1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------------------- FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 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 ----------------------------------- 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 the number of shares outstanding of each of the issuer's classes of common stock as of September 28, 1997 13,739,043 shares of $.02 par value Common Stock 2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS SOURCE SERVICES CORPORATION BALANCE SHEET (AMOUNTS IN THOUSANDS) ASSETS SEPTEMBER 28, DECEMBER 29, 1997 1996 ------------ ------------ (UNAUDITED) Current assets: Cash and cash equivalents ................................................................. $ 21,247 $18,849 Accounts receivable, less allowance for doubtful accounts and fee adjustments of $3,830 and $2,590 respectively ................................ 47,192 37,018 Deferred tax asset, net .................................................................. 2,152 1,611 Prepaid expenses and other ................................................................ 422 268 -------- ------- Total current assets ........................................................... 71,013 57,746 Property and equipment, net ................................................................... 7,757 6,807 -------- ------- Total assets ................................................................... $ 78,770 $64,553 ======== ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses ..................................................... $ 4,033 $ 3,796 Accrued commissions and payroll ........................................................... 17,660 11,684 Accrued 401 (k) plan contribution ......................................................... 644 430 Income taxes payable ..................................................................... 269 499 -------- ------- Total current liabilities ...................................................... 22,606 16,409 Other liabilities .............................................................................. 116 116 Deferred tax - long term ....................................................................... 550 91 -------- ------- Total liabilities .............................................................. 23,272 16,616 -------- ------- Stockholders' equity: Preferred stock, $.01 par, 2,000 shares authorized, no shares issued and outstanding ....................................................... 0 0 Common stock, $.02 par, 100,000 shares authorized, 13,739*, and 10,730* shares outstanding (includes 927* shares issued in 1996 to the profit sharing plan and 7,026*shares issued in 1996 as a stock dividend), respectively* ........................................................................ 274 274 Capital in excess of par* ................................................................. 25,964 25,615 Retained earnings ........................................................................ 29,312 22,077 Treasury stock ............................................................................ (8) (8) Cumulative translation adjustment ........................................................ (44) (21) -------- -------- Total stockholders' equity ...................................................... 55,498 47,937 -------- -------- Total liabilities and stockholders' equity ..................................... $ 78,770 $ 64,553 ======== ======== * Adjusted for 3-for-2 stock split effective November 15, 1997. The accompanying notes are an integral part of these financial statements. 1 3 SOURCE SERVICES CORPORATION STATEMENT OF REVENUES AND EXPENSES (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED) THREE MONTHS ENDED NINE MONTHS ENDED ------------------------------------------------------------ SEPTEMBER 28, SEPTEMBER 29, SEPTEMBER 28, SEPTEMBER 29, 1997 1996 1997 1996 ------------- ------------- ------------- ------------- Net service revenue ..................... $ 76,411 $ 54,035 $ 212,772 $ 142,768 Cost of sales, flexible staffing ........ 37,480 24,443 103,563 63,716 -------- -------- --------- --------- Gross profit ..................... 38,931 29,592 109,209 79,052 -------- -------- --------- --------- Operating expenses: Selling ............................ 31,303 24,363 88,641 66,229 General and administrative ......... 2,740 1,918 8,142 5,670 -------- -------- --------- --------- Total operating expenses..... 34,043 26,281 96,783 71,899 -------- -------- --------- --------- Operating income ............ 4,888 3,311 12,426 7,153 Other income (expense): Interest income .................... 310 92 838 114 Interest expense ................... (38) (35) (121) (126) Other, net ......................... (40) (64) (266) (259) -------- -------- --------- --------- Income before income taxes... 5,120 3,304 12,877 6,882 -------- -------- --------- --------- Income tax (expense) benefit: Current ............................. (2,339) (1,528) (5,724) (2,753) Deferred ............................ 173 165 83 46 -------- -------- --------- --------- Total income tax expense..... (2,166) (1,363) (5,641) (2,707) -------- -------- --------- --------- Net income .............................. $ 2,954 $ 1,941 $ 7,236 $ 4,175 ======== ======== ========= ========= Net income per share* ................... $ 0.21 $ 0.15 $ 0.52 $ 0.37 ======== ======== ========= ========= Weighted average shares outstanding* .... 14,079 12,711 13,976 11,390 ======== ======== ========= ========= * Adjusted for 3-for-2 stock split effective November 15, 1997. The accompanying notes are an integral part of these financial statements. 2 4 SOURCE SERVICES CORPORATION STATEMENT OF STOCKHOLDERS' EQUITY (AMOUNTS IN THOUSANDS) (UNAUDITED) Common Stock Capital Cumulative Treasury Stock Total ---------------- in Excess Retained Translation -------------- Stockholders' Shares* Amount* of Par* Earnings Adjustment Shares Cost Equity ------- ------- ------- -------- ---------- ------ ------ ------------ December 29, 1996 ............................. 13,701 $ 274 $ 25,615 $ 22,077 $ (21) 1 $ (8) $ 47,937 Net income .................................. 1,841 1,841 Foreign currency translation adjustment (28) (28) ------- ------ -------- -------- ------ ----- ----- -------- March 30, 1997 ................................ 13,701 $ 274 $ 25,615 $ 23,918 $ (49) 1 $ (8) $ 49,750 ------- ------ -------- -------- ------ ----- ----- -------- Net income .................................. 2,440 2,440 Foreign currency translation adjustment 33 33 ------- ------ -------- -------- ------ ----- ----- -------- June 29, 1997 ................................. 13,701 $ 274 $ 25,615 $ 26,358 $ (16) 1 $ (8) $ 52,223 Net income 2,954 2,954 Foreign currency translation adjustment (28) (28) Stock options exercised ..................... 38 349 349 ------- ------ -------- -------- ------ ----- ----- -------- September 28, 1997 ............................ 13,739 $ 274 $ 25,964 $ 29,312 $ (44) 1 $ (8) $ 55,498 ======= ====== ======== ======== ====== ===== ===== ======== * Adjusted for 3-for-2 stock split effective November 15, 1997. The accompanying notes are an integral part of these financial statements. 3 5 SOURCE SERVICES CORPORATION STATEMENT OF CASH FLOWS (AMOUNTS IN THOUSANDS) (UNAUDITED) NINE MONTHS ENDED ---------------------------- SEPTEMBER 28, SEPTEMBER 29, 1997 1996 ------------- ------------- Cash flows from operating activities: Net income .................................................... $ 7,236 $ 4,175 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ............................ 1,855 759 Profit Sharing Plan stock contributions .................. 0 12 Deferred tax asset, net .................................. (541) (148) Deferred tax liability, net .............................. 459 77 Loss on asset sales ...................................... 66 13 (Increase) in assets: Accounts receivable ...................................... (10,174) (8,107) Income tax receivable .................................... 0 (641) Prepaid expense .......................................... (154) 61 Increase (decrease) in liabilities: Accounts payable and accrued expenses .................... 237 (959) Accrued commissions and payroll .......................... 5,976 4 Accrued 401 (k) plan contribution ........................ 214 872 Accrued contribution to Profit Sharing Plan .............. 0 (6) Income taxes payable ..................................... (230) (340) Other liabilities ........................................ (23) (51) -------- -------- Net cash provided by operating activities .................................... 4,921 (4,279) -------- -------- Cash flows from investing activities: Expenditures for property and equipment ....................... (2,894) (4,354) Proceeds from sales of property and equipment ................. 22 327 -------- -------- Net cash (used in) investing activities ............. (2,872) (4,027) -------- -------- Cash flows from financing activities: Borrowings from revolving line of credit ...................... 0 44,437 Repayments of revolving line of credit ........................ 0 (44,437) Proceeds from exercise of stock options ....................... 349 72 Proceeds from Initial Public Offering ......................... 0 20,356 Costs associated with Initial Public Offering ................. 0 (1,148) Exercise of underwriters' overallotment option ................ 0 4,882 -------- -------- Net cash provided by financing activities ..................................... 349 24,162 -------- -------- Net decrease in cash and cash equivalents .......................... 2,398 15,856 Cash and cash equivalents at beginning of period ................... 18,849 1,388 -------- -------- Cash and cash equivalents at end of period ......................... $ 21,247 $ 17,244 ======== ======== Supplemental Cash Flow Information Cash paid during the period for : Interest ...................................................... $ 121 $ 63 ======== ======== Income Taxes .................................................. $ 843 $ 3,553 ======== ======== The accompanying notes are an integral part of these financial statements. 4 6 SOURCE SERVICES CORPORATION NOTES TO FINANCIAL STATEMENTS (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED) NOTE 1 --- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of business Source Services Corporation (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. Interim financial information The financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and, in management's opinion, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of results for such interim periods. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to SEC rules or regulations. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Form 10-K for the fiscal year ended December 29, 1996. Operating results for the three- and nine-month periods ended September 28, 1997, are not necessarily indicative of the results that may be expected for the fiscal year ended December 28, 1997. 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. 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. 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 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 billable employees and contractors. Revenue from flexible staffing on the 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 $13,900 and $4,500 at September 28, 1997 and December 29, 1996, respectively. 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. 5 7 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. 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 $100 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 (SFAS) 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. Income taxes The Company accounts for income taxes under the principles of SFAS No. 109, "Accounting for Income Taxes." SFAS No. 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 other 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. Earnings per share Earnings per share is computed by dividing net income by the weighted average number of common stock and common stock equivalents outstanding during the year. Common stock equivalents consist of stock options. Earnings per share have been retroactively adjusted to give effect to the 3-for-2 stock split declared on October 21, 1997, which will be distributed on or about November 15, 1997 (Note 5). NOTE 2 --- EQUITY The Company issued 22,500 stock options on January 2, 1997. These stock options were issued at an exercise price of $11.67, the closing market value on the date of issuance. No compensation expense was recorded in connection with the issuance of these stock options in accordance with generally accepted accounting principles. These stock options vest over four years: 1/3 on January 3, 1999, 1/3 on January 3, 2000, and 1/3 on January 3, 2001. The Company issued 37,500 stock options on May 15, 1997. These stock options were issued at an exercise price of $12.67, the closing market value on the date of issuance. No compensation expense was recorded in connection with the issuance of these stock options in accordance with generally accepted accounting principles. Of these stock options, 13,875 are non-qualified stock options which vest and are exerciseable over three years: 1/3 on July 26, 1998, 1/3 on July 26, 1999 and 1/3 on July 26, 2000. The remaining 23,625 are qualified stock options which vest and are exerciseable over four years: 1/4 on July 26, 1998, 1/4 on July 26, 1999, 1/4 on July 26, 2000 and 1/4 on July 26, 2001. 6 8 The Company issued 36,000 stock options on May 28, 1997. These stock options were issued at an exercise price of $13.83, the closing market value on the date of issuance. No compensation expense was recorded in connection with the issuance of these stock options in accordance with generally accepted accounting principles. Of these stock options, 9,000 were issued under the 1996 Non-Employee Directors Stock Option Plan. They vest and are exerciseable within six months of issuance. The remaining 27,000 stock options were issued under the 1997 Non-Employee Directors Stock Option Plan. They vest upon issuance, but are exerciseable over a five year period: 20% at May 28, 1998, 20% at May 28, 1999, 20% at May 28, 2000, 20% at May 28, 2001 and 20% at May 28, 2002. The Company issued 7,500 stock options on June 30, 1997. These stock options were issued at an exercise price of $17.92, the closing market value on the date of issuance. No compensation expense was recorded in connection with the issuance of these stock options in accordance with generally accepted accounting principles. These stock options were issued under the 1996 Incentive Stock Option Plan and vest over three years: 1/3 on August 2, 1998, 1/3 on August 2, 1999, and 1/3 on August 2, 2000. The Company issued 18,750 stock options on September 2, 1997. These stock options were issued at an exercise price of $19.33, the closing market value on the date of issuance. No compensation expense was recorded in connection with the issuance of these stock options in accordance with generally accepted accounting principles. These stock options were issued under the 1996 Incentive Stock Option Plan and vest over three years: 1/3 on September 3, 1999, 1/3 on September 3, 2000, and 1/3 on September 3, 2001. NOTE 3 --- NEW ACCOUNTING STANDARD In February 1997, SFAS No. 128 "Earnings Per Share" was issued effective for interim and annual periods ending after December 15, 1997. SFAS No. 128 establishes new standards for computing and presenting earnings per share. If the Company had computed earnings per share in accordance with SFAS No. 128, pro forma basic earnings per share for the three month periods ended September 28, 1997 and September 29, 1996, would have been $0.22 and $0.16 respectively and pro forma diluted earnings per share would have been $0.21 and $0.15, respectively. For the nine month period ended September 28, 1997 and September 29, 1996, pro forma basic earnings per share would have been $0.53 and $0.37 respectively, and pro forma diluted earnings per share would have been $0.52 and $0.37, respectively. NOTE 4 --- PREFERRED STOCK PLAN On May 28, 1997, the Board of Directors of the Company adopted a shareholder rights plan. Pursuant to such plan, a Series A Right is associated with, and trades with, each share of common stock outstanding. The record date for distribution of Series A Rights was June 18, 1997, and for so long as the Series A Rights are associated with the common stock, each new share of common stock issued by the Company will include one Series A Right. Each right entitles holders of the Company's common stock to buy one-one hundredth of a share of a new series of preferred stock at an exercise price of $90. The rights are exerciseable if a person or group acquires 20% or more of the Company's common stock or announces a tender offer to acquire 20% or more of the common stock. The rights will expire in ten years unless earlier redeemed or terminated. 7 9 NOTE 5 --- SUBSEQUENT EVENT On October 21, 1997, the Company declared a 3-for-2 stock split of its common stock. The stock split will be in the form of a 50% stock dividend which will be distributed on or about November 15, 1997, to shareholders of record at the close of business on November 3, 1997. All share and per share amounts have been re-stated to reflect this stock split. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD-LOOKING STATEMENTS This Form 10-Q 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 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 Financial Statements and the related Notes thereto included elsewhere in this document. RESULTS OF OPERATIONS Three- and Nine-Month Periods Ended September 28, 1997, compared to the Three- and Nine-Month Periods Ended September 29, 1996 Net Service Revenue. Net service revenue for the three month period ended September 28, 1997 increased 41.4% to $76.4 million, from $54.0 million for the three month period ended September 29, 1996. Net service revenue for the nine month period ended September 28, 1997 increased 49.0% to $212.8 million, from $142.8 million for the nine month period ended September 29, 1996. The growth in net service revenue was primarily attributable to the Company's continued focus on expanding its flexible staffing service offerings in existing markets. Net service revenues from flexible staffing services grew 54.7% to $52.3 million for the three months ended September 28, 1997, from $33.8 million for the three months ended September 29, 1996. Net service revenues from flexible staffing services grew 62.2% to $143.4 million for the nine months ended September 28, 1997, from $88.4 million for the nine month period ended September 29, 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 19.2% to $24.1 million for the three months ended September 28, 1997, from $20.2 million for the three months ended September 29, 1996. Permanent placement net service revenue increased 27.7% to $69.4 million for the nine months ended September 28, 1997, from $54.3 million for the nine months ended September 29, 1996. The growth in permanent placement net service revenue is 8 10 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 31.6% to $38.9 million for the three months ended September 28, 1997, from $29.6 million for the three months ended September 29, 1996. Gross profit as a percentage of net service revenues decreased slightly to 50.9% for the three months ended September 28, 1997, from 54.8% for the three months ended September 29, 1996. Gross profit increased 38.1% to $109.2 million for the nine months ended September 28, 1997, from $79.1 million for the nine months ended September 29, 1996. Gross profit as a percentage of net service revenues decreased slightly to 51.3% for the nine months ended September 28, 1997, from 55.4% for the nine months ended September 29, 1996. The decrease was primarily a result of a continued change in the mix of the Company's net service revenue toward flexible staffing. Operating expenses. Operating expenses increased 29.5% to $34.0 million for the three months ended September 28, 1997, from $26.3 million for the three months ended September 29, 1996. Operating expenses as a percentage of net service revenues decreased slightly to 44.6% for the three months ended September 28, 1997, from 48.6% for the three months ended September 29, 1996. Operating expenses increased 34.6% to $96.8 million for the nine months ended September 28, 1997, from $71.9 million for the nine months ended September 29, 1996. As a percentage of net service revenue, operating expenses decreased to 45.5% for the nine months ended September 28, 1997, as compared to 50.4% for the nine months ended September 29, 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. Operating Income. Operating income increased 47.6% to $4.9 million for the three months ended September 28, 1997, from $3.3 million for the three months ended September 29,1996. Operating income increased 73.7% to $12.4 million for the nine months ended September 28, 1997, from $7.2 million for the nine months ended September 29, 1996. The increase is primarily a result of the factors described above. Other (income) expense. Other (income) expense was $0.2 million of income for the three months ended September 28, 1997, compared to $0.007 million of expense for the three months ended September 29, 1996. Other (income) expense was $0.5 million of income for the nine months ended September 28, 1997, compared to $0.3 million of expense for the nine months ended September 29, 1996. Income Taxes. The effective tax rate increased to 42.3% for the three months ended September 28, 1997, and 43.8% for the nine months ended September 28, 1997, compared to 41.3% for the three months ended September 29, 1996 and 39.3% for the nine months ended September 29, 1996, respectively. Net Income. Net income increased to $3.0 million for the three months ended September 28, 1997, and $7.2 million for the nine months ended September 28, 1997, from $1.9 million for the three months ended September 29, 1996, and $4.2 million for the nine months ended September 29, 1996. The increase was primarily a result of the factors described above. LIQUIDITY AND CAPITAL RESOURCES As of September 28, 1997, the Company's sources of liquidity included approximately $48.4 million in net working capital. In addition, as of September 28, 1997, $10.0 million was available for borrowing under the Company's line of credit. During the first nine months of 1997, cash flow provided by operations was approximately $4.9 million, resulting primarily from net income and an increase in accrued commissions and payroll, offset by an increase in accounts receivable. During the first nine months of 1997, cash flow used by investing activities was approximately $2.9 million, resulting primarily from expenditures for computer equipment, office furniture and fixtures and telephone equipment. 9 11 The Company believes its cash balance, short-term investments and available line of credit borrowings will be sufficient to meet its anticipated cash requirements for at least the next twelve months unless it uses a substantial portion of its cash balances to fund additional acquisitions. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None ITEM 2. CHANGES IN SECURITIES None ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits (27) Financial Data Schedule (b) Reports on Form 8-K None 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. November 12, 1997 Source Services Corporation (Registrant) By:/s/ Richard Dupont ------------------------------------------------ Richard Dupont, Chief Financial Officer and Secretary 10 12 INDEX TO EXHIBITS EXHIBIT NUMBER EXHIBIT - ------ ------- 27 Financial Data Schedule