<PAGE>   1
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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
 X   EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998.
---
                                       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: 0-23686

                             PC SERVICE SOURCE, INC.
             (Exact name of registrant as specified in its charter)


          DELAWARE                                        52-1703687
          --------                                        ----------
(State or other jurisdiction of                        (I.R.S.Employer 
incorporation or organization)                         Identification No.)


  2350 VALLEY VIEW LANE, DALLAS, TEXAS                       75234
  ------------------------------------                       -----

(Address of principal executive offices)                   (Zip Code)


                                 (972) 481-4000
                                 --------------
              (Registrant's telephone number, including area code)


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


As of November 1, 1998, there were 5,773,820 shares of the registrant's common
stock outstanding.


===============================================================================



<PAGE>   2


                    PC SERVICE SOURCE, INC. AND SUBSIDIARIES
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            Page
                                                                           Number
                                                                           ------
<S>                                                                        <C>
PART I. FINANCIAL INFORMATION

         Item 1.  Financial Statements

                  Condensed Consolidated Balance Sheets at
                  September 30, 1998 and December 31, 1997 ................   1

                  Condensed Consolidated Statements of Operations
                  for the Three and Nine Months Ended September 30, 1998
                  and 1997 ................................................   2

                  Condensed Consolidated Statements of Cash Flows
                  for the Nine Months Ended September 30, 1998 and 1997 ...   3

                  Notes to Condensed Consolidated Financial Statements ....   4

         Item 2.  Management's Discussion and Analysis of
                  Financial Condition and Results of Operations ...........   6


PART II. OTHER INFORMATION

         Item 6.  Exhibits and Reports on Form 8-K ........................  10

SIGNATURES ................................................................  11
</TABLE>



<PAGE>   3


PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS


                    PC SERVICE SOURCE, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                     September 30,     December 31,
                                                                          1998             1997
                                                                     ------------      ------------
<S>                                                                  <C>               <C>       
                  ASSETS

Current assets:
  Cash and cash equivalents ......................................     $    877          $    717  
  Accounts receivable, net .......................................       19,805            15,973  
  Inventories ....................................................       22,775            17,511  
  Other current assets ...........................................        4,549             2,956  
                                                                       --------          --------  
         Total current assets ....................................       48,006            37,157  
                                                                                                   
Property and equipment, net ......................................       14,563            13,526  
Other assets, net ................................................        4,468             4,475  
                                                                       --------          --------  
                                                                                                   
        Total assets .............................................     $ 67,037          $ 55,158  
                                                                       ========          ========  
                                                                                                   
            LIABILITIES AND STOCKHOLDERS' EQUITY
                                                                                                   
Current liabilities:                                                                               
  Accounts payable ...............................................     $ 10,778          $  8,864  
  Accrued liabilities ............................................        6,973             3,403  
  Revolving line of credit .......................................       13,830                --  
  Current installments of obligations under capital leases .......        1,235             1,153  
                                                                       --------          --------  
       Total current liabilities .................................       32,816            13,420  
                                                                                                   
Long-term debt-revolving line of credit ..........................           --             5,535  
Obligations under capital leases .................................        3,209             3,160  
Deferred income taxes ............................................          687               709  
                                                                                                   
Stockholders' equity:                                                                              
 Common stock ....................................................           59                59  
 Additional paid-in capital ......................................       30,996            30,978  
 Retained earnings ...............................................        1,060             3,087  
 Less treasury stock, at cost ....................................       (1,790)           (1,790) 
                                                                       --------          --------  
                                                                                                   
      Total stockholders' equity .................................       30,325            32,334  
                                                                       --------          --------  
         Total liabilities and stockholders' equity ..............     $ 67,037          $ 55,158  
                                                                       ========          ========  
                                                                                         
</TABLE>


     See accompanying notes to condensed consolidated financial statements.



                                      -1-
<PAGE>   4


                    PC SERVICE SOURCE, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                               Three Months Ended          Nine Months Ended
                                                                  September 30,               September 30,
                                                            -----------------------     ------------------------
                                                              1998          1997          1998            1997
                                                            ---------     ---------     ---------      ---------
<S>                                                         <C>           <C>           <C>            <C>      
Net revenues ...........................................    $  42,865     $  33,495     $ 119,671      $  97,627
Cost of revenues .......................................       30,516        23,579        84,785         69,253
                                                            ---------     ---------     ---------      ---------
  Gross margin .........................................       12,349         9,916        34,886         28,374
                                                            ---------     ---------     ---------      ---------

Operating expenses:
  Selling, general and administrative ..................       10,705         8,756        33,729         24,260
  Depreciation and amortization ........................        1,130           943         3,305          2,487
                                                            ---------     ---------     ---------      ---------
    Total operating expenses ...........................       11,835         9,699        37,034         26,747
                                                            ---------     ---------     ---------      ---------

    Earnings (loss) from operations ....................          514           217        (2,148)         1,627

Interest expense, net ..................................          451           208         1,085            478
                                                            ---------     ---------     ---------      ---------

    Earnings (loss) before income taxes ................           63             9        (3,233)         1,149

Income tax expense (benefit) ...........................           17             4        (1,206)           426
                                                            ---------     ---------     ---------      ---------


    Net earnings (loss) ................................    $      46     $       5     $  (2,027)     $     723
                                                            =========     =========     =========      =========

Earnings (loss) per share:
    Basic ..............................................    $    0.01     $    0.00     $   (0.35)     $    0.13
                                                            =========     =========     =========      =========
    Diluted ............................................    $    0.01     $    0.00     $   (0.35)     $    0.12
                                                            =========     =========     =========      =========


Weighted average common shares outstanding:
    Basic ..............................................        5,760         5,751         5,760          5,747
                                                            =========     =========     =========      =========
    Diluted ............................................        5,832         5,880         5,760          5,882
                                                            =========     =========     =========      =========
</TABLE>


     See accompanying notes to condensed consolidated financial statements.



                                      -2-
<PAGE>   5


                    PC SERVICE SOURCE, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                            Nine Months Ended
                                                              September 30,
                                                           --------------------
                                                            1998         1997
                                                           -------      -------
<S>                                                        <C>          <C>    
Cash flows from operating activities:
  Net earnings (loss) ................................     $(2,027)     $   723
  Adjustments to reconcile net earnings (loss) to net
      cash provided by (used in) operating activities:
      Depreciation and amortization ..................       3,305        2,487
      Deferred income taxes ..........................      (1,033)         653
      Other, net .....................................         162       (1,444)
  Changes in operating assets and liabilities:
      Accounts receivable ............................      (3,832)      (3,033)
      Inventories ....................................      (5,264)           5
      Other current assets ...........................        (582)      (1,411)
      Accounts payable ...............................       1,914        1,850
      Accrued liabilities ............................       3,570        1,909
                                                           -------      -------
  Net cash provided by (used in) operating activities       (3,787)       1,739
                                                           -------      -------

Cash flows from investing activities:
  Capital expenditures ...............................      (4,073)      (3,990)
  Acquisition of noncash net assets ..................        (424)      (1,817)
                                                           -------      -------

Net cash used in investing activities ................      (4,497)      (5,807)
                                                           -------      -------

Cash flows from financing activities:
  Net revolving line of credit borrowings ............       8,295        1,545
  Payments under capital lease obligations ...........        (832)        (692)
  Proceeds from sale-leaseback transaction ...........         963           --
  Proceeds from exercise of common stock options .....          18            9
                                                           -------      -------

Net cash provided by financing activities ............       8,444          862
                                                           -------      -------

Net increase (decrease) in cash and cash 
  equivalents ........................................         160       (3,206)
Cash and cash equivalents at beginning of period .....         717        3,650
                                                           -------      -------
Cash and cash equivalents at end of period ...........     $   877      $   444
                                                           =======      =======
</TABLE>


     See accompanying notes to condensed consolidated financial statements.



                                      -3-
<PAGE>   6

                    PC SERVICE SOURCE, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)

(1)  BASIS OF PRESENTATION

     These unaudited condensed consolidated financial statements of PC Service
     Source, Inc. and its subsidiaries (the "Company"), for the three and nine
     months ended September 30, 1998 and 1997, have been prepared in accordance
     with generally accepted accounting principles for interim financial
     reporting. Accordingly, they do not include all of the information and
     footnotes required by generally accepted accounting principles for complete
     financial statements and should be read in conjunction with the audited
     consolidated financial statements and notes thereto included in the
     Company's Form 10-K for the year ended December 31, 1997. All significant
     intercompany balances and transactions have been eliminated in
     consolidation. In the opinion of management, all adjustments (consisting
     only of normal recurring adjustments) considered necessary for a fair
     presentation of the interim financial information have been included. The
     results of operations for any interim period are not necessarily indicative
     of the results of operations for a full year.


(2)  EARNINGS (LOSS) PER SHARE

     The Company adopted Statement of Financial Accounting Standards No. 128
     (SFAS 128), Earnings per Share, in the fourth quarter of 1997, which
     required companies to present basic earnings per share and diluted earnings
     per share. Basic earnings per share is computed by dividing income
     available to common stockholders by the weighted average number of common
     shares outstanding during the period. Diluted earnings per share reflects
     the potential dilution that could occur if securities or other contracts to
     issue common stock were exercised or converted into common stock. The
     Company has restated its earnings per share calculations for the three and
     nine months ended September 30, 1997 to reflect the adoption of SFAS 128.

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

<TABLE>
<CAPTION>
                                                Three Months Ended       Nine Months Ended
                                                   September 30,           September 30,
                                                ------------------      --------------------
                                                  1998        1997       1998          1997
                                                -------     -------     -------      -------
<S>                                             <C>         <C>         <C>          <C>    
     Net earnings (loss) ..................     $    46     $     5     $(2,027)     $   723
                                                =======     =======     =======      =======

     Weighted average common shares
        outstanding - basic ...............       5,760       5,751       5,760        5,747
     Employee stock options and other .....          72         129          --          131
                                                -------     -------     -------      -------

     Weighted average common shares
        outstanding - diluted .............       5,832       5,880       5,760        5,882
                                                =======     =======     =======      =======

     Earnings (loss) per share:
          Basic ...........................     $  0.01     $  0.00     $ (0.35)     $  0.13
          Diluted .........................     $  0.01     $  0.00     $ (0.35)        0.12
</TABLE>



                                      -4-
<PAGE>   7
 
     The weighted average common shares outstanding-diluted computation for the
     nine months ended September 30, 1998 excluded 95 employee stock options and
     other common stock equivalents because this impact would be anti-dilutive.

(3)  COMPREHENSIVE INCOME

     The Company adopted Statement of Financial Accounting Standards No. 130
     (SFAS 130), Reporting Comprehensive Income, in the first quarter of 1998,
     which requires companies to disclose comprehensive income separately from
     net income from operations. Comprehensive income is defined as the change
     in equity during a period from transactions and other events and
     circumstances from non-ownership sources. It includes all changes in equity
     during a period, except those resulting from investments by owners and
     distributions to owners. Comprehensive income (loss) is equal to net
     earnings (loss) as presented on the Condensed Consolidated Statements of
     Operations for the three and nine months ended September 30, 1998 and 1997.

(4)  SUPPLEMENTAL CASH FLOW INFORMATION

     Net cash flow from operating activities reflects cash payments for interest
     and income taxes as follows:

<TABLE>
<CAPTION>
                                                           Nine Months Ended
                                                              September 30,
                                                           -----------------
                                                            1998       1997
                                                            ----       ----
<S>                                                        <C>        <C>
     Interest paid  ...................................    $ 962       $ 419
     Income taxes paid, net............................       19         749
</TABLE>

     During the nine months ended September 30, 1998 and 1997, the Company
     acquired $963 and $907 of assets through non-cash capital lease
     transactions.

(5)  SUBSEQUENT EVENTS

     Pursuant to the Company's Stock Option Plan, incentive and nonstatutory
     options may be granted to eligible employees for the purchase of an
     aggregate of up to 1,000,000 shares of common stock, of which options to
     acquire all 1,000,000 shares have previously been granted. Subject to
     receiving stockholder approval of an amendment to increase the aggregate
     number of shares subject to issuance under the Stock Option Plan by 750,000
     shares (from 1,000,000 shares to 1,750,000 shares) the Stock Option
     Committee of the Board of Directors conditionally granted in October 1998,
     incentive options to acquire up to an additional 400,000 shares of common
     stock to eligible employees of the Company. The amendment is subject to the
     approval of the Company's stockholders.

     In October 1998, the Board of Directors also approved a Stock Price
     Appreciation Plan pursuant to which a total of 200,000 shares of the
     Company's common stock will be available for issuance to selected members
     of the Company's management if the closing per share price of the Company's
     common stock on Nasdaq exceeds $15.00 per share for twenty consecutive
     trading days prior to February 28, 2002.



                                      -5-
<PAGE>   8


                    PC SERVICE SOURCE, INC. AND SUBSIDIARIES

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION

RESULTS OF OPERATIONS

The following table displays the Company's statements of operations as a
percentage of net revenues:

<TABLE>
<CAPTION>
                                                                   Three Months Ended     Nine Months Ended
                                                                      September 30,         September 30,

                                                                    1998       1997       1998         1997
                                                                    -----      -----      -----       -----
<S>                                                                 <C>        <C>        <C>         <C>   
Net revenues ................................................       100.0%     100.0%     100.0%      100.0%
Cost of revenues ............................................        71.2       70.4       70.8        70.9
                                                                    -----      -----      -----       -----
          Gross margin ......................................        28.8       29.6       29.2        29.1
                                                                    -----      -----      -----       -----

Operating expenses:
          Selling, general and administrative ...............        25.0       26.2       28.2        24.8
          Depreciation and amortization .....................         2.6        2.8        2.8         2.6
                                                                    -----      -----      -----       -----
            Total operating expenses ........................        27.6       29.0       31.0        27.4
                                                                    -----      -----      -----       -----
               Earnings (loss) from operations ..............         1.2        0.6       (1.8)        1.7

Interest expense, net .......................................         1.1        0.6        0.9         0.5
                                                                    -----      -----      -----       -----
               Earnings (loss) before income taxes ..........         0.1        0.0       (2.7)        1.2

Income tax expense (benefit) ................................         0.0        0.0       (1.0)        0.5
                                                                    -----      -----      -----       -----
            Net earnings (loss) .............................         0.1%       0.0%      (1.7)%       0.7%
                                                                    =====      =====      =====       =====
</TABLE>


THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED 
SEPTEMBER 30, 1997

Net revenues were $42.9 million for the third quarter of 1998, representing an
increase of $9.4 million or a 28% increase over the third quarter of 1997.
Revenues are generated by providing a variety of service and repair logistics
services. These are comprised of general parts distribution, sourcing, service
provider alliances, original equipment manufacture outsourcing arrangements, as
well as repair and remanufacturing. The Company saw a shift in revenue mix
during the third quarter from general parts distribution to service provider
alliances, mainly due to increased service logistics outsourcing agreements,
which contributed primarily to the increase in revenues.

Gross margin as a percentage of net revenues decreased in the third quarter of
1998 to 28.8% from 29.6% in the same period in 1997. The Company's gross margin
on each of its service offerings varies; therefore, any change in the services
and repair logistics provided by the Company will impact the gross margin from
quarter to quarter. During the third quarter of 1998, gross margin as a
percentage of revenue declined due primarily to a higher mix of lower margin
service logistics outsourcing business.



                                      -6-
<PAGE>   9


Selling, general and administrative expenses ("SG&A") as a percentage of net
revenues decreased to 25.0% in the third quarter of 1998 compared to 26.2%
incurred in the third quarter of 1997. The decrease as a percentage of net
revenues was primarily attributable to better freight management and lower
telephone expense.

Depreciation and amortization increased by $187,000 for the quarter ended
September 30, 1998, compared with the same period in 1997. Depreciation and
amortization as a percentage of net revenues, however, declined to 2.6% for the
third quarter of 1998 compared to 2.8% in the same period of 1997 due to the
fact that revenues increased faster than capital expenditures in 1998.

Interest expense, net as a percentage of net revenues increased to 1.1% during
the third quarter of 1998 from 0.6% during the same period of 1997 due to a
higher average outstanding balance on the Company's revolving line of credit
during the third quarter of 1998.

In the third quarter, the Company underwent certain management changes including
the appointment of Avery More, the Company's largest shareholder and Chairman of
the Board, as Chief Executive Officer. Mr. More will be actively involved in the
day-to-day business operations of the Company. The new management initiated a
review of the Company's strategies and business focus. As a result, a process of
reviewing existing policies, procedures and methodologies utilized for the
valuation of assets and liabilities recorded in the balance sheet, including
inventory, accounts receivable and intangible assets was initiated. The outcome
of this analysis has not yet been completed but is expected to be completed by
the end of 1998. The results of this analysis could have a material adverse
impact through non-cash charges on the financial position and the results of
operations of the Company.

NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED 
SEPTEMBER 30, 1997

Net revenues were $119.7 million for the first nine months of 1998, representing
an increase of $22.0 million or a 22.6% increase over the first nine months of
1997. The increase was primarily attributed to the increase in service logistics
outsourcing agreements with the Company's service provider alliances.

Gross margin as a percentage of net revenues increased in the first nine months
of 1998 to 29.2% from 29.1% in the same period in 1997. The Company's gross
margin on each of its service offerings varies; therefore, any change in the mix
of services and repair logistics provided by the Company will impact the gross
margin from quarter to quarter.

SG&A as a percentage of net revenues increased to 28.2% in the nine months ended
September 30, 1998, compared to 24.8% in the same period of 1997. The increase
as a percentage of revenue was principally due to three factors. The first
factor was an increase in employee expenses resulting from new employees hired
and trained to handle an OEM repair contract, and overtime and temporary workers
to assist in the conversion to the Company's automated warehouse management
system. The second factor was a non-recurring charge related to the termination
of an unprofitable warranty processing program with an OEM customer with whom
the Company has other successful programs pending. The third factor was an
increase in freight expense resulting from deficiencies in freight monitoring,
control and billing processes. These deficiencies were identified in the second
quarter of 1998 in connection with the warehouse management system conversion
and management believes that proper controls are now in place.

Depreciation and amortization increased as a percentage of net revenues to 2.8%
in the first nine months of 1998 compared to 2.6% in the same period of 1997.
The increase was due to a higher asset base in 1998 resulting from the
significant capital expenditures made by the Company during 1997.



                                      -7-
<PAGE>   10

Interest expense, net as a percentage of net revenues increased to 0.9% during
the first nine months of 1998 from 0.5% during the same period of 1997 due to a
higher average outstanding balance on the Company's revolving line of credit.

LIQUIDITY AND CAPITAL RESOURCES

The Company currently maintains a $20 million revolving bank credit facility
which matures in June 1999. During the second quarter and again in the third
quarter of 1998, the Company exceeded an agreed upon ratio which triggered a
total borrowing base availability calculation (asset-based calculation), which
is based upon defined percentages of eligible accounts receivable and inventory.
As a result, the amount currently available under the Company's credit facility
is limited to the lesser of $20.0 million or calculated availability based on
the asset-based calculation. The Company's available credit facility at
September 30, 1998 was $20.0 million. The Company intends to renegotiate or
replace the credit facility in the fourth quarter of 1998.

The Company was not in compliance with certain financial performance covenants
at September 30, 1998. The Company has received a waiver from its lenders with
respect to the covenants and intends to renegotiate or replace the facility. The
inability of the Company to replace the facility or to obtain similar alternate
financing sources could have a material adverse impact on the liquidity and
capital resources of the Company.

The Company has historically been a net user of cash from operating activities
and has financed its capital expenditure requirements from revolving credit,
lease financing agreements and equity financing. Cash used in operating
activities during the first nine months of 1998 was $3.8 million as compared
with cash used in operating activities of $1.7 million for the first nine months
of 1997. The change in cash used in operations was primarily due to the change
in net earnings (loss) for the period as well as the increase in inventory and
accounts receivable that was necessary to support higher revenues of the
Company.

Capital expenditures totaled $4.1 million for the first nine months of 1998
compared with $4.0 million in 1997. Expenditures in the 1998 period were
primarily related to the Company's new warehouse management system.

YEAR 2000 COMPLIANCE

The Company's management recognizes the need to ensure that its operations and
relationships with vendors, customers and other third parties will not be
adversely impacted by the Year 2000 issue. The Year 2000 problem is a result of
computer programs being written using two digits rather than four to define the
applicable year. Based on its assessment, the Company determined a portion of
its software and certain hardware will require modification or replacement so
that those systems will properly utilize dates beyond December 31, 1999.
Although, the Company's assessment indicated that the significant information
technology systems would not be affected, that assessment however, indicated
that the software and hardware used in the Company's telephone equipment would
be at risk. The affected systems are the Company's primary sources of receiving
customer orders. With modification or replacement, the Company believes the Year
2000 issue can be mitigated. However, if such modifications or replacements are
not made, or not completed timely, the Year 2000 issue could have a significant
adverse impact on the operations of the Company.

The Company has also established a program to review its product line and
identify date-sensitive parts and the level of Year 2000 compliance that the
part supports. This program is to ensure that customers receive products that
are Year 2000 compliant, or at a minimum, are made aware of products that are
not compliant.



                                       -8-

<PAGE>   11

The Company also depends on the systems of its suppliers and customers.
Consequently, the Company is in the process of receiving adequate assurances
from its suppliers and customers that those systems on which the Company relies
are or will be Year 2000 compliant before the end of 1999.

To the extent possible, the Company will develop and implement contingency plans
designed to allow continued operations in the event of failure of the Company's
or third party systems to be Year 2000 compliant. These contingency plans have
not yet been developed, but are expected to be developed and implemented by the
end of 1999.

Management estimates that the total cost of the above initiatives to be $500,000
and is being funded through operating cash flows. The Company is expensing all
costs associated with these systems changes as the costs are incurred. As of
September 30, 1998, approximately $100,000 has been expensed.

Management of the Company believes it has an effective program in place to
resolve the Year 2000 issue in a timely manner. As noted above, the Company has
not yet completed all necessary phases of the Year 2000 program. Should the
critical applications fail to perform properly in response to the Year 2000
issue, the Company could be unable to receive and ship a substantial number of
orders received by their telephone systems. The amount of potential lost revenue
cannot be reasonably estimated at this time. Further, the failure of the Company
or third parties upon which the Company relies, to identify Year 2000 issues and
successfully and timely resolve them could have a material adverse impact on the
operations of the Company.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

The Company occasionally makes forward-looking statements concerning its plans,
goals, product and service offerings, and anticipated financial performance.
These forward-looking statements may generally be identified by introductions
such as "outlook" for an upcoming period of time, or words and phrases such as
"should", "expect", "hope", "plans", "projected", "believes", "forward-looking"
(or variants of those words and phrases) or similar language indicating the
expression of an opinion or view concerning the future.

These forward-looking statements are subject to risks and uncertainties based on
a number of factors and actual results or events may differ materially from
those anticipated by such forward-looking statements. These factors include, but
are not limited to: the growth rate of the Company's revenue and market share;
the consummation of new and the non-termination of existing OEM outsourcing
arrangements and service provider alliances; the Company's ability to
effectively manage its business functions while growing the Company's business
in a rapidly changing environment; the ability of the Company to adapt and
expand its services in such an environment; the effective and efficient
purchasing of parts and processing of sales orders; the quality of the Company's
plans and strategies and the ability of the Company to execute such plans and
strategies; and the Company's, as well as its vendors, customers and other third
parties ability to become Year 2000 compliant.

In addition, forward-looking statements concerning the Company's expected
revenue or earnings levels are subject to many additional uncertainties
applicable to competitors generally and to general economic conditions over
which the Company has no control. The Company generally does not plan to
publicly update prior forward-looking statements for unanticipated events or
otherwise and, accordingly, prior forward-looking statements should not be
considered to be "fresh" simply because the Company has not made additional
comments on those forward-looking statements.



                                      -9-
<PAGE>   12


                    PC SERVICE SOURCE, INC. AND SUBSIDIARIES

                           PART II. OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

         A.    EXHIBITS

               The following exhibits are filed as part of this report:

<TABLE>
<CAPTION>
EXHIBIT
  NO.          DESCRIPTION
-------        -----------
<S>            <C>                                                    
3.1+           Restated Certificate of Incorporation of the Company

3.2++          Amended and Restated Bylaws of the Company

10.1+++        Credit Agreement among the Company, certain lenders and 
               NationsBank, N.A., as administrative lender

10.2+v         Stock Option Plan, including form of Stock Option Agreements, as
               amended

10.3+v         Director Compensation Plan

10.4v          Employee Stock Purchase Plan

10.5*          Waiver and Third Amendment to Credit Agreement among the Company, 
               certain lenders and NationsBank, N.A., as administrative lender

27.1*          Financial Data Schedule

27.2*          Restated Financial Data Schedule

--------------
</TABLE>

+    Previously filed as an exhibit to the Company's report on Form S-8,
     Registration Number 33-98176, filed with the Securities and Exchange
     Commission on October 17, 1995.

++   Previously filed as an exhibit to the Company's report on Form 10-K for the
     year ended December 31, 1994, filed with the Securities and Exchange
     Commission on March 31, 1995.

+++  Previously filed as an exhibit to the Company's report on Form 10-K for the
     year ended December 31, 1997, filed with the Securities and Exchange
     Commission on March 31, 1998.

+v   Previously filed as an exhibit to the Company's report on Form 10-K for the
     year ended December 31, 1995, filed with the Securities and Exchange
     Commission on March 31, 1996.

v    Previously filed as an exhibit to the Company's Registration Statement on
     Form S-1, Registration Number 333-03977, initially filed with the
     Securities and Exchange Commission on May 17, 1996, and declared effective
     on May 28, 1996.

*    Filed herewith.

B.   REPORTS ON FORM 8-K

     No reports on Form 8-K have been filed by the registrant during the three
     (3) months ended September 30, 1998.



                                      -10-
<PAGE>   13


                    PC SERVICE SOURCE, INC. AND SUBSIDIARIES


                                   Signatures



Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                           PC SERVICE SOURCE, INC.
                                           -----------------------
                                           (Registrant)


November 16, 1998                          /s/ Avery More
                                           -----------------------
                                           Avery More
                                           Chairman and Chief Executive Officer


                                           /s/ Robert J. Boutin
                                           -----------------------
                                           Robert J. Boutin
                                           Chief Financial Officer
                                           (Principal Accounting Officer)


<PAGE>   14


                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
  NO.          DESCRIPTION
-------        -----------
<S>            <C>                                                    
3.1+           Restated Certificate of Incorporation of the Company

3.2++          Amended and Restated Bylaws of the Company

10.1+++        Credit Agreement among the Company, certain lenders and 
               NationsBank, N.A., as administrative lender

10.2+v         Stock Option Plan, including form of Stock Option Agreements, as
               amended

10.3+v         Director Compensation Plan

10.4v          Employee Stock Purchase Plan

10.5*          Waiver and Third Amendment to Credit Agreement among the Company,
               certain lenders and NationsBank, N.A., as administrative lender

27.1*          Financial Data Schedule

27.2*          Restated Financial Data Schedule
--------------
</TABLE>

+    Previously filed as an exhibit to the Company's report on Form S-8,
     Registration Number 33-98176, filed with the Securities and Exchange
     Commission on October 17, 1995.

++   Previously filed as an exhibit to the Company's report on Form 10-K for the
     year ended December 31, 1994, filed with the Securities and Exchange
     Commission on March 31, 1995.

+++  Previously filed as an exhibit to the Company's report on Form 10-K for the
     year ended December 31, 1997, filed with the Securities and Exchange
     Commission on March 31, 1998.

+v   Previously filed as an exhibit to the Company's report on Form 10-K for the
     year ended December 31, 1995, filed with the Securities and Exchange
     Commission on March 31, 1996.

v    Previously filed as an exhibit to the Company's Registration Statement on
     Form S-1, Registration Number 333-03977, initially filed with the
     Securities and Exchange Commission on May 17, 1996, and declared effective
     on May 28, 1996.

*    Filed herewith.