENDED
                                                    (MARCH 27, 1997)     DECEMBER 31,
                                                    TO DECEMBER 31,    -----------------
                                                          1997          1998      1999
                                                    ----------------   -------   -------
<S>                                                 <C>                <C>       <C>
Consideration (including Earnouts) paid by Metamor
  for the acquired companies:
  Cash............................................      $16,000        $61,691   $48,138
  Fair value of stock issued......................           --         13,896     1,639
                                                        -------        -------   -------
          Total...................................      $16,000        $75,587   $49,777
                                                        =======        =======   =======
Capitalization of Xpedior with respect to purchase
  of acquired companies:
  Capital contributions by Metamor................      $ 2,667        $12,999   $21,874
  Notes issued to Metamor(1)......................       13,333         62,588    27,903
                                                        -------        -------   -------
          Total...................................      $16,000        $75,587   $49,777
                                                        =======        =======   =======
</TABLE>

---------------

(1) Effective July 31, 1999, Metamor contributed to the capital of Xpedior $17.0
    million of the amounts due Metamor by Xpedior. This contribution is not
    reflected in these amounts.

9. LOSS PER SHARE

     The following table sets forth the computation of basis and diluted loss
per share from continuing operations:

<TABLE>
<CAPTION>
                                                      PERIOD FROM
                                                       INCEPTION             YEAR ENDED
                                                    (MARCH 27, 1997)        DECEMBER 31,
                                                    TO DECEMBER 31,      -------------------
                                                          1997             1998       1999
                                                  --------------------   --------   --------
                                                   (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                               <C>                    <C>        <C>
Numerator:
  Loss from continuing operations -- numerator
     for basic and diluted earnings per share...        $(1,498)         $  (581)   $(9,993)
                                                        =======          =======    =======
Denominator:
  Denominator for basic and diluted loss per
     share -- weighted-average shares...........         41,285           41,285     41,697
                                                        =======          =======    =======
Basic and diluted loss per share................        $ (0.04)         $ (0.01)   $ (0.24)
                                                        =======          =======    =======
</TABLE>

     The convertible notes and the 10,084,000 options to purchase common stock
outstanding were not included in the computation of diluted earnings per share
as the effect would be antidilutive.

     During the periods presented, the Company had no nominal issuances.

                                      F-15
<PAGE>   48
                     XPEDIOR INCORPORATED AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. STOCK PLANS

  Stock Incentive Plan

     The Company's Stock Incentive Plan (the "Plan") provides for the issuance
of stock options, stock appreciation rights and restricted stock. All full time
employees and directors of the Company or its affiliates are eligible to
participate. An aggregate of 15.0 million shares of common stock has been
reserved for issuance under the Plan. Generally, options granted have ten-year
terms and vest over three years. Stock options issued under the Plan can be
either incentive stock options or non-qualified stock options. The exercise
price of an incentive stock option will not be less than the fair market value
of the common stock on the date the option is granted.

     The Company applies APB 25 in accounting for the Plan. Compensation expense
has been recognized for options granted under its stock option plan that were
granted at prices below the fair value of the Company's common stock at the date
of issuance. This difference results in a compensation charge of $20.8 million,
which is being recognized over the vesting period. A compensation charge of $2.2
million was recognized during the year ended December 31, 1999.

     Pro forma information in accordance with Statement of Financial Accounting
Standards No. 123, Accounting for Stock-Based Compensation ("FAS 123") regarding
net income and earnings per common shares is set forth in the table below as if
the Company had accounted for its employee stock options under the fair value
method. The fair value of these options was estimated at the date of grant using
a Black-Scholes option pricing ("Black-Scholes") model with the following
weighted average assumptions for the year ended December 31, 1999: (i) risk-free
interest rate of 6.0%, (ii) a dividend yield of 0.0%, (iii) volatility factors
of the expected market price of the Company's common stock of 1.15 and (iv) an
expected life of three years.

     The Black-Scholes model was developed for use in estimating the fair value
of traded options that have no vesting restrictions and are fully transferable.
In addition, option valuation models require the input of highly subjective
assumptions, including expected volatility. Because the Company's employee stock
options have characteristics significantly different from those of traded
options and because changes in the subjective input assumptions can materially
affect the fair value estimate, in management's opinion, the existing models do
not necessarily provide a reliable single measure of the fair value of its
employee stock options.

     For purposes of pro forma disclosure, the estimated fair value of the
options is amortized to expense over the vesting period of the stock options.
Had compensation for the Company's stock-based compensation plan been determined
based on the fair value, as described above, at the grant dates for awards under
the Plan, the Company's net loss and loss per common share would have been
adjusted to the pro forma amounts indicated below.

<TABLE>
<CAPTION>
                                                                     YEAR ENDED
                                                                  DECEMBER 31, 1999
                                                              -------------------------
                                                              AS REPORTED    PRO FORMA
                                                              ------------   ----------
                                                                   (IN THOUSANDS,
                                                              EXCEPT PER SHARE AMOUNTS)
<S>                                                           <C>            <C>
Loss from continuing operations.............................    $(9,933)      $(11,664)
Net loss....................................................    $(8,388)      $(10,119)
Loss per share:
  Basic and diluted
     Loss from continuing operations........................    $ (0.24)      $  (0.28)
          Net loss..........................................    $ (0.20)      $  (0.24)
</TABLE>

                                      F-16
<PAGE>   49
                     XPEDIOR INCORPORATED AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     A summary of the Company's stock option for the year ended December 31,
1999 follows (in thousands):

<TABLE>
<CAPTION>
                                                               OPTIONS
                                                               -------
<S>                                                            <C>
Outstanding -- beginning of period..........................       --
  Granted...................................................   10,633
  Exercised.................................................       --
  Forfeited.................................................     (549)
                                                               ------
Outstanding -- end of period................................   10,084
                                                               ======
Options exercisable at end of period........................       --
</TABLE>

     The weighted average fair value of options granted during 1999 was 7.53.

     The following summarizes information about stock options outstanding as of
December 31, 1999:

<TABLE>
<CAPTION>
                                                 WEIGHTED
                                                 AVERAGE                          WEIGHTED
                                                REMAINING                         AVERAGE
RANGE OF EXERCISE PRICE                      CONTRACTUAL LIFE     SHARES       EXERCISE PRICE
-----------------------                      ----------------   ----------     --------------
<S>                                          <C>                <C>            <C>
$6.91 to $10.71...........................         9.63          8,745,200         $ 7.35
$11.35 to$16.00...........................         9.90          1,324,900         $13.36
$27.88 to $32.06..........................         9.99             13,900         $31.28
                                                   ----         ----------         ------
          Totals..........................         9.67         10,084,000         $ 8.18
</TABLE>

     In September 1999, the Company issued 50,000 shares of restricted stock to
its president and CEO, which are subject to forfeiture upon termination. The
Company has recorded as deferred compensation $0.6 million which is being
amortized over the 48-month vesting period.

     The Company also sold 129,702 shares of restricted stock to the executive
for $7.71 per share. Under terms of an employment agreement, the Company was
required to repurchase the stock in the event the Company did not complete its
initial public offering. The repurchase price equaled the price paid for the
stock by the executive plus $120,000. This arrangement was accounted for as a
variable compensation plan through the date of the Company's IPO, and
compensation expense was recognized for the difference between the IPO price of
$19 and the carrying amount. Compensation expense of $1.5 million was recognized
on this arrangement during 1999.

11. FAIR VALUE OF FINANCIAL INSTRUMENTS

     The Company has determined, based on available market information and
appropriate valuation methodologies, that the fair value of its financial
instruments approximates carrying value. The carrying value of accounts
receivable and accounts payable approximate fair value due to the short-term
maturity of the instruments. The carrying value of the amounts due to Parent
approximates fair value because the interest rates under the agreement are
variable, based on current market.

12. SEGMENT REPORTING

     The Company operates in one reportable segment and its foreign-based
revenues and assets represented less than 10 percent of the Company's
consolidated revenues and assets.

                                      F-17
<PAGE>   50
                     XPEDIOR INCORPORATED AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

13. CREDIT RISK

     The Company believes its portfolio of accounts receivable is well
diversified and, as a result, its credit risks are minimal. The Company
continually evaluates the creditworthiness of its customers and monitors
accounts on a periodic basis, but typically does not require collateral.

SUBSEQUENT EVENTS (UNAUDITED)

     On March 21, 2000, Metamor entered into an Agreement and Plan of Merger
with PSINet Inc. ("PSINet"), a Herndon, Virginia based provider of Internet and
eCommerce solutions to businesses, and PSINet Shelf IV Inc. Pursuant to the
agreement, each share of Metamor common stock will be exchanged for 0.9 of a
share of PSINet common stock upon closing of the merger. Completion of the
transaction is subject to a number of conditions, including approval of PSINet
and Metamor stockholders and certain regulatory approvals. The transaction is
expected to be completed by mid-2000.

     In connection with the agreement, PSINet plans to invest $50 million in
Xpedior convertible preferred stock that will have an initial conversion rate of
$37.50 per share. The Company plans to use the proceeds to accelerate its
organic growth and to make strategic acquisitions.

     On January 24, 2000, the Company acquired NewTHINK, a provider of eBusiness
strategic planning tools and services, in a purchase transaction valued at $3.0
million.

                                      F-18
<PAGE>   51

                         REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholders
Xpedior Incorporated

     We have audited the accompanying statements of operations, stockholders'
equity, and cash flows of Metamor Technologies, Ltd. (the "Company"), for the
period from January 1, 1997 to March 26, 1997. These statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

     We conducted our audit 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 audit provides a reasonable basis
for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects the results of operations and cash flows of Metamor
Technologies, Ltd. for the period from January 1, 1997 to March 26, 1997, in
conformity with accounting principles generally accepted in the United States.

                                                     ERNST & YOUNG LLP

Houston, Texas
July 3, 1999
except for Note 1
as to which the date is August 31, 1999

                                      F-19
<PAGE>   52

                           METAMOR TECHNOLOGIES, LTD.

                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                PERIOD FROM
                                                              JANUARY 1, 1997
                                                                    TO
                                                              MARCH 26, 1997
                                                              ---------------
<S>                                                           <C>
Revenues....................................................    $ 2,578,176
Cost of services............................................      1,852,803
                                                                -----------
Gross profit................................................        725,373
Operating expenses:
  Selling, general, and administrative......................        404,150
  Depreciation and amortization.............................        104,695
  Stock compensation........................................      6,328,504
                                                                -----------
                                                                  6,837,349
                                                                -----------
Loss from operations........................................     (6,111,976)
Other expense (income):
  Other expense.............................................          1,591
  Interest expense..........................................          6,179
  Interest income...........................................         (1,003)
                                                                -----------
          Total other expense...............................          6,767
                                                                -----------
Loss from continuing operations before taxes................     (6,118,743)
Provision for state replacement tax.........................          7,501
                                                                -----------
Loss from continuing operations.............................     (6,126,244)
Loss from discontinued operations...........................     (1,587,447)
                                                                -----------
          Net loss..........................................    $(7,713,691)
                                                                ===========
</TABLE>

                            See accompanying notes.

                                      F-20
<PAGE>   53

                           METAMOR TECHNOLOGIES, LTD.

                       STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                        RETAINED
                                                         ADDITIONAL     EARNINGS
                                                COMMON    PAID-IN     (ACCUMULATED
                                                STOCK     CAPITAL       DEFICIT)        TOTAL
                                                ------   ----------   ------------   -----------
<S>                                             <C>      <C>          <C>            <C>
Balance at December 31, 1996..................  $1,000   $       --   $ 2,397,767    $ 2,398,767
  Conversion of phantom stock and buy-out of
     stock options............................     --     8,467,913            --      8,467,913
  Net loss....................................     --            --    (7,713,691)    (7,713,691)
  Distributions...............................     --            --       (87,500)       (87,500)
                                                ------   ----------   -----------    -----------
Balance at March 26, 1997.....................  $1,000   $8,467,913   $(5,403,424)   $ 3,065,489
                                                ======   ==========   ===========    ===========
</TABLE>

                            See accompanying notes.

                                      F-21
<PAGE>   54

                           METAMOR TECHNOLOGIES, LTD.

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                 PERIOD FROM
                                                               JANUARY 1, 1997
                                                                      TO
                                                                MARCH 26, 1997
                                                              ------------------
<S>                                                           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss..................................................     $(7,713,691)
  Adjustments to reconcile net loss to net cash provided by
     operating activities
     Depreciation and amortization..........................         104,695
     Stock compensation.....................................       8,467,913
     Changes in assets and liabilities:
       Accounts receivable..................................      (1,897,786)
       Unbilled receivables.................................        (183,668)
       Prepaid expenses and other receivables...............         (58,659)
       Other assets.........................................           6,705
       Accounts payable and accrued expenses................       1,577,185
       Deferred revenue.....................................         (13,484)
       Deferred compensation and other......................        (192,169)
                                                                 -----------
          Net cash provided by operating activities.........          97,041
CASH FLOWS FROM INVESTING ACTIVITIES:
  Equipment and leasehold additions.........................        (501,401)
          Net cash used in investing activities.............        (501,401)
                                                                 -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net proceeds from line of credit..........................         250,000
  Distributions to shareholder..............................         (87,500)
                                                                 -----------
Net cash provided by financing activities...................         162,500
                                                                 -----------
Net decrease in cash and cash equivalents...................        (241,860)
Cash and cash equivalents at beginning of period............         244,520
                                                                 -----------
Cash and cash equivalents at end of period..................     $     2,660
                                                                 ===========
Supplemental disclosures of cash flow information:
  Interest paid.............................................     $     6,179
                                                                 ===========
  Income taxes paid.........................................     $        --
                                                                 ===========
</TABLE>

                            See accompanying notes.

                                      F-22
<PAGE>   55

                           METAMOR TECHNOLOGIES, LTD.

                         NOTES TO FINANCIAL STATEMENTS
                                 MARCH 26, 1997

1. BASIS OF PRESENTATION

     Metamor Technologies, Ltd. (the "Company") is the predecessor company of
Xpedior Incorporated ("Xpedior"). Effective October 31, 1999, the Company
distributed to Metamor Worldwide, Inc. ("Metamor"), the Parent of Xpedior, Inc.,
a non-eBusiness outsourcing services segment. Accordingly, the accompanying
financial statements reflect this segment as discontinued operations. Revenues
from discontinued operations were approximately $3.6 million for the period from
January 1, 1997 to March 26, 1997. Net assets of the discontinued operations
consist primarily of accounts receivable, fixed assets and liabilities.

2. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

  Business

     The Company, is an Illinois-based provider of eBusiness consulting
services. The Company was acquired by Metamor (the "Acquisition") on March 27,
1997 (see Note 12).

  Use of Estimates

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

  Revenue Recognition

     The Company's revenues are predominantly generated from contracts for
consulting services. The Company recognizes revenue on time and materials
contracts as the services are performed for clients. Revenues on major
fixed-price contracts are recognized using the percentage-of-completion method.

  Cash and Cash Equivalents

     For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents.

  Income Taxes

     The Company's shareholders have elected to be taxed as a small business
corporation under the provisions of Subchapter S of the Internal Revenue Code.
Accordingly, federal income tax is the responsibility of the individual
shareholder, and no provision for federal income tax is shown in the
accompanying financial statements.

     State replacement tax is the responsibility of the Company, and provision
for those taxes is shown in the financial statements. The Company has elected to
report its income for tax purposes on a cash basis. As a result, certain income
and expense items are accounted for in different periods for income tax
reporting purposes than for financial reporting purposes.

  Distributions

     Distributions represent cash distributions to shareholders primarily for
income taxes.

                                      F-23
<PAGE>   56
                           METAMOR TECHNOLOGIES, LTD.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  Stock Options

     The Company follows Accounting Principles Board Opinion No. 25 Accounting
for Stock Issued to Employees ("APB 25"), and related interpretations in
accounting for its employee stock options plan.

3. EQUIPMENT AND LEASEHOLD IMPROVEMENTS

     Property and equipment are recorded at cost. Depreciation is provided
utilizing accelerated methods over the estimated useful lives of five and seven
years. Leasehold improvements are amortized on a straight-line basis over the
terms of the lease, and computer software is amortized on a straight-line basis
over a three-year period.

4. OPERATING LEASES

     The Company conducts operations in leased office facilities in Chicago,
Illinois. The leases expire at various dates through 2005. Rental expense from
continuing operations, inclusive of real estate taxes and operating expenses
under these leases for the period from January 1, 1997 to March 26, 1997, net of
reimbursement from subleased space, was approximately $7,000. The sublease
expired on March 30, 1997.

     The leases for office space in Chicago, Illinois, include rent abatements
and scheduled base rent increases over the term of the leases. The total amount
of the base rent payments is being charged to expense on the straight-line
method over the term of the leases. The Company has recorded as accrued rent the
excess of rent expense over cash payments since inception of the leases.

     As of March 26, 1997, approximate future minimum cash lease payments for
each succeeding fiscal year under the leases are as follows:

<TABLE>
<S>                                                        <C>
1997.....................................................  $  311,499
1998.....................................................     415,332
1999.....................................................     415,332
2000.....................................................     415,332
2001.....................................................     415,332
Thereafter...............................................   1,557,495
                                                           ----------
          Total future minimum lease payments............  $3,530,322
                                                           ==========
</TABLE>

     The Company leases certain property and equipment under agreements which
are classified as operating leases. Rent expense from continuing operations
incurred under these leases was approximately $39,000 for the period from
January 1, 1997 to March 26, 1997. As of March 26, 1997, approximate future
minimum lease payments under operating leases are as follows:

<TABLE>
<S>                                                         <C>
1997......................................................  $ 90,226
1998......................................................   111,410
1999......................................................    34,296
2000......................................................    31,362
2001......................................................     7,596
                                                            --------
          Total future minimum lease payment..............  $274,890
                                                            ========
</TABLE>

                                      F-24
<PAGE>   57
                           METAMOR TECHNOLOGIES, LTD.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. NOTES PAYABLE

     The Company has a line of credit with a bank, whereby it may borrow up to
$800,000. Borrowings under this agreement bear interest at the bank's prime rate
and expired on April 30, 1997. There were borrowings under this agreement at
March 26, 1997 in the amount of $750,000 with an interest rate of 8.25%.

6. EMPLOYEE BENEFIT PLAN

     The Company has a profit-sharing plan and trust pursuant to the Internal
Revenue Code of 1986 which covers all eligible employees. The plan includes an
employee savings plan with employer participation in accordance with the
provisions of Section 401(k) of the Internal Revenue Code. The plan allows
participants to make pretax contributions with the Company matching a certain
percentage of employee contributions. In addition, the Company, at its
discretion, may make additional contributions. The contribution for the period
from January 1, 1997 to March 26, 1997, which included only matching
contributions, amounts to approximately $4,800.

7. PHANTOM STOCK PURCHASE PLAN

     The Company has a Phantom Stock Purchase Plan to provide deferred
compensation for the benefit of certain employees. The plan is designed to
provide the participants the limited right to participate in future capital
appreciation, profits, and dividends. Under this plan, units corresponding to
shares of stock are credited to a participant's account. The value of these
shares is to be measured by the increase in book value of the shares of the
Company's stock between the respective assignment dates and the date of such
retirement, death, or disability. Plan contributions will only be made if the
Plan is terminated in connection with a merger, consolidation, reorganization of
the Company into or with another company or affiliate, sale of substantially all
of the Company's assets, or a public stock offering of the Company's stock.

     As part of the Acquisition, all of the phantom stock was converted to
common stock. The primary shareholder of the Company provided common shares for
the total 525,000 phantom shares to convert into 525,000 common shares on March
26, 1997 and, therefore, shares outstanding did not change. The Company recorded
a compensation charge of $6,800,663, of which $1,373,865 was included in
discontinued operations due to the conversion based on the Acquisition price per
share.

8. COMMITMENTS AND CONTINGENCIES

     At March 26, 1997, the Company had an outstanding standby letter of credit
for $490,000 to guarantee payment of certain leases.

9. MAJOR CUSTOMER INFORMATION

     Sales to two major customers for the period from January 1, 1997 to March
26, 1997 accounted for approximately 80% of total sales from continuing
operations. The accounts receivable balance for the above major customers was
approximately $2,350,000 at March 26, 1997.

10. COMMON STOCK OPTIONS

     The Company adopted incentive and non-qualified stock option plans for
employees effective as of July 1, 1996. The incentive stock option plan is
intended to qualify under Section 422 of the Internal Revenue Code. Under the
terms of the plan, options to purchase common stock are granted at not less than
the estimated fair value at the date of the grant and are exercisable during
specific future periods. These options may not be exercised in whole or in part
until the Company has registered its common stock for sale to the public,
therefore, the incentive stock plan is a variable plan.

                                      F-25
<PAGE>   58
                           METAMOR TECHNOLOGIES, LTD.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     As part of the Acquisition the Company bought out the stock options for
$14.08 per stock option which represented a substantial change to the plan and
triggered a compensation charge. The Company recorded a one-time compensation
charge of $1,667,250, of which $765,544 was included in discontinued operations
as a result of this transaction.

     The following is a summary of stock option activity:

<TABLE>
<CAPTION>
                                                                           WEIGHTED
                                                               SHARES      AVERAGE
                                                               UNDER     OPTION PRICE
                                                               OPTION     PER SHARE
                                                              --------   ------------
<S>                                                           <C>        <C>
Outstanding at December 31, 1996............................    88,000      $10.80
  Options granted...........................................    23,489       12.00
  Options canceled..........................................    (6,115)      10.80
  Options bought out by the Company as part of
     Acquisition............................................  (105,374)      10.86
                                                              --------      ------
Outstanding at March 26, 1997...............................        --      $   --
                                                              ========      ======
</TABLE>

     At March 26, 1997, no options were outstanding and all stock-based
compensation related to options that were cashed out has been recorded in the
amounts reported. Assuming the Company had used the alternative fair value
method of accounting for stock-based compensation under Statement of Financial
Accounting Standards No. 123, Accounting for Stock-Based Compensation, net
income would not have been affected.

11. SUBSEQUENT EVENT

     Effective March 27, 1997, the Company was acquired by Metamor in exchange
for approximately $16.0 million in cash. In connection with the merger, all
phantom stock was converted into common shares and the Company bought out and
canceled all stock options. As of June 1999, the previous stockholders of the
Company have received an additional $21.0 million of contingent consideration
based on earnings before interest and taxes, as defined in the merger agreement.
There is no additional contingent consideration due to the sellers.

                                      F-26
<PAGE>   59
                           METAMOR TECHNOLOGIES, LTD.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

                                   SIGNATURES

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

                                            XPEDIOR INCORPORATED

                                            By:    /s/ DAVID N. CAMPBELL
                                              ----------------------------------
                                                      David N. Campbell
                                                President and Chief Executive
                                                            Officer
                                                        March 27, 2000

     The undersigned directors and officers of Xpedior Incorporated hereby
constitute and appoint David N. Campbell, J. Brian Farrar and Caesar J. Belbel,
and each of them, with full power to act without the other and with full power
of substitution and resubstitution, our true and lawful attorneys-in-fact and
agents, for him and in his name, place and stead, in any and all capacities, to
sign on his behalf any and all amendments to this Annual Report, and to file the
same, with all exhibits thereto and other documents in connection therewith,
with the Commission granting unto said attorney-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises as fully as to all
intents and purposes as he or she might or could do in person, and hereby ratify
and confirm that all such attorneys-in-fact or agents, or any of them, or their
substitutes shall lawfully do or cause to be done by virtue hereof.

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
Annual Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
                      SIGNATURE                                      TITLE                        DATE
                      ---------                                      -----                        ----
<C>                                                    <S>                                  <C>

                /s/ DAVID N. CAMPBELL                  President and Chief Executive         March 27, 2000
-----------------------------------------------------    Officer (Principal Executive
                  David N. Campbell                      Officer)

               /s/ STEVEN M. ISAACSON                  (Principal Financial and              March 27, 2000
-----------------------------------------------------    Accounting Officer)
                 Steven M. Isaacson

               /s/ JAMES W. CROWNOVER                  Chairman of the Board                 March 27, 2000
-----------------------------------------------------
                 James W. Crownover

                /s/ PETER T. DAMERIS                   Director                              March 27, 2000
-----------------------------------------------------
                  Peter T. Dameris

                  /s/ EUGENE ROONEY                    Director                              March 27, 2000
-----------------------------------------------------
                    Eugene Rooney
</TABLE>

                                      F-27
<PAGE>   60
                           METAMOR TECHNOLOGIES, LTD.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
                      SIGNATURE                                      TITLE                        DATE
                      ---------                                      -----                        ----
<C>                                                    <S>                                  <C>

                 /s/ J. BRIAN FARRAR                   Director                              March 27, 2000
-----------------------------------------------------
                   J. Brian Farrar

                /s/ ROBERT K. HATCHER                  Director                              March 27, 2000
-----------------------------------------------------
                  Robert K. Hatcher

                 /s/ MARC J. SHAPIRO                   Director                              March 27, 2000
-----------------------------------------------------
                   Marc J. Shapiro

                /s/ JOHN M. WHITESIDE                  Director                              March 27, 2000
-----------------------------------------------------
                  John M. Whiteside
</TABLE>

                                      F-28
<PAGE>   61

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                                  DESCRIPTION
        -------                                  -----------
<C>                      <S>
          2.1*           -- Merger Agreement dated as of March 26, 1997 by and among
                            Irvin M. Shapiro, the Irvin M. Shapiro Children's Trust,
                            Metamor Technologies, Ltd. and CORESTAFF, Inc. and
                            CORESTAFF Acquisition Sub #9, Inc. (Form S-1, Reg. No.
                            333-89239)
          2.2*           -- Agreement and Plan of Merger dated as of December 23,
                            1997 by and among CORESTAFF, Inc., CORESTAFF Acquisition
                            Sub #12, Inc., Sage I.T. Partners, Inc. and the
                            Shareholders of Sage I.T. Partners, Inc. (Form S-1, Reg.
                            No. 333-89239)
          2.3*           -- Stock Purchase Agreement dated as of December 31, 1997 by
                            and among CORESTAFF, Inc., Workgroup Productivity
                            Corporation, and the Shareholders of Workgroup
                            Productivity Corporation (Form S-1, Reg. No. 333-89239)
          2.4*           -- Agreement and Plan of Merger dated as of April 16, 1998
                            by and among Metamor Worldwide, Inc., CORESTAFF
                            Acquisition Sub #13, Inc., NDC Group, Inc. and the
                            Stockholders of NDC Group, Inc. (Form S-1, Reg. No.
                            333-89239)
          2.5*           -- Stock Purchase Agreement dated as of June 17, 1998 by and
                            among Metamor Worldwide, Inc., Informix Corporation and
                            the Sellers (Form S-1, Reg. No. 333-89239)
          2.6*           -- Stock Purchase Agreement dated as of July 16, 1998 by and
                            among Metamor Worldwide, Inc., Advanced Information
                            Solutions, Inc. and the Sellers (Form S-1, Reg. No.
                            333-89239)
          2.7*           -- Asset Purchase Agreement dated as of November 12, 1998 by
                            and among Metamor Worldwide, Inc., Metamor Technologies,
                            Ltd., New Technology Partners, Inc. and the Shareholders
                            of New Technology Partners, Inc. (Form S-1, Reg. No.
                            333-89239)
          2.8*           -- Stock Purchase Agreement dated as of September 17, 1999
                            by and among Xpedior Incorporated, Kinderhook Systems,
                            Inc. and the Sellers (Form S-1, Reg. No. 333-89239)
          3.1*           -- Form of Amended and Restated Certificate of Incorporation
                            (Form S-1, Reg. No. 333-89239)
          3.2            -- Amended and Restated Bylaws
          4.1*           -- Form of Common Stock Certificate (Form S-1, Reg. No.
                            333-89239)
         10.1*           -- Employment Agreement between Xpedior Incorporated and
                            David N. Campbell (Form S-1, Reg. No. 333-89239)
         10.2*           -- Employment Agreement between Xpedior Incorporated and J.
                            Brian Farrar (Form S-1, Reg. No. 333-89239)
         10.3*           -- Form of Indemnification Agreement (Form S-1, Reg. No.
                            333-89239)
         10.4*           -- Form of Registration Rights Agreement (Form S-1, Reg. No.
                            333-89239)
         10.5*           -- Form of Services Agreement (Form S-1, Reg. No. 333-89239)
         10.6*           -- Subsidiaries of the Company (Form S-1, Reg. No.
                            333-89239)
         24.1            -- Power of Attorney (included on the signature page of this
                            registration statement) (Form S-1, Reg. No. 333-89239)
         27.1            -- Financial Data Schedule
</TABLE>

---------------

 *  Incorporated by reference