<PAGE> 1
FILED PURSUANT TO
RULES 424(B)(3) AND 424(C)
REGISTRATION NO. 333-1084
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED APRIL 30, 1996
2,000,000 SHARES
LOGO
COMMON STOCK
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
This supplements the Prospectus dated April 30, 1996 which covers 2,000,000
shares of common stock, $.01 par value (the "Common Stock"), which may be
offered and issued by F.Y.I. Incorporated (the "Company") from time to time in
connection with the merger with or acquisition by the Company of other
businesses or assets, and which may be reserved for issuance pursuant to, or
offered and issued upon exercise or conversion of, warrants, options,
convertible notes or other similar instruments issued by the Company from time
to time in connection with any such merger or acquisition. This Prospectus
Supplement consists of the Company's Quarterly Report on Form 10-Q for the
fiscal period ended March 31, 1996 filed with the Securities and Exchange
Commission on May 15, 1996.
The Common Stock of the Company is included for quotation on the Nasdaq
National Market. On May 16, 1996, the closing price of the Common Stock on the
Nasdaq National Market was $21.25 per share as published in The Wall Street
Journal on May 17, 1996.
The date of this Prospectus Supplement is May 17, 1996.
<PAGE> 2
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934 for the quarterly period ended March 31, 1996 or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934 for the transition period from ____________ to
____________
Commission file number 0-27444
F.Y.I. INCORPORATED
----------------------
(Exact name of registrant as specified in its charter)
Delaware 75-2560895
(State or other jurisdiction of incorporation (I.R.S. Employer Identification
or organization) No.)
3232 McKinney Avenue, Suite 900, Dallas, Texas 75204
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (214) 953-7555
2911 Turtle Creek Boulevard, Suite 300, Dallas, Texas 75219
(Former address)
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
------- -------
As of April 30, 1996, 5,269,615 shares of the registrant's Common
Stock, $.01 par value per share, were outstanding.
S-1
<PAGE> 3
F.Y.I. INCORPORATED AND SUBSIDIARIES
FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 1996
INDEX
<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION
---------------------
Item 1 Financial Statements 3
Consolidated Balance Sheets - December 31, 1995 and March 31, 1996 4
(unaudited)
Consolidated Statements of Operations - Three months ended March 31,
1996 and three months ended March 31, 1995 (unaudited) 5
Consolidated Statement of Cash Flows - Three months ended March 31,
1996 and three months ended March 31, 1995 (unaudited) 6
Notes to financial statements - March 31, 1996 (unaudited) 7
Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations 9
PART II. OTHER INFORMATION
-----------------
Item 6 Exhibits and Reports on Form 8-K 12
SIGNATURES 13
Index to Exhibits 14
</TABLE>
S-2
<PAGE> 4
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
General Information
F.Y.I. Incorporated ("FYI") was incorporated in September 1994 for the
purpose of creating a national provider of document management services in
various industries, primarily healthcare, professional and legal services and
financial services. Simultaneously with the closing of its initial public
offering (the "Offering") on January 23, 1996, FYI and separate wholly owned
subsidiaries acquired (the "Merger") seven companies (the "Founding Companies")
located in California, Maryland, Texas, Pennsylvania, and Michigan. The
consideration for the stock of the Founding Companies consisted of a
combination of cash and common stock of FYI.
Between September 1994 and the consummation of the Offering, FYI had not
conducted any operations and all activities until the Offering related to the
Merger and the Offering. For accounting purposes and for the purposes of the
presentation of the financial statements herein, January 31, 1996, has been
used as the effective date of the Merger.
Operating results for the interim periods is not necessarily indicative of
the results for full years. It is suggested that these consolidated financial
statements be read in conjunction with the consolidated financial statements of
FYI and the Founding Companies and the notes thereto included in FYI's Annual
Report on Form 10-K filed with the Securities and Exchange Commission (the
"Commission") on April 10, 1996, as amended by FYI's Form 10-K/A, filed with
the Commission on April 29, 1996.
S-3
<PAGE> 5
F.Y.I. Incorporated and Subsidiaries
Consolidated Balance Sheets
(dollars in thousands, except share data)
<TABLE>
<CAPTION>
December 31, March 31,
1995 1996
----------- ----------
ASSETS (unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 52 $10,037
Accounts receivable and notes receivable, less allowance - 8,369
Accounts receivable, officers and employees - 77
Inventory - 349
Prepaid expenses and other current assets 52 499
------ -------
Total current assets 104 19,331
PROPERTY, PLANT AND EQUIPMENT, net 15 5,116
GOODWILL, DEFERRED OFFERING COSTS AND
OTHER INTANGIBLES 2,190 1,749
ACCOUNTS RECEIVABLE, OFFICER - LONG TERM - 644
OTHER NONCURRENT ASSETS 6 559
------ -------
Total assets $2,315 $27,399
====== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $1,101 $ 7,155
Short-term obligations - 47
Current maturities of long-term obligations - 227
------ -------
Total current liabilities 1,101 7,429
LONG-TERM OBLIGATIONS,
net of current maturities - 634
DEFERRED INCOME TAXES,
net of current portion - 129
------ -------
Total liabilities 1,101 8,192
------ -------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, Series A, $.01 par value, 1,000,000
and 0 shares authorized, 9,000 and 0 shares issued
and outstanding at December 31, 1995 and March 31,
1996, respectively - -
Preferred stock, $.01 par value, 1,000,000 shares
authorized, 0 shares issued and outstanding - -
Common stock, $.01 par value, 26,000,000 shares
authorized 663,125 and 5,269,615 shares issued
and outstanding at December 31, 1995 and March 31,
1996, respectively 7 53
Additional paid-in-capital 1,207 18,756
Retained earnings - 398
------ -------
Total stockholders' equity 1,214 19,207
------ -------
Total liabilities and stockholders' equity $2,315 $27,399
====== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-4
<PAGE> 6
F.Y.I. Incorporated and Subsidiaries
Consolidated Statements of Operations
(dollars in thousands, except share data)
(unaudited)
<TABLE>
<CAPTION>
Three months ended
-----------------------------
March 31, March 31,
1995 1996
---------- ----------
<S> <C> <C>
REVENUES:
Service revenue $- $7,407
Product revenue - 913
Other revenue - 93
-- ------
Total revenue - 8,413
COST OF SERVICES - 4,701
COST OF PRODUCTS SOLD - 718
DEPRECIATION - 212
-- -----
Gross profit - 2,782
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES - 2,253
-- -----
Operating income - 529
OTHER (INCOME) EXPENSE:
Interest expense - 14
Interest income - (106)
Other - (39)
-- -----
Income before income taxes - 660
PROVISION FOR INCOME TAXES - 262
-- -----
NET INCOME $- $398
== =====
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - 5,286
== =====
NET INCOME PER COMMON SHARE $- $.08
== =====
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-5
<PAGE> 7
F.Y.I. Incorporated and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three months ended
--------------------
March 31, March 31,
1995 1996
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ - $ 398
Adjustments to reconcile net income to net cash provided
by operating activities
Amortization and depreciation - 305
Change in operating assets and liabilities:
Accounts receivable - (220)
Inventories - (51)
Prepaid expenses and other assets - 2,022
Accounts payable and accrued liabilities - 59
------ -------
Net cash provided by operating activities - 2,513
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (4) (617)
Cash paid for acquisitions, net of cash received - (6,509)
------ -------
Net cash used for investing activities (4) (7,126)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from initial public offering, net of underwriting
discounts and other costs (128) 22,280
Proceeds from preferred stock issuance 135 -
Principal payments on short-term obligations - (2)
Principal payments on long-term obligations - (7,680)
------ -------
Net cash provided by financing activities 7 14,598
NET INCREASE IN CASH AND CASH EQUIVALENTS 3 9,985
CASH AND CASH EQUIVALENTS, beginning of period 669 52
------ -------
CASH AND CASH EQUIVALENTS, end of period $ 672 $10,037
====== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-6
<PAGE> 8
F.Y.I. Incorporated and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
1. ORGANIZATION AND BASIS OF PRESENTATION:
Simultaneously with the closing of its initial public offering (the
"Offering") on January 23, 1996, F.Y.I. Incorporated ("FYI") and separate
wholly owned subsidiaries (the "Company") acquired by merger (the "Merger")
seven companies (the "Founding Companies") located in California, Maryland,
Texas, Pennsylvania, and Michigan. The consideration for the stock of the
Founding Companies consisted of a combination of cash and common stock of FYI.
In the opinion of FYI's management, the accompanying consolidated financial
statements include the accounts of the Company and all adjustments necessary to
present fairly the Company's financial position at March 31, 1996, its results
of operations for the three months ended March 31, 1996 and 1995, and cash
flows for the three months ended March 31, 1996, and 1995. All significant
intercompany accounts have been eliminated. Although the Company believes that
the disclosures are adequate to make the information presented not misleading,
certain information and footnote disclosures normally included in annual
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the rules and regulations
of the Securities and Exchange Commission. These consolidated financial
statements should be read in conjunction with the combined financial statements
of the Founding Companies and the related notes thereto in FYI's Annual Report
on Form 10-K filed with the Securities and Exchange Commission (the
"Commission") on April 10, 1996, as amended by FYI's Form 10-K/A, filed with
the Commission on April 29, 1996. The results of operations for the three
month periods ended March 31,1996 and 1995, may not be indicative of the
results for the full year.
2. INITIAL PUBLIC OFFERING OF COMMON STOCK AND MERGER:
Initial Public Offering
On January 26, 1996, the FYI completed the Offering of 2,185,000 (including
the exercise of the underwriters' over-allotment option) shares of common
stock at $13.00 per share for proceeds, net of underwriter commissions and
estimated offering costs, of approximately $22.3 million. Of these net
proceeds, approximately $7.1 million was used to pay a portion of the
consideration for the Merger, and approximately $7.7 million was used to retire
certain indebtedness of the Founding Companies and the remainder will be used
for future acquisitions and general corporate purposes.
Upon closing of the Offering, the Company converted the 9,000 shares of
Series A Preferred Stock into 542,557 shares of common stock.
S-7
<PAGE> 9
Merger
Simultaneously with the closing of the Offering mentioned above, the
Company acquired the Founding Companies. The Company issued 1,878,933 shares
of common stock to the stockholders of the Founding Companies, in addition to
the consideration mentioned above, to effect the Merger.
Pro Forma Information
The accompanying combined operations of the Company for the three
month periods ended March 31, 1995 and 1996, include the combined operations of
the Founding Companies prior to the Offering and the Merger and, in the case of
the 1996 period, two months of operations after the Offering and Merger. The
summarized pro forma consolidated financial statements of operations data below
assumes that the Offering and the Merger had occurred and FYI's operations had
commenced on January 1, 1995, and 1996, respectively, and is as follows:
<TABLE>
<CAPTION>
Three months ended
------------------
(in thousands, except per share data)
March 31, March 31,
1995 1996
------- -------
<S> <C> <C>
Revenues $11,887 $12,330
Costs and expenses 10,540 11,122
------- -------
Income before income taxes $1,347 $1,208
Provision for income taxes 487 483
------- -------
Net income $860 $725
======= =======
Net income per share $0.16 $0.14
Number of shares used in net
income per share calculation 5,286 5,286
</TABLE>
This summarized pro forma information may not be indicative of actual
results if the transactions had occurred on the dates indicated or which may be
realized in the future. Neither expected benefits and cost reductions
anticipated by the Company nor future corporate costs of FYI nor interest
income on offering proceeds have been reflected in the above pro forma
information for 1995, nor the first month of 1996. The actual results of FYI
and its subsidiaries for the two months ended March 1996, inclusive of actual
corporate costs and interest income, have been included in the pro forma
results for the three months ended March 31, 1996.
S-8
<PAGE> 10
The number of shares (in thousands) used in calculating net income per
share and pro forma net income per share was determined as follows:
<TABLE>
<CAPTION>
Number
of Shares
---------
<S> <C>
Outstanding FYI shares after the Offering and the Merger 5,270
Warrants to purchase stock under the treasury stock method 16
-----
Number of shares used in pro forma net income
per share calculation 5,286
=====
</TABLE>
3. SUBSEQUENT EVENT:
In April of 1996, the Company entered into a credit agreement (the
"Credit Agreement") with a lending group (the "Lenders"). The Company may
borrow up to $35.0 million from time to time, under the secured revolving
credit and acquisition facility, subject to certain customary borrowing
capacity requirements. The Company and its subsidiaries may borrow up to an
aggregate $30.0 million of term loans under the Credit Agreement for
acquisitions under prescribed conditions. The Company and its subsidiaries may
borrow revolving credit loans up to an aggregate $5.0 million under the Credit
Agreement for working capital and general corporate purposes. The commitment
to fund revolving credit loans expires April 14, 2001. The commitment to fund
term loans expires October 15, 1997. The annual interest rate applicable to
borrowing under this facility is, at the option of the Company, (i) 1.50% plus
the prime rate or (ii) 3.00% plus the eurodollar rate.
The Credit Agreement requires mandatory prepayments in certain
circumstances. The outstanding principal balance of term loans as of October 15,
1997, shall thereafter be due and payable in fourteen equal quarterly payments
beginning January 15, 1998, and ending April 15, 2001. The outstanding
principal balance of revolving credit loans shall be due and payable on April
15, 2001. The Company currently has no borrowings outstanding under this
facility. A copy of the Credit Agreement has been filed as an exhibit to this
Form 10-Q.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
As discussed more fully in Item 1, the Company had conducted no
significant operations until the closing of the Offering and Merger on January
23, 1996. The Company seeks to acquire additional companies to create a
national single-source provider of document management services.
S-9
<PAGE> 11
Results of Operations - The Company
The Company had conducted no significant operations from its
inception through the Offering and the Merger. For accounting purposes and the
presentation of the actual financial results herein, January 31, 1996, has been
used as the effective date of the Merger. The Company incurred various legal,
accounting, marketing and travel costs in connection with the Offering and the
Merger, which were funded by issuance of common and preferred stock.
Additional costs associated with the Offering and the Merger are being repaid
with proceeds of the Offering.
Revenue for the three months ended March 31, 1996, was $8.4 million,
and gross profit for the three months was $2.8 million. Operating income was
$0.5 million, and net income was $0.4 million. As previously mentioned, FYI
had no operations until February 1996. For further discussion of pro forma
operations for the three months ended March 31, 1996 and 1995, see the Results
of Operations - Pro Forma.
Liquidity and Capital Resources - The Company
As of March 31, 1996, the Company had $11.9 million of working capital
and $10.0 million of cash. The Company paid off practically all of its debt
with the proceeds of the Offering with the exception of approximately $415,000
of debt with favorable interest rates and capital lease obligations of
approximately $425,000.
Subsequent to March 31, 1996, the Company negotiated a $35.0 million
line of credit (see Note 3 in the Notes to Financial Statements).
Management believes that the Company's current cash position and cash
flow from operations will be sufficient to fund planned capital expenditures and
ongoing obligations of the Company through the end of 1996. The bank financing
combined with the Company's cash reserves and 2 million shares of common stock
available under the Company's shelf registration statement will be utilized to
fund the Company's planned acquisition program.
Results of Operations - Pro Forma
As discussed in Note 2 in the Notes to Financial Statements,
summarized pro forma consolidated financial statements of operations data below
assumes the Offering and the Merger had occurred and FYI's operations had
commenced on January 1, 1995, and 1996, respectively, and is as follows:
S-10
<PAGE> 12
<TABLE>
<CAPTION>
Three months ended
------------------
(in thousands, except per share data)
March 31, March 31,
1995 1996
---- ----
<S> <C> <C>
Revenues $11,887 $12,330
Costs and expenses 10,540 11,122
------ ------
Income before income taxes $1,347 $1,208
Provision for income taxes 487 483
--- ---
Net income $860 $725
==== ====
Net income per share $0.16 $0.14
Number of shares used in net
income per share calculation 5,286 5,286
</TABLE>
The $443,000 or 4% increase in revenues is attributable to a 9% increase in
service revenues of $894,000. The increase in service revenues is offset by a
$417,000 or 24% decrease in product revenues, and a $34,000 or 21% decrease in
other revenue.
The increase in service revenue is largely due to i) an increase in
scanning and microfilming revenue of approximately $225,000 primarily due to an
overall increase in projects; ii) an increase in medical records release
revenues of $474,000 primarily attributable to the expansion into additional
healthcare institutions in the U.S. during 1995 and 1996; and iii) an increase
in records storage and retrieval revenues of $100,000 attributable to an
increase in volume in 1996. The decrease in product revenues resulted from
a decline in one major customer's film purchases caused by business interruption
at that customer. This decline is not expected to be permanent, as the
interruption was attributable to the federal government shutdown in late 1995.
Costs and expenses increased $582,000 or 6% largely due to i) an increase
in cost of services of approximately $586,000 or 9% primarily attributable to
the increases in service revenues; ii) cost of products decreased $396,000 as
a result of the reduction in film purchases by one major customer; and iii) an
increase in selling, general and administrative of approximately $407,000
primarily due to the establishment of corporate overhead required to execute
the acquisition program and to manage the consolidated group of companies.
The decrease in earnings before taxes of $139,000 to $1,208,000 and
decrease in net income of $135,000 to $725,000 is largely attributable to the
factors discussed above. Net income prior to the incremental corporate general
and administrative expense was $969,000, up 13% from the first quarter of 1995.
S-11
<PAGE> 13
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.14 Credit Agreement, dated as of April 18, 1996, by and among
F.Y.I. Incorporated and its subsidiaries and Banque Paribas,
IBJ Schroder Bank & Trust, and First Source Financial LLP
10.15 Lease Agreement between F.Y.I. Incorporated and One McKinney
Plaza, Inc. (Exhibit 10.12 of Post-Effective Amendment No. 1 to
F.Y.I. Incorporated's Registration Statement on Form S-1
(Registration No. 333-1084) effective April 30, 1996, is hereby
incorporated by reference)
10.16 Employment Agreement between F.Y.I. Incorporated and Margot
Lebenberg.
27.1 Financial data schedule
(b) Reports on Form 8-K
None
S-12
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
F.Y.I. Incorporated
Date: May 14, 1996 By: /s/ Ed H. Bowman, Jr.
------------ ---------------------
Ed H. Bowman, Jr.
Chief Executive Officer
Date: May 14, 1996 By: /s/ Robert C. Irvine
------------ --------------------
Robert C. Irvine
Chief Financial Officer (Principal Financial and
Accounting Officer)
S-13
