<PAGE>   1
===============================================================================



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

                                   FORM 10-Q

 X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
   ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 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: 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 Identification No.) 
incorporation or organization) 

  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 July 31, 1997, there were 5,750,820 shares of the registrant's common
stock outstanding.



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<PAGE>   2


                     PC SERVICE SOURCE, INC. AND SUBSIDIARY
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                       Page  
                                                                                      Number 
                                                                                      ------ 
<S>       <C>                                                                           <C>  
PART I.   FINANCIAL INFORMATION
          
          Item 1.  Financial Statements                                                    
                                                                                           
                   Condensed Consolidated Balance Sheets                                   
                   June 30, 1997 (Unaudited) and December 31, 1996 ..................    1 
                                                                                           
                   Condensed Consolidated Statements of Operations (Unaudited)             
                   Three and Six Months Ended June 30, 1997 and 1996 ................    2 
                                                                                           
                   Condensed Consolidated Statements of Cash Flows (Unaudited)             
                   Six Months Ended June 30, 1997 and 1996 ..........................    3 
                                                                                           
                   Notes to Condensed Consolidated Financial Statements (Unaudited)..    4 
                                                                                           
          Item 2.  Management's Discussion and Analysis of                                 
                   Financial Condition and Results of Operations ....................    5 
                                                                               
PART II.  OTHER INFORMATION                                            
                                                                               
          Item 6.  Exhibits and Reports on Form 8-K..................................    9
                                                                               
SIGNATURES...........................................................................   10


</TABLE>






<PAGE>   3



PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS


                     PC SERVICE SOURCE, INC. AND SUBSIDIARY
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                       June 30,   December 31,
                                                                         1997        1996
                                                                       --------    --------
                                                                           (Unaudited)
<S>                                                                        <C>         <C>
                  ASSETS

Current assets:
  Cash and cash equivalents ......................................     $    29     $ 3,650
  Accounts receivable, net .......................................      15,116      12,978
  Inventories ....................................................      18,978      19,590
  Income taxes receivable ........................................         332          --
  Deferred income taxes ..........................................         784         866
  Other current assets ...........................................       1,043         763
                                                                       -------     -------
         Total current assets ....................................      36,282      37,847

Property and equipment, net ......................................      12,379      10,418
Other assets, net ................................................       2,293       1,909
                                                                       -------     -------

  Total Assets ...................................................     $50,954     $50,174
                                                                       =======     =======

                 LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable ...............................................     $ 6,288     $ 7,821
  Accrued liabilities ............................................       2,815       2,600
  Income taxes payable ...........................................          --          38
  Revolving line of credit .......................................       3,940       3,053
  Current installments of obligations under capital leases .......       1,034         841
                                                                       -------     -------
Total current liabilities ........................................      14,077      14,353

Obligations under capital leases .................................       3,328       3,059
Deferred income taxes ............................................         635         566
Stockholders' equity .............................................      32,914      32,196
                                                                       -------     -------

  Total Liabilities and Stockholders' Equity .....................     $50,954     $50,174
                                                                       =======     =======
</TABLE>



See accompanying notes to condensed consolidated financial statements.


                                      1

<PAGE>   4



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

<TABLE>
<CAPTION>

                                                                            Three  Months Ended       Six Months Ended
                                                                                  June 30,                 June 30,
                                                                            -------------------     -------------------
                                                                             1997        1996        1997        1996
                                                                            -------     -------     -------     -------
<S>                                                                         <C>        <C>         <C>         <C>
Net revenues ..........................................................     $31,711     $26,786     $64,132     $53,067
Cost of revenues ......................................................      22,239      18,470      45,674      37,178
                                                                            -------     -------     -------     -------
  Gross margin ........................................................       9,472       8,316      18,458      15,889
                                                                            -------     -------     -------     -------


Operating expenses:
  Selling, general and administrative .................................       8,100       6,368      15,504      12,237
  Depreciation and amortization .......................................         802         498       1,544         932
                                                                            -------     -------     -------     -------
    Total operating expenses ..........................................       8,902       6,866      17,048      13,169
                                                                            -------     -------     -------     -------

    Earnings from operations ..........................................         570       1,450       1,410       2,720

Interest expense, net .................................................         141         242         270         471
                                                                            -------     -------     -------     -------

    Earnings before income taxes ......................................         429       1,208       1,140       2,249

Income tax expense ....................................................         158         449         422         836
                                                                            -------     -------     -------     -------

    Net earnings ......................................................     $   271     $   759     $   718     $ 1,413
                                                                            =======     =======     =======     =======



Earnings per common share .............................................     $   .05     $   .16     $   .12     $   .30
                                                                            =======     =======     =======     =======

Weighted average common shares
     outstanding ......................................................       5,878       4,850       5,882       4,634
                                                                            =======     =======     =======     =======
</TABLE>



See accompanying notes to condensed consolidated financial statements.


                                      2

<PAGE>   5



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

<TABLE>
<CAPTION>
                                                                            Six Months Ended
                                                                                 June 30
                                                                            ----------------
                                                                            1997        1996
                                                                            ----        ----
<S>                                                                     <C>          <C>                              
Cash flows from operating activities:
  Net earnings ......................................................    $   718      $ 1,413
  Adjustments to reconcile net earnings to net cash used in operating
      activities:
      Depreciation and amortization .................................      1,544          932
      Deferred income taxes .........................................        151          237
      Other, net ....................................................       (108)         (48)
  Changes in operating assets and liabilities:
      Accounts receivable ...........................................     (2,138)      (2,301)
      Inventories ...................................................        612       (5,149)
      Other current assets ..........................................       (294)        (257)
      Accounts payable ..............................................     (1,533)      (1,003)
      Accrued liabilities ...........................................        215          711
      Income taxes receivable/payable ...............................       (370)         731
                                                                         -------      -------
  Net cash used in operating activities .............................     (1,203)      (4,734)
                                                                         -------      -------
Cash flows from investing activities:
  Capital expenditures ..............................................     (2,528)        (809)
  Payment for purchase of equity interest ...........................       (332)          --
                                                                         -------      -------
Net cash used in investing activities ...............................     (2,860)        (809)
                                                                         -------      -------

Cash flows from financing activities:
  Net revolving line of credit borrowings (repayments) ..............        887       (8,934)
  Principal payments under capital lease obligations ................       (445)        (176)
  Net proceeds from public offering .................................         --       18,521
  Proceeds from exercise of common stock options ....................         --          155
                                                                         -------      -------
Net cash provided by financing activities ...........................        442        9,566
                                                                         -------      -------
Net increase (decrease) in cash and cash equivalents ................     (3,621)       4,023
Cash and cash equivalents at beginning of period ....................      3,650          833
                                                                         -------      -------
Cash and cash equivalents at end of period ..........................    $    29      $ 4,856
                                                                         =======      =======
</TABLE>


See accompanying notes to condensed consolidated financial statements.


                                      3
<PAGE>   6



                     PC SERVICE SOURCE, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                             (DOLLARS IN THOUSANDS)
                                  (UNAUDITED)

(1)      BASIS OF PRESENTATION

         These unaudited condensed consolidated financial statements of PC
         Service Source, Inc. and Cyclix Engineering Corporation, its majority
         owned subsidiary (collectively, the "Company"), for the quarter ended
         June 30, 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, 1996. All
         significant intercompany balances and transactions have been
         eliminated in consolidation. In the opinion of management, all
         adjustments, (consisting 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)      REVOLVING LINE OF CREDIT

         In June 1997, the Company entered into a two year Revolving Bank
         Credit Facility providing for a line of credit of up to $20.0 million,
         which replaced a $16 million credit facility that was limited by a
         borrowing base of qualified inventory and eligible receivables.
         Advances under this facility bear interest at prime or LIBOR plus
         1.5%, at the Company's option under certain conditions, and a .25% per
         annum unused commitment fee is assessed on the average daily unused
         amount of the facility. The new credit agreement requires the Company
         to meet certain financial ratios and covenants, including minimum
         tangible net worth, fixed charge coverage and restrictions on funded
         debt and capital expenditures.

(3)      EARNINGS PER COMMON SHARE

         Earnings per common share are calculated based on the weighted average
         number of common shares and the dilutive effect of common equivalent
         shares, to the extent they are material.

(4)      SUPPLEMENTAL CASH FLOW INFORMATION

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

<TABLE>
<CAPTION>
                                                                            Six Months Ended
                                                                                June 30,
                                                                            -----------------
                                                                            1997         1996
                                                                            ----         ----

                  <S>                                                     <C>          <C>
                  Interest paid, net  ..............................      $   284       $  445
                  Income taxes paid (refunded), net ................          631         (150)
</TABLE>

         During the first six months of 1997 and 1996, the Company acquired
         $907 and $1,910 of assets through non-cash capital lease obligations.


                                      4

<PAGE>   7
                     PC SERVICE SOURCE, INC. AND SUBSIDIARY


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

RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
                                               Three Months Ended       Six Months Ended
                                                    June 30,                June 30,
                                               -----------------      ------------------
                                                1997        1996        1997        1996
                                               -----       -----      ------        ----
<S>                                         <C>           <C>         <C>         <C>
Net revenues ..........................        100.0%      100.0%      100.0%      100.0%

Cost of revenues ......................         70.1        69.0        71.2        70.1
                                              ------      ------      ------      ------
    Gross margin ......................         29.9        31.0        28.8        29.9
                                              ------      ------      ------      ------

Operating expenses:
    Selling, general and administrative         25.6        23.7        24.2        23.0
    Depreciation and amortization .....          2.5         1.9         2.4         1.8
                                              ------      ------      ------      ------
         Total operating expenses .....         28.1        25.6        26.6        24.8
                                              ------      ------      ------      ------

         Earnings from operations .....          1.8         5.4         2.2         5.1

Interest expense, net .................           .4          .9          .4          .9
                                              ------      ------      ------      ------
Earnings before income taxes ..........          1.4         4.5         1.8         4.2

Income tax expense ....................           .5         1.7          .7         1.5
                                              ------      ------      ------      ------
         Net earnings .................          0.9%        2.8%        1.1%        2.7%
                                              ======      ======      ======      ======
</TABLE>


THREE MONTHS ENDED JUNE 30, 1997 COMPARED TO THREE MONTHS ENDED JUNE 30, 1996

Net revenues increased by $4.9 million, or 18%, from $26.8 million for the
quarter ended June 30, 1996 to $31.7 million for the quarter ended June 30,
1997. The increase in revenues was primarily due to an expanded customer base,
the addition of value added services, such as internet ordering and warranty
processing, and more original equipment manufacturers ("OEM") outsourcing
arrangements. The additional OEM arrangements have allowed the Company to add
new customers as well as increase product lines.

The gross margin percentage as a percentage of net revenues decreased in the
second quarter of 1997 to 29.9% from 31.0% in the same period in 1996. The
Company's gross margin on each computer spare part in its inventory is
different; therefore, any change in the mix of parts sold effects the Company's
gross margin for a particular period. The decrease in gross margin for the
second quarter of 1997 was primarily a result of a margin oriented pricing
strategy initiated by the Company in the first quarter of 1997 which lowered
the average selling price on certain products offered by the Company and many
of its competitors.




                                      5
<PAGE>   8

                     PC SERVICE SOURCE, INC. AND SUBSIDIARY

Selling, general and administrative expenses ("SG&A") as a percentage of net
revenues increased to 25.6% in the second quarter of 1997 compared to 23.7% for
the same period of 1996. The increase as a percentage of net revenues was
primarily attributable to higher salary expenses for new employees and
occupancy expenses incurred in anticipation of servicing expected future
increase in revenues, including the new spare parts distribution contract with
Dell Computer Corporation which was signed in July 1997.

Depreciation and amortization increased as a percentage of net revenues to 2.5%
in the second quarter of 1997 compared to 1.9% in the same period of 1996. The
increase was due to a higher asset base in 1997 resulting from an increased
level of capital expenditures incurred by the Company relating largely to
hardware and software for internet, purchasing and warranty system
applications.

Interest expense (net) as a percentage of net revenues decreased to .4% during
the second quarter of 1997 from .9% during the same period of 1996 due to lower
average outstanding balances on the Company's revolving line of credit during
the second quarter of 1997.

The Company recorded net earnings of $271,000, or $.05 per common share, on
5,878,000 shares for the second quarter of 1997, compared with net earnings of
$759,000, or $.16 per common share, on 4,850,000 shares for the same period in
1996. As a result of lower than expected business volumes, Cyclix adversely
impacted earnings in the second quarter of 1997 with a $157,000 loss compared
to a $108,000 loss in the 1996 period. This loss combined with the items
discussed above constitutes the reduction in net earnings from 1996 to 1997.

SIX MONTHS ENDED JUNE 30, 1997 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1996

Net revenues increased by $11.1 million, or 21%, from $53 million for the first
six months of 1996, to $64.1 million for the first six months of 1997. The
increase in revenues for the first six months of 1997 is attributable to the
reasons set forth above in the three month discussion.

The gross margin percentage as a percentage of net revenues decreased in the
first six months of 1997 to 28.8% from 29.9% in the same period in 1996. The
decrease in the gross margin for the first six months of 1997 was primarily due
to the margin oriented pricing strategy as discussed above.

SG&A as a percentage of net revenues increased to 24.2% in the first six months
of 1997 compared to 23.0% in the same period of 1996. The increase in SG&A for
the first six months is due to the same reasons discussed above.

Depreciation and amortization increased as a percentage of net revenues to 2.4%
in the first six months of 1997 compared to 1.8% in the same period of 1996.
The increase was due to a higher asset base in 1997 resulting from an increased
level of capital expenditures incurred by the Company relating largely to
hardware and software for internet, purchasing and warranty system
applications.


                                      6
<PAGE>   9



                     PC SERVICE SOURCE, INC. AND SUBSIDIARY


Interest expense (net) as a percentage of net revenues decreased to .4% during
the first six months of 1997 from .9% during the same period of 1996 due to
lower average outstanding balances on the Company's revolving line of credit
during the 1997 period.

The Company recorded net earnings of $718,000 or $.12 per common share, on
5,882,000 shares for the first six months of 1997 compared with net earnings of
$1,413,000 or $.30 per common share, on 4,634,000 shares for the same period in
1996. Cyclix experienced a $310,000 loss during the first six months of 1997,
compared to a loss of $178,000 in the comparable 1996 period. After entering
into service arrangements with OEMs during the first quarter of 1996, Cyclix
hired additional personnel to service new business Cyclix was to have received
under the terms of those service arrangements. Unfortunately, Cyclix did not
receive the volume of new business anticipated. High SG&A expenses in addition
to the loss incurred by Cyclix significantly impacted net earnings.

LIQUIDITY AND CAPITAL RESOURCES

On June 20, 1997, the Company entered into a new revolving bank line of credit,
which increased its borrowing capacity to $20.0 million. At June 30, 1997, the
Company had $3.9 million outstanding which provides for an available borrowing
capacity of $16.1 million. Further, the Company currently has financing
agreements in place for 1997 that allow for the acquisition of $2.5 million of
capital assets through leasing arrangements. During the first six months of
1997, the Company acquired $.9 million through these capital lease
arrangements.

The Company has historically financed its working capital requirements and its
capital expenditures from its revolving bank credit facility, financing
agreements, equity financing and internally generated funds. Cash used in
operating activities was $1.1 million compared with $4.7 million for the first
six months of 1996. The decrease in cash used by operations in the 1997 period
was primarily due to lower working capital requirements as a result of improved
operating efficiencies experienced through inventory management.

During January 1997, the Company acquired a 19.5% equity interest in a service
parts and logistics company in the United Kingdom for approximately $332,000.

Capital expenditures, including capital assets acquired through leasing
arrangements, totaled $3.4 million for the first six months of 1997 compared
with $2.7 million in 1996. Expenditures in the 1997 period were primarily used
for improvements and modifications to the Company's information systems.

The Company believes the cash generated from operations, revolving bank credit
facility and equipment financing agreements will be sufficient to meet its 1997
working capital and capital expenditure requirements.



                                      7
<PAGE>   10

                     PC SERVICE SOURCE, INC. AND SUBSIDIARY


EFFECTS OF INFLATION

The Company believes that the effects of inflation on its operations have not
been material during the past two years.

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; and the quality of the
Company's plans and strategies, and the ability of the Company to execute such
plans and strategies.

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 does not plan to generally
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.



                                      8
<PAGE>   11



                     PC SERVICE SOURCE, INC. AND SUBSIDIARY
                           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>
           27             Financial Data Schedule

         B. REPORTS ON FORM 8-K

         No reports on Form 8-K have been filed by the Registrant during the
         three (3) months ended June 30, 1997.
</TABLE>




                                      9

<PAGE>   12



                     PC SERVICE SOURCE, INC. AND SUBSIDIARY


                                   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)



August 13, 1997                      /s/ Danny G. Hair
                                     --------------------------
                                         Danny G. Hair
                                         Senior Vice President and Chief
                                           Financial Officer (Principal 
                                           Financial Officer)





                                      10

<PAGE>   13



                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>

EXHIBIT
  NO.             DESCRIPTION
-------           -----------
   <S>            <C>   
    27            Financial Data Schedule
</TABLE>



                                      11