<PAGE>  1

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    Form 10-K

  X      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE
____     ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

         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

                                     0-21796

                           CDW Computer Centers, Inc.
             (Exact name of registrant as specified in its charter)
              Illinois                                       36-3310735
    (State or other jurisdiction of                       (I.R.S. Employer
     incorporation or organization)                      Identification No.)

                             200 N. Milwaukee Ave.,
                          Vernon Hills, Illinois 60061
               (Address of principal executive offices) (Zip Code)

       Registrant's telephone number, including area code : (847) 465-6000
--------------------------------------------------------------------------------
          Securities registered pursuant to Section 12(b) of the Act :

Title of each class                    Name of each exchange on which registered
-------------------                    -----------------------------------------
       None                                             N/A

          Securities registered pursuant to Section 12 (g) of the Act :
                                  Common Stock
                                  ------------

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

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

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

                              -------

The  aggregate  market  value of the Common Stock held by  non-affiliates  as of
March 2, 2000 was approximately $1.333 billion,  based upon the market price per
share of $59.50.

As of March 3, 2000, the registrant had 43,317,973 shares of Common Stock, $0.01
par value, outstanding.

<PAGE> 2

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the following documents are incorporated by reference into the parts
of this Form 10-K designated to the right of the document listed.

Incorporated Document                          Location in Form 10-K

Definitive Proxy Statement for                 Part III, Items 10, 11, 12 and 13
Annual Meeting of Shareholders to be
held on May 24, 2000, to be filed
pursuant to Regulation 14 A not
later than April 30, 2000.

An Index to Exhibits appears at pages          Part IV, Item 14
19 - 21 herein




















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<PAGE> 3

                           CDW COMPUTER CENTERS, INC.

                          1999 FORM 10-K ANNUAL REPORT

                      FOR THE YEAR ENDED DECEMBER 31, 1999

                                      INDEX

                                     PART I                         10-K Page No

Item 1.              Business . . . . . . . . . . . . . . . . . . . . . . . . .1

Item 2.              Properties  . . . . . . . . . . . . . . . . . . . . . . . 9

Item 3.              Legal Proceedings  . . . . . . . . . . . .  . . . . . . . 9

Item 4.              Submission of Matters to a Vote of Security Holders . . . 9


                                     PART II

Item 5.              Market for Registrant's Common Equity and Related
                     Stockholder Matters . . . . . . . . . . . . . . . . . . .10

Item 6.              Selected Financial Data . . . . . . . . . . . . . . . .  11

Item 7.              Management's Discussion and Analysis of Financial Condition
                     and Results of Operations .  . . . . . . . . . . . . . . 12

Item 7A.             Quantitative and Qualitative Disclosure About
                     Market Risk. . . . . . . . . . . . . . . . . . . .. . . .18

Item 8.              Financial Statements and Supplementary Data . . . . . . .18

Item 9.              Changes in and Disagreements with Accountants on
                     Accounting and Financial  Disclosure  . . . . . . . . . .18


                                    PART III

Item 10.             Directors and Executive Officers of the Registrant. . . .18

Item 11.             Executive Compensation . . . . . . . . . . . . . . . . . 19

Item 12.             Security Ownership of Certain Beneficial Owners
                     and Management . . . . . . . . . . . . . . . . . . . . . 19

Item 13.             Certain Relationships and Related Transactions . . . . . 19


                                     PART IV

Item 14.             Exhibits, Financial Statement Schedule and Reports
                     on Form 8-K. . . . . . . . . . . . . . . .  . . . . . . .19

Signatures           . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22




                                       ii

<PAGE> 4

                                     PART I

Item 1.       Business.

General

     CDW Computer Centers, Inc. and its Subsidiaries  (collectively 'CDW' or the
"Company") is a leading direct marketer of microcomputer products,  primarily to
business,  government,  educational,  institutional and home office users in the
United  States.  The Company  sells a broad range of  multi-brand  microcomputer
products, including hardware and peripherals, software, networking/communication
products and accessories through  knowledgeable  sales account managers.  In May
1998,  the  Company  formed  CDW  Government,   Inc.  (CDW-G),  a  wholly  owned
subsidiary. CDW-G sells microcomputer products and related software, peripherals
and  accessories and focuses  exclusively on serving  government and educational
accounts. In April 1999, CDW Capital Corporation,  a wholly-owned  subsidiary of
CDW  established  in 1999, and First  Portland  Corporation  formed CDW Leasing,
L.L.C. ("CDW-L"), a 50/50 joint venture. CDW-L provides captive leasing services
to CDW customers.  The Company offers popular brand name microcomputer  products
from Apple, Canon, Cisco, Compaq, Computer Associates,  Epson,  Hewlett-Packard,
IBM, Intel, Lotus,  Microsoft,  NEC, Novell, Toshiba and 3Com, among others. The
Company's high volume,  cost-efficient  operation,  supported by its proprietary
information   technology  systems,   enables  it  to  offer  these  products  at
competitive prices combined with a high level of service.

     The Company  directs its marketing  efforts toward current and  prospective
customers with a particular focus on commercial  accounts,  including  business,
government, educational and institutional users. The Company believes that these
entities and persons have a high level of product  knowledge and are most likely
to purchase sophisticated systems and products on a repetitive basis through the
Company's direct marketing format. The Company markets to prospective  customers
through  its  catalog  and  other  direct  mailing  programs,  through  national
advertising  in computer  magazines  and  through  electronic  commerce  via the
Internet.  During  the year  ended  December  31,  1999,  the  Company  serviced
approximately  285,000  commercial  accounts which comprised 93% of total sales.
The  Company  continues  to focus  on  generating  repeat  sales  from  existing
customers  while   attracting   sales  from  new  customers.   The  Company  has
consistently  maintained  a high annual rate of repeat  purchases  from  current
customers by offering  excellent  customer service and competitive  pricing on a
broad range of microcomputer  products. The Company enhances repeat purchases by
offering  add-on and  replacement  products  through its  relationship  oriented
account managers who are knowledgeable about a customer's needs.

     Additionally,  the Company  focuses  significant  efforts on developing and
expanding its  E-business  initiatives.  The Company's  strategy is to implement
E-business  initiatives  that are an  extension  of its "high tech,  high touch"
relationship  based  business  model.  These  initiatives  include the Company's
Internet website,  www.cdw.com,  and cdw@work which provides customized websites
for  commercial  customers.  Details of these  initiatives  are  included in the
section titled www.cdw.com below.

The Microcomputer Products Industry Evolution

     The microcomputer  industry has evolved as a result of, among other things,
the development of new  technologies  that have been translated by manufacturers
into new products and applications. The Company has been and will continue to be
dependent on the continued  development of new  technologies and products by its
vendors, including but not limited to Cisco, Compaq, Hewlett Packard, IBM, Intel
and Microsoft,  as well as the acceptance of such  technologies and new products
by end-users.  A decrease in the rate of development of new technologies and new
products by  manufacturers,  or the lack of acceptance of such  technologies and
products by  end-users,  could have a material  adverse  effect on the Company's
growth prospects and results of operations.

                                        1

<PAGE> 5

     The sophistication and value  consciousness of the Company's customer base,
combined with the evolution of industry standards for  microcomputers,  has also
resulted in heightened end-user interest in, and acceptance of,  microcomputers,
peripherals and software which use the Microsoft operating  platform,  and other
operating platforms offered by the Company, and are manufactured by high quality
manufacturers.  In addition,  the intense  competition  among  manufacturers has
generally reduced prices and increased the number of microcomputers  and related
products  being used by businesses  and sold by direct  marketing  organizations
such as CDW. The Company  believes that its business  model,  which promotes the
sale of high quality,  brand name products at competitive prices combined with a
high  level of  personal  and  technical  service,  is well  suited  to serve an
increasingly sophisticated and value conscious customer base.

Competition

     The  microcomputer  products  industry is highly  competitive.  The Company
competes  with a large  number and variety of  resellers  of  microcomputer  and
related products as well as manufacturers that sell direct to customers.  In the
hardware   category,   the  Company  competes  with  traditional   microcomputer
retailers,   computer   superstores,   consumer  electronic  and  office  supply
superstores, mass merchandisers,  national direct marketers, Internet retailers,
corporate resellers and value-added  resellers.  In the software and accessories
categories,  the Company generally competes with these same resellers as well as
specialty  retailers  and  resellers.  In  addition,  as a result  of  improving
technology,  certain software  manufacturers  have developed and may continue to
develop sales  methods that allow  customers to download  software  programs and
packages  directly onto the  customer's  system through the use of the Internet.
The Company also  competes  with  manufacturers  that sell hardware and software
directly to certain  customers.  Several  manufacturers that sell product to the
Company for resale have  initiated or expanded their efforts to sell directly to
end users. Several of the Company's current and potential competitors are larger
and have substantially greater resources than the Company. Additionally, several
competitors in the direct marketing and Internet commerce industries have raised
capital in the public markets through initial and subsequent  public  offerings.
The  increased  visibility  of these  companies  and their access to the capital
markets may improve their market  position and their ability to compete with the
Company.  Although the Company offers products for sale via electronic commerce,
there can be no assurance that the Company's sales via electronic  commerce will
meet or exceed sales levels generated by competitors. As competition intensifies
the  Company  intends  to  improve  the  value-added  service  provided  to  its
customers,strengthen  its  customer  relationships  and  broaden  its  marketing
activities.  If the Company's  efforts are not successful  the Company's  growth
rates and operating margins could be negatively impacted.

     The current industry configuration, including the proliferation of Internet
resellers  with  access to  capital  markets,  may result in  increased  pricing
pressures.  Decreasing prices of microcomputers and related products,  resulting
in part from  technological  changes,  may require the Company to sell a greater
number of products to achieve the same level of net sales and gross profit. Such
a trend could make it more difficult for the Company to continue to increase its
net sales and earnings growth. In addition,  if the growth rate of microcomputer
sales were to slow down,  the  Company's  operating  results  could be adversely
affected.

The CDW Philosophy

     The  Company  adheres  to a central  philosophy  known as the CDW CIRCLE OF
SERVICE which places the customer at the center of all of the Company's actions.
The philosophy is based upon the premise,  promoted by management,  that "People
Do  Business  With  People  They  Like."  The CDW CIRCLE OF SERVICE is a graphic
reminder  to the  Company  and its  personnel  that good  service  leads to good
experiences and increased sales, and,  alternatively,  that bad experiences lead
to lost sales and job uncertainty.

Business Strategy

     The  Company's  business  strategy is to be a high  volume,  cost-efficient
direct solutions provider of multi-brand,  competitively  priced,  microcomputer
products and to provide a high level of customer service. The

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<PAGE> 6

Company  believes that the following factors are of principal  importance in its
ability to implement this "high tech, high touch" business strategy:

     Breadth and Depth of Selection. The Company offers a wide range of products
from  many  manufacturers,  providing  its  customers  with the  convenience  of
one-stop  shopping for their  microcomputer-related  needs.  The Company carries
brand name  products  and  regularly  reviews  and  modifies  its mix of product
offerings.

     Commercial  Customer  Focus.  The Company focuses the majority of its sales
and marketing  efforts on attracting and servicing  commercial  customers rather
than individual or consumer users.  Commercial  customers  includes  businesses,
government  and  institutional   customers.   The  Company  believes  commercial
customers  provide a higher rate of repeat sales at volume  levels as opposed to
the low volume  typically  experienced  with  consumer  sales.  In 1999,sales to
commercial  customers  comprised 93% of sales  revenue,  an increase from 88% in
1998.

     Competitive   Pricing.   The  Company   believes   that  its  high  volume,
cost-efficient  direct  marketing  format  allows it to  provide a high level of
value added service to its customers with competitive pricing.

     Marketing.  The Company uses a marketing mix of direct response activities,
including its catalog  formats and trade  magazine  advertising  combined with a
multifaceted branding campaign. These activities are intended to create customer
response  and a  high  level  of  awareness  of  CDW.  The  Company's  marketing
activities  are  directed  to  commercial  users  and  the  decision  makers  in
commercial organizations.

     Sales. The Company has adopted a relationship  oriented sales approach with
a high level of technical and skill based training for its account managers. New
account managers function in a corporate development mode designed to target and
develop a steady customer base.

     Customer  Service  - Custom  Configuration  and  Technical  Support.  As of
December 31, 1999, the Company custom configures  approximately  4,000 units per
week and ships the  majority  of its  orders  the day the order is  placed.  The
Company  offers  technical  support by telephone  for the life of the product 24
hours a day, seven days a week. The Company  employs a technical staff with over
200 manufacturer  certifications to assist the customer with technical questions
and issues.  The Company  believes that its commitment to service at the time of
sale and after the purchase maximizes sales and encourages repeat customers.

     Information Technology. The Company uses proprietary, real-time information
technology  systems  which  centralize  management of key functions and generate
daily  operating  control  reports  enabling  management to identify and respond
quickly to  internal  changes  and trends in the  industry  and to provide  high
levels of customer  satisfaction.  The Company  integrates its real-time systems
with www.cdw.com,  its Internet website, providing real-time information for its
customers.

     Effective Inventory Control. The Company's management  information systems,
"just-in-time"  purchasing  system,  radio frequency based cycle counting system
and use of vendor stock  balancing  and price  protection  programs  allow it to
minimize its investment in inventory,  reduce  inventory  discrepancies  and the
risk of obsolescence while meeting customer needs. These systems resulted in the
Company achieving approximately 23 inventory turns during 1999.

     High Quality Personnel. The Company strives to attract, retain and motivate
high quality  personnel and provides its  coworkers  with  financial  incentives
designed to maximize  performance and productivity.  The Company and Mr. Krasny,
its majority shareholder, Chairman and CEO, have instituted short-term incentive
programs and stock-based compensation programs to reward and motivate all of the
Company's coworkers.  In 1999, the Company established an on-site child care and
fitness center facility on its Vernon Hills,  Illinois,  campus as an additional
coworker benefit.

                                       3

<PAGE> 7

Merchandise

     The  Company  offers   microcomputer   products   including   hardware  and
peripherals, software, networking and communication products and accessories for
use with  microcomputers  based on a variety of  operating  platforms  including
Microsoft,  Apple, Linux,  Novel, Oracle and others. The Company's  just-in-time
purchasing  system and aggressive  inventory  management  allows it to limit its
on-hand inventory and ship orders generally on a same-day basis.

     The following is a listing of selected hardware and peripheral and software
manufacturers:

<TABLE>
<CAPTION>

         Product Categories                        Selected Product Manufacturers
         ------------------                        ------------------------------
<S>                          <C>                 <C>                 <C>            <C>
Hardware and Peripherals:
                              3Com                Fujitsu             Maxell         Seagate
                              3M                  Hewlett-Packard     Maxtor         Simple
                              Acer                IBM                 Memorex        SMC
                              Adaptec             Imation             Microtek       Sony
                              APC                 Infocus             Minolta        Targus
                              Apple               Intel               NEC            TDK
                              ATI                 Iomega              Netgear        Tectronix
                              Belkin              Kingston            Nikon          Toshiba
                              Canon               Kodak               Okidata        Tripp Lite
                              Cisco               Lexmark             Olympus        Verbatim
                              Compaq              Linksys             Palm           Viewsonic
                              Creative Labs       Logitech            Philips        Visiontek
                              CTX                 Lucent              Princeton      Western Digital
                                                                      Graphics
                              Epson               Magnavox            Quantum        Yamaha

Software:
                             Adobe                Intuit              Network        Red Hat
                                                                      Associates
                             Borland              Lotus               Novell         Seagate
                             Computer Associates  Macromedia          Oracle         Symantec
                             Corel                Microsoft           Quark          Visio

</TABLE>

     The Company  continually seeks to expand and improve its relationships with
manufacturers  as well as increase the number of products which it is authorized
to sell.

Purchasing and Vendor Selection; Inventory Management

     The Company  believes  that  effective  purchasing  is a key element of its
business  strategy of providing name brand products at competitive  prices.  The
Company's  purchasing staff works to identify reliable high quality suppliers of
products,  then actively  negotiates  to decrease the Company's  cost and expand
vendor support programs,  permitting the Company to improve the  competitiveness
of  selling  prices of its  products.  The  Company  seeks to  establish  strong
relationships  with its vendors,  and employs a policy of paying  vendors within
terms stated and taking advantage of all appropriate discounts.

     During  1999,  CDW  purchased  approximately  62% of its  merchandise  from
distributors  and  aggregators  and  the  balance  direct  from   manufacturers,
substantially all of which ship directly to the Company's distribution facility.
Products  purchased  through  distributors  and aggregators are a combination of
products

                                       4

<PAGE> 8

which are only sold by the manufacturers  through distribution and products that
are acquired as part of the Company's just-in-time purchasing model. The Company
is generally  authorized by  manufacturers  to sell via direct  marketing all or
selected products offered by the manufacturer.  The Company's authorization with
each manufacturer  provides for certain terms and conditions,  which may include
one or  more of the  following:  product  return  privileges,  price  protection
policies,  purchase  discounts and vendor support programs,  such as purchase or
sales rebates and cooperative advertising reimbursements. The Company's business
and results of operations may be adversely  affected if the terms and conditions
of the  Company's  authorizations  were  significantly  modified  or if  certain
products  become  unavailable  to the Company,  whether such  unavailability  is
because the manufacturer  terminates the Company's  authorization or the product
is subject to  allocation  or  otherwise.  Vendor  support  programs  are at the
discretion of the  manufacturers and usually require achieving a specified sales
volume or growth rate to qualify for all, or some, of the incentive program.

     For the year  ended  December  31,  1999,  Tech Data,  Ingram  Micro/Ingram
Alliance and Merisel were the only vendors from whom  purchases  exceeded 10% of
total purchases.  Additionally, in 1999 Compaq and Hewlett Packard products each
comprised  more  than  10% of  total  Company  sales.  The  loss of any of these
vendors, or any other key vendors, could have an adverse effect on the Company.

     The Company  believes  that the Chicago  metropolitan  area is an excellent
location for its  business as it is  centrally  located for purposes of shipping
products  throughout  the  United  States  and  provides  same day access to its
principal distributors and aggregators,  including Ingram Micro/Ingram Alliance,
Merisel,  and Tech Data.  The  relocation  of key  distributors  utilized in the
Company's  just-in-time  purchasing  model could adversely  impact the Company's
results  of  operations.  Although  brand  names  and  individual  products  are
important to the  Company's  business,  the Company  believes  that  competitive
sources  of  supply  are  available  in  substantially  all of  the  merchandise
categories the Company carries.

     CDW also applies its proprietary information technology systems to the task
of managing  its  inventory.  At December 31, 1999,  the Company  maintained  an
investment in inventory of approximately  $126 million with  approximately  $1.1
million of inventory on hand over 90 days old. The Company  turned its inventory
approximately 23 times during 1999.

Marketing and Advertising Activities

     The  Company  utilizes  a variety of  advertising  and  marketing  media to
attract and retain customers, including national advertising in computer related
publications, catalogs and certain other direct marketing activities, as well as
electronic  marketing  via the  Internet.  In 1999,  the Company  continued  the
national  branding  campaign it initiated in 1998 which includes  national print
media, national cable television advertisements and other activities. Due to its
relationships  with its product  suppliers and others, a substantial  portion of
its  advertising  and  marketing  expenses are  reimbursed  through  cooperative
advertising  reimbursement programs.  These cooperative advertising programs are
at the  discretion  of the Company's  vendors and are typically  tied to certain
purchasing volumes and other commitments  required by the Company. The Company's
approach to its marketing and  advertising  activities is proprietary in nature,
as is its  strategy in  managing  its files of  current,  prior and  prospective
customers.  In order to measure the  effectiveness of its marketing  activities,
the Company tracks responses to its various efforts by a variety of means.  This
information  is used to further  refine its strategy and develop more  effective
programs in the future.

www.cdw.com

     The  Company's  Internet  strategy,  executed  through  www.cdw.com,  is to
utilize the web as an extension of its "high tech,  high touch"  business model.
The  Company's  objective  is to make it easy  for  its  customers  to  transact
business and ultimately  enhance customer  relationships.  The web site includes
many advanced  features to attract new customers  and produce  sales,  including
more than 50,000 computer products to search

                                       5

<PAGE> 9
and order on-line, advanced search capabilities,  product specifications on over
25,000 products,  product  availability and pricing. It also offers side-by-side
product  comparisons,   links  to  product  reviews,  newsworthy  announcements,
personalized  access and customized two-way interaction that allows for checking
order  status at will.  CDW has  expanded  its  successful  www.cdw.com  site to
include  CDW@work,  a customized,  secure extranet site for business  customers.
CDW@work allows  customers to track order status,  manage current assets,  order
configured  systems,  obtain purchase history and get access to up-to-the-minute
availability of their dedicated CDW account team. In addition,  the Company has,
through  its  excellent  relations  with  vendors,  arranged  for links  between
vendors'  web sites and the  Company's.  The Company  believes the website is an
excellent   complement  to  its  business  model,   providing   information  and
convenience  for its  customers,  while also  serving as another  source for new
customers.  During 1999, the Company  generated $163.4 million of direct on-line
sales over its web site,  of which  $9.9  million  were  generated  by  CDW@work
extranet sites.  Many customers use  www.cdw.com to gather product  information,
pricing and  availability and follow up with their account manager to access the
account  manager's  knowledge base  regarding  product  compatibility  and other
information.  Many of these customers  ultimately  place their orders with their
account manager rather than using www.cdw.com.


Sales Activities and Order Fulfillment

     The  Company's  success  is due in  part  to the  strength  of its  account
managers who manage customer  relationships by responding to customer  inquiries
and  proactively  calling  existing and potential new  customers.  The Company's
account  managers are trained in Company systems and  philosophies,  are product
knowledgeable  and  motivated  to  maximize  sales and  provide  high  levels of
customer  service.  All account  managers are graduates of CDW  University,  the
Company's proprietary sales training program. The program includes four weeks of
classroom  training  followed by several weeks of sales experience in one of the
Company's retail showrooms, followed by one month of training on the phones. CDW
seeks to build  customer  relations  by assigning  each  customer to the account
manager who first  services  the  customer.  Upon  subsequent  calls to CDW, the
customer is directed to their account manager for  assistance.  In the spirit of
teamwork,  account  managers are  encouraged  to cooperate  and work together to
maximize sales and customer satisfaction.

     Each catalog and advertisement distributed by the Company bears a toll-free
number  to be used by  customers  in  phoning  CDW to  place  a  product  order.
Telephone calls are answered by account  managers who utilize  on-line  computer
terminals to retrieve information  regarding product  characteristics,  cost and
availability and to enter customer orders. Account managers enter orders on-line
into a  computerized  order  fulfillment  system  which  updates  the  Company's
customer   purchase  history.   Computer   processing  of  orders  is  performed
immediately  following  the  placement  of the order and upon  receipt of credit
approval.  The Company ships most credit  approved orders received by 9:00 p.m.,
exclusive of orders for products  not in stock or subject to  allocation  by the
manufacturer,  on the day the order was received.  Orders are shipped by Federal
Express,  Airborne  Express,  RPS,  Chicago  Messenger  Service,  United  Parcel
Service,  U.S. Mail,  common carrier or any other acceptable manner requested by
the  customer.  The  Company  charges  customers  for  shipping  but  may  offer
promotional  shipping  programs from time to time. The average  invoice size was
$918 in 1999 and $780 in 1998.

     CDW account  managers are  generally  compensated  pursuant to a commission
schedule  based upon the gross profit  generated by them.  CDW account  managers
have the authority to negotiate  and adjust  prices for products,  provided that
the  account  manager  sells the  product  at a price  which  meets  established
management  guidelines.  The Company's  account managers have the opportunity to
achieve  relatively  high  compensation   levels  and  have  historically  shown
increased productivity as training and experience levels increase.

Customers

     CDW  currently  maintains  a  database  of  over  3.8  million  active  and
prospective names of which approximately 588,000 were serviced by the Company in
1999,  including  285,000  commercial  customers.

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<PAGE> 10

The Company  believes  that its customers  consist  principally  of  businesses,
government  institutions  and  home  business  users,  which  tend  to  purchase
higher-end  equipment.  For the year ended December 31, 1999, sales to business,
government and  institutional  customers  accounted for approximately 93% of the
Company's net sales.

     CDW's customers are located  principally  throughout the United States.  In
1999,  approximately  20% of the Company's net sales were  generated by sales to
customers  in  Illinois,  approximately  30% were  generated to customers in the
eastern United States, approximately 15% were generated by sales to customers in
the  southern  United  States,  approximately  21%  were  generated  by sales to
customers in the western United States and  approximately  14% were generated by
sales to residents of the Midwestern  United States (other than Illinois).  Less
than 1% of sales were made to customers outside the United States.

Custom Configuration and Technical Support

     The Company offers custom configuration  services including installation of
accessories or expansion products,  software loading,  network configuration and
custom  application  loading.  During 1999, the Company's  custom  configuration
center  processed  approximately  171,000 custom  configured  units. The Company
employs a technical  staff that is trained and maintains  the highest  levels of
professional   certification  from  manufacturers   including  that  of  'Novell
Certified Network Engineer' and 'Certified  Microsoft  Engineer'.  The Company's
trained  technical  support personnel are available by telephone 24 hours a day,
seven days a week to assist the customer with technical problems or questions in
order to reduce  product  returns and increase  customer  satisfaction.  CDW has
developed  a  proprietary  customer  service  tracking  system  to  ensure  that
customer-initiated service requests are responded to rapidly.

Information Technology Systems

     CDW has installed and operates  customized  information  technology systems
based upon IBM AS/400,  Microsoft NT, Lucent and other platforms.  Collectively,
these  systems allow for  centralized  management  of key  functions,  including
inventory   and   accounts   receivable   management,   purchasing,   sales  and
distribution,  and the  preparation  of daily  operating  control  reports which
provide  concise and timely  information  regarding key aspects of the business.
The Company's proprietary  information  technology systems enable the Company to
enhance its  productivity,  ship customer  orders on a same-day  basis,  respond
quickly to changes in its industry and provide high levels of customer service.

     The Company's  success is dependent on the accuracy and proper  utilization
of its information  technology  systems,  including its telephone  systems.  The
Company's ability to manage its inventory and accounts  receivable  collections;
to purchase,  sell and ship its products  efficiently and on a timely basis; and
to maintain  its  cost-efficient  operation  is  dependent  upon the quality and
utilization of the information generated by its information  technology systems.
In that  regard,  the  Company  anticipates  that it will  continue  to  require
software and hardware upgrades for its present  information  technology systems.
In  addition,  the ability of the Company to adapt its systems to changes in the
competitive  environment  or to  take  advantage  of  additional  automation  is
dependent upon its ability to recruit and retain qualified IT professionals.  If
the  Company  were  unable to develop or  purchase  future  enhancements  to its
information  technology  hardware  or  software,  or continue to hire and retain
qualified IT professionals,  the Company's  operating results could be adversely
affected.  See Management's  Discussion and Analysis of Financial  Condition and
Results of  Operations  for  information  regarding  the impact of the Year 2000
issue on the Company's business.

     The Company's entire information technology system is located at its Vernon
Hills  campus.  The  integrity of the system is  vulnerable  to certain forms of
disaster including, but not limited to, natural disasters such as tornadoes. The
Company has  established  a disaster  recovery  plan which will utilize a backup
system for its  information  technology  and  telephones.  The  hardware for the
backup system is currently  being  installed at the new sales office  located in
downtown Chicago and will be operational in the second quarter of 2000.

                                       7

<PAGE> 11

Personnel and Training

     At December 31, 1999, the Company employed 1,937 coworkers. Of these, 1,563
were employed at the Company's  headquarters in Vernon Hills,  Illinois, 39 were
employed  at the  Company's  retail  showroom  in  Chicago,  Illinois,  321 were
employed at the Buffalo  Grove,  Illinois sales facility and 14 were employed at
the government sales office in Chantilly,  Virginia.  The Company  considers its
coworker  relations  to be  excellent.  The  Company's  level of net  sales  per
coworker  increased  approximately  5.0% to $1.46 million in 1999 as compared to
$1.39  million  in 1998.  No  coworkers  are  covered by  collective  bargaining
agreements.

     CDW emphasizes  the recruiting and training of high quality  personnel and,
to the extent possible, promotes people to positions of increased responsibility
from within the Company.  Each coworker initially receives training  appropriate
for his or her  position  and a complete  CDW  orientation.  This is followed by
varying  levels of  training in  information  technology.  New account  managers
participate in an intensive  four-week long classroom  training program known as
'CDW University,'  followed by hands-on,  face-to-face  showroom training during
which  time  they are  introduced  to the  Company's  philosophy,  systems,  and
products  and  services.  Finally,  the  account  managers  receive one month of
training while working on the  telephones.  Training for specific  product lines
and continuing  education  programs for all account managers are conducted on an
ongoing  basis,  supplemented  by vendor  sponsored  training  programs  for all
account managers and technical support personnel.

     During 1999, the Company  initiated a company-wide  training program called
L.E.A.D.  (Leadership,   Excellence,   Attitude,   Development)  which  provides
professional  development  training to all  coworkers.  The  program  includes a
series  of   instructional   courses   taught  by  CDW   personnel  and  outside
professionals  based on professional  development themes including areas such as
communication  skills and coaching for the Company's managers.  The Company also
offers  Internet based online training  (L.E.A.D.  Online) for all its coworkers
with a course library of 181 courses relating to professional development.

Incentive and Regular Compensation Arrangements

     Compensation   Arrangements.   The   Company's   coworkers   are  generally
compensated  on  a  basis  that  rewards  performance  and  the  achievement  of
identified goals. For example, account managers receive compensation pursuant to
a  commission  schedule  which is based upon  aggregate  gross  profit  dollars,
accounts receivable  personnel are eligible for monthly bonuses if late balances
are held below target levels, and operations  personnel are eligible for monthly
bonuses based upon such factors as prompt vendor  returns and order  fulfillment
rates.  The  Company  believes  that  these  incentives  positively  impact  its
performance and profitability.

     Coworker  Incentive  Stock Option,  MPK Stock Option and  Restricted  Stock
Plans.  In  addition  to  regular  compensation,  the  Company,  and Mr.  Krasny
individually,  provide Company  coworkers with additional  long-term  incentives
designed to maximize performance and productivity.  To this end, the Company and
Mr.  Krasny have adopted  various  stock-based  compensation  plans which enable
Company coworkers to share in the success of the Company through appreciation in
the value of the Company's stock.

Retail Showrooms

     The Company currently  operates two retail showrooms  allowing customers an
opportunity  to examine  products prior to purchase or to talk directly with CDW
sales or technical personnel.  One showroom is located within the Company's main
distribution facility and headquarters in Vernon Hills,  Illinois, and the other
is located in downtown Chicago,  Illinois.  These showrooms occupy approximately
5,100 square feet each.

     The Company's retail showrooms,  which generated  approximately 4.1% of the
Company's net sales for 1999, inclusive of orders placed by telephone and picked
up at the retail showroom,  provide an environment in which to further train the
Company's account managers before they join its sales department.

                                       8

<PAGE> 12

Trademarks

     The Company  conducts its business  under the trade names and service marks
"CDW",  "Computer Discount Warehouse",  "CDW-G",  "CDW@work"  ,"CDW-L",  "Direct
Solutions  Provider" and "Computing  Solutions Built for Business".  The Company
has taken steps to  register  and protect  these  marks and  believes  they have
significant value and are important factors in its marketing programs.

Item 2.       Properties.

     The  Company's  primary  location  and  headquarters  is in  Vernon  Hills,
Illinois,  and includes its main  distribution  center,  sales office,  a retail
showroom and corporate  offices.  The facility  consists of a combined  total of
approximately  200,000 square feet of warehouse space and 125,000 square feet of
office space, and is located on approximately 27 acres of land. The Company owns
a total of 45 acres of land at the Vernon Hills site, of which  approximately 17
are vacant and available for future  expansion.  The  Company's  Chicago  retail
showroom is under lease through June 2001.

     The Company is obligated under a lease through 2004 for a combined  104,000
square  foot office and  warehouse  facility in Buffalo  Grove,  Illinois,  that
previously  served as its main facility.  In October 1998, the Company  reopened
the office  portion of the Buffalo  Grove  facility as a sales  office.  In June
1999,  the Company  sublet the  warehouse  and showroom  portions of the Buffalo
Grove facility to a third party through December 2003. However,  the third party
sublessee  filed a Chapter 11 petition for  reorganization  under the bankruptcy
laws in  August  1999,  and  subsequently  decided  to  liquidate  the  business
operating from the sublet space. As a result of the  liquidation,  the sublessee
is not likely to affirm or complete the lease.  If the lease is terminated,  the
Company will  reevaluate  the future use of the  warehouse  space and adjust the
remaining exit liability as necessary depending on whether the Company pursues a
new sublease,  uses the space for its operations or leaves the space vacant. See
Note 7 of Notes to Consolidated Financial Statements.

     In October 1999, the Company  executed an operating lease agreement for two
floors of office space  totaling  approximately  72,000  square feet in Chicago,
Illinois. The Company plans to establish a sales office in the facility with the
lease  commencing  for one floor on April 1, 2000,  and for the second  floor on
September 1, 2000.  The lease provides a ten year term,  with certain  expansion
and renewal options.

     The Company plans to construct a second  warehouse on  approximately 6 to 8
acres of its Vernon Hills, Illinois campus by the end of 2000. The new warehouse
will provide  approximately  250,000  square feet of additional  capacity and is
estimated  to cost  between $12 million  and $13  million for  construction  and
equipment.  Upon  completion,  the Company's  total  warehouse  capacity will be
approximately 450,000 square feet.

     Based upon its planned  growth the Company will likely  require  additional
office  capacity  in  early  2001.  The  Company  is  currently  evaluating  the
alternatives to accommodate future capacity  requirements  including  additional
leased space and building expansion at its Vernon Hills campus.


Item 3.       Legal Proceedings.

     The Company is not currently party to any material legal proceedings.


Item 4.       Submission of Matters to a Vote of Security Holders.

     There were no matters submitted during the fourth quarter of 1999 to a vote
of security holders.

                                       9

<PAGE> 13


PART II

Item 5.       Market for Registrant's Common Equity and Related Stockholder
              Matters.

     The  following  table  sets  forth  the high and low sales  prices  for the
Company's Common Stock on The Nasdaq Stock Market (R) for the periods indicated.
These  quotations  were obtained from Nasdaq,  and have been adjusted to reflect
the  two-for-one  stock split paid on May 19,  19999 to common  shareholders  of
record on May 5, 1999.  The Company  believes that as of February 24, 2000 there
were approximately  10,620 beneficial owners of the Company's stock.  Except for
distributions  prior to May 25, 1993,  the date of  termination of the Company's
election to be taxed as an S Corporation,  the Company has neither  declared nor
paid any cash dividends on its Common Stock.  The Company  currently  intends to
retain  earnings  for use in the  operation  and  expansion  of its business and
therefore does not anticipate paying cash dividends in the foreseeable future.

                                    1999                         1998
                          -------------------------   --------------------------
    Quarter Ended           Low             High         Low             High
----------------------- -----------     -----------   -----------    -----------
March 31............... $30 31/32       $61 5/8       $23 3/4        $35  3/8
June 30................  27 15/16        38 1/4        19 1/8         30  3/4
September 30 ..........  36  3/8         42 1/2        18             27  1/2
December 31............  47              80            21 5/8         51 15/16



























                                       10

<PAGE> 14

Item 6.  Selected Financial Data.

                   CDW Computer Centers, Inc. and Subsidiaries
                      Selected Financial and Operating Data
          (in thousands, except per share and selected operating data)

<TABLE>
<CAPTION>

                                                                                  Year Ended December 31,
                                                        ----------------------------------------------------------------------------
                                                              1999           1998           1997           1996           1995
                                                        ----------------------------------------------------------------------------
<S>                                                     <C>             <C>            <C>           <C>          <C>
INCOME STATEMENT DATA :
Net sales                                               $   2,561,239  $   1,733,489   $  1,276,929  $     927,895    $   628,721
Cost of sales                                               2,237,700      1,513,314      1,106,124        805,413        548,568
                                                        ----------------------------------------------------------------------------
Gross profit                                                  323,539        220,175        170,805        122,482         80,153
Selling and administrative expenses                           165,627        115,537         90,315         64,879         49,175
Exit charge (1)                                                     -              -              -          4,000              -
                                                        ----------------------------------------------------------------------------
Income from operations                                        157,912        104,638         80,490         53,603         30,978
Interest income, net                                            4,931          4,708          4,259          3,469          1,973
Other income (expense), net                                      (450)          (335)          (241)          (188)            47
                                                        ----------------------------------------------------------------------------
Income before income taxes                                    162,393        109,011         84,508         56,884         32,998
Income tax provision                                           64,308         43,170         33,507         22,484         12,939
                                                        ----------------------------------------------------------------------------
Net income                                              $      98,085  $      65,841   $     51,001  $      34,400    $    20,059
                                                        ----------------------------------------------------------------------------

Net income per share
Basic                                                   $        2.27  $        1.53   $       1.18  $        0.80    $      0.48
                                                        ----------------------------------------------------------------------------
Diluted                                                 $        2.22  $        1.51           1.17  $        0.79    $      0.48
                                                        ----------------------------------------------------------------------------
Weighted average number of common
shares outstanding
Basic                                                          43,135         43,062          43,050         43,050         42,052
Diluted                                                        44,152         43,504          43,408         43,570         42,160

SELECTED OPERATING DATA :
Number of invoices processed (in thousands)                     2,934          2,367           1,822          1,318            998
Average invoice size                                    $         918  $         780   $         756 $          765   $        685
% of sales to commercial customers                                 93%            88%             81%            80%            77%
Commercial Customers serviced (in thousands)                      285            246             209            164            142
Net sales per coworker (in thousands)                   $       1,462  $       1,392   $       1,490 $        1,459          1,364
Inventory turnover                                                 23             24              21             23             22
Accounts receivable - days sales outstanding                       33             32              25             23             22

                                                                                       December 31,
                                                        ----------------------------------------------------------------------------
                                                              1999           1998           1997           1996           1995
                                                        ----------------------------------------------------------------------------
FINANCIAL POSITION:
Working capital                                         $     340,117  $     228,730         167,421 $      123,614   $     99,127
Total assets                                                  505,915        341,821         269,641        198,830        132,929
Total debt and capitalization lease obligations                     -              -               -              -              -
Total shareholders' equity                                    390,984        270,763         199,866        141,622        106,161


(1)  The exit charge provides for estimated  costs  associated with vacating the
     Company's  leased  facility.  See  Note  7 of  Notes  to  the  Consolidated
     Financial Statements.

</TABLE>

                                       11

<PAGE> 15

Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations.

     The following  discussion and analysis of the Company's financial condition
and  results of  operations  should be read in  conjunction  with the  Company's
Consolidated Financial Statements and the Notes thereto.

Results of Operations

The following  table sets forth for the periods  indicated  information  derived
from the Company's statements of income expressed as a percentage of net sales:

--------------------------------------------------------------------------------
                                                 PERCENTAGE OF NET SALES
        FINANCIAL RESULTS                        YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------------------
                                       1999            1998            1997
                                    ---------        --------        --------
Net sales                            100.0 %          100.0 %         100.0 %
Cost of sales                         87.4             87.3            86.6
                                    ---------        --------        --------
Gross profit                          12.6             12.7            13.4
Selling and administrative expenses    6.5              6.7             7.1
                                    ---------        --------        --------
Income from operations                 6.1              6.0             6.3
Interest and other income              0.2              0.3             0.3
                                    ---------        --------        --------
Income before income taxes             6.3              6.3             6.6
Income tax provision                   2.5              2.5             2.6
                                    ---------        --------        --------
Net income                             3.8 %            3.8 %           4.0 %


The following table sets forth for the periods indicated a summary of certain of
the Company's operating statistics:

OPERATING STATISTICS                               YEARS ENDED DECEMBER 31,
                                             -----------------------------------
                                                  1999        1998         1997
                                             ---------   ---------    ---------
Number of invoices processed                 2,934,286   2,366,778    1,822,173
Average invoice size                              $918        $780         $756
Commercial customers serviced (1)              285,000     246,000      209,000
% of sales to commercial customers                  93%         88%          81%
Number of account managers, end of period          798         622          399
Annualized inventory turnover                       23          24           21

(1)  Commercial  customers  includes  businesses,  government and  institutional
     customers.

                                       12

<PAGE> 16

The  following  table  represents  sales by product line as a percentage  of net
sales for each of the periods  indicated.  Product lines are based upon internal
product code classifications and are not retroactively adjusted for the addition
of new categories or changes in individual product categorization.

                                              Analysis of Product Mix
                                              Years Ended December 31,

                                ------------------------------------------------
                                      1999          1998          1997
                                    --------      --------      --------
Notebook & Laptop Computers           21.6 %        19.8 %        25.0 %
Desktop Computers and Servers         14.1          15.7          13.2
                                    --------      --------      --------
Subtotal Computer Products            35.7          35.5          38.2
Software                              12.5          13.4          12.6
Printers                              10.5          12.6          12.1
Data Storage Devices                  10.8          11.0          10.4
Net/Comm Products                      9.2           9.3           8.5
Video                                  7.5           7.8           7.8
Add-On Boards/Memory                   5.6           4.1           4.8
Supplies, Accessories and Other        8.2           6.3           5.6
                                    ---------     ---------     ---------
Total                                100.0 %       100.0 %       100.0 %


Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

     Net sales in 1999 increased  47.8% to a record $2.561  billion  compared to
$1.733 billion in 1998. The growth in net sales is primarily  attributable  to a
higher  concentration  of  commercial  accounts  and a higher level of sales per
active commercial account. Net sales per active commercial account grew 35.5% in
1999.  The Company  believes  that  spending by  customers  for  networking  and
Internet  capabilities,  as well  as  Year  2000  (Y2K)  compliance,  positively
impacted net sales in 1999.  Additionally,  the  expansion of the sales force by
28.5% in 1999 to 798 account  managers at December  31, 1999 enabled the Company
to expand its customer base and the level of sales per active customer. Notebook
computers and desktop  computers  and servers  continue to represent the largest
portion of the Company's  sales.  Notebook dollar volume increased more than 55%
from 1998 and desktop  computers and servers  dollar volume  increased more than
42% from 1998.

     The average  selling price of desktop CPU's  decreased 5.5% and the average
selling price of notebook CPU's  declined 2.4% from 1998.  The Company  believes
there may be additional  decreases in prices for personal  computers and related
products in 2000. Such decreases require the Company to sell more units in order
to maintain or increase the level of sales.  Should  future  manufacturer  price
reductions or the Company's marketing efforts fail to increase the level of unit
sales, the Company's sales growth rate and operating  results could be adversely
affected.  Sales of Compaq, Hewlett Packard, IBM, Microsoft and Toshiba products
comprise a substantial portion of the Company's sales. The loss of any of these,
or any other key vendors,  could have an adverse effect on the Company's results
from  operations.  The above  statements  concerning  future  prices,  sales and
results from  operations are forward  looking  statements  that involve  certain
risks and uncertainties such as those stated above.

     The fastest  growing  product  categories in terms of sales dollars in 1999
were add-on boards and memory at 82.7%, notebook computers at 54.6%, network and
communication  products at 50.8%,  software at 44.4% and data storage devices at
44%. Sales of add-on boards and memory were aided by increases in memory pricing
during the year.  Demand for certain  products  offered by the Company,  and the
growth of certain product  categories,  are driven by advances in technology and
the development of new products and applications by industry manufacturers,  and
acceptance of these new technologies and products by end-users.  Any slowdown in
the rate of  technological  advancement and new product  development by industry
manufacturers could have a material adverse effect on the Company's future sales
growth.

                                       13

<PAGE> 17

     Gross  profit  decreased  as a  percentage  of net  sales to 12.6% in 1999,
compared to 12.7% in 1998.  The decrease in gross profit as a percentage  of net
sales is  primarily  the result of lower  selling  margins  achieved  on certain
product lines and lower levels of inventory  price  protection  and rebates from
vendors.

     On a forward-looking basis, the gross profit margin achieved in 2000 may be
less than the 12.6%  achieved in 1999.  The  statement  concerning  future gross
profit  is  a  forward  looking   statement  that  involves  certain  risks  and
uncertainties such as the continued  participation by vendors in inventory price
protection and rebate programs, product mix, market conditions and other factors
which could result in a fluctuation  of gross  margins below recent  experience.
Although  the Company  believes  it  provides a higher  level of value and added
services,  pricing  and  gross  profit  could  be  negatively  impacted  by  the
activities of Internet only resellers.  Price protection and rebate programs are
at the  discretion  of the  manufacturers,  who may make  changes that limit the
amount of price  protection  or rebates for which the Company is eligible.  Such
changes  could  have a  negative  impact  on gross  margin  in  future  periods.
Additionally,  vendor  rebate  programs  are  generally  dependent  on achieving
certain  goals  and  objectives.  Accordingly,  there is no  certainty  that the
established goals and objectives will be attained.

     Selling and administrative expenses, which include net advertising expense,
other selling  administrative  expenses and the executive  incentive bonus pool,
decreased to 6.5% of net sales in 1999 versus 6.7% in 1998.

     Net advertising  expense increased $4.0 million in 1999 while decreasing as
a percentage of net sales to 0.6% from 0.7% in 1998. Gross  advertising  expense
increased $13.4 million in 1999 while decreasing as a percentage of net sales to
2.6% versus 3.0% in 1998.  The Company  decreased  catalog  circulation  and the
number of national  advertising  pages from the prior year,  while expanding its
spending  on  branding  and  electronic  commerce  activities.  Based  upon  the
Company's  planned  marketing  initiatives,  future levels of gross  advertising
expense as a percentage of net sales are likely to be relatively consistent with
or  higher   than  the  level   achieved   in  1999.   Cooperative   advertising
reimbursements  increased  $9.3 million in 1999 and decreased as a percentage of
net sales to 1.9% from 2.3% in 1998. Cooperative advertising reimbursements as a
percentage of net sales may fluctuate in future  periods  depending on the level
of vendor  participation  achieved and  collection  experience.  The  statements
concerning future advertising expense and cooperative advertising reimbursements
are forward looking  statements  that involve  certain risks and  uncertainties,
including  the ability to identify  and  implement  cost  effective  incremental
advertising and marketing  programs,  as well as the continued  participation of
vendors in the cooperative advertising reimbursement program.

     Other selling and  administrative  costs  decreased to 5.5% of net sales in
1999 from 5.7% in the prior year due  primarily  to  decreases  in  payroll  and
related costs as a percentage of net sales.  Increases in coworker  productivity
offset increased  payroll and associated costs related to expansion of the sales
force.  Approximately 76% of the 798 sales account managers at December 31, 1999
had  fewer  than 24  months  experience  and 53% had fewer  than 12  months,  as
compared to 76% and 61% at December 31, 1998.  The Company plans to increase the
number of sales account managers to more than 1,050 by December 31, 2000.

     In October 1999,  the Company agreed to lease  approximately  72,000 square
feet of office space in Chicago, Illinois as an additional sales office (see the
discussion  of Working  Capital  and  Footnote 7 to the  financial  statements).
Average  annual  future  minimum  lease  expense  for the new  sales  office  is
approximately  $1.1 million.  Additionally,  the Company will incur depreciation
expense  related  to   approximately  $8  million  to  $10  million  in  capital
expenditures  for  computer  and  telecommunication  equipment,   furniture  and
improvements  related to the facility.  As a result of the planned  expansion of
the  sales  force  and  the  new  sales  office,   the  Company's   selling  and
administrative  costs  may  increase  as a  percentage  of net  sales in  future
periods.

     The by-laws of the Company provide for an executive incentive bonus pool of
a maximum of 20% of the increase in year over year income from  operations.  For
1999 and 1998 the Compensation  Committee of the Board of Directors  established
the  bonus  pool  with a  maximum  eligible  amount of 15% of the year over year

                                       14

<PAGE> 17

increase in income from operations. The executive incentive bonus pool increased
to $8.8 million in 1999 from $3.3 million in 1998.

     Interest income,  net of other expenses,  increased to $4.5 million in 1999
compared to $4.4 million in 1998,  primarily  due to higher  levels of available
cash.

     The effective  income tax rate,  expressed as a percentage of income before
income taxes, was 39.6% in 1999 and 1998.

     Net income in 1999 was $98.1  million,  a 49.0% increase over $65.8 million
in 1998.  Diluted  earnings  per share were $2.22 in 1999 and $1.51 in 1998,  an
increase  of 47.0%.  All per share  amounts  have been  adjusted  to reflect the
two-for-one stock split effected in the form of a stock dividend paid on May 19,
1999.

Year Ended December 31, 1998 Compared to Year Ended December 31, 1997

     Net sales in 1998  increased  35.8% to $1.733  billion  compared  to $1.277
billion in 1997. The growth in net sales is primarily  attributable  to a higher
concentration of commercial accounts, a higher level of sales per active account
and an  increase  in the  number of  orders  processed.  Net  sales  per  active
commercial  account grew 22.9% in 1998.  Desktop  computers and servers were the
fastest  growing  product  category with unit volume  increasing  86% and dollar
volume 62%. Notebook computers  represented the largest portion of the Company's
sales at 20%, with dollar volume increasing more than 7% from 1997.

     The average  selling price of desktop CPU's decreased 15.5% and the average
selling price of notebook  CPU's  declined 3.5% from 1997.  The fastest  growing
product  categories in terms of sales dollars in 1998 were desktop  computers at
62%, network and  communication  products at 48%,  software at 45%, data storage
devices at 44%, and printers at 41%.

     Gross  profit  decreased  as a  percentage  of net  sales to 12.7% in 1998,
compared to 13.4% in 1997.  The decrease in gross profit as a percentage  of net
sales is  primarily  the result of lower  selling  margins  achieved  on certain
product  lines,  lower levels of  inventory  price  protection  from vendors and
increased  shipping costs. The lower levels of price protection in 1998 were the
result of changes by certain  manufacturers in the terms and conditions of their
inventory price protection programs.

     Selling and administrative expenses, which include net advertising expense,
other selling  administrative  expenses and the executive  incentive bonus pool,
decreased to 6.7% of net sales in 1998 versus 7.1% in 1997.

     Net advertising  expense  decreased as a percentage of net sales to 0.7% in
1998 from 1.3% in 1997. Gross advertising expense decreased to 3.0% of net sales
in 1998 versus 3.5% in 1997. The Company decreased  catalog  circulation and the
number of national  advertising pages versus the prior year, while expanding its
spending on branding and electronic  commerce  activities.  The decline in gross
advertising  spending  as a  percentage  of net  sales was  consistent  with the
Company's  strategy of shifting  resources in 1998 to an aggressive  sales force
expansion.  Cooperative advertising  reimbursements as a percentage of net sales
were consistent with the level achieved in 1997 at 2.3% of net sales.

     Other selling and  administrative  costs  increased to 5.7% of net sales in
1998 from 5.4% in the prior year due  primarily  to  increases  in  payroll  and
related  costs.  The increase in payroll  costs as a percentage  of sales is due
primarily to  investment  in the  recruiting,  training and  development  of new
account managers.  As of December 31, 1998, there were 622 account managers,  an
increase of 56% from 399 account  managers as of December 31,  1997.  Of the 622
account managers,  approximately 73% had fewer than 24 months experience and 58%
had fewer than 12 months, as compared to 70% and 42% at the end of 1997.

     The executive  incentive  bonus pool decreased to $3.3 million in 1998 from
$5.3 million in 1997.  Of the $2.0  million  decrease in the bonus pool from the
prior year,  $800,000 results from an effective increase in

                                       15

<PAGE> 18
the pool in 1997 due to the $4.0 million exit charge taken in 1996,  $100,000 is
due to a lower  level of growth  in  operating  income  and the  remaining  $1.1
million is due to a change in the bonus pool rate.  For 1998,  the  Compensation
and Stock Option Committee  established the bonus pool at 15% of the increase in
operating income over the prior year, versus 20% in prior periods.

     Legal costs incurred by the majority shareholder, Chairman and CEO, Michael
P. Krasny,  in connection  with the lawsuit filed by a former  shareholder  were
$1.3 million and $379,000, in 1998 and 1997, respectively. Mr. Krasny reimbursed
the Company for these costs, which were recorded by the Company as expenses with
an  offsetting  increase to paid-in  capital,  net of tax effects.  Although the
Company and Mr. Krasny believe their actions were honest and proper, they agreed
to a settlement of the suit in December 1998, whereby all pending litigation was
dismissed.  Under terms of the  settlement  the Company and Mr. Krasny agreed to
make a one time payment to the former shareholder of approximately $4.4 million,
which  amount was paid by Mr.  Krasny.  The Company  recorded the payment by Mr.
Krasny to the former shareholder as a capital  contribution,  with an offsetting
reduction of paid-in  capital for the  additional  redemption  price paid to the
former shareholder.  Thus, the settlement had no impact on the Company's results
of operations or cash flows.

     Interest income,  net of other expenses,  increased to $4.4 million in 1998
compared to $4.0 million in 1997,  primarily  due to higher  levels of available
cash.

     The effective  income tax rate,  expressed as a percentage of income before
income taxes, was 39.6% in 1998 versus 39.7% in 1997.

     Net income in 1998 was $65.8 million,  a 29% increase over $51.0 million in
1997.  Diluted  earnings  per  share  were  $1.51  and  $1.17 in 1998 and  1997,
respectively, an increase of 29%.

Seasonality

     Although the Company has historically  experienced variability in the rates
of  sales  growth,  it  has  not  historically  experienced  seasonality  in its
business.  However, the buying patterns of government customers typically result
in seasonally  high  revenues  during the third quarter of the year. If sales to
these customers increase, the Company may experience some seasonality.

Liquidity and Capital Resources

Working capital

     The  Company  has   historically   financed  its   operations  and  capital
expenditures primarily through cash flow from operations and public offerings of
common stock.  At December 31, 1999,  the Company had working  capital of $340.1
million,  including  cash, cash  equivalents and marketable  securities of $83.0
million.  At December  31,  1998,  the  Company  had  working  capital of $228.7
million.  The  increase  of $111.4  million in  working  capital in 1999 was due
primarily to certain  components of the Company's cash flows from operations for
1999 offset by capital expenditures for facility expansion and investment in the
Company's joint venture  discussed below. The Company's  current and anticipated
uses of its cash,  cash  equivalents  and marketable  securities are to fund the
growth in working capital and capital  expenditures  necessary to support future
growth in sales.

Market risk

         The Company's  investments in marketable  securities as of December 31,
1999  and 1998  are all due in one  year or less  and are  concentrated  in U.S.
Government and Government  Agency  securities.  As such, the risk of significant
changes  in the  value of these  securities  as a result  of a change  in market
interest rates is minimal.

                                       16

<PAGE> 19

Cash flows

     Cash provided by operating activities in 1999 was $22.5 million compared to
$4.5 million in 1998. The primary working capital factors that have historically
affected the  Company's  cash flows from  operations  are the levels of accounts
receivable,  merchandise inventory and accounts payable.  Accounts receivable at
December 31, 1999  increased  $79.0 million from December 31, 1998. The increase
in accounts  receivable  resulted from increased sales volume and an increase in
the  percentage of net sales  generated  from open credit terms with  commercial
customers to 70% from 62% in 1998. Cash provided by operating activities in 1999
was   positively   impacted  by  a  $17.4   million  tax  benefit   recorded  to
paid-in-capital,  relating to the exercise of options  pursuant to the MPK Stock
Option Plan and the CDW Incentive Stock Option Plan.

     Cash used in  investing  activities  in 1999 was $9.4  million  compared to
$17.6 million in 1998. In 1999, the Company incurred  approximately $9.2 million
of capital  expenditures for the purchase of warehouse equipment and information
technology investments.  The Company also invested approximately $6.5 million in
CDW Leasing,  L.L.C., a joint venture  discussed below.  These  investments were
offset by decreases in the Company's marketable securities portfolio.

     The  Company  reopened  the office  portion of the Buffalo  Grove  facility
during the fourth  quarter of 1998 as a sales office.  Accordingly,  the Company
records a  proportionate  share of the rent and other operating costs to selling
and  administrative  expenses.  The Company  sublet the  warehouse  and showroom
portions of the Buffalo Grove facility to a third party for the period beginning
June 15, 1999, and continuing  through the end of the lease term on December 31,
2003.  However,  the third  party  sublessee  filed a Chapter  11  petition  for
reorganization  under the  bankruptcy  laws in  August  1999,  and  subsequently
decided to liquidate the business  operating from the sublet space.  As a result
of the liquidation, the sublessee is not likely to affirm or complete the lease.
If the lease is  terminated,  the Company will  reevaluate the future use of the
warehouse  space and adjust the remaining exit liability as necessary  depending
on whether the Company pursues a new sublease, uses the space for its operations
or leaves the space vacant.

     In October  1999,  the Company  executed a lease  agreement  to establish a
sales office in Chicago, Illinois. The lease commences for one floor on April 1,
2000 and for the second floor on September 1, 2000.  The Company plans to expend
between $8 million and $10 million for computer and telecommunication equipment,
furniture and improvements related to the facility.  The computer equipment will
support the  operations of the new office and also replicate and serve as a back
up of the main computer system located at the Company's headquarters.

     The  Company  plans to  construct  a new  warehouse  at its  Vernon  Hills,
Illinois campus by the end of 2000. The new warehouse will provide approximately
250,000  square feet of additional  capacity and is estimated to cost between $6
million and $7 million for  construction  and equipment.  Upon  completion,  the
Company's total warehouse capacity will be approximately 450,000 square feet.

     The Company also received  approximately  $2.4 million as proceeds from the
exercise of stock options under the CDW Incentive Stock Option Plan in 1999.

Leasing Joint Venture

     In April 1999, CDW Capital Corporation,  a wholly-owned  subsidiary of CDW,
and  First  Portland  Corporation   ("FIRSTCORP")  formed  CDW  Leasing,  L.L.C.
("CDW-L"), a 50/50 joint venture. CDW-L provides captive leasing services to CDW
customers. Under the terms of an operating agreement, FIRSTCORP provides leasing
management  services to CDW-L, with net earnings of the venture allocated 50% to
CDW and 50% to FIRSTCORP. CDW Capital Corporation and FIRSTCORP each contributed
$100,000 to the capital of CDW-L,  maintain equal operating authority over CDW-L
and have an equal number of seats on the Board of Managers of the joint venture.
CDW Capital  Corporation  has  committed to loan up to $10 million to CDW-L on

                                       17

<PAGE> 20

a secured  basis to fund new leases  initiated  by CDW-L.  The terms of the loan
provide for monthly  interest  payments to the Company based on the 90 day LIBOR
rate plus 2.2%.  The  investment  in and loan to CDW-L at December  31, 1999 was
$6.5 million.

Year 2000 Readiness Disclosure

     All  of  the   Company's   hardware  and  software   systems   successfully
transitioned  to the year 2000. The Company has not  experienced any significant
problems  as a result of the Year 2000  Issue  ('Y2K')  with its own  systems or
those of its vendors.  However,  the potential  still exists for a non-compliant
system,  either within the Company or at a vendor, to malfunction due to Y2K and
cause a disruption to the Company's business. Due to the uncertain nature of the
Y2K issue,  the Company can not determine at this time whether the  consequences
of Y2K  failures  will  have a  material  impact  on the  Company's  results  of
operations  and  financial  condition.  The  Company  believes  that,  with  the
successful   transition  to  the  year  2000,  the  possibility  of  significant
interruptions of normal operations should be minimal.

     The Company  originally  estimated  that total  costs for its Y2K  project,
through December 31, 1999,  would range between $750,000 and $1 million.  Actual
costs  incurred  were  lower  than  originally  estimated.  Over the life of the
project the Company  incurred and recorded as operating  expenses  approximately
$443,000,  of  which  approximately  $203,000  was  incurred  during  1999.  The
Company's  expenditures consisted primarily of internal payroll costs related to
the  assessment   and   correction  of  internal   systems  and  assessment  and
communication  with vendors.  The Company does not anticipate  incurring further
costs related to the project.

     Certain  statements  included in  Management's  Discussion  and Analysis of
Financial  Condition and Results of Operations  concerning  the Company's  sales
growth, gross profit as a percentage of sales, advertising expense,  cooperative
advertising reimbursements and Y2K readiness are forward-looking statements that
involve certain risks and uncertainties, as specified herein.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

     See  discussion  of market risk in Item 7 under the heading  Liquidity  and
Capital Resources.

Item 8.  Financial Statements and Supplementary Data.

     The information required by this item is contained in a separate section of
this  Report  beginning  on page  F(i).  See  Index  to  Consolidated  Financial
Statements beginning on page F(i).

Item 9.  Changes in  and  Disagreements  with Accountants on Accounting and
         Financial Disclosure.

     There were no  disagreements  with  accountants on accounting and financial
disclosure matters during the periods reported herein.

PART III

Item 10. Directors and Executive Officers of the Registrant.

     The information required hereunder is incorporated by reference herein from
the  Registrant's   Definitive  Proxy  Statement  for  the  Annual  Meetings  of
Shareholders  to be held on May 24, 2000, to be filed pursuant to Regulation 14A
not later than April 30, 2000 (the 'Definitive Proxy Statement').

                                       18

<PAGE> 21

Item 11. Executive Compensation.

     The information required hereunder is incorporated by reference herein from
the Definitive  Proxy  Statement.  Information in the Definitive Proxy Statement
under the headings 'Report of the  Compensation and Stock Option  Committee' and
'Shareholder Return Performance  Presentation' is specifically note incorporated
by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management.

     The information required hereunder is incorporated by reference herein from
the Definitive Proxy Statement.

Item 13. Certain Relationships and Related Transactions.

     The information required hereunder is incorporated by reference herein from
the Definitive Proxy Statement.


PART IV

Item 14.      Exhibits, Financial Statement Schedule and Reports on Form 8-K.

(a)           The following documents are filed as part of this report :

              1.    Financial Statements (See Index to Consolidated Financial
                    Statements on page F(i) of this Report);

              2.    Index to Financial Statement Schedule :               Page
                                                                          ----

                    Report of Independent Accountants on Financial
                    Statement Schedule                                     S-1

                    Schedule II - Valuation and Qualifying Accounts        S-2

              All other schedules are omitted since the required  information is
              not  present or is not  present in amounts  sufficient  to require
              submission of the schedule, or because the information required is
              included  in  the  consolidated   financial  statements  or  notes
              thereto.

              3.    Exhibits required by Securities and Exchange Commission
                    Regulation S-K, Item 601:

<TABLE>
<CAPTION>

              Exhibit No.               Description of Document

              -----------               -----------------------
              <S>              <C>
              3 (c)            Articles of Incorporation of CDW Computer Centers, Inc. (an Illinois Corporation) (iii)
              3 (d)            Bylaws of CDW Computer Centers, Inc. (an Illinois Corporation) (iii)
              10 (a)           CDW Computer Centers, Inc. Employees' Defined ContributionRetirement Plan and Trust (i) (xi)
              10 (b)           CDW Incentive Stock Option Plan (i) (xi)
              10 (c)           MPK Stock Option Plan and Agreement (i) (xi)
              10 (d)           MPK Restricted Stock Plan and Agreement (i) (xi)
              10 (e)           Employment and Non-Competition Agreement dated as of March 15, 1993 between the Company and Michael
                               P. Krasny (i) (xi)
              10 (f)           Employment and Non-Competition Agreement dated as of March 15, 1993 between the Company and Greg  C.
                               Zeman (i) (xi)

                                       19

<PAGE> 22

              10 (g)           Employment and Non-Competition Agreement dated as of March 15, 1993 between the Company and Daniel B.
                               Kass (i) (xi)
              10 (n)           Tax Indemnification Agreement dated as of May 25, 1993 between the Company and Michael P. Krasny (i)
              10 (p)           Lease Agreement dated February 22, 1993 between the Company, as lessee, and Chevy Chase Business Park
                               Limited Partnership, as lessor, relating to the premises located in Buffalo Grove, Illinois (i)
              10 (t)           CDW Director Stock Option Plan (i)
              10 (y)           First Lease Amendment dated as of May 13, 1993 to Lease Agreement dated February 22, 1993 between the
                               Company, as lessee, and Chevy Chase Business Park Limited Partnership, as lessor, relating to the
                               Illinois (i)
              10 (ee)          Lease Agreement dated January 25, 1995 between the Company, as lessee, and IJM Management Limited
                               Partnership, as agent for the owner, as lessor, relating to the premises located in Chicago, Illinois
                               (ii)
              10 (ii)          Non-statutory Stock Option Agreement dated September 5, 1996 between the Company and Harry J.
                               Harczak, Jr. (iii) (xi)
              10 (jj)          Non-statutory Stock Option Agreement dated September 5, 1996 between the Company and James R. Shanks
                               (iii) (xi)
              10 (kk)          Form of Indemnification and Hold Harmless Agreement between the Company and the Selling Shareholder
                               (iv)
              10 (ll)          CDW 1996 Incentive Stock Option Plan (iv) (xi)
              10 (pp)          CDW 1997 Officer and Manager Bonus Plan (v) (xi)
              10 (rr)          Revolving  Note between the Company and The Northern  Trust  Company  dated June 30, 1998 (vi)
              10 (ss)          First Amendment to CDW Incentive Stock Option Plan (vii) (xi)
              10 (tt)          First Amendment to CDW 1996 Incentive Stock Option Plan (vii) (xi)
              10 (uu)          CDW 1998 Officer and Manager Bonus Plan (viii) (xi)
              10 (vv)          Operating Agreement of CDW Leasing, L.L.C. (viii)
              10 (ww)          Loan and Security Agreement Between CDW Capital Corp. and CDW Leasing, L.L.C. (viii)
              10 (xx)          First Amendment to 1996, 1997 and 1998 Officer and Manager Bonus Plans (viii) (xi)
              10 (yy)          Revolving Note between the Company and LaSalle National Bank dated June 28, 1999 (ix)
              10 (zz)          Lease  Agreement  dated  October  11,  1999  between  the  Company  as Lessee  and Solano  Associates
                               as Lessor  relating to the office space  located at 120 S.  Riverside  Plaza, Chicago, Illinois (x)
              10 (aaa)         CDW Officer and Manager Plan dated April 21, 1998 (xii)

              21               Subsidiaries of the Registrant (i)
              23               Consent of Independent Accountants
              27               Financial Data Schedule
</TABLE>

     Footnotes

                      (i)      Incorporated by reference from the exhibits filed
                               with   the   Company's   registration   statement
                               (33-59802) on Form S-1 filed under the Securities
                               Act of  1933  filed  on May  11,  1993,  and  the
                               Company's  registration  statement (333-60025) on
                               Form S-3 filed under the  Securities  Act of 1933
                               on July 28, 1998

                      (ii)     Incorporated by reference from the exhibits filed
                               with the Company's  quarterly report (0-21796) on
                               Form 10-Q for the quarter ended June 30, 1995.

                                       20

<PAGE> 23


                      (iii)    Incorporated by reference from the exhibits filed
                               with the Company's  quarterly report (0-21796) on
                               Form 10-Q for the  quarter  ended  September  30,
                               1997.(iii)

                      (iv)     Incorporated by reference from the exhibits filed
                               with   the   Company's   registration   statement
                               (333-20935)   on  Form  S-3   filed   under   the
                               Securities Act of 1993 on January 31, 1997.

                      (v)      Incorporated by reference from the exhibits filed
                               with the  Company's  annual  report  (0-21796) on
                               Form 10-K for the year ended December 31, 1997.

                      (vi)     Incorporated by reference from the exhibits filed
                               with the Company's  Quarterly report (0-21796) on
                               Form 10-Q for the quarter ended June 30, 1998.

                      (vii)    Incorporated by reference from the exhibits filed
                               with the  Company's  annual  report  (0-21796) on
                               Form 10-K for the year ended December 31, 1998.

                      (viii)   Incorporated by reference from the exhibits filed
                               with the Company's  Quarterly report (0-21796) on
                               Form 10-Q for the quarter ended March 31, 1999.

                      (ix)     Incorporated by reference from the exhibits filed
                               with the Company's  Quarterly report (0-21796) on
                               Form 10-Q for the quarter ended June 30, 1999.

                      (x)      Incorporated by reference from the exhibits filed
                               with the Company's  Quarterly report (0-21796) on
                               Form 10-Q for the  quarter  ended  September  30,
                               1999.

                      (xi)     Management  contract  or  compensatory  plan   or
                               arrangement.

                      (xii)    Incorporated by reference from the exhibits filed
                               with the  Company's  Notice of Annual  Meeting of
                               Shareholders  and Proxy  Statement  dated May 18,
                               1999.

     (b) The  Company  did not file any  reports  on Form  8-K  during  the last
         quarter of the year ended December 31, 1999.

     (c) The Exhibits required by Item 601 of Regulation S-K are reflected above
         in Section (a)3. of this Item.

     (d) The financial statement schedule is included as reflected in Section
         (a) 2. of this Item.


















                                       21

<PAGE> 24

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) 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.

                           CDW COMPUTER CENTERS, INC.

     Date : March 7, 2000

                                             By :  /s/ Michael P. Krasny
                                                   -----------------------------
                                                   Michael P.  Krasny,  Chairman
                                                   of the Board, Chief Executive
                                                   Officer and Secretary

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
     report  has been  signed  below by the  following  persons on behalf of the
     registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>

     Signature                          Title                              Date

     <S>                                <C>                                <C>
     /s/ Michael P. Krasny              Chairman of the Board, Chief       March 7, 2000
     --------------------------
     Michael P. Krasny                  Executive Officer and Secretary

     /s/ Gregory C. Zeman               President and Director             March 7, 2000
     --------------------------
     Gregory C. Zeman

     /s/ Daniel B. Kass                 Executive Vice President-Sales     March 7, 2000
     --------------------------         and Director
     Daniel B. Kass

     /s/ Harry J. Harczak, Jr.          Chief Financial Officer            March 7, 2000
     --------------------------         and Treasurer
     Harry  J. Harczak, Jr.

     /s/ Sandra M. Rouhselang           Controller and                     March 7, 2000
     --------------------------         Chief Accounting Officer
     Sandra M. Rouhselang

     /s/ Michelle L. Collins            Director                           March 7, 2000
     --------------------------
     Michelle L. Collins

     /s/ Casey Cowell                   Director                           March 7, 2000
     --------------------------
     Casey Cowell

     /s/ Dr. Donald Jacobs              Director                           March 7, 2000
     --------------------------
     Dr. Donald Jacobs

     /s/ Joseph Levy, Jr.               Director                           March 7, 2000
     --------------------------
     Joseph Levy, Jr.

     /s/ Brian Williams                 Director                           March 7, 2000
     --------------------------
     Brian Williams

                                       22

<PAGE> 25

</TABLE>

                               ITEMS 8 AND 14(A)
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

                                                                                                     Page(s)
                                                                                                     -------
<S>                                                                                                  <C>
Report of Independent Accountants                                                                      F-1

Consolidated Balance Sheets as of December 31, 1999 and 1998                                           F-2

Consolidated Statements of Income for the years ended December 31, 1999, 1998 and 1997                 F-3

Consolidated Statement of Shareholders' Equity for the years ended December 31, 1999, 1998 and 1997    F-4

Consolidated Statements of Cash Flows for the years ended December 31, 1999, 1998 and 1997             F-5

Notes to Consolidated Financial Statements                                                             F-6


</TABLE>


                                      F(i)

<PAGE> 26

REPORT OF INDEPENDENT ACCOUNTANTS


The Board of Directors
CDW Computer Centers, Inc.
Vernon Hills, Illinois

In our opinion,  the  accompanying  consolidated  balance sheets and the related
consolidated  statements of income,  shareholders' equity and cash flows present
fairly,  in all  material  respects,  the  financial  position  of CDW  Computer
Centers, Inc. and Subsidiaries (the 'Company') as of December 31, 1999 and 1998,
and the results of their  operations  and their cash flows for each of the three
years in the period ended  December  31, 1999,  in  conformity  with  accounting
principles  generally accepted in the United States.  These financial statements
are the  responsibility of the Company's  management;  our  responsibility is to
express  an  opinion  on these  financial  statements  based on our  audits.  We
conducted our audits of these  statements in accordance with auditing  standards
generally  accepted  within the United  States  which  require  that we plan and
perform the audit to obtain  reasonable  assurance  about whether the statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence  supporting the amounts and  disclosures  in the financial  statements,
assessing the  accounting  principles  used and  significant  estimates  made by
management,  and evaluating the overall  financial  statement  presentation.  We
believe  that our audits  provide a reasonable  basis for the opinion  expressed
above.

                                           PricewaterhouseCoopers LLP

Chicago, Illinois
January  20, 2000

                                       F-1

<PAGE> 27

                 CDW COMPUTER CENTERS, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEET

                                 (in thousands)


<TABLE>
<CAPTION>

                                                                          December 31,
                                                                          ------------
                                                                  1999                    1998
                                                              -------------            -------------
ASSETS

<S>                                                             <C>                    <C>
Current assets :
      Cash and cash equivalents                                $   19,747               $    4,230
      Marketable securities                                        63,228                   66,458
      Accounts receivable, net of allowance for doubtful
        accounts of $4,300 and $3,185, respectively               230,190                  152,308
      Miscellaneous receivables                                     7,589                    5,896
      Merchandise inventory                                       126,217                   64,392
      Prepaid expenses and other assets                             1,375                    1,423
      Deferred income taxes                                         6,702                    5,081
                                                                 ---------                ---------

         Total current assets                                     455,048                  299,788

Property and equipment, net                                        39,429                   37,056
Investments in and advances to subsidiary                           6,499                        -
Deferred income taxes and other assets                              4,939                    4,977
                                                                 ---------                ---------

         TOTAL ASSETS                                          $  505,915               $  341,821
                                                                ==========               ==========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities :
      Accounts payable                                         $   65,657               $   41,358
      Accrued expenses :
         Payroll, commissions and management
          incentive compensation                                   27,339                   16,279
         Income taxes                                              11,960                    5,146
         Exit costs                                                 2,219                    2,715
         Other                                                      7,756                    5,560
                                                                 ---------                ---------

         Total current liabilities                                114,931                   71,058
                                                                 ---------                ---------

Commitments and contingencies

Shareholders' equity :

      Preferred shares, $1.00 par value; 5,000 shares
         authorized; none issued                                        -                        -
      Common shares, $ .01 par value; 75,000 shares
         authorized; 43,339 and 43,142 shares
         issued, respectively                                         433                      431
      Paid-in capital                                             102,771                   81,137
      Retained earnings                                           290,344                  192,259
      Unearned compensation                                          (475)                    (975)
                                                                 ---------                ---------
                                                                  393,073                  272,852

      Less cost of common shares in treasury, 100 shares           (2,089)                  (2,089)

         Total shareholders' equity                               390,984                  270,763
                                                                 ---------                ---------


          TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY           $  505,915               $  341,821
                                                                ==========               ==========
</TABLE>

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

                                       F-2

<PAGE> 28

                   CDW COMPUTER CENTERS, INC. AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED STATEMENT OF INCOME
                      (in thousands, except per share data)

<TABLE>
<CAPTION>

                                                            Years Ended December 31,
                                                  ---------------------------------------------
                                                     1999             1998             1997
                                                  ---------------------------------------------


<S>                                               <C>              <C>              <C>
 Net sales                                        $ 2,561,239       $1,733,489      $ 1,276,929
 Cost of sales                                      2,237,700        1,513,314        1,106,124
                                                  -----------      -----------      -----------

 Gross profit                                         323,539          220,175          170,805

 Selling and administrative expenses                  165,627          115,537           90,315
                                                   -----------      -----------      -----------

 Income from operations                               157,912          104,638           80,490

 Interest income                                        4,931            4,708            4,259
 Other expense, net                                      (450)            (335)            (241)
                                                  -----------      -----------      -----------

 Income before income taxes                           162,393          109,011           84,508

 Income tax provision                                  64,308           43,170           33,507
                                                  -----------      -----------      -----------

 Net income                                       $    98,085      $    65,841      $    51,001
                                                  ===========      ===========      ===========

 Earnings per share

    Basic                                         $      2.27      $      1.53      $      1.18
                                                  ===========      ===========      ===========
    Diluted                                       $      2.22      $      1.51      $      1.17
                                                  ===========      ===========      ===========

 Weighted average number of
 common shares outstanding
    Basic                                              43,135           43,062           43,050
                                                  ===========      ===========      ===========
    Diluted                                            44,152           43,504           43,408
                                                  ===========      ===========      ===========
</TABLE>

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

                                       F-3

<PAGE> 29

                   CDW COMPUTER CENTERS, INC. AND SUBSIDIARIES
            CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                                 (in thousands)

<TABLE>
<CAPTION>

                                                                                                                           Total

                                              Common Stock     Paid in    Retained      Unearned    Treasury Shares    Shareholders'
                                             Shares  Amount    Capital    Earnings    Compensation  Shares   Amount        Equity
                                             --------------------------------------------------------------------------------------
<S>                                          <C>     <C>      <C>         <C>         <C>           <C>     <C>         <C>

BALANCE AT DECEMBER 31, 1996                 43,050  $  430   $  67,738   $  75,417    $  (1,963)        -  $     -     $  141,622

MPK Restricted Stock Plan forfeitures                               (35)                      35                                 -

Amortization of unearned compensation                                                        481                               481

Compensatory stock option grants, net of
     forfeitures                                                    699                                                        699

Tax Benefit from restricted stock and
     stock option transactions                                    5,835                                                      5,835

Capital contribution for legal costs assumed
     by majority shareholder, net of tax                            228                                                        228

Net income                                                                   51,001                                         51,001
                                             --------------------------------------------------------------------------------------

BALANCE AT DECEMBER 31, 1997                 43,050     430      74,465     126,418       (1,447)        -        -        199,866

MPK Restricted Stock Plan forfeitures                                (1)                                                        (1)

Amortization of unearned compensation                                                        472                               472

Compensatory stock option grants                                    986                                                        986

Exercise of Stock Options                        92       1       1,140                                                      1,141

Tax benefit from stock option transactions                        3,741                                                      3,741

Capital contribution for litigation
     settlement by majority shareholder                           4,365                                                      4,365

Additional redemption price pursuant to
     litigation settlement                                       (4,365)                                                    (4,365)

Capital contibution for legal costs assumed
     by majority shareholder, net of tax                            806                                                        806

Purchase of treasury shares                                                                            100   (2,089)        (2,089)

Net income                                                                   65,841                                         65,841
                                             --------------------------------------------------------------------------------------

BALANCE AT DECEMBER 31, 1998                 43,142     431      81,137     192,259         (975)      100   (2,089)       270,763

MPK Restricted Stock Plan forfeitures                              (101)                     101                                 -

Amortization of unearned compensation                                                        399                               399

Compensatory stock option grants                                  1,880                                                      1,880

Exercise of stock options                       197       2       2,417                                                      2,419

Tax benefit from stock option transactions                       17,438                                                     17,438

Net income                                                                   98,085                                         98,085
                                             --------------------------------------------------------------------------------------

BALANCE AT DECEMBER 31, 1999                 43,339  $  433   $ 102,771   $ 290,344    $    (475)      100  $(2,089)    $  390,984
                                             ======================================================================================



</TABLE>

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

                                       F-4

<PAGE> 30

                   CDW COMPUTER CENTERS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (in thousands)

<TABLE>
<CAPTION>

                                                                                      Years Ended December 31,
                                                                               --------------------------------------
                                                                                 1999           1998           1997
                                                                               --------       --------       --------
<S>                                                                            <C>            <C>            <C>
Cash flows from operating activities:

Net income                                                                     $ 98,085       $ 65,841       $ 51,001

Adjustments   to  reconcile  net  income  to  net  cash  provided  by  operating
activities:

        Depreciation                                                              6,788          4,758          2,672
        Accretion of marketable securities                                       (3,017)        (2,797)        (2,014)
        Stock-based compensation expense                                          2,279          1,458          1,180
        Allowance for doubtful accounts                                           1,115          1,235            850
        Legal fees assumed by majority shareholder, net of tax                        -            806            228
        Deferred income taxes                                                    (1,573)          (720)        (1,351)
        Tax benefit from stock option exercises                                  17,438          3,741          5,835

        Changes in assets and liabilities:
            Accounts receivable                                                 (78,997)       (66,019)       (30,978)
            Miscellaneous receivables                                            (1,693)        (1,936)           (29)
            Merchandise inventory                                               (61,825)        (2,451)       (20,479)
            Prepaid expenses and other assets                                        38           (675)            58
            Accounts payable                                                     24,299         (3,093)         7,809
            Accrued compensation                                                 11,060          3,283          2,246
            Accrued income taxes and other expenses                               9,010          1,769          3,108
            Accrued exit costs                                                     (496)          (676)          (596)
                                                                               --------       --------       --------

        Net cash provided by operating activities                                22,511          4,524         19,540
                                                                               --------       --------       --------

Cash flows from investing activities:

        Purchases of available-for-sale securities                              (81,567)       (26,810)       (13,825)
        Redemptions of available-for-sale securities                             53,792         32,250          9,575
        Purchases of held-to-maturity securities                                (50,020)       (88,122)       (87,330)
        Redemptions of held-to-maturity securities                               84,042         80,213         90,892
        Investment in and advances to subsidiary                                 (6,499)             -              -
        Purchase of property and equipment                                       (9,161)       (15,110)       (17,081)
                                                                               --------       --------       --------

        Net cash used in investing activities                                    (9,413)       (17,579)       (17,769)
                                                                               --------       --------       --------

Cash flows from financing activities:

        Proceeds of treasury shares                                                   -         (2,089)             -
        Proceeds from exercise of stock options                                   2,419          1,141              -
                                                                               --------       --------       --------

        Net cash provided by (used in) investing activities                       2,419           (948)             -
                                                                               --------       --------       --------

Net increse (decrease) increase in cash                                          15,517        (14,003)         1,771

Cash and cash equivalents - beginning of year                                     4,230         18,233         16,462
                                                                               --------       --------       --------

Cash and cash equivalents - end of year                                        $ 19,747          4,230       $ 18,233
                                                                               ========       ========       ========

Supplementary disclosure of cash flow information:

        Taxes paid                                                             $ 41,491       $ 40,400       $ 26,197

</TABLE>

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

                                       F-5

<PAGE> 31

CDW COMPUTER CENTERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.       Description of Business

         CDW Computer  Centers,  Inc.  and its  subsidiaries  (collectively  the
         'Company') are engaged in the sale of brand name personal computers and
         related products primarily through direct marketing to end users within
         the United States.  The Company's  primary business is conducted from a
         combined  sales  office,   corporate  office,  warehouse  and  showroom
         facility located in Vernon Hills, Illinois and through www.cdw.com(TM),
         its Internet  site. The Company also operates a sales office in Buffalo
         Grove,  Illinois,  a  retail  showroom  in  Chicago,   Illinois  and  a
         government sales office in Chantilly, Virginia.

         The Company  extends credit to business,  government and  institutional
         customers under certain circumstances based upon the financial strength
         of the customer. Such customers are typically granted net 30 day credit
         terms.  The balance of the Company's  sales are made primarily  through
         third party credit cards and for cash-on-delivery.

2.       Summary of Significant Accounting Policies

         Principles of Consolidation

         The accompanying consolidated financial statements include the accounts
         of CDW Computer Centers,  Inc, and its wholly owned  subsidiaries,  CDW
         Government,  Inc.  (CDW-G),  Northbrook Ad Agency,  Inc.  (NAA) and CDW
         Capital  Corporation.   CDW-G  sells  personal  computers  and  related
         products and focuses  exclusively on serving government and educational
         accounts.  NAA provides advertising  services,  primarily consisting of
         media placements, solely to the Company. CDW Capital Corporation owns a
         50% interest in CDW Leasing,  L.L.C.  (Note 12 ). The investment in CDW
         Leasing, L.L.C. is accounted for by the equity method. All intercompany
         transactions and accounts are eliminated in consolidation.

         Pervasiveness of 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.  Additionally,  such  estimates and
         assumptions affect the reported amounts of revenues and expenses during
         the reporting period. Actual results could differ from those estimates.

         Earnings Per Share

         The Company calculates  earnings per share in accordance with Statement
         of Financial  Accounting  Standards No. 128, 'Earnings Per Share' (SFAS
         128).  Accordingly,  the  Company  has  disclosed  earnings  per  share
         calculated  using both the basic and  diluted  methods  for all periods
         presented. A reconciliation of basic and diluted per-share computations
         is included in Note 10.

         On April 20, 1999,  the Board of  Directors of  the Company  approved a
         two-for-one stock split to be effected in  the form of a stock dividend
         payable on May 19,  1999 to all common  shareholders  of record at the
         close of  business on May 5, 1999.  All  per share and related  amounts
         contained in  these  financial  statements and notes have been adjusted
         to reflect the stock split.

<PAGE> 32

         Cash and Cash Equivalents

         Cash and cash  equivalents  include  all  deposits  in banks and highly
         liquid temporary cash investments purchased with original maturities of
         three months or less at the time of purchase.

         Marketable Securities

         The Company classifies securities with a stated maturity,  which it has
         the intent to hold to maturity, as 'held-to-maturity', and records such
         securities  at  amortized  cost.  Securities  which do not have  stated
         maturities or for which the Company does not have the intent to hold to
         maturity are  classified as  'available-for-sale'  and recorded at fair
         value, with unrealized  holding gains or losses, if material,  recorded
         as a separate  component of Shareholders'  Equity. The Company does not
         invest in trading  securities.  All  securities  are accounted for on a
         specific identification basis.

         The Company's marketable  securities are concentrated  in securities of
         the U.S. Government and U.S. Government  Agencies. Such investments are
         supported by the financial  stability and credit standing of the U. S.
         Government or applicable U. S. Government Agency.


         Merchandise Inventory

         Inventory is valued at the lower of cost or market.  Cost is determined
         on the first-in, first-out method.

         Property and Equipment

         Property  and  equipment  are stated at cost.  The  Company  calculates
         depreciation  using the straight-line  method with useful lives ranging
         from 2 to 25 years.  Expenditures  for major renewals and  improvements
         that extend the useful life of property and equipment are  capitalized.
         Expenditures  for  maintenance  and  repairs  are charged to expense as
         incurred.

         Revenue Recognition

         The Company  records  revenues  from sales  transactions  when title to
         products sold passes to the  customer.  The  Company's  shipping  terms
         dictate  that the passage of title  occurs upon  receipt of products by
         the customer.

         Advertising

         Advertising  costs are  charged  to  expense  in the  period  incurred.
         Cooperative   reimbursements   from  vendors,   which  are  earned  and
         available,   are  recorded  in  the  period  the  related   advertising
         expenditure is incurred.  Advertising expense,  included in selling and
         administrative  expenses net of cooperative  reimbursements earned, was
         approximately  $16,400,000,  $12,400,000  and $16,200,000 for the years
         ended December 31, 1999, 1998 and 1997, respectively.


         Stock-Based Compensation

         In accordance with Statement of Financial Accounting Standards No. 123,
         'Accounting  for Stock  Based  Compensation'  (SFAS  123),  the Company
         accounts for its  stock-based  compensation  programs  according to the
         provisions of Accounting  Principles Board Opinion No. 25,  'Accounting
         for Stock

<PAGE> 33

         Issued to  Employees.' Accordingly,  compensation expense is recognized
         to the  extent of employee or director  services  rendered based on the
         intrinsic  value  of  compensatory  options or shares granted under the
         plans.  See  Note  9  for   disclosure  of  the  Company's  stock-based
         compensation plans in accordance with SFAS 123.

         Fair Value of Financial Instruments

         The  Company  estimates  that  the  fair  market  value  of  all of its
         financial  instruments at December 31, 1999 and 1998 are not materially
         different  from the  aggregate  carrying  value due to the  short  term
         nature of these instruments.

         Treasury Shares

         During 1998, the Company's Board of Directors authorized the repurchase
         of  up  to 1  million  shares  of  its  common  stock  in  open  market
         transactions.  The Company repurchased a total of 100,000 shares during
         the third quarter of 1998 for approximately  $2.1 million.  The Company
         intends to hold the shares in treasury for general corporate  purposes,
         including  issuances  under various  employee  stock option plans.  The
         Company accounts for the treasury shares using the cost method.

3.       Marketable Securities

             The  amortized  cost and  estimated  fair  values of the  Company's
         investments in marketable  securities at December 31, 1999 and 1998 (in
         thousands) were:

<TABLE>
<CAPTION>
                                                                                      Gross
                                                                                    Unrealized
                                                               Estimated             Holding             Amortized
           Security Type                                      Fair Value      Gains         Losses         Cost
           -------------                                      -----------     ------        ------         ----
           <S>                                                 <C>            <C>          <C>          <C>
           December 31, 1999
           Available-for-sale:
               U.S. Government and Government Agency
               securities                                       $  30,757      $   -        $ (20)       $  30,777
                                                              -------------------------------------------------------

           Held-to-maturity:
               U.S. Government and Government Agency
               securities                                          32,458          7             -          32,451
                                                              -------------------------------------------------------
           Total marketable securities:                         $  63,215      $   7        $ (20)       $  63,228
                                                              =======================================================

            December 31, 1998 Available-for-sale:

               U.S. Government and Government Agency            $   2,004      $   4        $    -       $   2,000
               securities
                                                              -------------------------------------------------------

           Held-to-maturity:
               Bonds of states, municipalities, and
               political subdivisions                                 512          2             -             510
               U.S. Government and Government Agency
               securities                                          63,963         45          (30)          63,948
                                                              -------------------------------------------------------
               Total held-to-maturity                              64,475         47          (30)          64,458
                                                              -------------------------------------------------------
           Total marketable securities:                         $  66,479      $  51       $  (30)       $  66,458
                                                              =======================================================

</TABLE>

         The Company's  investments in securities  held-to-maturity  at December
         31,  1999  and 1998  were  all due in one  year or less by  contractual
         maturity.  Estimated fair values of marketable  securities are based on
         quoted market prices.

<PAGE> 34

4.       Property and  Equipment

         Property and equipment consists of the following (in thousands):

<TABLE>
<CAPTION>
                                                                         December 31,
                                                                   1999                1998
                                                                   ----                ----
              <S>                                                <C>                 <C>
              Land                                               $ 10,367            $ 10,367
              Machinery and equipment                              15,117              11,001
              Building and leasehold improvements                  13,455              12,885
              Computer and data processing equipment               10,168               7,502
              Furniture and fixtures                                2,193               1,882
              Computer software                                     2,482               1,341
              Construction in progress                              1,057                 728
                                                             ----------------    ----------------
                                                                   54,839              45,706
              Less accumulated depreciation                        15,410               8,650
                                                             -----------------   -----------------
              Net property and equipment                         $ 39,429            $ 37,056
                                                             =================   =================

</TABLE>

         The Company owns approximately 45 acres of land, of which approximately
         17 acres are vacant and available for future expansion.

         The Company plans to construct a second warehouse on approximately 6 to
         8 acres of its Vernon Hills,  Illinois  campus by the end of 2000.  The
         new  warehouse  will  provide  approximately  250,000  square  feet  of
         additional  capacity  and is  estimated to cost between $12 million and
         $13  million for  construction  and  equipment.  Upon  completion,  the
         Company's total warehouse capacity will be approximately 450,000 square
         feet.

5.       Financing Arrangements

         The Company has an aggregate $50 million available  pursuant to two $25
         million unsecured lines of credit with two financial institutions.  One
         line of credit expires in June 2000, at which time the Company  intends
         to renew the line, and the other does not have a fixed expiration date.
         Borrowings  under the first credit  facility bear interest at the prime
         rate less 2 1/2%,  LIBOR plus 1/2% or the federal funds rate plus 1/2%,
         as  determined  by the  Company.  Borrowings  under the  second  credit
         facility bear  interest at the prime rate less 2 1/2%,  LIBOR plus .45%
         or the federal funds rate plus .45%,  as determined by the Company.  At
         December 31, 1999,  there were no borrowings under either of the credit
         facilities.

6.       Trade Financing Agreements

         The Company has entered into security agreements with certain financial
         institutions ('Flooring Companies') in order to facilitate the purchase
         of inventory from various suppliers under certain terms and conditions.
         The  agreements  allow  for a  maximum  credit  line of  $64.0  million
         collateralized  by  inventory   purchases   financed  by  the  Flooring
         Companies. At December 31, 1999 and 1998, the Company owed the Flooring
         Companies  approximately $13.8 million and $6.7 million,  respectively,
         which is included in trade accounts payable.

<PAGE> 35

7.       Operating Leases and Exit Costs

         In October 1999, the Company  executed an operating lease agreement for
         two floors of office space totaling approximately 72,000 square feet in
         Chicago, Illinois. The Company plans to establish a sales office in the
         facility with the lease  commencing for one floor on April 1, 2000, and
         for the second  floor on September  1, 2000.  The lease  provides a ten
         year term, with certain expansion and renewal options.

         The Company is obligated under a  lease agreement  through December 31,
         2003 for its  Buffalo  Grove  office  and  warehouse  facility.  Future
         minimum  rentals  under  the lease  are  $802,000  in 2000 and 2001 and
         $842,000 in 2002 and 2003. The Company  is also obligated under a lease
         agreement for its Chicago  showroom  which expires on June 30, 2001. In
         addition to the Chicago  showroom  rental costs, the Company is subject
         to a  proportionate  share  of any  increase in real  estate  taxes and
         operating costs over a certain amount per square foot.

         For the years ended December 31, 1999,  1998 and 1997, rent expense was
         $432,000, $230,000 and $540,000, respectively.  Additionally,  $573,000
         and $689,000 of rental  payments were charged to the exit  liability in
         1999 and 1998, respectively.  Minimum future rentals are as follows (in
         thousands):

           Years Ended December 31,                              Amount
           ------------------------                              ------
           2000                                                 $  1,510
           2001                                                    1,928
           2002                                                    1,928
           2003                                                    1,961
           2004                                                    1,152
                                                            -----------------
           Thereafter                                              7,208
                                                            -----------------
                                                               $  15,687
                                                            =================

         The Company  recorded a $4.0 million  pre-tax  non-recurring  charge to
         operating results for exit costs relating to the Buffalo Grove facility
         in the first quarter of 1996.  The exit costs consist  primarily of the
         estimated  cost to the  Company of  subleasing  the  vacated  facility,
         including  holding costs, the estimated costs of restoring the building
         to its original  condition and certain asset write-offs  resulting from
         the  relocation.  During  1999,  1998 and  1997,  the  Company  charged
         approximately $496,000, $676,000 and $596,000 against the exit accrual,
         respectively. These amounts include cash payments for rent, real estate
         taxes and restoration, net of sublease payments.

         The Company  reopened the office  portion of the Buffalo Grove facility
         during the fourth quarter of 1998 as a sales office.  Accordingly,  the
         Company records a  proportionate  share of the rent and other operating
         costs to selling and  administrative  expenses.  The Company sublet the
         warehouse  and  showroom  portions of the Buffalo  Grove  facility to a
         third party for the period  beginning  June 15,  1999,  and  continuing
         through the end of the lease term on December  31, 2003.  However,  the
         third party  sublessee  filed a Chapter 11 petition for  reorganization
         under the bankruptcy laws in August 1999, and  subsequently  decided to
         liquidate the business  operating from the sublet space. As a result of
         the liquidation,  the sublessee is not likely to affirm or complete the
         lease.  If the lease is  terminated,  the Company will  reevaluate  the
         future  use of the  warehouse  space  and  adjust  the  remaining  exit
         liability as necessary  depending on whether the Company  pursues a new
         sublease, uses the space for its operations or leaves the space vacant.

<PAGE> 36

8.       Income Taxes

         Components  of the  provision  (benefit) for income taxes for the years
         ended December 31, 1999, 1998 and 1997 consist of (in thousands):

<TABLE>
<CAPTION>

                                             1999            1998           1997
                                        --------------  --------------  ---------------
     <S>                                   <C>            <C>            <C>
     Current:
        Federal                            $  54,135      $  35,968      $  28,630
        State                                 11,746          7,922          6,228
                                        --------------  --------------  ---------------
                                              65,881         43,890         34,858
     Deferred                                 (1,573)          (720)        (1,351)
                                        --------------  --------------  ---------------
     Provision for income taxes            $  64,308      $  43,170      $  33,507
                                        ==============  ==============  ===============

</TABLE>


         The current income tax liabilities for 1999, 1998 and 1997 were reduced
         by $17.4 million, $3.7 million and $5.8 million,  respectively, for tax
         benefits  recorded directly to paid-in capital relating to the exercise
         and vesting of shares  pursuant to the CDW Stock Option  Plan,  the MPK
         Stock Option Plan and the MPK Restricted Stock Plan.

         The  reconciliation  between  the  statutory  tax rate  expressed  as a
         percentage of income  before income taxes and the actual  effective tax
         rate for 1999, 1998 and 1997 is as follows:

                                              1999       1998        1997
                                            --------   --------    --------
Statutory federal income tax rate             35.0 %     35.0 %      35.0 %
State taxes, net of federal benefit            4.6        4.6         4.6
Other                                          0.0        0.0         0.1
                                            --------   --------    --------
                                              39.6 %     39.6 %      39.7 %
                                            ========   ========    ========


         The tax  effect  of  temporary  differences  that  give rise to the net
         deferred  income tax asset at December 31, 1999 and 1998 are  presented
         below (in thousands):

                                                    1999              1998
                                                    ----              ----
 Current:
   Accounts receivable                            $ 2,233           $ 1,827
   Payroll and benefits                             3,805             2,719
   Merchandise inventory                              462               333
   Accrued expenses                                   202               202
                                                  --------          --------
                                                    6,702             5,081
                                                  --------          --------
Non-current:

   Employee stock plans                             4,742             4,238
   Exit charge                                        865             1,059
   Property and equipment                            (752)             (562)
   Other                                              (47)              121
                                                  --------          --------
                                                    4,808             4,856
                                                  --------          --------
Net deferred tax asset                            $11,510           $ 9,937
                                                  ========          ========

<PAGE> 37

         The portion of the net  deferred tax asset  relating to employee  stock
         plans results primarily from the MPK Stock Option Plan and compensatory
         stock  option  grants under the CDW Stock  Option  Plans.  Compensation
         expense related to these plans is deductible for income tax purposes in
         the year the options are exercised.

         Although realization is not assured,  management  believes,  based upon
         historical taxable income,  that it is more likely than not that all of
         the deferred tax asset will be realized.

9.       Stock-Based Compensation

         CDW Stock Option Plans

         The Company has established certain stock-based  compensation plans for
         the benefit of its directors and coworkers. Pursuant to these plans the
         Company  has  reserved  a total of  2,281,240  common  shares for stock
         option grants. The plans generally include vesting  requirements from 3
         to 10 years and  option  lives of 20 years.  Options  may be granted at
         exercise  prices  ranging  from $0.01 to the market price of the common
         stock at the date of grant.

         Option  activity for the years ended  December 31, 1997,  1998 and 1999
         was as follows:

<TABLE>
<CAPTION>

                                                                       Weighted-Average         Options
                                                       Shares           Exercise Price        Exercisable
                                                  ----------------     ----------------    ----------------
             <S>                                  <C>                  <C>                 <C>
             Balance at January 1, 1997                 2,108,688              $ 21.17                   -

             Options granted                            1,719,518                26.17
             Options exercised                                  -                    -
             Options forfeited                           (164,368)               23.76
                                                  ----------------     ----------------    ----------------
             Balance at December 31, 1997               3,663,838                23.40              89,474
                                                  ----------------     ----------------    ----------------
             Options granted                            1,428,230                46.38
             Options exercised                            (91,744)               12.43
             Options forfeited                           (230,070)               25.25
                                                   ----------------    ----------------    ----------------
             Balance at December 31, 1998               4,770,254                30.40             226,090
                                                   ----------------    ----------------    ----------------

             Options granted                            1,849,365                62.21
             Options exercised                           (197,202)               12.26
             Options forfeited                           (324,530)               34.42
                                                   ----------------    ----------------    -----------------

             Balance at December 31, 1999               6,098,401              $ 40.42             409,955
                                                   ================    ================    =================

</TABLE>

<PAGE> 38

         For  the  years  ended   December   31,  1999,   1998  and  1997,   the
         weighted-average fair value of options granted was as follows:

<TABLE>
<CAPTION>

                                                                           1999          1998         1997
                                                                           ----          ----         ----
             <S>                                                          <C>           <C>          <C>
             Exercise price equals market price                           $45.76        $32.78       $18.09
             Exercise price is less than market price                     $78.62        $47.97       $26.06

</TABLE>

         The following table summarizes the status of outstanding  stock options
         as of December 31, 1999:

<TABLE>
<CAPTION>

                                         Options Outstanding                     Options Exercisable
                           -------------------------------------------------  ---------------------------
                                          Weighted-Average

          <S>              <C>            <C>                <C>             <C>          <C>
                            Number of        Remaining         Weighted-      Number of     Weighted-
             Range of        Options      Contractual Life      Average        Options       Average
          Exercise Prices  Outstanding       (in years)      Exercise Price  Exercisable  Exercise Price
          ---------------- ------------- ------------------- --------------- ------------ ---------------

               $0.005             68,064                18.0      $      .01            -    $          -

                $0.01             23,911                20.0             .01            -               -

           $4.67 - $6.50          16,200                15.0            5.92            -               -

           $11.38 - $13.50       536,522                15.7           12.84      307,824           12.34

           $20.00 - $24.47     2,387,662                17.4           27.34      102,131           29.66

           $32.41 - $47.97     1,240,574                19.0           47.72            -               -

           $48.63 - $49.78       986,480                19.8           49.77            -               -

               $78.625           838,988                20.2           78.63            -               -
          ---------------- ------------- ------------------- --------------- ------------ ---------------
          $0.005 - $78.625     6,098,401                18.3      $    40.42      409,955     $     16.66
          ================ ============= =================== =============== ============ ===============

</TABLE>

         Had the  Company  elected  to apply  the  provisions  of  Statement  of
         Financial  Accounting  Standards No. 123,  'Accounting  for Stock Based
         Compensation' (SFAS 123) regarding  recognition of compensation expense
         to the extent of the calculated  fair value of stock options,  reported
         net income and earnings per share would have been reduced as follows:

<TABLE>
<CAPTION>

                                                            (in 000's, except per share amounts)
                                                              1999            1998            1997
                                                        ----------      ----------      ----------
      <S>                                               <C>             <C>             <C>
      Net income, as reported                            $  98,085       $  65,841       $  51,001
      Pro forma net income                               $  90,525       $  61,574       $  48,573

      Basic earnings per share, as reported              $    2.27       $    1.53       $    1.18
      Diluted earnings per share, as reported            $    2.22       $    1.51       $    1.17

      Pro forma basic earnings per share                 $    2.10       $    1.43       $    1.13
      Pro forma diluted earnings per share               $    2.05       $    1.42       $    1.12

</TABLE>

<PAGE> 39

         The effects of applying SFAS 123 in the above pro forma  disclosure are
         not likely to be  representative  of the  effects  disclosed  in future
         years because the proforma  calculations  exclude stock options granted
         before 1995.

         For  purposes  of the SFAS 123 pro forma net  income and  earnings  per
         share calculation,  the fair value of each option grant is estimated as
         of the date of grant using the Black-Scholes  option-pricing model. The
         weighted-average   assumptions   used  in  determining  fair  value  as
         disclosed for SFAS 123 are shown in the following table:

                                            1999          1998         1997
                                            ----          ----         ----
     Risk-free interest rate                6.1 %         5.4 %        5.5 %
     Dividend yield                         0.0 %         0.0 %        0.0 %
     Option life (years)                    9.8           9.9          9.9
     Stock price volatility                54.6 %        52.6 %       51.7 %


         MPK Stock Option Plan

         Effective December 31, 1992, the Company's current majority shareholder
         established  the MPK Stock  Option  Plan  pursuant  to which he granted
         non-forfeitable  options  to certain  officers  to  purchase  8,286,750
         shares of common stock owned by him at an exercise  price of $.0085 per
         share.  Options  were  exercised  and the  resulting  shares  were sold
         pursuant  to  secondary  offerings  in 1995 and 1997,  and open  market
         transactions in 1998 and 1999, as follows:

              Transaction Year      Number of Options

              ----------------      -----------------
                          1995                676,000
                          1997                272,000
                          1998                330,000
                          1999                872,000

         In 1999, one of the plan participants,  who held 489,510 options at the
         time, terminated employment with the Company.  Pursuant to the terms of
         the  MPK  Stock  Option  Plan,  the  participant  exercised  all of the
         remaining options during 1999. Options for 2,065,074 shares for the two
         remaining  participants are exercisable as of December 31, 1999 and the
         remaining 2,667,000 options are exercisable at the rate of 1,143,000 on
         each December 31, 2000 and 2001,  and 381,000 on December 31, 2002. The
         options have a 20 year life. The number of options exercisable increase
         proportionately to shares, if any, sold by the majority shareholder.

<PAGE> 40

         MPK Restricted Stock Plan

         Effective upon the closing of the initial public offering,  the current
         majority  shareholder   established  the  MPK  Restricted  Stock  Plan.
         Pursuant to this plan,  the majority  shareholder  allocated  1,337,208
         shares of his  common  stock to be held in escrow  for the  benefit  of
         those  persons  employed by the Company as of December  31,  1992.  The
         number of shares  allocated  to each  employee was  dependent  upon the
         employee's  years of service and salary  history.  As a result of these
         grants,  which  provided for vesting based upon  continuous  employment
         with the  Company or its  subsidiaries  through  January  1, 2000,  the
         Company recorded a capital  contribution and offsetting deferred charge
         of approximately  $2.8 million for unearned  compensation  equal to the
         number of shares granted,  times $2.085 per share.  The deferred charge
         is classified in the equity section of the  consolidated  balance sheet
         of the Company as unearned  compensation  and is being  amortized  on a
         straight-line  basis over the vesting period.  As of December 31, 1999,
         338,930 shares have been forfeited for which the Company has recorded a
         reduction  of  both  unearned  compensation  and  paid-in  capital,  in
         addition  to  reducing  the   amortization  of  unearned   compensation
         accordingly.

         The  Company  filed a  Registration  Statement  on Form S-3,  which was
         effective  on  February  7,  1997,  to  modify  the  terms  of the  MPK
         Restricted Stock Plan and provide participants the option to accelerate
         the vesting on 25% of their shares in exchange for the extension of the
         vesting period on their remaining  shares through 2003. Under the terms
         of this  modification,  participants who elected the acceleration  were
         granted  options by the  Company  equal to the  number of shares  which
         became  vested with an exercise  price of $29.50 per share,  the market
         price  of the  stock on the  acceleration  date.  Participants  elected
         accelerated vesting under this modification for 264,128 shares.

         As of December 31, 1999,  53,034  shares remain  outstanding  under the
         original  terms and vest on January 1, 2000 and 681,116  shares  remain
         outstanding  under the modified  terms and vest 25% each year beginning
         on January 1, 2000. The Company filed a registration  statement on Form
         S-3, which was effective on December 7, 1999, to allow  participants of
         the plan to sell the shares as they vest under the plan.

         MPK Stock Plans, Tax Benefits

         The  exercise  and vesting of shares  pursuant to the MPK Stock  Option
         Plan and MPK Restricted  Stock Plan resulted in the  realization by the
         Company of tax  benefits as of $14.7  million in 1999,  $3.1 million in
         1998 and  $6.2  million  in  1997,  of  which  $381,000,  $144,000  and
         $334,000, respectively, were previously recorded in deferred taxes. The
         incremental tax benefits of $14.3 million in 1999, $2.9 million in 1998
         and $5.8 million in 1997 were recorded to paid-in capital.

<PAGE> 41

10.      Earnings Per Share

         At  December  31,  1999,  the  Company had  outstanding  common  shares
         totaling  43,239,000.  The Company has also granted options to purchase
         common  shares to the  coworkers of the Company as discussed in Note 9.
         These options have a dilutive effect on the calculation of earnings per
         share.  The  following  is  a  reconciliation  of  the  numerators  and
         denominators of the basic and diluted  earnings per share  computations
         as required by SFAS 128.

<TABLE>
<CAPTION>

                                                                      Years ended December 31,
                                                                  (in 000's except per share data)
                                                                  --------------------------------
                                                               1999             1998             1997
                                                               ----             ----             ----
             <S>                                          <C>              <C>             <C>

             Basic earnings per share:
             Income available to

               common shareholders (numerator)             $ 98,085         $ 65,841         $ 51,001
                                                          ===========      ===========     ============
             Weighted average common

               shares outstanding (denominator)              43,135           43,062           43,050
                                                          ===========      ===========     ============
             Basic earnings per share                      $   2.27         $   1.53         $   1.18
                                                          ===========      ===========     ============

            Diluted earnings per share:
             Income available to

               common shareholders (numerator)             $ 98,085         $ 65,841         $ 51,001
                                                          ===========      ===========     ============
             Weighted average common

               shares outstanding                            43,135           43,062           43,050
             Effect of dilutive securities:
               Options on common stock                        1,017              442              358
                                                          -----------      -----------     ------------
             Total common  shares and dilutive               44,152           43,504           43,408
               securities (denominator)
                                                          ===========      ===========     ============
             Diluted earnings per share                    $   2.22         $   1.51         $   1.17
                                                          ===========      ===========     ============

</TABLE>

11.      Profit Sharing and 401(k) Plan

         The Company has a profit sharing plan which includes a salary reduction
         feature  established  under the Internal  Revenue  Code Section  401(k)
         covering  substantially all employees.  Contributions by the Company to
         the profit  sharing plan are  determined at the discretion of the Board
         of Directors. For the years ended December 31, 1999, 1998 and 1997, the
         Company's   profit  sharing  expense  was   approximately   $2,639,000,
         $1,860,000 and $1,066,000, respectively.

12.      Leasing Joint Venture

         In April 1999, CDW Capital  Corporation,  a wholly-owned  subsidiary of
         CDW, and First Portland  Corporation  ("FIRSTCORP") formed CDW Leasing,
         L.L.C. ("CDW-L"), a 50/50 joint venture. CDW-L provides captive leasing
         services to CDW customers.  Under the terms of an operating  agreement,
         FIRSTCORP  provides  leasing  management  services  to CDW-L,  with net
         earnings of the venture allocated 50% to CDW and 50% to FIRSTCORP.  CDW
         Capital  Corporation  and FIRSTCORP  each  contributed  $100,000 to the
         capital of CDW-L,  maintain  equal  operating  authority over CDW-L and
         have an equal  number  of seats on the Board of  Managers  of the joint
         venture.  CDW  Capital  Corporation  has  committed  to  loan up to $10
         million  to CDW-L on a secured  basis to fund new leases  initiated  by
         CDW-L. The terms of the loan provide for monthly  interest  payments to
         the Company based on the 90 day LIBOR rate plus 2.2%. The investment in
         and loan to CDW-L at December 31, 1999 was $6.5 million.

<PAGE> 42

13.      Contingencies

         As of December  31,  1999,  the Company was not a party to any material
         legal proceedings.

         In December  1998,  the Company and  Michael P.  Krasny,  its  majority
         shareholder,  Chairman and CEO, agreed to settle the litigation brought
         against them in 1993 by a former  shareholder,  director and  executive
         officer of the  Company.  The  lawsuit  was  related  to the  Company's
         redemption of the common stock held by the former  shareholder  in July
         1990, and requested  actual and punitive damages . Although the Company
         and Mr.  Krasny  believe  their actions were honest and proper and that
         the  allegations  were without merit,  they agreed to the settlement of
         the suit,  whereby all pending litigation was dismissed with a one time
         payment by Mr. Krasny to the former shareholder of approximately $4.4


         million.  The amount was determined  based upon the difference  between
         the agreed upon  estimated fair market value of the Company at the time
         of the redemption of the former shareholder's  interest in 1990 and the
         amount  previously  paid to the  former  shareholder.  Pursuant  to Mr.
         Krasny's  indemnification  of the  Company  for all  costs,  damages or
         settlements related to the litigation, the Company recorded the payment
         by Mr. Krasny to the former shareholder as a capital contribution, with
         an  offsetting   reduction  of  paid-in   capital  for  the  additional
         redemption price paid to the former  shareholder.  Thus, the settlement
         had no impact on the Company's results of operations or cash flows.

         Mr. Krasny also  reimbursed  the Company for all  expenses,  net of tax
         benefits received by the Company, related to this action. For the years
         ended December 31, 1998 and 1997 , the Company and Mr. Krasny  incurred
         legal   expenses  of   approximately   $1.3   million  and  $379,000  ,
         respectively,  which  have been  assumed  by Mr.  Krasny.  These  legal
         expenses are recorded as a selling and  administrative  expense and the
         reimbursement,  net of tax,  is  recorded  as an  increase  to  paid-in
         capital.  As a result of the settlement the Company does not anticipate
         incurring any additional expenses related to this lawsuit.

14.      Selected Quarterly Financial Data (Unaudited)

         The following  information is for the years ended December 31, 1999 and
         1998 (in thousands, except per share data):

<TABLE>
<CAPTION>

                                                  First       Second        Third       Fourth
                                                 Quarter      Quarter      Quarter      Quarter
                                                 -------      -------      -------      -------
           <S>                                  <C>           <C>          <C>          <C>
           December 31, 1999

           Net sales                            $ 539,406    $ 597,554    $ 683,012    $ 741,267
           Gross profit                            67,906       74,747       85,614       95,272
           Income before income taxes              32,614       36,921       43,358       49,500
           Net income                              19,698       22,301       26,188       29,898
           Earnings per share:
                Basic                           $    0.46    $    0.52    $    0.61    $    0.69
                Diluted                         $    0.45    $    0.51    $    0.59    $    0.67


           December 31, 1998

           Net sales                            $ 384,591    $ 408,945    $ 462,720    $ 477,233
           Gross profit                            49,147       51,707       58,863       60,458
           Income before income taxes              24,453       25,807       28,384       30,367
           Net income                              14,770       15,588       17,141       18,342
           Earnings per share:
                Basic                           $    0.34    $    0.36    $    0.40    $    0.43
                Diluted                         $    0.34    $    0.36    $    0.39    $    0.42

</TABLE>

<PAGE> 43

                        REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
CDW Computer Centers, Inc.

Our report on the  consolidated  financial  statements of CDW Computer  Centers,
Inc. and  Subsidiaries  is included on page F-1 of this Form 10-K. In connection
with our audits of such financial  statements,  we have also audited the related
financial statement schedule listed in the index on page 19 of this Form 10-K.

In our  opinion,  the  financial  statement  schedule  referred  to above,  when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information required to be
included therein.

                                            PricewaterhouseCoopers LLP

Chicago, Illinois
January 20, 2000







                                      S-1
<PAGE> 44

                           CDW COMPUTER CENTERS, INC.

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                  years ended December 31, 1999, 1998 and 1997
                                 (in thousands)

<TABLE>
<CAPTION>



                   Column A                       Column B              Column C               Column D         Column E
                   --------                      ----------     -------------------------     ----------       ----------

                                                 Balance at     Charged to     Charged to                      Balance at
                                                 Beginning      Costs and        Other                            End
                 Description                     of Period       Expenses       Accounts      Deductions       of Period
                 -----------                     ----------     ----------     ----------     ----------       ----------
<S>                                              <C>            <C>            <C>            <C>              <C>
Year ended  December  31, 1999
  Deducted in the balance sheet
  from the asset to which it applies:
  Allowance for doubtful accounts                $    3,185     $    2,291     $        -     $    1,176 (a)   $    4,300
                                                 ----------     ----------     ----------     ----------       ----------
Year ended  December  31, 1998
  Deducted in the balance sheet
  from the asset to which it applies:
  Allowance for doubtful accounts                $    1,950     $    2,129     $        -     $      894 (a)   $    3,185
                                                 ----------     ----------     ----------     ----------       ----------
Year ended  December  31, 1997
  Deducted in the balance  sheet
  from the asset to
  which it applies:
  Allowance for doubtful accounts                $    1,100     $    1,166     $        -     $      316 (a)   $    1,950
                                                 ----------     ----------     ----------     ----------       ----------

</TABLE>


Note:

(a) Uncollectible items written off, less recoveries of items previously written
off.


                                      S-2