<PAGE>

                                    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 April 30, 1997

                                          OR

( )TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                     ACT OF 1934
              For the transition period from _________ to _________

                            Commission file number: 1-14192

                                  VANSTAR CORPORATION
                (Exact name of Registrant as specified in its charter)

            DELAWARE                                           94-2376431
  (State or other jurisdiction of                            (I.R.S. Employer
   incorporation or organization)                           Identification No.)

                                5964 West Las Positas Boulevard
                                Pleasanton, California  94588
                           (Address of principal executive offices)

Registrant's telephone number, including area code:  (510) 734-4000

Securities registered pursuant to Section 12 (b) of the Act:
          Title of each class         Name of each exchange on which registered
          -------------------         -----------------------------------------
   Common Stock, $0.001 par value                New York Stock Exchange
         ("Common Stock")

Securities registered pursuant to Section 12 (g) of the Act:  None 

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 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.  (  ) 

The aggregate market value of the voting stock held by non-affiliates of the 
Registrant on June 30, 1997 (based on the closing New York Stock Exchange 
sale price on such date) was $337,945,342 using beneficial ownership rules 
adopted pursuant to Section 13 of the Securities Exchange Act of 1934 to 
exclude stock that may be beneficially owned by directors, executive officers 
or 10% stockholders, some of whom might not be held to be affiliates upon 
judicial determination.

The number of outstanding shares of Common Stock of the Registrant as of June 
30, 1997 was 42,903,179.

                 DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement for the Registrant's 1997 Annual 
Meeting of Stockholders (the "1997 Proxy Statement") to be filed with the 
Securities and Exchange Commission, are incorporated by reference into Part 
III hereof.


<PAGE>


                                 VANSTAR CORPORATION 
                                  INDEX TO FORM 10-K


                                                                           Page
                                     PART I    
 ITEM 1.  BUSINESS                                                           3
 ITEM 2.  PROPERTIES                                                        16
 ITEM 3.  LEGAL PROCEEDINGS                                                 16
 ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS               16

                                     PART II   
 ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED 
          STOCKHOLDER MATTERS                                               17
 ITEM 6.  SELECTED FINANCIAL DATA                                           18
 ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF 
          FINANCIAL CONDITION AND RESULTS OF OPERATIONS                     21
 ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                       27
 ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON 
          ACCOUNTING AND FINANCIAL DISCLOSURE                               45

                                     PART III      
 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                45
 ITEM 11. EXECUTIVE COMPENSATION                                            45
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT    45
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                    45

                                     PART IV
 ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON 
          FORM 8-K                                                          46

          SIGNATURES                                                        49



                        FORWARD-LOOKING STATEMENTS

WITH THE EXCEPTION OF HISTORICAL INFORMATION, THE MATTERS DISCUSSED IN THIS 
ANNUAL REPORT ON FORM 10-K INCLUDE FORWARD-LOOKING STATEMENTS.  THOSE 
STATEMENTS RELATE TO DIVIDENDS, BUSINESS TRENDS, USES OF FUTURE EARNINGS, 
SATISFACTION OF FUTURE CASH REQUIREMENTS, FUNDING OF FUTURE GROWTH, 
ACQUISITION PLANS, AND OTHER MATTERS.  THOSE STATEMENTS INVOLVE RISKS AND 
UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE 
RESULTS DISCUSSED HEREIN.  FACTORS THAT MIGHT CAUSE SUCH A DIFFERENCE 
INCLUDE, BUT ARE NOT LIMITED TO, CHANGES IN DEMAND FOR VANSTAR'S PRODUCTS AND 
SERVICES, CHANGES IN RELATIONSHIPS WITH SIGNIFICANT CUSTOMERS, THE 
INTRODUCTION OF NEW TECHNOLOGY (WHICH, AMONG OTHER RESULTS, CAN PLACE 
INVENTORY AT CONSIDERABLE VALUATION RISK) AND SERVICES, CHANGES IN THE LEVEL 
OF OPERATING EXPENSES, COMPETITIVE CONDITIONS (INCLUDING THE INTENSE PRICE 
COMPETITION IN VANSTAR'S MARKETS), PRODUCT SUPPLY, AND CHANGES IN 
RELATIONSHIPS WITH THE KEY VENDORS UPON WHICH VANSTAR DEPENDS.  FOR A 
DISCUSSION OF THESE FACTORS AND OTHERS, PLEASE SEE "CERTAIN BUSINESS FACTORS" 
IN ITEM 1 OF THIS ANNUAL REPORT ON FORM 10-K.  READERS ARE CAUTIONED NOT TO 
PLACE UNDUE RELIANCE ON THE FORWARD-LOOKING STATEMENTS MADE IN, OR 
INCORPORATED BY REFERENCE INTO, THIS ANNUAL REPORT ON FORM 10-K OR IN ANY 
DOCUMENT OR STATEMENT REFERRING TO THIS ANNUAL REPORT ON FORM 10-K. 


                                       2

<PAGE>

                                     PART I

ITEM 1. BUSINESS

     Vanstar Corporation ("Vanstar" or the "Company") is a leading provider 
of services and products designed to build, manage and enhance personal 
computer ("PC") network infrastructures for Fortune 1000 companies and other 
large enterprises.  The Company provides customized, integrated solutions for 
its customers' network infrastructure needs by combining a comprehensive 
offering of value-added services with its expertise in sourcing and 
distributing PC hardware, network products, computer peripherals and software 
from many vendors.  The Company's services are organized around an integrated 
model called "Life Cycle Management." Life Cycle Management includes design 
and consulting, acquisition and deployment, operation and support, and 
enhancement and migration to support the customers' PC network infrastructure 
throughout its life cycle.  Service delivery is optimized through the proper 
application of automated systems, highly trained technical personnel and 
proven, repeatable processes to support the customer's network infrastructure 
throughout its entire life cycle. 

     The Company believes that its customers require increasingly 
sophisticated PC network systems and support infrastructures yet are 
constrained by limited technical personnel to design, manage and enhance 
these infrastructures.  Vanstar seeks to satisfy corporate infrastructure 
requirements while seeking to minimize its customers' internal staff 
requirements and systems development risk.  Vanstar enhances the delivery of 
its services and products with automated systems, such as the Vanstar Aviator 
and Navigator, and with process methodologies, such as Horizon, to analyze, 
design and manage its customers' PC network infrastructures more effectively. 
The Company's goal is to help customers reduce the total cost of technology 
ownership, increase productivity and reduce the risks of migrating to new 
technologies.

     The Company's current capabilities were developed internally and through 
acquisitions. These strategic acquisitions included: (i) the acquisition from 
1990 through 1992, of 23 of the Company's franchisees, operating in 33 major 
United States metropolitan markets; (ii) the 1991 acquisition of NYNEX 
Business Centers; (iii) the 1992 acquisition of the Customer Services 
Division of TRW, Inc.; (iv) the 1996 acquisition of the western and 
southwestern regions of the Dataflex Corporation; (v) the 1996 acquisition of 
Mentor Technologies, Ltd; and (vi) the 1996 merger with Contract Data 
Services, Inc. (then doing business as "National Technology Group"). 

     The Company was incorporated in September 1987 under the name 
"ComputerLand Corporation" following the acquisition by William Y. Tauscher, 
Warburg, Pincus Capital Company, L.P. and Richard H. Bard of the majority of 
the capital stock of the Company's predecessor, IMS Associates, Inc. ("IMS"). 
IMS was merged with the Company after such acquisition.  At that time, the 
Company operated and franchised computer retail stores in the United States.

     In 1994, the Company sold its remaining United States franchise business 
to Merisel FAB, Inc., a wholly-owned subsidiary of Merisel Inc., adopted the 
name Vanstar, and changed its fiscal year end from September 30 to April 30.

INDUSTRY

     Client/server computing has grown dramatically for large businesses in 
recent years as PC, software, and network technologies have improved and end 
users have demanded more and easier access to data and applications.  The 
shift to client/server has placed tremendous strain on large corporations, 
who must buy, install, maintain, and upgrade networks that link potentially 
thousands of PCs.

     The Company believes many corporations are eager to implement the most 
advanced computer technologies in an effort to increase productivity and 
profitability.  However, today's chief information officers are faced with  
limited resources and the challenge of designing new networks, integrating 
the latest technologies, migrating to new systems and training new end users.

                                       3

<PAGE>

     For these reasons, decisions regarding outsourcing are among the most 
strategic that can be made by an organization.  Large organizations are 
looking to distributed computing technology to improve their competitive 
position.  They are seeking assistance in transforming and re-engineering 
their businesses to take advantage of new technologies.  They also recognize 
that these new technologies require infrastructures that need to be managed 
differently from traditional mainframe systems.

     The Company believes business technology buying has matured and 
corporate customers have become more knowledgeable about integrating new 
technologies and how to get the most for their business out of the new 
technologies.  Rather than rushing out to purchase and install new systems, 
they are carefully considering their business goals and how technology can 
help them achieve those goals.  Companies are seeking the services of 
full-service information technology service providers who can evaluate their 
current PC networking systems as well as design a system that will help them 
meet business goals now and in the future.

     The Company believes that many companies are realizing that they lack 
the systems and expertise to effectively manage enterprise PC networks.  
Developing this capability is expensive, technically complex and 
time-consuming.  Many corporations find themselves struggling with patchwork 
solutions and they lack the in-house expertise to do the job.  It is by 
definition not their core competency.  They cannot run their businesses 
without cost-effective, robust, reliable PC networks; however, in order to 
stay competitive they cannot take their focus or development resources away 
from key areas of their core business.

     The Company believes that no other company in the marketplace today 
offers customers the same range of integrated PC network solutions and 
highly-trained technical personnel and business technology consultants as 
Vanstar.  Many service providers, including systems integrators, consulting 
firms and those emerging from the traditional mainframe environment, offer 
limited services, lack the capacity to support large widespread enterprises, 
or focus primarily on non-infrastructure services.  Value-added resellers 
typically have a regional focus or do not offer a broad line of products and 
services.  They often are too small to service the complex network 
requirements of the large multi-site customer. 

     The Company believes that the key criteria which businesses consider 
when evaluating PC network integration service providers include the 
provider's ability:  (i) to deliver one integrated solution (incorporating 
highly-qualified technical personnel) spanning the PC network life cycle; 
(ii) to supply multi-vendor network products customized to specific end-user 
demands; and (iii) to provide services on a national and international basis. 

THE VANSTAR SOLUTION

     Vanstar's product and service offerings span the life cycle of the PC 
network infrastructure.  The Company provides customized, integrated 
solutions for the network infrastructure needs of its customers by combining 
a comprehensive offering of value-added services with its expertise in 
sourcing and distributing products from a variety of vendors. The Company 
believes that a single source solution enables customers to use fewer vendors 
and provides tighter integration resulting in lower costs, minimized risk, 
and greater management control.  Vanstar's Life Cycle Management services 
include design and consulting, acquisition and deployment, operation and 
support, and enhancement and migration.  Vanstar has built substantial 
resource depth in all service areas and offers its integrated services on a 
nationwide basis. 

     The Company believes that its customers are demanding increasingly 
sophisticated PC network systems and support infrastructures yet have limited 
technical personnel to design and maintain these infrastructures.  Vanstar 
seeks to deliver comprehensive network infrastructure solutions while 
minimizing its customers' internal staff requirements and systems development 
risk.  Vanstar enhances the delivery of its services and products with 
automated systems that utilize open architecture and are expandable.  The 
Company believes that significant efficiency can be gained by capturing data 
at the point of origin and controlling that data throughout the life cycle.  
Vanstar also uses automation to give its customers greater control over order 
management and provision of services.  The Company's automated systems permit 


                                       4

<PAGE>


direct links between the customer and the Company, which the Company believes 
results in more efficient and faster delivery of products and services at a 
lower overall cost.  For example, the Vanstar Aviator, the Company's 
web-based product procurement system, provides an easy-to-use customer 
interface for self-service order management.  The Vanstar Aviator connects to 
Vanstar's Cockpit, which provides the Company's customer service 
representatives with real-time product availability, pricing and 
customer-specific account information.  Another example is Vanstar's NOVA 
system, a service delivery system being implemented by the Company for the 
management of many of the Company's services: help desk, dispatch, repair, 
installation, moves/adds/changes and asset management.  NOVA is designed to 
reduce costs, to improve billing procedures to capture additional revenue, 
and to improve resource utilization in delivering the Company's support 
services.

STRATEGY

     The Company's objective is to continue to be a leading provider of a 
complete range of PC network infrastructure products and services to large 
businesses throughout the world.  Vanstar now offers a full array of services 
including design and consulting, acquisition and deployment, operation and 
support, and enhancement and migration.  To achieve its objective, the 
Company believes it must: 

LEVERAGE ITS BROAD CUSTOMER BASE

     Vanstar has approximately 260 current customers who purchased products 
and services totaling at least $1.0 million during  fiscal year 1997.  
Preserving and enhancing its relationship with these customers is the 
Company's first priority.  In support of this effort, the Company maintains 
its StarBase Account Management system.  StarBase is an extensive database of 
customer information which is integrated with external data to pinpoint 
opportunities for the Company. 

DEVELOP AND ENHANCE VALUE-ADDED SERVICES

     The Company believes that opportunities exist to increase its operating 
margins by increasing the range of value-added services that it currently 
offers its customers.  According to a report by Donaldson, Lufkin & Jenrette, 
the market for outsourced PC network services is expected to grow at a 
compound annual rate of approximately 16%.  These services are typically sold 
at higher margins than more traditional services, such as product procurement 
or repair and maintenance.  Vanstar has developed expertise and solutions in 
a number of value-added market segments, has established four National 
Consulting Practices focused on emerging technologies and will continue to 
develop new services using its Horizon development methodology.  The Company 
also works with its suppliers, many of which provide leading technologies, to 
develop new services.  For example, Vanstar provides services to integrate 
Microsoft Windows NT and Intel Pentium-class systems and deploy Computer 
Associates' Unicenter TNG network management solutions into Vanstar's 
customers' environments.  The Company believes its relationship with 
Microsoft and Intel enhances its knowledge base and expertise.  

     Vanstar continually evaluates and pursues opportunities to acquire 
technology and other resources that will enhance and extend the reach of its 
value-added service offerings. 

EXPAND ITS WORLDWIDE SERVICE CAPABILITIES

     The Company believes that in addition to being in all major United 
States markets, it must also expand its global offerings.  To expand its 
global presence, the Company utilizes a program that overlays Vanstar's 
systems and processes onto the service delivery and product distribution 
capabilities of Groupe Bull, a European-based global computer and computer 
services company, and Ingram Micro, an international computer products 
distributor.  This integrated program provides Vanstar's U.S. based 
multinational customers a common management interface covering Vanstar 
performed services in the United States or services from Vanstar or its 
alliance partners in other countries. 

                                       5

<PAGE>

MAINTAIN A FOCUSED ACQUISITION STRATEGY

     In order to maintain its position as a leading provider of PC network 
infrastructure solutions to large businesses, the Company believes that 
expansion through acquisitions, as well as internal growth, will be 
necessary.  Accordingly, the Company has consummated and expects to continue 
to pursue the acquisition of companies that sell products and services that 
either complement or expand its existing business.

PRODUCTS AND SERVICES

     Vanstar combines a full suite of products and services to deliver 
custom, integrated solutions for the PC network infrastructure requirements 
of its customers.  The Company combines value-added services with its 
expertise in sourcing and distributing products from a variety of vendors to 
provide network integration solutions.  The Company's services are organized 
around an integrated model called "Life Cycle Management".  Life Cycle 
Management includes design and consulting, acquisition and deployment, 
operation and support, and enhancement and migration to support the 
customers' PC network infrastructure throughout its life cycle.  The Company 
offers each service as a discrete service or as part of an integrated Life 
Cycle Management program. The Company believes that proper planning and 
management are essential to providing quality service and to attaining 
customer satisfaction.  Through planning and management, the Company seeks to 
optimize solutions at any point in the PC network life cycle.

     Vanstar delivers technology services through its four primary service 
organizations: Professional Services, Life Cycle Services, Product Services 
and Education Services.  The Company's Professional Services Organization 
focuses on delivering solutions to help customers implement new network 
infrastructures and migrate to new technologies.  The Life Cycle Services 
organization provides services to support day-to-day operations in customer's 
existing IT environments.  Vanstar's Product Services group supports both 
Life Cycle Services and the Professional Services Organization by providing 
technology product procurement, configuration, and distribution services.  
The Company's Education Services group focuses on increasing end-user 
productivity by providing technology skills assessment and training services.

<TABLE>
<CAPTION>
VANSTAR SERVICE ORGANIZATION     FOCUS                              SERVICES
-----------------------------------------------------------------------------------------------
<S>                              <C>
Professional Services            New network infrastructures          -Design and Consulting
                                 and migrations to new technology     -Enhancement & Migration
-----------------------------------------------------------------------------------------------
Life Cycle Services              Day-to-day IT operations             -Operation & Support 
-----------------------------------------------------------------------------------------------
Product Services                 Product purchase & configuration     -Acquisition & Deployment 
-----------------------------------------------------------------------------------------------
Education Services               End-user productivity                -Education Consulting
                                                                      -Training
-----------------------------------------------------------------------------------------------
</TABLE>


DESIGN AND CONSULTING SERVICES

     Vanstar offers network design and consulting services that address the 
PC network life cycle.  For network design, the Company uses a five-step 
methodology to assist customers in selecting, designing, planning and 
executing network projects: discovery, current state definition, requirements 
definition, solution design, and implementation planning.  The Company 
employs national consulting practices including Business Solutions 
Consulting, Microsoft Platforms, Network Design, and Program and Project 
Management.  Other teams have expertise in process-mapping and re-engineering 
for outsourcing PC life cycle management, asset management and disaster 
recovery planning. 

ACQUISITION AND DEPLOYMENT SERVICES

     Vanstar's network deployment services include product procurement, 
configuration, distribution, installation, cabling and connectivity. 


                                       6

<PAGE>

     The Company sources PCs, servers, network products, computer peripherals 
and software to equip the network environment.  The Company provides products 
from over 700 vendors, including Compaq Computer Corporation, International 
Business Machines Corporation ("IBM"), Hewlett-Packard Company, Apple 
Computer, Inc., Sun Microsystems, Inc., Microsoft, Novell, Inc., Lotus 
Development, Cisco Systems, 3Com Corporation and Bay Networks, Inc. The 
Company is authorized to sell a wide variety of network products, including 
servers, desktop and mobile systems, bridges, routers, hubs and 
concentrators, operating systems, applications, groupware and electronic mail 
products.  Vanstar provides a single point of contact for customers to place 
and track all product orders.  The Company's customer support groups in 
Indianapolis, Indiana and Pleasanton, California provide complete order 
management services from quotation to order processing, order tracking and 
fulfillment. 

     Vanstar has centralized its configuration and distribution facilities in 
two highly automated distribution centers located in Indianapolis, Indiana 
and Livermore, California.  In June 1997, the Company completed the 
construction of a new 415,000 square foot distribution and manufacturing 
center in Indianapolis.  The Company's distribution facilities handle product 
receiving, warehousing, central configuration, testing, order handling and 
shipping.  The Company ensures timely and reliable network equipment 
integration by providing and coordinating a number of deployment services 
such as set-up, installation, cabling, server connection and testing. 

OPERATION AND SUPPORT SERVICES

     Vanstar offers a variety of network operation and support services, 
including moves, adds and changes, repair and maintenance, help desk and 
network monitoring and asset management. 

     The Company installs additional hardware and software to increase the 
capacity of, or otherwise upgrade, existing products and systems.  Generally, 
moves, adds and changes assist customers in avoiding the costs associated 
with acquiring new systems. 

     The Company offers repair and maintenance services, including extended 
warranty service, depot repair and preventive maintenance.  These services 
are designed to minimize product failures and to extend the useful life of 
equipment.  On all products for which the Company is authorized to provide 
warranty coverage, the Company offers its customers extended warranty service 
on standard manufacturer configurations and optional components, up to 24 
hours per day, 365 days per year, anywhere in the United States within 100 
miles of any of Vanstar's approximately 90 service locations. 

     The Company offers a single point of contact ("SPOC") service to provide 
seamless integration and fulfillment of customer's needs for technology 
products, services, training and support.  Customers' end users call one 
toll-free number for all of their PC needs, whether they require assistance 
with operating a PC application, ordering new hardware or software, 
installing/upgrading hardware or software, operating a mainframe application 
or establishing a network connection.  The SPOC coordinates all of the 
operations and support services provided to Vanstar customers through a 
single focal point, with the goal of reducing the total cost of PC/LAN 
ownership, reducing the risk of deploying new technology, increasing end-user 
productivity and increasing end-user satisfaction.  SPOC can include any of 
the following services - help desk, installs, moves, adds and changes 
("IMAC") activities, system maintenance, procurement management, asset 
management, training and network management. 

     The Company has also developed a network operations center, to provide 
the technology infrastructure to deliver remote network and systems 
management services, aimed at helping customers reduce the total cost of 
ownership for networked PCs, improve end user productivity and reduce 
technology deployment risk.  The network operations center provides remote 
management to actively monitor customer networks for optimal performance, 
manage storage requirements and network capacity, manage standard PC 
configurations across the network, manage electronic distribution of 
software, and provide network security monitoring and administration. 

     The Company provides asset management services.  The Company's asset 
management system captures and maintains detailed information about a 
customer's installed base of PC hardware and software 

                                       7

<PAGE>


assets, and about all subsequent service events related to those assets.  It 
generates reports and schedules through an end-user interface.  The Company 
can provide a detailed analysis of the installed base for use in managing 
asset costs. 

ENHANCEMENT AND MIGRATION SERVICES

     The Company offers enhancement and migration services to optimize the 
use of information technology by its customers and reduce the cost and 
disruption of changing technology platforms. The Company's tools and methods 
can migrate the customer to new hardware and software platforms. Developed 
under Horizon, Vanstar's development methodology, and managed using Lotus 
Notes, these comprehensive tool kits detail the full life cycle processes and 
procedures for planning and implementing a migration project.  Two of the 
Company's programs help customers migrate to Windows 95 and Windows NT. 

EDUCATION SERVICES

     The Company bases its education and training services on a consultative 
methodology that effectively assesses the customer's business environment and 
the skill sets of each user to identify training needs for critical 
applications in each area of the business.  The Company then utilizes 
traditional as well as innovative training methods, training facilities and 
certified instructors to deliver the appropriate training for each student.  
Vanstar is a Microsoft Authorized Technical Education Center, providing 
training for Microsoft Windows 95, Windows NT, and BackOffice.

RECENT ACQUISITION

     On July 7, 1997, the Company, through a wholly-owned subsidiary, 
acquired certain of the assets and assumed certain of the liabilities of 
Sysorex Information Systems, Inc. ("Sysorex"), a government technology 
provider which reported revenues of approximately $150 million for its fiscal 
year ended September 30, 1996.  The purchase price was approximately $46.0 
million, including net liabilities of approximately $11.0 million, subject to 
certain post-closing adjustments, and a contingent payment of 500,000 shares 
of Common Stock, based upon the future financial performance of the acquired 
business.  The acquisition is expected to expand Vanstar's technology 
services into the U.S. Federal Government markets which are experiencing 
high-growth demand for IT services as a result of the recent adoption of 
commercial-based IT practices. 

AUTOMATED SYSTEMS, PROCESS METHODOLOGIES AND TECHNICAL PERSONNEL

     Vanstar enhances its service delivery with customized automated systems 
which utilize open architecture and enable Vanstar's customers to change the 
processes they use to manage their PC network support infrastructures, 
thereby reducing cost and managing complexity.  The Company believes  
efficiency can be gained by capturing data at its point of origin and 
managing that data throughout the life cycle.  The Company believes that full 
life cycle automation increases efficiency and reduces touch costs.  Process 
methodologies allow Vanstar to analyze, design and manage the PC network 
environment better.  In addition to the Company's systems and methodologies, 
Vanstar believes that expert technical and consulting personnel are 
fundamental to its ability to deliver complete network life cycle solutions. 

AUTOMATED SYSTEMS

     Vanstar has invested significant resources automating its internal 
service delivery systems and developing electronic links between the 
Company's systems and its customers' systems.  The Company believes that 
these systems reduce costs, enhance service quality and improve reporting.  
The automated systems include the Vanstar Aviator, Cockpit, Distribution 
Center Management System ("DCMS"), FLEX and Tracker, and NOVA.  The Company 
uses electronic links, including Electronic Data Interchange, to connect to 
customers' systems. 

                                       8

<PAGE>


    -  VANSTAR AVIATOR.  The Vanstar Aviator is an order management system 
       designed to give customers access to information about products 
       available from the Company.  The Vanstar Aviator is a web-based system 
       which  provides customers with detailed information on product pricing 
       and availability, and can generate quotes, purchase orders, order
       status, invoice history, on-line help and toll-free telephone support.  
       With the Vanstar Aviator, customers can place and track orders 
       themselves. 
       
    -  COCKPIT.  Vanstar's customer service representatives use the Company's 
       order management system, called "Cockpit," to generate quotes and to 
       enter and track product orders.  Cockpit provides real-time product 
       availability and pricing information, and maintains detailed, customer-
       specific account information, including account history, standard 
       product configurations, special pricing, locations, authorized 
       purchasing personnel and credit limits. 
       
    -  DCMS, FLEX AND TRACKER.  DCMS and its FLEX systems operate the 
       Company's automated distribution and configuration centers located in 
       Indianapolis, Indiana, and Livermore, California. DCMS and FLEX manage 
       the flow of orders through the distribution process and provide the 
       on-line information necessary to configure systems to customers' 
       standards.  Operating on a LAN, DCMS assigns a unique barcode 
       fingerprint to each SKU as it arrives.  Warehouse staff use radio 
       frequency, hand-held devices to manage and track the movement of 
       product orders through the centers.  Vanstar's Tracker system tracks 
       each package from the warehouse to the customer site.  Vanstar's 
       distribution centers are collocated with Federal Express depots.  The 
       Company's systems are integrated with Federal Express' systems, 
       providing complete point-to-point delivery and tracking. 
       
    -  NOVA.  Vanstar is in the process of implementing NOVA, a service 
       delivery system for the management of its SPOC, dispatch, repair, 
       installation, moves/add/changes and asset management service 
       offerings. NOVA's resource allocation system is designed to insure 
       that the appropriate technical personnel are available to respond to 
       customer service calls.  Service calls placed by customers are 
       received through Vanstar's First Touch program.  NOVA automatically 
       determines which field engineer is available and sends all relevant 
       customer information to the field engineer through a field computing 
       device via radio.  NOVA is backed by more than 50 strategic parts 
       stocking locations in the United States; spare parts can be delivered 
       the same day or shipped overnight to either the customer location or 
       the field service engineer.  The Company believes that NOVA will 
       result in increased customer network uptime, more accurate matching of 
       parts and field service engineer skills to service needs, more 
       accurate and comprehensive information management, and lower costs. 
       
    -  ELECTRONIC LINKS.  To create a cooperative service environment, 
       Vanstar uses electronic links to connect its systems to its customers' 
       systems through Electronic Data Interchange, the Internet or through 
       private Wide Area Networks. 

PROCESS METHODOLOGIES

     The Company believes that the complex and sometimes unpredictable 
technical environment and the customization required by  customers contribute 
to the variability of service delivery requirements.  To manage this 
complexity, Vanstar uses several methods for capturing, codifying and 
disseminating organizational knowledge to individuals in the field.  Using 
Horizon, its professional service development process, Vanstar has developed 
a series of tool kits to provide standards and solutions for common network 
problems plus tools for solving unique problems. Lotus Notes is the primary 
vehicle used by the Company for electronic delivery of systematized 
procedures and processes.  The Company also employs flexible process-mapping, 
just-in-time training and knowledge-based management techniques. 
 
TECHNICAL PERSONNEL

     Vanstar deploys over 4,100 technical professionals in the United States. 
The Company intends to continue to expand its staff of technical 
professionals.  The technical personnel are both client dedicated 

                                       9

<PAGE>


and centrally dispatched, and provide service on either a contract basis or a 
project basis.  The Company is also developing groups of technical 
professionals who specialize in the areas of operations, methods and 
practices, process management and consulting. The Company's Professional 
Services Organization recently established a group of four national 
consulting practices staffed with high-end consultants focused on emerging 
technologies.  The Company's engineering staff is certified in the major 
network operating systems and has experience with LAN and WAN networking 
products and protocols.  The Company supports major network operating 
systems, including Microsoft Windows NT and BackOffice, Novell NetWare, IBM 
LAN Server and AppleShare. 
 
CUSTOMERS

     The Company's broad customer base of primarily Fortune 1000 companies 
and other large enterprises includes the following, all of which purchased 
products and services in excess of $1.0 million during the 12 months ended 
April 30, 1997 from the Company:
               
CUSTOMER NAME                                      INDUSTRY                    
-------------                                      --------                    
American Express Corporation                       Credit Services             
American Greetings Corporation                     Manufacturing               
Autodesk Inc.                                      Software                    
Blue Cross/Blue Shield                             Insurance                   
BellSouth Corporation                              Telecommunications          
Charles Schwab and Company Inc.                    Financial Services          
Chevron                                            Oil/Gas                     
Cigna Corporation                                  Insurance                   
Delta Airlines                                     Airline                     
Duke Power Company                                 Utility                     
Federal Express Corporation                        Transportation              
Glaxo, Inc.                                        Pharmaceuticals             
Hoechst Celanese Corporation                       Chemicals                   
Hoffmann-La Roche Inc.                             Pharmaceuticals             
International Business Machines Corporation        Computers                   
International Paper Company                        Forest Products             
Lehman Brothers Inc.                               Financial Services          
Liberty Mutual Insurance Group                     Insurance                   
Lotus Development Corporation                      Software                    
MCI Communications Corporation                     Telecommunications          
Microsoft Corporation                              Software                    
Motorola Inc.                                      High Technology             
Owens-Corning Fiberglas Corporation                Manufacturing               
Praxair Inc.                                       Manufacturing               
Sedgwick James Inc.                                Insurance                   
Signet Banking Corp.                               Financial Services          
Sony Music Entertainment Inc.                      Entertainment               
State of New Jersey                                State Government            
Sybase Inc.                                        Software                    
The Equitable Companies Inc.                       Insurance                   
United Technologies Corporation                    Aerospace and Manufacturing 
UNUM Corporation                                   Insurance

     Vanstar markets its PC network services by targeting executives of large 
enterprises who have information technology decision-making authority.  As of 
April 30, 1997, the Company's domestic sales network consisted of more than 
800 field sales and inside service representatives.  Vanstar's direct sales 
force is comprised of account managers and technical sales personnel.  
Vanstar's account management force is responsible for prospecting new 
business, maintaining and expanding relationships with current customers, and 
ensuring customer satisfaction.  Technical sales personnel provide the 
technical expertise to support and supplement the sales effort.  To improve 
sales productivity, Vanstar equips its sales organization with sales force 
automation tools that provide them with a complete suite of marketing and 
account management tools.  These tools reduce the sales representatives' 
physical dependence on the branch offices, allowing Vanstar to operate a 
"virtual office" environment while sharing information across multiple 
departments. 

                                       10

<PAGE>

     
CERTAIN BUSINESS FACTORS

SIGNIFICANT FLUCTUATIONS IN REVENUES AND OPERATING RESULTS

     The Company's quarterly and annual revenues and operating results have 
varied significantly in the past and are likely to continue to do so in the 
future.  Revenues and operating results may fluctuate as a result of the 
demand for the Company's products and services, the introduction of new 
hardware and software technologies offering improved features, the 
introduction of new services by the Company and its competitors, changes in 
the level of operating expenses, the timing of major service projects, 
inventory adjustments, competitive conditions and economic conditions 
generally.  In particular, the Company's operating results are highly 
sensitive to changes in the mix of the Company's product and service 
revenues, product margins and interest rates.  Further, the purchase of the 
Company's products and services generally involves a significant commitment 
of capital, with the attendant delays frequently associated with large 
capital expenditures and authorization procedures within an organization.  
For these and other reasons, the Company's operating results are subject to a 
number of significant risks over which the Company has little or no control, 
including customers' technology life cycle needs, budgetary constraints and 
internal authorization reviews.  In addition, the Company historically has 
experienced significant revenue fluctuations because of shortages of supply 
from certain vendors.  Shortages of supplies from vendors have previously 
occurred due primarily to credit limitations placed on the Company.  Future 
limitations of credit by vendors could have a material adverse effect on the 
Company.  In addition, the general availability of certain products, 
particularly state of the art computing and data communications products, is 
occasionally restricted.  While the Company has not historically experienced 
significant product supply shortages, other than due to credit restrictions 
as described above, any such shortages in the future could have a material 
adverse effect on the Company.  Accordingly, the Company believes that 
period-to-period comparisons of its operating results should not be relied 
upon as an indication of future performance.  In addition, the results of any 
quarterly period are not necessarily indicative of results to be expected for 
a full fiscal year.

SUBSTANTIAL INDEBTEDNESS AND FIXED OBLIGATIONS; DEPENDENCE ON IBMCC; INTEREST 
RATE SENSITIVITY

     The Company's business requires significant working capital to finance 
product inventory and accounts receivable.  Until recently, the Company has 
primarily funded its working capital requirements through its financing 
program agreement  with IBMCC (the "Financing Program Agreement").  As part 
of the Company's refinancing plan, the Company used an aggregate of $300.7 
million from its offering of Convertible Preferred Securities (as defined 
herein) and the Securitization Facility (as defined herein) to reduce the 
Company's outstanding indebtedness under the Financing Program Agreement.  At 
April 30, 1997, the outstanding principal balance under the Financing Program 
Agreement was approximately $171.4 million, out of a total of $250 million in 
available credit.  Borrowings under the line of credit are secured by certain 
assets of the Company, including accounts receivable, inventory and 
equipment.  The line of credit is currently available through October 31, 
1997.  IBMCC may terminate the Financing Program Agreement at any time upon 
90 days' notice to the Company.  In the event of such termination, the 
outstanding borrowings under the Financing Program Agreement mature at the 
end of the term of the line of credit.  There can be no assurance that IBMCC 
will continue to finance the Company's operations, or if such financing is 
not continued, that the Company will be able to secure additional debt 
financing.

     Effective December 20, 1996, the Company established a revolving funding 
trade receivables securitization facility (the "Securitization Facility"), 
which provides the Company with up to $175 million in available credit.  In 
connection with the Securitization Facility, the Company sells, on a 
revolving basis through a wholly-owned subsidiary, an undivided interest in 
certain of its trade receivables ("Pooled Receivables").  As of April 30, 
1997, the gross proceeds of those sales totaled $172.8 million.  The majority 
of those proceeds were used to reduce the Company's outstanding indebtedness 
under the Financing Program Agreement.  The remaining availability under the 
Securitization Facility is used, among other purposes, to provide working 
capital.


                                       11
<PAGE>

     The Company currently has substantial fixed obligations (including 
indebtedness) in relation to its stockholders' equity and there can be no 
assurance that the Company's operating results will be sufficient for payment 
of all of its fixed obligations.  The degree to which the Company is 
leveraged could have important consequences including the following: (i) the 
Company's ability to obtain other financing in the future may be impaired; 
(ii) a substantial portion of the Company's cash flow from operations must be 
dedicated to the payment of principal and interest on its indebtedness; and 
(iii) a high degree of leverage may make the Company more vulnerable to 
economic downturns and may limit its ability to withstand competitive 
pressures. The Company's ability to make scheduled payments on or to 
refinance its indebtedness (to the extent not restricted pursuant to the 
terms thereof) depends on its financial and operating performance, which is 
subject to prevailing economic conditions and to financial, business and 
other factors beyond its control.

RESTRICTIVE COVENANTS

     The Financing Program Agreement with IBMCC contains significant 
financial covenants.  The Company's ability to meet such covenants is 
dependent on its financial and operating performance, which is subject, at 
least in part, to prevailing economic conditions and to financial, business 
and other factors beyond its control.  There can be no assurance that 
financial results that comply with the restrictive covenants and financial 
tests in the Financing Program Agreement will be achieved, and the Company's 
inability to satisfy these covenants, if not waived by IBMCC, could result in 
a default under such financing arrangement. In the event of such a default, 
IBMCC could elect to declare all amounts borrowed, together with accrued and 
unpaid interest, due and payable.  If the Company were unable to pay such 
amounts, IBMCC could proceed against any collateral securing the obligations 
due to it.  If such indebtedness were to be accelerated, there can be no 
assurance that the assets of the Company would be sufficient to repay in full 
such indebtedness and other indebtedness of the Company.

DEPENDENCE ON AND NEED TO RECRUIT AND RETAIN KEY MANAGEMENT AND TECHNICAL 
PERSONNEL

     The Company's success depends to a significant extent on its ability to 
attract and retain key personnel.  In particular, the Company is dependent on 
its senior management team and technical personnel.  The Company has 
significantly expanded its technical staff.  The Company employs over 4,100 
technical professionals and has expanded its systems engineering force 
significantly in recent years.  Competition for such technical personnel in 
intense and no assurance can be given that the Company will be able to 
recruit and retain such personnel.  The failure to recruit and retain 
management and technical personnel could have a material adverse effect on 
the Company's growth, revenues and results of operations.

MANAGEMENT OF EXPANDING OPERATIONS AND INCREASED SERVICE FOCUS

     The Company's growth resulting from expanding operations and 
acquisitions has placed significant demands on the Company's management, 
operational and technical resources. Furthermore, the Company has increased 
the focus of its business operations on the provision of professional and 
life cycle services.  Such growth and increased service focus are expected to 
continue to challenge the Company's sales, marketing, technical and support 
personnel and senior management.  The Company's future performance will 
depend in part on its ability to manage expanding domestic and international 
operations and to adapt its operational systems to respond to changes in its 
business.  In particular, the Company's success will depend on its ability to 
attract, retain and train adequate numbers of technical field personnel and 
effectively integrate any acquired business operations.  The failure of the 
Company to manage its growth and increased service focus effectively or to 
train its technical field personnel could have a material adverse effect on 
the Company's business, financial condition and results of operations.

RISKS ASSOCIATED WITH RAPID TECHNOLOGICAL CHANGE

     The markets for the Company's product and service offerings are 
characterized by rapidly changing technology and frequent new product and 
service offerings.  The introduction of new technologies can render existing 
products and services obsolete or unmarketable.  The Company's continued 
success will depend on its ability to enhance existing products and services 
and to develop and introduce, on a timely and cost-effective basis, new 
products an services that keep pace with technological developments and 
address increasingly 

                                       12
<PAGE>

sophisticated customer requirements.  There can be no assurance that the 
Company will be successful in identifying, sourcing, developing and marketing 
product and service enhancements or new products and services that respond to 
technological change, that the Company will not experience difficulties that 
could delay or prevent the successful development, introduction and marketing 
of product and service enhancements or new products and services, or that its 
product and service enhancements and new products and services will 
adequately meet the requirements of the marketplace and achieve market 
acceptance.  The Company's business, financial condition and results of 
operations could be materially adversely affected if the Company were to 
incur delays in sourcing and developing product and service enhancements or 
new products and services or if such product and service enhancements or new 
products and services did not gain market acceptance. In addition, the 
Company has developed proprietary automated systems to enhance the delivery 
of its services.  No assurance can be given that the Company's automated 
systems will function as anticipated, will result in lower costs to the 
Company or its customers or will not be rendered obsolete as a result of 
technological change.

DEPENDENCE ON KEY VENDORS AND PRODUCT SUPPLY

     A significant portion of the Company's operating revenue is derived from 
sales of PC network hardware, peripherals and software, including products of 
various major vendors.  The Company's agreements with those vendors from 
which it purchases products directly generally contain provisions for 
periodic renewals and for termination by the vendor without cause, generally 
upon relatively short notice.  The loss of a major vendor, the deterioration 
of the Company's relationship with a major vendor or the failure of the 
Company to establish good relationships with major new vendors as they 
develop could have a material adverse effect on the Company's business.  As 
is typical in its industry, the Company receives credits from most of its 
vendors for marketing development funds, which are used to offset a portion 
of the Company's sales and marketing expense.  Any change in the provision of 
these credits could materially adversely affect the Company's operating 
results.  The Company is also dependent, in part, upon vendor financing for 
working capital requirements.  The failure of the Company to obtain vendor 
financing on satisfactory terms and conditions could have a material adverse 
effect on the Company's business, financial condition and results of 
operations. 

     The personal computer industry experiences significant product supply 
shortages and customer order backlogs from time to time due to the inability 
of certain manufacturers to supply certain products on a timely basis.  In 
addition, certain vendors have initiated new channels of distribution that 
increase competition for the available product supply.  The Company has 
experienced product supply shortages in the past and expects to experience 
such shortages from time to time in the future.  Failure to obtain adequate 
product supplies or fulfill customer orders on a timely basis could have a 
material adverse effect on the Company's business, financial condition and 
results of operations.

INVENTORY MANAGEMENT

     The personal computer industry is characterized by rapid product 
improvement and technological change resulting in relatively short product 
life cycles and rapid product obsolescence, which can place inventory at 
considerable valuation risk.  Although it is industry practice for the 
Company's suppliers to provide price protection to the Company intended to 
reduce the risk of inventory devaluation, such policies are subject to 
change.  The Company also has the option of returning, subject to certain 
limitations, a percentage of its current product inventories each quarter to 
certain manufacturers as it assesses each product's current and forecasted 
demand.  The amount of inventory that can be returned to suppliers varies 
under the Company's agreements and such return policies may provide only 
limited protection against excess inventory.  There can be no assurance that 
suppliers will continue such policies, that unforeseen new product 
developments will not materially adversely affect the Company or that the 
Company can successfully manage its existing and future inventories. 

CONCENTRATION OF REVENUES

     No single customer accounted for more than 10% of the Company's revenue 
during fiscal year 1997.  However, during fiscal 1997, the Company derived 
approximately 54% of its revenues from its 50 largest 

                                       13

<PAGE>

customers.  To the extent that the Company is successful in expanding its 
relationship with new and existing customers among large enterprises such as 
the Fortune 1000, its revenues may become more concentrated.  While the 
Company seeks to build long-term customer relationships, revenues from any 
particular customer can fluctuate from period to period due to such 
customer's purchasing patterns.  Any termination or significant disruption of 
the Company's relationships with any of its principal customers could have a 
material adverse effect on the Company's business, financial condition and 
results of operations.  In addition, a deterioration in the financial 
condition of any of its principal customers could expose the Company to the 
possibility of large accounts receivable write-offs, which could materially 
adversely affect the Company's financial condition and results of operations.

ACQUISITIONS

     As part of its growth strategy, the Company pursues the acquisition of 
companies that sell products and services that either complement or expand 
its existing business.  As a result, the Company continually evaluates 
potential acquisition opportunities, some of which may be material in size 
and scope.  The Company has recently consummated a number of such 
acquisitions. Acquisitions, including those recently consummated, involve a 
number of special risks, including the diversion of management's attention to 
the assimilation of the operations and personnel of the acquired companies, 
the incorporation of acquired products and services into the Company's 
offerings, adverse short-term effects on the Company's operating results, the 
amortization of acquired intangible assets, the loss of key employees and the 
difficulty of presenting a unified corporate image.  There can be no 
assurance that the Company's acquisitions can be integrated into the 
Company's operations successfully. 

     The Company intends to actively pursue existing and future acquisition 
opportunities.  No assurance can be given that the Company will have adequate 
resources to consummate any acquisition, that any acquisition by the Company 
will or will not occur, that if any acquisition does occur it will not 
materially adversely affect the Company or that any such acquisition will be 
successful in enhancing the Company's business.  The Company's ability to 
consummate acquisitions will be limited by the availability of attractive 
candidates at appropriate terms, the Company's capital resources and 
prevailing economic and market conditions. 

PROTECTION OF INTELLECTUAL PROPERTY

     The Company seeks to protect its proprietary software, systems and 
processes through copyright, trademark and trade secret laws and contractual 
restrictions on disclosure and copying.  Despite such measures, it may be 
possible for unauthorized third parties to copy aspects of the Company's 
software, systems and processes or to obtain and use information that the 
Company regards as proprietary.  In addition, no assurance can be given that 
the protective measures taken by the Company will be sufficient to preclude 
competitors from developing competing or similar proprietary software, 
systems and processes. 

COMPETITION

     The markets in which the Company operates are characterized by intense 
competition from several types of technical service providers, including 
mainframe and mid-range computer manufacturers and outsourcers entering the 
PC services marketplace.  These include Digital Equipment Corporation 
Multi-Vendor Services, Electronic Data Systems Corporation, Hewlett-Packard 
Company Multi-Vendor Services and IBM Global Services.  Other competitors 
include VARs, systems integrators and third-party service companies, such as 
CompuCom Systems, Inc., DecisionOne, Entex Information Services, GE 
Information Technology Services, InaCom Corp., MicroAge, Inc. and Technology 
Service Solutions.  The Company expects to face further competition from new 
market entrants and possible alliances between competitors in the future. 
Certain of the Company's current and potential competitors may have greater 
financial, technical, marketing and other resources than the Company.  As a 
result, they may be able to respond more quickly to new or emerging 
technologies and changes in customer requirements or to devote greater 
resources to the development, promotion and sales of their services than the 
Company.

                                       14

<PAGE>


EMPLOYEES

     As of May 1997, the Company had approximately 6,000 employees.   The 
Company has never experienced a work stoppage and its employees are not 
covered by a collective bargaining agreement.  The Company believes that its 
relations with its employees are good.

EXECUTIVE OFFICERS OF THE COMPANY

     Certain information about the Company's executive officers is provided 
below.

     William Y. Tauscher, age 47, became Chairman of the Board of the Company 
in September 1987 and Chief Executive Officer in September 1988.  He was 
President from September 1988 to July 1995.  Prior to September 1988, Mr. 
Tauscher was Chairman of the Board, President and Chief Executive Officer of 
FoxMeyer Corporation, a wholesale pharmaceutical distributor and franchisor 
which he co-founded in 1978 and a subsidiary of National Intergroup, Inc., a 
diversified holding corporation. 

     Jay S. Amato, age 37, became President and Chief Operating Officer in 
July 1995 and a director in December 1995.  From January 1993 until July 
1995, he was Senior Vice President and President, North America Operations of 
the Company.  From June 1991 until January 1993, Mr. Amato was Senior Vice 
President, Major Market Operations of the Company, and from April 1989 until 
June 1991, he was Vice President of Business Development of the Company.  Mr. 
Amato previously held various management positions at The Computer Factory, 
Inc. 

     Richard N. Anderson, age 40, became Senior Vice President Sales in 
December 1993.  He was Vice President, Field Sales from October 1992 until 
December 1993.  From July 1991 to October 1992, Mr. Anderson was an Area 
Director for the Company, responsible for sales in the New England area.  
From December 1983 until July 1991, he was a founder and Chief Operating 
Officer of New England Computer Corporation, which had been one of the 
largest Company franchisees. Prior thereto, Mr. Anderson was a Financial 
Systems Consultant for Digital Equipment Corporation. 

     Kauko Aronaho, age 58, became Senior Vice President and Chief Financial 
Officer in June 1997.  He worked as an independent consultant in the 
technology industry from June 1996 to June 1997.  From August 1995 to June 
1996, Mr. Aronaho was the President of SHL Computer Innovations, Inc., a 
Canadian provider of products and services to build and manage computer 
networks.  He was Senior Vice President and Chief Financial Officer of SHL 
Computer Innovations, Inc. from 1989 to August 1995.  

     H. Christopher Covington, age 47, became Senior Vice President, General 
Counsel and Secretary in August 1994.  From April 1993 until August 1994, he 
was Vice President.  From November 1990 until April 1993, Mr. Covington was 
Assistant General Counsel and Assistant Secretary of the Company.  From 
January 1988 until November 1990, he was a partner in the law firm of Hardin, 
Cook, Loper, Engel & Bergez. 

     Chris M. Laney, age 40, became Senior Vice President Networking Services 
in July 1995. From July 1993 until July 1995, he was Vice President 
Networking Services.  From April 1992 until July 1993, Mr. Laney was Western 
Regional Director of Networking Services.  From October 1989 until April 
1992, he was Director of Networking Services for Dataphaz, Inc., which had 
been a Company franchisee. 

     Ahmad Manshouri, age 56, became Senior Vice President and General 
Manager Product Operations in July 1995.  He was Senior Vice President, 
Purchasing and Vendor Management from January 1993 until July 1995.  From 
July 1992 until January 1993, Mr. Manshouri was a Vice President of the 
Company.  Prior thereto, he was the founder and Vice President of Infomax, 
Inc., which had been one of the largest Company franchisees. 


                                       15

<PAGE>

ITEM 2.  PROPERTIES

   The Company leases office space for its headquarters in Pleasanton, 
California, under a lease expiring in January 1998.  The Company leases a new 
415,000 square foot distribution center in Indianapolis, Indiana.  The lease 
on the new facility will expire in April 2007.  In addition, the Company 
leases a 192,000 square foot distribution center and a 29,000 square foot 
return center in Livermore, California, a 52,000 square foot repair facility 
in Wharton, New Jersey, and various office space near Atlanta, Georgia.  The 
lease for the Livermore, California, distribution center expires in September 
1999, subject to two five-year options to renew held by the Company; the 
lease for the Livermore, California, return center expires in September 1999; 
the lease for the Wharton, New Jersey, premises expires in March 2004, 
subject to one five-year option to renew held by the Company; and the lease 
for a portion of the Atlanta premises expires in May 1998 with the leases 
covering the remainder of the Atlanta premises expiring in 1999. The Company 
leases other properties that it does not consider material to its operations. 
The Company believes that its facilities are suitable and adequate for its 
present operations.

ITEM 3.  LEGAL PROCEEDINGS

  On July 3, 1997, a trust claiming to have purchased shares of the Common 
Stock filed suit in Superior Court of the State of California, County of 
Santa Clara, against the following persons or entities:  the Company, certain 
directors and officers of the Company; the Company's principal stockholder, 
Warburg Pincus Capital Company, L.P. and certain of its affiliates; and 
Robertson Stephens & Co., Alex. Brown & Sons, Inc. and The Robinson-Humphrey 
Company, Inc., each of which served as an underwriter in the Company's 
initial public offering in March 1996.  The plaintiff also seeks class action 
status under California law and purports to represent a class of purchasers 
of the Common Stock between March 11, 1996 and January 23, 1997.  In its 
original complaint, the plaintiff purports to state three causes of action 
under California law, alleging generally, among other things, that the 
defendants made false or misleading statements or concealed information 
regarding the Company and that the plaintiff, as a holder of the Common 
Stock, suffered damage as a result thereof.  The plaintiff seeks compensatory 
and punitive damages in an unspecified amount, together with other relief.  
The suit is entitled David T. O'Neal Trust, Dated 4/1/77, v. Vanstar 
Corporation, et al., Case No. CV767266.  The Company believes that the 
plaintiff's allegations are without merit and intends to defend the suit 
vigorously. 

  Various other legal actions arising in the normal course of business have 
been brought against the Company and certain of its subsidiaries.  Management 
believes that the ultimate resolution of these actions will not have a 
material adverse effect on the Company's financial position or results of 
operations, taken as a whole.

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

   No matter was submitted to a vote of security holders of the Company 
during the fourth quarter of the fiscal year ended April 30, 1997.


                                      16
<PAGE>

                                    PART II

ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER 
          MATTERS
 
   The Common Stock began trading on the New York Stock Exchange (the "NYSE") 
under the symbol "VST" on March 11, 1996.  The following table sets forth, 
for the periods indicated, the range of high and low sale prices for the 
Common Stock on the NYSE since March 11, 1996.

                                              HIGH         LOW
                                              ----         ---
Fiscal Year Ended April 30, 1997:
   Fourth Quarter                        $  16 1/2       $  6 1/2
   Third Quarter                            28 1/4         13 3/4
   Second Quarter                           29 3/4         15 3/4
   First Quarter                            17 3/8         12 1/4
Fiscal Year Ended April 30, 1996:
   Fourth Quarter (March 11, 1996 
     through April 30, 1996)                15 5/8          9

   As of June 30, 1997, there were 383 holders of record of the Common Stock.

   The Company has never declared or paid any cash dividends on the Common 
Stock and does not presently intend to pay cash dividends on the Common Stock 
in the foreseeable future.  The Company intends to retain future earnings for 
reinvestment in its business.  The Company's Financing Program Agreement with 
IBM Credit Corporation ("IBMCC") limits the Company's ability to declare or 
pay cash dividends on the Common Stock.  In addition, the Indenture relating 
to the Company's 6 3/4% Convertible Subordinated Debentures due 2016 (the 
"Debentures") gives the Company the right to defer interest payments on the 
Debentures.  If the Company exercises that interest payment deferral option, 
then during any deferral period, the Company may not declare or pay dividends 
on, or make distributions with respect to, the Common Stock, except dividends 
or distributions in shares of the Common Stock. 

                                       17

<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA

  The selected consolidated annual financial data presented below was derived 
from the Company's audited consolidated financial statements. This selected 
consolidated annual financial data should be read in conjunction with 
"Management's Discussion and Analysis of Financial Condition and Results of 
Operations" and the consolidated financial statements and notes thereto 
included elsewhere in this report. 

<TABLE>
<CAPTION>
                                                                                        SEVEN      
                                                    FISCAL YEAR ENDED                   MONTHS        FISCAL YEAR ENDED   
                                                       APRIL 30,                        ENDED            SEPTEMBER 30,    
                                           ------------------------------------        APRIL 30,     --------------------
                                           1997            1996            1995          1994        1993            1992
                                           ----            ----            ----          ----        ----            ----
                                                              (IN THOUSANDS, EXCEPT PER SHARE DATA)                   
<S>                                    <C>              <C>            <C>            <C>          <C>            <C>
INCOME STATEMENT DATA:
   Revenue                             $  2,178,566     $1,804,813     $1,385,392     $  586,514   $1,099,813     $ 787,798
   Gross margin                             313,964        244,927        210,538         97,002      178,024        91,280
   Operating income (loss)                   68,279         43,047         28,127           (434)      (3,296)      (76,272)
 Income (loss) from 
  continuing operations (1)                  35,138          8,053          1,268         (6,969)     (18,751)      (54,228)

 Net income (loss)                           29,994         17,247          1,268         44,505       (4,246)      (51,967)
     Income (loss) from 
      continuing operations per 
      share (2)                                0.69           0.23           0.04          (0.24)       (1.89)        (5.54)
 Primary and fully diluted 
  earnings (loss) per share (2)        $       0.69     $     0.50     $     0.04     $     1.52   $    (0.68)    $   (5.33) 
</TABLE>


<TABLE>
<CAPTION>
                                                                 APRIL 30,                              SEPTEMBER 30,    
                                           --------------------------------------------------        -------------------
                                           1997            1996            1995          1994        1993            1992
                                           ----            ----            ----          ----        ----            ----
                                                                            (IN THOUSANDS)
<S>                                    <C>              <C>            <C>            <C>          <C>            <C>
BALANCE SHEET DATA:
   Total assets                        $ 758,643        $ 803,365       $ 705,295      $ 610,458    $ 576,279     $ 700,035
   Short-term borrowings                  74,402                -               -        262,783      194,660       227,692
 Current maturities of long-term debt      4,785            1,759           7,685         12,788       23,190        14,898
 Long-term debt, less current 
   maturities                              5,946          293,007         337,750          6,732       13,017        32,219
 Company-obligated mandatorily 
   redeemable convertible preferred 
   securities of subsidiary trust 
   holding solely convertible
   subordinated debt securities 
   of the Company (3)                    194,518                -               -              -            -             -
 Redeemable preferred stock and 
  accrued dividends                            -                -               -          4,777        4,464         3,986
   Total stockholders' equity          $ 166,971        $ 127,053       $  22,589      $  24,797    $  13,584     $     684
</TABLE>

(1)  Represents income from continuing operations before distributions on  
     preferred securities of Trust of $5.1 million (net of applicable   
     taxes) in fiscal year 1997.

(2)  Earnings per share for the fiscal years ended April 30, 1996 and 1995 
     are presented giving effect to the conversion of all outstanding shares 
     of Preferred Stock into Common Stock and the exchange of all outstanding 
     warrants for shares of Common Stock in connection with the Company's 
     initial public offering on March 11, 1996, as if the conversion had 
     occurred at the later of the beginning of fiscal year 1995 or the 
     issuance date of the respective security.

(3)  The sole asset of the Trust is $207.5 million aggregate principal amount 
     of the Company's 6 3/4% Convertible Subordinated Debentures due year 
     2016.

                                       18
<PAGE>

QUARTERLY OPERATING RESULTS

   The following tables set forth the unaudited operating results for each of 
the four quarters in fiscal year 1997 and 1996.  These numbers have been 
derived from the Company's unaudited quarterly financial statements and in 
the opinion of management, reflect all adjustments (of a normal and recurring 
nature) which are necessary for a fair representation of the results of 
operations for the interim periods. 


<TABLE>
<CAPTION>
                                            4TH QUARTER    3RD QUARTER    2ND QUARTER    1ST QUARTER
                                            -----------    -----------    -----------    -----------
                                                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                         <C>            <C>            <C>            <C>
FISCAL YEAR ENDED APRIL 30, 1997
--------------------------------
REVENUE:
   Product                                  $457,656       $438,587       $463,057       $490,065   
   Services:                                                                                        
       Life cycle                             50,697         47,944         42,532         38,939   
       Professional                           31,208         30,555         27,600         21,698   
       Training and other                      8,640         10,456         10,544          8,388   
                                            --------       --------       --------       --------
           Total revenue                     548,201        527,542        543,733        559,090   
                                            --------       --------       --------       --------
                                                                                                    
GROSS MARGIN:                                                                                       
   Product                                    45,746         43,494         46,441         48,472   
   Services:                                                                                        
       Life cycle                             17,444         16,762         14,548         14,485   
       Professional                            9,126          9,995         12,273          8,417   
       Training and other                      5,577          6,417          8,019          6,748   
                                            --------       --------       --------       --------
           Total gross margin                 77,893         76,668         81,281         78,122   
                                            --------       --------       --------       --------
                                                                                                    
GROSS MARGIN PERCENTAGE:                                                                            
   Product                                     10.0%           9.9%          10.0%           9.9%  
   Services:                                                                                       
       Life cycle                              34.4%          35.0%          34.2%          37.2%  
       Professional                            29.2%          32.7%          44.5%          38.8%  
       Training and other                      64.5%          61.4%          76.1%          80.4%  
                                            --------       --------       --------       --------
           Total gross margin percentage       14.2%          14.5%          14.9%          14.0%  
                                            --------       --------       --------       --------
                                                                                                   
Selling, general and administrative 
  expenses                                   68,960         60,489         59,340         56,896   
    % of total revenue                         12.6%          11.5%          10.9%          10.2%  
                                                                                                    
Operating income                               8,933         16,179         21,941         21,226   
    % of total revenue                          1.6%           3.1%           4.0%           3.8%  
                                            --------       --------       --------       --------
                                                                                                    
NET INCOME                                   $ 1,632       $  7,521       $ 11,078       $  9,763   
                                            --------       --------       --------       --------
                                            --------       --------       --------       --------
                                                                                                    
PRIMARY AND FULLY DILUTED EARNINGS PER 
  SHARE                                      $  0.04       $   0.17       $  0.26        $   0.23   
                                            --------       --------       --------       --------
                                            --------       --------       --------       --------
</TABLE>

                                       19

<PAGE>

<TABLE>
<CAPTION>
                                            4TH QUARTER    3RD QUARTER    2ND QUARTER    1ST QUARTER
                                            -----------    -----------    -----------    -----------
                                                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                         <C>            <C>            <C>            <C>
FISCAL YEAR ENDED APRIL 30, 1996
--------------------------------
REVENUE:
   Product                                  $424,055       $391,130       $389,030       $374,083    
   Services:                                                                                         
      Life cycle                              36,145         34,758         34,031         33,484    
      Professional                            17,197         16,514         13,561         10,855    
       Training and other                      8,257          4,460          8,506          8,747    
                                            --------       --------       --------       --------
          Total revenue                      485,654        446,862        445,128        427,169    
                                            --------       --------       --------       --------
                                                                                                     
GROSS MARGIN:                                                                                        
   Product                                    40,843         36,254         36,597         34,200    
   Services:                                                                                         
       Life cycle                             11,542         13,075         12,091         12,423    
       Professional                            5,423          6,353          6,338          4,899    
       Training and other                      6,982          3,208          7,326          7,373    
                                            --------       --------       --------       --------
          Total gross margin                  64,790         58,890         62,352         58,895    
                                            --------       --------       --------       --------
                                                                                                     
GROSS MARGIN PERCENTAGE:                                                                             
   Product                                      9.6%           9.3%           9.4%           9.1%    
   Services:                                                                                         
       Life cycle                              31.9%          37.6%          35.5%          37.1%    
       Professional                            31.5%          38.5%          46.7%          45.1%    
       Training and other                      84.6%          71.9%          86.1%          84.3%    
                                            --------       --------       --------       --------
          Total gross margin percentage        13.3%          13.2%          14.0%          13.8%    
                                            --------       --------       --------       --------
                                                                                                     
Selling, general and administrative                                                                  
  expenses                                    31,855         76,891         46,772         46,362    
    % of total revenue                          6.6%          17.2%          10.5%          10.9%    
                                                                                                     
Operating income (loss)                       32,935        (18,001)        15,580         12,533    
    % of total revenue                          6.8%          (4.0%)          3.5%           2.9%    
                                            --------       --------       --------       --------
Income (loss) from continuing operations      16,519        (16,731)         4,951          3,314    
Gain on disposal of discontinued                                                                     
  businesses                                       -          9,194              -              -    
                                            --------       --------       --------       --------
NET INCOME (LOSS)                           $ 16,519       $ (7,537)      $  4,951       $  3,314    
                                            --------       --------       --------       --------
                                            --------       --------       --------       --------
                                                                                                     
PRIMARY AND FULLY DILUTED EARNINGS                                                                   
  (LOSS) PER SHARE (PRO FORMA PRIOR                                                                  
  TO MARCH 11, 1996): (1)                                                                            
   Continuing operations                    $   0.44       $  (0.53)      $   0.15       $   0.10    
   Discontinued operations                         -           0.29              -              -    
                                            --------       --------       --------       --------
                                            $   0.44       $  (0.24)      $   0.15       $   0.10    
                                            --------       --------       --------       --------
                                            --------       --------       --------       --------
</TABLE>

(1)  Earnings per share for fiscal year 1996 are presented giving effect to 
     the conversion of all outstanding shares of Preferred Stock into Common 
     Stock and the exchange of all outstanding warrants for shares of Common 
     Stock in connection with the Company's initial public offering on March 
     11, 1996, as if the conversion had occurred at the later of the 
     beginning of fiscal year 1995 or the issuance date of the respective 
     security.

   During the third quarter of fiscal year 1996, the Company recorded a $31.1 
million provision against its extended credit due from Merisel FAB.  In the 
fourth quarter of fiscal year 1996, the Company reversed $15.6 million of 
this provision (see note 3 of notes to consolidated financial statements). 

                                       20
<PAGE>
 
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
         RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

     During the fiscal year ended April 30, 1997, the Company's results of 
operations were impacted by the transactions described below.  On May 24, 
1996, the Company acquired certain of the assets and business operations of 
the western and southwestern regions of Dataflex Corporation (the "Dataflex 
Regions").  The Dataflex Regions offered PC product distribution, service and 
support in the states of Arizona, California, Colorado, Nevada, New Mexico, 
and Utah with combined revenues of $145 million reported for the fiscal year 
ended March 31, 1996.  On September 4, 1996, the Company acquired Mentor 
Technologies, Ltd., an Ohio limited partnership providing training and 
educational services in Ohio and throughout the upper mid-western United 
States, ("Mentor Technologies").  Mentor Technologies reported revenues of 
$5.5 million for the calendar year ended December 31, 1995.  During October 
1996, the Company, through the Vanstar Financing Trust, a Delaware statutory 
business trust (the "Trust"), issued 4,025,000 Trust Convertible Preferred 
Securities ("Convertible Preferred Securities").  Those securities are 
convertible into the Common Stock and pay cumulative cash distributions at an 
annual rate of 6 3/4% of the liquidation amount of $50 per security.  On 
December 16, 1996, the Company acquired Contract Data Services, Inc. ("CDS"), 
a North Carolina corporation with reported revenues of $74.3 million for the 
fiscal year ended March 31, 1996. CDS provided outsourcing of integrated 
information technology services, related technical support services and 
procurement of computer hardware and software. Effective December 20, 1996, 
the Company established the Securitization Facility which provides the 
Company with up to $175 million in available credit.  In connection with the 
Securitization Facility the Company sells, on a revolving basis through a 
wholly-owned subsidiary, an undivided interest in the Pooled Receivables.  

     Vanstar's four primary sources of revenue are: product, life cycle 
services, professional services, and training and other services.  The 
Company refers to the integration of the offerings of design and consulting, 
acquisition and deployment, operation and support, and enhancement and 
migration as "Life Cycle Management."  For larger clients, Vanstar can manage 
every phase of the life cycle of its customers' PC networks.  Product revenue 
is primarily derived from the sale of computer hardware, software, 
peripherals and communications devices manufactured by third parties and sold 
by the Company, principally to implement integration projects.  Life cycle 
services revenue is primarily derived from services performed for the desktop 
and focused on the client or user of the PC network.  These support services 
include desktop installation, repair and maintenance, moves, adds and 
changes, extended warranty, asset management and help desk.  Professional 
services revenue is primarily derived from high value-added services, 
including services focused on the server and communication segments of the PC 
network infrastructure.  Professional services revenue includes network 
installation, design and consulting, and enhancement and migration, as well 
as server deployment and support.  Training and other services revenue is 
primarily derived from fees earned on the distribution services agreement 
with ComputerLand Corporation (formerly with Merisel FAB) and training and 
education services.  Pursuant to the distribution services agreement, the 
Company provides product distribution to franchises and affiliates of 
ComputerLand Corporation (see note 3 of notes to consolidated financial 
statements).

     The following table set forth for the periods indicated, the Company's 
(i) total revenue, gross margin and gross margin percentage by revenue 
source, (ii) selling, general and administrative expenses in total and as a 
percentage of total revenue and (iii) operating income (loss) in total and as 
a percentage of total revenue:

                                       21

<PAGE>

<TABLE>
<CAPTION>

                                                          YEAR ENDED APRIL 30,
                                                ------------------------------------------
                                                      1997         1996           1995
                                                      ----         ----           ----
                                                              (IN THOUSANDS)
<S>                                             <C>            <C>              <C>
REVENUE:
  Product                                       $  1,849,365   $  1,578,298     $1,187,392
  Services:
     Life cycle                                      180,112        138,418        131,194
     Professional                                    111,061         58,127         31,842
     Training and other                               38,028         29,970         34,964
                                                ------------   ------------     ----------
        Total revenue                           $  2,178,566   $  1,804,813     $1,385,392
                                                ------------   ------------     ----------
                                                ------------   ------------     ----------

GROSS MARGIN:
  Product                                       $    184,153     $  147,894     $  113,513
  Services:
     Life cycle                                       63,239         49,131         55,053
     Professional                                     39,811         23,013         13,111
     Training and other                               26,761         24,889         28,861
                                                ------------   ------------     ----------
        Total gross margin                      $    313,964     $  244,927     $  210,538
                                                ------------   ------------     ----------
                                                ------------   ------------     ----------

GROSS MARGIN PERCENTAGE:
  Product                                              10.0%           9.4%           9.6%
  Services:
     Life cycle                                        35.1%          35.5%          42.0%
     Professional                                      35.8%          39.6%          41.2%
     Training and other                                70.4%          83.0%          82.5%
                                                ------------   ------------     ----------
        Total gross margin percentage                  14.4%          13.6%          15.2%
                                                ------------   ------------     ----------
                                                ------------   ------------     ----------

Selling, general and administrative expenses    $    245,685     $  201,880     $  182,411
   % of total revenue                                  11.3%          11.2%          13.2%
Operating income                                $    68,279      $  43,047      $  28,127
   % of total revenue                                   3.1%           2.4%           2.0%
</TABLE>

YEAR ENDED APRIL 30, 1997 AS COMPARED TO THE YEAR ENDED APRIL 30, 1996

   PRODUCT.  Revenue increased 17.2% to $1.8 billion for the year ended April 
30, 1997 from $1.6 billion for the year ended April 30, 1996 as a result of 
the Company's successful sales and marketing efforts, strengthened market 
position and increased sales resulting from the acquisitions of CDS and the 
Dataflex Regions.  Gross margin increased 24.5% to $184.2 million for the 
year ended April 30, 1997 from $147.9 million for the year ended April 30, 
1996.  Gross margin percentage increased to 10.0% for the year ended April 
30, 1997 from 9.4% for the year ended April 30, 1996.  The increase in gross 
margin percentage reflects the changing nature of the Company's relationships 
with its customers in moving toward long-term procurement service 
relationships as opposed to periodic commodity buying.  Revenue growth slowed 
during the second half of the year, which led the Company to "resize" its 
business in the fourth quarter of the fiscal year to accommodate that 
moderation in growth.  The Company's plans for fiscal year 1998 were adjusted 
to reflect a lower level of volume than previously anticipated.  There can be 
no assurance that product revenue growth will return to the levels seen in 
the first half of fiscal year 1997.

   LIFE CYCLE SERVICES.  Revenue increased 30.1% to $180.1 million for the 
year ended April 30, 1997 from $138.4 million for the year ended April 30, 
1996. This increase was the result of increased demand for the Company's 
overall life cycle service offerings plus increased sales as the result of 
the acquisition of CDS.  Gross margin increased 28.7% to $63.2 million for 
the year ended April 30, 1997 from $49.1 million for the year ended April 30, 
1996.  Gross margin percentage decreased to 35.1% for the year ended April 
30, 1997 from 35.5% for the year ended April 30, 1996.

                                       22
<PAGE>


   PROFESSIONAL SERVICES.  Revenue increased 91.1% to $111.1 million for the 
year ended April 30, 1997 from $58.1 million for the year ended April 30, 
1996. This increase reflects the increased customer demand for the Company's 
extensive consulting and deployment expertise through national practices 
focused on emerging technologies.  Gross margin increased 73.0% to $39.8 
million for the year ended April 30, 1997 from $23.0 million for the year 
ended April 30, 1996. Gross margin percentage decreased to 35.8% for the year 
ended April 30, 1997 from 39.6% for the year ended April 30, 1996 due to 
significant investments made in systems, recruiting, training, and 
development to enhance the Company's professional service offerings. 

   TRAINING AND OTHER SERVICES.  Revenue increased 26.9% to $38.0 million for 
the year ended April 30, 1997 from $30.0 million for the year ended April 30, 
1996 due to an increase in training revenues primarily as a result of the 
acquisition of Mentor Technologies.  Gross margin increased 7.5% to $26.8 
million for the year ended April 30, 1997 from $24.9 million for the year 
ended April 30, 1996.  Gross margin percentage decreased to 70.4% for the 
year ended April 30, 1997 from 83.0% for the year ended April 30, 1996 as the 
contribution of training revenues to total other services revenue increased.  
Revenue from training increased 127.0% and other revenue declined 7.8% for 
the year, resulting in an increase in the contribution from training from 
25.8% to 46.1%.

   SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.  Selling, general and 
administrative expenses increased 21.7% to $245.7 million for the year ended 
April 30, 1997 from $201.9 million for the year ended April 30, 1996.  
Selling, general and administrative expenses as a percentage of total revenue 
remained relatively constant for the year ended April 30, 1997 as compared to 
the year ended April 30, 1996.  The increase in selling, general and 
administrative expenses was due to an increase in services revenue as a 
percentage of total revenue (which carries higher selling, general and 
administrative expenses than product), lower than expected product revenues 
and certain costs associated with resizing the Company to accommodate a 
reduction in the growth rate of the product business.  These increases were 
partially offset by the reversal of certain amounts provided for in the 
original reserves established in connection with the sale of the Company's 
U.S. franchise business.

   OPERATING INCOME.  Operating income increased 58.6% to $68.3 million for 
the year ended April 30, 1997 from $43.0 million for the year ended April 30, 
1996. Operating income as a percentage of total revenue increased to 3.1% for 
the year ended April 30, 1997 from 2.4% for the year ended April 30, 1996 as 
a result of the increase in total gross margin percentage.

   INTEREST INCOME.  Interest income decreased 33.5% to $3.7 million for the 
year ended April 30, 1997 from $5.5 million for the year ended April 30, 1996 
due to lower interest earned on the Company's extended credit on certain of 
its trade receivables due from Merisel FAB plus lower discounts taken.

   FINANCING EXPENSES, NET.  Financing expenses, net for the year ended April 
30, 1997 represents primarily interest incurred on borrowings under the 
Company's financing agreement with IBMCC and discounts and net expenses 
associated with the Company's Securitization Facility.  Financing expenses, 
net for the year ended April 30, 1996 and 1995 represents primarily interest 
incurred on borrowings under the Company's financing agreement with IBMCC. 
Financing expenses, net decreased 52.3% to $17.1 million for the year ended 
April 30, 1997 from $35.8 million for the year ended April 30, 1996 due to 
significantly lower average borrowings and lower interest rates.  The decline 
in average borrowings which resulted in lower financing expenses was due to 
the issuance of  the Debentures to the Trust in October 1996, the proceeds of 
which were used to repay borrowings under the financing agreement with IBMCC, 
combined with improved cash flow from increased profitability (see note 9 of 
notes to consolidated financial statements).

   TAXES.  The effective tax rate for the year ended April 30, 1997 of  36% 
and 1996 of 37.0%, was different than the U.S. statutory rate of 35.0% 
primarily due to state tax provisions. 

                                       23

<PAGE>

YEAR ENDED APRIL 30, 1996 AS COMPARED TO THE YEAR ENDED APRIL 30, 1995

  PRODUCT.  Revenue increased 32.9% to $1.6 billion for the year ended April 
30, 1996 from $1.2 billion for the year ended April 30, 1995 as a result of 
the Company's successful sales and marketing efforts and strengthened market 
position.  Gross margin increased 30.3% to $147.9 million for the year ended 
April 30, 1996 from $113.5 for the year ended April 30, 1995. Gross margin 
percentage decreased to 9.4% for the year ended April 30, 1996 from 9.6% for 
the year ended April 30, 1995 due to the Company's emphasis on larger 
customers which resulted in lower gross margin percentages but higher sales 
volumes that more than offset the associated increase in distribution costs.

  LIFE CYCLE SERVICES.  Revenue increased 5.5% to $138.4 million for the year 
ended April 30, 1996 from $131.2 million for the year ended April 30, 1995. 
This increase reflects the growth in life cycle services related to increased 
product sales which more than offset a decline in repair and maintenance 
services attributable to improved product reliability and a shift by vendors 
to extended warranty programs. Gross margin decreased 10.8% to $49.1 million 
for the year ended April 30, 1996 from $55.1 million for the year ended April 
30, 1995. Gross margin percentage decreased to 35.5% for the year ended April 
30, 1996 from 42.0% for the year ended April 30, 1995, as a result of startup 
costs associated with newly obtained contracts.

  PROFESSIONAL SERVICES.  Revenue increased 82.5% to $58.1 million for the 
year ended April 30, 1996 from $31.8 million for the year ended April 30, 
1995.  This increase reflects the increased customer demand for the Company's 
value-added PC network service offerings. Gross margin increased 75.5% to 
$23.0 million for the year ended April 30, 1996 from $13.1 million for the 
year ended April 30, 1995. Gross margin percentage decreased to 39.6% for the 
year ended April 30, 1996 from 41.2% for the year ended April 30, 1995 due to 
increased investments in systems engineers.

  TRAINING AND OTHER SERVICES. Revenue decreased 14.3% to $30.0 million for 
the year ended April 30, 1996 from $35.0 million for the year ended April 30, 
1995. The decrease was the result of a negotiated reduction in the 
distribution fee from Merisel FAB and reduced demand for the Company's 
training services. Gross margin decreased to $24.9 million for the year ended 
April 30, 1996 from $28.9 million for the year ended April 30, 1995 while the 
gross margin percentage remained relatively constant.

  SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.  Selling, general and 
administrative expenses increased 10.7% to $201.9 million for the year ended 
April 30, 1996 from $182.4 million for the year ended April 30, 1995. 
Selling, general and administrative expenses as a percentage of total revenue 
decreased to 11.2% for the year ended April 30, 1996 from 13.2% for the year 
ended April 30, 1995. This decrease is due to higher volumes of product and 
networking revenue that more than offset the increase in associated fixed 
costs as well as cost reduction efforts to consolidate administrative 
functions and centralize branches. 

  OPERATING INCOME.  Operating income increased 53.0% to $43.0 million for 
the year ended April 30, 1996 from $28.1 million for the year ended April 30, 
1995. Operating income as a percentage of total revenue increased to 2.4% for 
the year ended April 30, 1996 from 2.0% for the year ended April 30, 1995 as 
the decrease in selling, general and administrative expenses as a percentage 
of total revenue more than offset the decrease in the total gross margin 
percentage. 

  FINANCING EXPENSES, NET.  Financing expenses, net for the years ended April 
30, 1996 and 1995 represents primarily interest incurred on borrowings under 
the Company's financing agreement with IBMCC.  Financing expenses increased 
10.0% to $35.8 million for the year ended April 30, 1996 from $32.6 million 
for the year ended April 30, 1995 due principally to higher average 
borrowings during fiscal year 1996 related to increased inventory levels and 
receivable balances as a result of the significant growth in product revenue. 
Interest income decreased 15.8% to $5.5 million from $6.6 million as the 
Company was paid in full on a significant note receivable during the first 
quarter of fiscal year 1996.

  TAXES.  The effective tax rate for the year ended April 30, 1996 of 37.0% 
and 1995 of 41.0% was different than the U.S. statutory rate of 35.0% 
primarily due to state tax provisions. 

                                       24

<PAGE>


DISCONTINUED OPERATIONS

  The Company disposed of most of its franchise business during 1994.  The 
largest of these sales occurred on January 31, 1994, when the Company sold 
certain assets and liabilities of its United States franchise business, 
including all domestic franchise agreements, Datago distribution agreements 
and the right to the "ComputerLand" name and trademark within the United 
States to Merisel FAB (see note 3 of notes to consolidated financial 
statements). 

DEFERRED TAX ASSETS

  At April 30, 1997 and 1996, the Company has recorded net deferred tax 
assets of $14.9 million and $31.3 million, respectively.  The full 
realization of the deferred tax assets carried at April 30, 1997 is dependent 
upon the Company achieving future pretax earnings, prior to the expiration of 
the net operating loss carryforwards, of $41.4 million. The net operating 
loss carryforwards expire in the years 2000 through 2010.  Management 
believes that sufficient taxable income will be generated from operations to 
realize the net deferred tax assets. 

LIQUIDITY AND CAPITAL RESOURCES

  The Company has utilized cash generated from operations, including sales of 
certain of its trade receivables, and proceeds from the issuance of 
Convertible Preferred Securities and Common Stock to fund its significant 
revenue growth, working capital requirements, payments on its debt 
obligations, and purchases of businesses and capital expenditures.

  In October, 1996, the Trust sold 4,025,000 Convertible Preferred 
Securities, raising gross proceeds of $201.3 million.  The holders of the 
Convertible Preferred Securities are entitled to cumulative cash 
distributions at an annual rate of 6 3/4% of the liquidation amount of $50 
per security.  The distributions are payable quarterly in arrears in the 
aggregate amount of approximately $3.4 million per quarter.  The aggregate 
net proceeds to the Company totaled $194.5 million after selling expenses, 
discounts and commissions.  The Company used the net proceeds of the offering 
to reduce its outstanding indebtedness to IBMCC.

  Effective December 20, 1996, the Company established the Securitization 
Facility, providing the Company with up to $175 million in available credit, 
pursuant to which the Company, through a wholly-owned subsidiary, sells an 
undivided percentage ownership interest in the Pooled Receivables.  As of 
April 30, 1997, the gross proceeds of the sales totaled $172.8 million.

  The Company currently has a $250 million line of credit under its Financing 
Program Agreement with IBMCC.  At April 30, 1997, the Company had $171.4 
million outstanding under this facility, of which $97.0 million is included 
in accounts payable and $74.4 million is classified as short-term borrowings. 
 Borrowings under the line of credit are subject to certain borrowing base 
limitations and are secured by portions of the Company's inventory, accounts 
receivable and certain other assets.  Amounts borrowed under the line of 
credit bear interest at prime minus 0.8 % (7.7% at April 30, 1997).  The line 
of credit expires October 31, 1997.

  In March 1996, the Company completed an initial public offering selling 
9,215,770 shares of Common Stock and raising $83.4 million after selling 
expenses and underwriting discounts and commissions.  The Company used the 
proceeds of the offering primarily to repay amounts borrowed under the line 
of credit with IBMCC.

  In January 1994, the Company sold certain assets and liabilities of its 
U.S. franchise business for cash plus additional contingent consideration.  
In February 1996, the Company received an additional $14.6 million from the 
sale in settlement of the contingent consideration.  In connection with this 
sale and pursuant to a distribution and services agreement, the Company 
continues to supply product for which it earns a monthly distribution fee.  
Approximately 30% of the Company's inventory shipments by dollar volume are 
made to fulfill the Company's obligation under the distribution services 
agreement. 

                                       25

<PAGE>


  During fiscal year 1997, exclusive of the proceeds of the sales of trade 
receivables of $172.8 million, the Company's operating activities used cash 
of $86.4 million primarily as a result of decreases in accounts payable and 
accrued liabilities and increases in inventory.  The decrease in accounts 
payable and the increase in inventory was the result of the Company utilizing 
certain cost effective purchasing programs and incentives offered by certain 
of its vendors. The decrease in accrued liabilities was primarily the result 
of payments against certain acquisition and other reserves.  During fiscal 
year 1997, the Company used cash of $36.0 million (net of cash acquired) to 
purchase various businesses and used $13.5 million to make payments on 
certain long-term obligations. During this period, the Company also used cash 
of $25.2 million for capital expenditures and plans to make additional 
investments in its automated systems and its capital equipment during fiscal 
year 1998.

  During fiscal year 1997, the Company acquired the Dataflex Regions for 
$37.7 million in cash.  In addition, a total of 300,000 shares of Company's 
Common Stock (having an aggregate value on the closing date of approximately 
$6.0 million) were issued in connection with the Company's acquisition of 
Mentor Technologies.  On December 16, 1996, the Company acquired CDS, in 
exchange for 952,491 shares of the Company's Common Stock (having an 
aggregate value on the closing date of approximately $21.9 million).  Ten 
percent of those shares were deposited into escrow for a period of 
approximately 10 months to satisfy certain indemnification obligations of 
CDS.  In addition to these acquisitions, the Company continues to pursue the 
acquisition of other companies that sell products and services that either 
complement or expand its existing business. To that aim, on July 7, 1997, the 
Company, through a wholly-owned subsidiary, acquired certain of the assets 
and assumed certain of the liabilities of Sysorex Information Systems, Inc., 
a government technology provider which reported revenues of approximately 
$150 million for its fiscal year ended September 30, 1996.

  The Company intends to continue to finance a significant portion of its 
working capital needs through credit facilities.  The Company believes that 
cash generated from operations and credit facilities will be sufficient to 
meet its cash requirements and fund its planned growth through at least the 
end of fiscal 1998. 

                                       26

<PAGE>


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                     REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS


To the Board of Directors and Stockholders' of
Vanstar Corporation:


   We have audited the accompanying consolidated balance sheets of Vanstar 
Corporation as of April 30, 1997 and 1996, and the related consolidated 
statements of income, shareholders' equity and cash flows for each of the 
three years in the period ended April 30, 1997.  Our audits also include the 
financial statement schedule listed in the Index at Item 14(a).  These 
financial statements and schedule are the responsibility of the Company's 
management.  Our responsibility is to express an opinion on these financial 
statements and schedule based on our audits.

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

   In our opinion, the financial statements referred to above present fairly, 
in all material respects, the consolidated financial position of Vanstar 
Corporation, at April 30, 1997 and 1996, and the consolidated results of its 
operations and its cash flows for each of the three years ended April 30, 
1997, in conformity with generally accepted accounting principles.

                              ERNST & YOUNG LLP



Atlanta, Georgia
June 10, 1997, except for Note 15 as
  to which the date is July 7, 1997


                                       27


<PAGE>

                              VANSTAR CORPORATION
                          CONSOLIDATED BALANCE SHEETS
                        (In thousands, except share data)
<TABLE>
<CAPTION>

                                                ASSETS

                                                                                 APRIL 30, 
                                                                        ---------------------------
                                                                          1997               1996
                                                                        --------           --------
<S>                                                                     <C>                <C>
Current assets:
     Cash                                                               $  5,686           $ 14,498 
     Receivables, net of allowance for doubtful accounts of
       $8,610 and $14,812 at April 30, 1997 and 1996, respectively       180,225            298,484 
     Inventories                                                         389,592            350,406 
     Deferred income taxes                                                14,855             25,750 
     Prepaid expenses and other current assets                             8,618              2,432 
                                                                        --------           --------
       Total current assets                                              598,976            691,570 
Property and equipment, net                                               39,240             23,183 
Other assets, net                                                         63,775             48,899 
Goodwill, net of accumulated amortization of $5,640 
     and $3,453 at April 30, 1997 and 1996, respectively                  56,652             39,713
                                                                        --------           --------
                                                                        $758,643           $803,365 
                                                                        --------           --------
                                                                        --------           --------


                                    LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable                                                   $255,147           $305,374 
     Accrued liabilities                                                  34,392             41,586 
     Deferred revenue                                                     21,821             27,109 
     Short-term borrowings                                                74,402                  - 
     Current maturities of long-term debt                                  4,785              1,759 
                                                                        --------           --------
       Total current liabilities                                         390,547            375,828 
Long-term debt, less current maturities                                    5,946            293,007 
Other long-term liabilities                                                  661              7,477 
Commitments and contingencies

Company-obligated mandatorily redeemable convertible
     preferred securities of subsidiary trust holding solely
     convertible subordinated debt securities of the Company             194,518                  - 

Stockholders' equity:
     Common stock;  $.001 par value: 100,000,000 shares authorized,
       42,896,779 shares issued and outstanding at April 30, 1997;
       40,475,144 shares issued and outstanding at April 30, 1996             43                 40 
     Additional paid-in capital                                          125,926            115,097 
     Retained earnings (since a deficit elimination of $78,448
       at April 30, 1994)                                                 41,002             11,916 
                                                                        --------           --------
          Total stockholders' equity                                     166,971            127,053 
                                                                        --------           --------
                                                                        $758,643           $803,365 
                                                                        --------           --------
                                                                        --------           --------
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       28

<PAGE>

                             VANSTAR CORPORATION
                    CONSOLIDATED STATEMENTS OF INCOME
                   (In thousands, except per share data)


<TABLE>
<CAPTION>


                                                                      YEAR ENDED APRIL 30,
                                                          -----------------------------------------
                                                               1997           1996           1995
                                                          ------------   ------------  ------------
<S>                                                       <C>            <C>           <C>
Revenue:
   Product                                                $  1,849,365   $  1,578,298  $  1,187,392 
   Services                                                    329,201        226,515       198,000 
                                                          ------------   ------------  ------------
       Total revenue                                         2,178,566      1,804,813     1,385,392 
                                                          ------------   ------------  ------------
Cost of revenue:
   Product                                                   1,665,212      1,430,404     1,073,879 
   Services                                                    199,390        129,482       100,975 
                                                          ------------   ------------  ------------
       Total cost of revenue                                 1,864,602      1,559,886     1,174,854 
                                                          ------------   ------------  ------------

Gross margin                                                   313,964        244,927       210,538 

Selling, general and administrative expenses                   245,685        201,880       182,411 
                                                          ------------   ------------  ------------

OPERATING INCOME                                                68,279         43,047        28,127 
   
   Interest income                                               3,685          5,539         6,577 
   Financing expenses, net                                    (17,061)       (35,804)       (32,555)
                                                          ------------   ------------  ------------
   
Income from continuing operations before income                       
   taxes and distributions on preferred securities 
   of Trust                                                    54,903         12,782          2,149 
Income tax provision                                          (19,765)        (4,729)          (881)
                                                          ------------   ------------  ------------
Income from continuing operations before                              
   distributions on preferred securities of Trust              35,138          8,053          1,268 
Gain on disposal of discontinued businesses                           
   (less income taxes of $5,400)                                    -          9,194             - 
Distributions on convertible preferred securities 
   of Trust            
   (less income taxes of $2,893)                               (5,144)             -             - 
                                                          ------------   ------------  ------------
   
NET INCOME                                                $    29,994    $    17,247    $    1,268 
                                                          ------------   ------------  ------------
                                                          ------------   ------------  ------------
   
PRIMARY AND FULLY DILUTED EARNINGS PER SHARE                          
    (PRO FORMA PRIOR TO MARCH 11, 1996):
   Continuing operations                                  $      0.69    $      0.23   $       0.04 
   Discontinued operations                                          -           0.27              - 
                                                          ------------   ------------  ------------
                                                          $      0.69    $      0.50   $       0.04 
                                                          ------------   ------------  ------------
                                                          ------------   ------------  ------------
Shares used in per share calculation                           43,282         34,250         32,486 
                                                          ------------   ------------  ------------
                                                          ------------   ------------  ------------
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       29

<PAGE>

                            VANSTAR CORPORATION
              CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                              (In thousands)

<TABLE>
<CAPTION>
                                               PREFERRED STOCK                COMMON STOCK A                 COMMON STOCK B
                                           ----------------------         ----------------------        ------------------------
                                            SHARES         AMOUNT         SHARES          AMOUNT        SHARES            AMOUNT 
                                           -------         ------         ------          ------        ------            ------
<S>                                        <C>             <C>            <C>             <C>            <C>              <C>
BALANCE AT APRIL 30, 1994                   15,309         $  153          7,460           $  7          3,708            $  4
                                                                                               
Redemption of Class A Common Stock               -              -          (154)              -              -               - 
Issuance of Class A Common Stock                 -              -             17              -              -               - 
Redemption of Class E Preferred Stock            -              -              -              -              -               - 
Net income                                       -              -              -              -              -               - 
Dividends                                        -              -              -              -              -               - 
                                           -------         ------         ------           ----         ------            ----
BALANCE AT APRIL 30, 1995                   15,309            153          7,323              7          3,708               4
                                                                                               
Redemption of Class A Common Stock               -              -          (103)              -              -               - 
Issuance of warrants                             -              -              -              -              -               - 
Conversion of Class F Preferred Stock             
     and Senior Preferred Stock to                
     Class A Common Stock                  (15,309)          (153)        15,309             15              -               - 
Conversion of Class B Common Stock to             
     Class A Common Stock                        -              -          3,708              4         (3,708)             (4)
Conversion of warrants to Class A                 
     Common Stock                                -              -          4,996              5              -               - 
Issuance of Class A Common Stock                 -              -          9,216              9              -               - 
Accrued dividends forgiven -                      
     Senior Preferred Stock                      -              -              -              -              -               - 
Exercise of options                              -              -             26              -              -               - 
Net income                                       -              -              -              -              -               - 
Dividends                                        -              -              -              -              -               - 
                                           -------         ------         ------           ----         ------            ----
BALANCE AT APRIL 30, 1996                        -              -         40,475             40              -               - 
                                                                                               
Issuance of Common Stock:                         
     Employee stock purchase plan                -              -            389              -              -               - 
     Exercise of options                         -              -            597              1              -               - 
     Business acquisitions                       -              -          1,252              2              -               - 
     Other                                       -              -            184              -              -               - 
Income tax benefit from stock                    -              -              -              -              -               - 
     option exercises                             
Unrealized holding gain on                        
     available-for-sale securities               -              -              -              -              -               - 
Net income                                       -              -              -              -              -               - 
                                           -------         ------         ------           ----         ------            ----
BALANCE AT APRIL 30, 1997                        -           $  -         42,897            $43              -            $  - 
                                           -------         ------         ------           ----         ------            ----
                                           -------         ------         ------           ----         ------            ----

<CAPTION>

                                                                        RETAINED
                                       STOCKHOLDER                      EARNINGS
                                          NOTE           ADDTL.         (ACCUM.
                                        RECEIVABLE    PAID-IN CAP.      DEFICIT)          TOTAL
                                       -----------    ------------      --------          -----
<S>                                    <C>            <C>               <C>               <C>
BALANCE AT APRIL 30, 1994               $  (1,000)      $  25,633          $  -           $ 24,797

Redemption of Class A Common Stock           1,000        (1,000)             -                  -
Issuance of Class A Common Stock                 -              -             -                  -
Redemption of Class E Preferred Stock            -            135             -                135
Net income                                       -              -         1,268              1,268
Dividends                                        -              -        (3,611)            (3,611)
                                        ----------      ---------        ------           --------
BALANCE AT APRIL 30, 1995                        -         24,768        (2,343)            22,589
                                                                                               
Redemption of Class A Common Stock               -              -             -                  -
Issuance of warrants                             -            500             -                500
Conversion of Class F Preferred Stock             
     and Senior Preferred Stock to                
     Class A Common Stock                        -            138             -                  -
Conversion of Class B Common Stock to             
     Class A Common Stock                        -              -             -                  - 
Conversion of warrants to Class A                 
     Common Stock                                -            (5)             -                  - 
Issuance of Class A Common Stock                 -         83,382             -             83,391 
Accrued dividends forgiven -                      
     Senior Preferred Stock                      -          6,162             -              6,162
Exercise of options                              -            152             -                152
Net income                                       -              -        17,247             17,247
Dividends                                        -              -        (2,988)            (2,988)
                                        ----------      ---------        ------           --------
BALANCE AT APRIL 30, 1996                        -        115,097        11,916            127,053
                                                                                               
Issuance of Common Stock:                         
     Employee stock purchase plan                -          3,898             -              3,898
     Exercise of options                         -          2,923             -              2,924
     Business acquisitions                       -              -        (2,281)            (2,279)
     Other                                       -             77             -                 77
Income tax benefit from stock                    -          3,931             -              3,931
     option exercises                            
Unrealized holding gain on                        
     available-for-sale securities               -              -         1,373              1,373
Net income                                       -              -        29,994             29,994
                                        ----------      ---------        ------           --------
BALANCE AT APRIL 30, 1997                     $  -       $125,926       $41,002           $166,971
                                        ----------      ---------        ------           --------
                                        ----------      ---------        ------           --------
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       30

<PAGE>


                              VANSTAR CORPORATION
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (In thousands)


<TABLE>
<CAPTION>
                                                                      YEAR ENDED APRIL 30,
                                                            --------------------------------------
                                                               1997            1996         1995
                                                            ----------      ---------      -------
<S>                                                         <C>             <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                   $  29,994      $  17,247      $  1,268 
Adjustments to reconcile net income to net cash
   provided by (used in) operating activities:
   Depreciation and amortization                                17,068          9,775         9,997 
   Change in provision for doubtful accounts                    (7,780)        14,393            95 
   Deferred income taxes                                        19,548         10,029        (1,097)
   Gain on disposal of discontinued businesses                       -        (14,594)            - 
   Changes in operating assets and liabilities:
      Receivables                                              159,694        (51,193)      (58,354)
      Inventories                                              (35,472)       (51,720)      (38,900)
      Prepaid expenses and other assets                         (6,322)        (2,462)       (1,257)
      Accounts payable                                         (64,066)        42,177        37,556 
      Accrued and other liabilities                            (26,338)         4,865         1,070 
                                                            ----------      ---------      -------
          Total adjustments                                     56,332        (38,730)      (50,890)
                                                            ----------      ---------      -------
Net cash provided by (used in) operating activities             86,326        (21,483)      (49,622)

CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital expenditures                                        (25,224)       (15,583)      (12,835)
   Proceeds from sale of building                                3,125              -             - 
   Purchase of businesses, net of cash acquired                (36,011)             -             - 
   Sales of businesses                                               -         14,594             - 
   Investment in available-for-sale securities                 (10,073)             -             - 
   Repayment of notes receivable                                     -              -         9,722 
                                                            ----------      ---------      --------
Net cash used in investing activities                          (68,183)          (989)       (3,113)

CASH FLOWS FROM FINANCING ACTIVITIES:
   Payments on long-term debt                                  (13,506)        (7,836)      (12,342)
   Borrowings (repayments) under line of credit, net          (214,670)       (46,999)       73,287 
   Proceeds from issuance of convertible preferred 
     securities, net                                           194,320              -             - 
   Issuance of common stock and warrants                         6,901         84,044             - 
   Redemption of preferred stock and accrued dividends               -              -        (4,654)
   Dividends paid                                                    -              -        (1,000)
                                                            ----------      ---------      --------
Net cash provided by (used in) financing activities            (26,955)        29,209        55,291 

NET INCREASE (DECREASE) IN CASH                                 (8,812)         6,737         2,556 
   Cash at beginning of the period                              14,498          7,761         5,205 
                                                            ----------      ---------      --------
CASH AT END OF THE PERIOD                                   $    5,686      $  14,498      $  7,761 
                                                            ----------      ---------      --------
                                                            ----------      ---------      --------

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
   Cash paid during the period for:
      Interest                                               $  17,075      $  38,761     $  31,352 
      Discounts and net expenses on receivable 
        securitization                                           3,275              -             - 
      Distributions on preferred securities of Trust             6,943              -             - 
      Income taxes, net of refunds                               3,386            625         1,424 
   Non-cash investing activities:
      Equipment acquired under capital leases                    8,416          4,293             - 
   Non-cash financing activities:
      Conversion of accrued dividends into a note payable            -              -         2,462 
</TABLE>


          See accompanying notes to consolidated financial statements


                                       31
<PAGE>



                              VANSTAR CORPORATION
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                APRIL 30, 1997

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

ORGANIZATION AND BASIS OF PRESENTATION

     Vanstar Corporation (the "Company") is a leading provider of services 
and products designed to build and manage PC network infrastructures 
primarily for Fortune 1000 companies and other large enterprises. The Company 
provides customized, integrated solutions for its customers' network 
infrastructure needs by combining a comprehensive offering of value-added 
services with its expertise in sourcing and distributing PCs, network 
products, computer peripherals and software from a variety of vendors.  The 
consolidated financial statements include the accounts of Vanstar Corporation 
and its consolidated subsidiaries. All significant intercompany balances have 
been eliminated. 

USE OF ESTIMATES

     The preparation of financial statements in conformity with generally 
accepted accounting principles requires management to make estimates and 
assumptions that affect the reported amounts of assets and liabilities and 
disclosure of contingent assets and liabilities at the date of the financial 
statements and the reported amounts of revenues and expenses during the 
reporting period.  Actual results could differ from those estimates.

REVENUE RECOGNITION

     Product revenue is primarily derived from the sale of computer hardware, 
software, peripherals and communications devices manufactured by third 
parties and sold by the Company, principally to implement integration 
projects. Services revenue is derived from value-added services, including 
services focused on the server and communication segments of the PC network 
infrastructure, services performed for the desktop and fees earned on a 
distribution services agreement.  Product sales are recognized at the time of 
shipment.  Revenue from services is recognized as services are performed or 
ratably if performed over a service contract period.  Deferred revenue 
primarily represents unrecognized service revenue.

FINANCIAL INSTRUMENTS

     The carrying amounts for cash, receivables, and accounts payable 
approximate their respective fair values due to the short-term maturity of 
these instruments.  The carrying value for amounts outstanding under the 
Company's credit facility with IBMCC approximates fair value since the 
facility bears interest at current market rates.  Long-term debt consists of 
variable-rate instruments at terms the Company believes would be available if 
similar financing were obtained from another party.  As such, carrying 
amounts also approximate their fair value.  The carrying value of the 
Convertible Preferred Securities approximates its fair value based upon 
quoted market prices.

INVENTORIES

     Inventory for resale and spare parts inventory are stated at the lower 
of cost (first-in, first-out method) or market.  Periodically, the Company 
assesses the appropriateness of the inventory valuations giving consideration 
to obsolete, slow-moving and nonsalable inventory. 

GOODWILL

     Goodwill represents the excess of cost over the net assets of acquired 
businesses and is amortized using the straight-line method over twenty to 
twenty-five years.  Amortization expense on goodwill was $2.2 million, $1.7 
million, and $1.7 million for the fiscal years ended April 30, 1997, 1996, 
and 1995, respectively.  The 


                                       32

<PAGE>


carrying amount of goodwill was adjusted to fair value at April 30, 1994 in 
connection with the Company's quasi-reorganization.  The Company periodically 
assesses the appropriateness of the carrying amount of goodwill and the 
amortization periods based on the undiscounted value of the current and 
anticipated future cash flows and projected profitability of the acquired 
businesses.  If there are indicated impairments, a write down is recorded to 
the extent the carrying amount exceeds the fair value.  The Company adopted 
Financial Accounting Standards Board ("FASB") Statement No. 121, ACCOUNTING 
FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE 
DISPOSED OF, on May 1, 1996.  The adoption of FASB Statement No. 121 did not 
have any effect on the financial statements.

EARNINGS PER SHARE

     Primary and fully diluted earnings per share are computed using the 
weighted average number of shares of Common Stock and dilutive common stock 
equivalents outstanding during the period.  Common stock equivalents are 
computed on the outstanding options using the treasury stock method.  
Pursuant to the Securities and Exchange Commission Staff Accounting 
Bulletins, common stock equivalents also include amounts computed on options 
and warrants issued within twelve months of the filing date of the Company's 
initial public offering as if they were outstanding for all periods presented 
using the treasury stock method and the initial public offering price.  
Earnings per share for the fiscal years ended April 30, 1996 and 1995 are 
presented giving effect to the conversion of all outstanding shares of 
Preferred Stock into Common Stock and the exchange of all outstanding 
warrants for shares of Common Stock in connection with the Company's initial 
public offering on March 11, 1996 as if the conversion had occurred at the 
later of the beginning of fiscal year 1995 or the issuance date of the 
respective security.     

STOCK-BASED COMPENSATION

     The Company accounts for its stock option and employee stock purchase 
plans in accordance with Accounting Principles Board ("APB") Opinion No. 25, 
ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES.  Accordingly, no compensation 
expense has been recognized because the options had an exercise price equal 
to the market value of the Common Stock on the date of grant.  Refer to Note 
13 regarding pro forma information provided pursuant to FASB Statement No. 
123, ACCOUNTING FOR STOCK-BASED COMPENSATION. 

NEW ACCOUNTING PRONOUNCEMENTS

     The Financial Accounting Standards Board recently issued standards which 
will be applicable to the Company but which the Company has not yet adopted: 
FASB Statement No. 130, REPORTING COMPREHENSIVE INCOME and FASB Statement No. 
131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION.  
These statements are not expected to have a significant impact on the 
financial statements.

     In February 1997, the Financial Accounting Standards Board issued 
Statement No. 128, EARNINGS PER SHARE, which is required to be adopted for 
both interim and annual financial statements for periods ending after 
December 15, 1997.  At that time, the Company will be required to change the 
method currently used to compute earnings per share and to restate all prior 
periods.  Under the new requirements for calculating earnings per share, the 
effect of stock options which are dilutive will be excluded.  The impact is 
expected to result in an increase in primary earnings per share for the 
fiscal years ended April 30, 1997 and April 30, 1996 of $0.03 and $0.03, 
respectively.  The Company has not yet determined what the impact of 
Statement 128 will be on the calculation of fully diluted earnings per share.

2.  ACQUISITIONS

   On May 24, 1996, the Company, through a wholly-owned subsidiary, acquired 
certain of the assets and assumed certain of the liabilities of Dataflex 
Corporation and of Dataflex's wholly-owned subsidiary, Dataflex Southwest 
Corporation.  The assets acquired and liabilities assumed comprise 
substantially all of the assets and business operations previously associated 
with the business operations of Dataflex known as the Dataflex Western Region 
and Dataflex Southwest Region (the "Dataflex Regions").  The Dataflex Regions 
offered PC product distribution, service and support in the states of 
Arizona, California, Colorado, 

                                       33

<PAGE>

Nevada, New Mexico, and Utah and reported revenues of approximately $145 
million for the fiscal year ended March 31, 1996.  The purchase price of the 
Dataflex Regions, was $37.7 million.

   On September 4, 1996, the Company acquired Mentor Technologies, Ltd., an 
Ohio limited partnership ("Mentor Technologies") providing training and 
education services throughout the upper mid-western United States.  A total 
of 300,000 shares of Company's Common Stock (having an aggregate value on the 
closing date of approximately $6.0 million) were issued in connection with 
the acquisition. For the calendar year ended December 31, 1995, Mentor 
Technologies reported revenues of approximately $5.5 million.

   On December 16, 1996, the Company acquired Contract Data Services, Inc., a 
North Carolina corporation ("CDS"), in exchange for 952,491 shares of the 
Company's Common Stock (having an aggregate value on the closing date of 
approximately $21.9 million).  Ten percent of those shares were deposited 
into escrow to satisfy certain indemnification obligations of CDS.  CDS 
provided outsourcing of integrated information technology services, related 
technical support services and procurement of computer hardware and software. 
For the fiscal year ended March 31, 1996, CDS reported total revenues of 
approximately $74.3 million.

   On January 9, 1997, the Company acquired inventory and equipment from DCT 
Systems, Inc., a Minnesota corporation, Niloy, Inc., a Georgia corporation, 
and NCT Systems, Inc., an Illinois corporation (collectively, "DCT").  The 
Company made an advance payment of $4.0 million towards the purchase price of 
the assets pending subsequent determination of the value of such assets.  In 
addition, DCT could receive a maximum of 180,000 shares of the Company's 
Common Stock upon the satisfaction of certain conditions.  The Company also 
entered into a servicing and marketing agreement on January 9, 1997 whereby 
the Company will provide certain computer products and billing services to 
DCT.  Based upon certain criteria under the servicing and marketing 
agreement, DCT also may receive, at their election, cash or up to 40,000 
additional restricted shares of the Company's Common Stock.
   
   The acquisitions of the Dataflex Regions and DCT were accounted for as 
purchases and the excess cost over the fair value of net assets acquired for 
each acquisition is being amortized on a straight line basis over a 25 year 
period.  The operations of these acquisitions are included in the 
consolidated statements of income from the respective dates of acquisition.
   
   The acquisitions of Mentor Technologies and CDS were accounted for as 
pooling-of-interests business combinations.  The consolidated statements of 
income, cash flows, and stockholders' equity were not restated to reflect 
these acquisitions due to the insignificance of the transactions.  
Accordingly, the operations of these acquisitions are included in the 
consolidated statements of income from the respective dates of acquisition.

3.  DISCONTINUED OPERATIONS

  On January 31, 1994, the Company sold certain assets and liabilities of its 
U.S. franchise business, including all domestic franchise agreements, Datago 
distribution agreements and the right to the "ComputerLand" name and 
trademark within the United States to Merisel Franchise Aggregation Business 
("Merisel FAB"), a wholly-owned subsidiary of Merisel, Inc. ("Merisel").  
Concurrent with the sale, the Company entered into a distribution services 
agreement with Merisel FAB.  Pursuant to that agreement, the Company 
continued to supply product and provide certain logistics and other support 
services to Merisel FAB and received a monthly distribution fee for such 
services.  The Company also granted Merisel FAB $20.0 million in extended, 
interest-bearing credit on its product purchases.

  Effective January 31, 1996, the Company and Merisel FAB signed amendments 
to the asset purchase agreement and distribution services agreement.  The 
amendments provided for: the term of the distribution services agreement to 
be extended through April 30, 1997; the distribution fee to be reduced 
retroactive to April 1, 1995; the additional consideration to be fixed at 
$14.6 million; the maximum amount of the extended credit to be increased by 
$11.1 million, which would be reduced in monthly installments from February 
1996 through July 1997; and the original amount of interest-bearing credit of 
$20.0 million to be extended and 

                                       34

<PAGE>

reduced in three equal monthly installments from May 15, 1997 through July 
15, 1997.  The Company recorded a gain of $9.2 million, net of applicable 
taxes, for the year ended April 30, 1996 as a result of the additional 
consideration.  As a result of announcements made by Merisel on February 20, 
1996, the Company decided to record a $31.1 million provision as of January 
31, 1996 against its extended credit due from Merisel FAB.  On May 29, 1996, 
the Company entered into an agreement with a third party under which the 
Company received $15.6 million in cash in exchange for providing the third 
party the right to receive payments in May, June and July 1997 totaling $20.0 
million out of amounts collected from the extended credit owed to the Company 
by Merisel FAB.  As a result, the Company adjusted a portion of the reserve 
on its extended credit from Merisel FAB resulting in additional pre-tax 
income of $15.6 million during the quarter ended April 30, 1996.

  On March 28, 1997, the distribution and services agreement was assigned 
from Merisel FAB to ComputerLand Corporation, a wholly owned subsidiary of 
Synnex Information Technologies, Inc., as a result of the sale by Merisel of 
substantially all of the assets of Merisel FAB to ComputerLand Corporation.

4.  INVENTORIES

    Inventories consist of the following:
                                                              APRIL 30,
                                                      -------------------------
                                                          1997           1996
                                                      ----------     ----------
                                                             (IN THOUSANDS)

    Inventory for resale                              $  387,498     $  348,419
    Less reserve for obsolete inventory                  (13,420)       (12,640)
                                                      ----------     ----------
                                                         374,078        335,779
    Spare parts (current)                                 15,514         14,627
                                                      ----------     ----------
                                                      $  389,592     $  350,406
                                                      ----------     ----------
                                                      ----------     ----------

5. PROPERTY AND EQUIPMENT, NET

    Property and equipment consist of the following:   
                                                                               
                                                              APRIL 30,
                                                      -------------------------
                                                          1997           1996
                                                      ----------     ----------
                                                             (IN THOUSANDS)

    Furniture and equipment                            $  89,570      $  57,093
    Building and improvements                             13,421         14,377
                                                      ----------     ----------
                                                         102,991         71,470
    Less accumulated depreciation and amortization       (63,751)       (48,287)
                                                      ----------     ----------
                                                       $  39,240      $  23,183
                                                      ----------     ----------
                                                      ----------     ----------

  The carrying value of property and equipment was adjusted to fair value on 
April 30, 1994 in connection with the Company's quasi-reorganization.  
Additions since April 30, 1994 have been recorded at cost.  Property and 
equipment is depreciated using the straight-line method over the estimated 
useful lives of the related assets of 3 to 5 years for furniture and 
equipment, 25 years for the building, and the lesser of the lease term or the 
useful life for improvements. Depreciation expense associated with property 
and equipment was $14.4 million, $7.7 million and $8.3 million for the fiscal 
years ended April 30, 1997, 1996 and 1995, respectively.


                                       35

<PAGE>

6.  OTHER ASSETS, NET

    Other assets consist of the following:
                                                              APRIL 30,
                                                      -------------------------
                                                          1997           1996
                                                      ----------     ----------
                                                             (IN THOUSANDS)

    Spare parts (non-current)                          $  31,541      $  28,883
    Capitalized software, net                             17,551         13,353
    Available-for-sale security                           10,719              -
    Deferred income taxes (non-current)                        -          5,593
    Other                                                  3,964          1,070
                                                      ----------     ----------
                                                       $  63,775      $  48,899
                                                      ----------     ----------
                                                      ----------     ----------

     Capitalized software represents the costs associated with development of 
software for the Company's internal use. Such costs are capitalized in 
accordance with FASB Statement No. 86, ACCOUNTING FOR THE COSTS OF COMPUTER 
SOFTWARE TO BE SOLD, LEASED, OR OTHERWISE MARKETED, and are amortized over 
the remaining useful economic life of the software of up to five years. 
Accumulated amortization at April 30, 1997 and 1996 was $2.0 million and $1.5 
million, respectively.  Amortization expense associated with capitalized 
software was $0.5 million, $0.3 million and $0.0 million for the fiscal years 
ended April 30, 1997, 1996 and 1995, respectively.

     In December 1996, the Company purchased 7.5% of the common stock of 
ComputerLand Poland S.A., a publicly traded foreign company, for $8.5 
million. The investment is classified as an "available-for sale" security in 
accordance with FASB Statement No. 115, ACCOUNTING FOR CERTAIN INVESTMENTS IN 
DEBT AND EQUITY SECURITIES.  At April 30, 1997 the fair market value of the 
investment was $10.7 million and the gross unrealized holding gain was $2.2 
million for the year ended April 30, 1997.  The net unrealized holding gain 
of $1.4 million (net of taxes of $0.8 million) was included in retained 
earnings.  On April 30, 1997, the Company purchased additional restricted 
common stock of ComputerLand Poland S.A. for $1.5 million.  At April 30, 
1997, the Company owns 8.9% of the common stock of ComputerLand Poland S.A.

7.   LONG-TERM DEBT

      Long-term debt consists of the following:   
                                                              APRIL 30,
                                                      -------------------------
                                                          1997           1996
                                                      ----------     ----------
                                                             (IN THOUSANDS)
 
            Line of credit                             $  74,402     $  289,072
            Obligations under capital leases               9,838          4,127
            Other                                            893          1,567
                                                      ----------     ----------
               Total outstanding debt                     85,133        294,766
            Less current maturities                      (79,187)        (1,759)
                                                      ----------     ----------
                                                      $    5,946     $  293,007
                                                      ----------     ----------
                                                      ----------     ----------

     The line of credit consists of amounts borrowed under a financing 
agreement with IBMCC, an affiliate of one of the Company's principal vendors. 
The line of credit is established for $250 million, is renewable every six 
months, is secured by portions of the Company's inventory, accounts 
receivable and certain other assets and is terminable by the Company or IBMCC 
at anytime upon 90 days' written notice. In the event of such termination, 
the outstanding borrowings are not due until the end of the term, currently 
expiring on October 31, 1997. The financing agreement contains various terms 
and covenants which require the Company to maintain certain levels of 
tangible net worth and certain other financial restrictions.  The financing 
agreement also limits the Company's ability to pay cash dividends on its 
Common Stock.  At April 30, 1997, the Company had $171.4 million outstanding 
under this facility, of which $97.0 million is included in accounts payable 
and $74.4 million is classified as short-term borrowings.  Amounts borrowed 
under the line of credit bear interest at 7.7 % at April 30, 1997 and 8.7% at 
April 30, 1996. 

                                       36
<PAGE>

     Aggregate maturities of long-term debt, excluding the line of credit, 
are approximately $4.8 million, $4.7 million, and $1.2 million, respectively 
for each of the succeeding three years, and none thereafter. 

8.  SALE OF ACCOUNTS RECEIVABLE

     Effective December 20, 1996, the Company, through a non-consolidated 
wholly-owned special purpose corporation, established a revolving funding 
trade receivables securitization facility (the "Securitization Facility") 
which provides the Company with up to $175 million in available credit.  In 
connection with the Securitization Facility, the Company sells on a revolving 
basis, certain of its trade receivables ("Pooled Receivables") to the special 
purpose corporation which in turn sells a percentage ownership interest in 
the Pooled Receivables to a commercial paper conduit sponsored by a financial 
institution. These transactions have been recorded as a sale in accordance 
with FASB Statement No. 125, ACCOUNTING FOR TRANSFERS AND SERVICING OF 
FINANCIAL ASSETS AND EXTINGUISHMENTS OF LIABILITIES.  The amount of the 
Pooled Receivables, which totaled $246.3 million at April 30, 1997, is 
reflected as a reduction to receivables.  The Company retains an interest in 
certain of the assets sold.  At April 30, 1997, the amount of that retained 
interest totaled $82.8 million and is included in receivables.  The Company 
is retained as servicer of the Pooled Receivables.  Although management 
believes that the servicing revenues earned will be adequate compensation for 
performing the services, estimating the fair value of the servicing asset was 
not considered practicable.  Consequently, a servicing asset has not been 
recognized.  The gross proceeds resulting from the sale of the percentage 
ownership interests in the Pooled Receivables totaled $172.8 million as of 
April 30, 1997.  Such proceeds are included in cash flows from operating 
activities in the consolidated statements of cash flows. Discounts and net 
expenses associated with the sales of the receivables totaling $3.4 million 
are included in financing expenses, net on the consolidated statements of 
income for the year ended April 30, 1997. 

9.  CONVERTIBLE PREFERRED SECURITIES OF TRUST

     During October 1996, Vanstar Financing Trust, a Delaware statutory 
business trust wholly-owned by the Company (the "Trust"), sold 4,025,000 
Trust Convertible Preferred Securities ("Convertible Preferred Securities").  
The Convertible Preferred Securities have a liquidation value of $50 per 
security and are convertible at any time at the option of the holder into 
shares of the Company's Common Stock at a conversion rate of 1.739 shares for 
each Convertible Preferred Security subject to adjustment in certain 
circumstances. Distributions on Convertible Preferred Securities accrue at an 
annual rate of 6 3/4% of the liquidation value of $50 per Convertible 
Preferred Security and are included in "Distributions on convertible 
preferred securities of trust, net of tax" in the consolidated statements of 
income.  The proceeds of the private placement, which totaled $194.5 million 
(net of initial purchasers' discounts and estimated offering expenses 
totaling $6.7 million) are included in "Company-obligated mandatorily 
redeemable convertible preferred securities of subsidiary trust holding 
solely convertible subordinated debt securities of the Company" on the 
consolidated balance sheets.  The Company has entered into several 
contractual arrangements (the "Back-up Undertakings") for the purpose of 
fully and unconditionally supporting the Trust's payment of distributions, 
redemption payments and liquidation payments with respect to the Convertible 
Preferred Securities.  Considered together, the Back-up Undertakings 
constitute a full and unconditional guarantee by the Company of the Trust's 
obligations on the Convertible Preferred Securities.

     The Trust invested the proceeds of the offering in 6 3/4% Convertible 
Subordinated Debentures due 2016 (the "Debentures") issued by the Company.  
The Debentures bear interest at 6 3/4% per annum, generally payable 
quarterly on January 1, April 1, July 1 and October 1.  The Debentures are 
redeemable by the Company, in whole or in part, on or after October 5, 1999 
at designated redemption prices.  If the Company redeems the Debentures, the 
Trust must redeem the Convertible Preferred Securities on a pro rata basis 
having an aggregate liquidation value equal to the aggregate principal amount 
of the Debentures redeemed.  The sole assets of the Trust are the Debentures, 
which have an aggregate principal amount of $207.5 million.  The Debentures 
and related income statement effects are eliminated in the Company's 
consolidated financial statements. 

                                       37

<PAGE>


10.  CONCENTRATION OF CREDIT RISK

  The Company purchases and sells multi-vendor PC products and provides 
various PC-related services to end-users.  Although receivables from 
end-users are uncollateralized, the credit risk is limited due to the large 
number and diversity of customers comprising the Company's customer base.  
The Company also distributes PC products under a distribution and services 
agreement with ComputerLand Corporation pursuant to which the Company 
generally receives payment within three business days.  No single customer 
accounted for more than 10% of the Company's revenue during fiscal year 1997. 
During fiscal year 1996 and 1995, no customer other than the Microsoft 
Corporation accounted for more than 10% of the Company's total revenues.  
Revenues from the Microsoft Corporation represented 12.0% and 10.8% of the 
Company's total revenues for fiscal year 1996 and 1995, respectively.

11.  COMMITMENTS AND CONTINGENCIES

LEASES

  The Company leases certain administrative, warehousing and other facilities 
under operating leases, and equipment under a combination of operating and 
capital leases. Most of the Company's operating leases are subject to annual 
escalation clauses ranging from two to five percent. Several facilities under 
operating leases have been sublet. 

  The future minimum lease payments on noncancelable operating leases with an 
initial term in excess of one year and future sublease income under 
noncancelable subleases as of April 30, 1997 are as follows:  

                                      MINIMUM      MINIMUM      
                                       LEASE      SUBLEASE      
                                      PAYMENTS      INCOME      
                                    ------------------------
                                         (IN THOUSANDS)
   Year Ending April 30,
        1998                           17,321         707
        1999                           14,091         129
        2000                            9,151           -
        2001                            6,435           -
        2002                            5,321           -
        Thereafter                     19,287           -
                                    ---------      ------
                                    $  71,606      $  836
                                    ---------      ------
                                    ---------      ------

  In connection with leases on facilities associated with acquisitions, the 
Company established reserves for future lease payments on certain duplicate 
or excess facilities. The balance of these reserves at April 30, 1997 was 
approximately $1.7 million, which has not reduced the amounts shown above. 

  Rental expense, under operating leases, charged to operations was $19.4 
million, $13.8 million and $14.2 million during fiscal years ended April 30, 
1997, 1996 and 1995, respectively. 

  The cost of assets recorded under capital leases was $12.7 million and $4.5 
million at April 30, 1997 and 1996, respectively.  Accumulated amortization 
on such assets was $3.3 million and $0.5 million at April 30, 1997 and 1996, 
respectively. The present value of minimum lease payments under capital 
leases as of April 30, 1997 was $9.8 million. 

LEGAL PROCEEDINGS   

  Various legal actions arising in the normal course of business have been 
brought against the Company and certain of its subsidiaries.  Management 
believes that the ultimate resolution of these actions will not have a 
material adverse effect on the Company's financial position or results of 
operations, taken as a whole.


                                       38

<PAGE>

12.  STOCKHOLDERS' EQUITY

INITIAL PUBLIC OFFERING

  On March 11, 1996, the Company completed an initial public offering selling 
9,215,770 shares of its Common Stock  for approximately $83.4 million, net of 
issuance costs.

PREFERRED STOCK, COMMON STOCK AND WARRANTS

  Concurrent with the consummation of the initial public offering, all 
outstanding shares of Senior Preferred Stock, Class F Preferred Stock and 
Class B Common Stock were converted into 19,018,088 shares of Common Stock. 
Additionally, all outstanding warrants were exchanged for 4,995,691 shares of 
Common Stock, all accrued dividends payable to the holder of the Senior 
Preferred Stock totaling $6.2 million were forgiven and all such stock and 
warrants converted to Common Stock were canceled.

  As of April 30, 1997, the Company had 15,000,000 shares of undesignated 
Preferred Stock, $0.01 par value, authorized.  No shares have been issued.

  At April 30, 1997, the Company had 7,943,551 shares of Common Stock 
reserved for future issuance for the Company's stock option and stock 
purchase plans. 

13.  EMPLOYEE BENEFIT PLANS

STOCK OPTION PLANS

  The Company has three stock option plans which provide for the issuance of 
incentive stock options ("ISOs"), stock options that are non-qualified for 
Federal income tax purposes ("NQSOs") and stock appreciation rights ("SARs"). 
The 1988 Stock Option Plan was adopted in July 1988 and provides for the 
issuance of ISOs, NQSOs and SARs to key employees and directors. The 1993 
Stock Option Plan was adopted in April 1993 and provides for the issuance of 
shares of Common Stock, ISOs, NQSOs and SARs to highly compensated, 
managerial employees, officers and directors.  The 1996 Stock Option Plan was 
adopted in August 1996 and provides for the issuance of shares of Common 
Stock, ISOs, NQSOs and SARs to officers, directors and employees of, and 
consultants to, the Company.  The exercise price of the ISOs under all plans 
may not be less than 100% of the fair market value of the Common Stock at the 
time of grant.  Under the 1993 plan, the exercise price of the NQSOs may not 
be less than 85% of the fair market value at the time of grant.  At April 30, 
1997, the total number of shares of Common Stock for which options may be 
granted pursuant to the 1988, 1993, and 1996 plans were 2.3 million, 2.4 
million and 3.3 million, respectively.  Under all plans, options generally 
become exercisable ratably over a four or five year period and expire in ten 
years.  At April 30, 1997, no SARs had been issued.  

  A summary of the Company's stock option activity, and related information 
for the fiscal years ended April 30, 1997, 1996 and 1995 are as follows (In 
thousands, except for weighted-average exercise prices): 

<TABLE>
<CAPTION>
                                        1997                          1996                     1995
                              --------------------------   --------------------------  ---------------------------
                                        WEIGHTED-AVERAGE             WEIGHTED-AVERAGE             WEIGHTED-AVERAGE
                              OPTIONS    EXERCISE PRICE    OPTIONS    EXERCISE PRICE    OPTIONS    EXERCISE PRICE
                              -------   ----------------   -------   ----------------   -------   ----------------
<S>                            <C>         <C>             <C>          <C>              <C>          <C>
Outstanding-beginning of year  3,817       $  4.62          2,161       $  5.71          1,418        $  5.55
Granted                        1,557         14.22          2,967          4.35            883           6.00
Exercised                       (597)         4.87            (26)         5.83              -              -
Canceled                        (307)         6.07         (1,285)         5.80           (140)          5.93
                               -----                       ------                        -----       
Outstanding-end of year        4,470       $  7.83          3,817       $  4.62          2,161        $  5.71
                               -----                       ------                        -----       
                               -----                       ------                        -----       

 Exercisable at end of year    1,721                        1,403                        1,265 
 Shares available for grant    2,858                        1,112                          117 
</TABLE>


                                       39
<PAGE>


   The following summarizes information about the Company's stock options 
outstanding and exercisable by price range at April 30, 1997 (options in 
thousands): 


<TABLE>
<CAPTION>

                           OPTIONS OUTSTANDING                                                     OPTIONS EXERCISABLE 
-------------------------------------------------------------------------------------      ---------------------------------
                                           WEIGHTED-AVERAGE
                                              REMAINING
   RANGE OF                 NUMBER           CONTRACTUAL             WEIGHTED-AVERAGE        NUMBER         WEIGHTED-AVERAGE
EXERCISE PRICES           OUTSTANDING        LIFE (YEARS)             EXERCISE PRICE       EXERCISABLE       EXERCISE PRICE
---------------           -----------      ----------------          ----------------      -----------      ----------------
<S>                       <C>              <C>                       <C>                   <C>              <C>
$ 0.18  -  $ 3.00           1,874                 8                     $   2.96               656              $     2.90
  5.00  -   10.00           1,319                 7                         7.64               797                    6.90
 14.75  -   23.87           1,277                 9                        15.16               268                   15.14
                            -----                                                            -----
$ 0.18  -  $23.87           4,470                 8                     $   7.83             1,721               $    6.66
                            -----                                                            -----
                            -----                                                            -----
</TABLE>

STOCK PURCHASE PLAN

  The Company provides an employee stock purchase plan (the "Stock Purchase 
Plan") allowing eligible employees to purchase shares of the Company's Common 
Stock.  The Stock Purchase Plan is intended to qualify as an employee stock 
purchase plan under Section 423 of the Code.  The total number of shares of 
Common Stock authorized for issuance under the plan is 1,000,000.  All 
full-time employees of the Company are eligible to participate, subject to 
certain limited exceptions.  The Stock Purchase Plan provides a means for the 
Company's employees to purchase stock through payroll deductions of up to 10% 
of their gross compensation.  The purchase price for shares offered under the 
Stock Purchase Plan is equal to 85% of the lower of the closing price of the 
Common Stock on the first day of the six month offer period or the last day 
of the six month offer period.  During fiscal year 1997, the Company sold 
389,245 shares of Common Stock under the Stock Purchase Plan to its employees.

PRO FORMA INFORMATION

  The Company has elected to follow APB Opinion No. 25 and related 
interpretations, and accordingly, has not recognized compensation expense for 
its employee stock options because all options had an exercise price equal to 
the market value of the Common Stock on the date of grant.  

  Pro forma information regarding net income and earnings per share is 
required by FASB Statement No. 123, and has been determined as if the Company 
had accounted for its stock options and employee stock purchase plan under 
the fair value method of that Statement.  

  Pro forma net income, earnings per share and compensation expense are as 
follows:



                                                 1997           1996
                                              ---------      ---------
                                       (IN THOUSANDS, EXCEPT PER SHARE DATA)



Net income                  As reported        $29,994        $17,247
                            Pro forma          $23,926        $15,119

Primary and fully diluted   As reported        $  0.69        $  0.50
  earnings per share        Pro forma          $  0.56        $  0.45

Compensation expense        Pro forma          $ 8,555        $ 3,221

  For purposes of pro forma disclosures only, the estimated fair value of the 
options is amortized to expense over the options' vesting period.  The fair 
value for all options was estimated at the date of grant using the 
Black-Scholes multiple option pricing model with the following assumptions:  
risk-free interest rates of 6.2% for fiscal year 1997 and 6.0% for fiscal 
year 1996; volatility factors of the expected market price of the Company's 
Common Stock of 71%; expected dividend yield of 0.0%; and expected life of 2 
years.  The per 

                                       40
<PAGE>

share weighted-average fair value of options granted was $8.09 during fiscal 
year 1997 and $2.55 during fiscal year 1996.  Pro forma net income reflects 
only options granted in fiscal year 1997 and 1996.  Therefore, the impact of 
calculating compensation cost for stock options will not be fully reflected 
in the pro forma net income and pro forma earnings per share amounts until 
fiscal year 2000.  

  For purposes of pro forma disclosures only, compensation cost associated 
with the Stock Purchase Plan is estimated for the fair value of the 
employees' purchase rights using the Black-Scholes model with the following 
assumptions: risk-free interest rates of 5.3% for fiscal year 1997 and 5.4% 
for fiscal year 1996; expected volatility of 58% for fiscal year 1997 and 72% 
for fiscal year 1996; expected dividend yield of 0.0%; and expected life of 6 
months.  The weighted-average fair value per share of those purchase rights 
granted in fiscal year 1997 and 1996 was $2.94 and $2.12, respectively.   

  The Black Scholes option valuation model was developed for use in 
estimating the fair value of traded options which have no vesting 
restrictions and are fully transferable.  Option valuation models required 
the input of highly subjective assumptions, including the expected stock 
price volatility.  Because the Company's employee stock options have 
characteristics significantly different from those of traded options, and 
because changes in the assumptions can materially affect the fair value 
estimate, in management's opinion, the existing models do not necessarily 
provide a reliable single measure of the fair value of its employee stock 
options.

401K PLAN

  The Company provides a savings plan under section 401(k) of the Internal 
Revenue Code to substantially all domestic employees who are over the age of 
21. Employees can contribute up to 12% of their annual salary to the plan up 
to the maximum allowed by the Internal Revenue Code.  Prior to August 1, 
1996, the Company matched 100% of certain eligible employee contributions up 
to $200 not to exceed the maximum of 1% of the employee's eligible 
compensation. If the employee contributed more than $200 to the plan, the 
Company contributed an amount equal to the greater of $200 or 25% of the 
employee's contribution up to a maximum of 1% of the employee's eligible 
compensation. The amount charged to expense for the matching contribution was 
$1.3 million, $0.7 million and $0.7 million, for the fiscal years ended April 
30, 1997, 1996 and 1995, respectively. Effective August 1, 1996, the Company 
changed its matching policy to 50% on the first 4% of eligible compensation 
contributed by an eligible employee up to a maximum of 2% of the employee's 
eligible compensation.

14.  INCOME TAXES

  The income tax provision computed under FASB Statement No. 109, ACCOUNTING 
FOR INCOME TAXES, consists of the following:


                                 YEAR ENDED APRIL 30,
                             ------------------------
                               1997     1996     1995
                               ----     ----     ----
                                  (IN THOUSANDS)

   Current:                                        
        Federal              $   623   $   -     $  - 
        State                    100       100    200 
                             -------   -------   ----
                                 723       100    200 
                             -------   -------   ----
   Deferred                                           
        Federal               14,319     8,561    562 
        State                  1,830     1,468    119 
                             -------   -------   ----
                              16,149    10,029    681 
                             -------   -------   ----
                             $16,872   $10,129   $881 
                             -------   -------   ----
                             -------   -------   ----


                                       41

<PAGE>

  The income tax provision is allocated between discontinued and continuing 
operations as follows: 


                                                  YEAR ENDED APRIL 30,
                                                ------------------------
                                                  1997     1996     1995
                                                  ----     ----     ----
                                                     (IN THOUSANDS)
Provision allocated to operations of 
  discontinued businesses and income on 
  disposal of discontinued businesses           $     -   $5,400   $  -
                                                -------   ------   ----
                                                -------   ------   ----
Income tax provision allocated to 
  continuing operations                         $16,872   $4,729   $881
                                                -------   ------   ----
                                                -------   ------   ----

  The income tax provision allocated to continuing operations for the 
fiscal year ending April 30, 1997 consists of the following (In thousands):  

Provision on income before taxes and 
  distribution on preferred securities 
  of Trust                                     $19,765 
Tax benefit allocable to distribution 
  on preferred securities of Trust              (2,893)
                                               -------
                                               $16,872
                                               -------
                                               -------

  Significant components of deferred tax assets consist of the following: 

                                                     APRIL 30,
                                               ----------------------
                                                  1997         1996
                                                  ----         ----
                                                    (IN THOUSANDS)
    Deferred tax assets:
      Net operating loss carryforwards         $  1,490     $  13,926
      Reserves                                    8,237        10,971
      Inventory                                   5,128         6,446
                                               --------     ---------
          Total net deferred tax assets        $ 14,855     $  31,343
                                               --------     ---------
                                               --------     ---------

  The net operating loss carryforwards listed above expire in the years 2000 
through 2010. 

  The full realization of the $14.9 million of deferred tax assets carried at 
April 30, 1997 is dependent upon the Company achieving sufficient future 
pretax earnings.  Although realization is not assured, management believes 
that sufficient taxable income will be generated through operations to 
realize the net deferred tax assets. 

  A reconciliation of the U.S. statutory income tax rate and the effective 
rate of the income tax provision allocated to continuing operations is as 
follows:     

                                                  YEAR ENDED APRIL 30,
                                           --------------------------------
                                               1997        1996        1995
                                               ----        ----        ----
                                                    (IN THOUSANDS)

    Statutory tax rate at 35%              $  16,403     $  4,473     $  752
    State income taxes, net of 
      federal benefit                          1,930          536        108
    Other                                     (1,461)        (280)        21
                                           ---------     --------     ------
                                           $  16,872     $  4,729     $  881
                                           ---------     --------     ------
                                           ---------     --------     ------

                                       42
<PAGE>

15.  SUBSEQUENT EVENTS

  On July 7, 1997, the Company, through a wholly-owned subsidiary, acquired 
certain of the assets and assumed certain of the liabilities of Sysorex 
Information Systems, Inc. ("Sysorex"), a government technology provider which 
reported revenues of approximately $150 million for its fiscal year ended 
September 30, 1996.  The purchase price was approximately $46.0 million, 
subject to certain post-closing adjustments, and a contingent payment of 
500,000 shares of Common Stock, based upon the future financial performance 
of the acquired business.  The Company anticipates accounting for the 
acquisition using the purchase method.

  On July 3, 1997, a purported class action suit was filed against the 
Company and other various parties.  The Company believes that the plaintiff's 
allegations are without merit and intends to defend the suit vigorously.  At 
this time, the Company is unable to determine what impact this matter may 
have upon its financial condition or results of operations. 


                                       43
<PAGE>

SCHEDULE II

                               VANSTAR CORPORATION
                  VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>

                                                             ADDITIONS
                                                           (REDUCTIONS)
                                         BALANCE AT           CHARGED                                BALANCE AT
                                        BEGINNING OF     (CREDITED) TO COSTS      WRITE-OFFS/          END OF 
ALLOWANCE FOR DOUBTFUL ACCOUNTS            PERIOD            AND EXPENSES            OTHER             PERIOD
-------------------------------            ------            ------------            -----             ------
<S>                                       <C>                <C>                 <C>                  <C>
Year ended April 30, 1995                 $14,098            $     95            $  1,867             $12,326
Year ended April 30, 1996                  12,326              14,393 *            11,907 **           14,812
Year ended April 30, 1997                  14,812              (2,705)***           3,497               8,610

INVENTORY RESERVES
------------------
Year ended April 30, 1995                 $11,447            $  5,400            $  5,412             $11,435
Year ended April 30, 1996                  11,435               3,854               2,649              12,640
Year ended April 30, 1997                  12,640               2,300               1,520              13,420
</TABLE>


*  Includes a provision for $4.4 million against the extended interest-bearing
credit and $7.8 million against the extended credit both due from Merisel FAB
(see note 3 of notes to consolidated financial statements).

**  Includes the write-off of $4.4 million of the extended interest-bearing
credit due from Merisel FAB.

***  Includes the reversal of $4.2 million of provisions against the extended
interest-bearing credit due from Merisel FAB.


                                     44
<PAGE>

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 material under the headings "Election of Directors," "Executive 
Officers," and "Section 16(a) Beneficial Ownership Reporting Compliance" in 
the 1997 Proxy Statement is incorporated herein by reference in response to 
this item.  Certain information regarding executive officers of the Company 
is set forth under the heading "Executive Officers of the Company" in Part 1 
of this Annual Report on Form 10-K.

ITEM 11.  EXECUTIVE COMPENSATION

     The material under the heading "Executive Compensation" in the 1997 
Proxy Statement is incorporated herein by reference in response to this item, 
except for the material under the subheadings "Compensation and Stock Option 
Committee Report on Executive Compensation" and "Comparison of Cumulative 
Total Returns," which are not incorporated herein by reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The material under the heading "Security Ownership of Certain Beneficial 
Owners, Directors and Management" in the 1997 Proxy Statement is incorporated 
herein by reference in response to this item.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The material under the heading "Certain Transactions" in the 1997 Proxy 
Statement is incorporated herein by reference in response to this item. 


                                     45
<PAGE>

                                   PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
     
     (a)  The following documents are filed as part of this report:

         (1)   Consolidated Financial Statements:
               Report of Ernst & Young LLP, Independent Auditors 
               Consolidated Balance Sheets at April 30, 1997 and 1996
               Consolidated Statements of Income for the years ended April 30, 
                 1997, 1996 and 1995
               Consolidated Statements of Stockholders' Equity for the years 
                 ended April 30, 1997, 1996 and 1995
               Consolidated Statements of Cash Flows for the years ended 
                 April 30, 1997, 1996 and 1995
               Notes to Consolidated Financial Statements

          (2)  Consolidated Financial Statement Schedule:
               Supplemental Schedule II - Valuation of Qualifying Accounts 
                 and Reserves
               All other schedules for which provision is made in the 
                 applicable accounting regulation of the Securities and 
                 Exchange Commission are not required under the related 
                 instructions or are inapplicable, and therefore have been
                 omitted.

          (3)  Exhibits 


EXHIBIT NO.                         DESCRIPTION OF EXHIBIT
-----------                         ----------------------
    3.1      Restated Certificate of Incorporation of the Registrant (1)
    3.2      By-laws of the Registrant (1)
    4.1      Certificate of Trust of Vanstar Financing Trust (4)
    4.2      Amended and Restated Declaration of Trust of Vanstar Financing 
             Trust dated as of October 2, 1996, among Jeffrey S. Rubin, 
             Leslie J. Alvarez, John J. Dunican, Jr. and Wilmington Trust 
             Company as trustees and Vanstar Corporation as sponsor (4)
    4.3      Indenture dated as of October 2, 1996 between Vanstar Corporation 
             as issuer and Wilmington Trust Company as trustee (4)
    4.4      Form of 6 3/4% Preferred Securities (4) (incorporated by 
             reference to Exhibit A-1 to Exhibit 4.2)
    4.5      Form of 6 3/4% Convertible Subordinated Debentures Due 2016 (4) 
             (incorporated by reference to Exhibit B to Exhibit 4.2)
    4.6      Preferred Securities Guarantee Agreement dated October 2, 1996 
             between Vanstar Corporation as guarantor and Wilmington Trust 
             Company as preferred guarantee trustee (4) 
***10.1      Form of Indemnity Agreement between the Company and each of its 
             directors and certain officers (1)
   10.2      Second Amended and Restated Financing Program Agreement dated 
             April 30, 1995, between the Registrant and IBM Credit Corporation 
             ("IBMCC"), as amended (1)
 **10.3      Distribution and Services Agreement dated January 31, 1994, 
             between the Registrant and Merisel FAB, Inc., as amended (1)
   10.4      Amended and Restated Registration Rights Agreement dated as of 
             May 18, 1995, among the Registrant, NYNEX Worldwide Services 
             Group, Inc., Warburg, Pincus Capital Company, L.P., WP Capco, 
             Inc., William Y. Tauscher, Richard H. Bard and Microsoft
             Corporation (1)
   10.5      Lease Agreement dated as of July 14, 1988, entered into between 
             the Registrant and Rosewood Associates (1)
   10.6      Real Estate Mortgage dated as of April 6, 1978, entered into 
             between Danners, Inc. and New England Mutual Life Insurance
             Company and the subsequent Contract for Purchase of Real Estate/
             Offer to Purchase Real Estate dated as of April 26, 1991, entered
             into between the Registrant and Cheyenne Plaza Associates (1)
   10.7      Lease Agreement dated as of December 9, 1993, entered into 
             between the Registrant and WRC Properties, Inc. (1)


                                     46
<PAGE>

    10.8     Lease Agreement dated as of August 21, 1991, entered into among 
             the Registrant, Lincoln Las Positas and Patrician Associates, 
             Inc. (1)
    10.9     Standard Industrial/Commercial Single-Tenant Lease-Gross dated as 
             of March 27, 1995, entered into among the Registrant, Thomas G. 
             Allan and Annie L. Henry (1)
    10.10    Lease Agreement dated as of March 29, 1994, entered into between 
             the Registrant and TMC Properties, Inc. (1)
    10.11    Lease Agreement dated as of November 1, 1991, entered into 
             between the Registrant and ASC North Fulton Associates Joint
             Venture (1)
    10.12    Agreement, dated May 29, 1996, between the Registrant and 
             Donaldson Lufkin & Jenrette Securities Corporation (3)
    10.13    Agreement for Purchase and Sale of Property dated June 3, 1996 
             entered into between the Registrant and Duke Realty Limited 
             Partnership (5)
    10.14    Lease Agreement dated as of June 3, 1996 entered into between the 
             Registrant and Duke Realty Limited Partnership (5)
    10.15    Lease Agreement dated as of May 30, 1996 entered into between the 
             Registrant and Dugan Realty, L.L.C. (5)
    10.16    Lease Agreement dated as of June 3, 1996 entered into between the 
             Registrant and Duke Realty Limited Partnership (5)
    10.17    Lease Amendment dated May 15, 1996 entered into between the 
             Registrant and Rosewood Associates (5)
    10.18    Asset Purchase Agreement by and among the Registrant, VST West, 
             Inc. and Dataflex Corporation and Dataflex Southwest Corporation, 
             dated as of May 24, 1996 (2)
 ***10.19    1988 Stock Option Plan (1) (incorporated by reference to Exhibit 
             4.1)
 ***10.20    Form of Nontransferable Non-Qualified Stock Option Agreement 
             under the 1988 Stock Option Plan of the Registrant (1)
             (incorporated by reference to Exhibit 4.2)
 ***10.21    1993 Stock Option/Stock Issuance Plan (1) (incorporated by 
             reference to Exhibit 4.3)
 ***10.22    Form of Stock Option Grant and Stock Purchase Agreement under the 
             1993 Stock Option Plan (1) (incorporated by reference to 
             Exhibit 4.4)
    10.23    Employee Stock Purchase Plan (1) (incorporated by reference to 
             Exhibit 4.5)
 ***10.24    1996 Stock Option/Stock Issuance Plan, as amended (4) 
             (incorporated by reference to Exhibit 10.25)
    10.25    Amendment No. 5 to Second Amended and Restated Financing Program 
             Agreement, dated September 25, 1996, between the Registrant and 
             IBMCC (6)
    10.26    Amendment No. 6 to Second Amended and Restated Financing Program 
             Agreement, dated December 20, 1996, between the Registrant and 
             IBMCC (7) (incorporated by reference to Exhibit 10.3)
    10.27    Receivables Purchase Agreement, dated December 20, 1996, among 
             Vanstar Finance Co., as seller, the Registrant, as servicer, 
             Pooled Accounts Receivable Capital Corporation, as purchaser, and 
             Nesbitt Burns Securities, Inc., as agent (7) (incorporated by 
             reference to Exhibit 10.1)
    10.28    Purchase and Contribution Agreement, dated as of December 20, 
             1996, between the Registrant and Vanstar Finance Co. (7)
             (incorporated by reference to Exhibit 10.2)
    10.29    Intercreditor Agreement, dated as of December 20, 1996, among 
             PAR Accounts Receivable Capital Corporation, the Registrant, 
             Vanstar Finance Co., and Nesbitt Burns Securities, Inc. (7) 
             (incorporated by reference to Exhibit 10.4)
   *10.30    Assignment, Consent to Assignment and Assumption, and Release 
             Agreement, dated as of March 28, 1997, by and among the 
             Registrant, Merisel, Inc., Merisel FAB, Inc., and ComputerLand 
             Corporation 
****10.31    Amendment No. 15, dated as of March 28, 1997, to Distribution and 
             Services Agreement between the Registrant and ComputerLand 
             Corporation
   *11.1     Statement of Computation of Earnings Per Share
   *21       List of Subsidiaries
   *23       Consent of Ernst & Young LLP
   *27       Financial Data Schedule


                                     47
<PAGE>

    (1)     Incorporated by reference to exhibits with the corresponding 
            numbers (except as otherwise noted) filed with Registrant's 
            Registration Statement on Form S-1 (Reg. No. 33-80297) as 
            declared effective by the Commission on March 8, 1996. 

    (2)     Incorporated by reference to Exhibit 2.1 to the Registrant's 
            Current Report on Form 8-K dated May 24, 1996.

    (3)     Incorporated by reference to Exhibit 10 to the Registrant's 
            Current Report on Form 8-K dated May 29, 1996.

    (4)     Incorporated by reference to exhibits with the corresponding 
            numbers (except as otherwise noted) filed with that Registration 
            Statement on Form S-1 (Reg. Nos. 333-16307 and 333-16307-01) 
            filed by the Registrant and Vanstar Financing Trust, as
            declared effective by the Commission on January 15, 1997.

   (5)      Incorporated by reference to exhibits with the corresponding 
            numbers filed with the Registrant's Annual Report on Form 10-K 
            for the fiscal year ended April 30, 1996.

   (6)      Incorporated by reference to Exhibit 10.1 to the Registrant's 
            Quarterly Report on Form 10-Q for the fiscal quarter ended
            October 31, 1996.

   (7)      Incorporated by reference to exhibits with the indicated numbers 
            filed with the Registrant's Current Report on Form 8-K
            dated December 26, 1996 and filed with the Commission on January 
            10, 1997.

    *       Filed herewith.

    **      Portions of this Exhibit were omitted and have been filed 
            separately with the Secretary of the Commission pursuant to the 
            Registrant's Application Requesting Confidential Treatment under 
            Rule 406 under the Securities Act of 1933, as amended. 

    ***     Management contract or compensatory plan or arrangement.

    ****    Filed herewith; however, portions of this Exhibit have been omitted
            and filed separately with the Secretary of the Commission pursuant 
            to the Registrant's Application Requesting Confidential Treatment 
            under Rule 24b-2 under the Securities Exchange Act of 1934, as 
            amended.

        (b) Reports on Form 8-K.

No Current Reports on Form 8-K were filed by the Company during the fiscal 
quarter ended April 30, 1997.


                                     48
<PAGE>

                                 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.

                                 VANSTAR CORPORATION
                                    (Registrant)


Dated:  July 21, 1997            By:  /s/ WILLIAM Y. TAUSCHER 
                                      ----------------------------
                                      William Y. Tauscher
                                      CHAIRMAN OF THE BOARD 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:

<TABLE>
<CAPTION>
      SIGNATURE                               TITLE                                    DATED
      ---------                               -----                                    -----
<S>                             <C>                                                 <C>
/s/ WILLIAM Y. TAUSCHER         Chairman of the Board, Chief Executive Officer      July 21, 1997
---------------------------     and Director (Principal Executive Officer)
   William Y. Tauscher

/s/ KAUKO O. ARONAHO            Senior Vice President and Chief Financial Officer    July 21, 1997
---------------------------     (Principal Financial and Accounting Officer)     
     Kauko O. Aronaho

/s/ JAY S. AMATO                President, Chief Operating Officer and Director      July 21, 1997
---------------------------     
       Jay S. Amato

/s/ JOHN W. AMERMAN             Director                                             July 21, 1997
---------------------------     
      John W. Amerman        

/s/ RICHARD H. BARD             Director                                             July 21, 1997
---------------------------     
      Richard H. Bard        
                                                           
/s/ STEPHEN W. FILLO            Director                                             July 21, 1997
---------------------------     
      Stephen W. Fillo       
                                                           
/s/ STEWART K.P. GROSS          Director                                             July 21, 1997
---------------------------     
      Stewart K.P. Gross     
                                                           
/s/ WILLIAM H. JANEWAY          Director                                             July 21, 1997
---------------------------     
      William H. Janeway     
</TABLE>
                                                           
                                                           
                                      49
<PAGE>

<TABLE>
<CAPTION>
      SIGNATURE                               TITLE                                    DATED
      ---------                               -----                                    -----
<S>                             <C>                                                 <C>
/s/ JOHN R. OLTMAN              Director                                            July 21, 1997
---------------------------
      John R. Oltman       
                                                           
/s/ JEFFREY S. RUBIN            Director                                            July 21, 1997
---------------------------     
      Jeffrey S. Rubin          
                                                           
                                                           
/s/ JOHN L. VOGELSTEIN          Director                                            July 21, 1997
---------------------------     
      John L. Vogelstein 
                                                           
                                                           
/s/ JOSH S. WESTON              Director                                            July 21, 1997
---------------------------     
      Josh S. Weston         
</TABLE>

                                      50