TYLER TECHNOLOGIES INC, 10-K405, 2000-04-07

TYLER TECHNOLOGIES INC
10-K405, 2000-04-07
STEEL WORKS, BLAST FURNACES & ROLLING & FINISHING MILLS

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

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Commission File Number 1-10485

TYLER TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)

DELAWARE 75-2303920
(State or other jurisdiction (I.R.S. employer
of incorporation or identification no.)
organization)

2800 W. MOCKINGBIRD LANE 75235
DALLAS, TEXAS (Zip code)
(Address of principal
executive offices)

Registrant's telephone number, including area code: (214) 902-5086

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

Name of each exchange
Title of each class on which registered
------------------- -------------------

COMMON STOCK, $0.01 PAR VALUE NEW YORK STOCK EXCHANGE

Securities registered pursuant to Section 12(g) of the Act:
NONE

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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 THE FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. YES X NO
--- ---

THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES OF
THE REGISTRANT ON MARCH 30, 2000 WAS $182,863,000.

THE NUMBER OF SHARES OF COMMON STOCK OF THE REGISTRANT OUTSTANDING ON MARCH
30, 2000 WAS 43,290,687.

DOCUMENTS INCORPORATED BY REFERENCE

CERTAIN INFORMATION REQUIRED BY PART III OF THIS ANNUAL REPORT IS
INCORPORATED BY REFERENCE FROM THE REGISTRANT'S DEFINITIVE PROXY STATEMENT FOR
ITS ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 28, 2000.

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TYLER TECHNOLOGIES, INC.
FORM 10-K
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
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PART I

<S> <C> <C>
Item 1. Business......................................................................................... 1

Item 2. Properties....................................................................................... 12

Item 3. Legal Proceedings................................................................................ 12

Item 4. Submission of Matters to a Vote of Security Holders.............................................. 14

PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters............................ 15

Item 6. Selected Financial Data.......................................................................... 16

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations............ 18

Item 7A. Quantitative and Qualitative Disclosures About Market Risk....................................... 32

Item 8. Financial Statements and Supplementary Data...................................................... 32

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure............. 32

PART III

Item 10. Directors and Executive Officers of the Registrant............................................... 33

Item 11. Executive Compensation........................................................................... 33

Item 12. Security Ownership of Certain Beneficial Owners and Management................................... 33

Item 13. Certain Relationships and Related Transactions................................................... 33

PART IV

Item 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K................................... 34

Signatures................................................................................................ 37
</TABLE>

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PART I

ITEM 1. BUSINESS.

GENERAL

Tyler Technologies, Inc. ("Tyler" or the "Company") is a premier provider
of technology, software, data warehousing, web hosting services, electronic
document management systems, information management outsourcing services, title
plant and property record database information, and real estate appraisal
services for local governments. Tyler's objective is to become the premier
provider of end-to-end e-government solutions. Tyler's e-government products and
services add content to a local government's e-portal offering by seamlessly
integrating its suite of e-commerce products to back office systems. Our
strategy is to rapidly grow the e-government segment of our business by
leveraging our nationally installed client base, our strong long-term
partnerships with local governments, and our expertise and experience in the
marketplace with solutions and offerings in the areas of:

o Nationwide branded application solutions

o Improved state-of-the-art technologies

o Internet accessibility for the public

o Electronic commerce solutions

o Application service provider ("ASP") hosting and data center services

o Outsourcing capabilities

o Public records information portal

In mid 1997, Tyler embarked on a multi-phase strategy and growth plan
focused on the specialized information management needs of local government.
Since that time, Tyler has experienced significant growth both internally and as
a result of a number of strategic acquisitions.

By the close of 1999, Tyler had established itself as a leading provider of
information management solutions in the local government marketplace - with a
huge breadth of products spanning virtually every area of city and county
government operations from law enforcements, to courts, financial systems,
appraisal and taxation, records management, and utility billing. Tyler's
installed base expanded to over 5,000 local government offices in 49 states and
Puerto Rico and Canada. Tyler has deployed Internet accessible solutions for
real-time public access via the Internet to a variety of public information,
including:

o Criminal and civil court records

o Jail booking and release information

o Bond and bondsmen information

o Court calendars and dockets

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o Property appraisal information

o Tax billing and collection information

o Utility billing records and history

In addition, Tyler has under development for deployment in 2000 a series of
e-commerce / e-government solutions for accepting Internet payments for the
following:

o Traffic and parking tickets

o Utility bill payments

o Current and delinquent tax payments

With Tyler's proprietary information management systems already processing
tickets for over 500 courts, generating utility bills in over 1,300
municipalities, and collecting taxes for several thousand taxing jurisdictions,
Tyler is well positioned to capture a large share of the millions of payment
transactions per month which occur in these local government agencies.
Additionally, Tyler's control of the back office automation systems allows its
Internet based e-government solutions to seamlessly post and update back office
systems in real-time.

In addition, Tyler has launched its national data portal - NationsData.com.
Tyler currently has tax data on over 65 million parcels of real property
nationwide. The national data portal augments Tyler's existing efforts to expand
its service offerings outside the local government marketplace. Additional
Internet accessible business-to-business solutions for the financial services
marketplace will be added during the year. Both the national data portal and the
Internet accessible business-to-business solutions are a natural outgrowth of
Tyler's automation of real property records for county recorders' and county
clerks' offices.

According to leading research reports from Gartner Research and others, the
ASP marketplace is slated to grow at a compound annual growth rate in excess of
100% per year. Tyler is moving into the ASP marketplace with a variety of
Internet deployable solutions coupled with a full range of outsourcing services.

The ASP architecture is generally defined as consisting of the following
four layers:

1. Network infrastructure

2. Platform/hosting center

3. Application solutions

4. Operations and services

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Tyler's strategy is to leverage the existing network infrastructure
provided by large telecommunications companies (which is nearly a commodity
item), and focus primarily on providing platform hosting, application solutions
and operations and services. Tyler believes the application solution is the most
industry-specific portion of the ASP architecture, is the area in which Tyler
has the most experience, and has the greatest barrier to entry for competitors.
Tyler will deploy both existing legacy application solutions utilizing ASP
hosting software as well as newly developed Tyler national branded products.

Tyler has several significant research and development initiatives
underway developing Internet/Intranet deployable products during 2000 in the
areas of: financial management, payroll, human resources, utility billing,
criminal and civil court case management, and police law enforcement and records
management. These offerings are all built on state-of-the-art "n"-tier
architecture, SQL compliant databases, thin client, browser compatible,
component based technology.

In summary, the next phase of Tyler's growth strategy is focused on:

Partnering with our clients...

To make local government...

More accessible to the public,
More responsive to the needs of the citizens, and
More efficient...

Through the migration to an integrated e-government environment.

MARKET OVERVIEW

The state, local, and municipal government market is one of the largest
and most decentralized information technology markets in the United States,
consisting of all 50 states with over 40,000 municipalities and agencies and
3,200 counties. This market is also comprised of hundreds of various

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governmental agencies, each with specialized, delegated responsibilities and
unique information management requirements.

Traditionally, local governmental bodies and agencies performed
state-mandated duties, including property assessment, record keeping (i.e.,
property and vital statistics), road maintenance, administration of election and
judicial functions, and the provision of welfare assistance. Today, a host of
emerging and urgent issues are confronting local government, each of which
demands a service response. These areas include solid waste disposal, clean air
and water, transportation, criminal justice and corrections, administration and
finance, public safety, health and human services, and public works. Transfers
of responsibility from the federal and state governments to county and municipal
governments and agencies in these and other areas also place additional service
and financial requirements on these governmental units. As a result, these
governmental bodies and agencies recognize the increasing value of information
management services and systems to, for example, improve revenue collection,
provide increased access to information, and streamline delivery of government
services to their constituents. Local governmental bodies are now recognizing
that `e-government' is an additional responsibility for community development.
From integrated tax systems to integrated criminal justice information systems,
many counties and municipal governments have benefited significantly from the
implementation of jurisdiction-wide systems that allow different agencies to
share data and provide a more comprehensive approach to information management.
Many of the county and municipal government agencies also have individual
information management requirements, which must be tailored to the specific
services being provided.

In 1998, G2Research estimated the annual expenditures by state, local,
and municipal governmental bodies and agencies for information technology
products and services at approximately $37 billion. G2Research estimates this
market will grow to over $52 billion by 2003. The external services and software
segments of the market, in which Tyler has significant offerings, are expected
to be the most rapidly growing areas of the local government information
technology market.

CORE SERVICES

The Company was founded in 1966, and until 1998 it provided products
and services to customers in a variety of industries through ownership of
various diversified operating companies, all of which have been sold or
discontinued. In February 1998, the Company narrowed its focus to the
specialized information management needs of local government and now classifies
its businesses into two fundamental areas based on the nature of the products
and services offered:

o Software Systems and Services

o Information and Property Records Services

Comparative segment revenues, profits, and related financial
information for 1999, 1998 and 1997 are provided in Note 18 in Notes to
Consolidated Financial Statements.

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SOFTWARE SYSTEMS AND SERVICES SEGMENT

GENERAL

The software systems and services segment provides county, local, and
municipal governments with software, systems, and services to serve their
diverse information technology and automation needs as well as real estate mass
appraisal services. This segment assists local and county governments with all
aspects of software and hardware selection, network design and management,
installation and training, and on-going support and related services. In
connection with these services, the Company integrates its own products with
computer equipment from hardware vendors, third-party database management
applications, and office automation software. Certain software products include
Internet accessible solutions for real-time public access to a variety of public
information. This segment also provides mass appraisal services to taxing
jurisdictions, including physical inspection of all properties in the assessing
jurisdiction, data collection and processing, computer analysis for property
valuation and preparation of tax rolls.

PRODUCTS AND SERVICES

The software systems and services segment offers the following products
and services:

o Criminal Justice Systems. The Company offers a suite of products designed
to integrate with law enforcement applications to track and manage the
judicial systems process from incidents initiated in computer aided
dispatch/emergency E-911 systems through an arrest, court appearances and
final disposition to probation. While each of these products may be
installed on a stand-alone basis, most of the products are generally
installed in the different government offices located in and around a
county to take full advantage of the benefits of an integrated system of
products, which eliminates the need for duplicate input and record keeping
and helps increase the efficiency of the offices. Added courtroom
technologies allow judges to review cases, calendars, scanned documents and
mug shots within a web browser. Additionally, document-imaging options
include the ability to scan, store, retrieve and archive a variety of
criminal and civil case-related documents.

Other court related applications include products designed to track and
manage the information involved in criminal and civil cases, including
applications that are designed to track cases, process fines, fees and
delinquent fees, generate judgment and sentencing paperwork in conjunction
with criminal cases, generate citations, notices and forms required in a
civil case, and generally track the status of each criminal and civil case
in the court system.

A suite of Internet/Intranet judicial database search products are
designed for public access to criminal and civil case records and court
dockets.

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o Law Enforcement Systems. The Company's systems automate law enforcement
agency functions from dispatch and police records management to booking and
jail management. Searching, reporting and tracking features are integrated,
allowing reliable, up-to-date access to the latest arrest and incarceration
data. The system also provides warrant checks for visitors or book-ins,
inmate classification and risk assessment, commissary, property and medical
processing, as well as a variety of statistical and regional state
reporting. A computer aided dispatch/emergency E-911 system tracks calls
and the status of emergency response vehicles, interfaces with local and
state searches, and generally assists dispatchers in processing emergency
situations. The law enforcement and jail management systems are fully
integrated with the suite of court related products that track and manage
the judicial process.

The law enforcement and jail management systems include web enabled
search capabilities for data searches of jail records. The web enabled
search is available to the general public and offers significant benefits
to the legal community and bondsman.

o Other Judicial Information Products. Other Tyler judicial information
products include jury selection, worthless document/hot check processing,
and adult and juvenile probation processing applications.

o Utility Billing and Customer Information Systems. The Company offers
systems that support the billing and collection of multiple metered and
non-metered services as well as multiple billing cycles. Comprehensive
applications calculate and generate bills for one or more cycles and
generate penalties and late notices for each billing cycle.

The Company's utility billing solutions are web enabled to offer
information services, by which, customers can access property information
such as average consumption, flood plain information and transaction
history. In addition, the utility billing solutions give customers the
ability to make secured Internet payments via credit cards and checks.

o Property Appraisal and Tax Systems. The Company provides systems that
automate the appraisal and assessment of real and personal property,
including record keeping, mass appraisal, inquiry and protest tracking,
appraisal and tax roll generation, tax statement processing, and electronic
state level reporting. These systems are image- and video-enabled for the
storage of the many property related documents involved as well as for the
on-line storage of electronic photographs of properties for use in
defending values in protest situations. Other related applications are
available for tax billing and collection agencies, including counties and
cities, school tax offices, as well as special collection agencies. These
systems support billing, collections, lock box operations, mortgage company
electronic payments, and provide various reporting requirements.

o Finance and Accounting Systems. The Company offers complete accounting
systems that include modules for budgetary accounting (general ledger),
bank manager, accounts payable,

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payroll/personnel, purchasing, project/grant accounting, fixed assets,
revenues, and human resources, all of which conform to government auditing
and financial reporting requirements and generally accepted accounting
principles.

o Specialized Municipal Information Products. These systems automate the
functions of city hall, including municipal court, equipment and project
costing and inventory, special assessments, and tax billing and collection.
Other applications offered at the city level include cemetery records,
ambulance billing and fleet maintenance, tracking of citizen complaints,
permits and inspections, and business licenses.

o Specialized County Products. The Company offers specialized products that
allow government offices in and around a courthouse to further integrate
and automate their operations, including child support tracking, voter
registration and election result tabulations, motor vehicle registration,
and an indexing application for all official public records such as deeds,
and birth and death certificates.

o Imaging and Voice Response Products. The Company provides a variety of
products that interface with and enhance its other products, including
electronic document imaging systems that integrate scanning, retrieval, and
display of document images into other applications where needed. Other
products add an electronic video imaging system, which integrates the
capture and display of pictures with other applications.

o Mass Appraisal Services. These services include: (1) the physical
inspection of all properties in the assessing jurisdiction, (2) data
collection and processing, (3) computer analysis for property valuation,
(4) preparation of tax rolls, (5) community education on the assessment
process and (6) arbitration between taxpayers and the assessing
jurisdiction.

o Internet Web Development. The Company offers specialized application
database interfaces that allow the public records portion of information
contained in various Company systems to be made available to the public via
the Internet. The services include building, maintaining, and hosting a
community's e-portal presence on the Internet.

SALES, MARKETING, AND CUSTOMERS

The software systems and services segment markets its products and
services through direct sales and marketing personnel located throughout the
United States. Other in-house staff focus on add-on sales, forms, supplies, and
professional services.

Sales of new systems are typically generated from referrals from
different governmental offices or departments within a county or municipality,
referrals from adjoining counties and local governments, relationships
established between sales representatives and county or local officials,
contacts at trade shows, direct mailings, and direct contact from prospects
already familiar with the Company. The

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Company is active in multiple state, county, and local government associations,
and participates in annual meetings, trade shows, and educational events.

Customers consist primarily of county, municipal agencies, school
districts and other local government offices. In counties, customers include the
auditor, treasurer, tax assessor/collector, county clerk, district clerk, county
and district court judges, probation officers, sheriff's office, and county
appraiser. At municipal government sites, customers include directors from
various departments, including administration, finance, utilities, public works,
code enforcement, personnel, purchasing, taxes, municipal court, and police. No
single customer accounted for more than 10% of the segment's total revenues for
1999. Contracts for products and services are generally implemented over periods
of six months to one year, with annually renewing service and software update
agreements thereafter. Although these agreements can be terminated by either the
Company or the customer, historically most support and maintenance agreements
are automatically renewed annually. Contracts for appraisal services are
generally one to three years in duration. During 1999, approximately 27% of this
segment's revenue was attributable to ongoing support and maintenance
agreements.

COMPETITION

The Company competes with numerous local, regional, and national firms
that provide or offer some or all of the products and services provided by the
software systems and services segment. The Company also occasionally competes
with internal, centralized information service departments of county or local
governments, which requires the Company to persuade the end-user department to
discontinue service by its own personnel and outsource the service to the
Company. The Company competes on a variety of factors, including price, service,
name recognition, confidence in the supplier, technological capabilities, and
the ability to modify existing products and services to accommodate the
individual requirements of the customer. The Company's ability to offer an
integrated system of applications for several offices/departments is often a
factor in its favor. County and local governmental units often are required to
put their contracts up for competitive bid. Competition may be increased if a
customer seeks bids on only one aspect of its system (such as only motor vehicle
registration) rather than bidding all of the services as an integrated whole,
because single function bidding generally results in more bidders and more
intense price competition.

SUPPLIERS

All computers, peripherals, printers, scanners, operating system
software, office automation software, and other equipment necessary for the
implementation and provision of software systems and services are presently
available from several third-party sources. Hardware is purchased on original
equipment manufacturer or distributor terms at discounts from retail. The
Company has not experienced any significant supply problems.

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BACKLOG

At December 31, 1999, the estimated sales backlog for the software
systems and services segment was approximately $67.1 million, compared to $69.4
million at December 31, 1998, on a pro forma basis. Backlog decreased primarily
due to installations in 1999 relating to year 2000 compliance issues. The
backlog represents contracts that have been signed but not delivered as of
year-end. Approximately $49.1 million of the backlog is expected to be installed
or services are expected to be performed within the next six to twelve months.
Of the remainder, approximately $11.0 million is expected to be earned in 2001
and $7.0 million thereafter.

INTELLECTUAL PROPERTY, PROPRIETARY RIGHTS, AND LICENSES

The Company regards certain features of its internal operations,
software, and documentation as confidential and proprietary and relies on a
combination of contractual restrictions, trade secret laws, and other measures
to protect its proprietary intellectual property. The Company does not rely on
patents. The Company believes that, due to the rapid rate of technological
change in the computer software industry, trade secrets and copyright protection
are less significant than factors such as knowledge, ability and experience of
the Company's employees, frequent product enhancements, and timeliness and
quality of support services. The Company typically licenses its software
products under exclusive license agreements, which are generally
non-transferable and have a perpetual term.

INFORMATION AND PROPERTY RECORDS SERVICES SEGMENT

GENERAL

The information and property records services segment provides a wide
range of information management outsourcing services, primarily related to the
real property records of county governments as well as to some commercial users.
These outsourcing services currently include records management and micrographic
reproduction, data warehousing, computerized indexing, and imaging of real
property records maintained by county clerks and recorders, as well as
information management outsourcing and professional services required by other
county government units and agencies. This segment also provides title plant
data and property records database information, copies of title plants and
update services to title companies or other firms that need title search
capabilities.

PRODUCTS AND SERVICES

The information and property records services segment offers the
following products and services:

o Property Records Software and Services. The Company offers products that
record and index real property transactions, maintain archival copies of
the filed documents, and make those records

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available for public inspection and copying. The Company also provides a
wide range of software products that provide document access and storage on
various computer platforms to commercial users and governmental agencies.
These products provide indexing and retrieval software for digitized
documents and microfilm documents.

o Re-creation Services. The Company provides image-enhanced, archival-quality
reprints of old property records, including photostatic prints, with
microfilm backup copies for improved security in case of loss by fire,
water damage, or other catastrophe.

o Title Plant Services. The Company provides a variety of title plant data
and update services (the information needed to perform title searches in
order to underwrite title insurance policies), and sells copies of these
title plants to title companies or other firms that need title search
capabilities. The Company also provides software to facilitate and automate
much of the work performed by title companies, including storing all
information necessary for a closing, tracking the progress of a closing,
producing all necessary closing documents, and other closing-related
services.

o Document Management and Imaging Solutions Software Products. The Company's
products and services are used for image storage and retrieval in a wide
range of document-intensive applications that are designed to deliver a
total document management solution for many work group and departmental
applications, particularly where hybrid media support is a requirement.

o National Data Repository. The Company is in the process of constructing a
national data repository ("Database") with an initial target market of the
financial services and mortgage industry. The Database currently has
web-enabled property tax information for over 65 million parcels of real
property nationwide. The Company plans to add, among other items, a wide
range of other public information such as real property assessment data,
chain of title property records and images and UCC filing data.

SALES, MARKETING, AND CUSTOMERS

The information and property records services segment markets its
products and services through its direct sales and marketing personnel. This
segment targets long-term contracts with larger governmental units and title
companies. Although many of its customers are small and do not have long-term
contracts, they have long-term, continuing relationships with the Company and
its sales and marketing personnel. Many of the county government customers and
title plant customers have been

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served by the information and property records services segment and its
predecessors for more than 20 years, with some customers dating back to 1962.
Customer turnover is considered by management to be extremely low.

No single customer accounted for 10% or more of the segment's total
revenues in 1999. The eight largest customers of this segment accounted for
approximately 23% of the segment's total revenues in 1999. All but one of these
customers have annually renewing contracts and most are long-term customers.

COMPETITION

The Company competes with numerous local and regional businesses that
provide or offer at least some of the products and services provided by the
information and property records services segment. The Company also occasionally
competes with internal, centralized information service departments of county
governments, which requires the Company to persuade the end-user department to
discontinue the service by its own personnel and outsource the service to the
Company and its subsidiaries. The Company competes on a variety of factors,
including price, service, name recognition, technological capabilities, and the
ability to modify existing products and services to accommodate the individual
requirements of the customer. County governments often are required to put their
contracts up for competitive bid. Competition may be increased if a customer
seeks bids on only one aspect of its system (such as imaging or indexing) rather
than bidding on all of the services as an integrated whole as single function
bidding generally results in more bidders and more intense price competition.

BACKLOG

At December 31, 1999, the estimated sales backlog for the information
and property records services segment was approximately $39.1 million, compared
to $17.0 million at December 31, 1998. The backlog for this segment consists of
sales of copies of title plants and associated updates, maintenance, royalties,
and other services. Approximately $15.2 million of the backlog relates to sales
of copies of title plants and associated updates of which approximately $1.7
million is expected to be earned in 2000 with the remainder expected to be
earned over the terms of the contracts which range from five to ten years.
Beginning in February 1999 the Company, entered into a series of contracts with
several customers to provide copies of title plants and update services for
contract terms from five to ten years. Contracts with a ten-year term allow for
early termination in the fifth year of the contract by providing 180-days notice
and paying a termination fee equal to 50% of the then remaining obligation due
under the contract. It is the Company's belief that any exercise of the early
termination provision in any of these contracts is highly unlikely due to the
unfavorable economic impact on the customer. The remaining backlog, excluding
sales of copies of title plants is approximately $23.9 million of which
approximately $17.0 million is expected to the installed or provided over the
next twelve months and $6.9 million in 2001.

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EMPLOYEES

At December 31, 1999, the Company had 1,370 employees, of whom 989 were
employed in the software systems and services segment, 343 were employed in the
information and property records services segment and 38 were employed in the
corporate office. None of the Company's employees are represented by a labor
union or are subject to collective bargaining agreement. Management considers
its relations with its employees to be positive.

ITEM 2. PROPERTIES.

The Company occupies approximately 332,000 square feet of office and
warehouse space. Approximately 206,000 square feet (179,000 leased/27,000 owned)
is attributable to the software and services segment while approximately 126,000
square feet (43,000 leased/83,000 owned) relates to the information and property
records services segment. With its principal executive office located in Dallas,
Texas, the Company leases other offices and facilities for its operating
companies in Lubbock, Plano, San Antonio, McKinney and Houston, all located in
Texas; Ames, Iowa; Falmouth, Maine; Dayton, Ohio; Ann Arbor, Michigan; Eagle,
Colorado; Driggs, Idaho; Aliso Viejo and Paradise, both located in California;
Raleigh, North Carolina; and Rochester, New York. The Company's owned property
has been pledged as security under its senior credit facility.

ITEM 3. LEGAL PROCEEDINGS.

Two of the Company's non-operating subsidiaries are involved in various
claims for work-related injuries and physical conditions and for environmental
claims relating to a formerly owned subsidiary that was sold in 1995.

Between 1968 and 1995, TPI of Texas, Inc. ("TPI") owned and operated a
foundry in Swan, Texas. Since 1997, more than 300 former employees of TPI have
filed a series of lawsuits against TPI, Swan Transportation Company, the parent
corporation of TPI ("Swan"), and in some instances, the Company, alleging
various personal injuries resulting from exposure to silica, asbestos, and/or
other related industrial dusts during their employment at TPI. As non-operating
subsidiaries, Swan and TPI's assets consist principally of various insurance
policies issued during the relevant time periods. In December 1999, the Company
instituted litigation against Swan and TPI's former insurance carriers in Harris
County, Texas demanding that such carriers undertake the defense of these
claims, fulfill all indemnity obligations with respect to these claims, and
reimburse the Company for past defense and settlement costs paid by the Company.

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Plaintiffs agreed to dismiss all pending claims against the Company and agreed
to not sue the Company for a minimum period of at least two years and thereafter
only in certain circumstances. Under the Standstill Agreement, the Company
agreed to seek to withdraw its outside counsel as counsel of record in the
pending lawsuits, re-tender the defense and indemnity obligations related to
these claims to the insurance carriers of Swan and TPI, and continue to
prosecute its insurance coverage suit in Harris County, Texas, in which the
plaintiffs if and when they receive a judgment may intervene in such litigation
and prosecute their claims directly against the insurance carriers. Further, the
Standstill Agreement provides that any Plaintiff that settles or receives a
judgment on any of its claims, and such settlement or judgment is fully paid or
compromised by the insurance carriers, then such Plaintiff will execute a
release in favor of the Company, its subsidiaries and affiliates from such
claims. In March 2000, The Hartford, one of Swan and TPI's primary and excess
coverage insurance carriers, has agreed to assume the ongoing and future defense
of these claims, subject to a reservation of rights.

The New Jersey Department of Environmental Protection and Energy
("NJDEPE") has alleged that a site where a former affiliate of TPI, Jersey-Tyler
Foundry Company ("Jersey-Tyler"), once operated a foundry contains lead and
possible other priority pollutant metals and may need on-site and off-site
remediation. The site was used for foundry operations from the early part of
this century to 1969 when it was acquired by Jersey-Tyler. Jersey-Tyler operated
the foundry from 1969 to 1976, at which time the foundry was closed. In 1976,
Jersey-Tyler sold the property to other persons who have operated a salvage yard
on the site. In 1995, NJDEPE and TPI agreed for TPI to conduct a feasibility
study to assess remediation options and propose a remedy for the site and the
impacted areas. This study was completed and submitted to the NJDEPE in the
first quarter of 1999. TPI continues to negotiate with the NJDEPE regarding the
results of this study. TPI has not agreed to commit to further action at this
time. TPI never held title to the site and denies liability.

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Recoveries from predecessor companies and insurance companies are shared by TPI
and the Buyer. Although it is impossible to predict the outcome of legal or
regulatory proceedings, the Company believes that substantially all of the
costs, expenses, and damages, if any, resulting from the legal proceedings and
environmental matters described above will be reimbursed by the Buyer pursuant
to the Acquisition Agreement or have been adequately provided for in the
financial statements.

Other than ordinary course, routine litigation incidental to the
business of the Company and except as described herein, there are no material
legal proceedings pending to which the Company or its subsidiaries are parties
or to which any of its properties are subject.

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

Not applicable.

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PART II

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

Tyler common stock is traded on the New York Stock Exchange. At
December 31, 1999, Tyler had approximately 3,200 stockholders of record. A
number of the Company's stockholders hold their shares in street name;
therefore, there are substantially more than 3,200 beneficial owners of its
common stock.

The following table sets forth for the calendar periods indicated the
high and low sales price per share of Tyler common stock as reported on the New
York Stock Exchange.

<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C> <C>
1998: First Quarter.................................. $ 8 3/4 $ 5 5/16

Second Quarter................................. 11 3/8 7 1/2

Third Quarter.................................. 10 1/2 6 1/2

Fourth Quarter................................. 8 7/16 5

1999: First Quarter.................................. $ 6 7/16 $ 4

Second Quarter................................. 6 7/8 3 1/2

Third Quarter.................................. 6 1/2 4 3/8

Fourth Quarter................................. 6 5/8 3 3/8

2000: First Quarter ................................. $ 6 1/4 3 7/8
</TABLE>

No cash dividends were paid in 1999 or 1998. The Company made a rights
redemption payment of $0.01 per share in 1998. The Company intends to retain
earnings for use in the operation and expansion of its business, and therefore
does not anticipate declaring a cash dividend in the foreseeable future.
Pursuant to the Company's Senior Credit Facility, the Company is restricted from
paying cash dividends to stockholders.

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<PAGE> 18

ITEM 6. SELECTED FINANCIAL DATA.

<TABLE>
<CAPTION>
AS OF OR FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------------------------------
(DOLLARS AND AVERAGE SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)

1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA: (1)
Revenues ........................... $ 108,401 $ 50,549 $ -- $ -- $ --
Costs and expenses:
Cost of revenues (2) ............ 54,413 24,749 -- -- --
Selling, general and
administrative expense (2) .... 37,909 14,461 2,959 6,858(3) 4,126
Costs of certain acquisition
opportunities .................. 1,851 3,146 -- -- --
Amortization of intangibles ..... 7,315 3,173 -- -- --
Interest (income) expense, net .. 4,573 1,831 (822) (304) 1,003
--------- --------- --------- --------- ---------
Income (loss) from continuing
operations before taxes ........ 2,340 3,189 (2,137) (6,554) (5,129)
Income tax provision (benefit) ..... 2,404 2,033 (918) (1,573) (1,753)
--------- --------- --------- --------- ---------
Income (loss) from continuing
operations ...................... $ (64) $ 1,156 $ (1,219) $ (4,981) $ (3,376)
========= ========= ========= ========= =========
Income (loss) from
continuing operations
per common share-diluted ........ $ (0.00) $ 0.03 $ (0.06) $ (0.25) $ (0.17)
========= ========= ========= ========= =========

Average number of diluted shares ... 39,105 34,400 20,498 19,876 19,869
OTHER DATA:
EBITDA (4) .................... $ 20,025 $ 13,669 $ (2,843) $ (6,757) $ (3,864)
</TABLE>

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------------------------------------------------
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA: (1)
Total assets ....................... $ 272,535 $ 150,094 $ 47,150 $ 52,484 $ 109,559
Long-term obligations, excluding
current portion .................. 67,446 37,189 -- -- --
Shareholders' equity ............... 138,904 76,346 31,403 32,041 93,362

STATEMENT OF CASH FLOWS DATA:
Cash flows from operating activities $ 654 $ 2,088 $ (5,829) $ 6,484 $ 13,514
Cash flows from investing activities (24,743) (36,787) (2,020) 6,139 49,187
Cash flows from financing activities 24,955 27,893 2,515 9 (62,663)
</TABLE>

(1) 1999 and 1998 includes the results of operations from the software systems
and services segment and information and property records services segment
from the acquired companies respective dates of acquisition and excludes
the results of operations from the discontinued automotive parts and
supplies business. Prior years' selected financial data has been restated
to reflect discontinuation of the automotive parts and supply business in
1998 and discontinuation of the fund-raising segment in 1997 and for years
prior to 1998, selling, general and administrative expense includes only
data relating to the holding company. See Notes 2 and 3 in Notes to
Consolidated Financial Statements.

(2) Depreciation and amortization included in cost of revenues and selling,
general and administrative expenses for 1999, 1998, 1997, 1996 and 1995 was
$3,946, $2,330, $116, $101 and $262, respectively.

(3) 1996 selling, general and administrative expenses include pretax
restructuring and other charges of $3,616.

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(4) EBITDA consists of income from continuing operations before interest,
costs of certain acquisition opportunities, income taxes, depreciation, and
amortization. Although EBITDA is not calculated in accordance with
accounting principles generally accepted in the United States, the Company
believes that EBITDA is widely used as a measure of operating performance.
Nevertheless, this measure should not be considered in isolation or as a
substitute for operating income, cash flows from operating activities, or
any other measure for determining the Company's operating performance or
liquidity that is calculated in accordance with generally accepted
accounting principles. EBITDA does not take into account the Company's debt
service requirements and other commitments and accordingly EBITDA is not
necessarily indicative of amounts that may be available for reinvestment in
the Company's business or other discretionary uses. In addition since all
companies do not calculate EBITDA in the same manner, this measure may not
be comparable to similarly titled measures reported by other companies.

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

FORWARD - LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. All statements
other than historical or current facts, including, without limitation,
statements about the business, financial condition, business strategy, plans and
objectives of management, and prospects of the Company are forward-looking
statements. Although the Company believes that the expectations reflected in
such forward-looking statements are reasonable, such forward-looking statements
are subject to risks and uncertainties that could cause actual results to differ
materially from these expectations. Such risks and uncertainties include,
without limitation, the ability of the Company to successfully integrate the
operations of acquired companies, technological risks associated with the
development of new products and the enhancement of existing products, changes in
the budgets and regulating environments of the Company's government customers,
the ability to attract and retain qualified personnel, changes in product
demand, the availability of products, changes in competition, changes in
economic conditions, risks associated with Year 2000 and similar issues, changes
in tax risks and other risks indicated in the Company's filings with the
Securities and Exchange Commission. These risks and uncertainties are beyond the
ability of the Company to control, and in many cases, the Company cannot predict
the risks and uncertainties that could cause its actual results to differ
materially from those indicated by the forward-looking statements.

When used in this Annual Report, the words "believes," "plans,"
"estimates," "expects," "anticipates," "intends," "continue," "may," "will,"
"should," "projects," "forecasts," "might," "could," or the negative of such
terms and similar expressions as they relate to the Company or its management
are intended to identify forward-looking statements.

GENERAL

In October 1997, the Company sold Institutional Financing Services,
Inc. ("IFS") which provided products for fund-raising programs. In March 1999,
the Company sold Forest City Auto Parts Company ("Forest City"), which was an
automotive parts and supplies business. With the disposal of Forest City, the
Company has focused solely on the software systems and services segment and the
information and property records services segment. Therefore, historical
financial information attributable to the automotive parts and supply business
has been reported as discontinued operations in 1999, 1998 and 1997, together
with the results of operations associated with the products for fund raising
business and all prior year financial information included herein has been
restated to reflect these dispositions. In 1997, continuing operations includes
only corporate expense and interest income mainly attributable to proceeds from
disposals of prior operating companies. Continuing operations in 1999 and 1998
are comprised of

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<PAGE> 21

the results of operations from the information management businesses from their
respective dates of acquisition.

As discussed in Note 16 in the Notes to Consolidated Financial
Statements, the Company adopted in the fourth quarter of 1999 a change in its
accounting for the sales of copies of title plants which only occurred during
the year ended December 31, 1999. The following discussion takes into
consideration the effects of this accounting change.

RESULTS OF OPERATIONS

1999 COMPARED TO 1998

Following is a summary of significant acquisitions consummated in 1998
and 1999:

On February 19, 1998, the Company acquired The Software Group ("TSG")
and Interactive Computer Designs, Inc. ("INCODE"), which provide county, local
and municipal governments with software, systems and services to serve their
information technology and automation needs. Their customer base is mainly
located in Texas, Georgia and Oregon.

On February 19, 1998, the Company also acquired Business Resources
Corporation ("Resources"), a major provider of a wide range of information
management outsourcing services, primarily to county governments, as well as to
some commercial users. These outsourcing services currently include records
management and micrographic reproduction, computerized indexing, and imaging of
real property records maintained by county clerks and recorders, as well as
information management outsourcing and professional services required by other
county government units and agencies. Resources also provides title plant data
and property records database information and title plant copies and title plant
update services.

On June 5, 1998, the Company acquired a line of document management
software and related customer installations and service contracts from the
Business Imaging Systems division of Eastman Kodak Company. Kofile, a newly
formed subsidiary in the Company's Resources unit, provides development, support
and marketing of document management software and related customer installations
and service contracts throughout the United States. Kofile's customer base
includes both commercial and governmental users.

Effective August 1, 1998, the Company completed the purchase of
Computer Management Services ("CMS"). CMS provides integrated information
management systems and services to county and municipal governments throughout
Iowa, Minnesota, Missouri, South Dakota, Illinois, Wisconsin and other states,
primarily in the upper Midwest.

Effective March 1, 1999, the Company acquired Eagle Computer Systems,
Inc. ("Eagle"). Eagle supplies networked computing solutions and services for
county governments, primarily in the western United States.

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<PAGE> 22

Effective April 1, 1999, the Company completed its acquisition of Micro
Arizala Systems, Inc. d/b/a FundBalance ("FundBalance"), a company which
develops and markets fund accounting software and other applications for state
and local governments, not-for-profit organizations and cemeteries.

On April 21, 1999, the Company acquired Process Incorporated d/b/a
Computer Center Software ("MUNIS"), which designs and develops integrated
financial and land management information systems for counties, cities, schools
and not-for-profit organizations primarily located in the northeastern and
southeastern United States.

On July 16, 1999, the Company acquired Pacific Data Technologies, Inc.
("Pacific Data"). Pacific Data is the primary developer of the Company's
database, which consists of software and systems that automate and manage public
information records for Internet delivery.

On November 4, 1999, the Company acquired selected assets and assumed
selected liabilities of Cole Layer Trumble Company, ("CLT"), a division of a
privately held company. CLT provides appraisal software and services to
governments.

During 1998 and 1999, the Company also made other acquisitions, which
were immaterial. All of the Company's acquisitions have been accounted for using
the purchase method for business combinations, and the results of operations of
the acquired entities are included in the Company's historical consolidated
financial statements from their respective dates of acquisition. Because of the
significance of these acquisitions, in the following analysis of results of
operations the Company has provided pro forma amounts as if all of the Company's
acquisitions had occurred as of the beginning of 1998. In comparing 1998 to
1997, the pro forma amounts include only completed acquisitions as of December
31, 1998 as if they had occurred as of the beginning of 1997.

REVENUES

For the year ended December 31, 1999, Tyler had revenues from
continuing operations of $108.4 million, $70.0 million of which were
attributable to the software systems and services segment and $38.4 million of
which were derived from the information and property records and services
segment. On a pro forma basis, total revenues in 1999 were $144.4 million
compared to $114.6 million in 1998.

Software Systems and Services Segment

On a pro forma basis, total revenues from the software systems and
services segment increased $23.6 million, or 29% to $106.0 million, for the
twelve months ended December 31, 1999 compared to $82.4 million in the
comparable prior year period. Pro forma software license revenue in 1999
increased approximately 31% compared to 1998. Software license revenue benefited
from the installation of several large contracts in 1999 for judicial
information management and court systems and property appraisal and tax systems
and increased sales volume from utilities applications. As a percentage of total
revenues on a pro forma basis, software license revenue was approximately 23% in
both 1999 and 1998.

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<PAGE> 23

Professional service revenue on a pro forma basis increased
approximately 37% in 1999 compared to 1998. Approximately two-thirds of this
increase is primarily due to customization and modifications of software
products required in several large contracts installed in 1999. The remaining
one-third of the increase is due to increased volume in mass appraisal services.
Professional service revenue was approximately 40% of total revenues for this
segment in 1999 compared to approximately 38% in 1998, on a pro forma basis.

Pro forma maintenance revenue increased $7.0 million due to an increase
in the Company's base of installed software and systems products. Maintenance
revenue was approximately 26% of total revenue for this segment in 1999 compared
to approximately 25% in 1998, on a pro forma basis.

Hardware revenues on a pro forma basis decreased approximately 8% in
1999 compared to 1998 as a result of the Company focusing its sales effort on
higher margin products and services. This decrease was offset slightly by an
increase in customer upgrades due to Year 2000 compliance requirements.

The Company anticipates revenues may be down slightly in 2000 in
comparison to 1999 as revenues generated from Year 2000 compliance decline.

Information and Property Records Services Segment

On a pro forma basis, total revenues from the information and property
records services segment increased $6.2 million or 19% to $38.4 million, for the
twelve months ended December 31, 1999 compared to $32.2 million in the
comparable prior year period. Sales of document management services contracts
and recording and imaging products provided the majority of the increase. In
July 1999, the Company was awarded a $4.5 million contract with the Cook County,
Illinois, Recorder of Deeds in Chicago. Under the contract, Tyler will convert
to digitized images documents recorded and stored on microfilm from 1985 to
1997. Those images will be accessed through Tyler's automated document
management system. In the fourth quarter of 1999, revenues recognized relating
to this contract were approximately $1.8 million and the remainder of the
contract is expected to be completed by the third quarter of 2000. The revenue
increase relating to this contract was offset by $3.6 million of revenue
recorded in 1998 relating to a previous completed contract with Cook County to
design and install an electronic document management and imaging system. Other
sources of revenue increases were provided by optical imaging services, title
company software and title plant update services.

COST OF REVENUES

For the year ended December 31, 1999, the Company had cost of revenues
from continuing operations of $54.4 million, $32.7 million of which were
attributable to the software systems and services segment and $21.7 million of
which were derived from the information and property records and services
segment. On a pro forma basis, cost of revenues were $77.5 million in 1999
compared to $62.2 million in 1998.

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Software Systems and Services Segment

On a pro forma basis, total cost of revenues from the software systems
and services segment increased $10.8 million, or 24%, for the twelve months
ended December 31, 1999 compared to $45.0 million in the comparable prior year
period. The software systems and services gross margin increased to 47% in 1999
compared to 45% for same period in the prior year, on a pro forma basis. The
gross margin benefited from a product mix in 1999, which included less hardware
and third party software than the prior year on a pro forma basis. Hardware and
third party software have a lower margin than proprietary software license
products and services. The gross margin increase was offset slightly by higher
costs associated with third party services utilized in connection with the
installation of two large mass appraisal contracts in 1999.

Information and Property Records Services Segment

On a pro forma basis, total cost of revenues from the information and
property records services segment increased $4.5 million, or 26%, for the twelve
months ended December 31, 1999 compared to $17.2 million in the comparable prior
year period. The gross margin from information and property records services was
lower at 44%, compared to the prior year period amount of 47%, on a pro forma
basis. This margin decline is mainly attributable to changes in product mix
caused by an increase in document management services, which have a lower gross
margin than other services.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses were $37.9 million in
1999, compared to $14.5 million in 1998. The current year includes a full year
of selling, general and administrative expenses associated with 1998 acquired
companies and partial year expenses for 1999 acquired companies. On a pro forma
basis, selling, general and administrative expenses as a percent of revenues was
approximately 32% for both 1999 and 1998.

COSTS OF CERTAIN ACQUISITION OPPORTUNITIES

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The Company submitted a cash only bid of $100,000 for the California Visual
Basic/Oracle Tax and CAMA software assets of CPS.

The Company closed on the transaction on March 30, 2000, and
anticipates minimal to no recovery of amounts due under its secured notes.
Accordingly, the aggregate bridge financings and related accrued interest
receivable and other costs amounting to $1.9 million were expensed in the 1999
consolidated financial statements.

On July 31, 1998, the Company entered into a letter of intent with a
Fortune 500 company to acquire certain businesses of the company in a
transaction to be accounted for as a purchase business combination. These
businesses had estimated annual revenues in excess of $500 million and
represented a business opportunity which was aligned with the Company's strategy
in the information management business. Direct and incremental costs totaling
$3.1 million associated with the combination, primarily consisting of fees paid
to outside legal and accounting advisors for due diligence, were incurred by the
Company and would have been considered as a cost of the acquisition upon the
successful closing of the transaction. Subsequent to September 30, 1998, the
potential seller elected not to sell any of the businesses. Accordingly, all
costs associated with this opportunity were expensed in the 1998 consolidated
financial statements.

AMORTIZATION OF INTANGIBLES

The Company accounted for all 1999 and 1998 acquisitions using the
purchase method of accounting for business combinations. The excess of the
purchase price over the net identifiable assets of the acquired companies
("goodwill") is amortized using the straight-line method of amortization over
their respective estimated useful lives.

At December 31, 1999 and 1998, the Company had $160.7 million and $96.0
million, respectively, of goodwill and other intangible assets, net of
accumulated amortization. Such intangibles amounted to 59% and 64% of total
assets and 116% and 126% of shareholders' equity at December 31, 1999 and 1998,
respectively. Goodwill prior to any amortization, at December 31, 1999 and 1998
was $108.0 million and $71.9 million, respectively.

The Company considers a variety of factors in estimating the useful
lives of goodwill and other intangible assets to be recorded as a result of its
acquisitions. Determining the appropriate useful life of goodwill and other
intangible assets is a matter of judgment. In making its determination, the
Company considered a number of factors, including the following:

o position of the acquired enterprise in the market and the extent of
barriers to entry for competitors;

o age, historical operating performance, and quality of earnings of the
acquired enterprise, including the extent of operating history and the
presence or lack of stable earnings history;

o experience of the acquired enterprise's management;

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<PAGE> 26

o the future viability of products and services, including the impact of
technological changes and advances and the level of continued
investment necessary to maintain the acquired enterprise's
technological position;

o competition; and

o industry practice.

In addition, the Company periodically retains the services of an
outside appraisal firm to assist in determining the value assigned to newly
acquired identifiable intangible assets and the estimated useful lives. At
December 31, 1999 and 1998, management of the Company believes such assets are
recoverable and the estimated useful lives are reasonable.

NET INTEREST EXPENSE

As a result of the debt incurred to finance acquisitions and their
related transaction costs in 1998 and 1999, the Company recorded net interest
expense of $4.6 million in 1999 compared to $1.8 million in 1998.

INCOME TAX PROVISION

In 1999, the Company had pre-tax income from continuing operations of
$2.3 million and an income tax provision of $2.4 million, resulting in an
effective tax rate of 103%. The comparable 1998 effective income tax rate was
64%. The high effective income tax rate is due to non-deductible items such as
goodwill amortization as compared to the relative amount of pretax earnings.

DISCONTINUED OPERATIONS

Forest City Divestiture

In December 1998, the Company entered into a letter of intent to sell
its non-core automotive parts and supplies business, Forest City. Accordingly,
this segment has been accounted for as a discontinued operation in compliance
with Accounting Principles Board Opinion No. 30.

On March 26, 1999, the Company sold all of the outstanding common stock
of Forest City, to HalArt, L.L.C. for $24.5 million. Proceeds consisted of $12.0
million in cash, $3.8 million in a short-term secured promissory note, $3.2
million in senior secured subordinated notes and $5.5 million in preferred
stock. The short-term secured promissory note was fully paid in July 1999. The
senior secured subordinated notes carry interest rates ranging between 6% to 8%,
become due in March 2002, and are secured by a second lien on Forest City
inventory and real estate. The preferred stock will be mandatorily redeemable
March 2006. Both the subordinated notes and the preferred stock will be subject
to partial or whole redemption upon the occurrences of specified events.

In determining the loss on the disposal of the business, the
subordinated notes were valued using present value techniques. As discussed in
Note 2 in the Notes to Consolidated Financial Statements, the

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$3.2 million in senior secured subordinated notes were subsequently assigned
without recourse to another party in connection with an acquisition. Because
redemption of the preferred stock is highly dependent upon future successful
operations of the buyer and due to the extended repayment terms, the Company is
unable to estimate the degree of recoverability. Accordingly, the Company will
record the value of the preferred stock as cash is received. The Company
originally estimated the loss on the disposal of Forest City to be $8.9 million,
which was recorded in the fourth quarter of 1998. The estimated loss included
anticipated operating losses from the measurement date of December 1998 to the
date of disposal and associated transaction costs. In 1999, the Company recorded
additional losses of $907,000 (including taxes of $183,000) to reflect adjusted
estimated transaction costs, funded operating losses which were higher than
originally estimated, income tax benefit adjustment and a write down of a
receivable in connection with a dispute.

Two of the Company's non-operating subsidiaries are involved in various
claims for work related injuries and physical conditions and for environmental
claims relating to a formerly owned subsidiary that was sold in 1995. During
1999, the Company expensed approximately $1.9 million (net of taxes of $877,000)
for trial costs and settlements in excess of the amounts accrued associated with
these claims. See Note 17 in Notes to Consolidated Financial Statements.

IFS Divestiture

Effective October 15, 1997, the Company sold all of the capital stock
of its subsidiary, IFS, which provided products for fund-raising programs, to
I.F.S. Acquisition Corporation for $8.4 million. This sale resulted in a loss on
disposal of $2.5 million. The estimated loss on disposal included estimates
regarding the value of certain assets that were subject to change. In 1998, the
Company made final adjustments to these assets, which resulted in a reduction of
the previously estimated loss on disposal by $801,000. Management does not
expect any further adjustments to the loss on disposal. Proceeds consisted of
$5.8 million in cash received at closing and $2.6 million received in January
1998.

INVESTMENT SECURITIES AVAILABLE-FOR-SALE

Pursuant to an agreement with two major shareholders of H.T.E., Inc.
("HTE"), the Company acquired approximately 32% of HTE's common stock in two
separate transactions in 1999. On August 17, 1999, the Company exchanged 2.3
million shares of its common stock for 4.7 million shares of HTE common stock.
This initial investment was recorded at $14.0 million. The second transaction
occurred on December 21, 1999, in which the Company exchanged 484,476 shares of
its common stock for 968,952 shares of HTE common stock and this investment was
recorded at $1.8 million.

Florida state corporation law restricts the voting rights of "control
shares", as defined, acquired by a third party in certain types of acquisitions,
which restrictions may be removed by a vote of the shareholders. The Florida
"control share" statute has not been interpreted by the courts. HTE has taken
the position that, under the Florida statute, all of the shares acquired by the
Company constitute "control shares" and therefore do not have voting rights
until such time as shareholders of HTE, other than the Company, restore voting
rights to those shares. Management of the Company believes that only the shares
acquired in excess of 20% of the outstanding shares of HTE constitute "control
shares" and therefore believes it currently has the right to vote all HTE shares
it owns up to at least 20% of the outstanding shares of HTE.

Because the Company currently does not have the ability to exercise
significant influence, the Company accounts for its investment in HTE pursuant
to the provisions of Statement of Financial Accounting Standards ("SFAS") No.
115, "Accounting for Certain Investments in Debt and Equity Securities". These
securities are classified as available-for-sale and are recorded at fair value
as determined by quoted market prices. Unrealized holding gains and losses, net
of the related tax effect, on available-for-sale securities are excluded from
earnings and are reported as a separate component of shareholders' equity until
realized.

At December 31, 1999, the cost, fair value and gross unrealized holding
gains of the investments available-for-sale amounted to $15.8 million, $33.7
million, and $17.9 million, respectively, based on a quoted market price of
$6.00 per share. Because of the Company's existing capital loss carryforwards,
any tax expense related to the unrealized gain is offset by a reduction in the
Company's valuation allowance. At March 31, 2000, the fair value was $18.1
million based on a quoted market price of $3.22 per share.

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NET INCOME AND OTHER MEASURES

Net loss was $2.8 million in 1999 compared to $8.4 million in 1998.
Diluted loss per share was $0.07 and $0.24 for 1999 and 1998, respectively. Net
loss from continuing operations was $64,000, or $0.00 per diluted share, in 1999
compared to net earnings of $1.2 million, or $0.03 per diluted share in 1998.
Excluding the effect of the costs of certain acquisition opportunities in 1999
and 1998, income from continuing operations would have been $1.1 million and
$3.2 million, respectively, and diluted earnings per share would have been $0.03
and $0.09 per dilutive share, respectively.

Earnings before interest, taxes, depreciation, amortization and costs
of certain acquisition opportunities ("EBITDA") for the year ended December 31,
1999, was $20.0 million compared to $13.7 million in 1998. EBITDA consists of
income from continuing operations before interest, costs of certain acquisition
opportunities, income taxes, depreciation and amortization. Although EBITDA is
not calculated in accordance with accounting principles generally accepted in
the United States, the Company believes that EBITDA is widely used as a measure
of operating performance. Nevertheless, the measure should not be considered in
isolation or as a substitute for operating income, cash flows from operating
activities, or any other measure for determining the Company's operating
performance or liquidity that is calculated in accordance with generally
accepted accounting principles. EBITDA is not necessarily indicative of amounts
that may be available for reinvestment in the Company's business or other
discretionary uses. In addition, because all companies do not calculate EBITDA
in the same manner, this measure may not be comparable to similarly titled
measures reported by other companies.

Because of the recent acquisitions in 1999 and 1998, the Company
records a significant level of charges for its amortization of intangibles, a
majority of which are not deductible for income tax purposes. The effect of
these amortization charges and the related tax effect was to decrease income
from continuing operations during the years ended December 31, 1999 and 1998 by
$5.8 million and $2.7 million and related diluted earnings per share by $0.15
and $0.08, respectively.

Page 26
<PAGE> 29

1998 COMPARED TO 1997

REVENUES

For the year ended December 31, 1998, Tyler had revenues from
continuing operations of $50.5 million, $22.1 million of which were attributable
to the software systems and services segment and $28.4 million of which were
derived from the information and property records and services segment. On a pro
forma basis for acquired companies as of December 31, 1998 only, total revenues
were $62.7 million compared to $48.1 million in 1997.

Software Systems and Services Segment

On a pro forma basis, total revenues from the software systems and
services segment increased $8.5 million, or 43% to $28.4 million, for the twelve
months ended December 31, 1998 compared to $19.9 million in the comparable prior
year period. Results benefited from an overall movement by county and local
governments to upgrade their current computer systems. The movement has been
driven in part by customers' need to solve their Year 2000 issues. Maintenance
revenue for this segment in 1998 was approximately 25% of total revenue for this
segment. In 1998, the Company was awarded significant contracts with the
counties of El Paso and Gregg, both located in Texas, and Multnomah County
(Portland) in Oregon for combined expected revenues of approximately $8.0
million. Installation of these contracts began in the fall of 1998 and was
expected to be significantly complete by the end of 1999. Revenues in 1998
include approximately $2.5 million associated with these three contracts.
Additional revenue growth was derived from product upgrades and expansion into
new markets in Georgia, Washington, Minnesota, Wisconsin and Illinois.

Information and Property Records Services Segment

On a pro forma basis, total revenues from the information and property
records services segment increased $6.2 million or 22% to $34.4 million, for the
twelve months ended December 31, 1998 compared to $28.2 million in the
comparable prior year period. A large portion of this increase is the result of
revenue earned from a contract for the Cook County Recorder of Deeds in Chicago,
Illinois to design and install an electronic document management and imaging
system. Implementation of the system began in the second quarter and was
completed in the fourth quarter of 1998. Although the installation of the Cook
County contract was completed in 1998, maintenance and support activities will
continue through 2003. Other sources of revenue increases were optical imaging
services, title plant update services, title company software, customized
programming associated with document management software and royalty income.
Royalty income is derived from the sale of property tax information for real
estate transactions. These increases were somewhat offset by lower re-creation
revenue compared to last year. Re-creation services provide image-enhanced,
archival-quality reprints of old and deteriorating records, including
photostatic prints, with microfilm backup copies for improved security in case
of fire,

Page 27
<PAGE> 30

theft, water damage, or other catastrophe. Re-creation revenue is generally
dependent on available county funds, which may result in uneven revenue streams
from year to year.

COST OF REVENUES

For the year ended December 31, 1998, Tyler had cost of revenues from
continuing operations of $24.7 million, $10.2 million of which were attributable
to the software systems and services segment and $14.5 million of which were
derived from the information and property records services segment. On a pro
forma basis, for acquired companies as of December 31, 1998 only, cost of
revenues were $32.1 million compared to $24.6 million in 1997.

Software Systems and Services Segment

On a pro forma basis, total cost of revenues from the software systems
and services segment increased $3.9 million, or 38%, for the twelve months ended
December 31, 1998 compared to $10.1 million in the comparable prior year period.
The gross margin for software systems and services in 1998 of 51% was up
slightly from 49% for same period in the prior year, on a pro forma basis,
primarily due to increased sales volume related to several large contracts in
the fourth quarter of 1998. The gross margin increase was offset somewhat by a
strong competitive market for computer professionals which resulted in increased
salaries and other costs associated with attracting and retaining quality
employees.

Information and Property Records Services Segment

On a pro forma basis, total cost of revenues from the information and
property records services segment increased $3.6 million, or 25%, for the twelve
months ended December 31, 1998 compared to $14.5 million in the comparable prior
year period. The gross margin from information and property records services was
slightly lower at 47%, compared to the prior year period amount of 49%, on a pro
forma basis. This decline in margin is mainly attributable to changes in product
mix, primarily re-creation revenue, which was unusually high in 1997 and has a
higher gross margin than other services.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses were $14.5 million in
1998, compared to $3.0 million in 1997. The increase is due to acquisition of
the information management companies as the prior year consists only of
corporate expense relating to the holding company's activities. On a pro forma
basis, selling, general and administrative expenses as a percent of revenues has
declined from approximately 29% in 1997 to approximately 27% in 1998, mainly due
to increased sales volume. This decline was offset somewhat by increased costs
associated with present and planned future growth.

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<PAGE> 31
AMORTIZATION OF INTANGIBLES

The Company accounted for all 1998 acquisitions using the purchase
method of accounting for business combinations. Unallocated purchase price over
the net identifiable assets of the acquired companies is amortized using the
straight-line method of amortization over their respective useful lives.

NET INTEREST EXPENSE

As a result of the debt incurred to finance acquisitions and their
related transaction costs in 1998, the Company recorded net interest expense of
$1.8 million compared to net interest income of $822,000 in 1997.

INCOME TAX PROVISION

The effective tax rate increased to 64% from a 43% benefit rate in the
prior year mainly due to the non-deductibility of goodwill amortization relating
to the 1998 acquisitions.

NET INCOME AND OTHER MEASURES

Net loss was $8.4 million in 1998 compared to $3.3 million in 1997.
Diluted loss per share was $0.24 and $0.16 for 1998 and 1997, respectively. Net
earnings from continuing operations was $1.2 million, or $0.03 per diluted
share, in 1998 compared to a net loss of $1.2 million, or $0.06 per diluted
share in 1997. Excluding the effect of the costs of certain acquisition
opportunities, income from continuing operations and diluted earnings per share
in 1998 would have been $3.2 million and $0.09, respectively.

ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED

In June 1999, SFAS No. 137, "Accounting for Derivative Instruments and
Hedging Activities-Deferral of Effective Date of FASB Statement No. 133" was
issued by the Financial Accounting Standards Board ("FASB"). The Statement
defers for one year the effective date of FASB Statement No. 133, "Accounting
for Derivative Instruments and Hedging Activities". The rule now will apply to
all fiscal years beginning after June 15, 2000. FASB statement No. 133 will
require the Company to recognize all derivatives on the balance sheet at fair
value. Derivatives that are not hedges must be adjusted to fair value through
income. If the derivative is a hedge, depending on the nature of the hedge,
changes in the fair value of derivatives will either be offset against the
change in fair value of the hedged assets, liabilities, or firm commitments
through earnings or recognized in other comprehensive income until the hedged
item is recognized in earnings. The ineffective portion of a derivative's change
in fair value will be immediately recognized in earnings. The adoption of SFAS
No. 133 is not expected to have a material impact on the Company's consolidated
financial statements and related disclosures.

Page 29
<PAGE> 32
LIQUIDITY

In October 1999, the Company entered into a three-year $80 million
revolving credit agreement ("Senior Credit Facility") with a group of banks.
Borrowings under the Senior Credit Facility, as amended, bear interest at either
the lead bank's prime rate plus a margin of .25% to 1.50% or the London
Interbank Offered Rate plus a margin of 2.25% to 3.50%, depending on the
Company's ratio of indebtedness to earnings before interest, taxes, depreciation
and amortization. The Senior Credit Facility replaced the Company's previous $50
million revolving credit facility. At December 31, 1999, the Company had
outstanding borrowings and letters of credit of $61.0 million and available
borrowing capacity of $19.0 million under the Senior Credit Facility. The
effective average interest rate for the borrowings was approximately 7.7% and
7.5% in 1999 and 1998, respectively. The Senior Credit Facility is secured by
substantially all of the Company's real and personal property and a pledge of
the common stock of present and future significant operating subsidiaries. The
Senior Credit Facility is also guaranteed by such subsidiaries. Under the terms
of the Senior Credit Facility, the Company is required to maintain certain
financial ratios and other financial conditions. The Senior Credit Facility also
prohibits the Company from making certain investments, advances or loans and
restricts substantial asset sales, capital expenditures and cash dividends.
Under the terms of the Senior Credit Facility the Company has the ability to
increase the facility to $100 million subject to the participation of additional
new lenders.

In addition, at December 31, 1999, the Company had several promissory
notes payable, capital lease obligations and other installment notes totaling
$6.5 million (excluding current portion of $3.7 million). Fixed interest rates
on the promissory and installment notes ranged from 6% to 10%. The Company made
principal payments of $3.2 million on these notes and $668,000 on capital lease
obligations in 1999.

In 1999, the Company made capital expenditures of $15.2 million for
continuing operations, of which approximately $2.5 million were financed through
capital lease obligations and a note payable. These expenditures included $6.7
million relating to the construction of the national data repository and
development of software. The remaining expenditures were primarily for computer
equipment and building expansions.

The Company entered into a tax-benefit transfer lease in 1983 pursuant
to which it is obligated to make income tax payments totaling $2.2 million over
the next two years beginning in 2000. This obligation is included in deferred
taxes at December 31, 1999.

In 1999, the Company paid in the aggregate, $25.6 million in cash and
issued 6.0 million shares of Tyler common stock for acquisitions accounted for
as purchases. Cash paid for acquisitions does not include transaction costs
related to the execution of the acquisitions, such as legal, accounting and
consulting fees, or acquired cash balances.

Page 30
<PAGE> 33

Excluding acquisitions, Tyler anticipates that 2000 capital spending
will be approximately $10.0 million, which is expected to be funded from
internal operations and/or bank financing. Included in these expenditures is
approximately $4.0 million relating to construction of the Database. Such costs
include certain payroll related programming costs as well as the costs to
purchase data from external sources to initially populate the Database. Upon
completion, the Database will include, among other items, a wide range of public
information such as real property tax and assessment data, chain of title
property records and images. The Company does not anticipate Database revenues
to be significant in 2000. Additionally, further expenditures will be necessary
subsequent to 2000 to update and expand the Database.

The Company is from time to time engaged in discussions with respect to
selected acquisitions and expects to continue to assess these and other
acquisition opportunities as they arise. The Company may also require additional
financing if it decides to make additional acquisitions. There can be no
assurance, however, that any such opportunities will arise, any such
acquisitions will be consummated or that any needed additional financing will be
available when required on terms satisfactory to the Company. Absent any
acquisitions, the Company anticipates that cash flows from operations, working
capital and unused borrowing capacity under its Senior Credit Facility will
provide sufficient funds to meet its needs for at least the next year.

The Company was a defendant in a lawsuit in which a favorable ruling
was rendered in the first quarter of 2000. From late 1999 through the first
quarter of 2000, the Company incurred legal fees in connection with the defense
of this matter estimated to range from $800,000 to $1.0 million, a majority of
which will be paid in the second quarter of 2000.

On January 3, 2000, the Company acquired the stock of Capital Commerce
Reporter, Inc. ("CCR") for approximately $3.0 million in cash, $1.2 million in
assumed debt and a $2.8 million five-year 10% subordinated note in a business
combination accounted for as a purchase. CCR is based in Austin, Texas and
provides public records research, document retrieval, filing and information
services. CCR has an active client base of approximately 1,800 financial
institutions, legal firms and title companies.

CAPITALIZATION

The Company's capitalization at December 31, 1999, consisted of $71.2
million in long-term obligations (including current portion) and $138.9 million
in shareholders' equity. The total debt-to-capital ratio was 34% at December 31,
1999.

YEAR 2000

In the prior years, the Company discussed the nature and progress of
its plans to become Year 2000 compliant. In late 1999, the Company completed its
remediation and testing of systems. As a result

Page 31
<PAGE> 34

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
significant Year 2000 issues that have affected its business. The number of Year
2000-related inquiries from customers into the Company's customer-care centers
has been minimal. While the Company does not anticipate any future problems, it
is possible that the Company's systems could be affected in the future by the
Year 2000 issue. The Company's systems interface with many third parties, which,
if they have not adequately addressed their Year 2000 issues, might result in
system failures that could cause a significant disruption to the Company's
operations.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The Company is exposed to market risk from changes in interest rates
due to the variable borrowing rates on its Senior Credit Facility. The Company's
Senior Credit Facility represents approximately 90% of its total long-term
obligations at December 31, 1999. If interest rates average 25 basis points more
in 2000 than they did during 1999, the Company's interest expense would be
increased by approximately $153,000. These amounts are determined by considering
the impact of the hypothetical interest rate on the Company's Senior Credit
Facility balance at December 31, 1999.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The consolidated financial statements of the Company, together with the
report of independent auditors and financial statement schedule, are included
herein and listed under the heading "(a)(1) The consolidated financial
statements of the Company of Part IV, Item 14." Financial statement schedules
other than the schedule included have been omitted because the required
information is contained in the consolidated financial statements or related
notes, or such information is not applicable.

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

None.

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<PAGE> 35

PART III

The information required by Items 10 through 13 of Part III is
incorporated herein by reference from the indicated sections of Tyler's
definitive proxy statement for its annual meeting of stockholders to be held on
June 28, 2000 (the "Proxy Statement"). Only those sections of the Proxy
Statement that specifically address the items set forth herein are incorporated
by reference. Such incorporation by reference does not include the Compensation
Committee Report or the Stock Performance Graphs, included in the Proxy
Statement.

<TABLE>
<CAPTION>
Headings in
Proxy Statement
----------------------------------------
<S> <C>
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. "Directors and Executive Officers"

ITEM 11. EXECUTIVE COMPENSATION. "Executive Compensation"

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS "Security Ownership of Directors
AND MANAGEMENT. and Executive Officers"

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. "Certain Transactions"
</TABLE>

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<PAGE> 36

PART IV

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

(a) (1) The consolidated financial statements of the Company
are filed as part of this report.
PAGE
<S> <C>
Report of Independent Auditors......................................................... F-1

Consolidated Statements of Operations for the years ended December 31, 1999, 1998,
and 1997.......................................................................... F-2

Consolidated Balance Sheets as of December 31, 1999 and 1998........................... F-3

Consolidated Statements of Shareholders' Equity for the years ended December 31,
1999, 1998 and 1997............................................................... F-4

Consolidated Statements of Cash Flows for the years ended December 31, 1999, 1998
and 1997.......................................................................... F-5

Notes to Consolidated Financial Statements............................................. F-6

(2) The following financial statement schedule is filed as part
of this report.

Schedule II--Valuation and Qualifying Accounts for the years ended December 31,
1999, 1998 and 1997.............................................................. F-40

(3) Exhibits
</TABLE>

Certain of the exhibits to this report are hereby incorporated by
reference, as specified:

EXHIBIT
NUMBER DESCRIPTION

3.1 Restated Certificate of Incorporation of Tyler Three, as amended
through May 14, 1990, and Certificate of Designation of Series A
Junior Participating Preferred Stock (filed as Exhibit 3.1 to the
Company's Form 10-Q for the quarter ended June 30, 1990, and
incorporated herein).

3.2 Certificate of Amendment to the Restated Certificate of Incorporation
(filed as Exhibit 3.1 to the Company's Form 8-K, dated February 19,
1998, and incorporated herein).

Page 34
<PAGE> 37

3.3 Amended and Restated By-Laws of Tyler Corporation, dated November 4,
1997 (filed as Exhibit 3.3 to the Company's Form 10-K for the year
ended December 31, 1997, and incorporated herein).

4.1 Rights Agreement, dated as of March 14, 1993, by and between Tyler
Corporation and The First National Bank of Boston, as Rights Agent,
which includes the form of Rights Certificate as Exhibit B thereto
(filed as Exhibit 4 to the Company's Form 8-K, dated January 29,
1993, and incorporated herein).

4.2 Specimen of Common Stock Certificate (filed as Exhibit 4.1 to the
Company's registration statement no. 33-33505 and incorporated
herein).

4.3 Credit agreement among Tyler Technologies, Inc., Bank of America,
N.A., Chase Bank of Texas, N.A., BankOne, Texas, N.A. and Bank of
America Securities LLC, dated October 1, 1999 (filed as Exhibit 4.3
to the Company's Form 10-Q for the quarter ended September 30, 1999,
and incorporated herein).

10.1 Form of Indemnification Agreement for directors and officers (filed
as Exhibit 10.1 to the Company's Form 10-Q for the quarter ended
March 31, 1992, and incorporated herein).

10.2 Stock Option Plan amended and restated as of February 7, 1997 (filed
as Exhibit 4.1 to the Company's registration statement no. 33-34809
and incorporated herein).

10.5 Indemnification Agreement, dated December 20, 1989 (filed as Exhibit
2.3 to the Company's registration statement no. 33-33505 and
incorporated herein).

10.8 Second Amended and Restated Agreement and Plan of Merger, dated as of
December 29, 1997, and effective as of October 8, 1997, among the
Company, T1 Acquisition Corporation, Business Resources Corporation,
and William D. Oates (filed as Exhibit 10.1 to the Company's Form
8-K, dated February 19, 1998, and incorporated herein).

10.9 Amended and Restated Agreement and Plan of Merger, dated as of
December 29, 1997, and effective as of October 8, 1997, among the
Company, T2 Acquisition Corporation, The Software Group, Inc., and
Brian B. Berry and Glenn A. Smith (filed as Exhibit 10.2 to the
Company's Form 8-K, dated February 19, 1998, and incorporated
herein).

10.10 Amendment Number One, dated February 19, 1998, and effective as of
October 8, 1997, to the Amended and Restated Agreement and Plan of
Merger among the Company, T2 Acquisition Corporation, The Software
Group, Inc. and Brian B. Berry and Glenn A. Smith (filed as Exhibit
10.3 to the Company's Form 8-K, dated February 19, 1998, and
incorporated herein).

10.11 Acquisition Agreement dated as of November 20, 1995, by and among the
Registrants, Tyler Pipe Industries, Inc. and Ransom Industries, Inc.,
formerly known as Union Acquisition Corporation (filed as Exhibit 2.1
to the Company's Form 8-K, dated December 14, 1995, and incorporated
herein).

10.12 Purchase Agreement between Tyler Corporation, Richmond Partners, Ltd.
and Louis A. Waters, dated August 20, 1997 (filed as Exhibit 10.24 to
the Company's Form 8-K, dated September 2, 1997, and incorporated
herein).

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<PAGE> 38

10.16 Employment agreement between the Company and Brian K. Miller, dated
December 1, 1997. (filed as Exhibit 10.16 to the Company's Form 10-K
for the year ended December 31, 1997 and incorporated herein).

10.18 Employment agreement between the Company and Theodore L. Bathurst,
dated October 7, 1998, (filed as Exhibit 10.18 to the Company's Form
10-Q for the quarter ended September 30, 1998, and incorporated
herein).

10.19 Purchase agreement dated March 26, 1999 between Tyler Corporation and
HalArt, L.L.C. (filed as Exhibit 10.1 to the Company's Form 8K, dated
April 8, 1999, and incorporated herein).

10.20 Agreement and Plan of Merger dated April 20, 1999, between Tyler
Corporation ("Parent") and Computer Center Software Inc., a Delaware
corporation and wholly-owned subsidiary of Parent, Process,
Incorporated d/b/a Computer Center Software (filed as exhibit 10.1 to
the Company's Form 8K, dated May 4, 1999 and incorporated herein).

*21 Subsidiaries of Tyler

*23 Consent of Ernst & Young LLP

*27 Financial Data Schedule

Tyler will furnish copies of these exhibits to shareholders upon
written request and payment for copying charges of $0.15 per page.

* Filed herewith.

(b) Reports on Form 8-K

<TABLE>
<CAPTION>
Form 8-K Item
Reported Date Reported Exhibits Filed
------------------ ------------ ------------------------------------------------------
<S> <C> <C> <C>
11/18/99 2 Asset Purchase Agreement dated November 3, 1999
among Tyler Technologies, Inc., Cole-Layer-Trumble
Company and Day & Zimmerman, L.L.C.

1/18/00 7(b) Pro forma condensed consolidated financial
statements for the year ended December 31, 1998 and
the nine months ended September 30, 1999.
</TABLE>

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<PAGE> 39

SIGNATURES

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

TYLER TECHNOLOGIES, INC.

Date: April 5, 2000 By: /s/ John M. Yeaman
------------------------------------------
John M. Yeaman
President
Director
(principal executive officer)

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

Date: April 5, 2000 By: /s/ Louis A. Waters
------------------------------------------
Louis A. Waters
Chairman of the Board

Date: April 5, 2000 By: /s/ John M. Yeaman
------------------------------------------
John M. Yeaman
President
Director
(principal executive officer)

Date: April 5, 2000 By: /s/ Theodore L. Bathurst
------------------------------------------
Theodore L. Bathurst
Vice President and Chief
Financial Officer
(principal financial officer)

Date: April 5, 2000 By: /s/ Brian K. Miller
------------------------------------------
Brian K. Miller
Vice President - Finance and Treasurer

Date: April 5, 2000 By: /s/ Terri L. Alford
------------------------------------------
Terri L. Alford
Controller
(principal accounting officer)

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<PAGE> 40

Date: April 5, 2000 By: /s/ Ernest H. Lorch
------------------------------------------
Ernest H. Lorch
Director

Date: April 5, 2000 By: /s/ F. R. Meyer
------------------------------------------
F. R. Meyer
Director

Date: April 5, 2000 By: /s/ William D. Oates
------------------------------------------
William D. Oates
Director

Date: April 5, 2000 By: /s/ C.A. Rundell, Jr.
------------------------------------------
C.A. Rundell, Jr.
Director

Page 38
<PAGE> 41

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors and Shareholders
Tyler Technologies, Inc.

We have audited the accompanying consolidated balance sheets of Tyler
Technologies, Inc. and subsidiaries as of December 31, 1999 and 1998, and the
related consolidated statements of operations, shareholders' equity, and cash
flows for each of the three years in the period ended December 31, 1999. Our
audits also included the financial statement schedule listed in the Index at
Item 14(a). These statements and schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and schedule 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Tyler Technologies, Inc. and subsidiaries at December 31, 1999 and 1998, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States. Also, in our opinion, the
related financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.

ERNST & YOUNG LLP

Dallas, Texas
March 30, 2000

F-1
<PAGE> 42
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended December 31
In thousands, except per share amounts

<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Revenues:
Software licenses $ 23,576 $ 10,761 $ --
Professional services 46,629 24,311 --
Maintenance 25,579 6,139 --
Hardware and other 12,617 9,338 --
--------- --------- ---------
Total revenues 108,401 50,549 --

Cost of revenues:
Software licenses 3,227 1,041 --
Professional services and maintenance 42,505 17,710 --
Hardware and other 8,681 5,998 --
--------- --------- ---------
Total cost of revenues 54,413 24,749 --
--------- --------- ---------

Gross margin 53,988 25,800 --

Selling, general and administrative expense 37,909 14,461 2,959
Costs of certain acquisition opportunities 1,851 3,146 --
Amortization of intangibles 7,315 3,173 --
--------- --------- ---------

Operating income (loss) 6,913 5,020 (2,959)

Interest expense (4,893) (2,009) (85)
Interest income 320 178 907
--------- --------- ---------

Income (loss) from continuing operations before
income taxes 2,340 3,189 (2,137)
Income tax provision (benefit) 2,404 2,033 (918)
--------- --------- ---------
Income (loss) from continuing operations (64) 1,156 (1,219)

Discontinued operations:
Income (loss) from operations, after income tax -- (1,378) 339
Loss on disposal, after income taxes (2,760) (8,138) (2,468)
--------- --------- ---------
Loss from discontinued operations (2,760) (9,516) (2,129)
--------- --------- ---------
Net loss $ (2,824) $ (8,360) $ (3,348)
========= ========= =========

Basic earnings (loss) per common share:
Continuing operations $ (0.00) $ 0.04 $ (0.06)
Discontinued operations (0.07) (0.30) (0.10)
--------- --------- ---------
Net loss per common share $ (0.07) $ (0.26) $ (0.16)
========= ========= =========

Diluted earnings (loss) per common share:
Continuing operations $ (0.00) $ 0.03 $ (0.06)
Discontinued operations (0.07) (0.27) (0.10)
--------- --------- ---------
Net loss per common share $ (0.07) $ (0.24) $ (0.16)
========= ========= =========

Weighted average common shares outstanding:
Basic 39,105 32,612 20,498
Diluted 39,105 34,400 20,498
</TABLE>

See accompanying notes

F-2
<PAGE> 43
CONSOLIDATED BALANCE SHEETS
December 31
In thousands, except par value and number of shares

<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,424 $ 1,558
Accounts receivable (less allowance for losses of $1,257 in 1999
and $531 in 1998) 39,464 14,429
Income tax receivable 3,392 1,308
Prepaid expenses and other current assets 3,301 1,445
Deferred income taxes 2,438 1,061
Net current assets of discontinued operations -- 12,752
--------- ---------
Total current assets 51,019 32,553

Net assets of discontinued operations -- 2,848

Property and equipment, net 21,789 14,147

Other assets:
Investment securities available - for - sale 33,713 --
Goodwill and other intangibles, net 160,665 95,996
Sundry 1,991 938
Other receivables 3,358 3,612
--------- ---------
$ 272,535 $ 150,094
========= =========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,163 $ 1,190
Accrued wages and commissions 7,262 1,903
Other accrued liabilities 6,524 3,249
Current portion of long-term obligations 3,747 1,876
Deferred revenue 24,303 10,148
--------- ---------
Total current liabilities 46,999 18,366

Long-term obligations, less current portion 67,446 37,189
Deferred income taxes 13,869 10,920
Other liabilities 5,317 7,273

Commitments and contingencies

Shareholders' equity:
Preferred stock, $10.00 par value; 1,000,000 shares authorized,
none issued -- --
Common stock, $.01 par value, 100,000,000 shares authorized;
44,709,169 and 35,913,313 shares issued in 1999 and
1998, respectively 447 359
Additional paid-in capital 151,298 103,985
Accumulated deficit (24,615) (21,791)
Accumulated other comprehensive income 17,931 --
Treasury stock, at cost, 1,418,482 shares in 1999 and 1,423,482
shares in 1998 (6,157) (6,207)
--------- ---------
Total shareholders' equity 138,904 76,346
--------- ---------
$ 272,535 $ 150,094
========= =========
</TABLE>

See accompanying notes.

F-3
<PAGE> 44
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the years ended December 31, 1999, 1998 and 1997
In thousands

<TABLE>
<CAPTION>
Accumulated
Common Stock Additional Other
-------------------- Paid-in Comprehensive Accumulated
Shares Amount Capital Income Deficit
--------- --------- ---------- ------------- -----------

<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996 21,309 $ 213 $ 48,520 $ -- $ (10,083)
Net loss/Total comprehensive loss -- -- -- -- (3,348)
Issuance of treasury shares upon
exercise of stock options -- -- (309) -- --
Issuance of treasury shares for
employee stock grants -- -- (442) -- --
Sale of common stock and warrant 2,000 20 3,480 -- --
Redemption of rights -- -- (220) -- --
Purchase of treasury shares -- -- -- -- --
Federal income tax benefit related
to exercise of stock options -- -- 187 -- --
--------- --------- ---------- ------------- -----------
Balance at December 31, 1997 23,309 233 51,216 -- (13,431)
Net loss/Total comprehensive loss -- -- -- -- (8,360)
Issuance of treasury shares upon
exercise of stock options -- -- (259) -- --
Shares issued for acquisitions 12,604 126 52,880 -- --
Federal income tax benefit related
to exercise of stock options -- -- 148 -- --
--------- --------- ---------- ------------- -----------
Balance at December 31, 1998 35,913 359 103,985 -- (21,791)
Comprehensive Income:
Net loss -- -- -- -- (2,824)
Unrealized gain on securities classified
as available-for-sale, net of tax -- -- -- 17,931 --

Total comprehensive income
Issuance of treasury shares upon
exercise of stock options -- -- (31) -- --
Investment securities available-for-sale 2,810 28 15,754 -- --
Shares issued for acquisitions 5,986 60 31,728 -- --
Revision of federal income tax benefit related
to exercise of stock options -- -- (138) -- --
--------- --------- ---------- ------------- -----------
Balance at December 31, 1999 44,709 $ 447 $ 151,298 $ 17,931 $ (24,615)
========= ========= ========== ============= ===========
</TABLE>

See accompanying notes.

Treasury Stock Total
---------------------- Shareholders'
Shares Amount Equity
--------- --------- -------------

<S> <C> <C> <C>
Balance at December 31, 1996 (1,429) $ (6,609) $ 32,041
Net loss/Total comprehensive loss -- -- (3,348)
Issuance of treasury shares upon
exercise of stock options 198 682 373
Issuance of treasury shares for
employee stock grants 150 942 500
Sale of common stock and warrant -- -- 3,500
Redemption of rights -- -- (220)
Purchase of treasury shares (472) (1,630) (1,630)
Federal income tax benefit related
to exercise of stock options -- -- 187
--------- --------- -------------
Balance at December 31, 1997 (1,553) (6,615) 31,403
Net loss/Total comprehensive loss -- -- (8,360)
Issuance of treasury shares upon
exercise of stock options 136 468 209
Shares issued for acquisitions (6) (60) 52,946
Federal income tax benefit related
to exercise of stock options -- -- 148
--------- --------- -------------
Balance at December 31, 1998 (1,423) (6,207) 76,346
Comprehensive Income:
Net loss -- -- (2,824)
Unrealized gain on securities classified
as available-for-sale, net of tax -- -- 17,931
-------------
Total comprehensive income 15,107
-------------
Issuance of treasury shares upon
exercise of stock options 5 50 19
Investment securities available-for-sale -- -- 15,782
Shares issued for acquisitions -- -- 31,788
Revision of federal income tax benefit related
to exercise of stock options -- -- (138)
--------- --------- -------------
Balance at December 31, 1999 (1,418) $ (6,157) $ 138,904
========= ========= =============
</TABLE>

F-4
<PAGE> 45

CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31
In thousands

<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (2,824) $ (8,360) $ (3,348)
Adjustments to reconcile net loss from operations
to net cash provided (used) by operations:
Depreciation and amortization 11,261 5,503 116
Impairment of notes receivable 1,851 -- --
Provision for doubtful accounts 702 179 --
Deferred income tax (benefit) 546 242 (2,477)
Discontinued operations - noncash charges and
changes in operating assets and liabilities (1,543) 9,266 2,794
Changes in operating assets and liabilities, exclusive of
effects of acquired companies and discontinued operations:
Accounts receivable (13,674) (7,683) (15)
Income tax receivable (2,214) 231 510
Prepaid expenses and other current assets 257 (189) (150)
Other receivables 594 882 --
Accounts payable 1,097 (533) (135)
Accrued liabilities 2,817 (463) (3,071)
Deferred revenue 1,784 4,316 --
Other liabilities -- (1,303) (53)
-------- -------- --------
Net cash provided (used) by operating activities 654 2,088 (5,829)
-------- -------- --------

Cash flows from investing activities:
Additions to property and equipment (6,011) (2,391) (139)
Investment in database and other software development costs (6,680) (267) --
Cost of acquisitions, net of cash acquired (25,949) (34,741) --
Capital expenditures of discontinued operations (534) (2,070) (1,290)
Proceeds from disposal of discontinued operations,
net of transaction costs 15,114 2,628 5,847
Issuance of notes receivable (1,335) -- (5,700)
Proceeds from disposal of property and equipment 144 21 --
Other 508 33 (738)
-------- -------- --------
Net cash used by investing activities (24,743) (36,787) (2,020)
-------- -------- --------

Cash flows from financing activities:
Net borrowings on revolving credit facility 30,190 30,810 --
Payments on notes payable (3,248) (2,042) --
Issuance of common stock -- -- 3,500
Net sale of treasury shares to employee benefit plans 19 209 645
Purchase of treasury shares -- -- (1,630)
Payments of principal on capital lease obligations (668) (551) --
Redemption of rights -- (220) --
Debt issuance costs (1,338) (313) --
-------- -------- --------
Net cash provided by financing activities 24,955 27,893 2,515
-------- -------- --------

Net increase (decrease) in cash and cash equivalents 866 (6,806) (5,334)
Cash and cash equivalents at beginning of year 1,558 8,364 13,698
-------- -------- --------

Cash and cash equivalents at end of year $ 2,424 $ 1,558 $ 8,364
======== ======== ========
</TABLE>

See accompanying notes.

F-5
<PAGE> 46

Notes to Consolidated Financial Statements
(Tables in thousands, except per share data)

December 31, 1999 and 1998

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

Tyler Technologies, Inc. (the "Company") provides information
management services and products through two business segments: the software
systems and services segment and the information and property records services
segment.

The software systems and services segment provides county, local and
municipal governments with software, systems and services to serve their
information technology and automation needs, as well as real estate appraisal
services. This segment integrates its software products with computer equipment
from hardware vendors, third-party database management applications and office
automation software. In addition, this segment also assists local and county
governments with all aspects of software and hardware selection, network design
and management, installation and training and on-going support and related
services. This segment also provides mass appraisal services to taxing
jurisdictions, including physical inspection of all properties in the assessing
jurisdiction, data collection and processing, computer analysis for property
valuation and preparation of tax rolls.

The information services and property records segment, provides a wide
range of information management outsourcing services, primarily to county
governments as well as to some commercial users. These services currently
include records management and micrographic reproduction, data warehousing,
computerized indexing, and imaging of real property records maintained by county
clerks and recorders, as well as information management outsourcing and
professional services required by other county government units and agencies.
This segment also provides title plant copies and title plant update services
as well as property records database information.

The Company discontinued operations of Institutional Financing
Services, Inc. ("IFS") and Forest City Auto Parts Company ("Forest City"). See
Note 3 for discussion of discontinued businesses.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the
Company and all of its wholly-owned subsidiaries. All significant intercompany
balances and transactions have been

F-6
<PAGE> 47

eliminated in consolidation. Prior years' financial statements have been
restated to reflect discontinued businesses.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid debt instruments purchased with
original maturities of three months or less, which includes overnight repurchase
agreements, to be cash equivalents.

REVENUE RECOGNITION

The Company's software systems and services segment derives revenue
from software licenses, postcontract customer support ("PCS"), and services. PCS
includes telephone support, bug fixes, and rights to upgrade on a when-and-if
available basis. Services range from installation, training, and basic
consulting to software modification and customization to meet specific customer
needs. In software arrangements that include rights to multiple software
products, specified upgrades, PCS, and/or other services, the Company allocates
the total arrangement fee among each deliverable based on the relative fair
value of each of the deliverables, determined based on vendor-specific objective
evidence.

In October 1997, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position ("SOP") 97-2, "Software Revenue
Recognition" which supersedes SOP 91-1. The Company was required to adopt SOP
97-2 for software transactions entered into beginning January 1, 1998.

The Company recognizes revenue in accordance with SOP 97-2 as amended,
as follows:

Software Licenses - The Company recognizes the revenue allocable to
software licenses and specified upgrades upon delivery and installation of the
software product or upgrade to the end user, unless the fee is not fixed or
determinable or collectibility is not probable. If the fee is not fixed or
determinable, revenue is recognized as payments become due from the customer. If
collectibility is not considered probable, revenue is recognized when the fee is
collected. Arrangements that include software services, such as training or
installation, are evaluated to determine whether those services are essential to
the functionality of other elements of the arrangement.

A majority of the Company's software arrangements involve
"off-the-shelf" software and the other elements are not considered essential to
the functionality of the software. For those software arrangements in which
services are not considered essential, the software license fee is recognized as
revenue after delivery and installation have occurred, training has commenced,

F-7
<PAGE> 48

customer acceptance is reasonably assured, the fee is billable and probable of
collection and the remaining services other than training are considered
nominal.

Software Services - When software services are considered essential,
revenue under the entire arrangement is recognized as the services are performed
using the percentage-of-completion contract accounting method. When software
services are not considered essential, the fee allocable to the service element
is recognized as revenue as the services are performed.

Computer Hardware Equipment - Revenue allocable to equipment based on
vendor specific evidence of fair value is recognized when the equipment is
delivered and collection is probable.

Postcontract Customer Support - PCS agreements are generally entered
into in connection with initial license sales and subsequent renewals. Revenue
allocated to PCS is recognized on a straight-line basis over the period the PCS
is provided. All significant costs and expenses associated with PCS are expensed
as incurred.

Contract Accounting - For arrangements that include customization or
modification of the software, or where software services are otherwise
considered essential, or for real estate mass appraisal projects, revenue is
recognized using contract accounting. Revenue from these arrangements are
recognized on a percentage-of-completion method with progress-to-completion
measured based primarily upon labor hours incurred or units completed.

Deferred revenue consists primarily of payments received in advance of
revenue being earned under software licensing, software and hardware
installation, support and maintenance contracts.

Through its information and property records services segment, the
Company provides computerized indexing and imaging of real property records,
records management and micrographic reproduction, as well as information
management outsourcing and professional services required by county and local
government units and agencies. The Company also provides title plant update
services to title companies and sales of copies of title plants. The Company
recognizes service revenue when services are performed and equipment sales when
the products are shipped.

Title Plants - Sales of copies of title plants are usually made under
long-term installment contracts. The contract with the customer is generally
bundled with a long-term title plant update service arrangement. The bundled
fees are payable on a monthly basis over the respective contract period and
revenue is recognized on an as-billable basis over the terms of the arrangement.

F-8
<PAGE> 49

The Company also receives royalty revenue relating to the current
activities of two operating companies. Royalty revenue is recognized as earned
upon receipt of royalty payments.

USE OF ESTIMATES

The preparation of the consolidated 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 the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

PROPERTY AND EQUIPMENT

Property, equipment and purchased software are recorded at cost.
Depreciation and amortization are computed for financial reporting purposes
primarily utilizing the straight-line method over the estimated useful lives of
the related assets, or for leasehold improvements and capital leases, the
shorter of the base lease term or estimated useful life. For income tax purposes
accelerated depreciation methods are primarily used with the establishment of
deferred income tax liabilities for the resulting temporary differences.

Maintenance and repairs are charged to expense as incurred. Costs of
renewals and betterments are capitalized. The cost and accumulated depreciation
and amortization applicable to assets sold or otherwise disposed of are removed
from the asset accounts, and any net gain or loss is included in the statement
of operations.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company accounts for its long-lived assets in accordance with the
provisions of Statement of Financial Accounting Standards ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of". SFAS No. 121 requires that long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets, including goodwill, to be held and used
is measured by a comparison of the carrying amount of an asset to future net
cash flows expected to be generated by the asset. If such assets are considered
to be impaired, the impairment to be recognized is measured by the amount by
which the carrying amount of the assets exceed the fair value of the assets.

Assets to be disposed of are reported at the lower of carrying amount
or fair value less costs to sell.

F-9
<PAGE> 50

RESEARCH AND DEVELOPMENT COSTS

The Company expenses all research and development costs as incurred. In
1999, the Company expensed $1,765,000 of research and development costs.
Research and development costs in 1998 and 1997 were insignificant.

INCOME TAXES

Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.

STOCK COMPENSATION

The Company has adopted the provisions of SFAS No. 123, "Accounting for
Stock-Based Compensation", which permits entities to recognize as expense over
the vesting period the fair value of all stock-based awards as of the date of
grant. Alternatively, SFAS No. 123 also allows entities to continue to apply the
provisions of APB Opinion No. 25, "Accounting for Stock Issued to Employees",
and related interpretations and provide pro forma net income and pro forma
earnings per share disclosures for employee stock option grants made in 1995 and
future years as if the fair-value-based method defined in SFAS No. 123 had been
applied. Under APB Opinion No. 25, compensation expense would be recorded on the
date of grant only if the current market price of the underlying stock exceeded
the exercise price.

The Company has elected to continue to apply the provisions of APB
Opinion No. 25 and provide the pro forma disclosure provisions of SFAS No. 123.
See Note 12 for additional information.

COMPREHENSIVE INCOME (LOSS)

SFAS No. 130, "Reporting Comprehensive Income", requires reporting and
displaying comprehensive income and its components, the accumulated balance of
other comprehensive income displayed separately from retained earnings and
capital surplus in the equity section of the statement of financial position.

F-10
<PAGE> 51

As of and for the year ended December 31, 1999, the Company had other
comprehensive income and accumulated comprehensive income of $17,931,000 (no tax
effect due to the change in the valuation allowance related to the existing
capital loss carryforwards) associated with unrealized gains on securities
classified as available-for-sale. Total comprehensive income (loss) for 1998 and
1997 was the same as the Company's reported net income (loss) for those periods
and there was no accumulated balance of comprehensive income as of December 31,
1998 or 1997.

GOODWILL AND OTHER INTANGIBLE ASSETS

The cost of acquired companies is allocated first to identifiable
assets based on estimated fair values. Costs allocated to identifiable
intangible assets are amortized on a straight-line basis over the remaining
estimated useful lives of the assets, as determined principally by underlying
contract terms or independent appraisals. The excess of the purchase price over
the fair value of identifiable assets acquired, net of liabilities assumed, is
recorded as goodwill and amortized on a straight-line basis over the estimated
useful life. The useful life is determined based on the individual
characteristics of the acquired entity and ranges from five to forty years.

The Company periodically evaluates the carrying amounts of goodwill, as
well as the related amortization periods, to determine whether adjustments to
these amounts or useful lives are required based on current events and
circumstances. The evaluation is based on the Company's projection of the
undiscounted future operating cash flows of the acquired operation over the
remaining useful lives of the related goodwill. To the extent such projections
indicate that future undiscounted cash flows are not sufficient to recover the
carrying amounts of related goodwill, the underlying assets are written down by
charges to expense so that the carrying amount is equal to fair value, primarily
determined based on future discounted cash flows. The assessment of
recoverability of goodwill will be affected if estimated future operating cash
flows are not achieved.

Title plants consist of title records relating to a particular region
and are generally stated at cost. Expenses associated with current maintenance,
such as salaries and supplies, are charged to expense in the year incurred. The
costs of acquired title plants and costs of building new title plants, prior to
the time that a plant is put into operation, are capitalized. In accordance with
SFAS No. 61, "Accounting for Title Plant," properly maintained title plants are
not amortized because there is no indication of diminution in their value.

Costs incurred after a title plant is operational to convert the
information from one storage and retrieval system to another have not been
capitalized as title plant. Those costs have been capitalized separately and are
being amortized over an estimated useful life of twenty years.

F-11
<PAGE> 52

COSTS OF COMPUTER SOFTWARE

SFAS No. 86, "Accounting for the Costs of Computer Software to be Sold,
Leased, or Otherwise Marketed", requires capitalization of software development
costs incurred subsequent to establishment of technological feasibility and
prior to the availability of the product for general release to customers. In
1999, the Company capitalized approximately $2,312,000 of software development
costs, which primarily include personnel costs. No such costs were capitalized
in 1998. Systematic amortization of capitalized costs begins when a product is
available for general release to customers and is computed on a
product-by-product basis at a rate not less than straight-line basis over the
product's remaining estimated economic life. Amortization of software
development costs in 1999 was approximately $122,000.

In accordance with the AICPA SOP 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use", certain external
direct costs of materials and services, internal payroll and payroll related
costs and other qualifying costs incurred in connection with developing or
obtaining internal use software are capitalized. The Company capitalizes
qualifying costs to internally construct a national data repository
("Database"). Such capitalized costs include certain payroll-related and
contracted programming costs as well as the costs to purchase data from external
sources to initially populate the Database. Costs to subsequently update the
Database are expensed as incurred. Upon its completion, the Database will
include among other items, a wide range of public information for delivery via
the Internet, such as real property tax and assessment data, and a chain of
title property records and images. During 1999 and 1998, $4,368,000 and
$266,000, respectively, of such costs were capitalized as Database software and
related costs. As of December 31, 1999, there has been no amortization of these
costs since the Database is not yet ready for its intended use. Additionally at
December 31, 1999, $3,426,000 of related equipment has been capitalized in
connection with construction of the Database. To date, there have been no
significant customer contracts signed since the Database is not yet ready for
its intended use. Although management currently believes these costs are fully
recoverable based on its projections of future sales, it is reasonably possible
that those estimates of anticipated future gross revenues could be reduced in
the near term due to the uncertainty inherent in such an investment, and the
carrying amount may be correspondingly reduced in the near term.

F-12
<PAGE> 53

FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair
value of each class of financial instruments:

Cash and cash equivalents, trade accounts receivables, other current
assets, other assets, notes payable to banks, trade accounts payables, and
accrued expenses (nonderivatives): The carrying amounts approximate fair value
because of the short maturity of these instruments. The Company's
available-for-sale investments are carried at fair value.

Long-term obligations: The fair value of the Company's long-term
obligations is estimated by discounting the future cash flows of each instrument
at rates currently offered to the Company for similar debt instruments of
comparable maturities by the Company's banks. Based upon the borrowing rates
available to the Company for bank loans with similar terms and average
maturities, the estimated fair value of the notes payable approximates carrying
value at December 31, 1999 and 1998.

The Company has no involvement with derivative financial instruments,
including those for speculative or trading purposes.

CONCENTRATIONS OF CREDIT RISK AND UNBILLED RECEIVABLES

Concentrations of credit risk with respect to receivables are limited
due to the wide variety of customers and markets into which the Company's
products and services are provided, as well as their dispersion across many
different geographic areas. As a result, as of December 31, 1999, the Company
does not consider itself to have any significant concentrations of credit risk.

The Company's real estate mass appraisal service contracts can range up
to three years in duration. In connection with these percentage of completion
contracts and for certain software service contracts, the Company may perform
the work prior to when the services are billable pursuant to the contract. The
Company has recorded unbilled receivables (costs and estimated profit in excess
of billings) which amounted to approximately $6,931,000 at December 31, 1999 in
connection with such contracts. Retentions included in trade accounts receivable
and current assets that are expected to be collected in excess of one year
amounted to approximately $669,000 at December 31, 1999.

COMMITMENTS AND CONTINGENCIES

The Company accounts for certain environmental matters in accordance
with SOP 96-1, "Environment Remediation Liabilities". The Company accrues for
losses associated with environmental remediation obligations when such losses
are probable and reasonably estimatable.

F-13
<PAGE> 54

Accruals for estimated losses from environmental remediation obligations
generally are recognized no later than completion of the remedial feasibility
study. Such accruals are adjusted as further information develops or
circumstances change. Such costs include the incremental direct costs of the
remediation effort, including fees estimated to be paid to outside law firms and
certain internal employee compensation and benefits directly related to the
remediation effort. Costs of future expenditures for environmental remediation
obligations are not discounted to their present value. Recoveries of
environmental remediation costs from other parties are recorded as assets when
their receipt is deemed probable and have been included in noncurrent other
receivables at December 31, 1999 and 1998.

Legal costs to defend nonenvironmental litigation matters are expensed
as incurred.

RECLASSIFICATIONS

Certain amounts for previous years have been reclassified to conform to
the 1999 presentation.

(2) ACQUISITIONS

On February 19, 1998, the Company completed the purchases of Business
Resources Corporation ("Resources"), The Software Group, Inc. ("TSG") and
Interactive Computer Designs, Inc. ("INCODE"). Resources provides a wide range
of information management outsourcing services, primarily to county governments
as well as to some commercial users. TSG and INCODE provide county, local and
municipal governments with software, systems and services to serve their
information technology and automation needs.

On June 5, 1998, the Company acquired a line of document management
software and related customer installations and service contracts from the
Business Imaging Systems division of Eastman Kodak Company. Kofile, Inc.
("Kofile"), a newly formed subsidiary in the Company's Resources unit consists
of the development, support and marketing of the document management software
and related maintenance and support services to governmental and commercial
users.

Effective August 1, 1998, the Company completed the purchase of
Computer Management Services, Inc. ("CMS"). CMS provides integrated information
management systems and services to county and municipal governmental agencies
throughout Iowa, Minnesota, Missouri, South Dakota, Illinois, Wisconsin and
other states, primarily in the upper Midwest.

F-14
<PAGE> 55

Effective March 1, 1999, the Company acquired Eagle Computer Systems,
Inc. ("Eagle"). Eagle is a leading supplier of networked computing solutions for
county governments, primarily in the western United States. In addition, Eagle
provides hardware, data conversion, site planning, training and ongoing support
to its customers.

Effective April 1, 1999, the Company completed its acquisition of Micro
Arizala Systems, Inc. d/b/a FundBalance ("FundBalance") a company which develops
and markets fund accounting software and other applications for state and local
governments, not-for-profit organizations and cemeteries.

On April 21, 1999, the Company acquired Process Incorporated d/b/a
Computer Center Software ("MUNIS") which designs and develops integrated
financial and land management information systems for counties, cities, schools
and not-for-profit organizations. MUNIS provides software solutions to customers
primarily located throughout the northeastern and southeastern United States.

Effective May 1, 1999, the Company acquired Gemini Systems, Inc.
("Gemini"). Gemini develops and markets software products for municipal
governments and utilities which are primarily installed in the New England area.

On July 16, 1999, the Company acquired Pacific Data Technologies, Inc.
("Pacific Data"). Pacific Data is the primary developer of the Company's
Database which consists of software and systems that automate and manage public
information records for Internet delivery.

On November 4, 1999, the Company acquired selected assets and assumed
selected liabilities of Cole Layer Trumble Company, ("CLT") a division of a
privately held company ("Seller"), in an asset purchase agreement with an
effective date of October 29, 1999. CLT provides appraisal software and services
to governments. At closing, consideration consisted of cash, restricted shares
of Tyler common stock, certain senior subordinated secured promissory notes due
March 26, 2002 of Forest City Auto Parts Company with an aggregate face amount
of $3,155,000, assigned without recourse, and included a price protection on the
sale of the Company's common stock which expires no later than November 4, 2001.
The price protection is equal to the difference between the actual sale proceeds
of the Tyler common stock and $6.25 on a per share basis, but is limited to
$2,750,000. The subsequent payment, if any, of the contingent consideration will
not change the recorded cost of the acquisition. In addition, at December 31,
1999, the Company has recorded a receivable from the Seller of approximately
$1,200,000, resulting from post closing adjustments primarily related to the
balance of net assets at closing. Also, the Company is obligated to purchase any
billed receivables not collected within 90 days of closing.

F-15
<PAGE> 56

During 1999 and 1998, the Company also made other acquisitions which
were immaterial.

The Company accounted for all of the aforementioned acquisitions using
the purchase method of accounting for business combinations. Results of
operations of the acquired entities are included in the Company's consolidated
financial statements from their respective dates of acquisition. The excess
purchase price over the fair value of the net identifiable assets of the
acquired companies (goodwill) is amortized using the straight-line method of
amortization over their respective estimated useful lives.

Following is a summary of the Company's 1999 and 1998 acquisitions:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
ASSUMED GOODWILL
SHARES OF VALUE OF NON-CURRENT USEFUL LIFE
COMPANY CASH COMMON STOCK COMMON STOCK DEBT GOODWILL (YEARS)
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
1999
Eagle $ 5,000 $ 1,053 $ 6,211 $ -- $ 8,150 20
MUNIS 16,250 2,703 14,561 -- 17,623 20
CLT 3,000 1,000 4,275 -- 9,185 20
Pacific Data -- 175 1,034 -- 521 5
Other 1,364 1,055 5,707 -- 4,617 20
------------- ------------- ------------- ------------- -------------

TOTAL $ 25,614 5,986 $ 31,788 $ -- $ 40,096
============= ============= ============= ============= =============

1998
Resources $ 15,250 10,000 $ 40,125 $ 12,790 $ 45,921 40
TSG 12,000 2,000 8,025 -- 14,066 20
INCODE 1,250 225 1,220 -- 2,509 20
Kofile 3,600 -- -- 1,900 5,550 20
CMS 1,205 228 2,099 -- 1,059 20
Other 1,526 145 1,477 240 2,843 10-20
------------- ------------- ------------- ------------- -------------
TOTAL $ 34,831 12,598 $ 52,946 $ 14,930 $ 71,948
============= ============= ============= ============= =============
</TABLE>

In addition to consideration paid in cash and common stock for the 1999
acquisitions, the Company provided other consideration which totaled
approximately $3,900,000. The other consideration consisted of the issuance of a
series of notes to the sellers and the assignment of notes obtained in
conjunction with the Forest City disposition (see Note 3).

Cash paid for acquisitions does not reflect cash paid for transaction
costs related to the execution of the acquisitions, such as legal, accounting
and consulting fees, of approximately $673,000 and $2,488,000 in 1999 and 1998,
respectively and excludes acquired cash balances of approximately $338,000 and
$2,578,000 in 1999 and 1998, respectively.

The following unaudited pro forma information presents the consolidated
results of operations as if all of the Company's acquisitions and dispositions
of Forest City and IFS

F-16
<PAGE> 57

(Note 3) occurred as of the beginning of 1999 and 1998, after giving effect to
certain adjustments, including amortization of intangibles, interest and income
tax effects and reflecting only the loss on the respective disposals of the
discontinued operations in the year reflected in the historical consolidated
financial statements. The pro forma information does not purport to represent
what the Company's results of operations actually would have been had such
transactions or events occurred on the dates specified, or to project the
Company's results of operations for any future period.

<TABLE>
<CAPTION>
Years ended December 31,
-----------------------------
1999 1998
-----------------------------
Unaudited
<S> <C> <C>
Revenues ............................... $ 144,381 $ 114,611

Income from continuing operations, net 3,397 1,377

Net income (loss) ...................... 637 (8,139)

Net income (loss) per diluted share .... $ 0.02 $ (0.19)
</TABLE>

(3) DISCONTINUED OPERATIONS

In December 1998, the Company entered into a letter of intent to sell
its non-core automotive parts retailer, Forest City. Accordingly, this segment
has been accounted for as a discontinued operation with prior years' financial
statements restated to report separately their operations in compliance with APB
Opinion No. 30.

On March 26, 1999, the Company sold all of the outstanding common stock
of Forest City to HalArt, L.L.C. ("HalArt") for approximately $24,500,000.
Proceeds consisted of $12,020,000 in cash, $3,825,000 in a short-term secured
promissory note, $3,155,000 in senior secured subordinated notes and $5,500,000
in preferred stock. The short-term secured promissory note was fully paid in
July 1999. The senior secured subordinated notes carry interest rates ranging
between 6% to 8%, become due in March 2002, and are secured by a second lien on
Forest City inventory and real estate. The preferred stock will be mandatorily
redeemable in March 2006. Both the subordinated notes and the preferred stock
are subject to partial or whole redemption upon the occurrences of specified
events.

In determining the loss on the disposal of the business, the
subordinated notes were valued using present value techniques. As discussed in
Note 2, the $3,155,000 in senior secured subordinated notes were subsequently
assigned without recourse to the seller on November 4, 1999 in connection with
an acquisition.

F-17
<PAGE> 58

Because the redemption of the preferred stock is highly dependent upon
future operations of the buyer and due to its extended repayment terms, the
Company is unable to estimate the degree of recoverability. Accordingly, the
Company will record the value of the preferred stock as cash is received. The
Company originally estimated the loss on the disposal of Forest City to be
$8,939,000, which was recorded in the fourth quarter of 1998. The estimated loss
included anticipated operating losses from the measurement date of December 1998
to the date of disposal and associated transaction costs. In 1999, the Company
recorded additional losses of $907,000 (including taxes of $183,000) to reflect
adjusted estimated transaction costs, funded operating losses which were higher
than originally estimated, adjustments to amounts previously provided for income
taxes in connection with the sale and to write down to estimated net realizable
value a post-closing receivable in connection with a dispute with the purchaser.

The net assets of discontinued operations at December 31, 1998
consisted principally of working capital (including accounts receivable,
inventories, accounts payable and accrued liabilities), property and equipment
of Forest City.

The Company has determined a capital loss of $12,720,000 for tax
purposes on the sale of Forest City. No tax benefit has been recorded for this
capital loss since realization of the capital loss is not assured.

The condensed components of net assets of discontinued Forest City
operations included in the consolidated balance sheets as of December 31, 1998
are as follows:

<TABLE>
<S> <C>
Merchandise inventory................................ $24,289
Other assets......................................... 7,657
Liabilities.......................................... (7,866)
-------
24,080
Less reserve for estimated loss on disposition,
including post balance sheet operating losses
and transaction costs, net of income taxes......... (8,480)
-------
Net assets........................................... 15,600
Reclassification of long-term assets on
disposition........................................ (2,848)
-------
Net current assets................................. $12,752
=======
</TABLE>

Two of the Company's non-operating subsidiaries are involved in various
claims for work related injuries and physical conditions and for environmental
claims relating to a formerly owned subsidiary that was sold in 1995. During
1999, the Company expensed approximately $1,853,000 (net of taxes of $877,000)
for trial costs and settlements in excess of the amounts accrued associated with
these claims (See Note 17).

F-18
<PAGE> 59

Effective October 15, 1997, the Company sold all of the capital stock
of its subsidiary IFS, which provided products for fund-raising programs, to
I.F.S. Acquisition Corporation for approximately $8,400,000, resulting in a loss
on disposal of approximately $2,500,000. Proceeds consisted of approximately
$5,800,000 in cash received at closing and $2,628,000 received in January 1998.
This estimated loss on disposal included estimates regarding the value of
certain assets that were subject to change. In 1998, the Company made final
adjustments to those assets, which resulted in a reduction of the previously
estimated loss on disposal of $801,000.

Operating results of all discontinued operations are as follows for the
years ended December 31, prior to their disposition:

<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
Revenues............................................................... $76,484 $98,342

Income (loss) before income tax (benefit).............................. (2,231) 374
Income tax (benefit) provision......................................... (853) 35
------- -------
Net income (loss) from discontinued operations......................... $(1,378) $ 339
======= =======
</TABLE>

Interest has been charged to discontinued operations based on the net
assets of Forest City. External interest expense of $374,000, was allocated to
discontinued operations in 1998 only. Income tax (benefit) has been charged
(credited) to discontinued operations based on the income tax (benefit)
resulting from inclusion of the discontinued segments in the Company's
consolidated federal income tax return.

The income tax provision (benefit) differs from the amount which would
be provided by applying the statutory income tax rate to income (loss) before
income tax (benefit) due to permanent difference items consisting primarily of
non-deductible goodwill and state income taxes.

(4) RELATED PARTY TRANSACTIONS

From time to time, the Company charters aircraft from businesses in
which either a director and/or member of management of the Company is an owner
or part owner. For the year ended December 31, 1999, the Company recorded
charter rental expense of approximately $249,000, in connection with this
activity.

The Company has several notes receivable from employees totaling
$443,000 and $335,000 at December 31, 1999 and 1998, respectively. All of the
notes are non-interest bearing and are due between 2000 and 2004. There is no
significant difference between the face value and the present value of the
notes.

F-19
<PAGE> 60

On October 8, 1997, the Company entered into an agreement to acquire
Resources and received shareholder approval for the transaction on February 19,
1998 (see Note 2). In connection with this transaction, the Company loaned
Resources $5,700,000 on December 29, 1997 for working capital purposes. The
unsecured loan bore interest at a rate of 8.5% and had an original maturity date
of September 30, 1999. Subsequent to the acquisition, the loan is eliminated in
consolidation.

The Company has five office building lease agreements with various
shareholders of the Company. Total rental expense related to such leases for the
years ended December 31, 1999 and 1998 was $525,000 and $83,000, respectively.

Total future minimum rental under noncancelable related party operating
leases as of December 31, 1999, are as follows:

<TABLE>
<S> <C>
2000............................ $ 831
2001............................ 1,025
2002............................ 1,091
2003............................ 1,065
2004............................ 1,084
Thereafter...................... 6,038
</TABLE>

(5) PROPERTY AND EQUIPMENT

Property and equipment consists of the following at December 31:

<TABLE>
<CAPTION>
Useful
Lives
(years) 1999 1998
-------- -------- --------
<S> <C> <C> <C>
Land .................................... -- $ 2,556 $ 2,450
Transportation equipment ................ 5 484 334
Computer equipment and purchased software 3-7 11,433 5,650
Furniture and fixtures .................. 3-10 4,198 2,842
Building and leasehold improvements ..... 3-35 4,518 3,529
Computer equipment under capital lease .. 3 4,622 1,874
-------- --------
27,811 16,679
Accumulated depreciation and amortization (6,022) (2,532)
-------- --------
Property and equipment, net ........... $ 21,789 $ 14,147
======== ========
</TABLE>

Depreciation expense and capital lease related amortization expense totaled
$3,820,000, $2,146,000 and $29,000 during the years ended December 31, 1999,
1998 and 1997, respectively. The Company entered into capital leases for
equipment of approximately $2,040,000

F-20
<PAGE> 61
and $338,000 during 1999 and 1998, respectively. Additionally the Company
acquired a building for $652,000, of which $476,000 was financed through a term
note with a bank.

(6) INVESTMENT SECURITIES AVAILABLE-FOR-SALE

Pursuant to an agreement with two major shareholders of H.T.E., Inc.
("HTE"), the Company acquired approximately 32% of HTE's common stock in two
separate transactions in 1999. On August 17, 1999, the Company exchanged
2,325,000 shares of its common stock for 4,650,000 shares of HTE common stock.
This initial investment was recorded at $14,008,000. The second transaction
occurred on December 21, 1999, in which the Company exchanged 484,476 shares of
its common stock for 968,952 shares of HTE common stock and this investment was
recorded at $1,774,000. This investment is classified as a non-current asset
since it was made for a continuing business purpose.

Under generally accepted accounting principles, an investment of 20% or
more of the voting stock of an investee should lead to a presumption that in
absence of evidence to the contrary, an investor has the ability to exercise
significant influence over the operating and financial policies of an investee.
Management of the Company has concluded that it currently does not have such
influence as evidenced by the following key factors:

o Inability to resolve the different interpretations regarding the
ability to vote the shares

o Inability to obtain additional financial information not otherwise
available to other shareholders

o Inability to obtain certain confirmations and consents from the
investee's independent auditors

Accordingly, the Company accounts for its investment in HTE pursuant to the
provisions of SFAS No. 115, "Accounting for Certain Investments in Debt and
Equity Securities". These securities are classified as available-for-sale and
are recorded at fair value as determined by quoted market prices. Unrealized
holding gains and losses, net of the related tax effect, on available-for-sale
securities are excluded from earnings and are reported as a separate component
of shareholders' equity until realized. Realized gains and losses from the sale
of available-for-sale securities (none in each of the three years ended December
31, 1999) are determined on a specific identification basis. A decline in the
market value of any available-for-sale security below cost that is deemed to be
other than temporary results in a reduction in carrying amount to fair value.
The impairment is charged to earnings and a new cost basis for the security is
established.

At December 31, 1999, the cost, fair value and gross unrealized holding
gains of the investment securities available-for-sale amounted to $15,782,000,
$33,713,000, and $17,931,000, respectively, based on a quoted market price of
$6.00 per share. Because of the Company's existing capital loss carryforwards
(see Note 10), any tax expense related to the unrealized gain is offset by a
reduction in the Company's valuation allowance. At March 31, 2000, the fair
value of the investment securities available-for-sale was $18,093,000 based on a
quoted market price of $3.22 per share.

If the uncertainty regarding the voting shares is resolved in the Company's
favor, the Company will retroactively adopt the equity method of accounting for
this investment. Therefore, the Company's results of operations and retained
earnings for periods beginning with the 1999 acquisition will be retroactively
restated to reflect the Company's investment in HTE for all periods in which it
held an investment in the voting stock of HTE. Under the equity method, the
original investment is recorded at cost and is adjusted periodically to
recognize the investor's share of earnings or losses after the respective dates
of acquisition. The Company's investment in HTE would include the unamortized
excess of the Company's investment over its equity in the net assets of HTE.
This excess would be amortized on a straight-line basis over the estimated
economic useful life of ten years. In addition, any loss in value of an
investment which is other than a temporary decline would also be charged to
earnings.

Because of the effects of such a future change, the following information
has been provided or derived from publicly filed financial information which has
not been independently confirmed to the Company and is considered unaudited. HTE
reported a net loss of $14,866,000 for the year ended December 31, 1999.
Subsequent to the Company's initial acquisition of HTE's shares in August 1999,
HTE recorded charges of approximately $7,900,000, net of tax, related to
write-offs of software development costs, certain accounts receivables and
employee-termination benefits that were recorded by HTE as a result of changes
in management and charges for litigation settlements. These costs would be
considered pre-acquisition costs by the Company in determining its share of
HTE's loss from the respective dates of acquisition. Had the Company's
investment in HTE been accounted for under the equity method, the Company would
have recorded equity in losses of HTE of $1,352,000 for the year ended December
31, 1999. Also, during the three months ended September 30, 1999, the Company
recorded equity in loss of HTE of $378,000 ($0.01 per diluted share). This
charge has been retroactively restated and eliminated in the accompanying
consolidated financial statements for the year ended December 31, 1999 to
reflect the aforementioned factors.

F-21
<PAGE> 62

(7) COSTS OF CERTAIN ACQUISITION OPPORTUNITIES

CPS Systems Notes Receivable

In March 1999, the Company entered into a merger agreement pursuant to
which the Company contemplated the acquisition of all of the outstanding common
stock of CPS Systems, Inc. ("CPS"). In connection with that agreement, the
Company provided CPS with bridge financing of $1,000,000 in the form of a note
secured by a second lien on substantially all of the assets of CPS, including
accounts receivable, inventory, intangibles, equipment and intellectual
property. The note bears interest at 2% over the prime rate and was initially
due on October 30, 1999. In June 1999, Tyler provided notice to CPS that it was
exercising its right to terminate the merger agreement. Although the original
agreement was terminated, the Company and CPS continued to negotiate to find an
alternative structure for the transaction. In August 1999, Tyler provided an
additional $200,000 of bridge financing, on terms similar to the original note
and continued to provide additional bridge financings on terms similar to the
other notes.

In January 2000, CPS filed a voluntary petition for relief under
Chapter 11 of the United States Bankruptcy Code. On March 24, 2000, the
bankruptcy court conducted a public auction of the assets and the Company
submitted a cash only bid of $100,000 for the California Visual Basic/Oracle Tax
and CAMA software assets of CPS.

F-22
<PAGE> 63

Other

On July 31, 1998, the Company entered into a letter of intent with a
Fortune 500 company to acquire certain businesses of the company in a
transaction to be accounted for as a purchase business combination. These
businesses had estimated annual revenues of over $500 million and represented a
business opportunity which was aligned with the Company's strategy in the
information management business. Direct and incremental costs associated with
the proposed combination, primarily consisting of fees paid to outside legal and
accounting advisors for due diligence, were incurred by the Company and would
have been considered as a cost of the acquisition upon the successful closing of
the transaction. Subsequent to September 30, 1998, the potential seller elected
not to sell any of the businesses. Accordingly, all costs associated with this
opportunity have been expensed in the accompanying 1998 consolidated financial
statements and included in "costs of certain acquisition opportunities."

(8) GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill, other intangible assets and related accumulated amortization
are as follows:

<TABLE>
<CAPTION>
Useful
Lives
(years) 1999 1998
--------- --------- ---------
<S> <C> <C> <C>
Goodwill ........................................... 5-40 $ 108,009 $ 71,948
Title plants ....................................... -- 13,100 13,100
Title plant modification ........................... 20 547 357
Customer lists ..................................... 20-35 16,832 5,035
Software acquired .................................. 5 14,715 5,020
Software development costs ......................... 3 6,995 142
Workforce .......................................... 5-10 6,970 3,301
Database under development ......................... 10 4,634 266
--------- ---------
171,802 99,169
Accumulated amortization ........................... (11,137) (3,173)
--------- ---------
Goodwill and other intangibles, net ............. $ 160,665 $ 95,996
========= =========
</TABLE>

F-23
<PAGE> 64
(9) LONG-TERM OBLIGATIONS

Long-term obligations consists of the following as of December 31:

<TABLE>
<CAPTION>
1999 1998
------- -------
<S> <C> <C>
Revolving senior credit facility ............................................. $61,000 $30,810
8.75% promissory note payable, payable in quarterly installments
through October 2004, collateralized by a building...................... 476 --
8% promissory note payable, payable in quarterly installments through
September 2005, collateralized by certain assets ....................... 885 1,002
7% promissory notes payable due May 2000 ..................................... 500 --
6.1% unsecured installment notes payable, payable in annual
installments through August 2002 ....................................... 134 173
10% unsecured installment notes payable, payable in monthly
installments through May 2004 .......................................... 214 250
9% promissory note payable, payable in monthly installments through
February 2001, collateralized by certain assets and the capital stock of
Title Records Corporation and Government Records Services, Inc.,
wholly-owned subsidiaries of Resources.................................. 3,649 4,632
Long-term obligations under various capital leases ........................... 3,730 1,826
Other ........................................................................ 605 372
------- -------
Total obligations ....................................................... 71,193 39,065
Less current portion ......................................................... 3,747 1,876
------- -------
Total long-term obligations ............................................. $67,446 $37,189
======= =======
</TABLE>

The aggregate maturities of long-term obligations for each of the years
subsequent to December 31, 1999, assuming the revolving credit facility is not
renewed, are as follows: 2000 - $3,747,000; 2001 - $4,049,000; 2002-
$62,410,000; 2003 - $247,000; 2004 - $600,000; thereafter - $140,000.

Interest paid in 1999, 1998 and 1997 was $4,053,000, $1,818,000 and
$5,000, respectively.

In October 1999, the Company entered into a three-year revolving credit
agreement with a group of banks ("Senior Credit Facility") in an amount not to
exceed $80,000,000. Borrowings under the Senior Credit Facility, as amended,
bear interest at either the lead bank's prime rate plus a margin of .25% to
1.50% or the London Interbank Offered Rate plus a margin of 2.25% to 3.50%,
depending on the Company's ratio of indebtedness to earnings before interest,
taxes, depreciation and amortization. The Senior Credit Facility replaced the
Company's previous $50,000,000 revolving credit facility ("Prior Facility"). At
December 31, 1999, the Company had outstanding borrowings and letters of credit
of $61,000,000 and available borrowing capacity of $19,000,000 under the Senior
Credit Facility. The interest rate at December 31, 1999 was 8.2%.

F-24
<PAGE> 65

The effective average interest rates for borrowings during 1999 and
1998 were 7.7% and 7.5%, respectively. The Senior Credit Facility is secured by
substantially all of the Company's real and personal property and a pledge of
the common stock of present and future significant operating subsidiaries. The
Senior Credit Facility is also guaranteed by such subsidiaries. Under the terms
of the Senior Credit Facility, the Company is required to maintain certain
financial ratios and other financial conditions. The Senior Credit Facility also
prohibits the Company from making certain investments, advances or loans and
restricts substantial asset sales, capital expenditures and cash dividends. The
Company is in compliance with its various covenants under the Senior Credit
Facility, as amended. Under the terms of the Senior Credit Facility, the Company
has the ability to increase the facility to $100,000,000 subject to the
participation of additional new lenders.

(10) INCOME TAX

The provision (benefit) included in continuing operations for income
tax consists of the following:

<TABLE>
<CAPTION>
Years ended December 31,
-----------------------------
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Current:
Federal ................... $ 1,775 $ 1,483 $ 1,280
State ..................... 742 354 --
------- ------- -------
2,517 1,837 1,280

Deferred ..................... (113) 196 (2,198)
------- ------- -------
$ 2,404 $ 2,033 $ (918)
======= ======= =======
</TABLE>

The income tax provision (benefit) differs from amounts computed by
applying the federal statutory tax rate of 35% to income (loss) from continuing
operations as follows:

<TABLE>
<CAPTION>
Years ended December 31,
----------------------------
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Income tax (benefit) at statutory rate ......... $ 819 $ 1,116 $ (748)
State income tax, net of federal income tax
benefit ..................................... 483 230 --
Non-deductible amortization .................... 1,054 652 13
Utilization of capital loss .................... -- -- (188)
Other, net ..................................... 48 35 5
------- ------- -------
$ 2,404 $ 2,033 $ (918)
======= ======= =======
</TABLE>

F-25
<PAGE> 66

Significant components of deferred tax assets and liabilities as of
December 31 are as follows:

<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Deferred income tax assets:
Insurance reserves............................................. $ 98 $ 98
Operating expenses not currently deductible ................... 1,582 1,611
Employee benefit plans ........................................ 260 149
Net operating loss ............................................ 34 --
Capital loss carryforward ..................................... 17,139 12,514
Research tax credits .......................................... 78 --
Other ......................................................... 1,166 408
-------- --------
Total deferred income tax assets............................ $ 20,357 $ 14,780
-------- --------

Deferred income tax liabilities:
Basis difference on investments available-for-sale............. $ (6,276) $ --
Tax-benefit transfer lease .................................... (2,224) (3,475)
Property and equipment ........................................ (719) (2,174)
Intangible assets ............................................. (11,689) (6,346)
Other ......................................................... (17) (130)
-------- --------
Total deferred income tax liabilities ...................... (20,925) (12,125)
-------- --------
Net deferred income tax assets before valuation
allowance ................................................... (568) 2,655
Less valuation allowance ...................................... 10,863 12,514
-------- --------
Net deferred income tax liabilities............................... $(11,431) $ (9,859)
======== ========
</TABLE>

The Company has research tax credit carryforwards of $78,000 at
December 31, 1999. The Company has net operating loss carryforwards of $98,000
which are subject to an annual IRC Section 382 limitation. The research tax
credit and net operating carryforwards will expire between 2016 and 2017.

Income taxes paid, net of refunds received, in 1999 and 1998 were
$2,841,000 and $1,478,000, respectively. In 1997, the Company received a refund
of prior year income taxes of $95,000.

Although realization is not assured, management believes it is more
likely than not that all the deferred tax assets will be realized except for
those relating to the capital loss carryforwards other than those offset by the
basis difference on investments available-for-sale. Accordingly, the Company
believes that no valuation allowance is required for the remaining deferred tax
assets. The Company's capital loss carryforwards expire beginning in 2003.

F-26
<PAGE> 67

(11) Shareholders' Equity

The Company has authorized 1,000,000 shares of $10 par value voting
preferred stock. The board of directors had designated 250,000 shares as Series
A Junior Participating Preferred Stock which were reserved for issuance upon
exercise of the Company's stock purchase rights. In December 1997, the board of
directors authorized the redemption of the preferred stock purchase rights in
connection with the contemplated acquisitions of Resources, TSG and INCODE. The
rights were redeemed in January 1998 at $.01 per share. Prior to this
redemption, each share of the Company's common stock included a stock purchase
right. These rights, which did not have voting rights, could be exercised only
after public announcement that a person or group had acquired 20% or more of the
Company's common stock or public announcement of an offer for 30% or more of the
Company's common stock. The Company had the right to redeem the rights at a
price of $.01 per right at any time prior to 15 days (or such longer period as
the board of directors may have determined) after the acquisition of 20% of the
Company's common stock. Upon exercise each right could have been used to
purchase 1/100 of a share of Series A Junior Participating Preferred Stock for
$21. Each share of Series A Junior Participating Preferred Stock would have had
a minimum preferential quarterly dividend of 100 times the dividend declared on
common stock, minimum liquidation preference of $100 per share and other
preferential common stock conversion features in connection with mergers or
other business combinations.

As of December 31, 1999, the Company had a warrant outstanding to
purchase 2,000,000 shares of the Company's common stock at $2.50 per share. The
warrant expires in September 2007.

(12) STOCK OPTION PLAN

The Company's stock option plan provides for the granting of
non-qualified and incentive stock options, as defined by the Internal Revenue
Code, to key employees of the Company and its subsidiaries of up to 4,300,000
shares of the Company's common stock at prices which represent fair market value
at dates of grant. All options granted have ten year terms and generally vest
over, and become fully exercisable at the end of, three to five years of
continued employment.

F-27
<PAGE> 68

The following table summarizes the transactions of the Company's stock
option plan for the three-year period ended December 31, 1999:

<TABLE>
<CAPTION>
Number of Weighted-Average
Shares Exercise Prices
---------- ---------------
<S> <C> <C>
Options outstanding at December 31, 1996 ....... 330 $ 1.88

Granted .................................. 1,517 2.36
Canceled ................................. (953) 1.80
Exercised ................................ (198) 1.87
----------
Options outstanding at December 31, 1997 ....... 696 3.04

Granted ................................... 1,371 7.10
Canceled .................................. (14) 5.92
Exercised ................................. (135) 1.53
----------
Options outstanding at December 31, 1998 ....... 1,918 6.03

Granted ................................... 1,583 4.87
Canceled .................................. (78) 3.67
Exercised ................................. (5) 4.29
----------
Options outstanding at December 31, 1999 ....... 3,418 $ 5.55
==========

Reserved for future options at December 31, 1999 340
==========

Exercisable options:
December 31, 1997 ......................... 145 $ 2.71
December 31, 1998 ......................... 239 $ 3.03
December 31, 1999 ......................... 706 $ 4.94
</TABLE>

The following table summarizes information concerning outstanding and
exercisable options at December 31, 1999:

<TABLE>
<CAPTION>
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE PRICE
REMAINING NUMBER OF PRICE OF NUMBER OF OF
RANGE OF EXERCISE CONTRACTUAL OUTSTANDING OUTSTANDING EXERCISABLE EXERCISABLE
PRICES LIFE OPTIONS OPTIONS OPTIONS OPTIONS
------------------- -------------- -------------- -------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
$ 0.00 - $2.13 7.0 years 100 $ 2.12 100 $ 2.12
$ 2.75 - $4.38 8.9 years 1,052 $ 3.87 281 $ 3.74
$ 5.00 - $7.88 8.8 years 2,156 $ 6.27 303 $ 6.58
$ 9.62 - $10.94 8.4 years 110 $ 10.42 22 $ 10.42
</TABLE>

SFAS No. 123, "Accounting for Stock-Based Compensation," became
effective for the Company in 1996. As allowed by SFAS No. 123, the Company has
elected to continue to follow APB Opinion No. 25, Accounting for Stock Issued to
Employees, which does not recognize compensation expense on the issuance of its
stock options because the option terms are fixed and the exercise price equals
the market price of the underlying stock on the grant date.

F-28
<PAGE> 69

As required by SFAS No. 123, the Company has determined the pro forma
information as if the Company had accounted for stock options granted since
January 1, 1995, under the fair value method of SFAS No. 123. The Black-Scholes
option pricing model was used with the following weighted-average assumptions
for 1999, 1998 and 1997, respectively: risk-free interest rates of 5.56%, 5.16%
and 6.49%; dividend yield of 0%; expected common stock market price volatility
factor of .70, .68 and .39; and a weighted-average expected life of the options
of seven years. The weighted-average fair value of options granted in 1999, 1998
and 1997 was $3.47, $4.93 and $1.24 per share, respectively.

Had compensation expense been recorded based on the fair values of the
stock option grants, the Company's 1999, 1998, and 1997 pro forma income (loss)
from continuing operations would have been $(1,868,000), $162,000, and
$(1,639,000), or $(0.05), $0.00, and $(0.08) per diluted share, respectively.
These pro forma calculations only include the effects of grants since 1995.
Accordingly, the impacts are not necessarily indicative of the effects on
reported net income of future years.

(13) EARNINGS (LOSS) PER COMMON SHARE - BASIC AND DILUTED

In accordance with SFAS No. 128 "Earnings per Share", the Company has
presented basic income (loss) per share, computed on the basis of the weighted
average number of common shares outstanding during the year, and diluted income
(loss) per share, computed on the basis of the weighted average number of common
shares and all dilutive potential common shares outstanding during the year.

The Company incurred a loss from continuing operations in 1999 and
1997. As a result, the denominator was not adjusted for dilutive securities in
1999 or 1997 as the effect would have been antidilutive.

For the years ended December 31, the following options were not
included in the computation of diluted earnings per share because the effect
would have been antidilutive:

<TABLE>
<CAPTION>
Options Price Range
------- -------------
<S> <C> <C>
1999............... 3,418 $2.13 - 10.94
1998............... 110 9.63 - 10.94
1997............... 696 $1.50 - 5.25
</TABLE>

Additionally, the warrant to purchase 2,000,000 shares of the Company's
common stock was not included in the computation of diluted earnings per share
for the years ended December 31, 1999 and 1997 because the effect would have
been antidilutive.

F-29
<PAGE> 70

The following table sets forth the computation of basic and diluted
earnings per share:

<TABLE>
<CAPTION>
Years ended December 31,
-------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Numerator for basic and diluted earnings per share:
Income (loss) from continuing operations ........ $ (64) $ 1,156 $ (1,219)
======== ======== ========

Denominator:
Denominator for basic earnings per share -
Weighted average shares ......................... 39,105 32,612 20,498

Effect of dilutive securities:
Employee stock options .......................... -- 340 --
Employee stock grant ............................ -- 67 --
Warrant ......................................... -- 1,381 --
-------- -------- --------
Dilutive potential common shares .................. -- 1,788 --
-------- -------- --------
Denominator for diluted earnings per share-
Adjusted weighted-average shares and
assumed conversion ......................... 39,105 34,400 20,498
======== ======== ========

Basic earnings (loss) per share from
continuing operations ...................... $ (0.00) $ 0.04 $ (0.06)
======== ======== ========

Diluted earnings (loss) per share from
continuing operations ...................... $ (0.00) $ 0.03 $ (0.06)
======== ======== ========
</TABLE>

(14) LEASES

The Company leases certain offices, transportation, computer and other
equipment used in its operations under noncancellable operating lease agreements
expiring at various dates through 2010. Most leases contain renewal options and
some contain purchase options. The leases generally provide that the Company pay
taxes, maintenance, insurance and certain other operating expenses.

Rent expense was approximately $1,515,000 in 1999, $903,000 in 1998 and
$191,000 in 1997.

The Company has capital leases for certain equipment, which is included
in "Property and equipment, net." The present value of future minimum lease
payments relating to these assets are capitalized based on contract provisions.
Capitalized amounts are depreciated over the lesser of the term of the lease or
the normal depreciable lives of the assets.

F-30
<PAGE> 71

Future minimum lease payments under noncancellable leases at December
31, 1999 are as follows:

<TABLE>
<CAPTION>
Operating Capital
Fiscal Year Leases Leases
- ----------------------------------------------------------- --------- -------
<S> <C> <C>
2000 ...................................................... $ 2,146 $ 1,628
2001 ...................................................... 2,087 1,482
2002 ...................................................... 1,977 1,184
2003 ...................................................... 1,663 --
2004 ...................................................... 1,483 --
2005 and thereafter ....................................... 6,425 --
------- -------
Total future minimum lease payments ....................... $15,781 4,294
=======
Less interest ............................................. 564
-------
Present value of future minimum lease payments ............ 3,730
Current portion of obligations under capital leases ....... (1,302)
-------
Long-term obligations under capital leases ................ $ 2,428
=======
</TABLE>

(15) EMPLOYEE BENEFIT PLANS

The Company maintains various defined contribution profit sharing
plans, primarily 401(k) retirement plans (the "Plans"), at each of its operating
subsidiaries. The Plans cover substantially all eligible employees of the
Company that meet age and length of service requirements. Employee contributions
are by salary reduction and are at the employees' discretion within the limits
imposed by the Plans' provisions and the Internal Revenue Code. Employer
contributions are determined by each operating company's board of directors. In
1999 and 1998, total employer contributions to the Plans were approximately
$400,000 and $106,000, respectively.

(16) FOURTH QUARTER CHANGES

During the nine months ended September 30, 1999, the Company previously
reported and recognized $5,723,000 of revenue and $180,000 of interest income in
connection with its sales of copies of title plants. In connection with each
sale, the Company contractually agreed to provide maintenance services for
periods ranging from 5 to 10 years to update the title plants on a monthly basis
with the same customers. The bundled fees are payable on a monthly basis over
the respective contract period pursuant to a non-cancellable agreement, and the
contract contains significant financial and legal exposure for either party who
terminates the arrangement prior to its early buy out expiration date. The
Company priced the arrangements based upon respective published price lists for
the sale of the copies of the title plants and the monthly updates. Prior to
ownership privileges being transferred, the Company sold the monthly updates to
these same

F-31
<PAGE> 72

customers, but at the request of certain of its customers and due to competitive
conditions, the Company elected to also sell ownership privileges. Also, the
Company continues to sell the updates separately to customers who have not
purchased the copies of the title plants. Therefore, the Company concluded that
it had vendor specific objective evidence of fair value and that the incremental
billing amount could be ascribed to the sale of the ownership privilege. The
title plants were fully functional upon delivery at which time the fee allocated
to the sale of the delivered title plant copies was recognized in accordance
with FASB No. 61 "Accounting for Title Plants". Such accounting is permitted for
certain software licenses arrangements which contain a bundled post-contract
customer support/ maintenance arrangement if the maintenance is sold separately
even though the vendor does not sell the software licenses separately.

On December 3, 1999, Staff Accounting Bulletin No. 101 entitled
"Revenue Recognition in Financial Statements", ("SAB 101") was issued by the
Securities and Exchange Commission ("SEC"). Such bulletins represent
interpretations and practices followed by certain offices and divisions of the
SEC. Pursuant to the interpretations, the SEC staff believes that the terms,
conditions, and amounts of certain arrangements are typically negotiated in
conjunction with the pricing of all of the elements. The bulletin continues by
stating that the customer would ascribe a significantly lower, and perhaps no,
value to elements ostensibly associated with the initial product delivery in the
absence of the registrant's performance of the other contract elements,
especially in those situations in which the initial product delivery is not sold
separately without the registrant's continuing involvement. The bulletin
concludes that those arrangements that contain product delivery and continuing
performance obligations related to future services to be provided be assessed as
an integrated package and for the bundled revenue to be recognized over the term
of the arrangement.

In the fourth quarter of 1999, the Company elected to adopt the
provisions of SAB 101 and to change its accounting principles to more closely
conform to the SEC interpretation. The election was made since the Company
historically has not separately entered into arrangements to sell copies of the
title plants without future monthly update services. Accordingly, the Company
has changed its accounting such that sales of the copies of the title plants are
no longer recognized upon delivery but are bundled with the update fee and
recognized ratably over the service period. The implementation of this change
was accounted for as a change in accounting principle which is applied
cumulatively as if the change occurred at the beginning of this fiscal year and
as if it was recorded in the first quarter of 1999. The implementation of SAB
101 had no effect on 1998 and prior periods as no sales of copies of title
plants occurred in those periods. However, the Company will restate its
previously reported 1999 quarterly results as required for

F-32
<PAGE> 73

such changes. The approximate effect of the accounting change for each quarter
of 1999 was to reduce net income and diluted earnings per share as follows:

<TABLE>
<CAPTION>
Effect on Net Income
--------------------
Total Per Share
----- ---------
<S> <C> <C>
First Quarter $1,061 $0.03
Second Quarter 1,191 0.03
Third Quarter 1,333 0.03
</TABLE>

A summary of the impact of these changes and the change in accounting
for the Company's investment in HTE in the third quarter (See Note 6) is as
follows.

<TABLE>
<CAPTION>
Quarter Ended Quarter Ended Quarter Ended
March 31, 1999 June 30, 1999 September 30, 1999
----------------------- ----------------------- -----------------------
Previously As Previously As Previously As
Reported Restated Reported Restated Reported Restated
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> < > <C>
Revenue ........ $ 20,433 $ 18,813 $ 28,674 $ 26,927 $ 29,502 $ 27,533
Income (loss)
from
continuing
operations .. 1,674 613 1,893 702 1,152 197
Net income
(loss) ...... 1,109 48 1,113 (78) 550 (405)
Diluted earnings
(loss) per
share ......... 0.03 0.00 0.03 0.00 0.01 (0.01)
</TABLE>

(17) COMMITMENTS AND CONTINGENCIES

Between 1968 and 1995, TPI of Texas, Inc. ("TPI") owned and operated a
foundry in Swan, Texas. Since 1997, more than 300 former employees of TPI have
filed a series of lawsuits against TPI, Swan Transportation Company, the parent
corporation of TPI ("Swan"), and in some instances, the Company, alleging
various personal injuries resulting from exposure to silica, asbestos, and/or
other related industrial dusts during their employment at TPI. As non-operating
subsidiaries, Swan and TPI's assets consist primarily of various insurance
policies issued during the relevant time periods. In December 1999, the Company
instituted litigation against Swan and TPI's former insurance carriers in Harris
County, Texas, demanding that such carriers

F-33
<PAGE> 74

undertake the defense of these claims, fulfill all indemnity obligations with
respect to these claims, and reimburse the Company for past defense and
settlement costs paid by the Company.

In March 2000, the Company entered into a Standstill Agreement with all
known plaintiffs asserting injuries described above, including all known
plaintiffs who have alleged injury but have not yet filed suit against Swan
and/or TPI (collectively, the "Plaintiffs"). Under the Standstill Agreement, the
Plaintiffs agreed to dismiss all pending claims against the Company and agreed
to not sue the Company for a minimum period of at least two years and thereafter
only in certain circumstances. Under the Standstill Agreement, the Company
agreed to seek to withdraw its outside counsel as counsel of record in the
pending lawsuits, re-tender the defense and indemnity obligations related to
these claims to the insurance carriers of Swan and TPI, and continue to
prosecute its insurance coverage suit in Harris County, Texas, in which the
plaintiffs if and when they receive a judgment may intervene in such litigation
and prosecute their claims directly against the insurance carriers. Further, the
Standstill Agreement provides that any Plaintiff that settles or receives a
judgment on any of its claims, and such settlement or judgment is fully paid or
compromised by the insurance carriers, then such Plaintiff will execute a
release in favor of the Company, its subsidiaries and affiliates from such
claims. In March 2000, The Hartford, one of Swan and TPI's primary and excess
coverage insurance carriers, has agreed to assume the ongoing and future defense
of these claims, subject to a reservation of rights.

The Company initially provides for estimated claim settlement costs
when minimum levels can be reasonably estimated. If the best estimate of claim
costs can only be identified within a range and no specific amount within that
range can be determined more likely than any other amount within the range, the
minimum of the range is accrued. Based on an initial assessment of claims and
contingent claims that may result in future litigation involving TPI, a reserve
for the minimum amount of $2,000,000 for claim settlements was recorded in 1996.
Legal and related professional services costs to defend litigation of this
nature have been expensed as incurred. During 1999, the Company has paid a total
of approximately $2,500,000 in claim settlements and in legal and related
defense costs on these cases. The remaining liability was approximately
$1,000,000 at December 31, 1999. Because of the inherent uncertainty regarding
litigation of this nature, it is reasonably possible that the amounts recorded
as liabilities for TPI related matters could change in the near term by amounts
that would be material to the consolidated financial statements.

F-34
<PAGE> 75

may need on-site and off-site remediation. The site was used for foundry
operations from the early part of this century to 1969 when it was acquired by
Jersey-Tyler. Jersey-Tyler operated the foundry from 1969 to 1976, at which time
the foundry was closed. In 1976, Jersey-Tyler sold the property to other persons
who have operated a salvage yard on the site. In 1995, NJDEPE and TPI agreed for
TPI to conduct a feasibility study to assess remediation options and propose a
remedy for the site and the impacted areas. This study was completed and
submitted to the NJDEPE in the first quarter of 1999. TPI continues to negotiate
with the NJDEPE regarding the results of this study. TPI has not agreed to
commit to further action at this time. TPI never held title to the site and
denies liability.

In connection with the sale of the assets of TPI to Ransom Industries,
Inc. (formerly known as Union Acquisition Corporation) (the "Buyer"), an
affiliate of McWane, Inc., on December 1, 1995, pursuant to an acquisition
agreement among the Company, TPI and the Buyer (the "Acquisition Agreement"),
the Buyer agreed to manage and direct the prosecution or defense of these
environmental related matters on behalf of TPI. In addition, the Buyer agreed to
reimburse TPI the first $3,000,000 of certain costs and expenses incurred in
connection with the investigation or remediation of the site, and one-half of
such expenses in excess of $3,000,000 with a maximum reimbursement to TPI of
$6,500,000. As of December 31, 1996, management estimated total cost to
investigate or remediate the New Jersey site to be $7,000,000. In accordance
with the above-mentioned provisions of the Acquisition Agreement, the Company
recorded a $5,000,000 receivable due from the Buyer for its portion of the
estimated costs as of December 31, 1996. As of December 31, 1999, approximately
$2,500,000 of expenses in connection with the investigation of the New Jersey
site, have been paid by TPI and as provided for in the Acquisition Agreement,
the Buyer has reimbursed this amount to TPI. Accordingly, management currently
estimates the cost remaining in connection with the investigation or remediation
of the New Jersey site to be approximately $4,300,000 and the related receivable
from the Buyer to be approximately $2,500,000 which is included as other
receivables in the accompanying December 31, 1999 consolidated balance sheet.
The Buyer, on behalf of TPI, is proceeding against predecessor owners and
operators of the site, as well as others, to bear their share of the cost of the
investigation and any other costs, including any remediation costs incurred by
TPI. Some costs may also be covered by insurance. TPI is currently in
negotiations with the major insurance carrier and predecessor owners and
operators of the site. Recoveries from predecessor companies and insurance
companies are shared by TPI and the Buyer. Although it is impossible to predict
the outcome of legal or regulatory proceedings, the Company believes that
substantially all of the costs, expenses, and damages, if any, resulting from
the legal proceedings and

F-35
<PAGE> 76

environmental matters described above will be reimbursed by the Buyer pursuant
to the Acquisition Agreement or have been adequately provided for in the
financial statements.

(18) SEGMENT AND RELATED INFORMATION

As of January 1, 1998, the Company has adopted SFAS No. 131,
"Disclosures About Segments of an Enterprise and Related Information", which
requires segment information to be reported using a management approach. This
management approach is based on reporting segment information the way management
organizes segments within the enterprise for making operating decisions and
assessing performance.

The Company has two reportable segments: software systems and services
segment and information and property records services segment. The software
systems and services segment provides municipal and county governments with
software systems and services to meet their information technology and
automation needs including real estate appraisal services. The largest component
of the information and property records services business is the computerized
indexing and imaging of real property records maintained by county clerks and
recorders, in addition to providing other information management outsourcing
services, records management, micrographic reproduction and title plant update
services and sales of copies of title plants to title companies.

Divested activities include the historical operating results and assets
of the automotive parts and supplies segment, which was discontinued in 1998 and
the products for fund raising segment, which was discontinued in 1997. See Note
3 for further discussion. In addition, corporate activities are included as
"Other".

The Company evaluates performance based on several factors, of which
the primary financial measure is business segment operating profit. The Company
defines segment operating income as income before noncash amortization of
intangible assets associated with their acquisition by the Company, interest
expense, non-recurring items and income taxes. The accounting policies of the
reportable segments are the same as those described in Note 1.

There were no intersegment transactions, thus no eliminations are
necessary.

F-36
<PAGE> 77

The Company's reportable segments are strategic business units that
offer different products and services. They are separately managed as each
business requires different marketing and distribution strategies.

The Company derives a majority of its revenue from external domestic
customers. The information and property records services segment conducts minor
operations in Germany, which are not significant and are not disclosed.

Summarized financial information concerning the Company's reportable
segments is set forth below based on the nature of the products and services
offered:

<TABLE>
<CAPTION>
As of and year ended December 31, 1999
- -------------------------------------------------------------------------------------------------------------------------
Information &
Software Property
Systems & Records Continuing Divested
Services Services Other Operations Activities Totals
- ------------------------ ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Revenues ............... $ 69,991 $ 38,410 $ -- $ 108,401 $ -- $ 108,401

Other amortization
expense .............. 47 79 -- 126 -- 126

Depreciation expense ... 808 2,826 186 3,820 178 3,998

Segment operating profit
(loss) .............. 13,545 10,191 (7,657) 16,079 -- 16,079

Capital expenditures,
including software
development costs ... 2,597 12,030 581 15,208 534 15,742

Segment assets ......... 122,065 103,376 47,094 272,535 -- 272,535
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

F-37
<PAGE> 78

<TABLE>
<CAPTION>
As of and year ended December 31, 1998
- --------------------------------------------------------------------------------------------------------------------------
Information &
Software Property
Systems & Records Continuing Divested
Services Services Other Operations Activities Totals
- ------------------------ ------------- ------------- ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Revenues ............... $ 22,108 $ 28,441 $ -- $ 50,549 $ 76,484 $ 127,033

Other amortization
expense .............. -- -- 184 184 822 1,006

Depreciation expense.... 217 1,880 49 2,146 1,066 3,212

Segment operating
profit (loss) ........ 4,863 9,249 (2,773) 11,339 (845) 10,494

Capital expenditures,
including software
development costs.... 432 2,076 150 2,658 2,070 4,728

Segment assets ......... 33,432 93,698 7,364 134,494 15,600 150,094
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
As of and year ended December 31, 1997
- ---------------------------------------------------------------------------------------------------------------------------
Information &
Software Property
Systems & Records Continuing Divested
Services Services Other Operations Activities Totals
- ------------------------ ------------- ------------- ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Revenues ............... $ -- $ -- $ -- $ -- $ 98,342 $ 98,342

Other amortization
expense .............. -- -- 87 87 749 836

Depreciation expense.... -- -- 29 29 1,817 1,846

Segment operating
profit (loss) ........ -- -- (2,959) (2,959) 1,106 (1,853)

Capital expenditures -- -- 139 139 1,290 1,429

Segment assets ......... -- -- 24,354 24,354 22,796 47,150
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

F-38
<PAGE> 79

<TABLE>
<CAPTION>
Years ended December 31,
=================================
Reconciliation of reportable segment operating profit 1999 1998 1997
(loss) to the Company's consolidated totals -------- -------- --------

<S> <C> <C> <C>
Total profit or loss for continuing reportable segments ..... $ 16,079 $ 11,339 $ (2,959)
Interest expense ............................................ (4,893) (2,009) (85)
Interest income ............................................. 320 178 907
Costs of certain acquisition opportunities .................. (1,851) (3,146) --
Goodwill and intangibles amortization associated with
acquisitions ............................................ (7,315) (3,173) --
-------- -------- --------
Income (loss) from continuing operations before income tax... $ 2,340 $ 3,189 $ (2,137)
======== ======== ========
</TABLE>

(19) SUBSEQUENT EVENTS

On January 3, 2000, the Company acquired the stock of Capitol Commerce
Reporter, Inc. ("CCR") of Austin, Texas for approximately $3,000,000 in cash,
$1,200,000 in assumed debt and a $2,800,000 five-year, 10% subordinated note.
CCR provides public records research, document retrieval, filing and information
services.

F-39
<PAGE> 80

TYLER TECHNOLOGIES, INC.

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)

Years ended December 31, 1999, 1998 and 1997

<TABLE>
<CAPTION>
Year ended December 31,
------------------------------
1999 1998 1997
------- ------- -------
Allowance For Doubtful Accounts
-------------------------------

<S> <C> <C> <C>
Balance at beginning of year ............. $ 531 $ -- $ --

Additions charged to costs and expenses... 702 179 --

Deductions for accounts charged off ...... (500) (56) --

Other changes (A) ........................ 524 408 --
------- ------- -------
Balance at end of year .......... $ 1,257 $ 531 $ --
======= ======= =======
</TABLE>

(A) Purchase of subsidiaries

F-40
<PAGE> 81
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------

<S> <C>
3.1 Restated Certificate of Incorporation of Tyler Three, as amended
through May 14, 1990, and Certificate of Designation of Series A
Junior Participating Preferred Stock (filed as Exhibit 3.1 to the
Company's Form 10-Q for the quarter ended June 30, 1990, and
incorporated herein).

3.2 Certificate of Amendment to the Restated Certificate of Incorporation
(filed as Exhibit 3.1 to the Company's Form 8-K, dated February 19,
1998, and incorporated herein).

3.3 Amended and Restated By-Laws of Tyler Corporation, dated November 4,
1997 (filed as Exhibit 3.3 to the Company's Form 10-K for the year
ended December 31, 1997, and incorporated herein).

4.2 Specimen of Common Stock Certificate (filed as Exhibit 4.1 to the
Company's registration statement no. 33-33505 and incorporated
herein).

10.1 Form of Indemnification Agreement for directors and officers (filed
as Exhibit 10.1 to the Company's Form 10-Q for the quarter ended
March 31, 1992, and incorporated herein).

10.2 Stock Option Plan amended and restated as of February 7, 1997 (filed
as Exhibit 4.1 to the Company's registration statement no. 33-34809
and incorporated herein).

10.5 Indemnification Agreement, dated December 20, 1989 (filed as Exhibit
2.3 to the Company's registration statement no. 33-33505 and
incorporated herein).

10.19 Purchase agreement dated March 26, 1999 between Tyler Corporation and
HalArt, L.L.C. (filed as Exhibit 10.1 to the Company's Form 8K, dated
April 8, 1999, and incorporated herein).

*21 Subsidiaries of Tyler

*23 Consent of Ernst & Young LLP

*27 Financial Data Schedule

Tyler will furnish copies of these exhibits to shareholders upon
written request and payment for copying charges of $0.15 per page.
</TABLE>

* Filed herewith.

<PAGE> 1
EXHIBIT 21

SUBSIDIARIES OF TYLER TECHNOLOGIES, INC.

Name Place of Incorporation

Business Resources Corporation Texas
The Software Group, Inc. Texas
Interactive Computer Designs, Inc. Texas
CMS Holdings, Inc. Texas
CompactData Solutions, Inc. Texas
Eagle Computer Systems, Inc. Delaware
FundBalance, Inc. Delaware
Gemini Systems Inc. Delaware
Process Incorporated Maine
NationsData.com, Inc. Delaware
Cole Layer Trumble Company Delaware
Appraisal Records Services, Inc. Texas
Automated Records Services, Inc. Texas
Government Records Services, Inc. Texas
Kofile, Inc. Texas
Kofile Germany, Gmbh Germany
PRETS Holdings, Inc. Delaware
Ram Quest Software, Inc. Texas
RTS Holdings, Inc. Texas
Spectrum Data, Inc. Texas
Title Records Corporation Texas

<PAGE> 1

EXHIBIT 23

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 33-34809) pertaining to the Tyler Corporation Stock
Option Plan of our report dated March 30, 2000, with respect to the consolidated
financial statements and schedule of Tyler Technologies, Inc. and subsidiaries
included in the Annual Report (Form 10-K) for the year ended December 31, 1999.

ERNST & YOUNG LLP

Dallas, Texas
March 31, 2000

<ARTICLE> 5
<MULTIPLIER> 1

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 2,424,000
<SECURITIES> 0
<RECEIVABLES> 40,721,000
<ALLOWANCES> 1,257,000
<INVENTORY> 0
<CURRENT-ASSETS> 51,019,000
<PP&E> 27,811,000
<DEPRECIATION> 6,022,000
<TOTAL-ASSETS> 272,535,000
<CURRENT-LIABILITIES> 46,999,000
<BONDS> 0
0
0
<COMMON> 447,000
<OTHER-SE> 138,457,000
<TOTAL-LIABILITY-AND-EQUITY> 272,535,000
<SALES> 108,401,000
<TOTAL-REVENUES> 0
<CGS> 54,413,000
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 702,000
<INTEREST-EXPENSE> 4,893,000
<INCOME-PRETAX> 2,340,000
<INCOME-TAX> 2,404,000
<INCOME-CONTINUING> (64,000)
<DISCONTINUED> (2,760,000)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,824,000)
<EPS-BASIC> (0.07)
<EPS-DILUTED> (0.07)

</TABLE>