<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, 1997

---      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 18, 1998 was  approximately  $550 million, based upon the market price per
share of $57.91.

As of March 18, 1998,  the  registrant  had  21,524,984  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
---------------------                         ---------------------

1997 Definitive Proxy Statement, to be        Part III, Items 10, 11, 12 and 13
filed pursuant to Regulation 14 A not
later than April 30, 1998.

An Index to Exhibits appears at pages         Part IV, Item 14
19 - 20 herein                                




































                                        i


<PAGE> 3


                           CDW COMPUTER CENTERS, INC.
                          1997 FORM 10-K ANNUAL REPORT
                      FOR THE YEAR ENDED DECEMBER 31, 1997
                                      INDEX


                                     PART I                     10-K Page No.
                                     ------                     -------------

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

Item 2.        Properties .  .  . . . . . . . . . . . . . . . . . . . . .  8

Item 3.        Legal Proceedings  . . . . . . . . . . . . . . . . . . . .  8

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 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.  (sometimes  referred to herein as "CDW") is a
leading  direct  marketer of over 30,000  microcomputer  products,  primarily to
business,  government,  educational,  institutional and home office users in the
United  States.  The  Company  sells a broad range of  name-brand  microcomputer
products, including hardware and peripherals, software, networking/communication
products and accessories through knowledgeable telemarketing account executives.
Sales of products  that  utilize,  or are  compatible  with,  Microsoft  Windows
95/Windows/Windows  NT/MS-DOS  operating platforms account for substantially all
of the Company's net sales. The Company offers popular brand name  microcomputer
products from Apple, Compaq, Canon, 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 discounted prices.

     The Company  directs its marketing  efforts toward current and  prospective
customers  with  a  particular  focus  on  business,  government,   educational,
institutional  and home office 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 through its 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,
1997,  the  Company  serviced  approximately  575,000  customers.   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 experienced  telemarketing account managers
who are  knowledgeable  about  a  customer's  needs,  and by  enhancing  product
offerings such as networking products through targeted catalogs to such users.

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,  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.

     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 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  direct
marketing format,  which promotes the sale of high quality,  brand name products
at competitive prices, 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.   In  the  hardware  category,   the  Company  competes  with
traditional microcomputer retailers,  computer superstores,  consumer electronic
and office supply superstores, mass merchandisers, national direct marketers and

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<PAGE> 5


value-added resellers. In the software and accessories  categories,  the Company
generally competes with these same resellers as well as specialty  retailers and
resellers. Certain national computer resellers also have established or acquired
their own direct  marketing  operations.  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  modem
telecommunications.   The  Company   also   competes   with   distributors   and
manufacturers  that sell  hardware and software  directly to certain  customers.
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  industry 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. The
Company  believes  that  competition  may  increase in the  future,  which could
require the Company to reduce prices, increase advertising  expenditures or take
other  actions  which  may have an  adverse  effect on the  Company's  operating
results.

     Additionally,  the  industry  has become more  accepting  of  large-volume,
cost-efficient  channels of distribution such as computer superstores,  consumer
electronics and office supply  superstores,  national direct  marketers and mass
merchants.  In addition,  several of the Company's competitors are attempting to
market computer products through  electronic  commerce,  including the Internet.
While these efforts to date represent only a small  percentage of  industry-wide
sales,  such  sales  may grow if  end-user  acceptance  of  electronic  commerce
increases.  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.

     The  current  industry   configuration  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.  The philosophy is based upon the premise,  promoted by its 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   marketer  of  a  broad  range  of  brand  name   competitively   priced
microcomputer  products  and to provide a high level of  customer  service.  The
Company believes that the following  factors are of principal  importance in its
ability to implement this business strategy:

     Breadth and Depth of Selection.  The Company  offers over 30,000  products,
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.

     Competitive   Pricing.   The  Company   believes   that  its  high  volume,
cost-efficient direct marketing format allows it to maintain a pricing advantage
over many other microcomputer product resellers.  The Company utilizes a pricing
model which allows it to efficiently  pass on pricing  changes as they occur and
provide its customers with the lowest possible price.

                                       2

<PAGE> 6


     Marketing and Advertising.  The Company uses telemarketing account managers
to respond to  customer  inquiries  generated  by direct  marketing  in personal
computer magazines, periodic catalog mailings and Internet marketing activities.
In addition to its direct  marketing  efforts,  the Company uses  certain  other
sales  strategies  to  expand  and  enhance  its base of active  customers.  The
Company's  sales  function is organized to support  customers  requiring  unique
service levels or product lines.

     Customer  Service and  Technical  Support.  The  Company  employs a trained
technical  staff that is available  by  telephone to assist the customer  should
technical  problems  occur in order  to  reduce  product  returns  and  increase
customer  satisfaction.  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.

     Effective Inventory Control. The Company's management  information systems,
"just-in-time"  purchasing  system,  RF-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 21 inventory turns during 1997.

     High Quality Personnel. The Company strives to attract, retain and motivate
high quality  personnel and provides its  employees  with  financial  incentives
designed to maximize  performance and  productivity.  The Company and Mr. Krasny
have  instituted  short-term  incentive  programs and  stock-based  compensation
programs to reward and motivate all of the Company's coworkers.

MERCHANDISE

     The Company offers over 30,000  microcomputer  products  including hardware
and peripherals, software, networking and communication products and accessories
for use with  microcomputers  based on a variety  of  operating  platforms.  The
Company's  just-in-time  purchasing system and aggressive  inventory  management
allows it to limit its on-hand  inventory to  approximately  8,500  products and
ship  orders  generally  on a same-day  basis.  


     The  following is a listing of selected  product  manufacturers  by product
category :

   PRODUCT CATEGORIES                      SELECTED PRODUCT MANUFACTURERS
   ------------------                      ------------------------------

HARDWARE AND PERIPHERALS
INCLUDING:
Notebook and Laptop Computers      Admor               Kingston        Simple
Desktop Computers and Servers      Canon               Lexmark         Sony
Printers                           Compaq              Magnavox        Supra
Data Storage Devices               Epson               Megahertz       Syquest
Video Products                     Hayes               Microtek        Umax
Add-on Boards/Memory               Hewlett-Packard     NEC             Viewsonic
Input Devices                      IBM                 Okidata         Visiontek
Multi-Media                        Iomega              Quantum
                                   Keytronics          Seagate


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SOFTWARE                           Adobe               Microsoft
                                   Corel               Symantec
                                   Lotus

NET/COMM PRODUCTS                  Bay-Netgear         SMC
                                   Cisco               US Robotics
                                   Novell              3Com

OTHER ACCESSORIES                  Logitech            Sony
                                   Maxell              TDK
                                   Memorex             3M

     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.   During  1997,  the  Company  was  successful  in  obtaining  initial
authorization  and  subsequently   increasing  the  number  of  products  it  is
authorized to sell from Hewlett-Packard.  In addition,  the Company expanded its
relationship  and obtained  authorization  to purchase  products  directly  from
Compaq.

     The Company offers  approximately  8,000 different software packages in the
business  and  personal  productivity,  utility and  language,  educational  and
entertainment categories. The Company also offers a broad range of microcomputer
accessories,  including  computer-related  items and supplies such as diskettes,
printer products, pointing devices, digital cameras and connectors.

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 1997,  CDW  purchased  approximately  52 % of its  merchandise  from
distributors and aggregators and the balance direct from  manufacturers,  all of
which ship  directly  to the  Company's  distribution  facility.  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/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.  In  addition,  the
relocation of key distributors utilized in the Company's just-in-time purchasing
model could adversely impact the Company's  results of operations.  For the year
ended December 31, 1997, Ingram  Micro/Ingram  Alliance was the only vendor from
whom purchases exceeded 10.0% of total purchases.  Additionally, Compaq, Toshiba
and Hewlett  Packard  products  each  comprise  more than 10.0% 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 quick access to manufacturers
and same day access to its principal  distributors  and  aggregators,  including
Ingram Micro/Ingram Alliance,  Tech Data, and Micro United. Although brand names

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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, 1997,  the Company  maintained  an
investment in inventory of approximately $62 million with approximately $662,000
of  inventory  on  hand  over  90  days  old. The  Company  turned its inventory
approximately 21 times during 1997.

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. 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.

     The Company has an established Internet web site, known as www.cdw.com,  in
order  to  capitalize  on  the  growing  interest  and  opportunity  created  by
electronic commerce. The web site includes many advanced features to attract new
customers and produce sales, including on-line ordering, product specifications,
product  availability  and pricing.  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  provides  information and
convenience  for its  customers,  while also  serving as another  source for new
customers.

SALES ACTIVITIES AND ORDER FULFILLMENT

     The  Company's  success  is due in  part  to the  strength  of its  account
managers who respond to customer telephone  inquiries generated by the Company's
advertising and marketing efforts, and contact 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.  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 United
Parcel Service, Fed Ex, Airborne Express, 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 order size for the years ended December 31, 1997 and 1996, respectively,
was $704.

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     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 AND MARKETING

     CDW  currently  maintains  a  database  of  over  2.3  million  active  and
prospective names of which approximately 575,000 were serviced by the Company in
1997. 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, 1997, sales to business,
government and institutional  customers  accounted for approximately 82%  of the
Company's net sales,  although consumers account for a greater proportion of the
total names on the Company's database.

     CDW's customers are located  principally  throughout the United States.  In
1997,  approximately  21%  of the Company's net sales were generated by sales to
Illinois  residents,  approximately  30%  were  generated  to  residents  of the
eastern United States,  approximately  16%  were generated by sales to residents
of the southern  United  States,  approximately  17%  were generated by sales to
residents of the western United States and  approximately 15 % were generated by
sales to residents of the  Midwestern  United States (other than  Illinois).  In
addition, approximately 1% were sold to customers outside the United States.

CUSTOMER SERVICE AND TECHNICAL SUPPORT

     CDW has developed a proprietary  customer service tracking system to ensure
that customer  initiated service requests are responded to rapidly.  As an added
service to customers,  the Company offers a configuration  service which permits
customers to add accessories, load software or request a custom setup of systems
purchased  from the  Company.  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  to assist the  customer  with  technical
problems or questions in order to reduce product  returns and increase  customer
satisfaction.

INFORMATION TECHNOLOGY SYSTEMS

     CDW has installed and operates  customized  information  technology systems
based  upon  an  IBM  AS/400,   Novell,   Microsoft  NT  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, from time to time, 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 addition 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,  the Company's  operating results

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<PAGE> 10

could be  adversely  affected.  See  Management's  Discussion  and  Analysis for
information  regarding  the  impact  of the Year  2000  issue  on the  Company's
business.

PERSONNEL AND TRAINING

     At December 31, 1997,  the Company  employed  986  persons,  including  970
employed full-time and 16 employed part-time. Of these, 941 were employed at the
Company's  headquarters in Vernon Hills,  Illinois while 45 were employed at the
Company's  retail  showroom in Chicago,  Illinois.  The  Company  considers  its
coworker  relations  to be  excellent.  The  Company's  level of net  sales  per
coworker increased approximately 2% to $1.49 million for the year ended December
31, 1997 vs. $1.46  million for the year ended  December 31, 1996.  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.  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.

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.  During 1996, the Company invested in
an  expansion  of the Chicago  showroom  which  increased  its size and enhanced
customer  service  levels.  The  showroom  associated  with the  Company's  main
distribution  facility was expanded in  conjunction  with its  construction  and
occupancy of its Vernon Hills  property.  These showrooms  occupy  approximately
5,100 square feet each.

     The Company's retail  showrooms,  which generated  approximately 7%  of the
Company's net sales for 1997, 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 telemarketing department.

                                       7

<PAGE> 11

TRADEMARKS

     The Company  conducts its business  under the trade names and service marks
"CDW" and "Computer Discount Warehouse." 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,  a retail  showroom and
corporate  offices.  The  facility  occupies a combined  total of  approximately
218,000   square  feet  of  warehouse   and  office  space  and  is  located  on
approximately 27 acres of land. In March 1998, the Company acquired 18 acres  of
vacant land contiguous to the Vernon Hills facility.  The  Company  now  owns  a
total of 45 acres of land at the Vernon Hills site, of which 32  are  vacant and
available for future expansion.  The Company's  Chicago  retail showroom and the
facility that previously served as the Company's headquarters  in Buffalo Grove,
Illinois  are  under lease  through  the year 2000 and 2004,  respectively.  The
Buffalo Grove  facility  is currently vacant and  the Company is  attempting  to
sublease the facility. See Note 8 in Notes to Consolidated Financial Statements.


ITEM 3.  LEGAL PROCEEDINGS.

     In July 1990, the Company redeemed the shares of the Company's Common Stock
then  held  by  Mr.  John  Marks,  a  former  executive  officer,  director  and
shareholder  who has since  terminated  any  association  with the Company.  The
purchase price of the redeemed  shares was $506,113,  of which $124,085 was paid
in cash and $382,028 was payable by a promissory note. The note bore interest at
a rate of 10% per annum,  with principal and interest payable in equal quarterly
installments of $31,835,  which began in July, 1991 and continued  through April
1, 1994, at which time the note was paid in full.

     In  June 1993, Mr. Marks filed a three-count Complaint in the United States
District Court for the Northern District of Illinois, Eastern Division, alleging
violations of the federal securities laws, fraud and breach of fiduciary duty in
connection with the July,  1990 redemption of his common stock.  Count I alleged
violations  of Section  10(b) of the  Securities  Exchange  Act of 1934 and Rule
10b-5  promulgated  thereunder  against  the Company  and Mr.  Krasny.  Count II
alleged a claim for fraud against the Company and Mr. Krasny.  Count III alleged
a breach  for  fiduciary  duty  against  Mr.  Krasny.  Mr.  Marks  sought in the
Complaint  to rescind the 1990 sale and have himself  restored to the  ownership
position he was in prior to the sale of his shares or, alternatively, be awarded
sufficient  damages  to  compensate  him for the  damages  allegedly  sustained,
including  pre-judgment  interest.  In addition, in Counts II and III, Mr. Marks
sought to recover punitive damages in an unspecified amount.

     In July   1993,  the Company and Mr.  Krasny  filed a motion to dismiss the
Complaint.  In their motion to dismiss,  the Company and Mr.  Krasny argued that
Mr. Marks' claim for the alleged  violation of Section  10(b) of the  Securities
Exchange Act were barred  because the statute of  limitations  for the claim had
expired.   Further,   Mr.   Krasny   and   the   Company   denied   making   any
misrepresentations  or omissions  and argued,  in the  alternative,  that if any
misrepresentations  or  omissions  of  material  fact  occurred,  they  were not
material,  nor the cause of Mr. Marks'  purported  damages.  The Company and Mr.
Krasny also  asserted  that certain  portions of Mr.  Marks'  Complaint  did not
comply with Federal Rule of Civil  Procedure  9(b),  which  requires  that fraud
claims be plead with particularity.  Finally,  the Company and Mr. Krasny argued
that  since  the sole  basis  for  federal  jurisdiction  was Count I, if it was
dismissed,  Counts II and III should be  dismissed  for lack of  subject  matter
jurisdiction.

     In  September 1995,  the  District Court granted,  without  prejudice,  the
motion to dismiss. In its Memorandum Opinion dismissing the Complaint, the Court
held Mr.  Marks'  allegations  established  that he had  inquiry  notice  of the
purported  securities  law  violation  by July 27,  1990,  the date the  Company
purchased his shares.  Because Mr. Marks brought his action in June 1993, beyond
the applicable  statute of limitations  period,  and because no facts alleged in
the Complaint provided a basis to toll that period, the District Court dismissed
the federal  securities  law claim in Count I. The District Court then dismissed
the state law claims in Counts II and III for lack of federal jurisdiction.  The
District  Court  provided Mr.  Marks with leave to file amended  complaint if he

                                       8

<PAGE> 12

could plead  facts that  enabled  him to  surmount  the  statute of  limitations
obstacles to his federal securities law claim.

     In October  1995,  Marks filed an Amended Complaint alleging the same three
causes of action contained in his original Complaint. The factual allegations of
the  Amended  Complaint  were  essentially  the same as  those  of the  original
Complaint. The Amended Complaint, however, included allegations which endeavored
to avoid  application  of the statute of limitations by alleging Mr. Marks' lack
of notice of his purported  federal  securities  law claim.  The Company and Mr.
Krasny in  November  1995  filed a  motion to  dismiss  the  Amended  Complaint,
arguing  that it  contained  the same  deficiencies  relative  to the statute of
limitations and certain other defects as the original Complaint.

     On June 14,  1996,  the  District  Court  granted the motion to dismiss the
Amended  Complaint,  with prejudice on the grounds that the securities law claim
alleged in Count I was barred by the statute of limitations  and it did not have
jurisdiction  over the state law claims  alleged in Counts II and III. Mr. Marks
appealed the District  Court  decision to the United States Court of Appeals for
the  Seventh  Circuit.  On July 28,  1997,  the Court of  Appeals  reversed  the
District  Court's  ruling and remanded the matter back to the District Court for
further  proceedings.  The Court of Appeals held,  among other things,  that the
District Court  improperly  granted the motion to dismiss the Amended  Complaint
because it based its decision on inferences of fact  inappropriate at this stage
of the proceedings.  The case is currently proceeding in the District Court. The
Company and Mr.  Krasny have  answered  the Amended  Complaint.  They denied any
wrongdoing  or  liability  on their part and  asserted  a number of  affirmative
defenses.

     On June 10, 1997,  Mr. Marks filed in the Circuit  Court of the  Nineteenth
Judicial Circuit, Lake County, Illinois, a lawsuit alleging essentially the same
fraud and breach of fiduciary duty claims  asserted in the previously  dismissed
federal  lawsuit.  The Company and Mr.  Krasny have  answered the  complaint and
moved to strike a portion of the relief  requested by Mr. Marks. In their answer
to the Complaint, the Company and Mr. Krasny denied any wrongdoing or liability.
The Company  anticipates this action will likely be dismissed or stayed in light
of the subsequent ruling by the Court of Appeals discussed above.

     The  Company and Mr.  Krasny  believe  that their  actions  were honest and
proper  and that  the suits  by Mr.  Marks are  without  merit.  The Company and
Mr. Krasny are committed to vigorously defending the litigation.

     Mr.  Krasny has agreed that in the event that the Company is ordered to pay
damages to Mr.  Marks on account of the  purchase by the  Company of Mr.  Marks'
shares,  Mr.  Krasny will  indemnify  and reimburse the Company for all damages,
including  amounts,  net of tax benefits received by the Company,  ordered to be
paid and legal fees and costs  incurred  by the Company in  connection  with the
defense of the litigation  and any appeals.  In the event the matter is settled,
Mr. Krasny has agreed to indemnify and reimburse the Company for any amount paid
to Mr. Marks in settlement of this matter,  net of tax benefits  received by the
Company.  No agreement of settlement may be entered into by the Company  without
the consent of Mr. Krasny. The Company and Mr. Krasny incurred legal expenses of
approximately  $379,000,  $133,000 and $140,000 for the years ended December 31,
1997, 1996 and 1995,  respectively,  which have been assumed, net of tax, by Mr.
Krasny.  These legal  expenses  are  recorded  as a selling  and  administrative
expense  and the  reimbursement  by Mr.  Krasny,  net of tax,  is recorded as an
increase to paid-in-capital.

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

     There were no matters submitted during the fourth quarter of 1997 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 for the  Company's  Common  Stock for the
periods indicated,  the high and low sales prices on The Nasdaq Stock Market sm.
These quotations were obtained from Nasdaq. As of February 25, 1998, the Company
believes that there were approximately  5,900 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.

                                 1997                           1996
                     ----------------------------   ----------------------------
  Quarter Ended          Low             High           Low             High
-----------------    ------------    ------------   ------------    ------------
March 31.........      $42 7/8         $70            $22 1/2         $39 5/32
June 30..........       39 5/8          57 3/4         32 53/64        59
September 30 ....       53              78             35              74
December 31......       42 13/16        69 3/4         59 1/4          72 1/4

                                       10

<PAGE> 14

ITEM 6.  SELECTED FINANCIAL DATA

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

<TABLE>
<CAPTION>


                                                                                  Year Ended December 31,
                                                        ----------------------------------------------------------------------------
                                                              1997           1996           1995           1994           1993
                                                        ----------------------------------------------------------------------------
<S>                                                     <C>              <C>            <C>            <C>            <C>
INCOME STATEMENT DATA :
Net sales                                               $     1,276,929  $     927,895  $     628,721  $     413,270  $     270,919
Cost of sales                                                 1,106,124        805,413        548,568        359,274        236,718
                                                        ----------------------------------------------------------------------------
Gross profit                                                    170,805        122,482         80,153         53,996         34,201
Selling and administrative expenses                              90,315         64,879         49,175         34,617         21,828
Exit charge (1)                                                       -          4,000              -              -              -
                                                        ----------------------------------------------------------------------------
Income from operations                                           80,490         53,603         30,978         19,379         12,373
Interest income (expense), net                                    4,259          3,469          1,973            392           (373)
Other income (expense), net                                        (241)          (188)            47            119             76
                                                        ----------------------------------------------------------------------------
Income before income taxes                                       84,508         56,884         32,998         19,890         12,076
Income tax provision                                             33,507         22,484         12,939          7,777          3,294
Benefit from change in tax status (2)                                 -              -              -              -         (3,807)
                                                        ----------------------------------------------------------------------------
Net income                                              $        51,001  $      34,400  $      20,059  $      12,113  $      12,589
                                                        ----------------------------------------------------------------------------

Pro Forma Income Data (Unaudited):
Income before income taxes                                                                                            $      12,076
                                                                                                                     ---------------
Pro forma provision for income taxes (3)                                                                                      4,725
Benefit from change in tax status (2)                                                                                        (3,807)
                                                                                                                     ---------------
Pro forma net income                                                                                                  $      11,158
                                                                                                                     ---------------
Net income per share (Pro forma for 1993)
Basic                                                   $          2.37  $        1.60  $        0.95  $        0.61  $        0.60
                                                        ----------------------------------------------------------------------------
Diluted                                                 $          2.35  $        1.58  $        0.95  $        0.61  $        0.60
                                                        ----------------------------------------------------------------------------
Weighted average number of common
shares outstanding (Pro forma for 1993)
Basic                                                            21,525         21,525         21,026         20,003         18,750
Diluted                                                          21,704         21,785         21,080         20,003         18,750

SELECTED OPERATING DATA :
Average order size                                      $           704  $         704  $         630  $         590  $         587
Number of orders shipped (in thousands)                           1,814          1,318            998            700            462
Customers serviced (in thousands)                                   575            462            374            274            190
Net sales per co-worker (in thousands)                  $         1,490  $       1,459  $       1,364  $       1,223  $       1,188
Inventory turnover                                                 21.4           23.4           21.7           22.2           29.7
Accounts receivable - days sales outstanding                       25.0           22.6           21.8           20.7           16.9

                                                                                       December 31,
                                                        ----------------------------------------------------------------------------
                                                              1997           1996           1995           1994           1993
                                                        ----------------------------------------------------------------------------
FINANCIAL POSITION:
Working capital                                         $       167,421  $     123,614  $      99,127  $      49,217  $      16,462
Total assets                                                    269,641        198,830        132,929         77,860         34,159
Total debt and capitalization lease obligations                       -              -              -              -          3,603
Total shareholders' equity                                      199,866        141,622        106,161         55,843         21,852

</TABLE>

(1) The exit charge  provides for estimated  costs  associated with vacating the
Company's  current  leased  facility.  See Note 8 of  Notes to the  Consolidated
Financial  Statements.  
(2) Net  income  and pro forma net income for the year ended  December 31,  1993
includes a $3,807,000  ($0.20 per diluted share)  tax  benefit relating  to  the
Company's  change in  tax status from  an  S corporation to a C  corporation  on
May 25, 1993 and  adoption  of  Statement  of  Financial  Accounting   Standards
No. 109  "Accounting  for Income  Taxes." 
(3) The Company terminated  its  election  to  be  treated  as an S  corporation
effective  May 25, 1993.  The pro forma income statement data has been  computed
by adjusting the Company's net income (loss),  as  reported  to  compute  income
taxes for the year ended December 31, 1993 assuming  an  effective  tax  rate of
39% which would have been recorded had the Company been a C corporation.

                                       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
                                                YEARS ENDED DECEMBER 31,
                                        ----------------------------------------
                                          1997            1996            1995
                                        --------        --------        --------
Net sales                                100.0 %         100.0 %         100.0 %
Cost of sales                             86.6            86.8            87.3
                                        --------        --------        --------
Gross profit                              13.4            13.2            12.7
Selling and administrative expenses        7.1             7.0             7.8
Exit charge                                ---             0.4             ---
                                        --------        --------        --------
Income from operations                     6.3             5.8             4.9
Interest and other income                  0.3             0.3             0.3
                                        --------        --------        --------
Income before income taxes                 6.6             6.1             5.2
Income tax provision                       2.6             2.4             2.0
                                        --------        --------        --------
Net income                                 4.0 %           3.7 %           3.2 %
                                        --------        --------        --------


The  following  table  represents  sales by product line as a percentage  of net
sales for each of the  periods  noted.  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.

                                        ----------------------------------------
                                                 SALES BY PRODUCT LINE
                                                YEARS ENDED DECEMBER 31,
                                        ----------------------------------------
                                          1997            1996            1995
                                        --------        --------        --------
Notebook & Laptop Computers               25.0 %          26.3 %          21.9 %
Desktop Computers and Servers             13.2            11.9            12.3
Software                                  12.6            12.2            11.4
Printers                                  12.1            11.3            13.9
Data Storage Devices                      10.4             9.7             8.5
Net/Comm Products                          8.5             9.6            11.6
Video                                      7.8             7.6             8.0
Add-On Boards/Memory                       4.8             5.7             8.5
Input Devices                              3.0             2.8             N/A
Multi-Media                                2.0             1.8             N/A
Other Accessories                          0.6             1.1             3.9
                                        --------        --------        --------
Total                                    100.0 %         100.0 %         100.0 %
                                        --------        --------        --------

                                       12

<PAGE> 16



Year Ended December 31, 1997 Compared to Year Ended December 31, 1996

     Net sales in 1997 increased  37.6% to a record $1.277  billion  compared to
$928 million in 1996. The Company's average order size in 1997 of $704 per order
was unchanged from 1996 and orders shipped  increased 37.6% to over 1.8 million.
The number of customers  serviced  for the year ended  December 31, 1997 grew to
575,000 compared to 462,000 for the year ended December 31, 1996.

     The growth in net sales is primarily  attributable  to growth in the number
of orders and customers  resulting from the expansion of marketing efforts,  new
product offerings,  manufacturer price reductions, and an increase in the number
of account  managers.  Lower  manufacturer  pricing levels and expanded  product
features in notebooks resulted in a shift within the notebook and laptop product
category to lower priced  models.  Selling prices on many models of notebook and
desktop  computers   decreased   substantially  from  previous  periods  due  to
manufacturer price reductions.  As a result,  desktop and notebook computer unit
volume grew 69% and 65%, respectively,  from 1996 while dollar sales volume grew
52% and 31%,  respectively.  The downward trend in  manufacturer  prices for CPU
products  stimulated  additional unit sales and further  expanded the market for
personal computers.

     The impact of the lower prices for personal  computers requires the Company
to sell more units of CPU products 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 CPU unit sales, the Company's sales growth
rate and operating results could be adversely  affected.  Sales of Compaq,  IBM,
Hewlett  Packard  and Toshiba  products  comprise a  substantial  portion of the
Company's  hardware  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 fastest  growing product  categories in 1997 were desktop  computers at
52%, data storage devices at 48%,  printers at 47%, software at 42% and notebook
computers at 31%. Video and memory products declined as a percentage of sales as
unit prices for these  products  declined  from the previous  year.  The Company
believes  that new product  introductions  in 1997,  including  MMX  technology,
positively impacted sales of CPU's, multimedia products, input devices, software
and data storage  devices.  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 the 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.

     The Company  expanded its number of account  managers to 399 as of December
31, 1997 from 311 at December 31,  1996.  The  Company's  ability to continue to
hire and retain account managers may also have a material effect on future sales
growth.

     Gross profit  increased as a percentage  of net sales to 13.4% for the year
ended December 31, 1997, compared to 13.2% for the year ended December 31, 1996.
The increase in gross profit as a  percentage  of net sales is primarily  due to
the expansion of selling margin on certain  product lines  resulting from vendor
support programs,  opportunistic  purchases and pricing strategies.  Many of the
vendor support programs are dependent on achieving  certain goals and objectives
as  determined  by the vendors.  Accordingly,  there is no  certainty  that such
programs will continue at their current levels or that the established goals and
objectives  will be  attained.  In  addition  to  changes  from  vendor  support
programs,  actual  gross profit  achieved  may vary on a quarterly  basis due to
changes in product mix, pricing strategies, market conditions and other factors.
As a result,  there is no  certainty  that the  Company  will be able to sustain
gross  profit as a  percentage  of net sales at the  levels  achieved  in recent
quarters.

     Selling and  administrative  expenses  increased slightly to 7.1% of net 
sales for the year ended December 31, 1997 from 7.0% for the year ended 
December 31, 1996.

                                       13

<PAGE> 17

     Net  advertising  expense as a percentage of net sales increased to 1.3% of
net sales in 1997 compared to 1.0% in 1996. Gross advertising  expense increased
to 3.5% of net sales in 1997  versus 3.2% in the prior  year,  primarily  due to
expanded catalog  circulation and national  advertising  pages combined with new
marketing  initiatives.   Cooperative  advertising   reimbursements   aggregated
approximately  2.2% of net  sales  in 1997  and  1996.  Cooperative  advertising
reimbursements may fluctuate in future quarters depending on the level of vendor
participation  achieved  and  collection  experience.  Based upon the  Company's
current plans,  future levels of net advertising  expense as a percentage of net
sales  are  likely to be  relatively  consistent  with or higher  than the level
achieved in 1997.  The  statement  concerning  future  advertising  expense is a
forward  looking   statement  that  involves  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.

     The  executive  incentive  bonus pool was $5.3 million and $5.0 million for
the years ended December 31, 1997 and 1996, respectively, and is included within
selling and administrative  expenses.  Pursuant to existing plans, the amount of
the executive  incentive bonus pool is set by the Compensation  Committee of the
Board of Directors with a maximum  eligible  amount of 20% of the year over year
increase in income from operations.  The exit charge recorded in 1996 caused the
executive  incentive  bonus pool to decrease in 1996 by $800,000 and increase by
the same amount in 1997.

     Legal  costs  incurred  by the  majority  shareholder  for the  year  ended
December 31, 1997 and 1996,  in  connection  with the lawsuit  filed by a former
shareholder  were  $379,000 and  $133,000,  respectively.  Although the majority
shareholder has agreed to indemnify the Company for all expenses or settlements,
if any,  incurred in  connection  with this suit,  the Company will  continue to
record such  expenses or  settlements,  if any, as an expense with an offsetting
increase to paid-in capital, net of tax effects.

     Other  selling  and  administrative  costs  were  5.4% of net sales in 1997
compared to 5.5% in the prior year, as increased occupancy and moving costs were
offset by improved productivity and other cost control measures.

     Interest  income  totaled $4.3 million for the year ended December 31, 1997
compared to $3.5 million for the year ended  December 31, 1996.  The increase is
due to higher  interest  rates combined with higher levels of cash available for
investment  resulting  from cash generated  from  operations,  including the tax
benefit from stock option and restricted stock transactions in the first quarter
of 1997, offset by funds utilized for construction of the Vernon Hills facility.

     The effective  income tax rate,  expressed as a percentage of income before
income taxes,  increased  slightly to 39.7% for the year ended December 31, 1997
from 39.5% for the year ended December 31, 1996.

      Net income for the year ended December 31, 1997 was $51.0 million, a 48.3%
increase over $34.4 million for the year ended  December 31, 1996.  Effective in
1997, the Company adopted Statement of Financial  Accounting  Standards No. 128,
"Earnings Per Share" (SFAS 128) which  requires the  presentation  of both basic
and diluted earnings per share for all periods presented.  The implementation of
SFAS 128 has no impact on the  Company's  earnings per share  amounts as diluted
earnings per share as defined by SFAS 128 is consistent  with earnings per share
as presented in previous periods. Diluted earnings per share was $2.35 and $1.58
for the year ended  December  31,  1997 and 1996,  respectively,  an increase of
48.7%.  Excluding  the impact of the exit charge and its  related  impact on the
executive  incentive  bonus  pool in 1997 and 1996,  pro forma  net  income  and
diluted  earnings per share were $51.5  million and $2.37 in 1997,  representing
increases of 41.6% and 41.9%, respectively, from 1996. All per share and related
amounts have been adjusted to reflect the three-for-two  stock split effected in
the form of a stock dividend paid on July 15, 1996.

Year Ended December 31, 1996 Compared to Year Ended December 31, 1995

     Net sales in 1996  increased  47.6% to $927.9  million  compared  to $628.7
million in 1995.  The Company's  average order size grew 11.7% to $704 per order
and orders shipped increased 32.1% to over 1.3 million.  The number of customers

                                       14

<PAGE> 18

serviced for the year ended December 31, 1996 grew to 462,000 versus 374,000 for
the year ended December 31, 1995.

     The  growth  in  net  sales  is  primarily   attributable  to  new  product
introductions,  expansion  of  marketing  efforts,  an increase in the number of
customers serviced and an increase in telemarketing account managers. The higher
average  order size is due,  among other  factors,  to a shift in product mix as
sales of  notebook/laptop  computers and desktop  computers  comprised  38.2% of
total  sales   dollars   compared   to  34.2%  in  the  prior  year.   Sales  of
notebook/laptop  and desktop computers were positively  impacted by the addition
of product  lines from Compaq  Computer  Corporation,  initially  authorized  in
November 1995 and expanded in September  1996,  and  Hewlett-Packard,  initially
authorized  in February  1996 and  expanded in August  1996.  In 1996,  sales of
Apple-branded  products declined from levels achieved in 1995 and were less than
3% of total net sales.

     The  fastest  growing  product  categories  in  1996  were  notebook/laptop
computers  at 77.6%,  data  storage  products  at 68.1%,  software  at 58.8% and
communications  products at 54.1%.  Printers and add-on  boards/memory  products
declined as a  percentage  of net sales due to  declining  unit prices for these
products. The Company believes that new product introductions in 1996, including
new 32-bit software which requires faster processors, more memory and additional
storage  capacity,  positively  impacted sales of CPU's,  multi-media  products,
input  devices,  software  and data  storage  devices.  The  growth  in sales of
notebook/laptop computers is due primarily to increased sales of high-end models
and new product offerings.

     The Company continues to recruit and train new account managers through CDW
University,  with 311 account  managers as of December 31, 1996,  an increase of
43% from December 31, 1995.

     Gross profit increased $42.3 million,  or 52.8%, in 1996 as a result of the
increase in net sales,  and increased as a percentage of net sales to 13.2% from
12.7% in 1995. The Company believes the increase in gross profit as a percentage
of net sales is due to, among other factors,  the expansion of selling margin on
certain   product  lines  resulting  from  new  rebate  programs  with  vendors,
opportunistic purchases and pricing strategies.

     Selling and administrative  expenses decreased as a percentage of net sales
to 7.0% for the year  ended  December  31,  1996  from  7.8% for the year  ended
December 31,  1995.  The  decrease in selling and  administrative  expenses as a
percentage  of net  sales is due  primarily  to a  decrease  in net  advertising
expense as a  percentage  of net sales,  as well as  improved  productivity  and
leveraging  of certain  fixed costs over a higher  sales  volume.  In 1996,  net
advertising  expense as a percentage of net sales decreased to 1.0% from 1.5% in
1995,  resulting from a 28.8% increase in gross advertising spending offset by a
higher rate of cooperative advertising  reimbursements provided by the Company's
vendors.  The  increase in gross  advertising  spending  is due to the  expanded
marketing efforts discussed above, which was partially offset by reduced catalog
production  costs. The higher  cooperative  advertising  reimbursement  rate was
primarily due to expanded  vendor  participation  in the  Company's  advertising
programs, increased purchasing volumes and improved claim processing procedures.

     Selling and administrative  expenses include the executive  incentive bonus
pool which was  approximately  $4.4 million and $2.1 million for the years ended
December 31, 1996 and 1995, respectively. Pursuant to existing plans, the amount
of the executive  incentive bonus pool is set by the  Compensation  Committee of
the Board of Directors  with a maximum  eligible  amount of 20% of the year over
year increase in income from operations.  The executive  incentive bonus pool in
1996 was effectively  reduced by $800,000 as a result of the exit charge.  Other
selling and administrative  expenses included $133,000 and $140,000 for 1996 and
1995, respectively,  in legal defense costs incurred by the majority shareholder
in  connection  with the lawsuit  filed by a former  shareholder.  Although  the
majority  shareholder  has agreed to  indemnify  the  Company  for  expenses  or
settlements,  if any, incurred in connection with this lawsuit, the Company will
continue to record such expenses or  settlements,  if any, as an expense with an
offsetting increase to paid-in capital, net of tax effects.

                                       15

<PAGE> 19

     In June 1996, the Company  purchased  approximately 27 acres of vacant land
in  Vernon  Hills,   Illinois  for  the  purpose  of   constructing  a  combined
telemarketing, warehouse, showroom and corporate office facility. In conjunction
with the move to the new  facility,  the Company  vacated and is  attempting  to
sublease the Buffalo Grove facility.  Accordingly,  the Company  recorded a $4.0
million pre-tax  non-recurring charge for exit costs, which consist primarily of
the estimated cost 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.
     Net  interest  income  increased  $1.5 million in 1996 as compared to 1995,
primarily as a result of the higher levels of funds  available  for  investment.
The increase in funds  available for investment is the result of the proceeds of
the  Company's  public equity  offering in August 1995 and cash flows  generated
from operations.

     The effective  income tax rate,  expressed as a percentage of income before
income taxes, increased slightly in 1996 to 39.5% from 39.2% in 1995.

     Net income for the year  ended  December  31,  1996 was $34.4  million,  an
increase of 71.5% over the year ended  December 31,  1995.  Earnings per diluted
share for 1996  increased  66.3% to $1.58 per diluted share as compared to $0.95
per diluted share for 1995.  Pro forma net income and earnings per diluted share
for the year ended  December 31, 1996,  excluding the $4.0 million impact of the
exit charge and the related $800,000 reduction in the executive  incentive bonus
pool,  net of tax  effects,  were $36.4  million  and $1.67 per  diluted  share,
representing  increases of 81% and 76%,  respectively,  over 1995. The growth in
earnings  per diluted  share was  affected by the  dilution  resulting  from the
825,000  additional  common  shares  issued  by the  Company  on  August 3, 1995
pursuant to the Company's public equity offering. All earnings per share amounts
reflect the two-for-one and  three-for-two  stock splits effected in the form of
stock dividends paid on May 6, 1995 and July 15, 1996, respectively.

SEASONALITY

     Although the Company has historically  experienced variability in the rates
of  sales  growth,  it  has  not  historically  experienced  seasonality  in its
business.

LIQUIDITY AND CAPITAL RESOURCES

WORKING CAPITAL

     CDW has  historically  financed  its  operations  and capital  expenditures
primarily  through cash flow from  operations,  short-term  bank  borrowings and
public  offerings of common stock.  At December 31, 1997,  the Company had cash,
cash equivalents and marketable  securities of $79.4 million and working capital
of $167.4  million.  At December  31,  1996 the  Company had working  capital of
$123.6 million. The increase of $43.8 million in working capital in 1997 was due
primarily to the Company's cash flow from operations for the year ended December
31,  1997  offset by  capital  expenditures  for  facility  expansion  and other
purposes.  The  Company's  current  primary and  anticipated  use of cash,  cash
equivalents and marketable  securities balances is to fund the growth in working
capital and capital expenditures necessary to support future growth in sales.

CASH FLOWS

     Cash provided by operating activities in 1997 was $19.5 million compared to
$28.8  million  for  1996.  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. The increase in
accounts  receivable  resulted from increased  sales volume,  an increase in the
percentage  of net  sales  generated  from  open  credit  terms to its  business
customers and a change in the Company's  credit terms during June 1997 to net 30
days from net ten days.  As a result of this trend and the  overall  increase in
net sales, net accounts receivable at December 31, 1997 increased 52.5% from the
level at December 31, 1996.

                                       16

<PAGE> 20

     Cash used in investing  activities for 1997 was $17.8 million. In 1997, CDW
incurred approximately $17.1 million of capital expenditures for construction of
the Vernon Hills  facility,  the  installation of automation and other equipment
therein,   additional   information   technology   investments   and   leasehold
improvements.  The  remainder  of cash  used in  investing  activities  reflects
increases in the Company's marketable securities portfolio.

     Financing  activities  in  1997  included  the  renewal  of  the  Company's
unsecured credit  facilities with two financial  institutions  aggregating $30.0
million. The credit facilities expire in June 1998 and contain certain financial
covenants.  Borrowings  under one of the lines bear  interest  at the prime rate
less 2 1/2%,  LIBOR  rate 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  rate plus .45% or the  federal
funds rate plus .45%, as  determined by the Company.  At December 31, 1997 there
were no borrowings against either of the credit facilities.  The Company intends
to renew the credit  facilities upon  expiration.  In December 1997, the Company
established a stand-by letter of credit for  approximately  $850,000  related to
improvements  to the Vernon  Hills  facility.  The  Company  has  pledged a U.S.
Treasury Note,  included in investments  held-to-maturity,  with a face value of
$1.1 million as collateral for the letter of credit.


FACILITIES EXPANSION

     Construction  of the Company's new facility was completed in June 1997, and
subsequently,  the Company relocated its headquarters and primary  operations to
the  new  facility.  The  total  cost  of  the  land,  building,  equipment  and
furnishings was approximately $23.9 million. In March 1998, the Company acquired
approximately  18  additional  acres of  vacant  land  adjacent  to its  current
property  in Vernon  Hills,  Illinois  for $4.3  million.  The  Company now owns
approximately 45 total acres, of which approximately 32 are vacant and available
for future  expansion.  As of December 31, 1997 the  remaining  exit  liability,
initially  recorded in 1996,  was $3.4 million.  There is no assurance  that the
remaining  exit  liability  will be adequate to cover  actual  costs  should the
Company's  actual   experience  in  subleasing  the  facility  differ  from  the
assumptions  used in calculating  the exit charge.  Any  additional  costs would
reduce operating results at the time such costs are known.


     The Company  believes  that the funds held in cash,  cash  equivalents  and
marketable  securities  combined with funds  available under the existing credit
facilities  and  cash  flow  from  operations  will be  sufficient  to fund  the
Company's working capital and cash requirements, including facilities expansion,
at least through December 31, 1998. The Company does not anticipate that it will
pay any cash dividends during 1998.


Global Market Risks

     A portion of the  products  the Company  markets  either are produced in or
have major  components  produced in the Asia Pacific  region.  While the Company
does not engage in business  relationships  with companies located in the region
directly,  it does  engage in U.S.  dollar  denominated  transactions  with U.S.
divisions and subsidiaries of these companies.  As a result,  the Company may be
indirectly  affected by risks associated with  international  events,  including
economic  and  labor  conditions,  political  instability,  tariffs  and  taxes,
availability of products and currency fluctuations in the U.S. Dollar versus the
regional currencies.

     Countries  in the Asia  Pacific  region,  including  Japan,  have  recently
experienced  weaknesses in their  currency,  banking and equity  markets.  These
weaknesses  could  adversely  affect  the  supply  and  price  of  products  and
components and ultimately, the Company's results of operations.

                                       17

<PAGE> 21

Information Technology and the Year 2000

     The Year 2000  Issue  ("Y2K")  is the  result of  computer  programs  being
written using two digits rather than four to define the applicable  year. Any of
the Company's computer programs that have date-sensitive  software may recognize
a date using "00" as the year 1900  rather  than  2000.  This could  result in a
system failure or miscalculations causing disruptions of operations,  including,
among  other  things,  a  temporary  inability  to  process  transactions,  send
invoices, or engage in similar normal business activities.

     During a recent Year 2000  ("Y2K")  assessment,  the Company  identified  a
manageable  amount  of  legacy  software  that  requires  modification  with the
remainder  already  compliant.   Based  on  this  assessment,  the  Company  has
determined  that it will  not be  required  to  modify  or  replace  significant
portions of its software to make the systems perform properly after December 31,
1999. However,  there can be no guarantee that the systems of other companies on
which the Company's  systems rely will be converted timely, or that a failure to
convert  by another  company,  or a  conversion  that is  incompatible  with the
Company's systems, would not have a material adverse effect on the Company.

     The Company will utilize both internal and external  resources to reprogram
and test software applications for Y2K compliance. The Company plans to complete
the Y2K project by December  31,1998.  To date,  the expenses of the Y2K project
have not had a material  effect on the  results  of  operations.  Moreover,  the
remaining  expenses,  which will be incurred  through December 31, 1998, are not
expected to have a material effect on the results of operations.

     The  costs  of the  project  and the  date on which  the  Company  plans to
complete the Y2K modifications  are based on management's best estimates,  which
were derived  utilizing  numerous  assumptions  of future  events  including the
continued availability of certain resources, third party modification plans, and
other factors.  However,  there can be no guarantee that these estimates will be
achieved and actual results could differ  materially from those plans.  Specific
factors that might cause such material  differences include, but are not limited
to, the availability and cost of personnel  trained in this area, the ability to
locate and correct  all  relevant  computer  codes,  and similar  uncertainties.
Additionally,  material  differences  could be  caused by the  ability  of third
parties  that  interface  with  the  Company's  systems  to make  all  necessary
modifications for Year 2000 compliance.

     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 exit charge are forward-looking  statements that
involve certain risks and uncertainties, as specified herein.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The information required by this item is contained in a separate section of
this Report. 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  1997  Definitive  Proxy  Statement,  to be filed  pursuant to
Regulation 14A not later than April 30, 1998.

                                       18

<PAGE> 22

ITEM 11. EXECUTIVE COMPENSATION.

     The information required hereunder is incorporated by reference herein from
the  Registrant's  1997  Definitive  Proxy  Statement,  to be filed  pursuant to
Regulation 14A not later than April 30, 1998.


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

     The information required hereunder is incorporated by reference herein from
the  Registrant's  1997  Definitive  Proxy  Statement,  to be filed  pursuant to
Regulation 14A not later than April 30, 1998.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     The information required hereunder is incorporated by reference herein from
the  Registrant's  1997  Definitive  Proxy  Statement,  to be filed  pursuant to
Regulation 14A not later than April 30, 1998.


                                     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 Contribution
                               Retirement Plan and Trust (i)
              10 (b)           CDW Incentive Stock Option Plan (i)
              10 (c)           MPK Stock Option Plan and Agreement (i)
              10 (d)           MPK Restricted Stock Plan and Agreement (i)
              10 (e)           Employment and Non-Competition Agreement dated as of March 15, 1993
                               between the Company and Michael P. Krasny (i)
              10 (f)           Employment and Non-Competition Agreement dated as of March 15, 1993
                               between the Company and Greg  C. Zeman (i)
         
                                       19

<PAGE> 23

              10 (g)           Employment and Non-Competition Agreement dated as of March 15, 1993
                               between the Company and Daniel B. Kass (i)
              10 (h)           Employment and Non-Competition Agreement dated as of March 15, 1993
                               between the Company and Mary C. Gerlits (i)
              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 (s)           Indemnification Agreement between the Company and Michael P. Krasny
                               to be dated as of May 19, 1993 (i)
              10 (t)           CDW Director Stock Option Plan (i)
              10 (w)           Indemnification and Hold Harmless Agreement between Michael P.
                               Krasny and the Company dated May 14, 1993 (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 premises 
                               located in Buffalo Grove, 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 (ff)          Purchase/Sale  Agreement  dated and effective  February 12, 1996 between the Company,  as
                               buyer,  and  Continental  Executive  Parke,  L.L.C.  as  seller,relating  to the premises
                               located in Vernon Hills, Illinois, made on March 14, 1996 (iii)
              10 (ii)          Non-statutory Stock Option Agreement dated September 5, 1996 between
                               the Company and Harry J. Harczak, Jr. (v)
              10 (jj)          Non-statutory Stock Option Agreement dated September 5, 1996 between
                               the Company and James R. Shanks (v)
              10 (kk)          Form of Indemnification and Hold Harmless Agreement between the
                               Company and the Selling Shareholder (vi)
              10 (ll)          CDW 1996 Incentive Stock Option Plan (vi)
              10 (mm)          Revolving  Note between the Company and LaSalle  National
                               Bank dated June 30, 1997 (vii)
              10 (nn)          Revolving Note between the Company and The Northern Trust
                               Company dated June 30, 1997 (vii)
              10 (oo)          Purchase/Sale  Agreement  dated and effective  December 16, 1997 between the Company,  as
                               buyer, and Continental  Executive Parke,  Vernon Hills,  Illinois,  made on March 2, 1998
              10 (pp)          CDW 1997 Officer and Manager Bonus Plan

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

     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.
                      (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.
                      (iii)    Incorporated  by reference  from the exhibits filed
                               with the  Company's  registration  statement  (33-94820)  on Form S-3 filed
                               under the Securities Act of 1993.

                                       20

<PAGE> 24

                      (iv)     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, 1996.
                      (v)      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, 1996.
                      (vi)     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.
                      (vii)    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, 1997.

(b)            The  Company  did not file any  reports  on Form  8-K  during the
               last quarter of the year ended December 31, 1997.

(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.

</TABLE>

                                       21

<PAGE> 25



                                   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 18, 1998

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

     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>
 
     <S>                                <C>                                   <C>    
     Signature                          Title                                 Date
     ---------                          -----                                 ----

     /s/ Michael P. Krasny              Chairman of the Board, Chief          March 18, 1998
     --------------------------         Executive Officer, Secretary and
     Michael P. Krasny                  Treasurer 
                                        

     /s/ Gregory C. Zeman               President and Director                March 18, 1998
     --------------------------
     Gregory C. Zeman

     /s/ Daniel B. Kass                 Vice President-Sales                  March 18, 1998
     --------------------------         and Director
     Daniel B. Kass                     

     /s/ Harry J. Harczak, Jr.          Chief Financial Officer               March 18, 1998
     --------------------------
     Harry J. Harczak, Jr.

     /s/ Daniel F. Callen               Vice President-Finance and            March 18, 1998
     --------------------------         Chief Accounting Officer
     Daniel F. Callen                   


</TABLE>

                                       22

<PAGE> 26





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





                                                                         Page(s)
                                                                         -------

Report of Independent Accountants                                          F-1

Consolidated Balance Sheets as of                                          F-2
         December 31, 1997 and 1996

Consolidated Statements of Income for the years ended                      F-3
         December 31, 1997, 1996 and 1995

Consolidated Statement of Shareholders' Equity for the years ended         F-4
         December 31, 1997, 1996 and 1995

Consolidated Statements of Cash Flows for the years ended                  F-5
         December 31, 1997, 1996 and 1995

Notes to Consolidated Financial Statements                                 F-6





















                                      F(i)



<PAGE> 27



REPORT OF INDEPENDENT ACCOUNTANTS


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

We have audited the  accompanying  consolidated  balance  sheets of CDW Computer
Centers,  Inc. and  Subsidiary as of December 31, 1997 and 1996, and the related
consolidated statements of income,  shareholders' equity and cash flows for each
of the three  years in the period  ended  December  31,  1997.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable  assurance about whether the  consolidated  financial  statements are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit also includes  assessing the accounting  principles  used and  significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement  presentation.  We believe that our audits provide a reasonable  basis
for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  consolidated  financial  position of CDW Computer
Centers,  Inc.  and  Subsidiary  as of  December  31,  1997  and  1996,  and the
consolidated  results of their  operations  and their cash flows for each of the
three years in the period ended December 31, 1997, in conformity  with generally
accepted accounting principles.




                                                            
Coopers & Lybrand L.L.P.

Chicago, Illinois
January  22, 1998

                                      F-1

<PAGE> 28

                    CDW COMPUTER CENTERS, INC. AND SUBSIDIARY
                      CONDENSED CONSOLIDATED BALANCE SHEET
                                 (in thousands)


<TABLE>
<CAPTION>

                                                                          December 31,
                                                                          ------------
                                                                  1997                    1996
                                                              -------------           ------------
ASSETS
<S>                                                             <C>                    <C>
Current assets :
      Cash and cash equivalents                                 $  18,233              $  16,462
      Marketable securities                                        61,192                 58,490
      Accounts receivable, net of allowance for doubtful
        accounts of $1,950 and $1,100, respectively                87,524                 57,396
      Miscellaneous receivables                                     3,960                  3,931
      Merchandise inventory                                        61,941                 41,462
      Prepaid expenses and other assets                               759                    823
      Deferred income taxes                                         3,587                  2,258
                                                                ---------              ---------

         Total current assets                                     237,196                180,822

Property and equipment, net                                        26,253                  3,636
Construction-in-progress                                              451                  8,659
Deferred income taxes and other assets                              5,741                  5,713
                                                                ---------              ---------

         TOTAL ASSETS                                           $ 269,641              $ 198,830
                                                                =========              =========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities :
      Accounts payable                                          $  44,451              $  36,642
      Accrued expenses :
         Compensation                                              12,996                 10,750
         Income taxes                                               5,504                  2,892
         Exit costs                                                 3,391                  3,987
         Other                                                      3,433                  2,937
                                                                ---------              ---------

         Total current liabilities                                 69,775                 57,208
                                                                ---------              ---------

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; 21,525 shares issued and
         outstanding                                                  215                    215
      Paid-in capital                                              74,680                 67,953
      Retained earnings                                           126,418                 75,417
      Unearned compensation                                        (1,447)                (1,963)
                                                                ---------              ---------
         Total shareholders' equity                               199,866                141,622
                                                                ---------              ---------

          TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY            $ 269,641              $ 198,830
                                                                =========              =========
</TABLE>

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

                                      F-2

<PAGE> 29

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

<TABLE>
<CAPTION>

                                                        
                                                            Years Ended December 31,   
                                                  --------------------------------------------- 

                                                     1997             1996             1995  
                                                  ---------------------------------------------


<S>                                               <C>              <C>              <C>      
 Net sales                                        $ 1,276,929      $   927,895      $   628,721
 Cost of sales                                      1,106,124          805,413          548,568
                                                  -----------      -----------      ----------- 

 Gross profit                                         170,805          122,482           80,153

 Selling and administrative expenses                   90,315           64,879           49,175
 Exit charge                                                -            4,000                -
                                                  -----------      -----------      -----------

 Income from operations                                80,490           53,603           30,978

 Interest income                                        4,259            3,469            1,973
 Other income (expense), net                             (241)            (188)              47
                                                  -----------      -----------      -----------

 Income before income taxes                            84,508           56,884           32,998

 Income tax provision                                  33,507           22,484           12,939
                                                  -----------      -----------      -----------

 Net income                                       $    51,001      $    34,400      $    20,059
                                                  ===========      ===========      ===========

 Earnings per share
    Basic                                         $      2.37      $      1.60      $      0.95
                                                  ===========      ===========      ===========
    Diluted                                       $      2.35      $      1.58      $      0.95
                                                  ===========      ===========      ===========

 Weighted average number of
 common shares outstanding
    Basic                                              21,525           21,525           21,026
                                                  ===========      ===========      ===========
    Diluted                                            21,704           21,785           21,080
                                                  ===========      ===========      =========== 
</TABLE>

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

                                      F-3

<PAGE> 30

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

<TABLE>
<CAPTION>

                                                                                                                         Total
                                               Common Stock                             Retained        Unearned      Shareholders'
                                             Shares     Amount     Paid-in Capital      Earnings      Compensation       Equity
                                             --------------------------------------------------------------------------------------
<S>                                          <C>        <C>         <C>                <C>             <C>            <C>
BALANCE AT DECEMBER 31, 1994                 20,700     $ 207       $  36,575          $  20,958       $  (1,897)     $   55,843

Issuance of common stock, net                   825         8          25,782                  -               -          25,790

Tax benefit recognized on stock options           
     exercised                                    -         -           4,027                  -               -           4,027

MPK Restricted Stock Plan forfeitures             -         -             (54)                 -              54               -

Amortization of unearned compensation             -         -               -                  -             358             358

Capital contribution for legal costs assumed      
     by majority shareholder                      -         -              84                  -               -              84

Net income                                        -         -               -             20,059               -          20,059
                                             --------------------------------------------------------------------------------------

BALANCE AT DECEMBER 31, 1995                 21,525     $ 215       $  66,414          $  41,017       $  (1,485)     $  106,161

MPK Restricted Stock Plan forfeitures             -         -            (127)                 -             127               -

Amortization of unearned compensation             -         -               -                  -             981             981

Compensatory stock option grants                  -         -           1,586                  -          (1,586)              -

Capital contribution for legal costs assumed      
     by majority shareholder                      -         -              80                  -               -              80

Net income                                        -         -               -             34,400               -          34,400
                                             --------------------------------------------------------------------------------------

BALANCE AT DECEMBER 31, 1996                 21,525     $ 215       $  67,953          $  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                      -         -             228                  -               -             228

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

BALANCE AT DECEMBER 31, 1997                 21,525     $ 215       $  74,680          $ 126,418       $  (1,447)     $  199,866
                                             ======================================================================================

</TABLE>


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

                                      F-4

<PAGE> 31

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

<TABLE>
<CAPTION>

                                                                                      Years Ended December 31,
                                                                               --------------------------------------
                                                                                 1997           1996           1995
                                                                               --------       --------       --------
<S>                                                                            <C>            <C>            <C>
Cash flows from operating activities:

Net income                                                                     $ 51,001       $ 34,400       $ 20,059

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

        Depreciation                                                              2,672          1,975          1,496
        Amortization/(Accretion) of marketable securities                        (2,014)           (87)           349
        Stock-based compensation expense                                          1,180            981            358
        Loss on disposal of fixed asset                                               -            281              -
        Legal fees assumed by majority shareholder                                  228             80             84
        Deferred tax benefit                                                     (1,351)        (3,228)          (462)
        Tax benefit from stock option exercise                                    5,835              -          4,027

        Changes in assets and liabilities:
            Accounts receivable, net                                            (30,128)       (19,835)       (14,171)
            Miscellaneous receivables                                               (29)        (1,569)        (1,062)
            Merchandise inventory                                               (20,479)       (14,040)        (4,258)
            Prepaid expenses and other assets                                        58           (625)           (31)
            Accounts payable                                                      7,809         17,206          3,199
            Accrued compensation                                                  2,246          6,061          1,070
            Accrued income taxes and other expenses                               3,108          3,187            572
            Accrued exit charge                                                    (596)         3,987              -
                                                                               --------       --------       --------

        Net cash provided by operating activities                                19,540         28,774         11,230
                                                                               --------       --------       --------

Cash flows from investing activities:

        Purchases of available-for-sale securities                              (13,825)       (24,701)       (19,400)
        Redemptions of available-for-sale securities                              9,575         27,300         16,900
        Purchases of held-to-maturity securities                                (87,330)       (86,781)       (43,708)
        Redemptions of held-to-maturity securities                               90,892         68,732         22,501
        Purchase of property and equipment                                      (17,081)       (11,078)        (2,066)
                                                                               --------       --------       --------

        Net cash used in investing activities                                   (17,769)       (26,528)       (25,773)
                                                                               --------       --------       --------

Cash flows from financing activities:

        Proceeds from issuance of common stock                                        -              -         25,911
        Payment of public offering expenses                                           -              -           (121)
                                                                               --------       --------       --------

        Net cash provided by financing activities                                     -              -         25,790
                                                                               --------       --------       --------

Net increase in cash                                                              1,771          2,246         11,247

Cash and cash equivalents - beginning of period                                  16,462         14,216          2,969
                                                                               --------       --------       --------

Cash and cash equivalents - end of period                                      $ 18,233       $ 16,642       $ 14,216
                                                                               ========       ========       ========

Supplementary disclosure of cash flow information:
        Interest paid                                                          $      1       $     14       $      -
        Taxes paid                                                               26,197         23,763          9,251

</TABLE>


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

                                      F-5

<PAGE> 32

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

1.       Description of Business

         CDW  Computer   Centers,   Inc.  (the  "Company")  is  engaged  in  the
         distribution  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
         telemarketing,  corporate  office and warehouse  and showroom  facility
         located in Vernon Hills,  Illinois.  The Company also operates a second
         retail showroom in Chicago, Illinois.

         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 the Company and Northbrook Ad Agency,  Inc.  ("NAA") for all periods
         presented.  NAA provides advertising services,  primarily consisting of
         media placements, solely to the Company.

         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

         Effective  December 31, 1997 the Company adopted 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. The
         implementation of SFAS 128 has no impact on the Company's  earnings per
         share amounts as diluted earnings per share, as defined by SFAS 128, is
         consistent  with  earnings  per common and common  equivalent  share as
         presented in previous  periods.  A reconciliation  of basic and diluted
         per-share  computations  is  included  in  Note  11  to  the  financial
         statements.

         On June 24, 1996,  the Board of  Directors  of the Company  announced a
         three-for-two stock split effected in the form of a stock dividend paid
         on July 15,  1996 to all  common  shareholders  of record as of July 5,
         1996. All per share and related  amounts  contained in these  financial
         statements and notes have been adjusted to reflect this stock split.

                                      F-6

<PAGE> 33



         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 3 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.

         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  $16,200,000,  $8,900,000  and  $9,500,000  for the years
         ended December 31, 1997, 1996 and 1995, 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 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 10 for  disclosure  of the  Company's  stock
         based compensation plans in accordance with SFAS 123.


<PAGE> 34

         Fair Value of Financial Instruments

         The  Company  estimates  that  the  fair  market  value  of  all of its
         financial  instruments at December 31, 1997 and 1996 are not materially
         different  from the  aggregate  carrying  value due to the  short  term
         nature of these instruments.

3.       Marketable Securities

         The amortized cost and estimated fair values of the Company's 
         investments in marketable securities  at December 31, 1997 and 1996
         (in thousands) were:
<TABLE>
<CAPTION>


                                                                                                  Gross
                                                                                                Unrealized
                                                                                                 Holding 
                                                                                                ----------
                                                                         Estimated                                      Amortized
                                                                         Fair Value        Gains          Losses          Cost
                                                                        ------------     ----------     ----------     -----------
<S>                                                                     <C>              <C>            <C>            <C>   
Security Type
-------------
DECEMBER 31, 1997
Available-for-sale:
     Redemptive tax-exempt preferred stocks                             $      7,250     $      ---     $      ---     $     7,250
                                                                        ----------------------------------------------------------

Held-to-maturity:
     Bonds of states, municipalities, and political subdivisions                 263              1            ---             262  
     U.S. Government and Government Agency securities                         53,614            ---            (66)         53,680
                                                                        ----------------------------------------------------------
     Total held-to-maturity                                                   53,877              1            (66)         53,942
                                                                        ----------------------------------------------------------
Total marketable securities:                                            $     61,127     $        1     $      (66)    $    61,192
                                                                        ==========================================================

DECEMBER 31, 1996
Available-for-sale:
     Redemptive tax-exempt preferred stocks                             $      2,940     $      ---     $      ---     $     2,940
                                                                        ----------------------------------------------------------

Held-to-maturity:
     Bonds of states, municipalities, and political subdividions              13,216             18            ---          13,198
     U.S. Government and Government Agency securities                         42,302            ---            (50)         42,352 
                                                                        ----------------------------------------------------------
     Total held-to-maturity                                                   55,518             18            (50)         55,550
                                                                        ----------------------------------------------------------
Total marketable securities:                                            $     58,458     $       18     $      (50)     $   58,490
                                                                        ==========================================================
</TABLE>


         The Company's  investments in securities  held-to-maturity  at December
         31,  1997  were  all due in one year or less by  contractual  maturity.
         Estimated  fair  values of  marketable  securities  are based on quoted
         market prices.


<PAGE> 35



4.       Property, Equipment and Facility Relocation

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

                                                          December 31,
                                                          ------------
                                                        1997          1996
                                                     ---------     --------- 
             Land                                    $   6,272     $       -
             Machinery and equipment                     9,316         2,228
             Building                                    8,276             -
             Computer and data processing equipment      3,596         2,523
             Furniture and fixtures                      1,246           803
             Computer software                           1,049         1,017
             Leasehold improvements                        390           935
                                                     ---------     ---------
                                                        30,145         7,506
             Less accumulated depreciation               3,892         3,870
                                                     ---------     ---------
             Net property and equipment              $  26,253     $   3,636
                                                     =========     =========

         In June 1996 the  Company  purchased  approximately  27 acres of vacant
         land in Vernon Hills,  Illinois,  upon which it  constructed a combined
         telemarketing,  warehouse,  showroom  and  corporate  office  facility.
         Construction  of the Vernon Hills  facility was completed in July 1997,
         at which time the Company relocated to the new facility and vacated the
         Buffalo Grove facility.

         As of December 31, 1997 the Company has  incurred  approximately  $23.9
         million of total costs for the new facility, including $6.1 million for
         land  acquisition  and $17.8  million for  construction,  equipment and
         furnishings.  The  remaining  balance  in the  construction-in-progress
         account includes  construction of separate internal projects at the new
         facility, unrelated to the initial construction.

         In March 1998 the  Company  acquired  approximately  18 acres of vacant
         land  contiguous  to its Vernon Hills  facility for $4.3  million.  The
         Company now owns  approximately 45 total acres, of which  approximately
         32 are vacant and available for future expansion.

5.       Financing Arrangements

         The  Company  has  an  aggregate  $30  million  available  pursuant  to
         unsecured lines of credit with two financial  institutions  expiring in
         June 1998. Borrowings under one of the lines bear interest at the prime
         rate less 2 1/2%,  LIBOR rate 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 rate plus
         .45% or the federal funds rate plus .45%, as determined by the Company.
         At  December  31,  1997,  there were no  borrowings  from these  credit
         facilities.

         In December 1997 the Company  established  a stand-by  letter of credit
         for approximately  $850,000 related to improvements to the Vernon Hills
         facility.  The Company has pledged a U.S.  Treasury  Note,  included in
         investments  held-to-maturity,  with a face  value of $1.1  million  as
         collateral for the letter of credit.

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  $24.0  million
         collateralized  by  inventory   purchases   financed  by  the  Flooring
         Companies. At December 31, 1997 and 1996, the Company owed the Flooring
         Companies  a total of  approximately  $7.2  million  and $7.4  million,
         respectively, which is included in trade accounts payable.

<PAGE> 36

7.       Stock Option Exercise and  Public Offerings of Common Stock


         The  Company  filed a  Registration  Statement  on Form S-3,  which was
         effective  on February  21,  1997,  pursuant to which  certain  Company
         employees sold an aggregate of 632,064  shares of the Company's  common
         stock. The shares sold included 136,437 shares received by participants
         upon  exercise of options  under the MPK Stock  Option Plan and 132,064
         shares  received  by  participants  of the MPK  Restricted  Stock  Plan
         pursuant to the vesting modification discussed in Note 10. The exercise
         and vesting of the shares pursuant to the MPK Stock Option Plan and MPK
         Restricted  Stock Plan resulted in the  realization by the Company of a
         tax benefit of $6.2 million in 1997, of which  $334,000 was  previously
         recorded in deferred taxes. The incremental tax benefit of $5.8 million
         was recorded to paid-in capital.

         On August 3, 1995,  the Company sold 825,000 shares of its newly issued
         common stock at $32.83 per share in an  underwritten  public  offering.
         Net  proceeds  to the Company  after  underwriting  discount  and other
         offering expenses were approximately $25.8 million. Concurrent with the
         sale of shares by the Company,  1,237,500  shares, of common stock were
         sold  by  certain  selling  shareholders  in  the  offering,  including
         approximately  900,000  shares  sold by the  majority  shareholder  and
         approximately 337,500 shares sold by certain officers.  The shares sold
         by certain  officers  were  obtained  through  the  exercise of options
         pursuant to the MPK Stock  Option Plan (Note 10).  The exercise of such
         options by the  certain  officers  resulted in the  realization  by the
         Company of a tax benefit of $4,323,000  in 1995, of which  $296,000 was
         previously  recorded in deferred taxes.  The incremental tax benefit of
         $4.0 million was recorded to paid-in capital.

8.       Operating Leases and Exit Accrual

         The Company is obligated under a lease agreement  through  December 31,
         2003 for its  vacated  Buffalo  Grove  distribution  center  and office
         facility.  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  1997 the  Company
         charged  approximately  $974,000  against the exit  accrual,  including
         $505,000 of assets  written off and $469,000 in cash payments for rent,
         real estate taxes and  restoration  of the Buffalo Grove  facility.  In
         addition,  various  accruals for operating costs related to the vacated
         facility  totaling  $378,000 were  reclassified  to the exit  liability
         during 1997.  The Company has vacated and is attempting to sublease the
         Buffalo Grove  facility.  There is no assurance that the remaining exit
         liability  of $3.4  million at  December  31,  1997 will be adequate to
         cover actual costs should the Company's actual experience in subleasing
         the facility differ from the  assumptions  used in calculating the exit
         charge.

<PAGE> 37

         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,  1997,  1996 and 1995 rent expense
         was  $540,000,  $923,000  and  $993,000, respectively.  Additionally, 
         in 1997 $379,000 of rental payments were charged to the exit liability.
         Minimum future rentals are as follows (in thousands):

               Years Ended December 31,                       Amount
               ------------------------                     ----------
               1998                                         $      955
               1999                                              1,028
               2000                                              1,028
               2001                                                931
               2002                                                873
               Thereafter                                          873
                                                            ----------
                                                            $    5,688
                                                            ==========

9.       Income Taxes

         Components  of the  provision (benefit) for income  taxes for the years
         ended  December  31,  1997,  1996 and 1995 consist of (in thousands):

               Current:                        1997         1996         1995
                                             --------     --------     --------
                  Federal                    $ 28,630     $ 20,978     $ 10,906
                  State                         6,228        4,734        2,495
                                             --------     --------     --------
                                               34,858       25,712       13,401
               Deferred                        (1,351)      (3,228)        (462)
                                             --------     --------     --------

               Provision for income taxes    $ 33,507     $ 22,484     $ 12,939
                                             ========     ========     ========

         The current  income tax  liabilities  for 1997 and 1995 were reduced by
         $5,835,000  and  $4,027,000,  respectively,  for tax benefits  recorded
         directly to paid-in  capital  relating to the  exercise  and vesting of
         shares  pursuant to the MPK Stock Option Plan and 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 1997, 1996 and 1995 is as follows:

                                                   1997       1996       1995
                                                  ------     ------     ------
         Statutory federal income tax rate        35.0 %     35.0 %     35.0 %
         State taxes, net of federal benefit       4.6        4.7        4.7
         Other                                     0.1       (0.2)      (0.5)
                                                  ------     ------     ------
 
                                                  39.7 %     39.5 %     39.2 %
                                                  ======     ======     ======

<PAGE> 38

         The tax  effect  of  temporary  differences  that  give rise to the net
         deferred  income tax asset at December 31, 1997 and 1996 are  presented
         below (in thousands):

                                                    1997             1996
                                                ------------     ------------
         Current:
            Accounts receivable                 $      1,385     $        993
            Merchandise inventory                        344              181
            Accrued expenses                           1,858            1,084
                                                ------------     ------------
                                                       3,587            2,258
                                                ------------     ------------
         Non-current:
            Employee benefit plans                     3,800            3,682
            Exit charge                                1,322            1,555
            Other                                        508              371
                                                ------------     ------------
                                                       5,630            5,608
                                                ------------     ------------
                                                $      9,217     $      7,866
                                                ============     ============

         The portion of the net deferred tax asset relating to employee  benefit
         plans  results  primarily  from the MPK  Stock  Option  Plan,  which is
         deductible  for income tax purposes based upon the fair market value of
         the stock at the date 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.

10.      Stock-Based Compensation

         CDW Stock Option Plans

         The Company has established certain stock-based  compensation plans for
         the benefit of its directors and employees. Pursuant to these plans the
         Company  has  reserved  a total of  4,109,377  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, 1995,  1996 and 1997
         was as follows:

<TABLE>
<CAPTION>
                                                                       Weighted-Average         Options
                                                         Shares         Exercise Price        Exercisable
                                                      ------------     ----------------       -----------

             <S>                                         <C>           <C>                    <C>   
             Balance at January 1, 1995                    240,282     $          21.80                 -

             Options granted                               331,841                26.81
             Options exercised                                   -                    -
             Options forfeited                              34,313                23.02
                                                      ------------     ----------------       -----------

             Balance at December 31, 1995                  537,810                24.81                 -
                                                      ------------     ----------------       -----------

             Options granted                               590,685                56.10
             Options exercised                                   -                    -
             Options forfeited                              74,151                24.93
                                                      ------------     ----------------       -----------

             Balance at December 31, 1996                1,054,344                42.33                 -
                                                      ------------     ----------------       -----------

             Options granted                               859,759                52.33
             Options exercised                                   -                    -
             Options forfeited                              82,184                47.51
                                                      ------------     ----------------       -----------

             Balance at December 31, 1997                1,831,919     $          46.79            44,737
                                                      ============     ================       ===========
</TABLE>

<PAGE> 39

         For  the  years  ended   December   31,  1997,   1996  and  1995,   the
         weighted-average  fair value of options  granted with an exercise price
         equal to market price was $36.18, $41.99 and $13.44, respectively,  and
         the  weighted-average  fair value of options  granted  with an exercise
         price below market price was $52.12, $42.40 and none, respectively.


         The following table summarizes the status of outstanding  stock options
         as of December 31, 1997:
<TABLE>
<CAPTION>


                                             Options Outstanding                         Options Exercisable
                               -------------------------------------------------    -----------------------------
                                              Weighted-Average
                                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
          -----------------    -----------    ----------------    --------------    -----------    --------------
          <S>                    <C>                      <C>     <C>                    <C>                <C>
          $0.01                     23,794                19.6    $         0.01              -                 -
 
          $9.33 - $13.00            16,500                17.0             11.38          3,000              9.33

          $22.75 - $27.00          430,154                18.0             25.31         41,737             22.75

          $40.00 - $59.31        1,361,471                19.5             54.82              -                 - 
          -----------------    -----------    ----------------    --------------    -----------    --------------

          $0.01 - $59.31         1,831,919                19.1    $        46.79         44,737             21.85
          =================    ===========    ================    ==============    ===========    ==============
</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 granted in
         1997,  1996 and 1995,  reported net income and earnings per share would
         have been reduced as follows:
<TABLE>
<CAPTION>


                                                                     (in 000's, except per share amounts)
                                                                  1997               1996               1995
                                                             --------------     --------------     --------------
         <S>                                                 <C>                <C>                <C>  

         Net income, as reported                             $       51,001     $       34,400     $       20,059
         Pro forma net income                                $       48,573     $       33,931     $       20,050

         Basic earnings per share, as reported               $         2.37     $         1.60     $         0.95
         Diluted earnings per share, as reported             $         2.35     $         1.58     $         0.95

         Pro forma basic earnings per share                  $         2.26     $         1.58     $         0.93
         Pro forma diluted earnings per share                $         2.25     $         1.56     $         0.95
</TABLE>


         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.

<PAGE> 40

         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:

                                                1997         1996         1995
                                               ------       ------       ------
           Risk-free interest rate              5.5 %        6.6 %        6.4 %
           Dividend yield                       0.0 %        0.0 %        0.0 %
           Option life (years)                  9.9         10.3          4.9
           Stock price volatility              51.7 %       48.2 %       48.2 %



         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  4,143,375
         shares of common  stock owned by him at an exercise  price of $.017 per
         share.  Options for approximately  462,000,  338,000 and 337,500 shares
         were exercised and the resulting shares were sold pursuant to secondary
         offerings in June 1994,  August 1995 and February  1997,  respectively.
         Options for 514,207 shares are  exercisable as of December 31, 1997 and
         the remaining  2,693,194 options are exercisable at the rate of 621,506
         on each December 31 hereafter  until all options are  exercisable.  The
         options have a 20 year life. The number of options exercisable increase
         proportionately to shares, if any, sold by the majority shareholder.

         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  668,604
         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 subsidiary 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 $4.17 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, 1997,
         126,237 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 $59.00 per share,  the market
         price  of the  stock on the  acceleration  date.  Participants  elected
         accelerated vesting under this modification for 132,064 shares.

         As of December 31, 1997,  26,535  shares remain  outstanding  under the
         original  terms and vest on January 1, 2000 and 383,768  shares  remain
         outstanding  under the modified  terms and vest 25% each year beginning
         on January 1, 2000.

<PAGE> 41

11.      Earnings Per Share

         The Company has outstanding at December 31, 1997 common shares totaling
         approximately  21,525,000.  The  Company  has also  granted  options to
         purchase  common shares to the coworkers of the Company as discussed in
         Note 10. 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,
                                                                        ----------------------------------------
                                                                           1997           1996           1995
                                                                        ----------     ----------     ----------
           <S>                                                          <C>           <C>            <C> 
           BASIC EARNINGS PER SHARE:
           Income available to
                common shareholders (numerator)                         $   51,001     $   34,400     $   20,059
                                                                        ==========     ==========     ==========
           Weighted average common
                shares outstanding (denominator)                            21,525         21,525         21,026
                                                                        ==========     ==========     ==========
           Basic earnings per share                                     $     2.37           1.60           0.95
                                                                        ==========     ==========     ==========

           DILUTED EARNINGS PER SHARE:
           Income available to
                common shareholders (numerator)                         $   51,001         34,400         20,059
                                                                        ==========     ==========     ==========
           Weighted average common
                shares outstanding                                          21,525         21,525         21,026
           Effect of dilutive securities:
                Options on common stock                                        179            260             54
                                                                        ----------     ----------     ----------
           Total common  shares and  dilutive  securities (denominator)     21,704         21,785         21,080
                                                                        ==========     ==========     ==========
           Diluted earnings per share                                   $     2.35           1.58           0.95
                                                                        ==========     ==========     ==========
</TABLE>




<PAGE> 42



12.      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, 1997, 1996 and 1995, the
         Company's profit sharing expense was approximately $1,066,000, $662,000
         and $560,000, respectively.

13.      Contingencies

         The Company and its majority  shareholder  are  defendants in a lawsuit
         filed by a former  shareholder.  The suit requests  actual and punitive
         damages of which the amount cannot be readily  determined.  The Company
         and its majority  shareholder  believe the suit to be without merit and
         are vigorously  defending against this action. The lawsuit is currently
         pending in the  Federal  District  Court for the  Northern  District of
         Illinois,  after  the  remand  on  Plaintiff's  appeal  of  the  case's
         dismissal  by the trial court for being filed  untimely and the Court's
         lack of jurisdiction.  The outcome of the appeal and the case cannot be
         readily  ascertained at this time. The majority  shareholder has agreed
         to indemnify  and  reimburse  the Company for all damages and expenses,
         net of tax benefits  received by the  Company,  related to this action.
         For the years ended  December 31, 1997,  1996 and 1995, the Company and
         majority  shareholder  have incurred  legal  expenses of  approximately
         $379,000, $133,000 and $140,000,  respectively, which have been assumed
         by the  majority  shareholder.  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.  Although  the majority
         shareholder  has agreed to  indemnify  the Company for all  expenses or
         settlements,  if any, in  connection  with the suit,  the Company  will
         continue to record such expenses or settlements,  if any, as an expense
         with an offsetting increase to paid-in capital, net of tax effects.


<PAGE> 43



14.      Selected Quarterly Financial Data (Unaudited)

         The following  information is for the years ended December 31, 1997 and
1996 (in thousands, except per share data):


                              First        Second         Third        Fourth
                             Quarter       Quarter       Quarter       Quarter
                            ----------    ----------    ----------    ----------

DECEMBER 31, 1997
Net sales                   $  297,777    $  304,545    $  323,901    $  350,706
Gross profit                    39,943        41,657        42,980        46,225
Income before income taxes      18,822        21,043        21,543        23,100
Net income                      11,359        12,700        13,001        13,941
Earnings per Share:
  Basic                     $     0.53    $     0.59    $     0.60    $     0.65
  Diluted                   $     0.52    $     0.59    $     0.60    $     0.64

DECEMBER 31, 1996
Net sales                   $  206,705    $  218,687    $  240,330    $  262,173
Gross profit                    26,647        29,616        31,586        34,633
Income before income taxes       9,072        13,859        16,132        17,821
Net income                       5,534         8,494         9,679        10,693
Earnings per Share:
  Basic                     $     0.26    $     0.39    $     0.45    $     0.50
  Diluted                   $     0.26    $     0.39    $     0.44    $     0.49


<PAGE> 44



                        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  Subsidiary  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.

                                                                     
Coopers & Lybrand L.L.P.

Chicago, Illinois
January 22, 1998



                                      S-1

<PAGE> 45

                           CDW COMPUTER CENTERS, INC.

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                  years ended December 31, 1997, 1996 and 1995
                                 (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, 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
                                                 ----------     ----------     ----------     ----------       ----------

Year ended  December  31, 1996 
  Deducted in the balance  sheet from the
  asset to which it applies:
  Allowance for doubtful accounts                $      625     $      517     $        -     $       42 (a)   $    1,100
                                                 ----------     ----------     ----------     ----------       ----------

Year ended  December  31, 1995
  Deducted in the balance  sheet
  from the asset to which it applies:
  Allowance for doubtful accounts                $      400     $      238     $        -     $       13 (a)   $      625
                                                 ----------     ----------     ----------     ----------       ----------

</TABLE>


Note:

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


                                      S-2