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Filed Pursuant to Rule 424(b)(3)
Registration Number 333-35607
592,915 SHARES
F.Y.I. INCORPORATED(R)
COMMON STOCK
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This Prospectus covers 592,915 shares (the "Shares") of common stock, $.01
par value (the "Common Stock"), which may be offered and issued by certain
stockholders (the "Selling Stockholders") of F.Y.I. Incorporated (the "Company"
or "F.Y.I.") from time to time, directly or through one or more broker-dealers,
in one or more transactions. All of the Shares to be sold by any of the Selling
Stockholders were issued in connection with (i) the acquisition by the Company
of various businesses which were previously owned by selected Selling
Stockholders; or (ii) the initial capitalization of the Company.
The Selling Stockholders and any broker-dealer through whom any Shares are
offered and sold may be deemed to be underwriters within the meaning of the
Securities Act of 1933, as amended (the "Securities Act") in connection with
such offers and sales. The Company will receive none of the proceeds from any
such sales.
Selling Stockholders or pledges, donees, distributees, transferees or other
successors in interest, may sell the Shares being offered hereby from time to
time in transactions (which may involve crosses and block transactions) on the
Nasdaq National Market, at market prices prevailing at the time of the sale, at
negotiated prices or otherwise. Selling Stockholders may sell some or all of
such Shares in transactions involving broker-dealers, who may act solely as
agent and/or may acquire Shares as principal. Broker-dealers participating in
such transactions as agent may receive commissions from Selling Stockholders
(and, if they act as agent for the purchaser of any such Shares, from such
purchaser), such commissions computed in appropriate cases in accordance with
the applicable rules of the Nasdaq National Market, which commissions may be at
negotiated rates where permissible under such rules. Participating
broker-dealers may agree with Selling Stockholders to sell a specified number of
Shares at a stipulated price per share and, to the extent any such broker-dealer
is unable to do so acting as an agent for a Selling Stockholder, to purchase as
principal any unsold Shares at the price required to fulfill the broker-dealer's
commitment to such Selling Stockholder. In addition or alternatively, Shares may
be sold by Selling Stockholders and/or by or through other broker-dealers in
special offerings, exchange distributions or secondary distributions pursuant to
and in compliance with the governing rules of the Nasdaq National Market.
Broker-dealers who acquire Shares as principal may thereafter resell such Shares
from time to time in transactions (which may involve crosses and block
transactions and which may involve sales to or through other broker-dealers,
including transactions of the nature described in the preceding two sentences)
on the Nasdaq National Market, at market prices prevailing at the time of sale,
at negotiated prices or otherwise, and in connection with such resales may pay
to or receive commissions from the purchase of such Shares. Any commissions paid
or concessions allowed to any broker-dealer, and, if any broker-dealer purchases
such Shares as principal, any profits received on the resale of such Shares, may
be deemed to be underwriting discounts and commissions under the Securities Act.
All expenses of registration of the Shares which may be offered hereby
under the Securities Act will be paid by the Company (other than underwriting
discounts and selling commissions, and fees and expenses of advisors to any of
the Selling Stockholders). The Company may agree to indemnify any Selling
Stockholder as an underwriter under the Securities Act against certain
liabilities, including liabilities arising under the Securities Act. Any Selling
Stockholder may indemnify any broker-dealer that participates in transactions
involving sales of the Shares against certain liabilities, including liabilities
arising under the Securities Act.
As of September 8, 1997, the Company had 10,306,979 shares of Common Stock
outstanding. The Common Stock is traded on the Nasdaq National Market. On
September 18, 1997, the closing price of the Common Stock on the Nasdaq National
Market was $24.125 per share, as published in The Wall Street Journal on
September 19, 1997.
The Company is a Delaware corporation and all references herein to the
Company refer to the Company and its subsidiaries.
THE SHARES OFFERED HEREBY INVOKES A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
COMMENCING ON PAGE 5 HEREOF.
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.
The date of this Prospectus is September 22, 1997
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AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza Building,
450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and its regional
offices located at 7 World Trade Center, 13th Floor, New York, New York 10048
and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661- 2511. Copies of such materials can be obtained from the Commission at
Judiciary Plaza, 450 Fifth Street, N.W. Washington, D.C. 20549, at prescribed
rates. The Commission maintains an Internet Web site that contains reports,
proxy and information statements and other information regarding issuers that
file electronically with the Commission. The address of that site is
http://www.sec.gov.
The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act with respect to the Common Stock offered hereby.
This Prospectus does not contain all the information set forth in the
Registration Statement and the exhibits and schedules thereto. For further
information with respect to the Company and such Common Stock, reference is made
to such Registration Statement and exhibits. A copy of the Registration
Statement on file with the Commission may be obtained from the Commission's
principal office in Washington, D.C. upon payment of the fees prescribed by the
Commission and through the Commission's Internet Web site.
The Company's Common Stock is traded on the Nasdaq National Market. Proxy
statements and other information concerning the Company can also be inspected at
the offices of the Nasdaq National Market, 1735 K Street, N.W., Washington D.C.
20006.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents of the Company (Commission File No. 0-27444) filed
with the Commission are incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 filed with the Commission on March 11, 1997;
(b) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997 filed with the Commission on May 13, 1997;
(c) The Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997 filed with the Commission on August 8, 1997;
(d) The Company's Current Report on Form 8-K filed with the Commission
on April 9, 1997; and
(e) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A filed with the Commission on
December 22, 1995.
In addition, all reports and other documents filed by the Company with the
Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act
subsequent to the date of effectiveness of the Registration Statement of which
this Prospectus is a part and prior to the termination of the offering made
hereby shall be deemed to be incorporated or deemed to be incorporated by
reference into this Prospectus. Any statement contained herein or incorporated
by reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus has been delivered, on the written or oral request of such
person, a copy of any and all of the information that has been
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or may be incorporated by reference in this Prospectus (not including exhibits
to the information that is incorporated by reference unless such exhibits are
specifically incorporated by reference into the information that this Prospectus
incorporates). Written requests for such copies should be directed to F.Y.I.
Incorporated, 3232 McKinney Avenue, Suite 900, Dallas, Texas 75204, Attention:
Investor Relations. Telephone requests may be directed to the Secretary at (214)
953-7555.
THE COMPANY
F.Y.I. Incorporated was founded in September 1994 to create a national,
single-source provider of document management services to three primary client
segments: healthcare institutions, professional services firms and financial
institutions. The Company's primary strategy is to consolidate the highly
fragmented document management services industry through acquisitions. In
January 1996, F.Y.I. acquired, simultaneously with the closing of its initial
public offering (the "IPO"), seven document management services businesses (the
"Founding Companies"). Since the IPO and through December 31, 1996, the Company
acquired 18 additional companies (the "Subsequent Acquisitions"). Since December
31, 1996, the Company has acquired eight additional companies, for a total of 33
acquisitions since the Company's inception. In December 1996, the Company
completed a public offering of 2,783,000 shares of Common Stock (including
420,000 shares of Common Stock sold by selling stockholders) (the "December
Offering"). A portion of the proceeds from the December Offering were used to
repay the outstanding balance under the Credit Agreement, as amended (the "Line
of Credit"), to pay a portion of the consideration for acquisitions and to
retire indebtedness assumed in acquisitions. The remaining proceeds have been
and will be used for general corporate purposes, to include additional
acquisitions. As a result of the Subsequent Acquisitions combined with internal
growth, the Company's revenue has increased from $47.6 million for the year
ended December 31, 1995 to $75.7 million for the year ended December 31, 1996
($102.9 million on a pro forma basis, assuming all significant acquisitions were
completed on January 1, 1996). The Company intends to continue to pursue
strategic acquisitions in existing and new markets, cross-sell its full range of
services to its current customer base and expand the marketing of its services
to new customers.
An estimated four trillion documents are generated annually in the United
States. The Company's three targeted client segments generate large volumes of
documents and require specialized processing, distribution, storage and
retrieval of these documents and the information they contain. The Company
believes that these client segments will continue to increase their outsourcing
of document management services in order to maintain their focus on core
operating competencies and revenue generating activities, reduce fixed costs,
including labor and equipment costs, and gain access to new technologies without
incurring the expense and risk of near-term obsolescence of such technologies.
While the document management requirements of each target client segment
require unique and specialized services, the Company offers document management
services that are transferable across client segments, such as: (i) document and
data conversion services, including microfilm and microfiche services and
electronic imaging services; (ii) records management services, namely active
storage and maintenance of documents and files and archival storage of inactive
documents; and (iii) database management and related services, including data
entry, direct mail and fulfillment services. In addition, in order to
accommodate the document management needs of targeted client segments, the
Company also offers industry specific services, such as: (i) medical records
release services, namely processing requests for patients' medical records from
physicians, insurers, attorneys, healthcare institutions and individuals; (ii)
litigation support services including document coding, discovery assistance,
forensic analysis and trial support services to law firms, corporations and
regulated entities as well as subpoena of business and medical records; and
(iii) employee and investor services including plan administration and record
keeping, primarily for the limited partnership industry and employee direct
stock purchase plans. The Company also derives revenue from the sale of certain
micrographic and business imaging products.
The Company believes that there are significant opportunities to
consolidate the capabilities and resources of a number of existing document
management services businesses with the intent of providing clients with a
single-source document management solution. Accordingly, the Company is pursuing
a "fill-in-
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the-grid" strategy aimed at providing comprehensive document management services
based on the demands of the given geographical market. The Company has
implemented an aggressive, three-tiered acquisition program consisting of
"beachhead acquisitions" to enter additional targeted markets, "service
expansion acquisitions" to acquire additional service capabilities within such
markets and "tuck-in" acquisitions to gain market share. The Company believes
that it will continue to be an attractive acquiror of other document management
services companies due to its strategy of retaining selected owners and
management of acquired companies, its access to growth capital and its ability
to offer sellers cash for their business as well as an ongoing equity stake in
the Company.
The Company believes that the consolidation of document management services
businesses will provide it with a significant competitive advantage over
existing smaller competitors. As the Company gains critical mass in certain
geographic markets, it expects to be able to capitalize on its existing client
relationships, technical expertise, additional operating efficiencies, enhanced
marketing initiatives and national account programs to vertically integrate by
expanding the services offered to each of its client segments and horizontally
integrate by offering certain transferable services to a larger overall client
base.
The Company is a Delaware corporation. Its executive offices are located at
3232 McKinney Avenue, Suite 900, Dallas, Texas 75204, and its telephone number
is (214) 953-7555.
RECENT DEVELOPMENTS
Acquisition Activity. Since December 31, 1996, the Company has acquired the
following document management services businesses (the "Recent Acquisitions"):
(i) Acadian Consultants, Inc., a medical records release business in Louisiana;
(ii) Computer Central Corporation, a data entry business with facilities in
Missouri and Ohio; (iii) Deliverex of San Francisco, a medical records storage
business expanding the Company's presence in the Pacific Northwest; (iv) MAVRICC
Management Systems, Inc. and an affiliated company, which are leading providers
of plan administration, record keeping and investor services based in Detroit,
Michigan; (v) Input of Texas, Inc., a data capture business primarily serving
national business customers and based in Grand Prairie, Texas; (vi) Information
Management Corporation, a micrographics electronic imaging and release of
information business with locations in Green Bay, Madison and Milwaukee,
Wisconsin; (vii) Major Legal Services, a litigation support company
headquartered in San Francisco, California; and (viii) Quality Copy Service,
QCSInet, Inc. and affiliates, which are medical records release of information
businesses primarily serving hospitals and state disability departments and
headquartered in Miami, Florida with operations in Massachusetts, Michigan,
North Carolina, South Carolina, New York, Oregon, Colorado and Pennsylvania. The
aggregate consideration for the Recent Acquisitions consisted of approximately
$5,625,000 in cash and 1,538,000 shares of Common Stock.
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RISK FACTORS
An investment in the Company involves a significant degree of risk.
Prospective investors should consider carefully the following factors in
addition to other information included in this Prospectus before making an
investment in the Common Stock.
LIMITED OPERATING HISTORY; RISKS OF INTEGRATION; ABILITY TO MANAGE GROWTH
F.Y.I. was founded in September 1994 and conducted no operations prior to
the consummation of the IPO. F.Y.I. acquired the Founding Companies
simultaneously with the closing of the IPO and has acquired 26 additional
companies since that time (together with the Founding Companies, the "Operating
Companies"). Prior to their acquisition, these companies operated as separate
independent entities. Currently, the Company has a decentralized financial
reporting system and relies on the existing reporting systems of the Operating
Companies. The success of the Company will depend, in part, on the Company's
ability to integrate the operations of the Operating Companies, including
centralizing certain functions to achieve cost savings and developing programs
and processes that will promote cooperation and the sharing of opportunities and
resources. F.Y.I.'s management group has been assembled recently and had no
previous experience in the document management services industry. There can be
no assurance that the management group will effectively be able to oversee the
combined entity and implement the Company's operating or growth strategies.
Further, to the extent that the Company is able to implement fully its
acquisition strategy, the resulting growth of the Company will place significant
demands on management and on the Company's internal systems and controls. There
can be no assurance that the recently assembled management group will
effectively be able to direct the Company through a period of significant
growth. In addition, no assurance can be given that the Company's current
systems will be adequate for its future needs or that the Company will be
successful in implementing new systems.
A number of the Operating Companies offer different services, utilize
different capabilities and technologies and target different geographic markets
and client segments. While the Company believes that there are substantial
opportunities in integrating these businesses, these differences increase the
risk inherent in successfully completing such integration. Further, there can be
no assurance that the Company's strategy to establish a single source provider
for document management services will be successful, or that the Company's
target client segments will accept the Company as a provider of such services.
In addition, there can be no assurance that the operating results of the Company
will match or exceed the combined individual operating results achieved by the
Operating Companies prior to their acquisition.
ACQUISITION STRATEGY
The Company's primary growth strategy is the acquisition of additional
document management services businesses that will complement its existing
businesses. There can be no assurance that the Company will continue to be able
to identify or reach mutually agreeable terms with acquisition candidates and
their owners, or that the Company will be able to profitably manage additional
businesses or successfully integrate such additional businesses into the Company
without substantial costs, delays or other problems. Acquisitions may involve a
number of special risks including: (i) adverse short-term effects on the
Company's reported operating results; (ii) diversion of management's attention;
(iii) dependence on retention, hiring and training of key personnel; (iv) risks
associated with unanticipated problems or legal liabilities; and (v)
amortization of acquired intangible assets. Some or all of these risks could
have a material adverse effect on the Company's operations and financial
performance. In addition, to the extent that consolidation becomes more
prevalent in the industry, the prices for attractive acquisition candidates may
be bid up to higher levels. In any event, there can be no assurance that
businesses acquired in the future will achieve sales and profitability that
justify the investment therein.
The Company is regularly in discussions with additional acquisition
candidates and may from time to time enter into letters of intent with respect
to the acquisition of such businesses. No assurance can be given, however, that
the Company will acquire any additional businesses.
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NEED FOR ADDITIONAL FINANCING TO CONTINUE ACQUISITION STRATEGY
The Company currently intends to finance future acquisitions by using cash
and its Common Stock for all or a portion of the consideration to be paid. A
prior shelf registration statement filed by the Company with the Commission
relates to the offering of shares of Common Stock to be used as consideration
for acquisitions by the Company, of which approximately 2,081,061 shares
remained available under such prior shelf registration statement as of September
12, 1997. In the event that the Company's Common Stock does not maintain
sufficient value, or potential acquisition candidates are unwilling to accept
the Company's Common Stock as consideration for the sale of their businesses,
the Company may be required to utilize more of its cash resources, if available,
in order to continue its acquisition program. If the Company does not have
sufficient cash resources, its growth could be limited unless it is able to
obtain capital through additional debt or equity financings. In December 1996,
the Company completed the December Offering. A portion of the proceeds from the
December Offering were used to repay the outstanding balance under the Line of
Credit, to pay a portion of the consideration for acquisitions and to retire
indebtedness assumed in acquisitions. Under the Line of Credit, the Company and
its subsidiaries initially could borrow, on a revolving credit basis, loans in
an aggregate outstanding principal amount of $5.0 million for working capital
and general corporate purposes and term loans in an aggregate principal amount
of $30.0 million for acquisitions, subject to certain restrictions in the Line
of Credit. As of September 12, 1997, the availability under the Line of Credit
was $5.0 million for working capital and $8.8 million for acquisitions. There
can be no assurance, however, that funds available under the Line of Credit will
be sufficient for the Company's needs.
EFFECT OF POTENTIAL FLUCTUATIONS IN OPERATING RESULTS ON PRICE OF COMMON STOCK;
VOLATILITY OF STOCK PRICE
Results for any quarter are not necessarily indicative of the results that
the Company may achieve for any subsequent quarter or a full fiscal year.
Quarterly results may vary materially as a result of the timing and structure of
acquisitions, the timing and magnitude of costs related to such acquisitions,
the gain or loss of material client relationships and variations in the prices
charged by the Company for the services it provides. In addition, since a
significant portion of the Company's revenue is generated on a
project-by-project basis, the timing or completion of material projects could
result in fluctuations in the Company's results of operations for particular
quarterly periods. Such fluctuations in operating results may adversely affect
the market price of the Common Stock. The market price for the Company's shares
may also fluctuate in response to material announcements by the Company or
significant clients or competitors of the Company, changes in the economic or
other conditions impacting the Company's targeted client segments or changes in
general economic conditions. Further, the securities markets have experienced
significant price and volume fluctuations from time to time that have often been
unrelated or disproportionate to the operating performance of particular
companies. These broad fluctuations may adversely affect the market price of the
Common Stock.
DEPENDENCE ON CERTAIN CLIENT SEGMENTS AND TECHNOLOGY
The Company derives its revenue primarily from its three targeted client
segments: healthcare institutions, professional services firms and financial
institutions. Fundamental changes in the business practices of any of these
client segments, whether due to regulatory, technological or other developments,
could cause a material reduction in demand by such clients for the services
offered by the Company. Any such reduction in demand would have a material
adverse effect on the results of operations of the Company. The document
management services industry is characterized by technological change, evolving
customer needs and emerging technical standards. Although the Company believes
that it will be able to continue to offer services based on the newest
technologies, there can be no assurance that the Company will be able to obtain
the rights to use any such technologies, that it will be able to effectively
implement such technologies on a cost-effective or timely basis or that such
technologies will not render obsolete the Company's role as a third-party
provider of document management services.
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COMPETITION
The document management services businesses in which the Company competes
and expects to compete are highly competitive. A significant source of
competition is the in-house document handling capability of the Company's
targeted client base. There can be no assurance that these businesses will
outsource more of their document management needs or that such businesses will
not bring in house services that they currently outsource. In addition, certain
of the Company's competitors are larger businesses and have greater financial
resources than the Company. Certain of these competitors operate in broader
geographic areas than the Company, and others may choose to enter the Company's
areas of operation in the future. The Company intends to enter new geographic
areas through internal growth and acquisitions and expects to encounter
significant competition from established competitors in each of such new areas.
As a result of this highly competitive environment, the Company may lose clients
or have difficulty in acquiring new clients and new companies, which would
adversely affect the Company's results of operations.
RELIANCE ON KEY PERSONNEL
The Company's operations are dependent on the continued efforts of its
executive officers and on senior management of the Operating Companies.
Furthermore, the Company will likely depend on the senior management of
businesses acquired in the future. If any of these people is unable or unwilling
to continue in his or her present role, or if the Company is unable to attract
and retain other skilled employees, the Company's business could be adversely
affected. The Company does not currently have key person life insurance covering
any of its executive officers or other members of senior management.
POTENTIAL LIABILITY FOR BREACH OF CONFIDENTIALITY
A substantial portion of the Company's business involves the handling of
documents containing confidential and other sensitive information. Although the
Company has established procedures intended to prevent any unauthorized
disclosure of confidential information and, in some cases, has contractually
limited its potential liability for unauthorized disclosure of such information,
there can be no assurance that unauthorized disclosures will not result in
material liability to the Company.
CONTROL BY MANAGEMENT
As of September 8, 1997, the directors and executive officers of the
Company beneficially owned approximately 20.9% of the outstanding shares of
Common Stock and exercise substantial control over the Company's affairs. These
stockholders, if acting together, would likely be able to elect a sufficient
number of directors to control the Board of Directors and to approve or
disapprove any matter submitted to a vote of stockholders.
POTENTIAL EFFECT OF SHARES ELIGIBLE FOR FUTURE SALE ON PRICE OF COMMON STOCK
The market price of the Common Stock could be adversely affected by the
sale or availability for sale of substantial amounts of Common Stock in the
public market. As of September 8, 1997, there were 10,306,979 shares of Common
Stock outstanding. The 2,783,000 shares sold by the Company and certain selling
stockholders in the December Offering, and the 2,185,000 shares sold in the IPO,
are freely tradable without restriction unless acquired by affiliates of the
Company. Of such 10,306,979 shares, 3,284,513 shares, have not been registered
under the Securities Act, which means that they may be resold publicly only upon
registration under the Securities Act or in compliance with an exemption from
the registration requirements of the Securities Act, including the exemption
provided by Rule 144 under the Securities Act.
In addition, the former owners of the Founding Companies and the initial
stockholders of the Company originally have agreed with the Company that they
will not sell any of their shares for a period of two years after January 26,
1996 (other than certain sales registered under the Securities Act and a limited
ability to pledge such shares as collateral or contribute up to 10% to a family
charitable trust). However, such contractual restriction shall be removed upon
the effectiveness of this Registration Statement.
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The Company issued 1,500,238 shares of Common Stock as partial
consideration for acquisitions completed since the IPO. Such 1,500,238 shares
were registered under the Company's prior shelf registration statement and are
freely tradable (except for 36,670 shares held by a wholly-owned subsidiary of
the Company) unless acquired by parties to the acquisition or affiliates of such
parties, other than the issuer, in which case they may be sold pursuant to Rule
145 under the Securities Act. In addition, these shares are subject to
contractual restrictions on resale which generally expire two years from the
date of issuance; however, 129,177 shares which were registered under the
Company's shelf registration statement are being registered on this Registration
Statement. The Company issued 1,083,636 shares of Common Stock which were
unregistered in certain acquisitions accounted for under the
pooling-of-interests method of accounting. Holders of up to 49% (or 530,982
shares of Common Stock) of such unregistered shares of Common Stock have the
right to register such shares under this Registration Statement; however holders
of only 214,782 of such shares elected to have such shares registered under this
Registration Statement.
The Company has an aggressive acquisition program under which it has
completed, and expects to continue to consummate, acquisitions that meet the
requirements of the pooling-of-interests method of accounting. Under the
pooling-of-interests method of accounting, the affiliates of the acquired
companies, which are generally all of the stockholders of the companies acquired
by the Company, must be free to sell or otherwise transfer shares of the Common
Stock received in the acquisition, subject to their compliance with federal
securities laws, as soon as the Company releases results of operations that
reflect the combined operations of the Company and the acquired company for a
minimum of 30 days. If a significant number of shares of Common Stock are issued
in acquisitions that are consummated in close proximity to each other, such
shares will become freely tradable at the same time. If a large number of shares
are sold by stockholders in the market as soon as their shares became freely
transferable, the price of the Common Stock could be adversely affected.
The Company has reserved for issuance under the Company's 1995 Stock Option
Plan, as amended (the "Plan"), an aggregate of 650,000 shares of Common Stock,
or 15% of the aggregate number of shares of the Common Stock outstanding,
whichever is greater. The Company has registered the shares issuable upon
exercise of options granted under the Plan, and such shares will be eligible for
resale in the public market. As of August 29, 1997, the Company had options to
purchase approximately 1,127,000 shares of Common Stock outstanding under the
Plan.
EFFECT OF CERTAIN CHARTER PROVISIONS
The Board of Directors of the Company is empowered to issue preferred stock
without stockholder action. The existence of this "blank-check" preferred could
render more difficult or discourage an attempt to obtain control of the Company
by means of a tender offer, merger, proxy contest or otherwise. See "Description
of Capital Stock."
RISKS ASSOCIATED WITH FORWARD-LOOKING STATEMENTS
This Prospectus contains certain forward-looking statements such as the
Company's or management's intentions, hopes, beliefs, expectations, strategies,
predictions, or any other variation thereof or comparable phraseology of the
Company's future activities or other future events or conditions within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act
which are intended to be covered by the safe harbors created thereby. Investors
are cautioned that all forward-looking statements involve risks and uncertainty,
including without limitation, the sufficiency of the Company's working capital
and the ability of the Company to realize benefits from consolidating certain
general and administrative functions, to continue its aggressive acquisition
program, to retain management, to implement its focused business strategy to
expand its document management services geographically, to retain customers or
attract customers from other businesses, to increase revenue by cross-selling
services and to successfully defend itself in ongoing and future litigation.
Although the Company believes that the assumptions underlying the
forward-looking statements contained herein are reasonable, any of the
assumptions could be inaccurate, and, therefore, there can be no assurance that
the forward-looking statements included in this Prospectus will prove to be
accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such
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information should not be regarded as a representation by the Company or any
other person that the objectives and plans of the Company will be achieved.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Common Stock
offered hereby.
SELLING STOCKHOLDERS
The following table sets forth information with respect to the Selling
Stockholders including: (i) the number and approximate percentage of shares
beneficially owned as of September 8, 1997; (ii) the number of Shares registered
for sale; and (iii) the number and approximate percentage of shares to be owned
after the completion of this Offering. The address of each person listed below
is c/o F.Y.I. Incorporated, 3232 McKinney Avenue, Suite 900, Dallas, Texas
75204. All persons listed have sole voting and investment power with respect to
their shares unless otherwise indicated.
<TABLE>
<CAPTION>
COMMON STOCK COMMON STOCK
BENEFICIALLY BENEFICIALLY
OWNED PRIOR OWNED
TO OFFERING AFTER OFFERING
----------------- NUMBER OF SHARES -----------------
NAME NUMBER PERCENT OFFERED NUMBER PERCENT
---- ------- ------- ---------------- ------- -------
<S> <C> <C> <C> <C> <C>
Gregory R. Melanson -- Director........... 459,260 4.5% 80,000 379,260 3.7%
Kyle C. Kerbawy -- Director............... 410,000 4.0% 90,000 320,000 3.1%
Craig F. Moncher.......................... 410,000 4.0% 90,000 320,000 3.1%
Jonathan B. Shaw -- Director.............. 230,198 2.2% 15,000 215,198 2.1%
R. M. Ames................................ 210,909 2.0% 21,600 189,309 1.8%
Charles J. Bauer, Jr...................... 183,333 1.8% 36,000 147,333 1.4%
Alan D. Simon............................. 158,586 1.5% 20,000 138,586 1.3%
Michael P. Wickman........................ 97,242 * 19,000 78,242 *
David L. Delgado.......................... 80,229 * 16,045 64,184 *
Kent Lee Patterson........................ 60,536 * 5,000 55,536 *
Brian E. Whiteside........................ 63,628 * 12,000 51,628 *
Neil Dean Patterson....................... 52,015 * 2,000 50,015 *
Ronald A. Rust............................ 55,000 * 5,000 50,000 *
G. Michael Bellenghi -- Director.......... 62,996 * 12,996 50,000 *
Michael J. Bradley(1) -- Director......... 62,030 * 13,697 48,333 *
Gerald E. Pierson......................... 63,246 * 15,000 48,246 *
Max T. Bly................................ 52,727 * 13,182 39,545 *
Roger Mansfield........................... 54,512 * 15,000 39,512 *
Christopher R. Yowell..................... 40,114 * 8,022 32,092 *
John Brown................................ 41,605 * 10,000 31,605 *
Rebecca D. Homan.......................... 33,943 * 6,700 27,243 *
K. Jill Simon............................. 19,465 * 3,000 16,465 *
Lou Rovens................................ 18,955 * 3,410 15,545 *
William M. DeArman........................ 21,703 * 10,703 11,000 *
Robert Tessler............................ 60,461 * 50,461 10,000 *
Jack B. Dane.............................. 7,681 * 2,000 5,681 *
Fairfield Management, LLC................. 17,099 * 17,099 0 *
</TABLE>
- ---------------
* Represents less than 1%.
(1) Does not include 6,667 shares which may be acquired upon the exercise of
options not exercisable within 60 days.
9
<PAGE> 10
The Company has agreed to use its best efforts to keep this Registration
Statement effective generally for a period of six months.
PLAN OF DISTRIBUTION
The shares of Common Stock registered hereunder and owned by the Selling
Stockholders may be offered and sold by means of this Prospectus from time to
time as market conditions permit in the over-the-counter market, or otherwise at
prices and terms then prevailing or at prices related to the then-current market
price, or in negotiated transactions. These shares may be sold by one or more of
the following methods, without limitation: (a) a block trade in which a broker
or dealer so engaged will attempt to sell the shares as agent but may position
and resell a portion of the block as principal to facilitate the transaction;
(b) a purchase by a broker or dealer as principal and resale by such broker or
dealer for its account pursuant to this Prospectus; (c) ordinary brokerage
transactions and transactions in which the broker solicits a purchase; and (d)
face-to-face transactions between sellers and purchasers without a broker or
dealer. In effecting sales, brokers or dealers engaged by the Selling
Stockholders may arrange for other brokers or dealers to participate. Such
brokers or dealers may receive commissions or discounts from Selling
Stockholders in amounts to be negotiated.
The Selling Stockholders and any brokers or dealers who act in connection
with the sale of the Shares hereunder may be deemed to be "underwriters" within
the meaning of 2(11) of the Securities Act, and any commissions received by them
or any profit on any resale of the Shares as principal might be deemed to be
underwriting discounts and commissions under the Securities Act. The Company may
agree to indemnify the Selling Stockholders and may agree to indemnify any such
broker or dealer who may be deemed to be an underwriter against certain
liabilities, including liabilities under the Securities Act as an underwriter or
otherwise.
The Company has advised the Selling Stockholders that, during such time as
they may be engaged in a distribution of the shares of Common Stock included
herein, they must comply with the applicable provisions of Regulation M under
the Exchange Act, as amended ("Regulation M"), and, in connection therewith, the
Selling Stockholders may not agree in any stabilization activity in connection
with any securities of the Company, that they must furnish copies of this
Prospectus to each broker-dealer through which the shares of Common Stock
included herein may be offered, and that they may not bid for or purchase any
securities of the Company or attempt to induce any person to purchase any
securities of the Company except as permitted under Regulation M. The Selling
Stockholders have also agreed to inform the Company and broker-dealers through
whom sales may be made hereunder when the distribution of the shares is
completed.
Rules 102 and 103 under Regulation M prohibit participants in a
distribution from bidding for or purchasing for any account in which the
participant has a beneficial interest any of the of the securities that are the
subject of the distribution.
Rule 104 under Regulation M governs bids and purchases made to stabilize
the price of a security in connection with a distribution of the security.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock offered by this
Prospectus has been passed upon for the Company by Morgan, Lewis & Bockius LLP,
New York, New York.
10
<PAGE> 11
EXPERTS
The audited consolidated financial statements for the years ended December
31, 1995 and 1996 incorporated by reference in this Prospectus and elsewhere in
this Registration Statement have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report. The audited
financial statements of Imagent Corporation and Related Company; Melanson and
Associates, Inc. and Related Company; C. & T. Management Services, Inc. and
Related Company; Leonard Archives, Inc.; Deliverex, Incorporated and Subsidiary
and Related Company; and Permanent Records, Inc. for the three years ended
December 31, 1995, or the applicable fiscal year-ends, incorporated by reference
in this Prospectus and elsewhere in the Registration Statement have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
reports. The audited Combined Financial Statements of the Founding Companies for
the one month ended January 31, 1996 and the three years ended December 31, 1995
incorporated by reference in this Prospectus and elsewhere in the Registration
Statement have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report. In this report, Arthur Andersen LLP
states that with respect to Recordex Services, Inc., as of and for the two years
in the period ended December 31, 1994, its opinion is based on the report of
other independent public accountants, namely Elko, Fischer, McCabe & Rudman,
Ltd. The audited financial statements for Recordex Services, Inc. for the year
ended December 31, 1995 incorporated by reference in this Prospectus and
elsewhere in the Registration Statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report. The audited
financial statements for Recordex Services, Inc. for the two years ended
December 31, 1994 incorporated by reference in this Prospectus and elsewhere in
the Registration Statement have been audited by Elko, Fischer, McCabe & Rudman,
Ltd., independent public accountants, as indicated in their report. These
financial statements are incorporated by reference herein in reliance upon the
authority of said firms as experts in giving said reports.
No dealer, representative or any other person has been authorized to give
any information or to make any representations other than those contained in
this Prospectus, and if given or made, such information or representations must
not be relied upon as having been authorized by the Company. Neither the
delivery of this Prospectus nor any sale made hereunder shall under any
circumstances create any implication that the information contained herein is
correct as of any date subsequent to the date hereof. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any securities
offered hereby by anyone in any jurisdiction in which such offer or solicitation
is not authorized or in which the person making such offer or solicitation is
not qualified to do so or to anyone to whom it is unlawful to make such offer or
solicitation.
11
<PAGE> 12
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information....................................... 2
Incorporation of Certain Information by Reference........... 2
The Company................................................. 3
Recent Developments......................................... 4
Risk Factors................................................ 5
Use of Proceeds............................................. 9
Selling Stockholders........................................ 9
Plan of Distribution........................................ 10
Legal Matters............................................... 10
Experts..................................................... 11
</TABLE>
12
