<PAGE>   1

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

                                    FORM 10-K

(Mark One)

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

     For the fiscal year ended December 28, 1997 or

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
          
     For the transition period from          to

                          Commission file number: 21027

                           SOURCE SERVICES CORPORATION
             (Exact name of registrant as specified in its charter)

          DELAWARE                                      36-2690960
(State or other jurisdiction                          (I.R.S. Employer
of incorporation or organization)                     Identification No.)

5580 LBJ FREEWAY
SUITE 300
DALLAS, TEXAS                                         75240
(Address of principal executive offices)              (zip-code)

       Registrant's telephone number, including area code: (972) 385-3002

           Securities registered pursuant to Section 12(b) of the Act:
                                      None

           Securities registered pursuant to Section 12(g) of the Act:
                             Common Stock, Par Value
                                 $.02 per share
                       ----------------------------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) had been subject to such filing
requirements in the past 90 days. YES  X     NO
                                     -----     -----

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

As of February 27, 1998, 13,754,043 shares of $.02 par value Common Stock were
outstanding, and the aggregate market value of the common shares (based upon the
last price on February 27, 1998) was approximately $362,762,884.

<PAGE>   2



PART I

ITEM 1.  BUSINESS

GENERAL

         Source Services Corporation (the "Company") is a specialty staffing
services firm that provides flexible staffing and permanent placement of
professional and skilled personnel primarily in the areas of information
technology, accounting and finance, and engineering and manufacturing. It
recently expanded its service offerings to include the staffing of professional
and skilled personnel in the areas of health care and legal services. The
Company believes that the ability to provide both flexible staffing and
permanent placement of professional and skilled personnel in a broad spectrum of
fields enables it to present integrated solutions to its clients' staffing
needs. The Company further believes that the staffing of professional and
skilled personnel in specialty niches generally includes longer term assignments
than typical clerical temporary placement and offers the Company the opportunity
for greater growth and higher profitability. The Company has offices in 55
markets throughout the United States and one in Canada.

         Initially a large provider of permanent placement services, the Company
shifted its focus in 1991 to flexible staffing services, traditionally known as
temporary staffing, in its areas of specialization. For the past three years,
the Company's net service revenue from flexible staffing has grown at a
compounded annual rate of approximately 44%. During fiscal year 1997,
approximately 68% of the Company's net service revenue was derived from its
flexible staffing services.

         The Company's flexible staffing business benefits greatly from the
Company's experience in providing permanent placement services. Over its 35
years, the Company has developed expertise in recruiting and selecting
professionals to satisfy client requests. Also, the Company currently maintains
a database of over one million potential professional or skilled candidates from
which it can match its clients' needs. In addition, virtually all of the
Company's sales associates have a background in one of the Company's areas of
specialization, thereby promoting a better understanding of the needs of the
Company's clients and providing the Company an advantage in its recruiting
efforts.

         On February 2, 1998, the Company and Romac International, Inc.
("Romac") announced that they had entered into a merger agreement providing for
a stock-for-stock transaction, under which Romac would be the surviving entity.
(See Note 13, under "Notes to Consolidated Financial Statements" for further
information.) This merger is subject to, among other considerations, approval by
shareholders of both companies. While the merger is anticipated by management to
be completed in the second calendar quarter of 1998, because all the conditions
of the merger agreement have not been met, consummation of the merger at this
time is uncertain. Therefore, the Company's Form 10-K has been prepared in a
manner to best describe its business in an ongoing manner, thus providing a
better understanding of the Company's strategies, business and ongoing
obligations as they existed at the end of its 1997 fiscal year for which the
report is filed.

INDUSTRY OVERVIEW

         The significant increase in demand for flexible staffing services has
been driven by the fundamental changes in the employer-employee relationship
that have occurred in recent years. Many employers have sought to control
personnel costs by reducing their permanent staff of employees and supplementing
their workforce with temporary employees for special projects, peak work loads
and other needs. Other employers have responded to new technology, increased
automation, shorter technology cycles, governmental regulation and global
competitive pressures by turning to flexible hiring practices to keep costs
variable, achieve maximum flexibility, outsource highly specialized skills and
avoid the negative effects of layoffs. Employers also use flexible staffing to
shift certain employment costs and risks from their business to staffing
companies which often are able to spread these risks and costs over a larger
number of employees.

THE COMPANY'S SPECIALTY STAFFING SERVICES

         Overview. The Company is a staffing services firm that specializes in
providing flexible staffing and permanent placement of professional and skilled
personnel primarily in the areas of information technology, 


<PAGE>   3

accounting and finance, and engineering and manufacturing. It provides services
in 55 markets throughout the United States and one in Canada. The Company's
operations are more heavily concentrated in large metropolitan areas. The
Company has recently expanded its service offerings to include the staffing of
professional and skilled personnel in the areas of health care and legal
services. The Company believes that providing a broad range of specialty
staffing services allows it to capitalize on its name recognition and reputation
initially developed as a provider of personnel to the information technology
industry.

         The Company seeks to develop an understanding of its clients' staffing
needs through its sales associates, virtually all of whom have a background in
an area in which the Company specializes. For example, sales associates in the
Company's information technology divisions have technical experience in various
computer-related fields, while most sales associates in the Company's accounting
and finance divisions are certified public accountants. The specialized
background of the Company's sales associates, coupled with the Company's
emphasis on developing and maintaining long-term relationships with its clients,
fosters the development of a consultative relationship that enhances the
Company's ability to offer integrated staffing solutions to meet the needs of
its clients.

         Due to its position as a provider of flexible staffing and permanent
placement staffing services in its primary areas of specialization, the Company
has developed access to a large number of qualified candidates. The Company
maintains a database of qualified candidates containing more than one million
names. The Company seeks to assure the high quality of its candidates through
personal screening interviews with each candidate. These screening interviews
are conducted by sales associates having a background in the candidate's area of
specialty, thereby further enabling the Company to offer its clients candidates
which best meet the clients' staffing needs. The Company's policy is to replace,
without additional charge, flexible staffing personnel who fail to perform to
the client's satisfaction and candidates placed in permanent positions whose
employment terminates within the guarantee period.

         Flexible Staffing. Flexible staffing involves the placement of Company
employees and independent contractors on short and long-term assignments with
clients. The Company believes that flexible staffing services offer its clients
a reliable and cost-effective way of obtaining professional and skilled
personnel for special projects or to balance uneven or peak workloads. Because
of its reputation and expertise in the segments of the staffing industry in
which it specializes, the Company has access to a large number of qualified
candidates to meet its clients' flexible staffing needs. The Company believes
that many professional and skilled personnel are attracted to flexible staffing
positions because of their desire to maintain flexible work schedules, obtain
different and challenging work experiences and familiarize themselves with an
employer prior to considering permanent employment. Additionally, the Company
believes that its ability to offer both flexible staffing and permanent
placement options to candidates gives the Company a competitive advantage in
attracting skilled and qualified flexible staffing placement candidates.

         Typically, the period of assignment depends upon the duration of the
need for the skills possessed by an individual employee. During a typical week,
the Company has more than 3,800 persons in flexible positions with clients. The
Company charges hourly fees for personnel placed in flexible staffing
assignments. For the years ended December 28, 1997, and December 29, 1996,
flexible staffing accounted for approximately 67.8% and 62.3% respectively, of
the Company's net service revenue. The ability of the Company to locate and hire
personnel with capabilities required by customers is critical to its operations.

         The following table sets forth the number of markets in which the
Company offered flexible staffing services in its areas of specialization as of
the dates indicated:

<TABLE>
<CAPTION>
                                               December 28,         December 29,         December 31,
                                                   1997                 1996                 1995
                                                   ----                 ----                 ----
<S>                                            <C>                  <C>                  <C>
Information Technology. . . . . . . . . .           49                   50                   43
Accounting and Finance. . . . . . . . . .           48                   45                   24
Engineering and Manufacturing . . . . . .           17                   16                   11
Other   . . . . . . . . . . . . . . . . .           10                   11                    4
</TABLE>




                                       2
<PAGE>   4

         Set forth below are the percentages of the Company's net service
revenue derived from its flexible staffing services for each of the years
indicated:


<TABLE>
<CAPTION>
                                              December 28,    December 29,   December 31,
                                                 1997             1996           1995
                                                 ----             ----           ----   
<S>                                              <C>              <C>            <C>   
Information Technology ...................       46.8%            45.1%          44.1% 
Accounting and Finance ...................       17.5             14.9           14.6  
Other ....................................        3.5              2.3            2.0  
                                                -----            -----          -----  
        Total Flexible Staffing ..........       67.8%            62.3%          60.7% 
                                                =====            =====          =====  
</TABLE>
                                                                                
         Permanent Placement. During fiscal years ended December 28, 1997 and
December 29, 1996, permanent placements accounted for 32.2% and 37.7%,
respectively, of the Company's net service revenue. The Company currently offers
permanent placement services in 54 markets covering 29 states and one in Canada.

         Permanent placement services include placement of candidates in
permanent positions with clients. The Company believes that many businesses, in
an effort to manage their cost structure and focus on their core business, have
generally reduced the number of permanent, full-time employees as well as the
size and capability of their human resources functions. Accordingly, companies
rely more heavily on permanent placement providers for their hiring needs. The
Company further believes that the increasing demand for specialized employee
skills has enhanced its clients' dependence on its ability to more effectively
identify and understand specialized and technical candidate skills. In addition,
utilizing permanent placement providers allows companies to access a broader
range of professional and skilled candidates. The Company believes its 35 year
history in permanent placement services, its database containing information on
over one million qualified potential placement candidates, its national presence
and its practice of employing sales associates with backgrounds in the areas in
which they recruit enable it to provide permanent placement staffing solutions
that meet clients' needs. Source keeps the database current by contacting the
candidates through direct mail, phone contact, direct contact, e-mail and other
means to update candidate information. This database of candidates has been
compiled over 36 years through direct mail, advertising, referrals, technical
seminars, job fairs, college fairs and other medium.

         The Company's permanent placement services typically result in payment
to the Company when a candidate is hired by a client and the candidate is
retained for the duration of the guarantee period. The Company's fee is usually
structured as a percentage of the placed candidate's first-year annual
compensation.

         Set forth below are the percentages of the Company's net service
revenue derived from its permanent placement services for each of the years
indicated:

<TABLE>
<CAPTION>
                                              December 28,    December 29,   December 31,
                                                 1997             1996           1995
                                                 ----             ----           ----   
<S>                                              <C>              <C>            <C>   
Information Technology ...................       17.0%           21.2%          24.0%  
Accounting and Finance ...................       11.8            12.3           11.5  
Other ....................................        3.4             4.2            3.8  
                                                -----           -----          -----  
        Total Permanent Placement ........       32.2%           37.7%          39.3% 
                                                =====           =====          =====                                 
</TABLE>

AREAS OF SPECIALIZATION

         The Company specializes in providing flexible staffing and permanent
placement of professional and skilled personnel in the areas of information
technology, accounting and finance, engineering and manufacturing, health care
and legal services through eight divisions. The Company regularly reviews its
areas of specialization to determine whether new areas can be added to better
serve its clients' needs. The Company's focus is on providing professional and
skilled personnel.

         Information Technology. The Company provides persons skilled in
computer-related fields for flexible staffing and permanent positions. Staffing
of information technology personnel accounted for approximately 63.8% of the
Company's net service revenue for fiscal year 1997, and 66.3% for the fiscal
year 1996.

         The Company meets clients' information technology staffing needs
through two divisions in 54 markets. SOURCE CONSULTING provides experienced
professionals in all information technology disciplines for flexible 




                                       3
<PAGE>   5

staffing assignments. SOURCE EDP provides information systems professionals on a
contingency fee and retainer basis for permanent employment.

         Accounting and Finance. For fiscal years 1997 and 1996, staffing of
accounting and finance personnel accounted for approximately 29.3% and 27.2%,
respectively, of the Company's net service revenue. The Company meets clients'
accounting and finance staffing needs through two divisions. ACCOUNTANT SOURCE
TEMPS provides accounting and financial personnel for flexible staffing
assignments in 48 markets. SOURCE FINANCE provides experienced accounting and
finance professionals on a contingency fee and retainer basis for permanent
employment in 48 markets.

         Engineering. The Company provides professional personnel in the fields
of engineering in 17 of the Company's markets in 11 states. For fiscal years
1997 and 1996, staffing of engineering personnel accounted for approximately
4.0% and 5.0%, respectively, of the Company's net service revenue.

         SOURCE ENGINEERING provides personnel highly skilled in a variety of
engineering disciplines for both flexible staffing and permanent placement. 

         Legal Services. Through its SOURCE LEGAL division, the Company recently
has started to provide legal services personnel for flexible staffing and
permanent placement in four markets.

         Health Care. The Company, through its SOURCE HEALTHCARE STAFFING
division, provides licensed professionals to health care institutions primarily
for flexible staffing in six markets.

ORGANIZATIONAL STRUCTURE

         The Company currently operates offices in 55 markets throughout the
United States and one in Toronto, Canada. The Company's operations are divided
into three geographic regions, each of which is under the management of a Vice
President of Operations who is responsible for the overall profitability of his
region. Each market served by the Company in a region is managed by a Managing
Director who reports directly to the Vice President of Operations of that region
and is responsible for sales of the Company's services in that market. Each of
the service offerings in a market is supervised by a Sales Manager for that
service. Each of the service offerings in each market is served by sales
associates who report to a Sales Manager.

         In order to provide further focus on its flexible staffing services,
the Company has two national executive management positions for the Company's
areas of specialization; National Director of Flexible Staffing Services for the
accounting and finance area and National Director of Flexible Staffing Services
for the information technology area. These directors work with operations
management in each market.

RECRUITING AND TRAINING

         Recruiting candidates is critical to the Company's business and growth
strategy. The Company believes it has an advantage over its competitors in
recruiting highly qualified personnel for the following reasons:

         *    the background and experience of the Company's sales associates
              in each of its areas of specialization;

         *    the Company's experience as a national provider of specialty
              staffing services;

         *    the Company's database of over one million candidates; and

         *    the Company's ability to offer candidates both flexible staffing
              assignments and permanent placement opportunities.



                                       4
<PAGE>   6


         The Company attracts more than half of its candidates through referrals
and repeat business. Additional candidates are identified through a
comprehensive Candidate Attraction Program which includes the use of a
proprietary, on-line database containing the names, qualifications and other
relevant information on more than one million professional or highly skilled
candidates; using proprietary and purchased lists of prospects; the use of the
Internet, including a Company home page; national advertising campaigns;
attendance at trade shows and career conferences; speaking engagements and
professional association memberships; local media advertising; and college
campus promotional activities and speaking engagements. Because of its national
geographic presence, the Company has the ability to recruit highly qualified
personnel in certain of its areas of specialization.

         The Company relies heavily on the recruitment efforts of its sales
associates. The majority of the Company's sales associates first contact the
Company as applicants for the Company's placement services. Therefore, most of
the Company's sales associates have personally experienced and benefited from
the ability of the Company to place its candidates in attractive flexible
staffing or permanent placement positions. This personal experience benefits the
sales associates and the Company in recruiting qualified candidates and in
understanding the staffing needs of the Company's clients.

         The Company's sales associates are trained by the Company. Each
newly-hired sales associate attends a one-week initial training program
administered by the corporate training department that employs field personnel
as trainers. When sales associates return to their assigned office, they undergo
an additional nine weeks of training by local office management. This
"Certification Program" is unique for each service of the Company and is formal
in its execution, including both qualitative and quantitative training events
with formal sign-off by local management. Additionally, regularly scheduled
meetings in each branch office include training events based on specific needs
in that office. Audio visual training aids are developed and disseminated by the
corporate training department to support field management with ongoing training.

         Before a candidate is placed with a client in either a flexible
staffing or permanent position, a sales associate with a background in the
candidate's area of specialty will conduct a personal interview with that
candidate in order to evaluate qualifications and level of skills. This
screening process allows the sales associate to match candidates who can satisfy
the needs of individual clients, as well as direct the prospective candidates
toward opportunities that are well suited to their career goals.

         The Company offers all of its candidates the opportunity to develop or
enhance their skills through a variety of training aids as technological or
other changes occur. In connection with an upgrade to its management information
systems, the Company provides training software licensed from a third-party
supplier. Candidates for the Company's flexible staffing and permanent placement
services also have the opportunity to increase their technical and business
skills through the use of an on-line discussion database and chat line.

SALES AND MARKETING

         The Company markets to local accounts through its sales associates,
thereby permitting the Company to capitalize on their expertise and
relationships in local markets. Marketing activities at the local level are
conducted within guidelines established by the Company and are supervised
through the Vice Presidents of Operations, Managing Directors and Sales
Managers.

         The Company's national marketing strategy, which is largely based on
attracting clients who desire to work with a limited number of vendors for their
staffing needs, is developed and coordinated at the corporate level and is
implemented through regional and local management. This enables the Company to
develop a focused national marketing strategy that is consistent throughout all
of its markets.

         Clients are solicited through personal sales presentations,
presentations at trade shows, telephone marketing, direct mail solicitation,
Company-sponsored technical seminars and training, and referrals from clients
and candidates. In addition, as a result of its history of providing permanent
placement services, the Company has developed and strives to maintain a network
of persons who were placed using the Company's services, and are now in
positions to affect hiring decisions and rely on the Company's services in
filling their flexible staffing and permanent placement needs. The Company
advertises in a variety of local and national media, including the Yellow Pages,
local and national newspapers and trade publications. The Company also operates
a Web page on the Internet which provides both clients and candidates with
information about the Company and its services as well as 






                                       5
<PAGE>   7

employment opportunities. Each year, the Company publishes salary surveys for
professionals in the information technology, accounting and finance, and
engineering and manufacturing industries because the Company recognizes the need
for candidates to have timely information regarding hiring trends and skills
currently in demand. In addition, the Company maintains information regarding
the hiring status of employers and the skills they require.

         The Company's marketing plan incorporates a continual review of its
clients' anticipated future staffing needs to enable the Company to respond to
changes in "in-demand" skills. The quality of the relationship with client
personnel is a key component of this strategy, and the Company seeks to develop
long-term consultative relationships with each of its clients to more fully
understand and anticipate their flexible staffing and permanent placement needs.

MANAGEMENT INFORMATION SYSTEMS

         The Company relies heavily on its management information systems in the
conduct of its business. The Company principally uses a proprietary system
called WIZARD, which is an enhanced version of their previous system, SCORE.
WIZARD is based on the use of client-server technology, the inter-connection of
all of the Company's computer systems over a high-speed frame relay network, and
the use of third-party software to manage daily documentation and correspondence
with clients and to provide training for the Company's candidates. The Company
believes that WIZARD's unique system of coding skills and qualifications of the
Company's candidates provides the Company an advantage in matching such skills
and qualifications with clients' needs. For example, WIZARD enables the Company
to include within the coding of the skills and qualifications of a candidate
various subcandidates possessing a group of skills and qualifications,
including, for example, a high level of skill in a particular computer program,
WIZARD will also identify candidates possessing most of the required
qualifications and having skills in related or similar computer programs. This
enables the Company to respond to specific client needs by searching for
candidates possessing highly specialized skills or a broad grouping of skills as
the circumstances require.

COMPETITION

         The specialty staffing services industry is very competitive and
fragmented. There are limited barriers to entry and new competitors frequently
enter the market. A number of the Company's competitors possess substantially
greater resources than the Company. The Company faces substantial competition
from local and national specialty staffing firms. National specialty staffing
firms that offer staffing services in some or all of the Company's areas of
specialization include AccuStaff Incorporated, Alternative Resources
Corporation, COREStaff, Inc., Robert Half International, Inc. and Romac
International, Inc. In addition, in each of the Company's markets, one or more
local firms compete with the Company.

         The Company believes that the availability and quality of candidates,
the level of service, the effective monitoring of job performance and the price
of service are the principal elements of competition in the staffing industry.
The Company believes that the availability of qualified candidates is especially
important. In order to attract qualified candidates, the Company places emphasis
upon its ability to provide both flexible staffing and scheduling flexibility.
Additionally, in certain markets the Company has experienced significant pricing
pressure from some of its competitors. Although the Company believes it competes
favorably with respect to these factors, it expects competition to increase and
there can be no assurance that the Company will remain competitive.

INSURANCE

         The Company maintains a fidelity bond and a number of insurance
policies including general liability and automobile liability, (each with excess
liability coverage), professional liability and errors and omissions, and
worker's compensation and employers' liability. There can be no assurance that
any of the above coverages will be adequate for the Company's needs.

TRADEMARKS

         The Company has registered the following trademarks: ACCOUNTANT SOURCE
TEMPS, SOURCE ENGINEERING, SOURCE, SOURCE CONSULTING, SOURCE EDP, SOURCE
FINANCE, SOURCE TEMPS, SOURCE LEGAL and SOURCE SERVICES. The Company also has
registered the SOURCE EDP logo. The Company vigorously defends its rights
pursuant to 




                                       6
<PAGE>   8

these trademarks. The Company believes that the loss of one or more of such
trademarks could have a material adverse effect on its business.

EMPLOYEES

         As of December 28, 1997, the Company employed approximately 4,160
persons. Of such persons, approximately 85 were engaged in corporate management
and support functions, approximately 1,122, including approximately 767 sales
associates, were involved in functions related to customer service, and the
balance of 3,453 (of which approximately 230 were independent contractors) were
available for or were on assignment in temporary staffing positions. As the
employer, the Company is responsible for the permanent and temporary payrolls
and employer's share of social security taxes (FICA), federal and state
unemployment taxes, workers' compensation insurance and other direct labor costs
relating to its employees. The Company offers access to various insurance
programs and benefits for its flexible employees. The Company has no collective
bargaining agreements covering any of its employees and has never experienced
any material labor disruption. The Company considers its relations with its
employees to be good.


ITEM 2.  PROPERTIES

PROPERTIES

         The Company owns no real estate. It leases its headquarters as well as
its branch offices. The leases generally have terms of five years. The Company
believes that its facilities are adequate for its needs and does not anticipate
difficulty replacing any of its facilities or locating additional facilities.


ITEM 3.  LEGAL PROCEEDINGS

         In the ordinary course of its business, the Company is from time to
time threatened with or named as a defendant in various lawsuits, including
discrimination and harassment and other similar claims. The Company is not
currently involved in any material litigation. (See Note 12 -- "Commitments and
Contingencies" to Financial Statements).


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

         No matters were submitted to a vote of security holders during the
quarter ended December 28, 1997.


                                     PART II

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

         The Company's Common Stock is listed on the Nasdaq National Market
under the symbol "SRSV" since the Company's initial public offering on July 29,
1996. 

         The Company has not paid any dividends in recent years and has not
declared any cash dividends on its Common Stock in 1997. The Company currently
intends to retain any earnings to provide for the operation and expansion of its
business and does not anticipate paying any cash dividends in the foreseeable
future.



                                       7
<PAGE>   9



         The following table sets forth, for the periods indicated, the range of
high, low and close sales prices for the Common Stock as reported on the Nasdaq
National Market since the Company's initial public offering (the "Offering") in
July 1996. All amounts have been adjusted for the 3-for-2 stock split effective
November 15, 1997.


<TABLE>
<CAPTION>

1997                                                            High         Low       Close
----                                                            ----         ---       -----
<S>                                                           <C>        <C>        <C>      
First Quarter (through  March 30, 1997) .................     $   13.33  $   11.33  $   11.92
Second Quarter (through June 29, 1997) ..................         19.00      10.50      17.25
Third Quarter (through September 28, 1997) ..............         20.67      17.00      19.67
Fourth Quarter (through December 28, 1997) ..............         22.13      18.17      19.75

</TABLE>


<TABLE>
<CAPTION>

1996                                                            High         Low       Close
----                                                            ----         ---       -----
<S>                                                           <C>        <C>        <C>      
Third Quarter (from July 29,1996)  ......................     $   13.33  $    9.33  $   11.67
Fourth Quarter (through December 29, 1996) ..............         12.42      10.33      11.42

</TABLE>

         As of February 27, 1998, there were approximately 213 stockholders of
record and approximately 2,400 beneficial holders of the Company's Common Stock.
On March 11, 1998, the closing market price was $25.75.

         On July 29, 1996, the Company's Registration Statement on Form S-1
(File No. 2-21027) (the "Registration Statement") relating to the Offering was
declared effective by the Commission. The Registration Statement registered an
amount of Common Stock having an aggregate offering price of $27,138,034. The
Offering was consummated on July 29, 1996, and the Company issued 1,938,431
shares of Common Stock at $14 per share (for an aggregate offering amount of
$27,138,034). The managing underwriters of the Offering were The
Robinson-Humphrey Company, Inc. and Rauscher Pierce Refsnes, Inc. In connection
with the Offering, the Company paid underwriting discounts and commissions of
$1,899,662 of expenses for the underwriters and approximately $1,148,237 of
other expenses. None of such expenses were paid to directors, officers, 10%
stockholders or affiliates of the Company. After deducting such total expenses
of $3,047,899, the Company's net proceeds from the Offering were $24,090,135.
[Pending its use of the remaining $11,795,872 in net proceeds, the Company has
invested this amount in short-term, investment grade, interest-bearing
obligations.]



                                       8
<PAGE>   10


ITEM 6.  SELECTED FINANCIAL DATA

         The following table sets forth selected financial information regarding
the Company's financial position and operating results which has been extracted
from the Company's financial statements for the five years ended December 28,
1997. The information should be read in conjunction with Item 7 - "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Consolidated Financial Statements and related Notes included elsewhere in
this report. All prior year net income per share and weighted average shares
outstanding amounts have been retroactively adjusted for 3-for-2 stock split
effective November 15, 1997.


<TABLE>
<CAPTION>
                                                                               Year Ended
                                                 -----------------------------------------------------------------------
                                                 December 28,  December 29,    December 31,    January 1,     January 2,
                                                    1997           1996           1995           1995           1994
                                                 ----------      ---------      ---------      ---------      ----------
                                                             (Amounts in thousands, except per share amounts)
<S>                                               <C>            <C>            <C>            <C>            <C>      
Income Statement Data:
   Net service revenue ......................     $ 294,676      $ 204,748      $ 141,832      $  90,067      $  53,835
   Cost of sales, flexible
     staffing ...............................       143,582         92,042         63,052         35,411         19,927
                                                  ---------      ---------      ---------      ---------      ---------
   Gross profit .............................       151,094        112,706         78,780         54,656         33,908
                                                  ---------      ---------      ---------      ---------      ---------
   Operating expenses:
     Selling ................................       122,570         93,211         64,882         43,795         27,546
     General and
       administrative .......................        10,694          8,371          6,636          5,447          4,683
                                                  ---------      ---------      ---------      ---------      ---------
         Total operating
           expenses .........................       133,264        101,582         71,518         49,242         32,229
                                                  ---------      ---------      ---------      ---------      ---------
   Operating income .........................        17,830         11,124          7,262          5,414          1,679
   Other income (expense),
     net ....................................           743             88           (540)          (403)          (349)
                                                  ---------      ---------      ---------      ---------      ---------
   Income before income
     taxes ..................................        18,573         11,212          6,722          5,011          1,330
                                                 
   Income tax expense .......................        (8,045)        (4,741)        (2,547)        (1,764)          (513)
                                                  ---------      ---------      ---------      ---------      ---------
   Net income ...............................     $  10,528      $   6,471      $   4,175      $   3,247      $     817
                                                  =========      =========      =========      =========      =========
   Net income per share:
     Basic ..................................     $    0.77      $    0.54      $    0.39      $    0.30      $    0.07
                                                  =========      =========      =========      =========      =========
     Diluted ...............................      $    0.75      $    0.54      $    0.39      $    0.30      $    0.07
                                                  =========      =========      =========      =========      =========
   Weighted average shares outstanding:
     Basic ..................................        13,721         11,978         10,767         10,875         11,079
     Diluted ................................        13,978         12,049         10,836         10,920         11,079

</TABLE>


     The Company has not declared or paid any cash dividends during the five
year period ending December 28, 1997.

<TABLE>
<CAPTION>
                                          December 28,    December 29,   December 31,    January 1,    January 2,
                                            1997             1996         1995             1995       1994    
                                           -------          -------      -------          -------     ------- 
                                                                    ( In thousands)                           
<S>                                        <C>              <C>          <C>              <C>         <C>     
Balance Sheet Data:                                                                                           
   Working capital ...................     $51,959          $41,337      $14,642          $ 6,419     $ 4,238 
   Total assets ......................      86,269           64,553       30,624           22,434      13,031 
   Total long-term debt ..............          --               --           --               --         630 
   Stockholders' equity ..............      59,024           47,937       17,294            7,812       4,107 
                                                                                          
</TABLE>


                                       9
<PAGE>   11


         The following tables set forth the unaudited quarterly results of
operations for the years ended December 28, 1997 and December 29, 1996:

<TABLE>
<CAPTION>
                                                                 QUARTER ENDED
                                                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                            ----------------------------------------------------------------------------------------------
                              MARCH 30, 1997         JUNE 29, 1997          SEPTEMBER 28, 1997         DECEMBER 28, 1997
                            ------------------     -----------------     -----------------------    ----------------------
<S>                         <C>                    <C>                   <C>                        <C>    
Net service revenue              $65,392               $70,969                 $76,411                    $81,904
Gross profit                     $33,956               $36,323                 $38,931                    $41,885
Net income                       $ 1,841               $ 2,440                 $ 2,954                    $ 3,293
Net income per share:
  Basic                          $  0.13               $  0.18                 $  0.22                    $  0.24
  Diluted                        $  0.13               $  0.18                 $  0.21                    $  0.23
</TABLE>

<TABLE>
<CAPTION>
                                                                 QUARTER ENDED
                                                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                            ----------------------------------------------------------------------------------------------
                              MARCH 31, 1996        JUNE 30, 1996          SEPTEMBER 29, 1996         DECEMBER 29, 1996
                            -------------------    ----------------      -----------------------    ----------------------
<S>                         <C>                    <C>                   <C>                        <C>      
Net service revenue              $40,833                 $47,899                $54,035                    $61,980  
Gross profit                     $22,298                 $27,161                $29,592                    $33,653  
Net income                       $   802                 $ 1,430                $ 1,941                    $ 2,297  
Net income per share:                                                                                               
  Basic                          $  0.07                 $  0.11                $ 0. 16                    $  0.17  
  Diluted                        $  0.07                 $  0.11                $ 0 .15                    $  0.17  
</TABLE>

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

Forward-Looking Statements

         This Form 10-K includes certain "forward-looking" statements, within
the meaning of the Private Securities Litigation Reform Act of 1995, which
reflect the Company's current expectations regarding the future results of
operations, performance and achievements. Source Services Corporation has tried,
wherever possible, to identify these "forward-looking" statements by using words
such as "anticipate," "believe," "estimate," "expect" and similar expressions.
These statements reflect the Company's current beliefs and are based on
information currently available to it. Accordingly, these statements are subject
to risks and uncertainties which could cause the Company's actual results,
performance or achievements to differ materially from those expressed in, or
implied by these statements. These risks and uncertainties include the
following: economic activity in the United States and in the regions of the
country in which the Company operates; the Company's ability to attract and
retain qualified personnel; the Company's ability to maintain and protect its
information processing systems and proprietary technology; the achievement and
management of growth by the Company through internal expansion in current
markets; the retention of key management personnel and qualified sales
associates; exposure to employment liability risk; competition in the Company's
current and potential target markets; and changes in legislative or regulatory
requirements. Readers are encouraged to review the Risk Factors Section of the
Company's Form S-1 filing dated July 29, 1996 for a more complete description of
these factors. The Company is not obligated to update or revise these
"forward-looking" statements to reflect new events or circumstances.

         The following discussion should be read in connection with the
Company's Consolidated Financial Statements and the related Notes thereto
included elsewhere in this document.

Overview 
         
         On February 2, 1998, the Company and Romac International, Inc.
("Romac") announced that they had entered into a merger agreement providing for
a stock-for-stock transaction, under which Romac would be the surviving entity.
(See Note 13, under "Notes to Consolidated Financial Statements" for further
information.) This merger is subject to, among other considerations, approval by
shareholders of both companies.  While the merger is anticipated by management
to be completed in the second calendar quarter of 1998, because all the
conditions of the merger agreement have not been met, consummation of the merger
at this time is uncertain. Therefore, the Company's Form 10-K has been prepared
in a manner to best describe its business in an ongoing manner, thus providing a
better understanding of the Company's strategies, business and ongoing
obligations as they existed at the end of its 1997 fiscal year for which the
report is filed.

         In recent years, substantially all of the Company's growth has come
from expansion of its flexible staffing services, adding staffing services in
new areas of specialization and entering new geographic markets. 

         All growth has been through internal expansion rather than from
acquisitions.



                                       10
<PAGE>   12

         The following table sets forth the number of markets, by service type
and area of specialization, as of the end of the indicated fiscal periods:

<TABLE>
<CAPTION>
                                                      1997     1996     1995     1994    1993
                                                      ----     ----     ----     ----    ----
<S>                                                    <C>      <C>      <C>      <C>     <C>
         Flexible Staffing                             55       54       47       43      30
         Permanent Placement                           54       53       51       46      45
         ------------------------------------------------------------------------------------
         Information Technology                        54       53       51       46      43
         Accounting and Finance                        52       51       37       33      35
         Engineering and Manufacturing                 17       16       11        7       5
         Other                                         10       11        4        2       0
</TABLE>

RESULTS OF OPERATIONS

Fiscal Year 1997 as compared to Fiscal Year 1996

     Net service revenue. Net service revenue increased 44.0% to $294.7 million
in 1997, from $204.7 million in 1996. The growth in net service revenue was
primarily attributable to an increase in the number of sales associates, and the
Company's continued emphasis on expanding the number of service offerings in all
markets.

     Net service revenues from flexible staffing services grew 56.8% to $199.9
million in 1997, from $127.5 million in 1996. The growth in flexible staffing
net service revenue is primarily due to an increase in the hours billed from
adding additional markets and growth in existing markets and, to a lesser
extent, an increase in the average billing rates.

     Permanent placement net service revenue increased 22.8% to $94.8 million in
1997, from $77.2 million in 1996. The growth in permanent placement net service
revenue is primarily the result of an increase in the number of permanent
placements and, to a lesser extent, an increase in the average placement fees.

     Gross profit. Gross profit increased 34.1% to $151.1 million in 1997, from
$112.7 million in 1996. Gross profit as a percentage of net service revenues
decreased slightly to 51.3% for 1997, from 55.1% in 1996. The decrease was
primarily a result of a continued change in mix of the Company's net service
revenue toward flexible staffing services.

     Operating expenses. Operating expenses increased 31.2% to $133.3 million in
1997, from $101.6 million in 1996. The increase was primarily a result of hiring
additional operations employees, increased expenses associated with the
expansion of the Company's business, and upgrades in the Company's management
information system. As a percentage of net service revenue, operating expenses
decreased to 45.2% in 1997, as compared to 49.6% in 1996.

     Operating income. Operating income increased 60.4% to $17.8 million in
1997, from $11.1 million in 1996. The increase is primarily a result of the
factors described above.

     Other (income) expense. Other income was $0.7 million in 1997, as compared
to $88,000 of income in 1996. The increase in other income was primarily a
result of an increase in interest income.

     Income taxes. The effective tax rate was 43.3% and 42.2% in 1997 and 1996,
respectively.

     Net income. Net income increased 61.5% to $10.5 million in 1997, from $6.5
million in 1996, as a result of the factors described above.

Fiscal Year 1996 as compared to Fiscal Year 1995

     Net service revenue. Net service revenue increased 44.4% to $204.7 million
in 1996, from $141.8 million in 1995. The growth in net service revenue was
primarily attributable to an increase in the number of sales associates, and the
Company's continued emphasis on expanding the number of service offerings in all
markets.



                                       11
<PAGE>   13

     Net service revenues from flexible staffing services grew 48.1% to $127.5
million in 1996, from $86.1 million in 1995. The growth in flexible staffing net
service revenue is primarily due to an increase in the hours billed in existing
markets, and, to a lesser extent, an increase in the average billing rates.

     Permanent placement service revenue increased 38.6% to $77.2 million in
1996, from $55.7 million in 1995. The growth in permanent placement net service
revenue is primarily the result of an increase in the number of permanent
placements, and, to a lesser extent, an increase in the average placement fees.

     Gross profit. Gross profit increased 43.1% to $112.7 million in 1996, from
$78.8 million in 1995. Gross profit as a percentage of net service revenues
decreased to 55.1% for 1996, from 55.5% in 1995. The decrease was primarily as a
result of a continued change in mix of the Company's net service revenue toward
flexible staffing services.

     Operating expenses. Operating expenses increased 42.0% to $101.6 million in
1996, from $71.5 million in 1995. The increase was primarily a result of hiring
additional operations employees, increased expenses associated with the
expansion of the Company's business, and upgrades in the Company's management
information system. As a percentage of net service revenue, operating expenses
decreased to 49.6% in 1996, as compared to 50.4% in 1995.

     Operating income. Operating income increased 53.2% to $11.1 million in
1996, from $7.3 million in 1995. The increase is primarily a result of the
factors described above.

     Other (income) expense. Other (income) expense increased to $88,000 of
income in 1996, as compared to $540,000 of expense in 1995.

     Income taxes. The effective tax rate was 42.2% and 37.9% in 1996 and 1995,
respectively.

     Net income. Net income increased to $6.5 million in 1996, from $4.2 million
in 1995, as a result of the factors described above.

LIQUIDITY AND CAPITAL RESOURCES

     Cash provided by operating activities was $9.9 million for the fiscal year
ended December 28, 1997, as compared to cash used in operating activities of
$1.2 million for the fiscal year ended December 29, 1996. The increase in cash
from operating activities in fiscal 1997 is primarily attributable to higher
net income and increases in accounts payable and accrued expenses and accrued
commissions and payroll. Cash provided by operating activities was $1.2 million
for the fiscal year ended December 31, 1995 primarily as a result of net
income, adjusted for non-cash items, offset by increases in working capital.

     Cash used in investing activities was $5.4 million, $5.5 million and $2.0
million for the fiscal years ended December 28, 1997, December 29, 1996 and
December 31, 1995, respectively. Cash used in investing activities in fiscal
1997 includes $3.5 million in capital expenditures and purchases of short-term
investments of $1.9 million. Cash used in investing activities in fiscal 1996
and 1995 includes $5.9 million and $2.2 million in capital expenditures,
respectively.

     Cash provided by financing activities were $0.4 million in fiscal 1997 and
$24.2 million in fiscal 1996. Cash provided by financing activities in fiscal
1997 includes $0.4 million in proceeds from the exercise of stock options. Cash
provided by financing activities in fiscal 1996 includes $24.1 million in net
proceeds from the Company's initial public offering.

     Working capital for the fiscal year ended December 28, 1997, is $52.0
million as compared to $41.3 million for the fiscal year ended December 29,
1996.

     Historically, the Company has financed its operations through cash
generated by operating activities and through various forms of external
financing, including operating leases, capital leases and bank lines of credit.
The principal use of cash is for financing working capital, particularly through
periods of growth. As a result of the Offering on July 29, 1996, the Company
received $24.1 million in net proceeds. These proceeds have been used to repay
short-term borrowings, make capital improvements and to support future growth.

     If new offices are established or acquired, or existing offices expanded,
there will be increased requirements for cash resources to fund operations. The
start-up of services in a new market has generally required expenditures of up
to approximately $200,000 before generating positive cash flow. Historically,
such new operations generally have achieved operating profitability within nine
months of inception but have not contributed significant net service revenues
for the first 12-to-18 months.

     On April 30, 1997, the Company renewed its $10.0 million line of credit
loan agreement. No amounts were borrowed under the agreement during the year. As
of December 28, 1997, $10.0 million is available for borrowing under the
Company's line of credit loan agreement.

     During 1997, capital expenditures were made primarily for computer
equipment and office furniture and fixtures. The foregoing capital expenditures
were financed internally from operating activities.

     Flexible staffing personnel are generally paid weekly for their services,
whereas customer payments are generally received within 30 to 90 days from the
date of invoice. Should the Company's flexible staffing business grow and
accounts receivable increase, the Company's need for capital will increase. With
the exception of 




                                       12
<PAGE>   14

possible acquisitions, the Company believes that its cash balance, funds from
operations and its line of credit will be sufficient to fund continued expansion
of its services and office locations at least through the next 12 months.

YEAR 2000 COMPUTER ISSUES

         Many computer systems in use today were designed and developed using
two digits, rather than four, to specify the year. As a result, such systems
will recognize the year 2000 as "00." This could cause many computer
applications to fail completely or to create erroneous results unless corrective
measures are taken.

         The Company utilizes software or related computer technologies
essential to its operations that will be affected by the Year 2000 issue. The
Company has studied what actions will be necessary to make its computer systems
Year 2000 compliant and has completed certain phases of its compliance plan.
The Company expects all of its systems to be Year 2000 compliant by late 1998
and has determined that it will not have a material impact on its business,
operations nor its financial statements.


                                       13
<PAGE>   15



ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


Management's Report

         The accompanying financial statements of Source Services Corporation
(the "Company") are the responsibility of and have been prepared by the Company
in conformity with generally accepted accounting principles. It is necessary to
include some amounts that are based on best judgment and estimates. The
financial information displayed in other sections of this report is consistent
with these financial statements.

         The Company seeks to assure the objectivity and integrity of its
financial records by careful selection of its managers, by organizational
arrangements that provide an appropriate division of responsibility and by
communications programs aimed at assuring that its policies and methods are
understood throughout the organization.

         The Company has a comprehensive formalized system of internal
accounting controls designed to provide reasonable assurance that assets are
safeguarded and that financial records are reliable. Appropriate management
monitors the system for compliance. In addition, as part of their audit of
financial statements, the Company's independent accountants review and test the
internal accounting controls selectively to establish a basis of reliance
thereon in determining the nature, extent and timing of tests to be applied.

         The Board of Directors pursues its oversight role in the area of
financial reporting and internal accounting control through its Audit Committee.
This Committee, composed solely of nonmanagement directors, regularly meets with
the independent accountants and management to monitor the proper discharge of
each of its responsibilities relative to internal accounting controls and the
financial statements.



/s/ D. Les Ward                           /s/ Richard Dupont
-------------------------------------     -------------------------------------
D. Les Ward                               Richard Dupont
President and Chief Executive Officer     Chief Financial Officer and Secretary



                                       14
<PAGE>   16


                        REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders
of Source Services Corporation

In our opinion, the consolidated financial statements and financial statement
schedule listed in the index appearing under Item 14(a)(1) and (2) and 14(d) on
page F-2 present fairly, in all material respects, the financial position of
Source Services Corporation and its subsidiary at December 28, 1997 and December
29, 1996, and the results of their operations and their cash flows for each of
the three years in the period ended December 28, 1997, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

As described in Note 13, on February 2, 1998, Source Services Corporation
announced that they had entered into an agreement to merge with Romac
International, Inc. ("Romac"), in a stock-for-stock transaction, under which
Romac would be the surviving entity.

/s/ Price Waterhouse LLP
------------------------------
PRICE WATERHOUSE LLP
Dallas, Texas
February 6, 1998


                                       15
<PAGE>   17



                           SOURCE SERVICES CORPORATION
                           CONSOLIDATED BALANCE SHEET
                (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                     ASSETS

                                                                              DECEMBER 28,   DECEMBER 29,
                                                                                 1997           1996
                                                                                --------      --------
<S>                                                                             <C>           <C>     
Current assets:
     Cash and cash equivalents ............................................     $ 23,723      $ 18,849
     Accounts receivable, less allowance for doubtful accounts
          and fee adjustments of $4,543 and $2,590, respectively ..........       49,254        37,018
     Short-term investments ...............................................        1,906            --
     Deferred tax asset ...................................................        2,789         1,611
     Prepaid expenses and other ...........................................          882           268
                                                                                --------      --------
               Total current assets .......................................       78,554        57,746
Property and equipment, net ...............................................        7,715         6,807
                                                                                --------      --------
               Total assets ...............................................     $ 86,269      $ 64,553
                                                                                ========      ========


                      LIABILITIES AND STOCKHOLDERS' EQUITY


Current liabilities:
     Accounts payable and accrued expenses ................................     $  5,351      $  3,796
     Accrued commissions and payroll ......................................       20,374        11,684
     Accrued 401(k) plan contribution .....................................          537           430
     Income taxes payable .................................................          333           499
                                                                                --------      --------
               Total current liabilities ..................................       26,595        16,409
Other liabilities .........................................................          650           207
                                                                                --------      --------
               Total liabilities ..........................................       27,245        16,616
                                                                                

Commitments and contingencies (Note 12)
Stockholders' equity:
     Preferred stock, $.01 par, 2,000 shares authorized, no
          shares issued and outstanding ...................................           --            --
     Common stock, $.02 par, 100,000 shares authorized, 13,754
          and 13,701 shares outstanding ...................................          274           182
     Capital in excess of par .............................................       26,196        25,707
     Retained earnings ....................................................       32,605        22,077
     Treasury stock .......................................................           (9)           (8)
     Cumulative translation adjustment ....................................          (42)          (21)
                                                                                --------      --------
               Total stockholders' equity .................................       59,024        47,937
                                                                                --------      --------
               Total liabilities and stockholders' equity .................     $ 86,269      $ 64,553
                                                                                ========      ========

</TABLE>




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



                                       16
<PAGE>   18


                           SOURCE SERVICES CORPORATION
                 CONSOLIDATED STATEMENT OF REVENUES AND EXPENSES
                (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


<TABLE>
<CAPTION>
                                                                YEAR ENDED
                                                  ------------------------------------------
                                                  DECEMBER 28,   DECEMBER 29,   DECEMBER 31,
                                                     1997            1996          1995
                                                   ---------      ---------      ---------
<S>                                                <C>            <C>            <C>      
Net service revenue ..........................     $ 294,676      $ 204,748      $ 141,832
Cost of sales, flexible staffing .............       143,582         92,042         63,052
                                                   ---------      ---------      ---------
          Gross profit .......................       151,094        112,706         78,780
                                                   ---------      ---------      ---------
Operating expenses:
     Selling .................................       122,570         93,211         64,882
     General and administrative ..............        10,694          8,371          6,636
                                                   ---------      ---------      ---------
               Total operating expenses ......       133,264        101,582         71,518
                                                   ---------      ---------      ---------
               Operating income ..............        17,830         11,124          7,262
Other income (expense):
     Interest income .........................         1,175            472             99
     Interest expense ........................          (181)          (173)           (61)
     Other, net ..............................          (251)          (211)          (578)
                                                   ---------      ---------      ---------
               Income before income taxes ....        18,573         11,212          6,722
                                                   ---------      ---------      ---------
Income tax (expense) benefit:
     Current .................................        (8,727)        (5,508)        (2,764)
     Deferred ................................           682            767            217
                                                   ---------      ---------      ---------
               Total income tax expense ......        (8,045)        (4,741)        (2,547)
                                                   ---------      ---------      ---------
Net income ...................................     $  10,528      $   6,471      $   4,175
                                                   =========      =========      =========
Net income per share:
     Basic ...................................     $    0.77      $    0.54      $    0.39
                                                   =========      =========      =========
     Diluted .................................     $    0.75      $    0.54      $    0.39
                                                   =========      =========      =========
Weighted average shares outstanding:
     Basic ...................................        13,721         11,978         10,767
                                                   =========      =========      =========
     Diluted .................................        13,978         12,049         10,836
                                                   =========      =========      =========

</TABLE>






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


                                       17
<PAGE>   19



                           SOURCE SERVICES CORPORATION
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                             (AMOUNTS IN THOUSANDS)


<TABLE>
<CAPTION>
                                      Common Stock    Capital                           Cumulative    Treasury Stock       Total
                                    --------------   in Excess  Retained    Deferred   Translation  -----------------  Stockholders'
                                    Shares  Amount    of Par    Earnings  Compensation  Adjustment  Shares     Cost       Equity
                                    ------  ------   ---------  --------  ------------ -----------  ------   --------  -------------
<S>                                 <C>     <C>      <C>        <C>       <C>          <C>          <C>      <C>         <C>
January 1, 1995 ..................   2,269  $   48   $    124   $ 11,755     $   (412)   $    (21)     126   $ (3,682)   $  7,812
  Net income .....................                                 4,175                                                    4,175
  Foreign currency translation 
    adjustment ...................                                                             (4)                             (4)
  Stock contribution to profit 
    sharing plan .................     213       2      1,606       (679)                             (139)     4,063       4,992
  2.9-for-1 stock split ..........   4,684      94        (94)                                                                --
  Deferred compensation ..........     (13)                19        269          412                   13       (381)        319
                                    ------  ------   --------   --------     --------    --------   ------   --------    --------
December 31, 1995 ................   7,153     144      1,655     15,520            0         (25)       0          0      17,294
                                    ------  ------   --------   --------     --------    --------   ------   --------    --------
  Net income .....................                                 6,471                                                    6,471
  Stock contribution to profit 
    sharing plan .................                        (72)        86                                                       14
  Foreign currency translation 
    adjustment ...................                                                              4                               4
  Initial public offering of 
    common stock .................   1,563      31     20,325                                                              20,356
  Costs of initial public 
    offering .....................                     (1,148)                                                             (1,148)
  Stock options exercised ........      44                 72                                                                  72
  Repurchase of fractional 
    shares .......................      (1)                                                               1       (8)         (8)
  Underwriters overallotment 
    exercised ....................     375       7      4,875                                                               4,882
                                    ------  ------   --------   --------     --------    --------    ------  --------    --------
December 29, 1996 ................   9,134     182     25,707     22,077            0         (21)        1        (8)     47,937
                                    ------  ------   --------   --------     --------    --------    ------  --------    --------
  Net Income .....................                                10,528                                                   10,528
  Foreign currency translation 
    adjustment ...................                                                            (21)                            (21)
  Stock options exercised ........      53                366                                                                 366
  Tax benefit from exercise of 
    stock options ................                        215                                                                 215
  3-for-2 stock split ............   4,567      92        (92)                                                                 --
  Repurchase of fractional 
    shares .......................                                                                                 (1)         (1)
                                    ------  ------   --------   --------     --------    --------    ------  --------    --------
December 28, 1997 ................  13,754  $  274   $ 26,196   $ 32,605     $      0    $    (42)        1  $     (9)   $ 59,024
                                    ======  ======   ========   ========     ========    ========    ======  ========    ========
</TABLE>


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


                                       18
<PAGE>   20


                         SOURCE SERVICES CORPORATION
                     CONSOLIDATED STATEMENT OF CASH FLOWS
                            (AMOUNTS IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                              YEAR ENDED
                                                               -----------------------------------------
                                                               DECEMBER 28,   DECEMBER 29,  DECEMBER 31,
                                                                  1997           1996           1995
                                                               ----------      --------      -----------
<S>                                                              <C>           <C>           <C>     
Cash flows from operating activities:
     Net income ............................................     $ 10,528      $  6,471      $  4,175
     Adjustments to reconcile net income to net cash
        provided by (used in) operating activities:
          Depreciation and amortization ....................        2,552         1,476           570
          Profit Sharing Plan stock contributions ..........           --            14         4,992
          Deferred compensation ............................           --            --           288
          Deferred tax asset, net ..........................       (1,178)         (859)         (236)
          Deferred tax liability, net ......................          497            91            --
          Loss on asset sales ..............................           --            18            52
          Tax benefit from exercise of stock options .......          215            --            --
     Decrease (increase) in assets:
          Accounts receivable ..............................      (12,236)      (11,719)       (7,315)
          Prepaid expense ..................................         (614)          137          (188)
          Investments ......................................           --            --           147
     Increase (decrease) in liabilities:
          Accounts payable and accrued expenses ............        1,555           188          (600)
          Accrued commissions and payroll ..................        8,690         2,443         3,745
          Accrued 401(k) plan contribution .................          107           430            --
          Accrued contribution to profit sharing plan ......           --            (6)       (3,236)
          Income taxes payable .............................         (166)          159        (1,157)
          Other liabilities ................................          (75)          (15)          (44)
                                                                 --------      --------      --------
               Net cash provided by (used in)
                  operating activities .....................        9,875        (1,172)        1,193
                                                                 --------      --------      --------

Cash flows from investing activities:
     Expenditures for property and equipment ...............       (3,485)       (5,875)       (2,168)
     Proceeds from sales of property and equipment .........           25           354           152
     Purchases of short-term investments ...................       (1,906)           --            --
                                                                 --------      --------      --------
               Net cash used in investing
                  activities ...............................       (5,366)       (5,521)       (2,016)
                                                                 --------      --------      --------

Cash flows from financing activities:
     Initial public offering proceeds, net of
        offering costs .....................................           --        19,208            --
     Exercise of underwriters' overallotment
       option ..............................................           --         4,882            --
     Proceeds from exercise of stock options, net ..........          366            72            --
     Repurchase treasury stock from
        Profit Sharing Plan ................................           (1)           (8)           --
                                                                 --------      --------      --------
               Net cash provided by financing
                      activities ...........................          365        24,154            --
                                                                 --------      --------      --------

Net increase (decrease) in cash and cash
  equivalents ..............................................        4,874        17,461          (823)
Cash and cash equivalents at beginning of period ...........       18,849         1,388         2,211
                                                                 --------      --------      --------
Cash and cash equivalents at end of period .................     $ 23,723      $ 18,849      $  1,388
                                                                 ========      ========      ========

Supplemental Cash Flow Information
Cash paid during the period for :
     Interest ..............................................     $    181      $     73      $     61
                                                                 ========      ========      ========
     Income taxes ..........................................     $  8,675      $  4,977      $  3,447
                                                                 ========      ========      ========
</TABLE>

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


                                       19
<PAGE>   21


                           SOURCE SERVICES CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

NOTE 1 --- ORGANIZATION AND BUSINESS

     Source Services Corporation (the Company) was incorporated under the laws
of the State of Delaware on May 6, 1969. The Company, which operates in a single
business segment for generally accepted accounting principle reporting purposes,
places experienced personnel in the fields of information technology,
accounting, finance, engineering, law and health care through its divisions:
Source Edp, Source Finance, Source Engineering, Source Manufacturing, Source
Consulting, Accountant Source Temps, Source HealthCare Staffing and Source
Legal.

NOTE 2 --- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   Basis of presentation

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

   Management estimates

     The preparation of 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.

   Fiscal periods

     The Company utilizes 4-4-5 (week) quarterly accounting periods with the
fiscal year ending on the Sunday nearest the last day of December. Fiscal 1997
ended December 28, 1997, fiscal 1996 ended December 29, 1996, and fiscal 1995
ended December 31, 1995.

   Revenue recognition

     Revenue for the placement of personnel on a permanent basis is recognized
on the date the employer and individual mutually agree to an offer and
acceptance of employment with an employment date no later than the end of the
following month. If the individual fails to continue employment for a period of
time as specified in the placement agreement, generally a thirty- to ninety-day
period, the Company is not entitled to collect the placement fee. Revenue from
permanent placements is shown on the Consolidated Statement of Revenues and
Expenses net of amounts written off for adjustments due to placed candidates not
remaining in employment for the Company's guarantee period. Revenue derived from
flexible staffing is recognized as services are performed by the Company's
employees. Revenue from flexible staffing on the Consolidated Statement of
Revenues and Expenses represents gross billings less amounts written off. The
Company maintains an allowance for potential fee adjustments and uncollectible
accounts.

   Cash and cash equivalents

     Cash and cash equivalents include cash on hand and in banks and overnight
investments. Overnight investments in Eurodollars were $15,400 and $4,500 at
December 28, 1997 and December 29, 1996, respectively.

   Short-term investments

     Short-term investments include marketable debt securities at December 28,
1997. All such securities are classified as held-to-maturity in accordance with
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." The debt securities include
government and corporate obligations all with maturities less than one year. The
carrying amount of these investments approximates market value.



                                       20
<PAGE>   22


   Treasury stock

     Treasury shares acquired are held for future reissuance. Treasury shares
are recorded at cost of acquisition. Reissued shares are relieved using the
average cost method.

   Property and equipment

     Furniture and equipment is stated at cost and is depreciated on a
straight-line basis over estimated useful lives, ranging from three to seven
years. Leasehold improvements are stated at cost and are amortized on a
straight-line basis over the shorter of the lease term or the estimated useful
life of the improvements.

   Long-lived assets

     It is the Company's policy to periodically review the net realizability of
its long-lived assets through an assessment of the estimated future cash flows
related to such assets. In the event that assets are found to be carried at
amounts which are in excess of estimated gross future cash flows, then the
assets will be adjusted for impairment to a level commensurate with a 
discounted cash flow analysis of the underlying assets.

   Self-insurance

     The Company offers an employee benefit program for which it is self-insured
for a portion of the cost. The Company is liable for claims up to $125 per
employee and aggregate claims up to a defined yearly payment limit. All
full-time employees and salaried consultants are eligible to participate in the
program. Self-insurance costs are accrued using actuarial estimates to
approximate the liability for reported claims and claims incurred but not
reported.

   Fair value of financial instruments

     Statement of Financial Accounting Standards No. 107, "Disclosure About Fair
Value of Financial Instruments," requires the disclosure, to the extent
practicable, of the fair value of financial instruments which are recognized or
unrecognized in the balance sheet. The carrying amounts of the Company's
financial instruments, primarily cash, investments, and short-term trade
receivables and payables, approximate fair value. There were no off-balance
sheet investments or derivatives at December 28, 1997 or December 29, 1996.

   Stock-based compensation

     The Company accounts for stock option and stock purchase plans in
accordance with Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" ("APB 25") and makes the appropriate disclosures as
required by Statement of Financial Accounting Standards No. 123 "Accounting for
Stock-Based Compensation" ("SFAS 123"). (See Note 8 - Stock Option Plans)

   Income taxes

     The Company accounts for income taxes under the principles of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
109"). SFAS 109 requires an asset and liability approach to the recognition of
deferred tax assets and liabilities for the expected future tax consequences of
differences between the carrying amounts and the tax bases of assets and
liabilities.

   Foreign currency translation

     Foreign currency translation adjustments arise primarily from activities of
the Company's Canadian operations. Results of operations are translated using
the average exchange rates during the period, while assets and liabilities are
translated into U.S. dollars using current rates. Resulting foreign currency
translation adjustments are recorded in stockholders' equity.



                                       21
<PAGE>   23


   Earnings per share

     The Company computes earnings per share in accordance with Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128") which
was issued in February 1997, effective for interim and annual periods ending
after December 15, 1997. Prior year earnings per share have been restated in
accordance with SFAS 128. Basic net earnings per share is computed by dividing
net income by the weighted average number of common shares outstanding during
the period. Diluted earnings per share is computed by dividing net income by the
weighted average number of common shares and potential dilutive common shares
outstanding during the period. Quarterly and year-to-date computations of per
share amounts are made independently; therefore, the sum of the per share
amounts for the quarter may not equal per share amounts for the year.

   Recently issued accounting standards

     In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 131, "Disclosures about Segments of an Enterprise and Related Information"
("SFAS 131") effective for fiscal years beginning after December 15, 1997. SFAS
131 requires companies to disclose certain information regarding their operating
segments, their products and services, their major customers and geographical
areas in which they operate. The determination of reportable segments under SFAS
131 is based on material segments of a company whose operating results are
regularly reviewed by the chief operating decision maker in determining
allocation of resources between segments and assessing their performance. The
Company is presently evaluating its reporting requirements under this standard
and will adopt the provisions of SFAS 131 effective December 31, 1998.

     In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 130, "Reporting Comprehensive Income" ("SFAS 130") effective for fiscal
years beginning after December 15, 1997. SFAS 130 establishes standards for the
reporting and display of comprehensive income and its components in a full set
of financial statements. The adoption of this statement in 1998 is not expected
to have a significant effect on the Company's financial statements.

NOTE 3 --- PROPERTY AND EQUIPMENT

     Property and equipment is comprised of the following at:

<TABLE>
<CAPTION>
                                                                December 28,  December 29,
                                                                   1997          1996
                                                                 --------      --------
<S>                                                              <C>           <C>     
Furniture and fixtures .....................................     $  7,455      $  5,899
Computer equipment .........................................        6,092         5,060
Leasehold improvements .....................................          550           404
                                                                 --------      --------
                                                                   14,097        11,363
Accumulated depreciation and amortization ..................       (6,382)       (4,556)
                                                                 --------      --------
                                                                 $  7,715      $  6,807
                                                                 ========      ========
</TABLE>

NOTE 4 --- ACCOUNTS PAYABLE AND ACCRUED EXPENSES

      Accounts payable and accrued expenses are comprised of the following at:

<TABLE>
<CAPTION>
                                                               December 28,     December 29,
                                                                  1997             1996   
                                                                 ------           ------  
<S>                                                              <C>              <C>     
Trade accounts payable .....................................     $1,492           $1,798  
Self-insurance accrual for employee benefits ...............      1,809            1,015  
Accrued sales meeting ......................................        719              308  
Other ......................................................      1,331              675  
                                                                 ------           ------  
                                                                 $5,351           $3,796  
                                                                 ======           ======  
</TABLE>
                                                                           
NOTE 5 --- 401(K) AND PROFIT SHARING PLAN

     Effective October 1, 1997, the Company merged its profit sharing plan and
401(k) plan to form the Source Services 401(k) and Profit Sharing Retirement
Savings Plan ("the Plan"), and Merrill Lynch became the trustee and
administrator. The Plan covers all active participants who were participating in
either the previous 401(k) or profit sharing plan or those employees who meet
the Plan's requirements for eligibility. At December 28, 1997 and December 29,
1996, the Plan held 3,469 and 5,048 shares, respectively, of the Company's
common stock. The shares held by the Plan represented approximately 25% and 37%,
respectively, of the Company's outstanding shares. Employer contributions to the
Plan were $2,037 in 1997. Employer contributions to the 401(k) plan were



                                       22
<PAGE>   24

$1,608 in 1996. There were no contributions to the Profit Sharing Plan in 1997
or 1996, and contributions to the Profit Sharing Plan were $4,998 in 1995.

NOTE 6 --- REVOLVING LINE OF CREDIT

      The Company has a $10,000 revolving line of credit agreement dated April
30, 1997. The revolving line of credit is collateralized by accounts receivable
and other property of the Company. The commitment period extends to April 29,
1998. Commitment fees are payable on the unused balance at a rate of 0.375% per
annum, payable quarterly. Interest accrues on outstanding amounts at the prime
rate. The prime rate was 8.50% at December 28, 1997. Restrictive covenants under
the agreement include tangible net worth levels, current ratio limitations, and
interest coverage requirements in addition to restrictions on indebtedness,
liens, and sale of assets. There were no amounts outstanding under the line of
credit at December 28, 1997.

      Prior to April 30, 1997, the Company had a $10,000 revolving line of
credit dated May 21, 1996. The commitment period extended through May 21, 1997.
There were no amounts outstanding under the line of credit at December 29, 1996,
however the Company borrowed against the line of credit at various times during
fiscal 1996 for working capital purposes on an as needed basis. Interest accrued
on the outstanding amounts at the prime rate. The prime rate at December 29,
1996 was 8.25%.

NOTE 7 --- EQUITY

      On October 21, 1997, the Company declared a 3-for-2 stock split of its
common stock. The stock split was in the form of a 50% stock dividend and was
distributed on November 15, 1997, to stockholders of record at the close of
business on November 3, 1997. Other than as specifically noted, all share and
per share amounts have been re-stated to reflect the stock split. In conjunction
with the stock split, the Company purchased fractional shares from certain
stockholders. This repurchase consisted of approximately 0.1 shares for $1.2.

      On July 29, 1996, the Company effected an initial public offering (the
"Offering") in which 2,500.0 (pre-split) shares of common stock were offered;
1,563.4 (pre-split) shares by the Company and 936.6 (pre-split) shares by
certain stockholders of the Company. The offering price was $14.00 (pre-split)
per share, of which the Company received $13.02 (pre-split), after application
of underwriting discounts, resulting in net proceeds of $20,356. The Company did
not receive any proceeds from the sale of shares sold by existing stockholders.

      In addition, the Company granted the underwriters of the Offering, a
30-day option to purchase up to an aggregate of 375.0 (pre-split) additional
shares of Common Stock at the Offering price less the underwriting discount
solely to cover over-allotments, if any. The underwriters exercised their
over-allotment option in full on August 13, 1996. Upon exercising the option,
total proceeds to the Company from the Offering increased to $25,238.

      Contemporaneous with the Offering, the Company issued stock options to
certain key employees. The total number of shares granted in these options was
358.8 (pre-split) at the Offering price of $14.00 (pre-split) per share. These
options are generally exercisable in the following cumulative installments:
first installment - up to one-third of the total optioned shares at any time on
or after two years from the date of grant; second installment - up to an
additional one-third of the total optioned shares at any time after three years
from the date of grant; and third installment - up to an additional one-third of
the total optioned shares at any time after four years from the date of grant.
There was no compensation expense recorded in connection with the issuance of
the options. These options terminate on July 25, 2006. (See Note 8 -- Stock
Option Plans).

      During the fourth quarter of 1996, the Company re-purchased fractional
shares held by the Profit Sharing Plan as well as certain stockholders. This
repurchase consisted of approximately 0.5 shares for $7.9.

      


                                       23
<PAGE>   25


NOTE 8 --- STOCK OPTION PLANS

      The Company approved the 1996 Stock Option Plan (the Employees' Stock
Option Plan) in April 1996. Under the Employees' Stock Option Plan, options may
be granted to eligible employees of the Company or its subsidiaries for the
purchase of an aggregate 1,000 shares of the Company's common stock. All options
must be issued with an exercise price equal to the market value of the option on
the date of grant. Options granted under the plan vest over four years and
expire ten years from issuance.

      The Company also maintains various stock option plans for non-employee
directors. Options granted under the 1994 and 1995 non-employee director plans
vest equally over two years and expire ten years from issuance. Option granted
under the 1996 non-employee director plan vest six months from the date of grant
and expire five years from issuance. Options granted under the 1997 non-employee
director plan vest at the date of grant, are exerciseable on a pro rata basis
over a five year period and expire ten years from issuance.

Activity under the various stock option plans is as follows:

<TABLE>
<CAPTION>
                                         Number of     Weighted Average
                                          Options         Exercise Price
                                         ---------     ----------------
<S>                                      <C>           <C>       
Outstanding, December 29, 1996 .....       612.3           $    8.54 
   Granted .........................       168.8           $   15.68 
   Exercised .......................       (52.5)          $    6.98 
                                          ------                     
Outstanding, December 28, 1997 .....       728.6           $   10.31 
                                          ======            
</TABLE>

      The following table summarizes information about options outstanding under
the stock option plans at December 28, 1997:

<TABLE>
<CAPTION>
                   Options Outstanding                                              Options Exerciseable
                   -------------------                                              --------------------
    Range of              Number of        Weighted Average                    Number of        Weighted Average
Exercise Prices     Options Outstanding        Exercise Price             Options Exerciseable       Exercise Price
---------------     ------------------     -----------------             -------------------    -----------------
<S>                 <C>                    <C>                           <C>                   <C>  
  $1.11 - $2.33             50.3                  $2.17                            50.3                 $2.17
 $9.33 - $13.83            605.6                  $9.89                            18.0                $11.58
$17.92 - $20.50             72.7                 $19.40                               -                     -

</TABLE>

      The Company applies APB 25 and related interpretations in accounting for
its stock-based compensation plans. In accordance with SFAS 123, the Company
elected to continue to apply the provisions of APB 25. However, pro forma
disclosures as if the Company adopted the cost recognition provisions of SFAS
123 are required and are presented below.

<TABLE>
<CAPTION>
                                                                1997                      1996
                                                                ----                      ----
<S>                                                           <C>                        <C>   
Net income                 As reported . . . . . . . . .      $ 10,528                   $6,471
                           Pro forma . . . . . . . . . .      $  9,696                   $6,222

Net income per share       As Reported:
                              Basic  . . . . . . . . . .         $0.77                    $0.54
                              Diluted  . . . . . . . . .         $0.75                    $0.54

                           Pro Forma:
                              Basic  . . . . . . . . . .         $0.71                    $0.52
                              Diluted  . . . . . . . . .         $0.69                    $0.51

</TABLE>

      The fair value of each option grant is estimated on the date of the grant
using the Black-Scholes option pricing model with the following weighted-average
assumptions used for grants in 1997 and 1996, respectively: no dividend yield,
expected volatility of 27.0% and 29.0%, risk free interest rates of 6.6% and
6.6%, and expected lives 



                                       24
<PAGE>   26

of ten years. The weighted average fair value of options granted during 1997 and
1996 was $8.66 and $5.31, respectively.


NOTE 9 - EARNINGS PER SHARE

      Following is a reconciliation of the denominators of the basic and diluted
earnings per share calculations. There were no differences in the numerator (net
income) for any of the years presented.

<TABLE>
<CAPTION>
                                                 Effect of
          Shares for the                     Dilutive Securities
            year ended         Basic EPS       (Stock Options)           Diluted EPS
          --------------       ---------       ---------------           -----------
<S>       <C>                  <C>             <C>                       <C>
               1997             13,721               257                  13,978
               1996             11,978                71                  12,049
               1995             10,767                69                  10,836
</TABLE>


NOTE 10 -- EMPLOYEE STOCK PURCHASE PLAN

      During 1996, the Company enacted an Employee Stock Purchase Plan. This
plan allows employees to purchase stock at the current market price through
payroll deductions, without paying commissions on purchases. All employees are
eligible to participate in the Employee Stock Purchase Plan, and there is no
waiting period.

NOTE 11 --- INCOME TAXES

      The components of the provision for income taxes are as follows:

<TABLE>
<CAPTION>
                                                         1997          1996        1995
                                                         -----         ----        ----
<S>                                                      <C>           <C>         <C>    
Current provision:
   Federal ........................................     $ 6,869      $ 4,074      $ 2,540
   State and other ................................       1,858        1,434          224
                                                        -------      -------      -------
                                                          8,727        5,508        2,764
Deferred benefit:
   Federal and state ..............................        (682)        (767)        (217)
                                                        -------      -------      -------
       Total income tax expense ...................     $ 8,045      $ 4,741      $ 2,547
                                                        =======      =======      =======
</TABLE>

      The Company's income tax expense was computed in accordance with SFAS 109.
Deferred benefit represents the change in the net deferred tax asset and is
discussed further below.

      Balance sheet amounts of deferred taxes are recognized on the temporary
differences between the bases of assets and liabilities as measured by tax laws
and their bases as reported in the financial statements. The principal sources
of temporary differences, tax effected at statutory rates, are reduced by
unrecognized benefits in arriving at the deferred tax. The deferred tax
provision or benefit is recognized for the change in deferred tax liabilities or
assets between periods.



                                       25
<PAGE>   27



     Deferred tax assets / (liabilities) are comprised of the following at :

<TABLE>
<CAPTION>
                                                               December 28,  December 29,
                                                                  1997         1996
                                                                 -------      -------
<S>                                                              <C>          <C>    
Deferred tax assets:
   Employee insurance claims ...............................     $   739      $   411
   Accrued rent ............................................          44           52
   Allowance for doubtful accounts .........................       1,856        1,051
   Accrued vacation ........................................         150           97
                                                                 -------      -------
Gross deferred tax assets ..................................       2,789        1,611
Deferred tax liabilities:
   Depreciation ............................................        (587)         (91)
                                                                 -------      -------
Net deferred tax asset .....................................     $ 2,202      $ 1,520
                                                                 =======      =======
</TABLE>


The following table reconciles the federal income tax provision at the statutory
rate to actual taxes reflected in the accompanying financial statements:


<TABLE>
<CAPTION>
                                                          1997         1996       1995
                                                         -------     -------     -------
<S>                                                      <C>         <C>         <C>    
Statutory U.S. tax rates ...........................     $ 6,501     $ 3,814     $ 2,213
Increase/(Decrease) in taxes resulting from:
   Permanent differences ...........................         297         125         116
   State taxes, net of federal benefit .............       1,130         766         224
   Other ...........................................         117          36          (6)
                                                         -------     -------     -------
Income tax expense .................................     $ 8,045     $ 4,741     $ 2,547
                                                         =======     =======     =======
</TABLE>


NOTE 12 --- COMMITMENTS AND CONTINGENCIES

   Lease agreements

      The Company leases office facilities and various equipment under
noncancellable leases expiring at various dates through 2002. Certain leases are
subject to escalation clauses based upon changes in the Consumer Price Index.
The minimum future annual operating lease commitments for leases with
noncancellable terms in excess of one year, exclusive of escalation, are as
follows:


<TABLE>
<CAPTION>
           Year                                
           ----                                
<S>                                            <C>   
           1998                                  $5,380
           1999                                   5,231
           2000                                   4,465
           2001                                   2,469
           2002                                   1,089
           Thereafter                             2,883
</TABLE>


Rental expense for the years ended December 28, 1997, December 29, 1996, and
December 31, 1995 was $4,826, $3,932, and $3,063, respectively.

   Litigation

      The Company is a defendant in various lawsuits arising in the normal
course of business. The ultimate outcome of these matters cannot presently be
determined; however, it is management's belief that the outcome of these
lawsuits will not be material to the Company's results of operations or
financial condition. Accordingly, no provision for any liability that may result
has been made in the financial statements.



                                       26
<PAGE>   28

NOTE 13 --- SUBSEQUENT EVENT

      On February 2, 1998, the Company and Romac International, Inc. ("Romac")
announced that they had entered into a merger agreement providing for a
stock-for-stock transaction, under which Romac would be the surviving entity,
which the parties intend to qualify as a "pooling of interest" for accounting
purposes and to qualify as a tax-free reorganization. Under the terms of the
merger agreement, stockholders of the Company will receive 1.1932 shares of
Romac common stock, par value $0.01 per share, for each of the approximately
13.7 million outstanding shares of the Company's common stock, subject to
adjustment based on Romac's market price prior to closing and certain other
conditions. The consummation of the merger is subject to certain conditions
including effectiveness of a registration statement to be filed by Romac with
the Securities and Exchange Commission, approval by the stockholders of each
company, termination of the waiting period under the Hart-Scott-Rodino
Improvements Act of 1976, receipt of opinions from both companies' accountants
regarding the ability of the merger to be treated as a "pooling of interest" for
accounting purposes and other conditions. The merger is expected to be completed
in the second calendar quarter of 1998.



                                       27
<PAGE>   29


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

          None.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The executive officers and directors of the Company, and their ages as of
February 28, 1998, are as follows:

<TABLE>
<CAPTION>

Name                                                   Age     Position
----                                                   ---     --------
<S>                                                    <C>     <C> 
D. Les Ward (1) . . . . . . . . . . . . . . . . .      43      President, Chief Executive Officer and Director 
Richard M. Dupont  . . . . . . . . . . . . . . .       42      Chief Financial Officer and Secretary   
Richard J. Davis . . . . . . . . . . . . . . . .       40      Vice President of Operations - Eastern Division
Joseph A. Gendron   . . . . . . . . . . . . . . .      46      Vice President of Operations - Western Division
Lawrence J. Stanczak   . . . . . . . . . . . . .       49      Vice President of Operations - Central Division
John N. Allred (2)  . . . . . . . . . . . . . . .      51      Director                                
Adrian Alter (2)(3)(4)  . . . . . . . . . . . . .      72      Director                                
Paul M. Bass, Jr. (1)(3)  . . . . . . . . . . . .      62      Director                                
Wayne D. Emigh (1)(2) . . . . . . . . . . . . . .      64      Chairman of the Board of Directors      
John Sifonis (3). . . . . . . . . . . . . . . . .      56      Director                                
Karl Vogeler (2)(4). . . . . . . . . . . . . . .       55      Director                                
</TABLE>


-----------                                            
(1)  Member of the Executive Committee
(2)  Member of the Audit Committee
(3)  Member of the Compensation Committee
(4)  Member of the Nominating Committee

         D. Les Ward has served as President and Chief Executive Officer of the
Company since September 1994. From December 1989, when he joined the Company,
until September 1994, Mr. Ward served as Chief Financial Officer of the Company.
From November 1988 until joining the Company, Mr. Ward served as Controller of
Muratec Incorporated, a telecommunications company. Mr. Ward has eighteen years
of financial management experience, including management positions with
companies in the staffing, telecommunications, oil and gas and insurance
industries. Mr. Ward has served as a director since September 1994.

         Richard M. Dupont joined the Company in December 1989 as its Controller
and has served as its Chief Financial Officer and Secretary since September
1994. From November 1988 until joining the Company, Mr. Dupont served in various
capacities, including Assistant Controller, of Muratec Incorporated. Mr. Dupont
has fifteen years of financial management experience, including positions with
companies in the telecommunications, retail and insurance industries.

         Richard J. Davis has served as Vice President of Operations - Eastern
Division since May 1997. From 1988 until joining the Company, Mr. Davis served
in various capacities, including National Director of Sales Methodology, at
Ernst & Young, LLP. Prior to joining Ernst & Young, LLP, Mr. Davis worked with
the Dun & Bradstreet Corporation holding various positions in sales, sales
management, and national account pursuits.

         Joseph A. Gendron has served as Vice President of Operations - Western
Division since October 1995. From April 1992 until that time, Mr. Gendron served
as Regional Vice President after having served as Managing Director from October
1991. From October 1990 until October 1991, Mr. Gendron served as a search
consultant for Innovative Technology, a personnel search firm specializing in
the placement of data communication and software professionals. Prior to that
time, Mr. Gendron served in various capacities with the Company beginning in
March 1983.

         Lawrence J. Stanczak was named Vice President of Operations - Central
Division in December 1995. From January 1994 until that time, he served as
Managing Director of the Company's Chicago market. From July 



                                       28
<PAGE>   30

1993 through December 1993, Mr. Stanczak was a branch manager of Data
Performance, Inc., a provider of temporary personnel. Prior to that, Mr.
Stanczak served in various capacities with the Company, including Chicago Area
Manager of Source Edp from May 1983 until June 1993.

         John N. Allred has served as President of A.R.G., Inc., a provider of
temporary and permanent physicians located in Kansas City area since January
1994. Prior to that time, Mr. Allred served in various capacities with the
Company. Beginning in 1976 he was named Branch Manager of the Kansas City
branch, and was promoted to Regional Vice President in 1983 and Vice President
in 1987. Prior to joining the Company, Mr. Allred held various positions,
including Manager of Data Processing Services and Systems Analyst with Systec
Data Management. Mr. Allred served as a director of the Company from August 1992
until November 1993 and was again elected as a director in September 1994.

         Adrian Alter served as Managing Partner of the Dallas/Fort Worth office
of Ernst & Young until his retirement in 1986. From 1986 until 1988, he was
Senior Vice President and Managing Director of corporate Finance of Lovett,
Underwood, Neuhaus & Webb, an investment banking firm. Since 1988, Mr. Alter has
been President of Alter and Associates, a financial consulting firm located in
Dallas, Texas. Mr. Alter has served as director of the Company since 1991.

         Paul M. Bass, Jr. has been Vice Chairman of First Southwest Company, a
regional investment banking firm, since 1988. He has served as Director of the
Company since 1992. Mr. Bass is also affiliated with California Federal Bank
(Director and Chairman of the Audit Committee), Keystone Consolidated
Industries, Inc., a wire manufacturing company (Director and Chairman of the
Audit Committee and member of the Executive Committee), MACC Private Equities,
Inc., a small business investment company (Director and Chairman of the Board),
and Richard Gordman 1/2 Price Stores, Inc. (Chairman of the Board and Chairman
of the Executive Committee).

         Wayne D. Emigh has served as a director of the Company since 1983. He
has served as Chairman of the Board intermittently from 1985 to 1991, and
continuously since 1993. Mr. Emigh joined the Company in 1968 and served in
various management positions until retiring in 1985. Mr. Emigh also served as
President of the Company on an interim basis from January 1991 until September
1991. Prior to joining the Company, Mr. Emigh held various positions, including
Director of Corporate Management Information Systems with Rexall Drug and
Chemical Company, and Systems Analyst with UNIVAC, Inc.

         John Sifonis has been a Principal with Siberg Associates, an
information technology consulting firm in New York, New York, for more than five
years. Prior to that time, Mr. Sifonis has served as Vice President of Mercer
Management Consultants, as Partner with Ernst & Young LLP and in various
development positions with Unisys, Inc., a computer technology firm, and General
Electric Corp. Mr. Sifonis is the author of two books on corporate management,
Dynamic Planning and Corporation on a Tightrope. Mr. Sifonis has served as a
director of the Company since 1992.

         Karl Vogeler is a litigation partner with the law firm of Thompson,
Coe, Cousins & Irons in Dallas, Texas, where he has been employed since 1990.
Mr. Vogeler's previous business experience includes serving as Branch Manager of
the Dallas, Texas office of Source Edp, as Project Manager and Senior Systems
Analyst of Republic National Bank of Dallas, N.A., and Systems Engineer for
Electronic Data Systems, Inc. Mr. Vogeler has served on the Board of Directors
of the Company since 1994.

COMMITTEES OF THE BOARD OF DIRECTORS

         The Executive Committee of the Board of Directors is composed of
Messrs. Emigh, Ward and Bass. Subject to statutory limitations, the Executive
Committee is authorized to exercise the powers of the Board of Directors between
regular meetings.

         The Audit Committee is composed of Messrs. Allred, Alter, Emigh and
Vogeler. The Audit Committee reviews the scope of the independent accountants'
examinations of the Company's financial statements and receives and reviews
their reports. The Audit Committee also meets with the independent accountants,
receives recommendations or suggestions for changes in accounting procedures,
and initiates and supervises any special investigations it may choose to
undertake.




                                       29
<PAGE>   31

         The Compensation Committee consists of Messrs. Alter, Bass and Sifonis.
The Compensation Committee determines the nature and amount of all compensation
of the Company's officers. In addition, the Compensation Committee oversees
administration of the Company's Employees' Stock Option Plan.

         The Nominating Committee consists of Messrs. Alter and Vogeler. The
Nominating Committee recommends to the Board of Directors nominees for
directors. Other than as set forth in the Company's Bylaws, no formal procedures
have been established for considering nominations by shareholders.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

         Section 16 of the Securities and Exchange Act of 1934, as amended (the
"1934 Act"), requires the Company's executive officers and directors and persons
who own greater than 10% of a registered class of the Company's equity
securities to file reports of ownership and changes in ownership with the
Securities and Exchange Commission (the ""Commission") and the Nasdaq Stock
Market. Based solely on a review of Forms 3 and 4 it has received and on written
representations from certain reporting persons that no Forms 3, 4 or 5 were
required from them, the Company believes that, except as set forth below, during
1997 all Section 16 filing requirements applicable to its executive officers,
directors and greater than 10% beneficial owners were complied with by such
persons.

         Richard M. Dupont inadvertently failed to timely file a Form 4 to
report three contemporaneous transactions. Such report was subsequently filed.


                                       30
<PAGE>   32


ITEM 11.  EXECUTIVE COMPENSATION

         The following table summarizes the compensation paid to the Company's
chief executive officer and its four other most highly compensated executive
officers (each, a "Named Officer") for services rendered for each of the years
presented:

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                        LONG TERM
                                                                       COMPENSATION
                                                                        AWARDS (1)
                                                                        SECURITIES   ALL OTHER
                                                                        UNDERLYING  COMPENSATION
NAME AND PRINCIPAL POSITION        YEAR     SALARY ($)  BONUS ($)        OPTIONS      ($)(2)
---------------------------        ----     ----------  ---------        -------    ------------
<S>                                <C>      <C>          <C>             <C>          <C>     
D. Les Ward,                       1997     $350,000     $175,000        - - - -     $ 11,203
President and Chief Executive      1996      250,000      250,000 (4)     60,000       10,828
Officer                            1995      200,000      100,000        - - - -       26,578

Richard M. Dupont,                 1997     $200,000     $100,000        - - - -     $ 11,203
Chief Financial Officer and        1996      144,000      147,500 (4)     37,500        9,841
Secretary                          1995      112,000       50,000        - - - -       26,578

Richard J. Davis,                  1997     $157,000     $ 50,000         37,500     $  2,549
Vice President of Operations -     1996        - - -        - - -        - - - -      - - - -
Eastern Division (3)               1995        - - -        - - -        - - - -      - - - -


Joseph A. Gendron,                 1997     $176,000     $279,000        - - - -     $ 11,203
Vice President of Operations -     1996      176,000      108,000         37,500       10,828
Western Division                   1995      125,000      107,000        - - - -       26,578

Lawrence J. Stanczak,              1997     $185,000     $255,000        - - - -     $ 11,203
Vice President of Operations -     1996      170,000       35,000         37,500       10,828
Central Division                   1995       21,000      199,000        - - - -       26,578
</TABLE>


(1)  None of the Named Officers had any restricted stock holdings as of December
     28, 1997.
(2)  Consists of $22,500 of the Company's common stock contributed to the
     Company's Profit Sharing Plan on behalf of each executive officer, $3,964
     of medical and dental premiums and $114 of life insurance premiums paid on
     behalf of each executive officer (except for Mr. Davis who received $2,478
     and $71 in medical and dental premiums and life insurance, respectively),
     as well as 401(k) matching paid for 1997 and 1996, respectively, as
     follows: Messrs. Ward, Gendron, Stanczak and Dupont - $7,125 each, and
     Messrs. Ward, Gendron, Stanczak - $6,750 each, Mr. Dupont - $5,763.
(3)  Mr. Davis commenced employment with the Company on May 15, 1997.
(4)  Includes bonus for participation in the Offering, as follows: Mr. Ward -
     $75,000, Mr. Dupont - $50,000.


                                       31
<PAGE>   33



ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         The following table sets forth certain information as of February 28,
1998 with respect to each director, each of the Named Officers, and directors
and executive officers of the Company as a group, and to the persons known by
the Company to be the beneficial owner for more than five percent of the
Company's Common Stock.

<TABLE>
<CAPTION>
                                                                            Number of             Percent of
                                                                             Shares                Company's
                                                                            Presently             Outstanding
Name of Shareholder                                                         Owned (1)                Stock
-------------------                                                         ---------                -----
<S>                                                                         <C>                      <C> 
Merrill Lynch, as trustee of the
   Source Services Corporation 401(k) and
   Profit Sharing Retirement Savings Plan                                  3,244,094 (2)              23.6
                                                                                                            
T. Rowe Price Associates, Inc.                                             1,705,050 (3)              12.4 
                                                                                                            
Dresdner RCM Global Investors LLC                                            869,450 (4)               6.3  
                                                                                                            
John N. Allred                                                                48,014 (5)                 *  
                                                                                                            
Adrian Alter                                                                  25,200 (5)(7)              *  
                                                                                                            
Paul M. Bass                                                                  24,750 (5)(7)              * 
                                                                                                            
Wayne D. Emigh                                                                48,499 (7)                 * 
                                                                                                            
John Sifonis                                                                  24,750 (5)                 * 
                                                                                                            
Karl Vogeler                                                                  24,750 (5)                 * 
                                                                                                            
D. Les Ward                                                                   50,294 (6)                 * 
                                                                                                            
Richard M. Dupont                                                             40,748 (6)                 * 
                                                                                                            
Joseph A. Gendron                                                             51,732                     * 
                                                                                                            
Lawrence J. Stanczak                                                          42,466                     * 
                                                                                                            
All directors and executive officers as a group (11 individuals)             381,203                   2.8 

</TABLE>
--------------------
*    Less than 1%.

(1)  On November 15, 1997, the Company's common stock split 3-for-2.

(2)  As will be reported on a Schedule 13G to be filed with the Commission by
     Merrill Lynch. According to such Schedule 13G, Merrill Lynch has sole
     voting power over 3,244,094 shares. These shares are held in trust for
     participants in the Source Services Corporation 401(k) and Profit Sharing
     Retirement Savings Plan. The address of the stockholder is Merrill Lynch,
     9603 South Merdian Blvd., Englewood, Colorado, 80112.

(3)  As reported on a Schedule 13G dated February 11, 1998 filed with the
     Commission by T. Rowe Price Associates, Inc. According to such Schedule
     13G, T. Rowe Price Associates, Inc. has sole voting power over 331,750
     shares and sole dispositive power over 1,705,050 shares. The address of the
     stockholder is T. Rowe Price Associates, Inc., 100 E. Pratt Street,
     Baltimore, Maryland, 21202.


                                       32
<PAGE>   34


     These securities are owned by various individual and institutional
     investors which T. Rowe Price Associates, Inc. serves as investment advisor
     with power to direct investments and/or sole power to vote the securities.
     For purposes of the reporting requirements of the Securities Exchange Act
     of 1934, T. Rowe Price Associates, Inc. is deemed to be a beneficial owner
     of such securities; however, T. Rowe Price Associates, Inc. expressly
     disclaims that it is, in fact, the beneficial owner of such securities.

(4)  As reported on a Schedule 13G dated February 6, 1998 filed with the
     Commission by Dresdner RCM Global Investors LLC. According to such Schedule
     13G, Dresdner RCM Global Investors LLC has sole voting power over 681,950
     shares, sole dispositive power over 816,950 shares and shared dispositive
     power over 52,500 shares. The address of the stockholder is Dresdner RCM
     Global Investors LLC, Four Embarcadero Center, San Francisco, California,
     94111.

(5)  Includes shares of Common Stock subject to options exercisable within 60
     days as follows: Mr. Allred - 24,750; Mr. Alter -- 3,000; Mr. Bass --
     3,000; Mr. Sifonis - 9,750; and Mr. Vogeler - 24,750.

(6)  Includes the following number of Common Shares credited to the accounts of
     the above mentioned beneficial owners by the trustee acting under the
     provisions of the Source Services Corporation 401(k) and Profit Sharing
     Retirement Savings Plan: Mr. Ward - 49,172 shares; and Mr. Dupont - 33,207
     shares.

(7)  Includes 21,750 shares of Common Stock held in the Adrian and Sue Alter
     Family Trust, 450 shares held by Sue Alter; 48,499 shares of Common Stock
     held in the Wayne D. and Glenda L. Emigh Family Trust; and 21,750 shares of
     Common Stock held in the Bass Family Trust. Under the rules and regulations
     of the Securities and Exchange Commission, Messrs. Alter, Emigh and Bass
     may not be deemed the beneficial owner of such shares.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Messrs. Alter, Bass and Sifonis are the members of the Company's
Compensation Committee. There are no material transactions or relationships
between the Compensation Committee members and the Company.



                                       33
<PAGE>   35


                                     PART IV

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


(a)  List of Financial Statements, Financial Statement Schedules and Exhibits.

          (1) and (2) - Response to this portion of Item 14 is submitted as a
                        separate section of this report.

          (3) - Response to this portion of Item 14 is submitted as a separate
                section of this report.

(b)  Reports on Form 8-K.

     (1)  The Company filed a Form 8-K on or about December 11, 1997, to report
          the 3-for-2 split of the Company's stock, reporting Item 5.

(c)  Exhibits - Response to this portion of Item 14 is submitted as a separate
     section of this report.

(d)  Financial Statement Schedules - Response to this portion of Item 14 is
     submitted as a separate section of this report.


                                       34
<PAGE>   36

     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 hereunto duly authorized, on March 20, 1998.

          Source Services Corporation
          (Registrant)


          By:    /s/ Richard M. Dupont
               --------------------------------------------------
                     Richard M. Dupont, Chief Financial Officer
                     and Secretary

          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 indicated on March 20, 1998.

<TABLE>
<CAPTION>
          Signature                                   Title
          ---------                                   -----
<S>                                                 <C>
          /s/ D. Les Ward
          -------------------------------
          D. Les Ward                                 President, Chief Executive Officer
                                                      and Director

          /s/ Richard M. Dupont
          -------------------------------
          Richard M. Dupont                           Chief Financial Officer and Secretary


          /s/ John N. Allred
          -------------------------------
          John N. Allred                              Director


          /s/ Adrian Alter
          -------------------------------
          Adrian Alter                                Director


          /s/ Paul M. Bass, Jr.
          -------------------------------
          Paul M. Bass, Jr.                           Director


          /s/ Wayne D. Emigh
          -------------------------------
          Wayne D. Emigh                              Chairman of the Board of Directors


          /s/ John Sifonis
          -------------------------------
          John Sifonis                                Director


          /s/ Karl Vogeler
          -------------------------------
          Karl Vogeler                                Director

</TABLE>



                                       35
<PAGE>   37



                                    Form 10-K
                      Item 14(a)(1) and (2) and Form 14(d)
              Financial Statements and Financial Statement Schedule
                          Year Ended December 29, 1996
                           Source Services Corporation
                                  Dallas, Texas








                                       F-1
<PAGE>   38



         LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

          The following financial statements and report of independent
accountants are included in Item 8:

<TABLE>
<CAPTION>
                                                                                                   Page
                                                                                                   ----
<S>                                                                                               <C>
     Report of Independent Accountants ........................................................     15
     Consolidated Balance Sheet at December 28, 1997 and
          December 29, 1996 ...................................................................     16
     Consolidated Statement of Revenues and Expenses for the
         Years Ended December 28, 1997, December 29, 1996 and
         December 31, 1995  ...................................................................     17
     Consolidated Statement of Stockholder's Equity for the
         Years Ended December 28, 1997, December 29, 1996, and
         December 31, 1995  ...................................................................     18
     Consolidated Statement of Cash Flows for the Years Ended
         December 28, 1997, December 29, 1996 and
         December 31, 1995 ....................................................................     19
     Notes to Consolidated Financial Statements ...............................................     20
</TABLE>

     The following financial statement schedule of Source Services Corporation
is included herein:

<TABLE>
<S>                                                                                               <C>
     Schedule II - Valuation and Qualifying Accounts ..........................................    F-3
</TABLE>

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







                                       F-2
<PAGE>   39


                           SOURCE SERVICES CORPORATION
                 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
                              SUPPLEMENTAL SCHEDULE
                             (AMOUNTS IN THOUSANDS)


<TABLE>
<CAPTION>

Column A                       Column B       Column C         Column D       Column E
                               --------       --------         --------       --------
                                              Additions
                                              ---------    
                               Balance at     Charges to                      Balance at
                               Beginning      Costs and                       End of
Description                    of Period      Expenses          Deductions    Period
-----------                    ----------     ----------        ----------    ----------
<S>                    <C>      <C>             <C>              <C>            <C>    
Allowance Reserve      1995     $1,052          $  887           $  582         $1,357 
                       1996      1,357           2,622            1,389          2,590 
                       1997      2,590           3,633            1,680          4,543 
                                                                                
</TABLE>






                                      F-3

<PAGE>   40



                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
         Exhibit                        Description
         -------                        -----------
     <S>            <C> 
          2         - Agreement and Plan of Merger by and among Romac
                      International, Inc. and Source Services Corporation, dated
                      as of February 1, 1998, as amended.
          3.1*      - Amended and Restated Certificate of Incorporation of the
                      Registrant
          3.2*      - Amended and Restated Bylaws of the Registrant
          4.1*      - Form of certificate representing shares of the
                      Registrant's Common Stock
          10.1*     - Office Lease dated January 23, 1995 by and between
                      Massachusetts Mutual Life Insurance Company and the
                      Registrant
          10.2*     - Source Services Corporation 1996 Stock Option Plan
          10.3*     - Source Services Corporation Employees' Profit Sharing Plan
          10.4*     - Amendment No. 1 to Source Services Corporation Employees'
                      Profit Sharing Plan
          10.5*     - Source Services Corporation Non-Employee Director Stock
                      Option Plan
          10.6*     - Loan Agreement dated May 21, 1996 between the Registrant
                      and Bank One, Texas, N.A.
          10.7*     - Security Agreement dated as of May 21, 1996 between the
                      Registrant and Bank One, Texas, N.A.
          10.8*     - Promissory Note dated May 21, 1996 payable to Bank One,
                      Texas, N.A.
          10.9*     - Form of Director Incentive Stock Option Bonus Agreement
          10.10*    - Source Services Corporation 401(k) Plan
          23.1      - Consent of Independent Accountants
          24.1*     - Power of attorney
          27.1      - Financial Data Schedule

</TABLE>

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

*    Previously filed with the Securities and Exchange Commission as an Exhibit
     to the Company's Registration Statement on Form S-1 (File No. 333-4691),
     and incorporated herein by reference.





                                      F-4