##### Table of Contents



UNITED STATES
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, 2002

OR

|     |  |                                                                                         
|---- |  | ----------------------------------------------------------------------------------------
|[  ] |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

| |  |                                                     
| |  | ----------------------------------------------------
| |  | For the transition period from                    to

Commission file number      0-21796

CDW Computer Centers, Inc.

(Exact name of registrant as specified in its charter)


|                                                                        |  |                                                
|----------------------------------------------------------------------- |  | -----------------------------------------------
|Illinois
(State or other jurisdiction of
incorporation or organization) |  | 36-3310735
(I.R.S. Employer
Identification No.)

|                                                                                      |  |                 
|------------------------------------------------------------------------------------- |  | ----------------
|200 N. Milwaukee Ave.
Vernon Hills, Illinois
(Address of principal executive offices) |  | 60061
(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 ]

As of June 28, 2002, the last business
day of the registrant's most recently completed second fiscal
quarter, the aggregate market
value of the common stock held by
non-affiliates was approximately
$2.722 billion, based upon the closing
market price per share of $46.81.

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act) Yes [ X ] No [ ]

As of March 19, 2003, the
registrant had 83,859,884 shares of common stock,
$0.01 par value, outstanding.

Documents Incorporated by Reference

Portions of the definitive Proxy Statement for the Annual Meeting of
Shareholders to be held on May 21, 2003, to be filed not later than April 30,
2003, are incorporated by reference into Part III.





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TABLE OF CONTENTS



|                                            |                                                                                                         |  |  |  |  |  |  | 
|------------------------------------------- | ------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                                     
|                                            | Item 1. Business                                                                                       
|                                            | Item 2. Properties                                                                                     
|                                            | Item 3. Legal Proceedings                                                                              
|                                            | Item 4. Submission of Matters to a Vote of Security Holders                                            
|PART II                                    
|                                            | Item 5. Market for Registrants Common Equity                                                          
|                                            | Item 6. Selected Financial Data                                                                        
|                                            | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations          
|                                            | Item 7A. Quantitative and Qualitative Disclosures About Market Risk                                    
|                                            | Item 8. Financial Statements and Supplementary Data                                                    
|                                            | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure           
|PART III                                   
|                                            | Item 10. Directors and Executive Officers of the Registrant                                            
|                                            | Item 11. Executive Compensation                                                                        
|                                            | Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|                                            | Item 13. Certain Relationships and Related Transactions                                                
|                                            | Item 14. Controls and Procedures                                                                       
|PART IV                                    
|                                            | Item 15. Exhibits, Financial Statement Schedule and Reports on Form 8-K                                
|SIGNATURES                                 
|CERTIFICATIONS                             
|CDW Compensation Protection Plan           
|Form of Transitional Compensation Agreement
|Form of Noncompensation Agreement          
|Subsidiaries of the Registrant             
|Consent of Independent Accountants         
|Certification of Chief Executive Officer   
|Certification of Chief Financial Officer   



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CDW COMPUTER CENTERS, INC.
FORM 10-K ANNUAL REPORT
FOR THE YEAR ENDED DECEMBER 31, 2002
INDEX

|         |  |                                                                                                |  |             
|-------- |  | ---------------------------------------------------------------------------------------------- |  | ------------
|         |  |                                                                                                |  | 10-K Page
No
|         |  | PART I                                                                                         |  |             
|         |  |                                                                                                |  |             
|Item 1.  |  | Business                                                                                       |  | 1           
|         |  |                                                                                                |  |             
|Item 2.  |  | Properties                                                                                     |  | 11          
|         |  |                                                                                                |  |             
|Item 3.  |  | Legal Proceedings                                                                              |  | 11          
|         |  |                                                                                                |  |             
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                            |  | 11          
|         |  |                                                                                                |  |             
|         |  | PART II                                                                                        |  |             
|         |  |                                                                                                |  |             
|Item 5.  |  | Market for Registrants Common Equity                                                          |  | 12          
|         |  |                                                                                                |  |             
|Item 6.  |  | Selected Financial Data                                                                        |  | 13          
|         |  |                                                                                                |  |             
|Item 7.  |  | Managements Discussion and Analysis of Financial Condition and
Results of Operations          |  | 14          
|         |  |                                                                                                |  |             
|Item 7A. |  | Quantitative and Qualitative Disclosure About Market Risk                                      |  | 23          
|         |  |                                                                                                |  |             
|Item 8.  |  | Financial Statements and Supplementary Data                                                    |  | 24          
|         |  |                                                                                                |  |             
|Item 9.  |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure           |  | 24          
|         |  |                                                                                                |  |             
|         |  | PART III                                                                                       |  |             
|         |  |                                                                                                |  |             
|Item 10. |  | Directors and Executive Officers of the Registrant                                             |  | 24          
|         |  |                                                                                                |  |             
|Item 11. |  | Executive Compensation                                                                         |  | 24          
|         |  |                                                                                                |  |             
|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters |  | 24          
|         |  |                                                                                                |  |             
|Item 13. |  | Certain Relationships and Related Transactions                                                 |  | 25          
|         |  |                                                                                                |  |             
|Item 14. |  | Controls and Procedures                                                                        |  | 25          
|         |  |                                                                                                |  |             
|         |  | PART IV                                                                                        |  |             
|         |  |                                                                                                |  |             
|Item 15. |  | Exhibits, Financial Statement Schedule and Reports on Form 8-K                                 |  | 26          
|         |  |                                                                                                |  |             
|         |  | Signatures                                                                                     |  | 30          
|         |  |                                                                                                |  |             
|         |  | Certifications                                                                                 |  | 31          
|         |  |                                                                                                |  |             
|         |  |                                                                                                |  |             

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PART I




Item 1.   Business.

General

CDW Computer Centers, Inc. (collectively with its subsidiaries, CDW or
the Company) is the largest direct marketer of multi-brand computers and
related technology products and services in the United States. The Company was
founded in 1984 and reincorporated in 1995 in Illinois. Our extensive offering
of products, including hardware, software and accessories, combined with our
service offerings, provide comprehensive solutions for our customers
technology needs. We offer customers a broad range of technology products from
leading vendors such as Cisco, Hewlett-Packard, IBM, Intel, Microsoft, Sony and
Toshiba, among others. Our high volume, cost-efficient operations, supported
by our proprietary information technology systems, enable us to offer these
products at competitive prices combined with a high level of service, an
approach we call high tech, high touch. Our value-added services include
the ability to custom configure multi-branded solutions for our customers and
offer technical support 24 hours a day, 7 days a week.

We have more than 1,300 account managers and sales specialists who sell
primarily to commercial customers. For financial reporting purposes, we have
two operating segments: corporate, which is primarily comprised of business
customers, but also includes consumers (consumers generated approximately 3% of
total net sales in 2002), and public sector, which is comprised of federal,
state and local government and educational institution customers who are served
by CDW Government, Inc. (CDW-G), a wholly-owned subsidiary. Our corporate
customers are concentrated in the small to medium business (SMB) category. The
discussions of sales and marketing activities for the corporate segment and any
reference to commercial accounts exclude consumers. (See Note 14 to the
Consolidated Financial Statements for certain financial information regarding
our two operating segments.)

We market to current and prospective customers through our catalogs, other
direct mailing programs, product advertisements in computer trade magazines,
our Web sites and various Web advertising vehicles. Additionally, we promote
the CDW brand on a national basis through our branding campaign, which includes
television, print media and other activities. Our marketing efforts are
integrated with a proactive calling program by our account managers. We also
focus significant efforts on developing and expanding our E-business
initiatives. These initiatives include CDW.com and
CDWG.com (our Web sites),
and CDW@work and CDWG@work (our extranets), which are customized Web sites for
our commercial customers.

For the year ended December 31, 2002, we served approximately 361,000
commercial accounts, which comprised 97% of our total net sales. We focus on
generating repeat sales from existing customers while also generating sales
from new customers. We engender a high degree of customer loyalty through our
relationship-based account managers. These account managers are knowledgeable
about customer needs and assist customers by providing advice on the selection
and configuration of multi-branded technology solutions.

We adhere to a core philosophy known as the CDW CIRCLE OF SERVICE, which
places the customer at the center of all of the Companys actions. The
philosophy is based on the premise that People Do Business With People They
Like. The CDW CIRCLE OF SERVICE is a graphic reminder to our coworkers that
good service leads to good experiences and increased sales. A fundamental
element of the CDW CIRCLE OF SERVICE is our coworkers, who are highly
motivated and incented to share in the Companys success.

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Electronic versions of CDWs Annual Report on Form 10-K, Quarterly Reports
on Form 10-Q, Current Reports on Form 8-K and amendments to these reports are
available free of charge through our Web sites, CDW.com and
CDWG.com, as soon
as reasonably practicable after we electronically file these reports with the
Securities and Exchange Commission.

Business Strategy

Our business strategy is to be a high volume, cost-efficient direct
marketer of multi-brand, competitively-priced computers and related technology
products and services while providing a high level of support to our customers.
We believe that the following factors are of principal importance in our
ability to implement this high tech, high touch business strategy:

Multi-Branded Solutions.We offer more than 80,000 products, which
include a wide range of product types from leading manufacturers including
Cisco, Hewlett-Packard, IBM, Intel, Microsoft, Sony and Toshiba. With this
broad selection of products, we can provide our customers with
fully-integrated, multi-branded technology solutions and the convenience of
one-stop shopping. We also continuously review and enhance our product mix
based on new product introductions and the buying needs of our customers.

Customer Focus.We focus our sales and marketing efforts on attracting
and serving commercial customers rather than consumers. We believe commercial
customers typically have ongoing requirements to purchase sophisticated
products and systems and value our relationship-based approach and high level
of service. In 2002, sales to commercial customers comprised 97% of total net
sales.

We also continue to grow our public sector business, which is directed at
meeting the technology needs of federal, state and local governments, and
primary and secondary educational institutions. We serve these markets, which
have different purchasing requirements, with a field sales force that actively
calls on customers and prospects in person to augment the Companys inside
sales force. We also reach our public sector customer base through our
customized Web site, CDWG@work.

Competitive Pricing. We are able to offer our customers competitive
prices due to our low cost structure, efficient distribution methods, ability
to purchase products directly from manufacturers and economies of scale in
purchasing products. Our size and financial strength allow us to negotiate
advantageous purchasing terms and earn vendor rebates and incentives.

Marketing.We use a marketing mix of direct response activities,
including our catalogs and trade magazine advertising, combined with a
multifaceted branding campaign, including national television advertising.
These activities are intended to generate customer response and a high level of
awareness of CDW. Our marketing activities are directed to commercial users
and the decision makers in commercial organizations.

Customer Service.We have over 1,300 account managers and sales
specialists who are highly trained in the Companys products, systems and
philosophies, enabling them to provide a high level of customer service. We
assign an account manager to each customer. Account managers understand their
customers businesses and technology systems and are able to recommend
integrated product solutions based on customer needs, past purchases and
technological developments. Our account managers provide a high level of
customer service through CDWs proprietary customer relationship management
system. Customers also benefit from specialty sales support teams that have
in-depth knowledge of and experience with complex technology products and
applications such as network solutions, storage applications and software
licenses.

Custom Configuration.We offer custom configuration services such as the
installation of accessories and expansion products, loading of software,
imaging for custom applications and configuration of network operating systems.
Our custom configuration services benefit our customers by reducing the cost
and time necessary to deploy new products into their existing technology
environment.

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Technical Support.Our technical staff is well-trained and maintains the
highest levels of professional certification from manufacturers. We employ a
technical staff of more than 130 with over 470 manufacturer certifications to
assist the customer with technical questions and issues. We offer technical
support services by telephone 24 hours a day, 7 days a week. We believe that
our commitment to service at the time of sale and after the purchase maximizes
sales and encourages repeat customers.

Information Technology.We use 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. We integrate our real-time systems with
CDW.com and CDWG.com, our Web sites, providing real-time information for our
customers.

Effective Inventory Control.Our management information systems,
purchasing system, radio frequency-based cycle counting system and use of
vendor stock balancing and price protection programs allow us to minimize our
investment in inventory and to reduce inventory discrepancies and the risk of
obsolescence while meeting customer needs. These systems resulted in the
Company achieving approximately 27 inventory turns during 2002.

High Quality Personnel.We strive to attract, retain and motivate high
quality personnel and provide our coworkers with financial incentives designed
to maximize performance and productivity. Our objective is, whenever possible,
to promote people from within to positions of increased responsibility. We
have instituted short-term incentive programs, stock-based compensation and an
on-site childcare and fitness center facility to reward and motivate all of our
coworkers.

Product Offering

We offer multi-brand computers and related technology products, including
hardware and peripherals, software, networking and communication products and
accessories, for use with microcomputers based on a variety of operating
platforms, including Microsoft, Apple, Linux, Novel, Oracle and others.
Aggressive inventory management allows us to limit our on-hand inventory and
ship orders generally on a same-day basis.

We continually seek to expand and improve our relationships with
manufacturers as well as increase the number of products which we are
authorized to sell.

Purchasing and Vendor Relationships

We believe that effective purchasing from a diverse vendor base is a key
element of our business strategy. For the year ended December 31, 2002, Tech
Data and Ingram Micro were the only individual distributors from whom our
purchases exceeded 10% of total purchases. Additionally, in 2002,
Hewlett-Packard and Microsoft were the only individual manufacturers whose
products comprised more than 10% of our total sales.

Our marketing and purchasing staffs work together to identify reliable,
high-quality suppliers of products, then actively negotiate to achieve the
lowest possible cost and expand vendor support programs. We seek to establish
strong relationships with our vendors, and employ a policy of paying vendors
within stated terms and taking advantage of all appropriate discounts. Several
of our leading vendors such as Hewlett-Packard and Microsoft have full-time
representatives on-site at the Companys facilities.

We purchase products for resale both directly from manufacturers and
indirectly through distributors and other sources, all of whom we consider our
vendors. During 2002, we purchased approximately 53% of our merchandise
directly from manufacturers and the remaining amount from distributors and
other sources. We are
authorized by manufacturers to sell via direct marketing all or selected
products offered by the manufacturer. Our authorization with each manufacturer
provides for certain terms

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and conditions, which may include one or more of the
following: product return privileges, price protection policies, purchase
discounts and vendor support programs, such as purchase or sales rebates and
cooperative advertising reimbursements. Vendors also periodically offer the
Company bulk inventory purchase opportunities to purchase a large amount of
product at reduced prices. Vendor support programs are at the discretion of
the vendors and usually require the achievement of a specified sales volume or
growth rate to qualify for all, or some, of the incentive program.

Inventory Management/Distribution

We apply our proprietary information technology systems to the task of
managing our inventory in an aggressive, cost-efficient manner, resulting in a
rapid-turn inventory model. Our information technology systems provide
information on each item of inventory from the time it is ordered until it is
shipped to a customer. We generally only stock items that have attained a
minimum sales volume. All of our inventory items contain UPC bar codes that
are matched to our internal product codes which allow the system to track and
discern trends with respect to product movement and inventory obsolescence. We
also use vendor stock balancing and price protection programs to minimize our
investment in inventory.

Our distribution process is highly automated. Once a customer order is
received, either by phone, online or fax, it is processed for credit approval.
After credit approval is received, orders are automatically routed to our
warehouse for shipping. All product picking is performed using bar-coded
labels, UPC bar codes and radio frequency scanning. All product shipments
travel through our warehouse on automatic conveyor systems with in-line
scanning and are subject to numerous quality control checks. Our sorting
system automatically provides a final quality control check and directs boxes
to the appropriate commercial carrier.

We believe that the Chicago metropolitan area is an excellent location for
our business as it is centrally located for purposes of shipping products
throughout the United States and provides timely access to our principal
distributors. Our location enables the Company to obtain non-stocked items for
same-day shipping. The relocation of key distributors utilized in our
purchasing model could adversely impact our results of operations. We believe
that competitive sources of supply are available in substantially all of the
merchandise categories we carry.

Marketing and Advertising Activities

We market to our current and prospective customers using catalogs,
promotional mailing campaigns, advertising and a proactive outbound calling
program. In addition, we promote the CDW brand through a national branding
campaign, which includes print media, television advertisements and other
activities.

Catalogs are one of our main advertising vehicles and approximately 40
million catalogs are produced and distributed each year. Our catalog strategy
has evolved to include specialty catalogs such as networking communications and
software. Our main catalog now includes relevant content such as interviews
with industry executives and noteworthy technology developments. In 2000, we
launched a Customer Technology Seminar Series, hosting representatives from
industry manufacturers and influential persons in the technology field who
discuss the latest information technology issues with our customers. Customers
who are unable to attend the series can access the presentations on the
Companys Web sites.

As a result of our relationships with our vendors, a substantial portion
of our advertising and marketing expenses are reimbursed through cooperative
advertising reimbursement programs. These cooperative advertising programs are
at the discretion of our vendors and are typically tied to sales or purchasing
volumes and other commitments required by the Company. In order to measure the
effectiveness of our marketing activities, we track responses to our various
efforts by a variety of means. We use this information to further refine our
marketing strategy and to develop more effective programs.

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E-business

We utilize our Web sites and extranets to implement our high tech, high
touch business strategy. Our objective is to make it easy for our customers
to transact business with the Company and ultimately to enhance our customer
relationships. Our Web sites include many advanced features to attract new
customers and produce sales, including more than 80,000 computer products to
search and order online, advanced search capabilities, product specifications,
and information on product availability and pricing. During 2002 and 2001, we
generated $829.2 million and $615.3 million, respectively, of direct online
sales over our Web sites. We also offer side-by-side product comparisons,
links to product reviews, newsworthy announcements, personalized access and
customized two-way interaction that allows for checking order status.

We continue to enhance our award-winning, customized Web sites, marketed
as CDW@work and CDWG@work extranets. These sites give customers online access
to information such as order status, accounts payable details, purchase history
and details about their dedicated CDW or CDW-G account team. Customers may also
use their site to automate technology purchasing procedures, inventory
asset-tagged items, reprint invoices and retrieve quotes prepared by their
account manager. In addition, we have, through our strong relationships with
vendors, arranged for links between vendors Web sites and our own. Many
customers use the extranets to gather product information, including pricing
and availability, and then follow up with their account manager to access the
account managers knowledge base regarding product compatibility and other
information. In 2002, sales to customers with active extranets, including
online orders and those placed directly with account managers, totaled
approximately $3.0 billion, representing approximately 70% of total sales.

Sales Activities and Order Fulfillment

Our success is due in part to the strength of our account managers who
manage customer relationships by responding to customer inquiries and
proactively calling existing and potential new customers. Our account managers
are trained in Company systems and philosophies, have in-depth product
knowledge and are motivated to maximize operating income and provide high
levels of customer service. All account managers are graduates of CDW
University, our proprietary sales training program. New account managers are
immersed in the Universitys intense College of Sales and complete an 11-week
sales consulting, product training, systems and customer service curriculum.
We seek to build customer relationships by assigning each customer to the
account manager who first serves 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 operating income 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 our
customer purchase history. Computer processing of orders is performed
immediately following the placement of the order and upon receipt of credit
approval. We ship most credit approved orders on the day the order is
received. We generally ship products to customers by Airborne, A.I.T., Eagle,
FedEx, FedEx Ground, United Parcel Service and other commercial delivery
services and invoice customers for shipping charges.

Our account managers are generally compensated pursuant to a commission
schedule based upon the gross profit they generate. Our 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 and pursuant to various contracted prices, where applicable. Our
account managers have the opportunity to achieve relatively high compensation
levels and have historically shown increased productivity as training and
experience levels increase.

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Customers

We served approximately 361,000 commercial customers for the year ended
December 31, 2002. For the year ended December 31, 2002, sales to our
commercial customers accounted for approximately 97% of total net sales. We
are not dependent on any one customer. For the year ended December 31, 2002,
our largest customer comprised only .50% of net sales and our top five
customers comprised approximately 1.30% of net sales. Our corporate customers
are primarily small and medium size businesses that generally have less than
1,000 employees at a single location. We also serve larger corporate
customers, including FORTUNE 1000 companies, as either a primary or secondary
vendor. CDW-G, which conducts the Companys public sector business, focuses on
meeting the technology needs of federal, state and local governments, as well
as primary and secondary educational institutions.

Our customers are located almost entirely in the United States. In 2002,
approximately 11% of our net sales were to customers in Illinois, approximately
33% were to customers in the eastern United States, approximately 19% were to
customers in the southern United States, approximately 21% were to customers in
the western United States and approximately 15% were to customers in the
midwestern United States (excluding Illinois). Approximately 1% of our sales
in 2002 were to customers outside of the continental United States.

Custom Configuration and Technical Support

We offer custom configuration services, including installation of
accessories or expansion products, software loading, network configuration and
custom applications imaging. Custom configurations provide additional value to
our customers because they reduce the cost and time necessary to deploy new
products into their existing technology environments. The ability to configure
products to customer specifications enables CDW to generate incremental sales.
We have the infrastructure in place to double the number of custom-configured
products.

Our technical support staff is well trained and maintains the highest
levels of professional certification from manufacturers, including that of
Microsoft Certified Systems Engineer (MCSE) and Novell Certified Network
Engineer. Our technical support staff is motivated to obtain high
certification levels, as they are compensated, in part, on the basis of those
certifications. Technical support is available by telephone 24 hours a day, 7
days a week to assist customers with technical problems or answer questions in
order to increase customer satisfaction and reduce product returns. We have
developed a proprietary customer service tracking system to ensure that
customer-initiated service requests are responded to rapidly. As a result,
substantially all customer service calls are answered in one minute or less.

Information Technology Systems

Our information technology systems are a key element in our ability to
maintain what we believe is the lowest cost structure among multi-brand direct
marketers of computers and related technology products and services. We have
installed and operate customized information technology and telephony systems.
Collectively, these systems allow for centralized management of key functions,
including inventory, accounts receivable, purchasing, sales and distribution.
Additionally, our systems enable the preparation of daily operating control
reports which provide thorough, detailed and timely information regarding key
aspects of our business. Our proprietary information technology systems enable
us to enhance productivity, ship customer orders on a same-day basis, respond
quickly to industry changes and provide high levels of customer service.
Historical customer orders are tracked within our system so that we can provide
our customers with updates regarding product upgrades and other information
relating to the products they purchase from the Company.

Our success is dependent on the accuracy and proper utilization of our
information technology and telephony systems. We anticipate that we will
continue to require software and hardware upgrades for our current information
technology systems. In addition, our ability to adapt our systems to changes
in the

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competitive environment or to take advantage of additional automation is
dependent on our ability to recruit and retain qualified information technology
professionals.

The integrity of our information technology systems is vulnerable to
certain forms of disaster including, but not limited to, natural disasters such
as tornadoes. We have established a disaster recovery plan that utilizes a
backup system for our information technology and telephone systems. The
primary components of our information technology systems and the hardware for
backup systems are maintained at separate locations.

Coworkers, Training and Culture

At December 31, 2002, we employed approximately 2,900 coworkers. We
consider our coworker relations to be excellent. No coworkers are covered by
collective bargaining agreements.

We emphasize the recruiting, training and development of high quality
coworkers throughout our organization. Our objective is to promote people from
within to positions of increased responsibility, whenever possible. We develop
our coworkers through CDW University, our company-wide training program with
colleges of specialization. The colleges of CDW University provide specialized
training in sales and relationship-building techniques, technical
certifications and leadership development skills. In 2001, the College of
Performance Excellence was added to the existing colleges of Sales, Technology,
Knowledge Management and Leadership. The College of Performance Excellence
offers more than fifteen instructor-led courses designed to enhance coworkers
interpersonal and professional skills.

We strive to create a supportive and rewarding work environment. In 2003,
we were named by FORTUNE magazine as one of the 100 Best Places to Work in
America for the fifth consecutive year. Our Vernon Hills facility contains an
on-site childcare and fitness center. Additionally, we sponsor a series of
English language classes for coworkers who speak English as a second language,
provide on-site dry cleaning and private rooms for nursing mothers. CDW
coworkers are encouraged to provide their thoughts and concerns regarding the
Company directly to management.

Incentive and Regular Compensation Arrangements

Compensation Arrangements. Our 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 monthly commission
schedule which is based on performance. 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 and
pursuant to various contracted prices, where applicable. Account managers have
the opportunity to achieve relatively high compensation levels and have
historically shown increased productivity as training and experience levels
increase. In addition, most coworkers, excluding the Companys sales force,
are eligible for monthly,
quarterly or annual bonus programs that are tied to achieving certain goals.
We believe that these incentives positively impact the Companys performance
and profitability.

Coworker Bonus, Stock Option and Restricted Stock Plans.In addition to
regular compensation, we provide coworkers with additional long-term incentives
designed to maximize performance and productivity. To this end, we have
adopted various stock-based compensation plans which enable coworkers to share
in the Companys success through appreciation in the value of the Companys
stock. We reward every coworker with a stock option grant as a part of their
compensation.

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Business Technology Centers

We currently operate two Business Technology Centers allowing local
customers an opportunity to examine products prior to purchase and to meet
face-to-face with our sales or technical coworkers. One of these centers is
located at our main facility in Vernon Hills, Illinois, and the other is
located in Chicago, Illinois. These centers occupy approximately 5,100 square
feet each.

Trademarks and Trade Names

We conduct business under a number of trademarks, trade names and service
marks, some of which are registered; for example CDW, CDW. The Right
Technology. Right Away., CDW CIRCLE OF SERVICE, CDW@work, CDW-G,
CDWG@work and Direct Solutions Provider. We have taken steps to register
and protect these marks and believe they have significant value and are
important factors in our marketing programs.

Certain Factors Affecting CDWs Business

There are many factors that affect our business and the results of
operations, some of which are beyond our control. The following is a
description of some important factors that may cause the actual results of
operations in future periods to differ materially from those currently expected
or desired.

Vendor Relationships and Product Availability.We purchase products for
resale both directly from manufacturers and indirectly through distributors and
other sources, all of whom we consider our vendors. We are authorized by
manufacturers to sell all or some of their products via direct marketing. Our
authorization with each manufacturer is subject to specific terms and
conditions regarding such things as product return privileges, price protection
policies, purchase discounts and vendor incentive programs such as purchase
rebates, sales volume rebates and cooperative advertising reimbursements. From
time to time, vendors may terminate the right of the Company to sell some or
all of their products or change these terms and conditions or reduce or
discontinue the incentives that they offer the Company. Any such termination
or implementation of such changes could have a negative impact on our operating
income. Additionally, some products are subject to manufacturer allocation,
which limits the number of units of such products that are available to
resellers, including the Company. Sales of Hewlett-Packard (including Compaq),
IBM, Microsoft, Sony, Toshiba and Cisco products comprise a substantial portion
of our sales. In 2002, products from each of Hewlett-Packard and Microsoft
represented more than 10% of our total sales. In addition, although we
purchase from a diverse vendor base, in 2002, products purchased by the Company
from each of distributors Tech Data and Ingram Micro represented more than 10%
of our total purchases. The loss of any of these or any other key vendors, or
the diminished availability of their products, could reduce the supply and
increase the costs of products sold by the Company and negatively impact our
competitive position. In 2002, Compaq merged into Hewlett-Packard. Although
to date this merger has not had an adverse impact on our business and results
of operations, further consolidation among manufacturers could adversely impact
the Company.

Information Technology Systems.Our success is dependent on the accuracy,
proper utilization and continuing development of our information technology
systems, including our business application systems, Web servers and telephony
system. The quality and our utilization of the information generated by the
information technology systems affects, among other things, our ability to
conduct business with our customers, manage our inventory and accounts
receivable, purchase, sell, ship and invoice our products efficiently and on a
timely basis and maintain our cost-efficient operating model. While we have
taken steps to protect our information technology systems from a variety of
threats, including computer viruses and malicious hackers, there can be no
guarantee that such steps will be effective. Any disruption to or infiltration
of our information technology systems could significantly harm our business and
results of operations.

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New Technologies and Products.The market for computers and related
technology products and services has evolved as a result of the development of
new technologies that are transformed by manufacturers into new products and
applications. We have been and will continue to be dependent on the
development of new technologies and products by manufacturers, as well as the
acceptance of those technologies and 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 those technologies and products by end-users, could
have an adverse effect on our business and results of operations.

Sales Force.Our statistics show that the level of sales achieved by our
account managers increases with the number of years of experience they have
with the Company. Our rate of sales growth and our operating results would be
negatively affected if we were unable to expand the size of our sales force, if
the turnover rate of account managers increases from historical levels or if
the sales volumes achieved by our account managers does not increase with
experience.

Competition.The market for computers and related technology products and
accessories is highly competitive. Our competition includes national direct
marketers, such as Insight Enterprises, MicroWarehouse, PC Connection, PC Mall
and Zones; manufacturers who sell directly to end-users, such as Dell and
Gateway; computer superstores, such as CompUSA; government resellers, such as
GTSI; consumer electronic and office supply superstores, such as Best Buy,
Circuit City, Office Depot, Office Max and Staples; value-added resellers;
corporate resellers, such as CompuCom; and Web resellers, such as Amazon.com
and Buy.com.

Some of our hardware and software vendors, such as Hewlett-Packard and
IBM, have sold, and continue to intensify their efforts to sell, their products
directly to end-users. In addition, some software manufacturers have
developed, and may continue to develop, sales methods that directly provide
customers with subscription-based software programs and packages. If either of
these trends becomes more prevalent, it could adversely affect our sales growth
and profitability.

We believe that competition may increase in the future, which could
require us to reduce prices, increase advertising expenditures or take other
actions which may have an adverse effect on our operating results. Some of our
competitors have reduced their prices in an attempt to stimulate sales and
limit the impact of the current economic slowdown. Decreasing prices of
computers and related technology products and accessories resulting from
competition and technological changes require us to sell a greater number of
products to achieve the same level of net sales and gross profit. If this
trend continues and we are unable to attract new customers and sell increased
quantities of products, our sales growth and profitability could be adversely
affected.

Inventory Risk.We are exposed to inventory risks as a result of the
rapid technological changes that affect the market and pricing for the products
we sell. We seek to minimize our inventory exposure through a variety of
inventory management procedures and policies, including our rapid-turn
inventory model, as well as vendor price protection and product return
programs. However, if we were unable to maintain our rapid-turn inventory
model, if there were unforeseen product developments or if vendors change their
terms and conditions, our inventory risks could increase. We also periodically
take advantage of cost savings associated with certain opportunistic bulk
inventory purchases offered by our vendors. These bulk purchases could
increase our exposure to inventory obsolescence.

Natural Disaster or Other Adverse Occurrence.We operate our business
from a primary facility in Vernon Hills, Illinois. Although we have multiple
sales office locations, substantially all of our corporate, warehouse and
distribution functions are located at the Vernon Hills facility. If the
warehouse and distribution equipment at the Vernon Hills facility were to be
seriously damaged by a natural disaster or other adverse occurrence, we could
utilize third-party distributors to ship products to our customers. However,
this may not be sufficient to avoid interruptions in service and may not enable
us to meet all of the needs of our customers. Additionally, this would cause
the Company to incur incremental operating

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costs. As a result, a natural
disaster or other adverse occurrence at our primary facility in Vernon Hills
could negatively impact our business and profitability.

Dependence on Commercial Delivery Services.We generally ship products to
customers by Airborne, A.I.T., Eagle, FedEx, FedEx Ground, United Parcel
Service and other commercial delivery services and invoice customers for
shipping charges. If we are unable to pass on future increases in the cost of
commercial delivery services to our customers, our profitability could be
adversely affected. Additionally, strikes or other service interruptions by
such shippers could adversely affect our ability to deliver products on a
timely basis.

General Economic Conditions.Continued weak general economic conditions,
along with uncertainties in political conditions, could adversely impact our
revenues and growth rate. During the year ended December 31, 2002, the
information technology market continued to weaken, particularly in the
corporate segment. Continued softness in the information technology market
could result in lower demand for our products and services. In 2002, we
continued to be impacted by the effects of the economic downturn, most notably
a decline in I.T. budgets and a decline in the average selling prices of
desktop computers, servers and notebook computers. In addition, our revenues,
gross margins and earnings could deteriorate in the future as a result of
unfavorable economic or political conditions.

Public Sector Contracts.Revenues from the public sector segment are
derived from sales to state, federal and local governmental departments and
agencies, as well as to educational institutions, through various contracts and
open market sales. Government contracting is a highly regulated area.
Noncompliance with government procurement regulations or contract provisions
could result in civil, criminal, and administrative liability, including, but
not limited to, substantial monetary fines or damages, termination of
government contracts, and suspension, debarment or ineligibility from doing
business with the government. The effect of any of these possible actions by
any governmental department or agency could adversely affect our business and
results of operations.

Global Market Risk.Portions of our products are either produced, or have
major components produced, in the Asia Pacific region. We engage in U.S.
dollar denominated transactions with U.S. divisions and subsidiaries of
companies located in this region. As a result, we 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.
In the past, countries in the Asia Pacific region, including Japan, have
experienced volatility in their currency, banking and equity markets. Future
volatility could adversely affect the supply and price of products and
components and ultimately, our results of operations.

State and Local Sales/Use Tax.We currently collect state and local
sales/use tax only on sales of products to non-exempt residents of the State of
Illinois and on sales to some customers in a limited number of other states as
required by law. Various states have sought to require the collection of state
and local sales/use taxes on the sale of products shipped to the taxing states
residents by direct marketers. The United States Supreme Court has ruled that
no state, absent Congressional legislation, may impose tax collection
obligations on a direct marketer whose only contacts with the taxing state are
the distribution of catalogs and other advertisement materials through the mail
and the delivery of purchased goods by U.S. mail or interstate common carriers.
We cannot predict the level of contact, including Web activities, with any
state which would give rise to future or past tax collection obligations within
the parameters of the Supreme Court cases. Additionally, on several occasions
in the past several years, including recently, legislation has been introduced
in the United States Congress which, if passed, could impose state or local
sales/use tax collection obligations on direct marketers such as CDW. If
Congress
enacts legislation that permits states to impose tax collection obligations on
direct marketers, or we are deemed to have a physical presence in one or more
states, additional tax collection obligations may be imposed on the Company.
This would likely result in additional costs and administrative expenses to
CDW, price increases to our customers and reduced demand for our products, any
or all of which would adversely affect our operating results.

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Item 2.     Properties.

We own our primary location and headquarters in Vernon Hills, Illinois,
which includes our warehouse and distribution center, a Business Technology
Center and corporate offices. The facility consists of approximately 450,000
square feet of warehouse and distribution center space and 125,000 square feet
of office space. We own a total of 45 acres of land at the Vernon Hills site,
of which approximately 11 acres are vacant and available for future expansion.

We have executed various operating lease agreements, primarily for sales
office facilities in the Chicago metropolitan area. The lease agreements
generally provide for minimum rent and a proportionate share of operating
expenses and property taxes, and include certain renewal and expansion options.
The following table summarizes these lease agreements and the related financial
commitment:

|                                                  |  |         |         |              |  |              |  |                |  |               |  |              |  |           |  |         |  |  |  | 
|------------------------------------------------- |  | ------- | ------- | ------------ |  | ------------ |  | -------------- |  | ------------- |  | ------------ |  | --------- |  | ------- |  |  |  | 
|Lease Agreements and Related Financial Commitment
|                                                 
|                                                  |  |         |         |              |  |              |  |                |  |               |  |              |  | Aggregate |  | Average
|                                                  |  |         |         |              |  |              |  |                |  |               |  |              |  | Future    |  | Annual 
|                                                  |  | Square  |         | Lease        |  | Lease        |  | Minimum        |  | Lease        
|Location                                          |  | Footage |         | Commencement |  | Term         |  | Lease Payments |  | Expense      
|                                                  |  |         |         |              |  |              |  |                |  |              
|120 S. Riverside                                  |  |         |         |              |  | April and    |  |                |  |               |  |              |  |           |  |         |  | 
|Chicago, IL                                       |  |         | 72,000  |              |  | August 2000  |  | 10 years       |  | $9.5 million  |  | $1.2 million
|                                                  | 
|10 S. Riverside                                   |  |         |         |              |  | February and |  |                |  |               |  |              |  |           |  |         |  | 
|Chicago, IL                                       |  |         | 72,000  |              |  | August 2001  |  | 10 years       |  | $12.0 million |  | $1.4 million
|                                                  | 
|Mettawa, IL                                       |  |         | 156,000 |              |  | March 2001   |  | 10 years       |  | $30.9 million |  | $3.8 million

We are obligated under a lease through 2003 for a combined 104,000 square
foot office and warehouse facility in Buffalo Grove, Illinois, that previously
served as our main facility and is currently unoccupied.




Item 3.     
Legal Proceedings.

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




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

There were no matters submitted during the fourth quarter of 2002 to a
vote of security holders.

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PART II




Item 5.   Market for Registrants Common
Equity.

The following table sets forth for the periods indicated the high and low
sales prices for the Companys common stock, which is traded on The Nasdaq
Stock Market® under the symbol CDWC. These quotations were obtained from
Nasdaq, and have been adjusted to reflect the two-for-one stock split paid in
the form of a stock dividend on June 21, 2000 to common shareholders of record
on June 14, 2000. We believe that as of March 13, 2003 there were
approximately 25,013 beneficial owners of the Companys common stock. Except
for distributions prior to May 25, 1993, the date of termination of our
election to be taxed as an S Corporation, we have neither declared nor paid any
cash dividends on our common stock. We currently intend to retain earnings for
use in the operation and expansion of our business and therefore we do not
anticipate paying cash dividends in the foreseeable future, however, we
continue to review this policy on an annual basis.

|              |  |      |        |      |  |     |        |      |  |   |        |  |  |   |        | 
|------------- |  | ---- | ------ | ---- |  | --- | ------ | ---- |  | - | ------ |  |  | - | ------ | 
|              |  | 2002 |        | 2001
|              |  |      |        |     
|Quarter Ended |  | Low  |        | High |  | Low |        | High
|              |  |      |        |      |  |     |        |     
|March 31      |  | $    | 46.320 |      |  | $   | 60.000 |      |  | $ | 24.875 |  |  | $ | 42.375 | 
|June 30       |  | $    | 41.400 |      |  | $   | 56.900 |      |  | $ | 29.500 |  |  | $ | 48.440 | 
|September 30  |  | $    | 40.250 |      |  | $   | 52.350 |      |  | $ | 28.350 |  |  | $ | 48.980 | 
|December 31   |  | $    | 40.500 |      |  | $   | 56.580 |      |  | $ | 32.500 |  |  | $ | 56.880 | 

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ITEM
6.      Selected Financial Data

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

|                                                      |         |   |                         |        |      |   |           |        |      |   |           |        |  |   |           |        |  |   |           |        | 
|----------------------------------------------------- | ------- | - | ----------------------- | ------ | ---- | - | --------- | ------ | ---- | - | --------- | ------ |  | - | --------- | ------ |  | - | --------- | ------ | 
|                                                      |         |   | Year Ended December 31,
|                                                      |         |   |                        
|                                                      |         |   | 2002                    |        | 2001 |   | 2000      |        | 1999 |   | 1998     
|                                                      |         |   |                         |        |      |   |           |        |      |   |          
|Income Statement Data:                                |         |   |                         |        |      |   |           |        |      |   |           |        |  |   |           |        |  |   |           |       
|Net sales                                             |         | $ | 4,264,579               |        |      | $ | 3,961,545 |        |      | $ | 3,842,452 |        |  | $ | 2,561,239 |        |  | $ | 1,733,489 |       
|Cost of sales                                         |         |   | 3,700,744               |        |      |   | 3,434,510 |        |      |   | 3,352,609 |        |  |   | 2,237,700 |        |  |   | 1,513,314 |       
|                                                      |         |   |                         |        |      |   |           |        |      |   |          
|Gross profit                                          |         |   | 563,835                 |        |      |   | 527,035   |        |      |   | 489,843   |        |  |   | 323,539   |        |  |   | 220,175   |       
|Selling, administrative and net advertising expenses  |         |   | 265,657                 |        |      |   | 258,837   |        |      |   | 230,235   |        |  |   | 165,627   |        |  |   | 115,537   |       
|                                                      |         |   |                         |        |      |   |           |        |      |   |          
|Income from operations                                |         |   | 298,178                 |        |      |   | 268,198   |        |      |   | 259,608   |        |  |   | 157,912   |        |  |   | 104,638   |       
|Interest income, net                                  |         |   | 9,548                   |        |      |   | 12,637    |        |      |   | 9,739     |        |  |   | 4,931     |        |  |   | 4,708     |       
|Other expense, net                                    |         |   | (1,529                  | )      |      |   | (859      | )      |      |   | (690      | )      |  |   | (450      | )      |  |   | (335      | )     
|                                                      |         |   |                         |        |      |   |           |        |      |   |          
|Income before income taxes                            |         |   | 306,197                 |        |      |   | 279,976   |        |      |   | 268,657   |        |  |   | 162,393   |        |  |   | 109,011   |       
|Income tax provision                                  |         |   | 120,948                 |        |      |   | 111,290   |        |      |   | 106,388   |        |  |   | 64,308    |        |  |   | 43,170    |       
|                                                      |         |   |                         |        |      |   |           |        |      |   |          
|Net income                                            |         | $ | 185,249                 |        |      | $ | 168,686   |        |      | $ | 162,269   |        |  | $ | 98,085    |        |  | $ | 65,841    |       
|                                                      |         |   |                         |        |      |   |           |        |      |   |          
|Earnings per share:                                   |         |   |                         |        |      |   |           |        |      |   |           |        |  |   |           |        |  |   |           |       
|                                                      | Basic   |   | $                       | 2.18   |      |   | $         | 1.97   |      |   | $         | 1.87   |  |   | $         | 1.14   |  |   | $         | 0.76   | 
|                                                      |         |   |                         |        |      |   |           |        |      |   |          
|                                                      | Diluted |   | $                       | 2.10   |      |   | $         | 1.89   |      |   | $         | 1.79   |  |   | $         | 1.11   |  |   | $         | 0.76   | 
|                                                      |         |   |                         |        |      |   |           |        |      |   |          
|Weighted-average number of common
shares outstanding: |         |   |                         |        |      |   |           |        |      |   |           |        |  |   |           |        |  |   |           |       
|                                                      | Basic   |   |                         | 84,862 |      |   |           | 85,803 |      |   |           | 87,003 |  |   |           | 86,270 |  |   |           | 86,124 | 
|                                                      |         |   |                         |        |      |   |           |        |      |   |          
|                                                      | Diluted |   |                         | 88,296 |      |   |           | 89,136 |      |   |           | 90,860 |  |   |           | 88,304 |  |   |           | 87,008 | 
|                                                      |         |   |                         |        |      |   |           |        |      |   |          
|Selected Operating Data:                              |         |   |                         |        |      |   |           |        |      |   |           |        |  |   |           |        |  |   |           |       
|Number of invoices processed (in 000s)               |         |   | 4,995                   |        |      |   | 4,394     |        |      |   | 3,810     |        |  |   | 2,934     |        |  |   | 2,367     |       
|Average invoice size                                  |         | $ | 935                     |        |      | $ | 964       |        |      | $ | 1,054     |        |  | $ | 918       |        |  | $ | 780       |       
|Commercial customers served (in 000s) (1)            |         |   | 361                     |        |      |   | 357       |        |      |   | 309       |        |  |   | 285       |        |  |   | 246       |       
|% of sales to commercial customers                    |         |   | 97                      | %      |      |   | 97        | %      |      |   | 96        | %      |  |   | 93        | %      |  |   | 88        | %     
|Net sales per coworker (in 000s)                     |         | $ | 1,508                   |        |      | $ | 1,436     |        |      | $ | 1,634     |        |  | $ | 1,462     |        |  | $ | 1,392     |       
|Inventory turnover                                    |         |   | 27                      |        |      |   | 30        |        |      |   | 28        |        |  |   | 23        |        |  |   | 24        |       
|Accounts
receivable - days sales outstanding          |         |   | 29                      |        |      |   | 29        |        |      |   | 32        |        |  |   | 33        |        |  |   | 32        |       

|                                                  |  |              |           |      |  |      |         |      |  |      |         |  |  |      |         |  |  |      |         |  | 
|------------------------------------------------- |  | ------------ | --------- | ---- |  | ---- | ------- | ---- |  | ---- | ------- |  |  | ---- | ------- |  |  | ---- | ------- |  | 
|                                                  |  | December 31,
|                                                  |  |             
|                                                  |  | 2002         |           | 2001 |  | 2000 |         | 1999 |  | 1998
|                                                  |  |              |           |      |  |      |         |      |  |     
|Financial Position:                               |  |              |           |      |  |      |         |      |  |      |         |  |  |      |         |  |  |      |         | 
|Cash, cash equivalents, and marketable securities |  | $            | 504,614   |      |  | $    | 394,381 |      |  | $    | 202,621 |  |  | $    | 82,975  |  |  | $    | 70,688  | 
|Working capital                                   |  | $            | 846,942   |      |  | $    | 695,786 |      |  | $    | 561,697 |  |  | $    | 340,117 |  |  | $    | 228,730 | 
|Total assets                                      |  | $            | 1,095,664 |      |  | $    | 937,029 |      |  | $    | 748,437 |  |  | $    | 505,915 |  |  | $    | 341,821 | 
|Total debt and capitalized lease obligations      |  | $            |          |      |  | $    |        |      |  | $    |        |  |  | $    |        |  |  | $    |        | 
|Total shareholders equity                        |  | $            | 924,070   |      |  | $    | 778,657 |      |  | $    | 636,251 |  |  | $    | 390,984 |  |  | $    | 270,763 | 
|Return on shareholders equity (2)                |  | 22.8         | %         |      |  | 24.7 | %       |      |  | 31.0 | %       |  |  | 30.1 | %       |  |  | 28.2 | %      



|(1) |  | Commercial customers is defined as public sector and corporate customers
excluding consumers.                     
|--- |  | ------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Return on shareholders equity is calculated as net income for the period
divided by average shareholders equity.

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

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

Overview

We are the largest direct marketer of multi-brand computers and related
technology products and services in the United States. Our primary business is
conducted from a combined corporate office and distribution center located in
Vernon Hills, Illinois, sales offices in Mettawa and Chicago, Illinois, and a
sales office in Lansdowne, Virginia. Additionally, we market and sell products
through CDW.com and CDWG.com, our Web sites.

For financial reporting purposes, we have two operating segments:
corporate, which is primarily comprised of business customers, but also
includes consumers (which generated approximately 3% of total sales in 2002),
and public sector, comprised of federal, state and local government and
educational institution customers, who are served by CDW Government, Inc.
(CDW-G), a wholly-owned subsidiary.

Financial Reporting Release No. 60, released by the Securities and
Exchange Commission, encourages all registrants to include a discussion of
critical accounting policies or methods used in the preparation of financial
statements. We present in the notes to our consolidated financial statements a
summary of these accounting policies. Our most significant accounting policies
relate to the sale, purchase, distribution and promotion of our products.
Therefore, our accounting principles in the areas of revenue recognition, trade
accounts receivable valuation, inventory valuation, vendor transactions and
marketing activities are the most significant.

The preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America requires
management to make use of certain estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities as of the date of the financial statements and the reported
amounts of revenues and expenses during the reported periods. We base our
estimates on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances, the results of which form
the basis for making judgments about carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results could differ
from those estimates, and revisions to estimates are included in our results
for the period in which the actual amounts become known.

Significant estimates in our financial statements include allowances for
doubtful accounts receivable, sales returns and pricing disputes, net
realizable value of inventories, vendor transactions and loss contingencies.

Allowance for doubtful accounts receivable.We provide allowances for
doubtful accounts related to accounts receivable for estimated losses resulting
from the inability of our customers to make required payments. We take into
consideration the overall quality and aging of the receivable portfolio along
with specifically identified customer risks. If actual customer payment
performance were to deteriorate to an extent not expected, additional
allowances may be required.

Sales returns and pricing disputes.At the time of sale, we record an
estimate for sales returns and pricing disputes based on historical experience.

Net realizable value of inventories.Inventory is valued at the lower of
cost or market value. We decrease the value of inventory for estimated
obsolescence equal to the difference between the cost of inventory and the
estimated market value, based upon an aging analysis of the inventory on hand,
specifically known inventory-related risks, and assumptions about future demand
and market conditions. If actual market conditions are less favorable than
those projected by management, additional inventory write-downs may be
required.

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Vendor transactions.We receive incentives from vendors related to
cooperative advertising allowances, rebates, price protection and other
programs. These incentives generally relate to agreements with the vendors and
are recorded as adjustments to gross margin or net advertising expense, as
appropriate. If market conditions were to deteriorate, vendors may change the
terms of some or all of these programs.

Loss contingencies.We accrue for contingent obligations when a loss is
probable and the amount can be reasonably estimated. As facts concerning
contingencies become known, we reassess our position and make appropriate
adjustments to the financial statements.

Results of Operations

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

|                                    |  |                          |       |      |  |      |       |   |  |  |       |   | 
|----------------------------------- |  | ------------------------ | ----- | ---- |  | ---- | ----- | - |  |  | ----- | - | 
|                                    |  | Percentage of Net Sales 
|Financial Results                   |  | Years Ended December 31,
|                                    |  |                         
|                                    |  | 2002                     |       | 2001 |  | 2000
|                                    |  |                          |       |      |  |     
|Net sales                           |  |                          | 100.0 | %    |  |      | 100.0 | % |  |  | 100.0 | %
|Cost of sales                       |  |                          | 86.8  |      |  |      | 86.7  |   |  |  | 87.2  |  
|                                    |  |                          |       |      |  |     
|Gross profit                        |  |                          | 13.2  |      |  |      | 13.3  |   |  |  | 12.8  |  
|Selling and
administrative expenses |  |                          | 6.1   |      |  |      | 6.4   |   |  |  | 5.7   |  
|Net advertising expenses            |  |                          | 0.1   |      |  |      | 0.1   |   |  |  | 0.3   |  
|                                    |  |                          |       |      |  |     
|Income from operations              |  |                          | 7.0   |      |  |      | 6.8   |   |  |  | 6.8   |  
|Interest and other income           |  |                          | 0.2   |      |  |      | 0.3   |   |  |  | 0.2   |  
|                                    |  |                          |       |      |  |     
|Income before income taxes          |  |                          | 7.2   |      |  |      | 7.1   |   |  |  | 7.0   |  
|Income tax provision                |  |                          | 2.8   |      |  |      | 2.8   |   |  |  | 2.8   |  
|                                    |  |                          |       |      |  |     
|Net income                          |  |                          | 4.4   | %    |  |      | 4.3   | % |  |  | 4.2   | %
|                                    |  |                          |       |      |  |     

The following table sets forth for the periods indicated a summary of
certain of our consolidated operating statistics:

|                                             |  |                          |           |      |  |      |           |   |  |   |           |  
|-------------------------------------------- |  | ------------------------ | --------- | ---- |  | ---- | --------- | - |  | - | --------- | -
|Operating Statistics                         |  | Years Ended December 31,
|                                             |  |                         
|                                             |  | 2002                     |           | 2001 |  | 2000
|                                             |  |                          |           |      |  |     
|Number of invoices processed                 |  |                          | 4,995,459 |      |  |      | 4,394,157 |   |  |   | 3,810,452 |  
|Average invoice size                         |  | $                        | 935       |      |  | $    | 964       |   |  | $ | 1,054     |  
|Commercial customers served (1)              |  |                          | 361,052   |      |  |      | 356,769   |   |  |   | 309,471   |  
|% of sales to commercial customers           |  |                          | 97.4      | %    |  |      | 96.7      | % |  |   | 96.0      | %
|Sales force, end of period                   |  |                          | 1,320     |      |  |      | 1,301     |   |  |   | 1,216     |  
|Annualized inventory turnover                |  |                          | 27        |      |  |      | 30        |   |  |   | 28        |  
|Accounts receivable - days sales outstanding |  |                          | 29        |      |  |      | 29        |   |  |   | 32        |  
|Direct web sales (000s)                     |  | $                        | 829,233   |      |  | $    | 615,316   |   |  | $ | 416,259   |  
|Daily average web users                      |  |                          | 91,419    |      |  |      | 91,617    |   |  |   | 82,765    |  



|(1) |  | Commercial customers is defined as public sector and corporate customers
excluding consumers.
|--- |  | ---------------------------------------------------------------------------------------------

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The following table presents consolidated net sales dollars by product
category as a percentage of total consolidated net sales dollars. Product
lines are based upon internal product code classifications. Product mix for
the years ended December 31, 2001 and 2000 has been retroactively adjusted for
certain changes in individual product categorization.

|                                   |  |                          |       |      |  |      |       |   |  |  |       |  
|---------------------------------- |  | ------------------------ | ----- | ---- |  | ---- | ----- | - |  |  | ----- | -
|Analysis of Product Mix            |  | Years Ended December 31,
|                                   |  |                         
|                                   |  | 2002                     |       | 2001 |  | 2000
|                                   |  |                          |       |      |  |     
|Notebook computers and accessories |  |                          | 12.5  | %    |  |      | 14.7  | % |  |  | 19.5  | %
|Desktop computers and servers      |  |                          | 13.4  |      |  |      | 13.4  |   |  |  | 15.7  |  
|                                   |  |                          |       |      |  |     
|Subtotal computer products         |  |                          | 25.9  |      |  |      | 28.1  |   |  |  | 35.2  |  
|Software                           |  |                          | 17.8  |      |  |      | 16.8  |   |  |  | 12.2  |  
|Data storage devices               |  |                          | 14.2  |      |  |      | 14.5  |   |  |  | 13.8  |  
|Printers                           |  |                          | 13.3  |      |  |      | 12.9  |   |  |  | 11.4  |  
|Net/comm products                  |  |                          | 9.5   |      |  |      | 9.5   |   |  |  | 9.1   |  
|Video                              |  |                          | 8.8   |      |  |      | 8.4   |   |  |  | 7.7   |  
|Add-on boards/memory               |  |                          | 4.2   |      |  |      | 4.3   |   |  |  | 6.0   |  
|Input devices                      |  |                          | 3.2   |      |  |      | 2.9   |   |  |  | 2.5   |  
|Other                              |  |                          | 3.1   |      |  |      | 2.6   |   |  |  | 2.1   |  
|                                   |  |                          |       |      |  |     
|Total                              |  |                          | 100.0 | %    |  |      | 100.0 | % |  |  | 100.0 | %
|                                   |  |                          |       |      |  |     

The following table represents the change in year-over-year consolidated
sales dollars by product categories for each of the periods indicated. Product
lines are based upon internal product code classifications. The rates of
change for the years ended December 31, 2001 and 2000 have been retroactively
adjusted for certain changes in individual product categorization.

|                                    |  |                          |      |      |  |      |       |    |  |  |      |  
|----------------------------------- |  | ------------------------ | ---- | ---- |  | ---- | ----- | -- |  |  | ---- | -
|Analysis of Product Category Growth |  | Years Ended December 31,
|                                    |  |                         
|                                    |  | 2002                     |      | 2001 |  | 2000 |       |    |  | 
|                                    |  |                          |      |      |  |      |       |    |  | 
|Notebook computers and accessories  |  |                          | (8.3 | )%   |  |      | (22.7 | )% |  |  | 48.5 | %
|Desktop computers and servers       |  |                          | 7.4  |      |  |      | (12.5 | )  |  |  | 45.2 |  
|                                    |  |                          |      |      |  |      |       |    |  | 
|Subtotal computer products          |  |                          | (0.8 | )    |  |      | (18.2 | )  |  |  | 47.0 |  
|Software                            |  |                          | 13.8 |      |  |      | 41.7  |    |  |  | 38.9 |  
|Data storage devices                |  |                          | 5.1  |      |  |      | 7.8   |    |  |  | 47.1 |  
|Printers                            |  |                          | 11.1 |      |  |      | 16.2  |    |  |  | 36.3 |  
|Net/comm products                   |  |                          | 7.0  |      |  |      | 6.7   |    |  |  | 61.5 |  
|Video                               |  |                          | 13.3 |      |  |      | 11.5  |    |  |  | 63.1 |  
|Add-on boards/memory                |  |                          | 5.7  |      |  |      | (26.2 | )  |  |  | 78.6 |  
|Input devices                       |  |                          | 20.9 |      |  |      | 17.4  |    |  |  | 47.9 |  
|Other                               |  |                          | 27.1 |      |  |      | 26.4  |    |  |  | 86.2 |  
|                                    |  |                          |      |      |  |      |       |    |  | 
|Total                               |  |                          | 7.6  | %    |  |      | 3.1   | %  |  |  | 50.0 | %
|                                    |  |                          |      |      |  |      |       |    |  | 

Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

Net sales in 2002 increased 7.6% to a record $4.265 billion, compared to
$3.962 billion in 2001. Sales of software, input devices, video and printers
were strong, with sales increasing over 10% for each of these product
categories over 2001. Corporate segment sales increased 3.6% from $3.281
billion in 2001 to $3.399 billion in 2002, and comprised 79.7% of our total
sales for 2002. Public sector segment sales increased 27.1%, from $681 million
in 2001 to $865 million in 2002 and comprised 20.3% of our total sales for
2002. The growth in our public sector segment is due in part to focused sales
and marketing efforts in the federal, state and local government and
educational institution markets.

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The average selling price of desktop computers decreased 8.3%, servers
decreased 0.4% and notebook computers decreased 9.0% from 2001. Unit sales of
desktop computers increased 15.2% and unit sales of servers increased 11.2%
from 2001, while unit sales of notebook computers decreased 0.6% from 2001. We
believe there may be future decreases in pricing for computer products in 2003,
resulting in a lower average invoice size. Such decreases require us to
generate more orders and sell more units in order to maintain or increase the
level of sales.

On a forward-looking basis, we believe that cautious assumptions as to the
rate of sales growth in 2003 are appropriate, primarily due to uncertainty
related to economic as well as political conditions, and potentially lower unit
selling prices and reduced I.T. spending.

Gross profit increased 7.0% to $563.8 million in 2002 from $527.0 million
in 2001. As a percentage of net sales, gross profit decreased to 13.2% in
2002, compared with 13.3% in 2001. Our gross profit objective as a percentage
of net sales is between 12.5% and 13.0%. The gross profit margin depends on
various factors, including vendor inventory price protection and rebate
programs, product mix, including third party services, pricing strategies,
market conditions and other factors, any of which could result in a fluctuation
of gross margins below recent experience.

Selling and administrative expenses increased 3.3% to $261.6 million in
2002, compared to $253.3 million in 2001. This increase resulted primarily
from $3.9 million of increased employee-related costs (which include items such
as profit sharing, incentive awards and insurance), $3.7 million of increased
payroll costs and $1.6 million of increased occupancy costs. Selling and
administrative expenses decreased to 6.1% of net sales in 2002 versus 6.4% in
2001.

At December 31, 2002, approximately 62% of our sales account managers had
fewer than 24 months experience and 38% had fewer than 12 months, as compared
to 72% and 46% at December 31, 2001, respectively. On a forward-looking basis,
during 2003, we plan to expand our sales force in both the corporate and public
sector segments by a total of approximately 150 account managers. Selling and
administrative expenses may increase as a percentage of net sales over prior
year levels due to investments in additional sales personnel.

We have executed various operating lease agreements, primarily for sales
office facilities in the Chicago metropolitan area. The following table
summarizes these lease agreements and the related financial commitment (see
Note 7 to the Consolidated Financial Statements):

|                                                  |  |         |         |              |  |              |  |                |  |                |  |              |  |           |  |         |  |  |  | 
|------------------------------------------------- |  | ------- | ------- | ------------ |  | ------------ |  | -------------- |  | -------------- |  | ------------ |  | --------- |  | ------- |  |  |  | 
|Lease Agreements and Related Financial Commitment
|                                                 
|                                                  |  |         |         |              |  |              |  |                |  |                |  |              |  | Aggregate |  | Average
|                                                  |  |         |         |              |  |              |  |                |  |                |  |              |  | Future    |  | Annual 
|                                                  |  | Square  |         | Lease        |  | Lease        |  | Minimum        |  | Lease         
|Location                                          |  | Footage |         | Commencement |  | Term         |  | Lease Payments |  | Expense       
|                                                  |  |         |         |              |  |              |  |                |  |               
|120 S. Riverside                                  |  |         |         |              |  | April and    |  |                |  |                |  |              |  |           |  |         |  | 
|Chicago, IL                                       |  |         | 72,000  |              |  | August 2000  |  | 10 years       |  | $  9.5 million |  | $1.2 million
|                                                 
|10 S. Riverside                                   |  |         |         |              |  | February and |  |                |  |                |  |              |  |           |  |         |  | 
|Chicago, IL                                       |  |         | 72,000  |              |  | August 2001  |  | 10 years       |  | $12.0 million  |  | $1.4 million
|                                                 
|Mettawa, IL                                       |  |         | 156,000 |              |  | March 2001   |  | 10 years       |  | $30.9 million  |  | $3.8 million

Net advertising expense decreased to $4.0 million in 2002, compared to
$5.5 million in 2001. The decrease in net advertising expense was the result
of an increase in cooperative advertising income, which more than offset the
increase in gross advertising expense. As a percentage of net sales, net
advertising

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expense was 0.1% in both 2002 and 2001. Gross advertising expense
increased $1.7 million to $89.1 million in 2002 while decreasing as a
percentage of net sales to 2.1% versus 2.2% in 2001. Cooperative advertising
reimbursements increased to $85.0 million in 2002, compared to $81.8 million in
2001. As a percentage of net sales, cooperative advertising reimbursements
decreased to 2.0% in 2002, compared to 2.1% in 2001. Cooperative advertising
reimbursements as a percentage of net sales may decrease in future periods
depending on the level of vendor participation achieved and collection
experience.

Consolidated operating income was $298.2 million in 2002, an 11.2%
increase from $268.2 million in 2001. This increase was primarily a result of
the increase in net sales and gross margin in 2002, partially offset by the
increase in operating expenses. Consolidated operating income as a percentage
of net sales increased to 7.0% in 2002, compared to 6.8% in 2001. Corporate
segment operating income was $281.9 million in 2002, a 14.8% increase from
$245.5 million in 2001. The increase in corporate segment operating income was
primarily due to increased sales. Public sector segment operating income was
$16.3 million in 2002, a 28.2% decrease from $22.7 million in 2001. Public
sector segment operating income as a percentage of net sales decreased to 1.9%
in 2002, compared to 3.3% in 2001. The decrease in public sector segment
operating income was due to lower gross margin and higher operating expenses,
consisting primarily of payroll and coworker costs incurred to support current
and future projected growth in our public sector business.

Interest income, net of other expenses, decreased to $8.0 million in 2002,
compared to $11.8 million in 2001, as higher levels of cash available for
investing were offset by decreases in the rates of interest earned. The higher
levels of cash were due to cash flows from operations, primarily net income,
and tax benefits from stock options and restricted stock transactions.

The effective income tax rate, expressed as a percentage of income before
income taxes, was 39.5% in 2002 and 39.75% in 2001.

Net income in 2002 was $185.2 million, a 9.8% increase from $168.7 million
in 2001. Diluted earnings per share were $2.10 in 2002 and $1.89 in 2001, an
increase of 11.1%.

Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

Net sales in 2001 increased 3.1% to $3.962 billion, compared to $3.842
billion in 2000. The growth in net sales in 2001 was primarily attributable to
an increased customer base as well as substantial growth in our public sector
segment. We expanded our sales force by 7.0% in 2001 to 1,301 account managers
at December 31, 2001 and continued to actively market, enabling us to increase
our customer base 15.3% from the prior year. Public sector segment sales
increased 62.8%, from $418 million in 2000 to $681 million in 2001, and
comprised 17.2% of our total sales for 2001. Corporate segment sales declined
4.2% to $3.281 billion in 2001 due to reduced I.T. spending levels in a
difficult economic environment and reduced average selling prices per unit.
The growth in our public sector segment was due in part to focused sales and
marketing efforts in the federal, state and local government and educational
institution markets and the fact that these customers did not reduce I.T.
budgets as severely as those in the corporate markets.

The average selling price of desktop computers decreased 17.9%, servers
decreased 24.2% and notebook computers decreased 18.1% from 2000. Unit sales
of desktop computers increased 9.2% and unit sales of servers increased 11.6%
from 2000, while unit sales of notebook computers decreased 11.7% from 2000.

Gross profit increased 7.6 % in 2001 to $527.0 million, compared to $489.8
million in 2000. As a percentage of net sales, gross profit increased to 13.3%
in 2001, compared to 12.8% in 2000. The increase in the gross profit
percentage was primarily due to vendor incentives and the impact of software
maintenance products and third party services that are recorded as net sales at
the net amount retained by the Company, with no cost of goods sold.

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Selling and administrative expenses increased 16.3% in 2001, to $253.3
million, compared to $217.8 million in 2000. This increase was primarily due
to $11.4 million of increased occupancy costs along with $16.9 million of
increased payroll costs, which was partially due to a higher average number of
sales account managers during 2001. Approximately 72% of sales account
managers at December 31, 2001 had fewer than 24 months experience and 46% had
fewer than 12 months, as compared to 77% and 58% at December 31, 2000,
respectively. Selling and administrative expenses increased to 6.4% of net
sales in 2001 versus 5.7% in 2000.

Net advertising expense decreased to $5.5 million in 2001, compared to
$12.5 million in 2000, as gross advertising expense decreased and cooperative
advertising reimbursements increased. As a percentage of net sales, net
advertising expense decreased to 0.1% in 2001 from 0.3% in 2000. Gross
advertising expense decreased $3.9 million to $87.4 million in 2001 while
decreasing as a percentage of net sales to 2.2% versus 2.4% in 2000. Although
gross advertising spending decreased, we believe we achieved more coverage due
to reduced media rates. Cooperative advertising reimbursements increased $3.0
million to $81.8 million in 2001 and remained constant as a percentage of net
sales at 2.1%.

Consolidated operating income was $268.2 million in 2001, a 3.3% increase
from $259.6 million in 2000. This increase was primarily a result of the
increase in sales and gross margin in 2001, partially offset by the increase in
operating expenses. Consolidated operating income as a percentage of net sales
was 6.8% in both 2001 and 2000. Corporate segment operating income was $245.5
million in 2001, compared to $245.9 million in 2000. This slight decrease in
operating income was primarily due to increased operating expenses, partially
offset by increased gross margin. Operating expenses increased due to higher
payroll costs and higher occupancy costs resulting from additional sales
offices and the expansion of our distribution center. The increase in gross
margin resulted primarily from changes in product mix, vendor incentives and
the impact of software maintenance products and third party services, which are
recorded as net sales at the net amount retained by the Company. Corporate
segment operating income increased as a percentage of net sales to 7.5% in 2001
from 7.2% in 2000. Public sector segment operating income was $22.7 million in
2001, a 65.7% increase from $13.7 million in 2000, primarily due to the
increase in sales. Public sector segment operating income as a percentage of
net sales was 3.3% in both 2001 and 2000.

Interest income, net of other expenses, increased to $11.8 million in
2001, compared to $9.0 million in 2000, primarily due to higher levels of cash
available for investing offsetting a decrease in the average rate of interest
earned. The higher levels of cash were due to cash flows from operations,
primarily net income, a decrease in accounts receivable and tax benefits from
stock options and restricted stock transactions.

The effective income tax rate, expressed as a percentage of income before
income taxes, was 39.75% in 2001 and 39.6% in 2000.

Net income in 2001 was $168.7 million, a 4.0% increase from $162.3 million
in 2000. Diluted earnings per share were $1.89 in 2001 and $1.79 in 2000, an
increase of 5.6%. All per share amounts have been adjusted to reflect the
two-for-one stock split effected in the form of a stock dividend paid on June
21, 2000.

Seasonality

While sales in our corporate segment, which serves business and consumer
markets, have not historically experienced significant seasonality throughout
the year, sales in our public sector segment have historically been higher in
the third quarter than in other quarters
due to the buying patterns of government and education customers. If
sales to public sector customers continue to increase as a percentage of
overall sales, the Company as a whole may experience increased seasonality in
future periods.

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Liquidity and Capital Resources

Working Capital

We have historically financed our operations and capital expenditures
primarily through cash flow from operations. At December 31, 2002, we had
cash, cash equivalents and marketable securities of $504.6 million and working
capital of $846.9 million, representing an increase of $110.2 million in cash,
cash equivalents and marketable securities and an increase of $151.1 million in
working capital from December 31, 2001. The increase in working capital was a
result of increases in cash, cash equivalents and marketable securities,
accounts receivable and merchandise inventory, partially offset by increases in
accrued expenses.

We have an aggregate $70 million available pursuant to two $35 million
unsecured lines of credit with two financial institutions. One line of credit
expires in June 2003, at which time we intend to renew the line, and the other
does not have a fixed expiration date. Borrowings under the first credit
facility bear interest at the prime rate less 2 1/2%, LIBOR plus 1/2% or the
federal funds rate plus 1/2%, as determined by the Company. Borrowings under
the second credit facility bear interest at the prime rate less 2 1/2%, LIBOR
plus .45% or the federal funds rate plus .45%, as determined by the Company.
At December 31, 2002, there were no borrowings under either of the credit
facilities.

In January 2001, our Board of Directors authorized the purchase of up to
5,000,000 shares of our common stock. This repurchase program was completed
during September 2002. Repurchased shares are held in treasury pending use for
general corporate purposes, including issuances under various employee stock
plans. Under this repurchase program, we purchased 2,307,500 shares of our
common stock during the year ended December 31, 2002, at a total cost of $106.4
million (an average price of $46.11 per share). These repurchases included
384,376 shares repurchased on May 7, 2002, at a total cost of $19.0 million
($49.50 per share), from Daniel B. Kass, then an Executive Vice President and a
Director of the Company. From January 2001 though September 2002, we purchased
the 5,000,000 shares authorized to be repurchased at a total cost of $204.6
million (an average price of $40.92 per share).

In July 2002, our Board of Directors authorized a new share repurchase
program of up to 2,500,000 shares of our common stock. These purchases may be
made from time to time in both the open market and private transactions, as
conditions warrant. This program will remain in effect through July 2004
unless earlier terminated by the Board or completed. Under this repurchase
program, we purchased 508,376 shares of our common stock at a total cost of
$21.9 million (an average price of $42.99 per share) during the year ended
December 31, 2002.

Our current and anticipated uses of our cash, cash equivalents and
marketable securities are to fund growth in working capital and capital
expenditures necessary to support future growth in sales, our stock buyback
program and possible expansion through acquisitions. We believe that the funds
held in cash, cash equivalents and marketable securities, and funds available
under the credit facilities, will be sufficient to fund our working capital and
cash requirements at least through December 31, 2003.

Cash Flows

Net cash provided by operating activities in 2002 was $231.4 million
compared to $302.4 million in 2001. The primary factors that affected our cash
flow from operations were net income; changes in accounts receivable,
merchandise inventory, and accrued income taxes and other expenses; and tax
benefits from stock options and restricted stock transactions. Accounts
receivable at December 31, 2002 increased $15.7 million compared to December
31, 2001, primarily due to an increase in sales. Inventory increased $31.7
million at December 31, 2002 compared to December 31, 2001, primarily to
support higher sales volume. Accrued income taxes and other expenses increased
$12.7 million at December 31, 2002 compared to December 31, 2001, due to the
timing of estimated tax payments. Cash provided by operating activities in
2002 was also positively impacted by a $69.5 million tax benefit recorded to
paid-in capital,

20



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relating to the exercise of options pursuant to the MPK Stock
Option Plan, the CDW Incentive Stock Option Plan and the vesting of shares
related to the MPK Restricted Stock Plan.

Net cash used in investing activities for the year ended December 31, 2002
was $109.8 million, including $99.8 million for investments in marketable
securities and $10.6 million used for capital expenditures. Capital
expenditures related primarily to furniture and fixtures, leasehold
improvements and computer software.

At December 31, 2002, we had a $5.2 million net investment in and loan to
CDW Leasing, L.L.C. (CDW-L). CDW-L is a joint venture that is 50 percent
owned by each of CDW Capital Corporation (CDWCC), a wholly-owned subsidiary
of the Company, and First Portland Corporation (FIRSTCORP), an unrelated
third party leasing company. Subsequent to December 31, 2002, FIRSTCORP was
acquired by IFC Credit Corporation. We use the equity method to account for
our investment in CDW-L. Effective May 1, 2002, we decided to stop originating
new leases with this venture and began to refer customers to independent
leasing sources, including
FIRSTCORP and several manufacturer captive entities. The existing leases
in CDW-Ls portfolio will be held until maturity, with the majority expiring
prior to December 31, 2004. CDWCC had previously committed to loan up to $10
million to CDW-L to fund new leases. On September 5, 2002, CDWCC terminated
its loan commitment. Repayment of the outstanding loans may be made through
cash flow from operations after debt service on subordinated loans outstanding
from financial institutions. At December 31, 2002, $4.0 million was
outstanding under this loan agreement, $1.4 million of which is subordinated to
CDW-Ls loan from a financial institution. CDW-L has a $40 million financing
commitment from a financial institution, of which $12.2 million was outstanding
and $27.8 million remained available at December 31, 2002. The financing
commitment, collateralized by lease receivables, requires CDW-L to meet certain
financial covenants and is without recourse to CDWCC or the Company. Under the
terms of the financing agreements, CDW-Ls total loans outstanding and related
terms were:

|                                                        |       |                    |  |                   |          |                   |  |            |               |  |                     |   |                      |  |                        |        | 
|------------------------------------------------------- | ----- | ------------------ |  | ----------------- | -------- | ----------------- |  | ---------- | ------------- |  | ------------------- | - | -------------------- |  | ---------------------- | ------ | 
|CDW Leasing, L.L.C. Loans Outstanding and Related Terms
|                                                       
|                                                        |       |                    |  |                   |          |                   |  |            |               |  |                     |   |                      |  | Outstanding Balance as
|                                                        |       |                    |  |                   |          |                   |  |            |               |  | Interest Rate as of |   | of December 31, 2002
|Lender                                                  |       | Type of Instrument |  | Maturity          |          | December 31, 2002 |  | (in
000s)
|                                                        |       |                    |  |                   |          |                   |  |           
|Financial                                               |       |                    |  |                   |          | Various thru      |  |            |               |  |                     |   |                      | 
|institution                                             |       | Term note          |  |                   | 04/29/04 |                   |  |            | 4.87% - 8.86% |  |                     | $ | 12,200               | 
|                                                       
|                                                        |       |                    |  |                   |          | Payable on        |  |            | 6.382%        |  |                     |   |                      | 
|CDWCC                                                   |       | Subordinated note  |  | demand            |          | (LIBOR + 5.0%)    |  |            | 1,400         | 
|                                                       
|                                                        |       | Non-subordinated   |  |                   |          |                   |  |            | 3.582%        |  |                     |   |                      | 
|CDWCC                                                   |       | note               |  | Payable on demand |          | (LIBOR + 2.2%)    |  |            | 2,600         | 
|                                                        |       |                    |  |                   |          |                   |  |           
|                                                        | Total |                    |  |                   |          |                   |  |            |               |  |                     |   |                      |  | $                      | 16,200 | 
|                                                        |       |                    |  |                   |          |                   |  |           

At December 31, 2002, the present value of CDW-Ls borrowing base was
$16.2 million and CDW-L was in compliance with all of the covenants under the
agreement with the financial institution.

Net cash used in financing activities for the year ended December 31, 2002
was $110.5 million. The repurchase of 2,815,876 shares of our common stock at
a total cost of $128.3 million was partially offset by proceeds of $17.8
million from the exercise of stock options under our various stock option
plans.

In August 2001, Michael P. Krasny, the Chairman Emeritus, principal
shareholder and a Director of the Company; Gregory C. Zeman, a Director and
then Vice Chairman of the Company; and Daniel B. Kass, then an Executive Vice
President and a Director of the Company, sold 10,562,500 shares of common stock
through a secondary public offering at a price of $40.00 per share. We did not
receive any proceeds from the sale of their shares and the number of
outstanding common shares was not impacted. The shares sold by

21



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Mr. Zeman and
Mr. Kass were acquired from Mr. Krasny through the exercise of options
previously granted to them pursuant to the MPK Stock Option Plan. The sale of
shares by Mr. Zeman and Mr. Kass resulted in the realization by the Company in
the year ended December 31, 2001 of an income tax benefit of approximately
$43.5 million, of which approximately $600,000 had been previously recorded to
deferred taxes. The incremental tax benefit of $42.9 million was recorded as
an increase to paid-in capital. Additionally, we recorded incremental payroll
tax expense of approximately $1.6 million related to the option exercise, which
reduced diluted earnings per share by approximately $0.01 per share.

In March 2002, Mr. Zeman sold 2,000,000 shares of common stock at a price
of $48.00 per share. We did not receive any proceeds from the sale of shares
and the number of outstanding common shares was not impacted. The shares sold
by Mr. Zeman were acquired from Mr. Krasny through the exercise of options
previously granted to Mr. Zeman pursuant to the MPK Stock Option Plan. The
exercise of options by Mr. Zeman resulted in the realization by the Company of
an income tax benefit of approximately $37.9 million in the first quarter of
2002, of which approximately $400,000 had been previously recorded to deferred
taxes. We recorded the incremental tax benefit of $37.5 million as an increase
to paid-in capital. In addition, we recorded incremental payroll tax expense
related to the option exercise of approximately $1.4 million, which reduced
diluted earnings per share by approximately $0.01 per share.

Recently Issued Accounting Pronouncements

In 2002, we adopted Statement of Financial Accounting Standards No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets and determined
that there was no impact on our financial statements. If facts and
circumstances indicate that the cost of any long-lived assets may be impaired,
an evaluation of recoverability would be performed. If an evaluation is
required, we would measure the carrying amount of the assets against the
estimated undiscounted future cash flows associated with them. At the time any
such evaluations indicate that the future undiscounted cash flows of certain
long-lived assets are not sufficient to recover the carrying value of such
assets, these assets would be adjusted to their fair values.

In April 2002, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 145, Rescission of FASB
Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13 and Technical
Corrections. Among other
things, the statement updates, clarifies and simplifies existing
accounting pronouncements relating to the extinguishment of debt. The
provisions of this statement related to the extinguishment of debt shall be
applied in fiscal years beginning after May 15, 2002. We do not expect the
adoption of this statement to have a material impact on our financial position
or results of operations.

In July 2002, the FASB issued Statement of Financial Accounting Standards
No. 146, Accounting for Costs Associated with Exit or Disposal Activities
(SFAS 146). The statement requires companies to recognize costs associated
with exit or disposal activities when they are incurred rather than at the date
of a commitment to an exit or disposal plan. This statement replaces previous
accounting guidance provided by Emerging Issues Task Force (EITF) Issue No.
94-3. SFAS 146 is to be applied prospectively to exit or disposal activities
initiated after December 31, 2002.

In November 2002, the EITF reached consensus on Issue No. 02-16,
Accounting for Consideration Received from a Vendor by a Customer (Including a
Reseller of the Vendors Products). Cash consideration should generally be
considered an adjustment of the prices of the vendors products and, therefore,
characterized as a reduction of cost of sales when recognized in the resellers
income statement unless certain conditions apply. We will adopt the provisions
of this issue for all agreements modified or entered into on or after January
1, 2003. We expect the adoption of this issue will result in the
reclassification of certain amounts currently classified as a reduction of
advertising expense to a reduction of cost of sales on a prospective basis.

In November 2002, the EITF published Issue No. 00-21, Revenue
Arrangements with Multiple Deliverables (EITF 00-21), which addresses
certain aspects of the accounting by a vendor for

22



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arrangements under which it
will perform multiple revenue-generating activities. EITF 00-21 addresses how
to determine whether an arrangement involving multiple deliverables contains
more than one unit of accounting. EITF 00-21 is effective for the Company for
revenue arrangements entered into beginning July 1, 2003. We have not yet
determined the impact, if any, of adopting EITF 00-21.

In November 2002, the FASB issued FASB Interpretation No. 45, Guarantors
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others (FIN 45). FIN 45 requires the
disclosure of certain guarantees existing at December 31, 2002 and recognition
of a liability for the fair value of the obligation of qualifying guarantee
activities that are initiated or modified after December 31, 2002. As of
December 31, 2002, the Company had no significant guarantees.

In December 2002, the FASB issued Statement of Financial Accounting
Standards No. 148, Accounting for Stock-Based Compensation  Transition and
Disclosure  An Amendment of FASB Statement No. 123 (SFAS 148). SFAS 148
provides additional transition guidance for those entities that elect to
voluntarily adopt the accounting provisions of Statement of Financial
Accounting Standards No. 123, Accounting for Stock-Based Compensation and
provides additional disclosure requirements for all companies. The disclosure
requirements are effective as of December 31, 2002, and are reflected within
the notes to the financial statements.

In January 2003, the FASB issued FASB Interpretation No. 46,
Consolidation of Variable Interest Entities, an interpretation of ARB 51
(FIN 46). FIN 46 requires that the assets, liabilities and results of the
activity of variable interest entities be consolidated into the financial
statements of the company that has the controlling financial interest. FIN 46
also provides the framework for determining whether a variable interest entity
should be consolidated based on voting interests or significant financial
support provided to it. FIN 46 will be effective for the Company on February
1, 2003 for variable interest entities created after January 31, 2003, and on
July 1, 2003 for variable interest entities created prior to February 1, 2003.
We do not expect the adoption of FIN 46 to have a material impact on our 2003
consolidated financial statements.

Any statements in this report that are forward-looking (that is, not
historical in nature) are made pursuant to the safe harbor provisions of The
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements include, for example, statements concerning the Companys sales
growth, gross profit as a percentage of sales, advertising expense and
cooperative advertising reimbursements. In addition, words such as likely,
may, would, could, anticipate, believe, estimate, expect,
intend, plan, and similar expressions, may identify forward-looking
statements in this report. Forward-looking statements in this report are based
on the Companys beliefs and expectations as of the date of this report and are
subject to risks and uncertainties, including those outlined in detail in this
report in Item 1  Business under the heading Certain Factors Affecting CDWs
Business and other factors identified from time to time in the Companys
filings with the Securities and Exchange Commission. Such risks and
uncertainties may have a significant impact on the Companys business,
operating results or financial condition. Investors are cautioned that these
forward-looking statements are inherently uncertain. Should one or more of the
risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results or outcomes may vary materially from those described
herein.




Item 7A.   Quantitative and Qualitative Disclosures About Market Risk.

The Companys investments in marketable securities as of December 31, 2002
all mature before December 31, 2004 and are concentrated in U.S. Government and
Government agency securities, municipal bonds and corporate fixed income
securities. As such, the risk of significant changes in the value of these
securities as a result of a change in market interest rates is minimal.

23



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Item 8.   Financial Statements and Supplementary Data.

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




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

None.




PART III




Item 10.   Directors and Executive Officers of the Registrant.

The information required hereunder is incorporated by reference herein
from the Registrants Definitive Proxy Statement for the Annual Meeting of
Shareholders to be held on May 21, 2003, to be filed pursuant to Regulation
14A not later than April 30, 2003 (the Definitive Proxy Statement).




Item 11.   Executive Compensation.

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




Item 12.   Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters.

The information required hereunder concerning the security ownership of
certain beneficial owners and management is incorporated by reference herein
from the Definitive Proxy Statement.

Equity Compensation Plan Information

The following table sets forth information, as of December 31, 2002,
regarding securities authorized for issuance under our equity compensation
plans. The numbers included in this table have been adjusted to account for
all splits in our common stock that have occurred since our initial public
offering.

|                                                       |  |                         |                        |  |             |                      |                        |       |                     |  |                     |               |  | 
|------------------------------------------------------ |  | ----------------------- | ---------------------- |  | ----------- | -------------------- | ---------------------- | ----- | ------------------- |  | ------------------- | ------------- |  | 
|                                                       |  | A                       |                        |  | B           |                      | C                     
|                                                       |  |                         |                        |  |             | Number of Securities
|                                                       |  |                         |                        |  |             |                      |                        |       |                     |  | Remaining Available
|                                                       |  |                         |                        |  |             |                      | Weighted               |       | for Future Issuance
|                                                       |  |                         |                        |  |             |                      | Average Exercise       |       | Under Equity       
|                                                       |  | Number of Securities to |                        |  | Price of    |                      | Compensation Plans    
|                                                       |  | be Issued Upon Exercise |                        |  | Outstanding |                      | (Excluding Securities 
|Plan Category                                          |  | of Outstanding Options  |                        |  | Options     |                      | Reflected in Column A)
|                                                       |  |                         |                        |  |             |                      |                       
|Equity Compensation
Plans Approved by
Shareholders     |  |                         | 3,743,224              |  |             |                      | $                      | 38.01 |                     |  |                     | 7,696,046 (1) | 
|Equity Compensation
Plans Not Approved
by Shareholders |  |                         | 8,745,349 (2)(3)(4)(5) |  |             |                      | $                      | 19.89 |                     |  |                     |              | 
|                                                       |  |                         |                        |  |             |                      |                       
|Total                                                  |  |                         | 12,856,395             |  |             |                      | $                      | 27.61 |                     |  |                     | 7,696,046     | 
|                                                       |  |                         |                        |  |             |                      |                       

24



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| | (1) |  | Includes purchase rights accruing under the Companys Employee Stock
Purchase Plan (ESPP), which has a shareholder-approved reserve of
500,000 shares. Under the ESPP, each eligible employee may purchase up
to 325 shares of common stock per quarter at a purchase price per share
equal to 85% of the lesser of the fair market value of the stock on the
first or last business day of the quarterly offering period.                                                                                                                                                                                                                                                                                                                                                      
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (2) |  | Includes non-forfeitable options established under the MPK Stock
Option Plan. The MPK Stock Option Plan was established March 15, 1993
by Michael P. Krasny, the Chairman Emeritus, principal shareholder and a
Director of the Company. Under the
plan, Mr. Krasny granted options to certain employees to purchase shares
of common stock owned by Mr. Krasny. As of December 31, 2002, options for
1,108,864 shares of common stock remain outstanding under this plan. The
outstanding options are fully vested and exercisable. The exercise of
such options will not result in any issuance by the Company of additional
shares of our common stock.                                                                                                                        
|
| | (3) |  | Includes options granted under the CDW Incentive Stock Option Plan
(1993 Plan), which was adopted at the time of our initial public
offering in May 1993. The 1993 Plan gave our Compensation Committee the
authority to grant non-statutory options to coworkers employed with CDW
and our subsidiaries. The total number of shares available for awards
under the 1993 Plan was 4,200,000, reduced on a share-for-share basis by
shares for which options were outstanding under the CDW Director Stock
Option Plan. Upon approval by Company shareholders of the CDW 2000
Incentive Stock Option Plan (2000 Plan) in May 2000, all future grants
under the 1993 Plan were suspended and the number of shares available
for future grants were transferred to the 2000 Plan.
|
| | (4) |  | Includes options granted under the CDW 1996 Incentive Stock Option
Plan (1996 Plan), which was adopted in November 1996. The 1996 Plan
gave our Compensation Committee the authority to grant non-statutory
options to directors and coworkers employed with CDW and our
subsidiaries. The total number of shares available for awards under the
1996 Plan was 12,000,000. Upon approval by Company shareholders of the
2000 Plan in May 2000, all future grants under the 1996 Plan were
suspended and the number of shares available for future grants were
transferred to the 2000 Plan.                                                                                                                                                                                     
|
| | (5) |  | Includes options granted under the CDW 1998 Officer and Manager Bonus
Plan (1998 OMB Plan), which was adopted in December 1998. The 1998
OMB Plan gave our Compensation Committee the authority to grant
non-statutory options to certain coworkers of CDW and our subsidiaries.
The total number of shares available for awards under the 1998 OMB Plan
was 41,096, all of which have been granted.                                                                                                                                                                                                                                                                                                                                                                            




Item 13.   Certain Relationships and Related Transactions.

The information required hereunder is incorporated by reference herein
from the Definitive Proxy Statement. Information in the Definitive Proxy
Statement under the headings Report of the Compensation and Stock Option
Committee and Shareholder Return Performance Presentation is specifically
not incorporated by reference.




Item 14.   Controls and Procedures.



| | (a) |  | Evaluation of disclosure controls and procedures: The Companys
Chief Executive Officer and its Chief Financial Officer, after
evaluating the effectiveness of our disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14(c) and
15-d-14(c)) as of a date within 90 days of filing date of this annual
report (the Evaluation Date), have
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| |     |  | concluded that as of the
Evaluation Date, our disclosure controls and procedures were adequate
and effective to ensure that material information relating to the
Company would be made known to them by others within the Company,
particularly during the period in which this annual report was being
prepared.                                                                                 
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | Changes in internal controls: There were no significant changes
in our internal controls or in other factors that could significantly
affect our internal controls and procedures subsequent to the
Evaluation Date, nor any significant deficiencies or material
weaknesses in such internal controls and procedures requiring
corrective actions. As a result, no corrective actions were taken.




PART IV




Item 15.     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:

|            |  |                                                                                                                                              
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description of Document                                                                                                                      
|            |  |                                                                                                                                              
|3 (a)       |  | Articles of Incorporation of the Company (xiii)                                                                                              
|            |  |                                                                                                                                              
|3 (b)       |  | Amendment to Articles of Incorporation of the
Company filed with the Illinois Secretary of State on May 26,
2000 (iii)                       
|            |  |                                                                                                                                              
|3 (c)       |  | Bylaws of the Company (xxi)                                                                                                                  
|            |  |                                                                                                                                              
|10 (a)      |  | CDW Computer Centers, Inc. Employees Defined Contribution Retirement Plan and Trust (i) (xi)                                                
|            |  |                                                                                                                                              
|10 (b)      |  | CDW Incentive Stock Option Plan (i) (xi)                                                                                                     
|            |  |                                                                                                                                              
|10 (c)      |  | First Amendment to CDW Incentive Stock Option Plan (vii) (xi)                                                                                
|            |  |                                                                                                                                              
|10 (d)      |  | MPK Stock Option Plan and Agreement (i) (xi)                                                                                                 
|            |  |                                                                                                                                              
|10 (e)      |  | MPK Restricted Stock Plan and Agreement (i) (xi)                                                                                             
|            |  |                                                                                                                                              
|10 (f)      |  | Employment and Non-Competition Agreement dated as of
March 15, 1993 between the Company and Michael P. Krasny (i) (xi)                       
|            |  |                                                                                                                                              
|10 (g)      |  | Employment and Non-Competition Agreement dated as of
March 15, 1993 between the Company and Greg C. Zeman (i) (xi)                           
|            |  |                                                                                                                                              
|10 (h)      |  | First amendment to Employment and Non-Competition
Agreement dated as of January 28, 2001 between the Company and
Gregory C. Zeman (xvii) (xi)

26



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##### Table of Contents



|        |  |                                                                                                                                                                                                                                                        
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10 (i)  |  | Employment and Non-Competition Agreement dated as of
March 15, 1993 between the Company and Daniel B. Kass (i) (xi)                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                        
|10 (j)  |  | Tax Indemnification Agreement dated as of May 25, 1993 between
the Company and Michael P. Krasny (i)                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                                        
|10 (k)  |  | 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 (l)  |  | 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 (m)  |  | CDW Director Stock Option Plan (i) (xi)                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                        
|10 (n)  |  | 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 (o)  |  | Non-statutory Stock Option Agreement dated September
5, 1996 between the Company and Harry J. Harczak, Jr. (xvi) (xi)                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                        
|10 (p)  |  | Non-statutory Stock Option Agreement dated September
5, 1996 between the Company and James R. Shanks (xvi) (xi)                                                                                                                                        
|        |  |                                                                                                                                                                                                                                                        
|10 (q)  |  | CDW 1996 Incentive Stock Option Plan (iv) (xi)                                                                                                                                                                                                         
|        |  |                                                                                                                                                                                                                                                        
|10 (r)  |  | First Amendment to CDW 1996 Incentive Stock Option Plan (vii) (xi)                                                                                                                                                                                     
|        |  |                                                                                                                                                                                                                                                        
|10 (s)  |  | CDW 1997 Officer and Manager Bonus Plan (v) (xi)                                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                        
|10 (t)  |  | Revolving Note between the Company and The Northern Trust Company dated June 30, 1998 (vi)                                                                                                                                                             
|        |  |                                                                                                                                                                                                                                                        
|10 (u)  |  | CDW 1998 Officer and Manager Bonus Plan (viii) (xi)                                                                                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                        
|10 (v)  |  | First Amendment to 1996, 1997 and 1998 Officer and Manager Bonus Plans (viii) (xi)                                                                                                                                                                     
|        |  |                                                                                                                                                                                                                                                        
|10 (w)  |  | CDW Officer and Manager Plan dated April 21, 1998 (xii) (xi)                                                                                                                                                                                           
|        |  |                                                                                                                                                                                                                                                        
|10 (x)  |  | Operating Agreement of CDW Leasing, L.L.C. (viii)                                                                                                                                                                                                      
|        |  |                                                                                                                                                                                                                                                        
|10 (y)  |  | Loan and Security Agreement Between CDW Capital Corp. and CDW Leasing, L.L.C. (viii)                                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                                        
|10 (z)  |  | Lease Agreement dated October 11, 1999 between the
Company as Lessee and Solano Associates as Lessor relating to
the office space located at 120 S. Riverside Plaza, Chicago,
Illinois (x)                                                             
|        |  |                                                                                                                                                                                                                                                        
|10 (aa) |  | Revolving Note between the Company and LaSalle
National Bank dated June 28, 2000 (ix)                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                        
|10 (bb) |  | Lease Agreement dated June 19, 2000 between the
Company as Lessee and Solano Associates as Lessor relating to
the office space located at 10 S. Riverside Plaza, Chicago,
Illinois (ix)                                                                
|        |  |                                                                                                                                                                                                                                                        
|10 (cc) |  | Lease Agreement dated October 3, 2000 between the
Company as Lessee and Hamilton Partners as Lessor relating to
the office space located at Woodland Falls I, Mettawa, Illinois
(xiv)                                                                  
|        |  |                                                                                                                                                                                                                                                        
|10 (dd) |  | CDW 2000 Incentive Stock Option Plan, as amended through April 2,
2002 (xxiii)(xi)                                                                                                                                                                     
|        |  |                                                                                                                                                                                                                                                        
|10 (ee) |  | CDW Senior Management Incentive Plan (xv) (xi)                                                                                                                                                                                                         
|        |  |                                                                                                                                                                                                                                                        
|10 (ff) |  | Employment Agreement dated as of January 28, 2001
between the Company and John A. Edwardson (xvii) (xi)                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                        
|10 (gg) |  | Transitional Compensation Agreement dated as of
January 28, 2001 between the Company and John A. Edwardson
(xvii) (xi)                                                                                                                                 
|        |  |                                                                                                                                                                                                                                                        
|10 (hh) |  | Award Notice of Stock Option Grant dated as of
January 28, 2001 between the Company and John A. Edwardson
(xvii) (xi)                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                        
|10 (ii) |  | Restricted Stock Award dated as of January 28, 2001
between the Company and John A. Edwardson (xvii) (xi)                                                                                                                                              
|        |  |                                                                                                                                                                                                                                                        
|10 (jj) |  | Registration Rights Agreement between the Company
and Gregory C. Zeman dated as of February 5, 2001 (xvii)                                                                                                                                             

27



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|        |  |                                                                                                                                                                                                                          
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10 (kk) |  | Registration Rights Agreement between the Company
and Daniel B. Kass dated as of February 5, 2001 (xvii)                                                                                                                 
|        |  |                                                                                                                                                                                                                          
|10 (ll) |  | Revolving Note between the Company and LaSalle
National Bank dated June 28, 2001 (xviii)                                                                                                                                 
|        |  |                                                                                                                                                                                                                          
|10 (mm) |  | Second Lease Amendment dated April 15, 2001 between
the Company as Lessee and IJM Management Limited Partnership as
Lessor relating to the retail sales space located at 317 West
Grand Avenue, Chicago, Illinois (xviii)
|        |  |                                                                                                                                                                                                                          
|10 (nn) |  | Revolving Note between the Company and LaSalle Bank
dated August 15, 2001 (xix)                                                                                                                                          
|        |  |                                                                                                                                                                                                                          
|10 (oo) |  | Line of Credit Demand Note between the Company and
Northern Trust Company dated July 25, 2001 (xix)                                                                                                                      
|        |  |                                                                                                                                                                                                                          
|10 (pp) |  | Separation Agreement and General Release between
the Company and Paul A. Kozak dated December 3, 2001 (xi) (xxii)                                                                                                        
|        |  |                                                                                                                                                                                                                          
|10 (qq) |  | Stock Purchase Agreement between the Company and
Daniel B. Kass dated as of May 7, 2002 (xxi)                                                                                                                            
|        |  |                                                                                                                                                                                                                          
|10 (rr) |  | CDW Compensation Protection Plan adopted as of
December 10, 2002, applicable to the Companys executive
officers                                                                                                         
|        |  |                                                                                                                                                                                                                          
|10 (ss) |  | Form of Transitional Compensation Agreement,
effective December 2002, entered into with each of the Companys
executive officers                                                                                         
|        |  |                                                                                                                                                                                                                          
|10 (tt) |  | Form of Noncompetition Agreement, effective
December 2002, entered into with each of the Companys executive
officers                                                                                                    
|        |  |                                                                                                                                                                                                                          
|10 (uu) |  | Revolving Note
between the Company and LaSalle National Bank dated June 30, 2002
(xxi)                                                                                                                                   
|        |  |                                                                                                                                                                                                                          
|10 (vv) |  | CDW Employee Stock
Purchase Plan (xxiii)                                                                                                                                                                                 
|        |  |                                                                                                                                                                                                                          
|21      |  | Subsidiaries of the Registrant                                                                                                                                                                                           
|        |  |                                                                                                                                                                                                                          
|23      |  | Consent of Independent Accountants                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                          
|99.1    |  | Certification of Chief Executive Officer Pursuant to 18 U.S.C. 1350                                                                                                                                                      
|        |  |                                                                                                                                                                                                                          
|99.2    |  | Certification of Chief Financial Officer Pursuant to 18 U.S.C. 1350                                                                                                                                                      

Footnotes

|       |  |                                                                                                                                                                                
|------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i)    |  | Incorporated by reference from the exhibits
filed with the Companys registration statement (33-59802)
on Form S-1 filed under the Securities Act of 1933 filed on
May 11, 1993
|       |  |                                                                                                                                                                                
|(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 Form S-8 (333-48172) filed October
18, 2000.                                                              
|       |  |                                                                                                                                                                                
|(iv)   |  | Incorporated by reference from the exhibits
filed with the Companys registration statement (333-20935)
on Form S-3 filed under the Securities Act of 1933 on
January 31, 1997.
|       |  |                                                                                                                                                                                
|(v)    |  | Incorporated by reference from the exhibits
filed with the Companys annual report (0-21796) on Form
10-K for the year ended December 31, 1997.                                
|       |  |                                                                                                                                                                                
|(vi)   |  | Incorporated by reference from the exhibits
filed with the Companys Quarterly report (0-21796) on Form
10-Q for the quarter ended June 30, 1998.                              
|       |  |                                                                                                                                                                                
|(vii)  |  | Incorporated by reference from the exhibits
filed with the Companys annual report (0-21796) on Form
10-K for the year ended December 31, 1998.                                
|       |  |                                                                                                                                                                                
|(viii) |  | Incorporated by reference from the exhibits filed with
the Companys Quarterly report (0-21796) on Form 10-Q for
the quarter ended March 31, 1999.                             
|       |  |                                                                                                                                                                                
|(ix)   |  | Incorporated by reference from the exhibits
filed with the Companys Quarterly report (0-21796) on Form
10-Q for the quarter ended June 30, 2000.                              

28



---



##### Table of Contents



|        |  |                                                                                                                                                                                   
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(x)     |  | Incorporated by reference from the exhibits
filed with the Companys Quarterly report (0-21796) on Form
10-Q for the quarter ended September 30, 1999.                            
|        |  |                                                                                                                                                                                   
|(xi)    |  | Management contract or compensatory plan or
arrangement.                                                                                                                          
|        |  |                                                                                                                                                                                   
|(xii)   |  | Incorporated by reference from the exhibits
accompanying the Companys Notice of Annual Meeting of
Shareholders and Proxy Statement filed March 26, 1999.                         
|        |  |                                                                                                                                                                                   
|(xiii)  |  | 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 1933 filed on July 21,
1995. 
|        |  |                                                                                                                                                                                   
|(xiv)   |  | 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, 2000.                            
|        |  |                                                                                                                                                                                   
|(xv)    |  | Incorporated by reference from the exhibits
accompanying the Companys Notice of Annual Meeting of
Shareholders and Proxy Statement filed March 31, 2000.                         
|        |  |                                                                                                                                                                                   
|(xvi)   |  | 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.                            
|        |  |                                                                                                                                                                                   
|(xvii)  |  | Incorporated by reference from the exhibits filed with
the Companys annual report (0-21796) on Form 10-K for the
year ended December 31, 2000.                                   
|        |  |                                                                                                                                                                                   
|(xviii) |  | 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, 2001.                                 
|        |  |                                                                                                                                                                                   
|(xix)   |  | 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, 2001.                            
|        |  |                                                                                                                                                                                   
|(xx)    |  | Incorporated by reference from the exhibits
filed with the Companys registration statement (333-63820)
on Form S-3 filed under the Securities Act of 1933 filed on
June 26, 2001.
|        |  |                                                                                                                                                                                   
|(xxi)   |  | 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, 2002.                                 
|        |  |                                                                                                                                                                                   
|(xxii)  |  | Incorporated by reference from the exhibits
filed with the Companys annual report (0-21796) on Form
10-K for the year ended December 31, 2001.                                   
|        |  |                                                                                                                                                                                   
|(xxiii) |  | Incorporated by reference from the exhibits accompanying the Company's Definitive Proxy Statement filed April 16, 2002.                                                           



| | (b) |  | The Company did not file any reports on Form 8-K during the last
quarter of the year ended December 31, 2002.
| | --- |  | -------------------------------------------------------------------------------------------------------------
|
| | (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.                    

29



---



##### Table of Contents






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 28, 2003 |  |      |  |                                                        
|                     |  |      |  |                                                        
|                     |  | By : |  | /s/ John A. Edwardson                                  
|                     |  |      |  |                                                        
|                     |  |      |  | John A. Edwardson, Chairman and
Chief Executive Officer



|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.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                               |  |                                                                                  |  |               
|---------------------------------------------- |  | -------------------------------------------------------------------------------- |  | --------------
|Signature                                      |  | Title                                                                            |  | Date          
|                                               |  |                                                                                  |  |               
|                                               |  |                                                                                  |  |               
|/s/ John A. Edwardson

John A. Edwardson       |  | Chairman of the Board and 
Chief Executive Officer                               |  | March 28, 2003
|                                               |  |                                                                                  |  |               
|/s/ Barbara A. Klein

Barbara A. Klein         |  | Senior Vice President and 
Chief Financial Officer
(principal financial officer) |  | March 28, 2003
|                                               |  |                                                                                  |  |               
|/s/ Sandra M. Rouhselang

Sandra M. Rouhselang |  | Vice-President and Controller 
(principal accounting officer)                    |  | March 28, 2003
|                                               |  |                                                                                  |  |               
|/s/ Michelle L. Collins

Michelle L. Collins   |  | Director                                                                         |  | March 28, 2003
|                                               |  |                                                                                  |  |               
|/s/ Casey G. Cowell

Casey G. Cowell           |  | Director                                                                         |  | March 28, 2003
|                                               |  |                                                                                  |  |               
|/s/ Daniel S. Goldin

Daniel S. Goldin         |  | Director                                                                         |  | March 28, 2003
|                                               |  |                                                                                  |  |               
|/s/ Dr. Donald Jacobs

Dr. Donald Jacobs       |  | Director                                                                         |  | March 28, 2003
|                                               |  |                                                                                  |  |               
|/s/ Michael P. Krasny

Michael P. Krasny       |  | Director                                                                         |  | March 28, 2003
|                                               |  |                                                                                  |  |               
|/s/ Terry L. Lengfelder

Terry L. Lengfelder   |  | Director                                                                         |  | March 28, 2003
|                                               |  |                                                                                  |  |               
|/s/ Susan D. Wellington

Susan D. Wellington   |  | Director                                                                         |  | March 28, 2003
|                                               |  |                                                                                  |  |               
|/s/ Brian E. Williams

Brian E. Williams       |  | Director                                                                         |  | March 28, 2003
|                                               |  |                                                                                  |  |               
|/s/ Gregory C. Zeman

Gregory C. Zeman         |  | Director                                                                         |  | March 28, 2003

30



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##### Table of Contents






CERTIFICATIONS

I, John A. Edwardson, certify that:



|1. |  | I have reviewed this annual report on Form 10-K of
CDW Computer
Centers, Inc.;                                                                                                                                                                                                                                          
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this annual report does not
contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this annual report;
|  
|3. |  | Based on my knowledge, the financial statements, and
other
financial information included in this annual report, fairly present in
all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented
in this annual report;                   
|  
|4. |  | The registrants other certifying officer and I are
responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:                                                                                                   



| | a. |  | designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this annual report is being prepared;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this annual report (the Evaluation
Date); and                                                                                                  
|
| | c. |  | presented in this annual report our conclusions about
the effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officer and I have
disclosed,
based on our most recent evaluation, to the registrants auditors and
the audit committee of registrants board of directors (or persons
performing the equivalent function):
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a. |  | all significant deficiencies in the design or
operation of internal controls which could adversely affect the
registrants ability to record, process, summarize and report
financial data and have identified for the registrants auditors
any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrants internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officer and I have
indicated in
this annual report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |                                                                                                 
| |  | ------------------------------------------------------------------------------------------------
| |  | /s/ John A. Edwardson                                                                           
| |  | John A. Edwardson
Chairman and Chief Executive Officer
CDW Computer Centers, Inc.
March 28, 2003

31



---



##### Table of Contents



I, Barbara A. Klein, certify that:



|1. |  | I have reviewed this annual report on Form 10-K of
CDW Computer
Centers, Inc.;                                                                                                                                                                                                                                          
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this annual report does not
contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this annual report;
|  
|3. |  | Based on my knowledge, the financial statements, and
other
financial information included in this annual report, fairly present in
all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented
in this annual report;                   
|  
|4. |  | The registrants other certifying officer and I are
responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:                                                                                                   



| | a. |  | designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this annual report is being prepared;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this annual report (the Evaluation
Date); and                                                                                                  
|
| | c. |  | presented in this annual report our conclusions about
the effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officer and I have
disclosed,
based on our most recent evaluation, to the registrants auditors and
the audit committee of registrants board of directors (or persons
performing the equivalent function):
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a. |  | all significant deficiencies in the design or
operation of internal controls which could adversely affect the
registrants ability to record, process, summarize and report
financial data and have identified for the registrants auditors
any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrants internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officer and I have
indicated in
this annual report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |                                                                                                                                   
| |  | ----------------------------------------------------------------------------------------------------------------------------------
| |  | /s/ Barbara A. Klein

Barbara A. Klein
Senior Vice President and Chief Financial Officer
CDW Computer Centers, Inc.
March 28, 2003

32



---



##### Table of Contents



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

|                                                                                                              |  |        
|------------------------------------------------------------------------------------------------------------- |  | -------
|                                                                                                              |  | Page(s)
|                                                                                                              |  |        
|Managements Responsibility for Financial
Statements                                                          |  | F-1    
|                                                                                                             
|Report of Independent Accountants                                                                             |  | F-2    
|                                                                                                             
|Consolidated Balance Sheets as
of          December 31, 2002 and 2001                                         |  | F-3    
|                                                                                                             
|Consolidated Statements of Income
for the years ended          December 31, 2002, 2001 and 2000               |  | F-4    
|                                                                                                             
|Consolidated Statements of Shareholders Equity for
the years ended          December 31, 2002, 2001 and 2000 |  | F-5    
|                                                                                                             
|Consolidated Statements of Cash Flows for the years
ended           December 31, 2002, 2001 and 2000          |  | F-6    
|                                                                                                             
|Notes to Consolidated Financial Statements                                                                    |  | F-7    

F(i)





---



##### Table of Contents



MANAGEMENTS RESPONSIBILITY FOR FINANCIAL
STATEMENTS

Management is responsible for the preparation, integrity and
objectivity of the
consolidated financial statements and other financial information presented in
this report. The accompanying consolidated financial statements were prepared
in accordance with accounting principles generally accepted in the United
States of America, applying certain estimates and judgments as required.

CDW Computer Centers, Inc.s internal controls are
designed to provide
reasonable assurance as to the integrity and reliability of the financial
statements and to adequately safeguard, verify and maintain accountability of
assets. Such controls are based on established operating and written policies
and procedures, are implemented by trained, skilled personnel with an
appropriate segregation of duties and are monitored through a comprehensive
business process assurance program. These policies and procedures prescribe
that the Company and all its employees are to maintain the highest ethical
standards and that its business practices are to be conducted in a manner which
is above reproach.

PricewaterhouseCoopers LLP, independent auditors, are
retained to audit CDW
Computer Centers, Inc.s financial statements. Their accompanying report is
based on audits conducted in accordance with auditing standards generally
accepted in the United States of America, which include the consideration of
the Companys internal controls to establish a basis for reliance thereon in
determining the nature, timing and extent of the audit tests to be applied.

The Board of Directors exercises its responsibility for these
financial
statements through its Audit Committee, which consists entirely of independent
non-management Board members. The Audit Committee meets periodically with the
independent auditors and with the Companys Business Process Assurance manager,
both privately and with management present, to review accounting, auditing,
internal controls and financial reporting matters.

|                                     |  |                                                  
|------------------------------------ |  | -------------------------------------------------
|/s/ John A. Edwardson                |  | /s/ Barbara A. Klein                             
|                                     |  |                                                  
|John A. Edwardson                    |  | Barbara A. Klein                                 
|Chairman and Chief Executive Officer |  | Senior Vice President and Chief Financial Officer

F-1





---



##### Table of Contents



REPORT OF INDEPENDENT ACCOUNTANTS

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

In our opinion, the accompanying consolidated balance sheets
and the related
consolidated statements of income, shareholders equity and cash flows present
fairly, in all material respects, the financial position of CDW Computer
Centers, Inc. and Subsidiaries (the Company) at December 31, 2002 and 2001,
and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 2002, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements are the responsibility of the Companys management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the 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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Chicago, Illinois
January 17, 2003

F-2





---



##### Table of Contents



CDW COMPUTER CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)

|                                            |                                                                                                          |  |              |           |      |  |         |          |  
|------------------------------------------- | -------------------------------------------------------------------------------------------------------- |  | ------------ | --------- | ---- |  | ------- | -------- | -
|                                            |                                                                                                          |  | December 31,
|                                            |                                                                                                          |  |             
|                                            |                                                                                                          |  | 2002         |           | 2001
|                                            |                                                                                                          |  |              |           |     
|Assets                                      |                                                                                                          |  |              |           |      |  |         |         
|Current
assets :                            |                                                                                                          |  |              |           |      |  |         |         
|                                            | Cash and cash
equivalents                                                                                |  | $            | 157,140   |      |  | $       | 145,977  |  
|                                            | Marketable
securities                                                                                    |  |              | 347,474   |      |  |         | 248,404  |  
|                                            | Accounts receivable,
net of allowance for doubtful
accounts of $10,500 and $9,500, respectively          |  |              | 333,084   |      |  |         | 318,405  |  
|                                            | Merchandise
inventory                                                                                    |  |              | 150,785   |      |  |         | 119,117  |  
|                                            | Miscellaneous
receivables                                                                                |  |              | 14,084    |      |  |         | 9,760    |  
|                                            | Deferred income
taxes                                                                                    |  |              | 11,757    |      |  |         | 9,040    |  
|                                            | Prepaid
expenses                                                                                         |  |              | 4,212     |      |  |         | 3,455    |  
|                                            |                                                                                                          |  |              |           |     
|                                            | Total current
assets                                                                                     |  |              | 1,018,536 |      |  |         | 854,158  |  
|                                           
|Property
and equipment, net                 |                                                                                                          |  | 64,088       |           |      |  | 69,073  |         
|Investment in and advances to joint venture |                                                                                                          |  | 5,176        |           |      |  | 5,382   |         
|Deferred
income taxes and other assets      |                                                                                                          |  | 7,864        |           |      |  | 8,416   |         
|                                            |                                                                                                          |  |              |           |     
|                                            | Total
assets                                                                                             |  | $            | 1,095,664 |      |  | $       | 937,029  |  
|                                            |                                                                                                          |  |              |           |     
|                                           
|Liabilities and Shareholders Equity        |                                                                                                          |  |              |           |      |  |         |         
|Current
liabilities :                       |                                                                                                          |  |              |           |      |  |         |         
|                                            | Accounts
payable                                                                                         |  | $            | 102,786   |      |  | $       | 106,808  |  
|                                            | Accrued expenses
:                                                                                       |  |              |           |      |  |         |          |  
|                                            | Compensation                                                                                             |  |              | 33,057    |      |  |         | 28,113   |  
|                                            | Income
taxes                                                                                             |  |              | 17,945    |      |  |         | 7,847    |  
|                                            | Exit
costs                                                                                               |  |              | 1,223     |      |  |         | 1,587    |  
|                                            | Other                                                                                                    |  |              | 16,583    |      |  |         | 14,017   |  
|                                            |                                                                                                          |  |              |           |     
|                                            | Total current
liabilities                                                                                |  |              | 171,594   |      |  |         | 158,372  |  
|                                            |                                                                                                          |  |              |           |     
|                                           
|Commitments and contingencies               |                                                                                                          |  |             |           |      |  |        |         
|                                           
|Shareholders equity :                      |                                                                                                          |  |              |           |      |  |         |         
|                                            | Preferred shares,
$1.00 par value; 5,000 shares
authorized; none issued                                  |  |              |          |      |  |         |         |  
|                                            | Common shares, $ .01
par value; 500,000 shares
authorized; 89,669 and 88,466 shares
issued, respectively |  |              | 897       |      |  |         | 885      |  
|                                            | Paid-in
capital                                                                                          |  |              | 346,054   |      |  |         | 258,708  |  
|                                            | Retained
earnings                                                                                        |  |              | 806,548   |      |  |         | 621,299  |  
|                                            | Unearned
compensation                                                                                    |  |              | (837      | )    |  |         | (1,931   | )
|                                            | Accumulated other
comprehensive income                                                                   |  |              | 3         |      |  |         |         |  
|                                            |                                                                                                          |  |              |           |     
|                                            |                                                                                                          |  | 1,152,665    |           |      |  | 878,961 |         
|                                            | Less cost of common
shares in treasury, 5,708 shares
and 2,893 shares, respectively                      |  |              | (228,595  | )    |  |         | (100,304 | )
|                                            |                                                                                                          |  |              |           |     
|                                            | Total
shareholders equity                                                                               |  |              | 924,070   |      |  |         | 778,657  |  
|                                            |                                                                                                          |  |              |           |     
|                                            | Total liabilities
and shareholders equity                                                               |  | $            | 1,095,664 |      |  | $       | 937,029  |  
|                                            |                                                                                                          |  |              |           |     

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

F-3





---



##### Table of Contents



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

|                                                      |         |   |                         |        |      |   |           |        |  |   |           |        | 
|----------------------------------------------------- | ------- | - | ----------------------- | ------ | ---- | - | --------- | ------ |  | - | --------- | ------ | 
|                                                      |         |   | Years Ended
December31,
|                                                      |         |   |                        
|                                                      |         |   | 2002                    |        | 2001 |   | 2000     
|                                                      |         |   |                         |        |      |   |          
|Net
sales                                             |         | $ | 4,264,579               |        |      | $ | 3,961,545 |        |  | $ | 3,842,452 |       
|Cost of
sales                                         |         |   | 3,700,744               |        |      |   | 3,434,510 |        |  |   | 3,352,609 |       
|                                                      |         |   |                         |        |      |   |          
|Gross
profit                                          |         |   | 563,835                 |        |      |   | 527,035   |        |  |   | 489,843   |       
|                                                     
|Selling
and administrative expenses                   |         |   | 261,611                 |        |      |   | 253,328   |        |  |   | 217,756   |       
|Net
advertising expense                               |         |   | 4,046                   |        |      |   | 5,509     |        |  |   | 12,479    |       
|                                                      |         |   |                         |        |      |   |          
|Income
from operations                                |         |   | 298,178                 |        |      |   | 268,198   |        |  |   | 259,608   |       
|                                                     
|Interest
income                                       |         |   | 9,548                   |        |      |   | 12,637    |        |  |   | 9,739     |       
|Other
expense, net                                    |         |   | (1,529                  | )      |      |   | (859      | )      |  |   | (690      | )     
|                                                      |         |   |                         |        |      |   |          
|Income
before income taxes                            |         |   | 306,197                 |        |      |   | 279,976   |        |  |   | 268,657   |       
|                                                     
|Income
tax provision                                  |         |   | 120,948                 |        |      |   | 111,290   |        |  |   | 106,388   |       
|                                                      |         |   |                         |        |      |   |          
|Net
income                                            |         | $ | 185,249                 |        |      | $ | 168,686   |        |  | $ | 162,269   |       
|                                                      |         |   |                         |        |      |   |          
|Earnings
per share:                                   |         |   |                         |        |      |   |           |        |  |   |           |       
|                                                      | Basic   |   | $                       | 2.18   |      |   | $         | 1.97   |  |   | $         | 1.87   | 
|                                                      |         |   |                         |        |      |   |          
|                                                      | Diluted |   | $                       | 2.10   |      |   | $         | 1.89   |  |   | $         | 1.79   | 
|                                                      |         |   |                         |        |      |   |          
|Weighted-average number of
common shares outstanding: |         |   |                         |        |      |   |           |        |  |   |           |       
|                                                      | Basic   |   |                         | 84,862 |      |   |           | 85,803 |  |   |           | 87,003 | 
|                                                      |         |   |                         |        |      |   |          
|                                                      | Diluted |   |                         | 88,296 |      |   |           | 89,136 |  |   |           | 90,860 | 
|                                                      |         |   |                         |        |      |   |          

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

F-4





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##### Table of Contents



CDW COMPUTER CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
(in thousands)

|                                                                |  |               |          |        |  |         |     |          |  |              |         |          |  |               |         |               |  |   |        |   |  |   |          |       |  |             |   |  |  |   |         | 
|--------------------------------------------------------------- |  | ------------- | -------- | ------ |  | ------- | --- | -------- |  | ------------ | ------- | -------- |  | ------------- | ------- | ------------- |  | - | ------ | - |  | - | -------- | ----- |  | ----------- | - |  |  | - | ------- | 
|                                                                |  |               |          |        |  |         |     |          |  |              |         |          |  |               |         |               |  |   |        |   |  |   |          |       |  | Accumulated |   |  |  |  
|                                                                |  | Total         |          |        |  |         |     |          |  |              |         |          |  |               |         |               |  |   |        |   |  |   |          | Other |  |             |   | 
|                                                                |  | Shareholders |          | Common |  | Paid-in |     | Retained |  | Unearned     |         | Treasury |  | Comprehensive |         | Comprehensive
|                                                                |  | Equity        |          | Shares |  | Capital |     | Earnings |  | Compensation |         | Shares   |  | Income        |         | Income       
|                                                                |  |               |          |       
|Balance at
December 31, 1999                                    |  | $             | 390,984  |        |  | $       | 866 |          |  | $            | 102,338 |          |  | $             | 290,344 |               |  | $ | (475   | ) |  | $ | (2,089   | )     |  | $           |  |  |  |   |         | 
|MPK Restricted Stock
Plan forfeitures                           |  |               |         |        |  |         |     |          |  |              | (15     | )        |  |               |         |               |  |   | 15     |   |  |   |          |       |  |             |   |  |  |   |         | 
|Amortization of
unearned compensation                           |  |               | 258      |        |  |         |     |          |  |              |         |          |  |               |         |               |  |   | 258    |   |  |   |          |       |  |             |   |  |  |   |         | 
|Compensatory stock
option grants                                |  |               | 4,225    |        |  |         |     |          |  |              | 4,225   |          |  |               |         |               |  |   |        |   |  |   |          |       |  |             |   |  |  |   |         | 
|Exercise of stock
options                                       |  |               | 7,125    |        |  |         | 9   |          |  |              | 7,116   |          |  |               |         |               |  |   |        |   |  |   |          |       |  |             |   |  |  |   |         | 
|Tax benefit from
stock option and
restricted stock transactions |  |               | 71,390   |        |  |         |     |          |  |              | 71,390  |          |  |               |         |               |  |   |        |   |  |   |          |       |  |             |   |  |  |   |         | 
|Net
income                                                      |  |               | 162,269  |        |  |         |     |          |  |              |         |          |  |               | 162,269 |               |  |   |        |   |  |   |          |       |  |             |   |  |  |   |         | 
|                                                                |  |               |         
|Balance at
December 31, 2000                                    |  |               | 636,251  |        |  |         | 875 |          |  |              | 185,054 |          |  |               | 452,613 |               |  |   | (202   | ) |  |   | (2,089   | )     |  |             |  |  |  |   |         | 
|MPK Restricted Stock
Plan forfeitures                           |  |               |         |        |  |         |     |          |  |              | (2      | )        |  |               |         |               |  |   | 2      |   |  |   |          |       |  |             |   |  |  |   |         | 
|Amortization of
unearned compensation                           |  |               | 1,932    |        |  |         |     |          |  |              |         |          |  |               |         |               |  |   | 1,932  |   |  |   |          |       |  |             |   |  |  |   |         | 
|Compensatory stock
option grants                                |  |               | 2,741    |        |  |         |     |          |  |              | 2,741   |          |  |               |         |               |  |   |        |   |  |   |          |       |  |             |   |  |  |   |         | 
|Compensatory
restricted stock grant                             |  |               |         |        |  |         | 1   |          |  |              | 3,662   |          |  |               |         |               |  |   | (3,663 | ) |  |   |          |       |  |             |   |  |  |   |         | 
|Exercise of stock
options                                       |  |               | 9,136    |        |  |         | 9   |          |  |              | 9,127   |          |  |               |         |               |  |   |        |   |  |   |          |       |  |             |   |  |  |   |         | 
|Tax benefit from
stock option and
restricted stock transactions |  |               | 58,126   |        |  |         |     |          |  |              | 58,126  |          |  |               |         |               |  |   |        |   |  |   |          |       |  |             |   |  |  |   |         | 
|Purchase of treasury
shares                                     |  |               | (98,215  | )      |  |         |     |          |  |              |         |          |  |               |         |               |  |   |        |   |  |   | (98,215  | )     |  |             |   |  |  |   |         | 
|Net
income                                                      |  |               | 168,686  |        |  |         |     |          |  |              |         |          |  |               | 168,686 |               |  |   |        |   |  |   |          |       |  |             |   |  |  |   |         | 
|                                                                |  |               |         
|Balance at
December 31, 2001                                    |  |               | 778,657  |        |  |         | 885 |          |  |              | 258,708 |          |  |               | 621,299 |               |  |   | (1,931 | ) |  |   | (100,304 | )     |  |             |  |  |  |   |         | 
|MPK Restricted Stock
Plan forfeitures                           |  |               |         |        |  |         |     |          |  |              | (22     | )        |  |               |         |               |  |   | 22     |   |  |   |          |       |  |             |   |  |  |   |         | 
|Amortization of
unearned compensation                           |  |               | 1,072    |        |  |         |     |          |  |              |         |          |  |               |         |               |  |   | 1,072  |   |  |   |          |       |  |             |   |  |  |   |         | 
|Exercise of stock
options                                       |  |               | 17,837   |        |  |         | 12  |          |  |              | 17,825  |          |  |               |         |               |  |   |        |   |  |   |          |       |  |             |   |  |  |   |         | 
|Tax benefit from
stock option and
restricted stock transactions |  |               | 69,543   |        |  |         |     |          |  |              | 69,543  |          |  |               |         |               |  |   |        |   |  |   |          |       |  |             |   |  |  |   |         | 
|Purchase of treasury
shares                                     |  |               | (128,291 | )      |  |         |     |          |  |              |         |          |  |               |         |               |  |   |        |   |  |   | (128,291 | )     |  |             |   |  |  |   |         | 
|Net
income                                                      |  |               | 185,249  |        |  |         |     |          |  |              |         |          |  |               | 185,249 |               |  |   |        |   |  |   |          |       |  |             |   |  |  | $ | 185,249 | 
|Net unrealized gains
on marketable securities                   |  |               | 3        |        |  |         |     |          |  |              |         |          |  |               |         |               |  |   |        |   |  |   |          |       |  |             | 3 |  |  |   | 3       | 
|                                                                |  |               |          |        |  |         |     |          |  |              |         |          |  |               |         |              
|Comprehensive
income                                            |  |               |          |        |  |         |     |          |  |              |         |          |  |               |         |               |  |   |        |   |  |   |          |       |  |             |   |  |  | $ | 185,252 | 
|                                                                |  |               |          |        | 
|Balance at
December 31, 2002                                    |  | $             | 924,070  |        |  | $       | 897 |          |  | $            | 346,054 |          |  | $             | 806,548 |               |  | $ | (837   | ) |  | $ | (228,595 | )     |  | $           | 3 |  |  |   |         | 
|                                                                |  |               |          |        | 

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

F-5





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##### Table of Contents



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

|                                                                                  |                                                     |   |                          |            |      |   |         |            |   |   |         |          |  
|--------------------------------------------------------------------------------- | --------------------------------------------------- | - | ------------------------ | ---------- | ---- | - | ------- | ---------- | - | - | ------- | -------- | -
|                                                                                  |                                                     |   | Years Ended December
31,
|                                                                                  |                                                     |   |                         
|                                                                                  |                                                     |   | 2002                     |            | 2001 |   | 2000   
|                                                                                  |                                                     |   |                          |            |      |   |        
|Cash
flows from operating activities:                                             |                                                     |   |                          |            |      |   |         |            |   |   |         |         
|                                                                                 
|Net
income                                                                        |                                                     | $ | 185,249                  |            |      | $ | 168,686 |            |   | $ | 162,269 |         
|                                                                                 
|Adjustments to reconcile net income to net cash provided
by operating activities: |                                                     |   |                          |            |      |   |         |            |   |   |         |         
|                                                                                 
|                                                                                  | Depreciation                                        |   |                          | 15,564     |      |   |         | 15,383     |   |   |         | 10,478   |  
|                                                                                  | Accretion of
marketable securities                  |   |                          | 699        |      |   |         | (181       | ) |   |         | (2,930   | )
|                                                                                  | Stock-based
compensation expense                    |   |                          | 1,072      |      |   |         | 4,673      |   |   |         | 4,483    |  
|                                                                                  | Allowance for
doubtful accounts                     |   |                          | 1,000      |      |   |         | 2,500      |   |   |         | 2,700    |  
|                                                                                  | Deferred income
taxes                               |   |                          | (1,446     | )    |   |         | (3,438     | ) |   |         | (1,866   | )
|                                                                                  | Tax benefit from
stock transactions                 |   |                          | 69,543     |      |   |         | 58,126     |   |   |         | 71,390   |  
|                                                                                 
|                                                                                  | Changes in assets
and liabilities:                  |   |                          |            |      |   |         |            |   |   |         |          |  
|                                                                                  | Accounts
receivable                                 |   |                          | (15,679    | )    |   |         | 16,519     |   |   |         | (109,934 | )
|                                                                                  | Miscellaneous
receivables and other assets          |   |                          | (5,391     | )    |   |         | 3,360      |   |   |         | (5,940   | )
|                                                                                  | Merchandise
inventory                               |   |                          | (31,668    | )    |   |         | (8,915     | ) |   |         | 16,015   |  
|                                                                                  | Prepaid
expenses                                    |   |                          | (757       | )    |   |         | (495       | ) |   |         | (2,097   | )
|                                                                                  | Accounts
payable                                    |   |                          | (4,022     | )    |   |         | 50,727     |   |   |         | (9,576   | )
|                                                                                  | Accrued
compensation                                |   |                          | 4,944      |      |   |         | 1,468      |   |   |         | (694     | )
|                                                                                  | Accrued income taxes
and other expenses             |   |                          | 12,664     |      |   |         | (5,734     | ) |   |         | 7,882    |  
|                                                                                  | Accrued exit
costs                                  |   |                          | (364       | )    |   |         | (275       | ) |   |         | (357     | )
|                                                                                  |                                                     |   |                          |            |      |   |        
|                                                                                  | Net cash provided by
operating activities           |   |                          | 231,408    |      |   |         | 302,404    |   |   |         | 141,823  |  
|                                                                                  |                                                     |   |                          |            |      |   |        
|Cash
flows from investing activities:                                             |                                                     |   |                          |            |      |   |         |            |   |   |         |         
|                                                                                 
|                                                                                  | Purchases of
available-for-sale securities          |   |                          | (1,542,447 | )    |   |         | (1,895,807 | ) |   |         | (116,398 | )
|                                                                                  | Redemptions of
available-for-sale securities        |   |                          | 1,609,622  |      |   |         | 1,790,862  |   |   |         | 60,900   |  
|                                                                                  | Purchases of
held-to-maturity securities            |   |                          | (346,586   | )    |   |         | (94,249    | ) |   |         | (130,781 | )
|                                                                                  | Redemptions of
held-to-maturity securities          |   |                          | 179,645    |      |   |         | 109,928    |   |   |         | 93,480   |  
|                                                                                  | Investment in and
advances to joint venture         |   |                          | (8,956     | )    |   |         | (23,579    | ) |   |         | (21,706  | )
|                                                                                  | Repayment of
advances from joint venture            |   |                          | 9,510      |      |   |         | 24,323     |   |   |         | 22,489   |  
|                                                                                  | Purchase of property
and equipment                  |   |                          | (10,579    | )    |   |         | (22,490    | ) |   |         | (33,015  | )
|                                                                                  |                                                     |   |                          |            |      |   |        
|                                                                                  | Net cash used in
investing activities               |   |                          | (109,791   | )    |   |         | (111,012   | ) |   |         | (125,031 | )
|                                                                                  |                                                     |   |                          |            |      |   |        
|Cash
flows from financing activities:                                             |                                                     |   |                          |            |      |   |         |            |   |   |         |         
|                                                                                 
|                                                                                  | Purchase of treasury
shares                         |   |                          | (128,291   | )    |   |         | (98,215    | ) |   |         |         |  
|                                                                                  | Proceeds from
exercise of stock options             |   |                          | 17,837     |      |   |         | 9,136      |   |   |         | 7,125    |  
|                                                                                  |                                                     |   |                          |            |      |   |        
|                                                                                  | Net cash (used in)
provided by financing activities |   |                          | (110,454   | )    |   |         | (89,079    | ) |   |         | 7,125    |  
|                                                                                  |                                                     |   |                          |            |      |   |        
|Net
increase in cash                                                              |                                                     |   | 11,163                   |            |      |   | 102,313 |            |   |   | 23,917  |         
|                                                                                 
|Cash
and cash equivalents - beginning of year                                     |                                                     |   | 145,977                  |            |      |   | 43,664  |            |   |   | 19,747  |         
|                                                                                  |                                                     |   |                          |            |      |   |        
|Cash
and cash equivalents - end of year                                           |                                                     | $ | 157,140                  |            |      | $ | 145,977 |            |   | $ | 43,664  |         
|                                                                                  |                                                     |   |                          |            |      |   |        
|Supplementary disclosure of cash flow information :                               |                                                     |   |                          |            |      |   |         |            |   |   |         |         
|                                                                                  | Taxes
paid                                          |   | $                        | 42,684     |      |   | $       | 66,763     |   |   | $       | 28,679   |  

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

F-6





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##### Table of Contents



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



|1. |  | Description of Business                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | CDW Computer Centers, Inc. (collectively with its
subsidiaries, CDW or
the Company) is the largest direct marketer of multi-brand computers and
related technology products and services in the United States. Our
primary business is conducted from a combined corporate office and
distribution center located in Vernon Hills, Illinois, sales offices in
Mettawa and Chicago, Illinois, and a sales office in Lansdowne, Virginia.
Additionally, we market and sell products through CDW.com and CDWG.com,
our Web sites.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  
|   |  | We extend credit to corporate and public sector customers
under certain
circumstances based upon the financial strength of the customer. Such
customers are typically granted net 30 day credit terms. Payment for the
balance of our sales is made primarily through third party credit cards.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|2. |  | Summary of Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|   |  | Presented here is a summary of the most significant
accounting policies
used in the preparation of our consolidated financial statements. Our
most significant accounting policies relate to the sale, purchase,
distribution and promotion of our products. Therefore, our accounting
policies in the areas of revenue recognition, inventory valuation, vendor
purchase and merchandising arrangements and marketing activities, among
others, are discussed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|   |  | Principles of Consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  
|   |  | The accompanying consolidated financial statements
include the accounts of
CDW Computer Centers, Inc. and our wholly-owned subsidiaries. One of our
wholly-owned subsidiaries, CDW Capital Corporation (CDWCC), owns a 50%
interest in CDW Leasing, L.L.C. (CDW-L) (Note 12). The investment in
CDW-L is accounted for by the equity method. All intercompany
transactions and accounts are eliminated in consolidation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|   |  | Use of Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|  
|   |  | The preparation of financial statements in accordance
with accounting
principles generally accepted in the United States of America requires
management to make use of certain estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reported
periods. We base our estimates on historical experience and on various
other assumptions that we believe are reasonable under the circumstances,
the results of which form the basis for making judgments about carrying
values of assets and liabilities that are not readily apparent from other
sources. Significant estimates in these financial statements include
allowances for doubtful accounts receivable, sales returns and pricing
disputes, net realizable value of inventories, vendor transactions and
loss contingencies. Actual results could differ from those estimates.
|  
|   |  | Allowance for doubtful accounts receivable.We
provide allowances for
doubtful accounts related to accounts receivable for estimated losses
resulting from the inability of our customers to make required payments.
We take into consideration the overall quality and aging of the receivable
portfolio along with specifically identified customer risks. If actual
customer payment performance were to deteriorate to an extent not
expected, additional allowances may be required.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

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##### Table of Contents





| |  | Sales returns and pricing disputes.At the time of
sale, we record an
estimate for sales returns and pricing disputes based on historical
experience.                                                                                                                                                                                                                                                                                                                                                                                                
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Net realizable value of inventories.Inventory is
valued at the lower of
cost or market value. We decrease the value of inventory for estimated
obsolescence equal to the difference between the cost of inventory and the
estimated market value, based upon an aging analysis of the inventory on
hand, specifically known inventory-related risks, and assumptions about
future demand and market conditions. If actual market conditions are less favorable than
those projected by management, additional inventory write-downs may be
required.
|
| |  | Vendor transactions.We receive incentives from
vendors related to
cooperative advertising allowances, rebates, price protection and other
programs. These incentives generally relate to agreements with the
vendors and are recorded as adjustments to gross margin or net advertising
expense, as appropriate. If market conditions were to deteriorate,
vendors may change the terms of some or all of these programs.                                                                                                                           
|
| |  | Loss contingencies.We accrue for contingent
obligations when a loss is
probable and the amount can be reasonably estimated. As facts concerning
contingencies become known, we reassess our position and make appropriate
adjustments to the financial statements.                                                                                                                                                                                                                                                                                  
|
| |  | Earnings Per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | We calculate earnings per share in accordance with
Statement of Financial
Accounting Standards No. 128, Earnings Per Share (SFAS 128).
Accordingly, we have disclosed earnings per share calculated using both
the basic and diluted methods for all periods presented. A
reconciliation of basic and diluted per share computations is included in
Note 10.                                                                                                                                                                                    
|
| |  | On April 22, 2000, the Board of Directors of the
Company approved a
two-for-one stock split effected in the form of a stock dividend paid on
June 21, 2000 to all common shareholders of record at the close of
business on June 14, 2000. All per share and related amounts contained in
these financial statements and notes have been adjusted to reflect this
stock split.                                                                                                                                                                      
|
| |  | 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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | We classify securities with a stated maturity, which we
intend to hold to
maturity, as held-to-maturity, and record such securities at amortized
cost. Securities which do not have stated maturities or which we do not
intend to hold to maturity are classified as available-for-sale and
recorded at fair value, with unrealized holding gains or losses recorded
as a separate component of Shareholders Equity. We do not invest in
trading securities. All securities are accounted for on a specific
identification basis.             
|
| |  | Our marketable securities are concentrated in securities
of the U.S.
Government, U.S. Government agencies and municipal bonds. 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.                                                                                                                                                                                                                                                                                                                                                                                                                                           





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##### Table of Contents





| |  | Property and Equipment                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Property and equipment are stated at cost. We calculate
depreciation
using the straight-line method over the useful lives of the assets.
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. The following
table shows estimated useful lives of property and equipment:

|                                       |  |                       
|-------------------------------------- |  | ----------------------
|Classification                         |  | Estimated Useful Lives
|                                       |  |                       
|Machinery and equipment                |  | 5 to 15 years         
|Building and leasehold improvements    |  | 2 to 25 years         
|Computer and data processing equipment |  | 2 to 3 years          
|Computer software                      |  | 3 to 5 years          
|Furniture and fixtures                 |  | 5 years               



| |  | Revenue Recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | We record revenues from sales transactions when both risk
of loss and
title to products sold pass to the customer. Our shipping terms dictate
that the passage of title occurs upon receipt of products by the customer.
The majority of our revenues relate to physical products and are
recognized on a gross basis with the selling price to the customer
recorded as net sales and the acquisition cost of the product recorded as
cost of sales. At the time of sale, we also record an estimate for sales
returns based on historical experience. Software maintenance products,
third party services and extended warranties that we sell (for which we
are not the primary obligor) are recognized on a net basis in accordance
with SEC Staff Accounting Bulletin No. 101, Revenue Recognition and EITF
99-19, Reporting Revenue Gross as a Principal versus Net as an Agent.
Accordingly, such revenues are recognized in net sales either at the time
of sale or over the contract period, based on the nature of the contract,
at the net amount retained by us, with no cost of goods sold. In
accordance with EITF 00-10, Accounting for Shipping and Handling Fees and
Costs, we record freight billed to our customers as net sales and the
related freight costs as a cost of sales. Vendor rebates and price
protection are recorded when earned as a reduction to cost of sales or
merchandise inventory, as applicable.
|
| |  | 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. The following table summarizes advertising costs and
cooperative reimbursements for the years ended December 31, 2002, 2001 and
2000, respectively (in thousands):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

|                                |  |      |         |      |  |      |         |   |  |   |         |  
|------------------------------- |  | ---- | ------- | ---- |  | ---- | ------- | - |  | - | ------- | -
|                                |  | 2002 |         | 2001 |  | 2000
|                                |  |      |         |      |  |     
|Gross advertising
expenses      |  | $    | 89,079  |      |  | $    | 87,352  |   |  | $ | 91,296  |  
|Less cooperative
reimbursements |  |      | (85,033 | )    |  |      | (81,843 | ) |  |   | (78,817 | )
|                                |  |      |         |      |  |     
|Net advertising
expenses        |  | $    | 4,046   |      |  | $    | 5,509   |   |  | $ | 12,479  |  
|                                |  |      |         |      |  |     



| |  | Stock-Based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | At December 31, 2002, we had several stock-based
employee compensation
plans, which are described more fully in Note 9. In accordance with
Statement of Financial Accounting Standards No. 123, Accounting for
Stock-Based Compensation (SFAS 123), we account for our 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. The following table
illustrates the effect on net income and earnings per





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| |  | share if we had
applied the fair value recognition provisions of SFAS 123 to stock-based
employee compensation for the years ended December 31, 2002, 2001 and
2000, respectively (in thousands, except per share amounts):
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                                                           |  |      |         |      |  |      |         |   |  |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------ |  | ---- | ------- | ---- |  | ---- | ------- | - |  | - | ------- | -
|                                                                                                                                           |  | 2002 |         | 2001 |  | 2000
|                                                                                                                                           |  |      |         |      |  |     
|Net income, as
reported                                                                                                                    |  | $    | 185,249 |      |  | $    | 168,686 |   |  | $ | 162,269 |  
|                                                                                                                                           |  |      |         |      |  |      |         |   |  |   |         |  
|Add stock-based
employee compensation
expense included in reported net
income, net of related tax effects                                  |  |      | 649     |      |  |      | 2,793   |   |  |   | 2,707   |  
|                                                                                                                                           |  |      |         |      |  |      |         |   |  |   |         |  
|Deduct total
stock-based employee
compensation expense determined under
fair value based method for all
awards, net of related tax effects |  |      | (26,123 | )    |  |      | (25,911 | ) |  |   | (15,765 | )
|                                                                                                                                           |  |      |         |      |  |     
|Pro forma net
income                                                                                                                       |  | $    | 159,775 |      |  | $    | 145,568 |   |  | $ | 149,211 |  
|                                                                                                                                           |  |      |         |      |  |     
|Basic earnings per
share, as reported                                                                                                      |  | $    | 2.18    |      |  | $    | 1.97    |   |  | $ | 1.87    |  
|Diluted earnings per
share, as reported                                                                                                    |  | $    | 2.10    |      |  | $    | 1.89    |   |  | $ | 1.79    |  
|                                                                                                                                          
|Pro forma basic
earnings per share                                                                                                         |  | $    | 1.88    |      |  | $    | 1.70    |   |  | $ | 1.72    |  
|Pro forma diluted
earnings per share                                                                                                       |  | $    | 1.81    |      |  | $    | 1.63    |   |  | $ | 1.67    |  



| |  | Fair Value of Financial Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | We estimate that the fair market value of all of our
financial instruments
at December 31, 2002 and 2001 are not materially different from the
aggregate carrying value due to the short-term nature of these
instruments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | Treasury Shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | We intend to hold repurchased shares in treasury for
general corporate
purposes, including issuances under various employee stock option plans.
We account for the treasury shares using the cost method.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | Recently Issued Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | In 2002, we adopted Statement of Financial Accounting
Standards No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets and
determined that there was no impact on our financial statements. If facts
and circumstances indicate that the cost of any long-lived assets may be
impaired, an evaluation of recoverability would be performed. If an
evaluation is required, we would measure the carrying amount of the assets
against the estimated undiscounted future cash flows associated with them.
At the time any such evaluations indicate that the future undiscounted
cash flows of certain long-lived assets are not sufficient to recover the
carrying value of such assets, these assets would be adjusted to their
fair values.
|
| |  | In April 2002, the Financial Accounting Standards Board
(FASB) issued
Statement of Financial Accounting Standards No. 145, Rescission of FASB
Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13 and
Technical Corrections. Among other things, the statement updates,
clarifies and simplifies existing accounting pronouncements relating to
the extinguishment of debt. The provisions of this statement related to
the extinguishment of debt shall be applied in fiscal years                                                                                                                                                                                                                                                            





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##### Table of Contents





|   |  | beginning
after May 15, 2002. We do not expect the adoption of this statement to
have a material impact on our financial position or results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | In July 2002, the FASB issued Statement of Financial
Accounting Standards
No. 146, Accounting for Costs Associated with Exit or Disposal
Activities (SFAS 146). The statement requires companies to recognize
costs associated with exit or disposal activities when they are incurred
rather than at the date of a commitment to an exit or disposal plan. This
statement replaces previous accounting guidance provided by Emerging
Issues Task Force (EITF) Issue No. 94-3. SFAS 146 is to be applied
prospectively to exit or disposal activities initiated after December 31,
2002.                                                                                                                                                                                                                                                                                                 
|  
|   |  | In November 2002, the EITF reached consensus on Issue
No. 02-16,
Accounting for Consideration Received from a Vendor by a Customer
(Including a Reseller of the Vendors Products). Cash consideration
should generally be considered an adjustment of the prices of the vendors
products and, therefore, characterized as a reduction of cost of sales
when recognized in the resellers income statement unless certain
conditions apply. We will adopt the provisions of this issue for all
agreements modified or entered into on or after January 1, 2003. We
expect the adoption of this issue will result in the reclassification of
certain amounts currently classified as a reduction of advertising expense
to a reduction of cost of sales on a prospective basis.                                                                                                              
|  
|   |  | In November 2002, the EITF published Issue
No. 00-21, Revenue
Arrangements with Multiple Deliverables (EITF 00-21), which addresses
certain aspects of the accounting by a vendor for arrangements under which
it will perform multiple revenue-generating activities. EITF 00-21
addresses how to determine whether an arrangement involving multiple
deliverables contains more than one unit of accounting. EITF 00-21 is
effective for the Company for revenue arrangements entered into beginning
July 1, 2003. We have not yet determined the impact, if any, of adopting
EITF 00-21.                                                                                                                                                                                                                                                                                                
|  
|   |  | In November 2002, the FASB issued FASB Interpretation
No. 45, Guarantors
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others (FIN45). FIN 45 requires the
disclosure of certain guarantees existing at December 31, 2002 and recognition of a
liability for the fair
value of the obligation of qualifying guarantee activities that are
initiated or modified after December 31, 2002. As of December 31, 2002,
the Company had no significant guarantees.                                                                                                                                                                                                                                                                                                                                                                    
|  
|   |  | In December 2002, the FASB issued Statement of Financial
Accounting
Standards No. 148, Accounting for Stock-Based Compensation - Transition
and Disclosure - An Amendment of FASB Statement No. 123 (SFAS
148).
SFAS 148 provides additional transition guidance for those entities that
elect to voluntarily adopt the accounting provisions of SFAS 123 and
provides additional disclosure requirements for all companies. The
disclosure requirements are effective as of December 31, 2002, and are
reflected within the notes to the financial statements.                                                                                                                                                                                                                                                                                                                            
|  
|   |  | In January 2003, the FASB issued FASB Interpretation
No. 46,
Consolidation of Variable Interest Entities, an interpretation of ARB 51
(FIN 46). FIN 46 requires that the assets, liabilities and results of
the activity of variable interest entities be consolidated into the
financial statements of the company that has the controlling financial
interest. FIN 46 also provides the framework for determining whether a
variable interest entity should be consolidated based on voting interests
or significant financial support provided to it. FIN 46 will be effective
for the Company on February 1, 2003 for variable interest entities created
after January 31, 2003, and on July 1, 2003 for variable interest entities
created prior to February 1, 2003. We do not expect the adoption of FIN
46 to have a material impact on our 2003 consolidated financial
statements.
|  
|3. |  | Marketable Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|   |  | The amortized cost and estimated fair values of our
investments in
marketable securities at December 31, 2002 and 2001 were (in thousands):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    





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|                            |                                                  |            |           |         |         |        |            |      |  |   |   |   |  |   |         |         | 
|--------------------------- | ------------------------------------------------ | ---------- | --------- | ------- | ------- | ------ | ---------- | ---- |  | - | - | - |  | - | ------- | ------- | 
|                            |                                                  |            |           |         |         |        | Gross      |      |  |   |  
|                            |                                                  |            |           |         |         |        | Unrealized |      |  |   |  
|                            |                                                  |            |           |         | Holding |        |           
|                            |                                                  |            | Estimated |         |         |        | Amortized 
|Security Type               |                                                  | Fair Value |           | Gains   |         | Losses |            | Cost
|                            |                                                  |            |           |         |         |        |            |     
|December 31, 2002           |                                                  |            |           |         |         |        |            |      |  |   |   |   |  |   |         |        
|Available-for-sale:         |                                                  |            |           |         |         |        |            |      |  |   |   |   |  |   |         |        
|                            | Municipal
bonds                                  |            | $         | 124,674 |         |        | $          | 3    |  |   | $ |  |  |   | $       | 124,671 | 
|                            |                                                  |            |           |         |         |        |            |     
|                            | Total
available-for-sale                         |            |           | 124,674 |         |        |            | 3    |  |   |   |  |  |   |         | 124,671 | 
|                            |                                                  |            |           |         |         |        |            |     
|Held-to-maturity:           |                                                  |            |           |         |         |        |            |      |  |   |   |   |  |   |         |        
|                            | U.S. Government and
Government
agency securities |            |           | 193,306 |         |        |            | 675  |  |   |   |  |  |   |         | 192,631 | 
|                            | Corporate fixed
income securities                |            |           | 30,185  |         |        |            | 16   |  |   |   |  |  |   |         | 30,169  | 
|                            |                                                  |            |           |         |         |        |            |     
|                            | Total
held-to-maturity                           |            |           | 223,491 |         |        |            | 691  |  |   |   |  |  |   |         | 222,800 | 
|                            |                                                  |            |           |         |         |        |            |     
|Total
marketable securities |                                                  | $          | 348,165   |         |         | $      | 694        |      |  | $ |  |   |  | $ | 347,471 |        
|                            |                                                  |            |           |         |         |        |            |     
|December 31, 2001           |                                                  |            |           |         |         |        |            |      |  |   |   |   |  |   |         |        
|Available-for-sale:         |                                                  |            |           |         |         |        |            |      |  |   |   |   |  |   |         |        
|                            | U.S. Government and
Government
agency securities |            | $         | 133,718 |         |        | $          | 573  |  |   | $ |  |  |   | $       | 133,145 | 
|                            | Municipal
bonds                                  |            |           | 58,755  |         |        |            |     |  |   |   |  |  |   |         | 58,755  | 
|                            |                                                  |            |           |         |         |        |            |     
|                            | Total
available-for-sale                         |            |           | 192,473 |         |        |            | 573  |  |   |   |  |  |   |         | 191,900 | 
|                            |                                                  |            |           |         |         |        |            |     
|Held-to-maturity:           |                                                  |            |           |         |         |        |            |      |  |   |   |   |  |   |         |        
|                            | U.S. Government and
Government
agency securities |            |           | 44,271  |         |        |            | 140  |  |   |   |  |  |   |         | 44,131  | 
|                            | Corporate fixed
income securities                |            |           | 12,437  |         |        |            | 64   |  |   |   |  |  |   |         | 12,373  | 
|                            |                                                  |            |           |         |         |        |            |     
|                            | Total
held-to-maturity                           |            |           | 56,708  |         |        |            | 204  |  |   |   |  |  |   |         | 56,504  | 
|                            |                                                  |            |           |         |         |        |            |     
|Total
marketable securities |                                                  | $          | 249,181   |         |         | $      | 777        |      |  | $ |  |   |  | $ | 248,404 |        
|                            |                                                  |            |           |         |         |        |            |     



| |  | Estimated fair values of marketable securities are based
on quoted market
prices. The amortized cost and estimated fair value of our investments in
marketable securities at December 31, 2002 and 2001 by contractual
maturity were (in thousands):
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                             |                                            |   |            |         |           |   |         |         | 
|---------------------------- | ------------------------------------------ | - | ---------- | ------- | --------- | - | ------- | ------- | 
|                             |                                            |   | Estimated  |         | Amortized
|                             |                                            |   | Fair Value |         | Cost     
|                             |                                            |   |            |         |          
|December 31, 2002            |                                            |   |            |         |           |   |         |        
|Due in
one year or less      |                                            | $ | 243,095    |         |           | $ | 242,761 |        
|Due in
greater than one year |                                            |   | 105,070    |         |           |   | 104,710 |        
|                             |                                            |   |            |         |          
|                             | Total investments in
marketable securities |   | $          | 348,165 |           |   | $       | 347,471 | 
|                             |                                            |   |            |         |          
|December 31, 2001            |                                            |   |            |         |           |   |         |        
|Due in
one year or less      |                                            | $ | 223,560    |         |           | $ | 222,932 |        
|Due in
greater than one year |                                            |   | 25,621     |         |           |   | 25,472  |        
|                             |                                            |   |            |         |          
|                             | Total investments in
marketable securities |   | $          | 249,181 |           |   | $       | 248,404 | 
|                             |                                            |   |            |         |          



| |  | As of December 31, 2002, all of the marketable
securities that are due in
greater than one year have maturity dates prior to December 31, 2004.                                                                                                                                                                                                                      
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The gross unrealized holding gains and losses on
available-for-sale
securities are recorded as accumulated other comprehensive income, which
is reflected as a separate component of shareholders equity. The gross
realized gains and losses on marketable securities that are included in
other expense in the Consolidated Statements of Income are not material.





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|4. |  | Property and Equipment                                          
|-- |  | ----------------------------------------------------------------
|  
|   |  | Property and equipment consists of the following (in
thousands):

|                                       |  |              |         |      |  |   |         | 
|-------------------------------------- |  | ------------ | ------- | ---- |  | - | ------- | 
|                                       |  | December 31,
|                                       |  |             
|                                       |  | 2002         |         | 2001
|                                       |  |              |         |     
|Land                                   |  | $            | 10,367  |      |  | $ | 10,367  | 
|Machinery and
equipment                |  |              | 32,662  |      |  |   | 31,665  | 
|Building and
leasehold improvements    |  |              | 31,418  |      |  |   | 29,032  | 
|Computer and data
processing equipment |  |              | 24,126  |      |  |   | 22,269  | 
|Computer
software                      |  |              | 10,368  |      |  |   | 7,861   | 
|Furniture and
fixtures                 |  |              | 7,952   |      |  |   | 6,260   | 
|Construction in
progress               |  |              | 2,801   |      |  |   | 1,763   | 
|                                       |  |              |         |     
|Total property and
equipment           |  |              | 119,694 |      |  |   | 109,217 | 
|Less accumulated
depreciation          |  |              | 55,606  |      |  |   | 40,144  | 
|                                       |  |              |         |     
|Net property and
equipment             |  | $            | 64,088  |      |  | $ | 69,073  | 
|                                       |  |              |         |     



|   |  | We own approximately 45 acres of land, of which
approximately 11 acres are
vacant and available for future expansion.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|5. |  | Financing Arrangements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|  
|   |  | We have an aggregate $70 million available pursuant
to two $35 million
unsecured lines of credit with two financial institutions. One line of
credit expires in June 2003, at which time we intend to renew the line,
and the other does not have a fixed expiration date. Borrowings under the
first credit facility bear interest at the prime rate less 2 1/2%, LIBOR
plus 1/2% or the federal funds rate plus 1/2%, as determined by the
Company. Borrowings under the second credit facility bear interest at the
prime rate less 2 1/2%, LIBOR plus .45% or the federal funds rate
plus .45%, as determined by the Company. At December 31, 2002,
there were no
borrowings under either of the credit facilities.
|  
|6. |  | Trade Financing Agreements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|  
|   |  | We have 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 $84.0 million collateralized
by inventory purchases financed by the Flooring Companies. At December
31, 2002 and 2001, we owed the Flooring Companies approximately $17.6
million and $20.5 million, respectively, which is included in trade
accounts payable.                                                                                                                                                                                      
|  
|7. |  | Operating Leases and Exit Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  
|   |  | We are obligated under various operating lease
agreements, primarily for
office facilities in the Chicago metropolitan area. The lease agreements
generally provide for minimum rent payments and a proportionate share of
operating expenses and property taxes and include certain renewal and
expansion options. For the years ended December 31, 2002, 2001 and 2000,
rent expense was $9.8 million, $7.6 million and $2.0 million,
respectively. Additionally, $753,000, $572,000 and $571,000 of rental
payments were charged to the exit liability in 2002, 2001 and 2000,
respectively. Future minimum lease payments are as follows (in
thousands):                                                           





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##### Table of Contents



|                                    |  |        |        | 
|----------------------------------- |  | ------ | ------ | 
|Years Ended December 31,            |  | Amount
|                                    |  |       
|2003                                |  | $      | 6,988  | 
|2004                                |  |        | 6,322  | 
|2005                                |  |        | 6,432  | 
|2006                                |  |        | 6,424  | 
|2007                                |  |        | 6,483  | 
|Thereafter                          |  |        | 21,658 | 
|                                    |  |       
|Total future minimum
lease payments |  | $      | 54,307 | 
|                                    |  |       



|   |  | In 1996, we recorded a $4.0 million pre-tax charge
to operating results
for exit costs relating to our leased Buffalo Grove facility. 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 2002, 2001 and 2000, we
charged approximately $764,000, $565,000 and $357,000 against the exit
accrual, respectively. These amounts include cash payments for rent, real
estate taxes and restoration, net of sublease payments.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | We discontinued use of the Buffalo Grove facility in the
fourth quarter of
2002 and sales personnel were relocated to the Mettawa office. In 2002
and 2001, respectively, we recorded $400,000 and $290,000 of additional
pre-tax charges to operating results to cover additional exit costs we
anticipated relating to the Buffalo Grove facility. The Buffalo Grove
lease term expires in December 2003.                                                                                                                                                                                                                                         
|  
|8. |  | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  
|   |  | Components of the provision (benefit) for income
taxes for the years ended
December 31, 2002, 2001 and 2000 consist of (in thousands):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

|                           |         |   |         |         |      |   |         |        |  |   |         |        | 
|-------------------------- | ------- | - | ------- | ------- | ---- | - | ------- | ------ |  | - | ------- | ------ | 
|                           |         |   | 2002    |         | 2001 |   | 2000   
|                           |         |   |         |         |      |   |        
|Current:                   |         |   |         |         |      |   |         |        |  |   |         |       
|                           | Federal |   | $       | 101,449 |      |   | $       | 95,503 |  |   | $       | 89,520 | 
|                           | State   |   |         | 20,945  |      |   |         | 19,224 |  |   |         | 18,734 | 
|                           |         |   |         |         |      |   |        
|Total
current              |         |   | 122,394 |         |      |   | 114,727 |        |  |   | 108,254 |       
|Deferred                   |         |   | (1,446  | )       |      |   | (3,437  | )      |  |   | (1,866  | )     
|                           |         |   |         |         |      |   |        
|Provision for income taxes |         | $ | 120,948 |         |      | $ | 111,290 |        |  | $ | 106,388 |       
|                           |         |   |         |         |      |   |        



| |  | The current income tax liabilities for 2002, 2001 and
2000 were reduced by
$69.5 million, $58.1 million and $71.4 million, respectively, for tax
benefits recorded directly to paid-in capital relating to the exercise and
vesting of shares pursuant to the CDW Stock Option Plan, the MPK Stock
Option Plan and the MPK Restricted Stock Plan.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The reconciliation between the statutory tax rate
expressed as a
percentage of income before income taxes and the actual effective tax rate
for the years ended December 31, 2002, 2001 and 2000 is as follows:                                                                                                                                  





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|                                    |       |  |      |      |      |  |      |      |   |  |      |      |  
|----------------------------------- | ----- |  | ---- | ---- | ---- |  | ---- | ---- | - |  | ---- | ---- | -
|                                    |       |  | 2002 |      | 2001 |  | 2000
|                                    |       |  |      |      |      |  |     
|Statutory federal income tax rate   |       |  | 35.0 | %    |      |  | 35.0 | %    |   |  | 35.0 | %   
|State
taxes, net of federal benefit |       |  | 4.4  |      |      |  | 4.3  |      |   |  | 4.5  |     
|Other                               |       |  | 0.1  |      |      |  | 0.5  |      |   |  | 0.1  |     
|                                    |       |  |      |      |      |  |     
|                                    | Total |  |      | 39.5 | %    |  |      | 39.8 | % |  |      | 39.6 | %
|                                    |       |  |      |      |      |  |     



| |  | The tax effect of temporary differences that give rise to
the net deferred
income tax asset at December 31, 2002 and 2001 are presented below (in
thousands):
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------

|                       |                        |                      |        |       |        |      |        |       |       | 
|---------------------- | ---------------------- | -------------------- | ------ | ----- | ------ | ---- | ------ | ----- | ----- | 
|                       |                        |                      |        | 2002  |        | 2001
|                       |                        |                      |        |       |        |     
|Current:               |                        |                      |        |       |        |      |        |      
|                       | Accounts
receivable    |                      | $      | 4,851 |        |      | $      | 4,463 |      
|                       | Payroll
and benefits   |                      |        | 4,737 |        |      |        | 2,974 |      
|                       | Merchandise inventory  |                      |        | 734   |        |      |        | 583   |      
|                       | Accrued
expenses       |                      |        | 1,435 |        |      |        | 1,020 |      
|                       |                        |                      |        |       |        |     
|                       |                        | Subtotal
current     |        |       | 11,757 |      |        |       | 9,040 | 
|                       |                        |                      |        |       |        |     
|Non-current:           |                        |                      |        |       |        |      |        |      
|                       | Employee
stock plans   |                      |        | 5,014 |        |      |        | 6,332 |      
|                       | Exit
charge            |                      |        | 489   |        |      |        | 635   |      
|                       | Property
and equipment |                      |        | 174   |        |      |        | (37   | )    
|                       | Other                  |                      |        | 825   |        |      |        | 843   |      
|                       |                        |                      |        |       |        |     
|                       |                        | Subtotal
non-current |        |       | 6,502  |      |        |       | 7,773 | 
|                       |                        |                      |        |       |        |     
|Net
deferred tax asset |                        | $                    | 18,259 |       |        | $    | 16,813 |      
|                       |                        |                      |        |       |        |     



|   |  | The portion of the net deferred tax asset relating to
employee stock plans
results primarily from the MPK Stock Option Plan and compensatory stock
option grants under the CDW Stock Option Plans. Compensation expense
related to these plans is deductible for income tax purposes in the year
the options are exercised.                                                                                                                                                          
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Although realization is not assured, management believes,
based upon
historical taxable income, that it is more likely than not that all of the
deferred tax asset will be realized.                                                                                                                                                                                                                                                                                                 
|  
|9. |  | Stock-Based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|  
|   |  | CDW Stock Option Plans                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  
|   |  | We have established certain stock-based compensation
plans for the benefit
of our directors and coworkers. Pursuant to these plans, as of December
31, 2002, we have reserved a total of 7,696,046 common shares for future
stock option grants. The plans generally include vesting requirements
from one to 10 years and option lives of up to 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,
2000, 2001 and 2002 was
as follows:                                                                                                                                                                                                                                                                                                                                                                                                 
|  
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      



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##### Table of Contents



|                             |  |        |            |                |  |             |       |  |  |  |           | 
|---------------------------- |  | ------ | ---------- | -------------- |  | ----------- | ----- |  |  |  | --------- | 
|                             |  |        |            |                |  | Weighted-   |       |  |  | 
|                             |  |        |            | Average        |  | Options    
|                             |  | Shares |            | Exercise Price |  | Exercisable
|                             |  |        |            |                |  |            
|Balance at
January 1, 2000   |  |        | 12,197,434 |                |  | $           | 20.21 |  |  |  | 819,910   | 
|                             |  |        |            |                |  |            
|Options
granted              |  |        | 985,250    |                |  |             | 25.84 |  |  |  |          | 
|Options
exercised            |  |        | (787,028   | )              |  |             | 9.02  |  |  |  |          | 
|Options
forfeited            |  |        | (355,893   | )              |  |             | 25.78 |  |  |  |          | 
|                             |  |        |            |                |  |            
|Balance at
December 31, 2000 |  |        | 12,039,763 |                |  |             | 21.24 |  |  |  | 1,202,352 | 
|                             |  |        |            |                |  |            
|Options
granted              |  |        | 1,973,514  |                |  |             | 35.01 |  |  |  |          | 
|Options
exercised            |  |        | (901,386   | )              |  |             | 10.13 |  |  |  |          | 
|Options
forfeited            |  |        | (463,015   | )              |  |             | 19.93 |  |  |  |          | 
|                             |  |        |            |                |  |            
|Balance at
December 31, 2001 |  |        | 12,648,876 |                |  |             | 24.01 |  |  |  | 1,300,460 | 
|                             |  |        |            |                |  |            
|Options
granted              |  |        | 1,169,464  |                |  |             | 55.15 |  |  |  |          | 
|Options
exercised            |  |        | (1,203,031 | )              |  |             | 15.45 |  |  |  |          | 
|Options
forfeited            |  |        | (1,235,600 | )              |  |             | 28.11 |  |  |  |          | 
|                             |  |        |            |                |  |            
|Balance at
December 31, 2002 |  |        | 11,379,709 |                |  | $           | 27.79 |  |  |  | 1,803,103 | 
|                             |  |        |            |                |  |            



| |  | For the years ended December 31, 2002, 2001 and
2000, the weighted-average
fair value of options granted was as follows:
| |  | ------------------------------------------------------------------------------------------------------------------------

|                                                          |  |      |       |      |  |      |       |  |  |   |       | 
|--------------------------------------------------------- |  | ---- | ----- | ---- |  | ---- | ----- |  |  | - | ----- | 
|                                                          |  | 2002 |       | 2001 |  | 2000
|                                                          |  |      |       |      |  |     
|Exercise price
equals market price at time of grant       |  | $    | 30.82 |      |  | $    | 20.51 |  |  | $ | 21.25 | 
|Exercise price is
less than market price at time
of grant |  | $    |      |      |  | $    | 53.70 |  |  | $ | 27.87 | 





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##### Table of Contents





| |  | The following table summarizes the status of outstanding
stock options as
of December 31, 2002:
| |  | -----------------------------------------------------------------------------------------------

|                |  |             |                     |             |                     |           |           |             |  |           |       |  |  |  |           |  |  |   |       |  | 
|--------------- |  | ----------- | ------------------- | ----------- | ------------------- | --------- | --------- | ----------- |  | --------- | ----- |  |  |  | --------- |  |  | - | ----- |  | 
|                |  |             | Options
Outstanding |             | Options
Exercisable
|                |  |             |                     |             |                    
|                |  |             |                     |             |                     |           | Weighted- |             |  |           |       |  |  |  |           |  |  |   |      
|                |  |             |                     |             |                     |           | Average   |             |  |           |       |  |  |  |           |  |  |   |      
|                |  |             |                     | Remaining   |                     | Weighted- |           |             |  | Weighted-
|                |  | Number of   |                     | Contractual |                     | Average   |           | Number of   |  | Average  
|Range of        |  | Options     |                     | Life (in    |                     | Exercise  |           | Options     |  | Exercise 
|Exercise Prices |  | Outstanding |                     | years)      |                     | Price     |           | Exercisable |  | Price    
|                |  |             |                     |             |                     |           |           |             |  |          
|$0.003 -
  0.01 |  |             | 273,764             |             |                     |           | 17.8      |             |  | $         | 0.01  |  |  |  |          |  |  | $ |      | 
|$ 5.68  -  6.75 |  |             | 89,366              |             |                     |           | 12.8      |             |  | $         | 6.51  |  |  |  | 89,366    |  |  | $ | 6.51  | 
|$10.00 -
14.83  |  |             | 2,855,219           |             |                     |           | 14.5      |             |  | $         | 13.74 |  |  |  | 752,377   |  |  | $ | 13.83 | 
|$16.20 -
23.99  |  |             | 1,908,084           |             |                     |           | 16.0      |             |  | $         | 23.98 |  |  |  | 360,130   |  |  | $ | 23.98 | 
|$24.31 -
34.52  |  |             | 2,194,182           |             |                     |           | 16.5      |             |  | $         | 26.40 |  |  |  | 107,937   |  |  | $ | 25.77 | 
|$36.62 -
54.75  |  |             | 3,140,024           |             |                     |           | 12.1      |             |  | $         | 38.59 |  |  |  | 493,193   |  |  | $ | 37.54 | 
|$54.97 -
63.38  |  |             | 919,070             |             |                     |           | 9.6       |             |  | $         | 56.04 |  |  |  | 100       |  |  | $ | 55.63 | 
|                |  |             |                     |             |                     |           |           |             |  |          
|$0.003 -
63.38  |  |             | 11,379,709          |             |                     |           | 14.1      |             |  | $         | 27.79 |  |  |  | 1,803,103 |  |  | $ | 22.70 | 
|                |  |             |                     |             |                     |           |           |             |  |          



| |  | Had we elected to apply the provisions of SFAS 123
regarding recognition
of compensation expense to the extent of the calculated fair value of
stock options, reported net income and earnings per share would have been
reduced as follows (in thousands, except per share amounts):
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                                                           |  |      |         |      |  |      |         |   |  |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------ |  | ---- | ------- | ---- |  | ---- | ------- | - |  | - | ------- | -
|                                                                                                                                           |  | 2002 |         | 2001 |  | 2000
|                                                                                                                                           |  |      |         |      |  |     
|Net income, as
reported                                                                                                                    |  | $    | 185,249 |      |  | $    | 168,686 |   |  | $ | 162,269 |  
|                                                                                                                                           |  |      |         |      |  |      |         |   |  |   |         |  
|Add stock-based
employee compensation
expense included in reported net
income, net of related tax effects                                  |  |      | 649     |      |  |      | 2,793   |   |  |   | 2,707   |  
|                                                                                                                                           |  |      |         |      |  |      |         |   |  |   |         |  
|Deduct total
stock-based employee
compensation expense determined under
fair value based method for all
awards, net of related tax effects |  |      | (26,123 | )    |  |      | (25,911 | ) |  |   | (15,765 | )
|                                                                                                                                           |  |      |         |      |  |     
|Pro forma net
income                                                                                                                       |  | $    | 159,775 |      |  | $    | 145,568 |   |  | $ | 149,211 |  
|                                                                                                                                           |  |      |         |      |  |     
|Basic earnings per
share, as reported                                                                                                      |  | $    | 2.18    |      |  | $    | 1.97    |   |  | $ | 1.87    |  
|Diluted earnings per
share, as reported                                                                                                    |  | $    | 2.10    |      |  | $    | 1.89    |   |  | $ | 1.79    |  
|                                                                                                                                          
|Pro forma basic
earnings per share                                                                                                         |  | $    | 1.88    |      |  | $    | 1.70    |   |  | $ | 1.72    |  
|Pro forma diluted
earnings per share                                                                                                       |  | $    | 1.81    |      |  | $    | 1.63    |   |  | $ | 1.67    |  





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##### Table of Contents





| |  | 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 pro forma calculations exclude stock options granted before
1995.                                                                                                            
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | For purposes of the SFAS 123 pro forma net income and
earnings per share
calculations, 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:

|                        |  |      |      |      |  |      |      |   |  |  |      |  
|----------------------- |  | ---- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                        |  | 2002 |      | 2001 |  | 2000
|                        |  |      |      |      |  |     
|Risk-free interest
rate |  |      | 4.4  | %    |  |      | 4.8  | % |  |  | 5.0  | %
|Dividend
yield          |  |      | 0.0  | %    |  |      | 0.0  | % |  |  | 0.0  | %
|Option life
(years)     |  |      | 5.0  |      |  |      | 4.8  |   |  |  | 8.7  |  
|Stock price
volatility  |  |      | 61.2 | %    |  |      | 62.4 | % |  |  | 57.6 | %



| |  | MPK Stock Option Plan                                                                                                                                                                                                                                                                                                        
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Effective December 31, 1992, the Companys then
majority shareholder
established the MPK Stock Option Plan pursuant to which he granted
non-forfeitable options to certain officers to purchase 16,573,500 shares
of common stock owned by him at an exercise price of $.004175 per share.
Options were exercised as follows:

|                 |  |                             |           | 
|---------------- |  | --------------------------- | --------- | 
|Transaction Year |  | Number of Options
Exercised
|                 |  |                            
|1994             |  |                             | 1,844,892 | 
|1995             |  |                             | 1,353,258 | 
|1997             |  |                             | 545,746   | 
|1998             |  |                             | 659,752   | 
|1999             |  |                             | 1,743,992 | 
|2000             |  |                             | 4,180,888 | 
|2001             |  |                             | 2,751,732 | 
|2002             |  |                             | 2,384,376 | 



| |  | The outstanding 1,108,864 shares for the two remaining
participants are
exercisable as of December 31, 2002 and must be exercised by July 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | MPK Restricted Stock Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | Effective upon the closing of our initial public offering
in 1993, the
then majority shareholder established the MPK Restricted Stock Plan.
Pursuant to this plan, the majority shareholder allocated 2,674,416 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 our
subsidiaries through January 1, 2000, we recorded a capital contribution
and offsetting deferred charge of approximately $2.8 million for unearned
compensation equal to the number of shares granted, times $1.0425 per
share.
|
| |  | We 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 January 1, 2003. Under the terms of this
modification, participants who elected the acceleration were granted
options by us equal to the number of shares which became vested with an
exercise price of $14.75 per share, the market price of the stock on the
acceleration date.                                                                                                                                                                                                                





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|    |  | As of December 31, 2002, 292,822 shares were
outstanding under the
modified terms. All of these shares vested on January 1, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | MPK Stock Plans, Tax Benefits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|    |  | The exercise and vesting of shares pursuant to the MPK
Stock Option Plan,
MPK Restricted Stock Plan and the CDW Incentive Stock Option Plan resulted
in the realization by the Company of tax benefits of $71.0 million in
2002, $59.2 million in 2001 and $72.5 million in 2000, of which $1.5
million, $1.1 million and $1.1 million, respectively, were previously
recorded in deferred taxes. The incremental tax benefits of $69.5 million
in 2002, $58.1 million in 2001 and $71.4 million in 2000 were recorded to
paid-in capital.                                                                                                                                                                                                                                                                                                                                                    
|   
|    |  | Restricted Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|    |  | On January 28, 2001, we granted a restricted stock
award of 100,000 shares
of common stock to our Chairman and Chief Executive Officer that will vest
in equal annual installments on the first four anniversaries of the date
of grant. Compensation expense related to this restricted stock award is
recognized over the vesting period. As of December 31, 2002, 75,000 of
such shares had not yet vested.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|    |  | Employee Stock Purchase Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    |  | On October 1, 2002, we established an Employee Stock
Purchase Plan
(ESPP) which provides that eligible coworkers may contribute up to 15%
of their eligible compensation towards the quarterly purchase of our
common stock. The coworkers purchase price is 85% of the lesser of the
fair market value of the stock on the first business day or the last
business day of the quarterly offering period. Coworkers may purchase
shares having a fair market value of up to $25,000 (measured on the first
day of the quarterly offering period for each calendar year) or 325 shares
per quarter. No compensation expense is recorded in connection with the
plan. The total number of shares issuable under the ESPP is 500,000.
Subsequent to December 31, 2002, there were 20,300 shares issued under the
ESPP at a price of $37.05 related to the fourth quarter 2002 offering
period.
|   
|10. |  | Earnings Per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|    |  | At December 31, 2002, we had outstanding common
shares totaling
83,960,897. We have granted options to purchase common shares to the
directors and coworkers of the Company as discussed in Note 9. These
options have a dilutive effect on the calculation of earnings per share.
The following table is a reconciliation of the numerators and denominators
of the basic and diluted earnings per share computations as required by
SFAS 128 (in thousands, except per share amounts).                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               



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|                                                          |                            |   |                          |       |      |   |         |       |  |   |         |       | 
|--------------------------------------------------------- | -------------------------- | - | ------------------------ | ----- | ---- | - | ------- | ----- |  | - | ------- | ----- | 
|                                                          |                            |   | Years Ended December
31,
|                                                          |                            |   |                         
|                                                          |                            |   | 2002                     |       | 2001 |   | 2000   
|                                                          |                            |   |                          |       |      |   |        
|Basic
earnings per share:                                 |                            |   |                          |       |      |   |         |       |  |   |         |      
|Income
available to
common shareholders (numerator)       |                            | $ | 185,249                  |       |      | $ | 168,686 |       |  | $ | 162,269 |      
|                                                          |                            |   |                          |       |      |   |        
|Weighted-average common
shares outstanding (denominator)  |                            |   | 84,862                   |       |      |   | 85,803  |       |  |   | 87,003  |      
|                                                          |                            |   |                          |       |      |   |        
|Basic
earnings per share                                  |                            | $ | 2.18                     |       |      | $ | 1.97    |       |  | $ | 1.87    |      
|                                                          |                            |   |                          |       |      |   |        
|Diluted
earnings per share:                               |                            |   |                          |       |      |   |         |       |  |   |         |      
|Income
available to
common shareholders (numerator)       |                            | $ | 185,249                  |       |      | $ | 168,686 |       |  | $ | 162,269 |      
|                                                          |                            |   |                          |       |      |   |        
|Weighted-average common
shares outstanding                |                            |   | 84,862                   |       |      |   | 85,803  |       |  |   | 87,003  |      
|Effect
of dilutive securities:                            |                            |   |                          |       |      |   |         |       |  |   |         |      
|                                                          | Options on common
stock    |   |                          | 3,434 |      |   |         | 3,333 |  |   |         | 3,857 | 
|                                                          |                            |   |                          |       |      |   |        
|Total
common shares and dilutive securities
(denominator) |                            |   | 88,296                   |       |      |   | 89,136  |       |  |   | 90,860  |      
|                                                          |                            |   |                          |       |      |   |        
|                                                          | Diluted earnings per share |   | $                        | 2.10  |      |   | $       | 1.89  |  |   | $       | 1.79  | 
|                                                          |                            |   |                          |       |      |   |        



| |  | Additional options to purchase common shares were
outstanding during the
year ended December 31, 2002 but were not included in the computation of
diluted earnings per share because the exercise prices of these options
were greater than the average market price of common shares during the
respective periods. The following table summarizes the weighted-average
number, and the weighted-average exercise price, of those options which
were excluded from the calculation:
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                              |  |                          |       |      |  |   |       | 
|--------------------------------------------- |  | ------------------------ | ----- | ---- |  | - | ----- | 
|                                              |  | Years Ended December
31,
|                                              |  |                         
|                                              |  | 2002                     |       | 2001
|                                              |  |                          |       |     
|Weighted-average
number of options (in 000s) |  |                          | 920   |      |  |   | 59    | 
|Weighted-average
exercise price               |  | $                        | 55.69 |      |  | $ | 60.57 | 



|    |  | The options were all outstanding at December 31,
2002 and 2001,
respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|11. |  | Profit Sharing and 401(k) Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|    |  | We have a profit sharing plan that includes a salary
reduction feature
established under the Internal Revenue Code Section 401(k) covering
substantially all employees. Company contributions to the profit sharing
plan are made in cash and determined at the discretion of the Board of
Directors. For the years ended December 31, 2002, 2001 and 2000, amounts
charged to expense for this plan totaled $4,506,000, $3,060,000 and
$3,600,000, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|12. |  | Leasing Joint Venture                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|    |  | In April 1999, CDWCC, a wholly-owned subsidiary of the
Company, and First
Portland Corporation (FIRSTCORP), an unrelated third party leasing
company, formed CDW-L, a joint venture that is 50 percent owned by each of
CDWCC and FIRSTCORP. Subsequent to December 31, 2002, FIRSTCORP was
acquired by IFC Credit Corporation. CDW-L provides captive leasing
services to our customers. Under the terms of an operating agreement,
FIRSTCORP provides leasing management services to CDW-L, with net earnings
of the venture allocated 50% to us and 50% to FIRSTCORP. CDWCC and
FIRSTCORP each contributed $600,000 to the capital of CDW-L, maintain
equal operating control over CDW-L and have an equal number of seats on
the Board of Managers of the joint venture. Effective May 1, 2002, we
decided to stop originating new leases with this venture and began to
refer customers to independent leasing sources, including FIRSTCORP and
several





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| |  | manufacturer captive entities. The existing leases in
CDW-Ls
portfolio will be held until maturity, with the majority expiring prior to
December 1, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | At December 31, 2002, CDWCC has a $5.2 million
net investment in and loan
to CDW-L. Pursuant to a loan agreement between CDWCC and CDW-L, CDWCC had
previously committed up to $10 million in loans to CDW-L. On September 5,
2002, CDWCC terminated its loan commitment. Repayment of the outstanding loans may be
made through cash flow from operations after debt service on subordinated
loans outstanding from financial institutions. At December 31, 2002, $4.0
million was outstanding under this loan agreement, $1.4 million of which
is subordinated to loans from financial institutions. In 2000, CDW-L
obtained a financing commitment for $25 million from a financial
institution. This commitment was increased to $40 million in 2001, of
which $12.2 million was outstanding and $27.8 million remained available
at December 31, 2002. The financing commitment, collateralized by lease
receivables, requires CDW-L to meet certain financial covenants and is
without recourse to CDWCC or the Company. Under the terms of the
financing agreements, CDW-Ls total loans outstanding are limited to a
maximum of 90% of the present value of the lease payments receivable,
discounted at the prime rate. At December 31, 2002, CDW-Ls total loans
outstanding and related terms were:

|                                                        |  |                       |  |                       |  |                       |  |                        |        | 
|------------------------------------------------------- |  | --------------------- |  | --------------------- |  | --------------------- |  | ---------------------- | ------ | 
|CDW Leasing, L.L.C. Loans Outstanding and Related
Terms
|                                                        |  |                       |  |                       |  |                       |  | Outstanding
Balance as
|                                                        |  |                       |  |                       |  | Interest Rate as of   |  | of December
31,2002   
|Lender                                                  |  | Type of Instrument    |  | Maturity              |  | December 31, 2002     |  | (in
000s)            
|                                                        |  |                       |  |                       |  |                       |  |                       
|Financial
institution                                   |  | Term note             |  | Various thru
04/29/04 |  | 4.87% - 8.86%         |  | $                      | 12,200 | 
|                                                       
|CDWCC                                                   |  | Subordinated note     |  | Payable on demand     |  | 6.382%
(LIBOR + 5.0%) |  |                        | 1,400  | 
|                                                       
|CDWCC                                                   |  | Non-subordinated
note |  | Payable on demand     |  | 3.582%
(LIBOR + 2.2%) |  |                        | 2,600  | 
|                                                        |  |                       |  |                       |  |                       |  |                       
|Total                                                   |  |                       |  |                       |  |                       |  | $                      | 16,200 | 
|                                                        |  |                       |  |                       |  |                       |  |                       



|    |  | At December 31, 2002, the present value of
CDW-Ls borrowing base was
$16.2 million and CDW-L was in compliance with all of the covenants under
the agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|13. |  | Contingencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|    |  | As of December 31, 2002, the Company was not a party
to any material legal
proceedings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|14. |  | Segment Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|    |  | We are engaged in the sale of multi-brand computers and
related technology
products and services, primarily through direct marketing. We have two
operating segments: corporate, which is primarily comprised of business
customers, but also includes consumers, and public sector, which is
comprised of federal, state and local government and educational
institution customers. In accordance with Statement of Financial
Accounting Standards No. 131, Disclosure about Segments of an Enterprise
and Related Information, the internal organization that is used by
management for making operating decisions and assessing performance is the
source of our reportable segments.
|   
|    |  | The accounting policies of the segments are the same as
those described in
Note 2, Summary of Significant Accounting Policies. We allocate
resources to and evaluate performance of our segments based on both sales
and operating income. Our corporate segment provides purchasing,
merchandising, accounting, information technology, marketing, distribution
and fulfillment services to the public sector                                                                                                                                                                                                                                                                           





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| |  | segment. Certain elements of gross margin and operating expenses
are subject to intercompany service
agreements which provide for, among other things, a mark-up on
intercompany sales and allocation of indirect expenses such as occupancy,
operations and other support, payroll, training and benefits. The table
below presents information about our reportable segments:
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                      |  |                                         |           |               |  |              |         |              |  |   |          |   |  |   |           | 
|------------------------------------- |  | --------------------------------------- | --------- | ------------- |  | ------------ | ------- | ------------ |  | - | -------- | - |  | - | --------- | 
|                                      |  | Year Ended December 31, 2002
(in 000s)
|                                      |  |                                        
|                                      |  | Corporate                               |           | Public Sector |  | Eliminations |         | Consolidated
|                                      |  |                                         |           |               |  |              |         |             
|External customer
sales               |  | $                                       | 3,399,118 |               |  | $            | 865,461 |              |  | $ |         |   |  | $ | 4,264,579 | 
|Transfers between
segments            |  |                                         | 823,086   |               |  |              |        |              |  |   | (823,086 | ) |  |   |          | 
|                                      |  |                                         |           |               |  |              |         |             
|Total net
sales                       |  | $                                       | 4,222,204 |               |  | $            | 865,461 |              |  | $ | (823,086 | ) |  | $ | 4,264,579 | 
|                                      |  |                                         |           |               |  |              |         |             
|Income from
operations                |  | $                                       | 281,911   |               |  | $            | 16,267  |              |  | $ |         |   |  | $ | 298,178   | 
|                                      |  |                                         |           |               |  |              |         |             
|Net interest income
and
other expense |  |                                         |           |               |  |              |         |              |  |   |          |   |  |   | 8,019     | 
|                                      |  |                                         |           |               |  |              |         |             
|Income before income
taxes            |  |                                         |           |               |  |              |         |              |  |   |          |   |  | $ | 306,197   | 
|                                      |  |                                         |           |               |  |              |         |             
|Total
assets                          |  | $                                       | 1,034,795 |               |  | $            | 64,348  |              |  | $ | (3,479   | ) |  | $ | 1,095,664 | 
|                                      |  |                                         |           |               |  |              |         |             
|                                      |  |                                        
|                                      |  |                                        
|                                      |  | Year Ended December 31, 2001
(in 000s)
|                                      |  |                                        
|                                      |  | Corporate                               |           | Public Sector |  | Eliminations |         | Consolidated
|                                      |  |                                         |           |               |  |              |         |             
|External customer
sales               |  | $                                       | 3,280,632 |               |  | $            | 680,913 |              |  | $ |         |   |  | $ | 3,961,545 | 
|Transfers between
segments            |  |                                         | 619,819   |               |  |              |        |              |  |   | (619,819 | ) |  |   |          | 
|                                      |  |                                         |           |               |  |              |         |             
|Total net
sales                       |  | $                                       | 3,900,451 |               |  | $            | 680,913 |              |  | $ | (619,819 | ) |  | $ | 3,961,545 | 
|                                      |  |                                         |           |               |  |              |         |             
|Income from
operations                |  | $                                       | 245,539   |               |  | $            | 22,659  |              |  | $ |         |   |  | $ | 268,198   | 
|                                      |  |                                         |           |               |  |              |         |             
|Net interest income
and
other expense |  |                                         |           |               |  |              |         |              |  |   |          |   |  |   | 11,778    | 
|                                      |  |                                         |           |               |  |              |         |             
|Income before income
taxes            |  |                                         |           |               |  |              |         |              |  |   |          |   |  | $ | 279,976   | 
|                                      |  |                                         |           |               |  |              |         |             
|Total
assets                          |  | $                                       | 891,857   |               |  | $            | 74,753  |              |  | $ | (29,581  | ) |  | $ | 937,029   | 
|                                      |  |                                         |           |               |  |              |         |             





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##### Table of Contents



|                                      |  |                                         |           |               |  |              |         |              |  |   |          |   |  |   |           | 
|------------------------------------- |  | --------------------------------------- | --------- | ------------- |  | ------------ | ------- | ------------ |  | - | -------- | - |  | - | --------- | 
|                                      |  | Year Ended December 31, 2000
(in 000s)
|                                      |  |                                        
|                                      |  | Corporate                               |           | Public Sector |  | Eliminations |         | Consolidated
|                                      |  |                                         |           |               |  |              |         |             
|External customer
sales               |  | $                                       | 3,424,173 |               |  | $            | 418,279 |              |  | $ |         |   |  | $ | 3,842,452 | 
|Transfers between
segments            |  |                                         | 382,469   |               |  |              |        |              |  |   | (382,469 | ) |  |   |          | 
|                                      |  |                                         |           |               |  |              |         |             
|Total net
sales                       |  | $                                       | 3,806,642 |               |  | $            | 418,279 |              |  | $ | (382,469 | ) |  | $ | 3,842,452 | 
|                                      |  |                                         |           |               |  |              |         |             
|Income from
operations                |  | $                                       | 245,872   |               |  | $            | 13,736  |              |  | $ |         |   |  | $ | 259,608   | 
|                                      |  |                                         |           |               |  |              |         |             
|Net interest income
and
other expense |  |                                         |           |               |  |              |         |              |  |   |          |   |  |   | 9,049     | 
|                                      |  |                                         |           |               |  |              |         |             
|Income before income
taxes            |  |                                         |           |               |  |              |         |              |  |   |          |   |  | $ | 268,657   | 
|                                      |  |                                         |           |               |  |              |         |             
|Total
assets                          |  | $                                       | 726,319   |               |  | $            | 41,930  |              |  | $ | (19,812  | ) |  | $ | 748,437   | 
|                                      |  |                                         |           |               |  |              |         |             



|    |  | Our assets are primarily managed as part of the corporate
segment,
including all inventory and the majority of all property and equipment.
As a result, capital expenditures and related depreciation are immaterial
for the public sector segment. The public sector segment assets consist
principally of cash and cash equivalents and accounts receivable. Certain
reclassifications of assets between segments were made during 2002, with
no impact on total consolidated assets. Prior amounts have been
reclassified to conform to this presentation.                                                                                                                                                                                                                                                                                                                                                                
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Sales and operating expenses relating to our investment
in CDW-L,
accounted for under the equity method, are immaterial to us as a whole and
are evaluated by management for making operating decisions and allocating
resources as part of the corporate segment. The net equity earnings
relating to our investment in CDW-L, accounted for under the equity
method, were $347,900, $322,100 and $88,400 for the years ended December
31, 2002, 2001 and 2000, respectively. These amounts are included in
selling and administrative expenses in the Consolidated Statements of
Income.                                                                                                                                                                                                                                                                                                                                   
|   
|    |  | No single customer accounted for more than 1.0% of net
sales in fiscal
years 2002, 2001 or 2000. Less than 1.0% of our revenues are comprised of
sales to customers outside of the United States.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|15. |  | Share Repurchase Programs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|    |  | In January 2001, our Board of Directors authorized the
purchase of up to
5,000,000 shares of our common stock. This repurchase program was
completed during September 2002. Repurchased shares are held in treasury
pending use for general corporate purposes, including issuances under
various employee stock plans. Under this repurchase program, we purchased
2,307,500 shares of our common stock during the year ended December 31,
2002, at a total cost of $106.4 million (an average price of $46.11 per
share). These repurchases included 384,376 shares repurchased on May 7,
2002, at a total cost of $19.0 million ($49.50 per share), from Daniel B.
Kass, then an Executive Vice President and a Director of the Company.
From January 2001 though September 2002, we purchased the 5,000,000 shares
authorized to be repurchased at a total cost of $204.6 million (an average
price of $40.92 per share).
|   
|    |  | In July 2002, our Board of Directors authorized a new
share repurchase
program of up to 2,500,000 shares of our common stock. These purchases
may be made from time to time in both the open market and private
transactions, as conditions warrant. This program will remain in effect
through July 2004 unless earlier terminated by the Board or completed.
Under this repurchase program, we purchased 508,376 shares of our common
stock at a total cost of $21.9 million (an average price of $42.99 per
share) during the year ended December 31, 2002.                                                                                                                                                                                                                                                                                                                                                               





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|16. |  | Public Offering of Common Shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | In August 2001, Michael P. Krasny, the Chairman Emeritus,
principal
shareholder and a Director of the Company; Gregory C. Zeman, a Director
and then Vice Chairman of the Company; and Daniel B. Kass, then an
Executive Vice President and a Director of the Company, sold 10,562,500 shares of common stock through
a secondary
public offering at a price of $40.00 per share. We did not receive any
proceeds from the sale of their shares and the number of outstanding
common shares was not impacted. The shares sold by Mr. Zeman and Mr. Kass
were acquired from Mr. Krasny through the exercise of options previously
granted to them pursuant to the MPK Stock Option Plan. The sale of shares
by Mr. Zeman and Mr. Kass resulted in the realization by the Company in
the year ended December 31, 2001 of an income tax benefit of approximately
$43.5 million, of which approximately $600,000 was previously recorded to
deferred taxes. The incremental tax benefit of $42.9 million was recorded
as an increase to paid-in capital. Additionally, we recorded incremental
payroll tax expense related to the option exercise of approximately $1.6
million, which reduced diluted earnings per share by approximately $0.01
per share.
|   
|    |  | In March 2002, Mr. Zeman sold 2,000,000 shares of
common stock at a price
of $48.00 per share. We did not receive any proceeds from the sale of
shares and the number of outstanding common shares was not impacted. The
shares sold by Mr. Zeman were acquired from Mr. Krasny through the
exercise of options previously granted to Mr. Zeman pursuant to the MPK
Stock Option Plan. The exercise of options by Mr. Zeman resulted in the
realization by the Company of an income tax benefit of approximately $37.9
million in the first quarter of 2002, of which approximately $400,000 had
been previously recorded to deferred taxes. We recorded the incremental
tax benefit of $37.5 million as an increase to paid-in capital. In
addition, we recorded incremental payroll tax expense related to the
option exercise of approximately $1.4 million, which reduced diluted
earnings per share by approximately $0.01 per share.                                                                                                                                                                                                                                                                                                             
|   
|17. |  | Selected Quarterly Financial Data (Unaudited)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|    |  | The following information is for the years ended
December 31, 2002 and
2001 (in thousands, except per share data):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

|                           |         |   |           |      |         |   |           |      |         |   |           |      |  |   |           |      | 
|-------------------------- | ------- | - | --------- | ---- | ------- | - | --------- | ---- | ------- | - | --------- | ---- |  | - | --------- | ---- | 
|                           |         |   | First     |      | Second  |   | Third     |      | Fourth 
|                           |         |   | Quarter   |      | Quarter |   | Quarter   |      | Quarter
|                           |         |   |           |      |         |   |           |      |        
|December 31, 2002          |         |   |           |      |         |   |           |      |         |   |           |      |  |   |           |     
|Net
sales                  |         | $ | 1,002,836 |      |         | $ | 1,056,820 |      |         | $ | 1,150,970 |      |  | $ | 1,053,953 |     
|Gross
profit               |         |   | 130,163   |      |         |   | 137,248   |      |         |   | 157,040   |      |  |   | 139,384   |     
|Income
before income taxes |         |   | 67,366    |      |         |   | 72,814    |      |         |   | 90,734    |      |  |   | 75,283    |     
|Net
income                 |         |   | 40,756    |      |         |   | 44,053    |      |         |   | 54,894    |      |  |   | 45,546    |     
|Earnings
per share:        |         |   |           |      |         |   |           |      |         |   |           |      |  |   |           |     
|                           | Basic   |   | $         | 0.47 |         |   | $         | 0.51 |         |   | $         | 0.65 |  |   | $         | 0.54 | 
|                           | Diluted |   | $         | 0.45 |         |   | $         | 0.49 |         |   | $         | 0.63 |  |   | $         | 0.52 | 
|December 31, 2001          |         |   |           |      |         |   |           |      |         |   |           |      |  |   |           |     
|Net
sales                  |         | $ | 987,245   |      |         | $ | 995,045   |      |         | $ | 991,065   |      |  | $ | 988,190   |     
|Gross
profit               |         |   | 130,119   |      |         |   | 132,623   |      |         |   | 133,974   |      |  |   | 130,319   |     
|Income
before income taxes |         |   | 67,181    |      |         |   | 71,418    |      |         |   | 71,760    |      |  |   | 69,617    |     
|Net
income                 |         |   | 40,476    |      |         |   | 43,030    |      |         |   | 43,235    |      |  |   | 41,945    |     
|Earnings
per share:        |         |   |           |      |         |   |           |      |         |   |           |      |  |   |           |     
|                           | Basic   |   | $         | 0.47 |         |   | $         | 0.50 |         |   | $         | 0.50 |  |   | $         | 0.49 | 
|                           | Diluted |   | $         | 0.45 |         |   | $         | 0.48 |         |   | $         | 0.49 |  |   | $         | 0.47 | 





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REPORT OF INDEPENDENT ACCOUNTANTS

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

Our audits of the consolidated financial statements of CDW
Computer Centers,
Inc. and Subsidiaries referred to in our report dated January 17, 2003
appearing on page F-2 of this Form 10-K also included an audit of the financial
statement schedule listed in Item 15(a)(2) of this Form 10-K. In our opinion,
this financial statement schedule presents fairly, in all material respects,
the information set forth therein when read in conjunction with the related
consolidated financial statements.

/s/ PricewaterhouseCoopers LLP



PricewaterhouseCoopers LLP
Chicago, Illinois
January 17, 2003

S-1





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CDW COMPUTER CENTERS, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

Years ended December 31, 2002, 2001 and 2000
(in thousands)


|                                                                                               |                                 |           |            |          |            |          |            |            |  |           |   |   |            |  |   |       |     |  |   |        | 
|---------------------------------------------------------------------------------------------- | ------------------------------- | --------- | ---------- | -------- | ---------- | -------- | ---------- | ---------- |  | --------- | - | - | ---------- |  | - | ----- | --- |  | - | ------ | 
|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
|                                                                                               |                                 |           |            |          |            |          |            |            |  |          
|Year ended December 31, 2002
Deducted in the balance sheet from
the asset to which it applies: |                                 |           |            |          |            |          |            |            |  |           |   |   |            |  |   |       |     |  |   |       
|                                                                                               | Allowance for doubtful accounts |           | $          | 9,500    |            |          | $          | 5,833      |  |           | $ |  |            |  | $ | 4,833 | (a) |  | $ | 10,500 | 
|                                                                                               |                                 |           |            |          |            |          |            |            |  |          
|Year ended December 31, 2001
Deducted in the balance sheet from
the asset to which it applies: |                                 |           |            |          |            |          |            |            |  |           |   |   |            |  |   |       |     |  |   |       
|                                                                                               | Allowance for doubtful accounts |           | $          | 7,000    |            |          | $          | 8,384      |  |           | $ |  |            |  | $ | 5,884 | (a) |  | $ | 9,500  | 
|                                                                                               |                                 |           |            |          |            |          |            |            |  |          
|Year ended December 31, 2000
Deducted in the balance sheet from
the asset to which it applies: |                                 |           |            |          |            |          |            |            |  |           |   |   |            |  |   |       |     |  |   |       
|                                                                                               | Allowance for doubtful accounts |           | $          | 4,300    |            |          | $          | 6,817      |  |           | $ |  |            |  | $ | 4,117 | (a) |  | $ | 7,000  | 
|                                                                                               |                                 |           |            |          |            |          |            |            |  |          

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

S-2