<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM 10-Q


             (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended May 2, 1998

                                      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 No. 0-24642
                                              -------

                            CORPORATE EXPRESS, INC.
                            ----------------------   
            (Exact name of registrant as specified in its charter)


       Colorado                                     84-0978360
----------------------------                        ----------
(State of incorporation or                       (I.R.S. Employer
 organization)                                   Identification No.)


    1 Environmental Way
    Broomfield, Colorado                                80021
----------------------------                        -------------
(Address of principal executive offices)              (Zip Code)


      Registrant's telephone number, including area code: (303) 664-2000


     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
                                        ----                  ----

     The number of shares of the registrant's common stock, par value $.0002 per
share, outstanding as of June 8, 1998 was 108,031,481.
<PAGE>
 
PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements


                            CORPORATE EXPRESS, INC.

                          CONSOLIDATED BALANCE SHEETS
              (In thousands, except share and per share amounts)
ASSETS

                                                     May 2,         January 31,
                                                      1998             1998
                                                 ---------------  --------------
                                                   (Unaudited)

Current assets:
  Cash and cash equivalents                      $    36,906      $    44,362
  Trade accounts receivable, net of allowance
    of $15,292 and $14,523, respectively             647,467          616,574
  Notes and other receivables                         79,356           86,687
  Inventories                                        275,453          251,108
  Deferred income taxes                               37,506           40,729
  Other current assets                                40,896           41,713
                                                 -----------      -----------
          Total current assets                     1,117,584        1,081,173

Property and equipment:
  Land                                                17,564           17,540
  Buildings and leasehold improvements               129,839          126,006
  Furniture and equipment                            356,258          339,577
                                                 -----------      -----------
                                                     503,661          483,123
  Less accumulated depreciation                     (140,873)        (131,756)
                                                 -----------      -----------
                                                     362,788          351,367

Goodwill, net of $64,369 and $57,558 of 
  accumulated amortization, respectively             860,357          847,544
Other assets, net                                     88,192           69,575
                                                 -----------      -----------

          Total assets                           $ 2,428,921      $ 2,349,659
                                                 ===========      ===========



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


                                       -2-
<PAGE>
 
                            CORPORATE EXPRESS, INC.

                    CONSOLIDATED BALANCE SHEETS, Continued
              (In thousands, except share and per share amounts)

LIABILITIES AND SHAREHOLDERS' EQUITY

<TABLE> 
<CAPTION> 
                                                                  May 2,           January 31,
                                                                   1998               1998
                                                               -----------         -----------
                                                               (Unaudited)
<S>                                                            <C>                 <C>  
Current liabilities:
  Accounts payable - trade                                     $   378,982         $   354,915
  Accounts payable - acquisitions                                    2,264               6,106
  Accrued payroll and benefits                                      56,750              61,308
  Accrued purchase costs                                             9,087               9,378
  Accrued merger and related costs                                  12,846              15,512
  Other accrued liabilities                                         96,975              80,214
  Current portion of long-term debt and capital leases              34,359              36,264
                                                               -----------         -----------
     Total current liabilities                                     591,263             563,697

Capital lease obligations                                            7,381               9,414
Long-term debt                                                   1,161,281             753,829
Deferred income taxes                                               57,127              52,515
Minority interest in subsidiaries                                   19,654              20,791
Other non-current liabilities                                       16,919              16,980
                                                               -----------         -----------
     Total liabilities                                           1,853,625           1,417,226

Contingencies (Note 7)

Shareholders' equity:
  Preferred stock, $.0001 par value, 25,000,000 shares
    authorized, none issued or outstanding                              --                  --
  Common stock, $.0002 par value, 300,000,000 shares
    authorized, 143,002,580 and 142,392,845 shares
    issued and outstanding, respectively                                28                  28
  Common stock, non-voting, $.0002 par value, 3,000,000
    shares authorized, none issued or outstanding                       --                  --
  Additional paid-in capital                                       855,944             852,507
  Retained earnings                                                106,595              91,887
  Accumulated other comprehensive expense                           (8,021)            (11,989)
                                                               -----------         -----------
                                                                   954,546             932,433
Less:                                           
  Treasury stock, at cost, 35,000,000 shares at 
    May 2, 1998                                                   (379,250)                 --
                                                               -----------         -----------
     Total shareholders' equity                                    575,296             932,433
                                                               -----------         -----------
          Total liabilities and shareholders' equity           $ 2,428,921         $ 2,349,659
                                                               ===========         ===========
</TABLE> 


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

                                       -3-
<PAGE>
 
                            CORPORATE EXPRESS, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                   (In thousands, except per share amounts)


                                                      Three Months Ended
                                                ----------------------------
                                                         (Unaudited)

                                                   May 2,           May 3,
                                                    1998             1997
                                                -----------      -----------


Net sales                                       $ 1,108,061      $   921,455
Cost of sales                                       850,291          703,650
                                                -----------      -----------
   Gross profit                                     257,770          217,805
Warehouse operating and selling expenses            182,825          160,757
Corporate general and administrative expenses        33,102           29,098
                                                -----------      -----------
   Operating profit                                  41,843           27,950
Interest expense and other, net                      12,791            8,953
                                                -----------      -----------
   Income before income taxes                        29,052           18,997
Income tax expense                                   13,044            7,500
                                                -----------      -----------
   Income before minority interest                   16,008           11,497
Minority interest expense (income)                      196             (911)
                                                -----------      -----------
   Income before extraordinary item                  15,812           12,408
Extraordinary item, net of tax:
  Loss on early extinguishment of debt                1,104               --
                                                -----------      -----------
   Net income                                   $    14,708      $    12,408
                                                ===========      ===========

Net income per share - Basic:
     Net income before extraordinary item       $      0.12      $      0.10
     Extraordinary item                               (0.01)              --
                                                -----------      -----------
     Net income                                 $      0.11      $      0.10
                                                ===========      ===========

Net income per share - Diluted:
     Net income before extraordinary item       $      0.12      $      0.09
     Extraordinary item                               (0.01)              --
                                                -----------      -----------
     Net income                                 $      0.11      $      0.09
                                                ===========      ===========

Weighted average common shares outstanding:
    Basic                                           134,410          126,067
    Diluted                                         136,729          131,268


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

                                       -4-
<PAGE>
 
                             CORPORATE EXPRESS, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)

<TABLE> 
<CAPTION> 
                                                                            Three Months Ended
                                                                       ---------------------------
                                                                        May 2,              May 3,
                                                                         1998               1997
                                                                       ---------         ---------
                                                                               (Unaudited)
<S>                                                                    <C>               <C> 
     Cash flows from operating activities:
       Net income                                                      $  14,708         $  12,408
       Adjustments to reconcile net income to net cash
             provided by (used in) operating activities:
         Depreciation                                                     12,004             9,579
         Amortization                                                      6,916             5,458
         Non-cash portion of merger and restructuring charge                  --             1,396
         Loss on early extinguishment of debt                              1,104                --
         Minority interest (income) expense                                  196              (911)
         Other                                                               678                95
     Changes in assets and liabilities, excluding acquisitions:
         (Increase) decrease in accounts receivable                        2,797            17,465
         (Increase) decrease in inventory                                (17,014)           (6,400)
         (Increase) decrease in other current assets                       3,662            (4,131)
         (Increase) decrease in other assets                              (2,812)             (939)
         Increase (decrease) in accounts payable                          (1,706)          (29,688)
         Increase (decrease) in accrued liabilities                       11,281           (22,283)
                                                                       ---------         ---------
     Net cash provided by (used in) operating activities                  31,814           (17,951)
                                                                       ---------         ---------

     Cash flows from investing activities:
         Proceeds from sale of assets                                        703               637
         Capital expenditures                                            (21,501)          (30,542)
         Payment for acquisitions, net of cash acquired                  (21,047)          (10,854)
         Investment in marketable securities                                (994)              572
         Other, net                                                          (71)               13
                                                                       ---------         ---------
         Net cash used in investing activities                           (42,910)          (40,174)
                                                                       ---------         ---------

     Cash flows from financing activities:
         Issuance of common stock                                            156             8,641
         Repurchase of common stock                                     (379,250)               --
         Debt issuance costs                                             (15,150)             (151)
         Proceeds from long-term borrowings                              252,179            11,515
         Repayments of long-term borrowings                               (6,936)          (29,539)
         Proceeds from short-term borrowings                               1,188               358
         Repayments of short-term borrowings                              (2,075)           (1,997)
         Net  proceeds from (payments on) line of credit                 153,752            49,778
         Other                                                               (77)               86
                                                                       ---------         ---------

     Net cash provided by financing activities                             3,787            38,691
                                                                       ---------         ---------
     Effect of foreign currency exchange rate changes on cash               (147)             (303)
                                                                       ---------         ---------
     (Decrease) increase in cash and cash equivalents                     (7,456)          (19,737)
     Cash and cash equivalents, beginning of period                       44,362            58,993
                                                                       ---------         ---------
     Cash and cash equivalents, end of period                          $  36,906         $  39,256
                                                                       =========         =========
</TABLE> 

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


                                       -5-
<PAGE>
 
                            CORPORATE EXPRESS, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   Basis of Presentation and Significant Accounting Policies

     The consolidated financial statements include the accounts of Corporate
Express, Inc. ("Corporate Express" or the "Company") and its majority-owned
subsidiaries. Acquisitions accounted for as purchases are included in the
accounts and operations as of the effective date of the acquisition and
immaterial acquisitions accounted for as poolings of interests are included in
the accounts and operations as of the beginning of the fiscal quarter in which
the acquisition is effective. The Company accounts for its investments in less
than 50% owned entities using the equity or cost methods. All intercompany
balances and transactions have been eliminated.

     These financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, such interim statements reflect all adjustments (consisting of
normal recurring accruals) necessary to present fairly the financial position
and the results of operations and cash flows for the interim periods presented.
The results of operations for these interim periods are not necessarily
indicative of the results to be expected for the full year. These financial
statements should be read in conjunction with the audited consolidated financial
statements and footnotes included in the Company's Annual Report on Form 10-K
for the eleven months ended January 31, 1998.

     In January 1998 the Company changed its fiscal year end from the end of
February to January 31, 1998. The consolidated financial statements for the
previously reported prior year first quarter have been restated to conform to
the new fiscal year and accordingly reflect the three-month period ended May 3,
1997. Certain reclassifications have been made to the consolidated financial
statements for the three-month period ended May 3, 1997 to conform to the
three-month period ended May 2, 1998 presentation. These reclassifications had
no impact on net income.

     The Company capitalizes certain salaries and wages and payments to outside
firms for direct services related to the development and implementation of its
software. All software is amortized over its economic useful life of three to
seven years using the straight-line method.

     New Accounting Standards:

     In the first quarter of fiscal 1998, the Company adopted Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income."
Comprehensive income, consisting of net income, the change in the foreign
currency translation adjustment and an unrealized holding gain or loss on
marketable securities, totaled $18,676,000 for the three months ended May 2,
1998 and $8,004,000 for the three months ended May 3, 1997.

     The Company is required to adopt SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information," in the fourth quarter of fiscal 1998.
SFAS No. 131 will supercede the business segment disclosure requirements
currently in effect under SFAS No. 14. SFAS No. 131, among other things,
establishes standards regarding the information a company is required to
disclose about its operating segments and provides guidance regarding what
constitutes a reportable operating segment. The Company is currently evaluating
disclosures under SFAS No. 131 compared to current disclosures.

     The Company is required to adopt the disclosure requirements of SFAS No.
132, "Employer's Disclosures about Pensions and Other Postretirement Benefits,"
in the fourth quarter of fiscal 1998. SFAS No. 132 revises disclosure
requirements for such pension and postretirement benefit plans to, among other
things, standardize certain disclosures and eliminate certain other disclosures
no longer deemed useful. SFAS No. 132 does not change the measurement or
recognition criteria for such plans.

     On March 4, 1998, the Accounting Standards Executive Committee (AcSEC)
issued Statement of Position (SOP) 98-1 providing guidance on accounting for the
costs of computer software developed or obtained for internal use. The effective
date of this pronouncement is for fiscal years beginning after December 15,
1998. 


                                      -6-
<PAGE>
 
                            CORPORATE EXPRESS, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company is in the process of reviewing its current policies for accounting
for costs associated with internal software development projects and how they
may be affected by SOP 98-1. The Company believes its current policies are
materially consistent with the SOP; however, the ultimate impact on the
Company's future results of operations has not yet been determined.

2.   Accrued Purchase Costs

     In conjunction with acquisitions accounted for as purchases, the Company
accrues certain of the direct external costs associated with closing redundant
facilities of acquired companies, and severance and relocation payments for the
acquired companies' employees. All consolidation projects are planned to be
completed within two years of the acquisition date. Remaining balances primarily
represent international and the recent Data Documents Incorporated ("DDI")
consolidation plans.

     The following table sets forth activity in the Company's accrued purchase
costs liability account for the three months ended May 2, 1998:

<TABLE> 
<CAPTION> 

                                                                                                      Disposition
                                                 Facility          Redundant                           of Assets
                                  Total         Exit Costs         Facilities         Severance         & Other
                                  -----        -----------        ------------        ---------       -----------
                                                                 (In thousands)
<S>                               <C>          <C>                <C>                 <C>             <C>  
Balance, January 31, 1998         $9,378         $  464            $3,128              $4,400           $1,386
Additions                            712             --               152                 544               16
Payments                          (1,003)          (128)             (301)               (382)            (192)
                                  ------         ------            ------              ------           ------
Balance, May 2, 1998              $9,087         $  336            $2,979              $4,562           $1,210
                                  ======         ======            ======              ======           ======
</TABLE> 

3.   Merger and Other Nonrecurring Charges

     The Company accrues, among other things, costs to complete pooling of
interests transactions, costs of merging and closing redundant facilities, and
costs associated with personnel reductions and centralizing certain
administrative functions.

     The following table sets forth activity in the Company's accrued merger and
other non-recurring charges liability account for the three months ended May 2,
1998:

<TABLE> 
<CAPTION> 

                                                  Balance       Cash         Non-        Balance
                                                  1/31/98     Payments     Cash Usage     5/2/98
                                                  -------     --------     ----------     ------
                                                                 (In thousands)
<S>                                              <C>          <C>          <C>           <C> 
Merger transaction costs (1)                     $   611      $   (299)                  $   312
Employee severance and                           
   termination costs (2)                           9,696        (1,690)                    8,006
Facility closure and consolidation costs (3)       5,205          (677)                    4,528
                                                 -------       --------                  -------        
Accrued merger and related costs, balance         15,512        (2,666)                   12,846
Other asset write-downs and costs (4)              2,759           ---        $(203)       2,556
                                                 -------       --------        -----     -------
     Total                                       $18,271       $(2,666)       $(203)     $15,402
                                                 =======       ========        =====     =======
</TABLE> 

(1)  Merger transaction costs are the direct costs from the pooling of interests
     transactions and those direct costs incurred by DDI, and include legal,
     accounting, investment banking, printing, contract buy-outs and other
     related costs.


                                      -7-
<PAGE>
 
                            CORPORATE EXPRESS, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(2)  Employee severance and termination costs are related to the elimination of
     duplicate management positions, facility closures and consolidations, and
     centralization of certain shared services. Of the 1,716 employees planned
     to be terminated, 782 have been terminated as of May 2, 1998. The Company
     expects to complete the facility closures and related terminations for the
     fiscal 1995 charge, which balance totals $1,589,000 and the fiscal 1996
     charge, which balance totals $1,009,000, by the end of fiscal 1998. The
     centralization of certain shared services began in the second quarter of
     fiscal 1997 and will continue through fiscal 1998. The Company expects to
     complete the facility closures and related terminations for the fiscal year
     1997 charge, which balance totals $5,408,000, by the end of fiscal 1998.

(3)  Facility closure and consolidation costs are the estimated costs to close
     redundant facilities, lease costs and other costs associated with closed
     facilities. Of the 215 facilities planned to be closed or consolidated, 144
     have been closed or consolidated as of May 2, 1998. The remaining
     facilities included in the fiscal 1995 and 1996 charges, and the facilities
     identified in the fiscal 1997 charge are expected to be closed by the end
     of fiscal 1998.

(4)  Other asset write-downs and costs are recorded as contra assets, and
     include the expected loss on sale of assets and leasehold improvements and
     equipment being abandoned or written off as a result of the exit plans. The
     remaining balance primarily represents assets that will be disposed of in
     conjunction with facility closures, which are expected to be completed by
     the end of fiscal 1998.


4.   Pro Forma Acquisition Results

     Effective November 26, 1997 the Company issued approximately 10,740,000
shares of common stock in exchange for all of the outstanding stock of DDI, a
provider of forms management services and systems, custom business forms and
pressure-sensitive labels.

     The operating results of DDI are included in the Company's consolidated
statement of operations from the effective date of the acquisition. The
following pro forma financial information assumes the DDI acquisition occurred
at the beginning of the three-month period ended May 3, 1997 and primarily
reflects goodwill amortization, debt retirement and the issuance of shares.
These results have been prepared for comparative purposes only and do not
purport to be indicative of what would have occurred had the transaction
occurred at the beginning of the period, or of results which may occur in the
future.

                                                  Three Months Ended
                                                     May 3, 1997
                                                     -----------
                                        (In thousands, except per share amounts)
                                                     (Unaudited)

         Net sales                                     $985,304
         Net income                                      14,388
         Net income per share - Basic                      0.11
         Net income per share - Diluted                    0.10


5.   Repurchase of Common Stock

     On February 5, 1998 the Company commenced a Dutch Auction issuer tender
offer to purchase for cash up to 35,000,000 shares of its issued and outstanding
common stock, par value $.0002 per share. The terms of the tender offer invited
the Company's shareholders to tender up to 35,000,000 shares of the Company's
common stock to the Company at prices not greater than $11.50 nor less than
$10.00 per share, as specified by the tendering shareholders. On April 10, 1998
the Company closed the tender offer and purchased 35,000,000 shares tendered at
a price of $10.75 per share. Shares tendered at prices in excess of the purchase
price and shares not purchased because of proration were returned to
shareholders. The 35,000,000 treasury shares resulting from this transaction
are reflected an the balance sheet at cost plus applicable fees and expenses of
approximately $3,000,000.


                                      -8-
<PAGE>
 
                            CORPORATE EXPRESS, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


6.   Debt

     On April 22, 1998 the Company executed a new $1 billion Senior Secured
Credit Facility ("Senior Secured Credit Facility") consisting of a $250,000,000,
seven-year term loan and a $750,000,000 five-year revolving credit facility and
terminated the existing $500,000,000 Credit Facility ("Senior Credit Facility").
The Company has utilized borrowings under the new credit facility to fund the
purchase of 35,000,000 shares of its common stock pursuant to its Dutch Auction
tender offer, to repay and terminate the previously existing Senior Credit
Facility and for general corporate and working capital requirements. The Senior
Secured Credit Facility is guaranteed by substantially all domestic subsidiaries
of the Company and is collateralized by all tangible and intangible property of
the guarantors including inventory and receivables. At the borrower's option
interest rates are at a base rate or a Eurodollar rate plus an applicable margin
determined by a leverage ratio as defined in the loan agreements. The term
loan's interest rate ranges from 0.25% to 0.75% above the revolving loan. The
Company is subject to usual convenants customary for this type of facility
including restrictions on dividends, additional borrowings and certain financial
covenants. Approximately $1,810,000 of deferred financing costs related to the
terminated Senior Credit Facility were expensed in the first quarter of fiscal
1998 and are reflected as an extraordinary item of $1,104,000, net of tax of
$706,000.

7.   Contingencies

     In the normal course of business, the Company is subject to certain legal
proceedings. In the opinion of management, the outcome of such litigation will
not have a material adverse effect on the Company's financial position or
operating results. The Company has a dispute with a former shareholder of a
company acquired by the Company in fiscal 1996. No legal proceedings have been
commenced by the shareholder, and the Company cannot determine if any legal
action will be initiated, or the results or materiality of any such action.

8.   Earnings Per Share

     Basic and diluted earnings per share are calculated as follows:

                                               Three Months      Three Months
                                                  Ended             Ended
                                               May 2, 1998       May 3, 1997
                                               -----------       -----------
                                           (In thousands, except per share data)
     Numerator for basic and diluted EPS:
         Income before extraordinary item           $15,812          $12,408
         Extraordinary item                          (1,104)             ---
                                                    -------          -------
         Net income                                 $14,708          $12,408
                                                    =======          =======

     Basic EPS Calculation:
     Denominator:
         Average common shares outstanding          134,410 (1)      126,067
                                                    =======          =======

     Earnings per common share:
         Income before extraordinary item           $  0.12          $  0.10
         Extraordinary item                           (0.01)             ---
                                                    -------          -------
         Net income                                 $  0.11          $  0.10
                                                    =======          =======



                                      -9-
<PAGE>
 
                            CORPORATE EXPRESS, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     Diluted EPS Calculation:
     Denominator (2):
         Basic shares                               134,410          126,067
         Dilutive stock options and warrants          2,319            5,201
                                                    -------          -------
         Diluted shares                             136,729          131,268
                                                    =======          =======

     Earnings per common share:
         Income before extraordinary item           $  0.12          $  0.09
         Extraordinary item                           (0.01)             ---
                                                    -------          -------
         Net income                                 $  0.11          $  0.09
                                                    =======          =======

(1)  Reflects the shares repurchased only from the April 10, 1998 purchase date.

(2)  Antidilutive stock options omitted from the denominator were immaterial.
     Also excluded from the calculation are the Convertible Notes with an
     exercise price of $33.33 per share which is greater than the average market
     price of the common shares.

9.   Subsequent Events

     On May 29, 1998 the Company issued at par $350,000,000 principal amount of
unsecured 9 5/8% Senior Subordinated Notes due 2008. The notes are guaranteed by
all material domestic subsidiaries of the Company and are subordinated in right
of payment to all senior debt including the Senior Secured Credit Facility. On
or after June 1, 2003 through maturity the notes may be redeemed at the option
of the Company, in whole or in part, at redemption rates ranging from 104.813%
to 100%. At any time on or before June 1, 2001 the Company may redeem up to 35%
of the notes with the net cash proceeds of one or more public equity offerings
at a redemption price equal to 109.625% of the principal amount thereof, subject
to certain restrictions. Semi-annual interest payments are due on June 1 and
December 1 commencing on December 1, 1998. A portion of the proceeds from the
sale of these notes was used to repay prior to maturity substantially all of the
$90,000,000 9 1/8% Senior Subordinated Notes Series B due 2004 and to repay a
portion of the Senior Secured Credit Facility. As a result of this repayment,
the Company will record an extraordinary loss of approximately $5,000,000, net
of tax, in the second quarter of fiscal 1998.

     During the fourth quarter of fiscal 1997, the Company entered into an
interest rate hedging contract based on $300,000,000 of U.S. Treasury notes to
manage the Company's exposure related to an anticipated debt offering which the
Company has completed. The cost of the settlement of the contract will be
amortized over the ten-year term of the Senior Secured Credit Facility as an
adjustment to the effective interest rate of the debt agreement.


                                     -10-
<PAGE>
 
Item 2  --  Management's Discussion and Analysis of Financial Condition and
Results of Operations

Results of Operations

         Net Sales. Consolidated net sales increased 20.3% to $1,108,061,000 in
the three months ended May 2, 1998 from $921,455,000 in the three months ended
May 3, 1997. Net sales for the Company's product distribution segment increased
30.4% to $913,658,000 in the three months ended May 2, 1998 from $700,619,000 in
the three months ended May 3, 1997, while net sales in the services segment
decreased 12.0% to $194,403,000 in the three months ended May 2, 1998 from
$220,836,000 in the three months ended May 3, 1997. The overall increases were
primarily attributable to strong internal growth reflecting increased market
penetration in the Company's product distribution segment and to the
acquisition of DDI completed on November 26, 1997. The decline in the services
segment reflects the disposition of certain non-strategic businesses, the effect
of consolidating or closing facilities, and the elimination of low margin
customers.

         International operations accounted for 20.0% of consolidated net sales,
or $221,927,000, in the three months ended May 2, 1998 and 19.0% of consolidated
net sales, or $174,690,000, in the three months ended May 3, 1997. This growth
is primarily attributable to expansion in Germany, Italy, Ireland, and
Switzerland and strong internal growth in Canada and France.

         Gross Profit. Cost of sales includes merchandise, occupancy and
delivery costs. Consolidated gross profit as a percentage of net sales was 23.3%
for the three months ended May 2, 1998 and 23.6% for the three months ended May
3, 1997. The slight decrease in the gross profit percentage is primarily
attributable to the services segment, which experienced reduced gross profit
margins as a result of consolidation costs, increases in driver and vehicle
related costs, and reductions in pricing, partially offset by better product
distribution margins. Also affecting gross profit were lower international gross
margins and increased computer software license agreement sales which typically
have lower gross margins, all of which were partially offset by increased vendor
rebates as a result of improved programs.

         Warehouse Operating and Selling Expenses. Warehouse operating and
selling expenses primarily include labor and administrative costs associated
with operating regional warehouses and sales offices, selling expenses including
commissions related to the Company's direct sales force, and warehouse
consolidation and relocation costs and expenses. Consolidated warehouse
operating and selling expenses as a percentage of net sales decreased to 16.5%
for the three months ended May 2, 1998 from 17.4% for the three months ended May
3, 1997. The improvement in operating expenses as a percentage of net sales
primarily reflects the Company's efforts to leverage and streamline its
operations, including the elimination of redundant facilities and positions.

         Corporate General and Administrative Expenses. Corporate general and
administrative expenses include the central expense incurred to provide
corporate oversight and support for regional operations, goodwill amortization
and certain depreciation. Consolidated corporate general and administrative
expenses decreased to 3.0% of net sales in the three months ended May 2, 1998
from 3.2% in the three months ended May 3, 1997. This decrease reflects the
Company's efforts to leverage these expenses over expanded operations, partially
offset by increased amortization of goodwill. Consolidated corporate general and
administrative expenses increased to $33,102,000 in the three months ended May
2, 1998 from $29,098,000 in the three months ended May 3, 1997, reflecting the
Company's expanded operations.

         Operating Profit. Consolidated operating profit was $41,843,000, or
3.8% of net sales, for the three months ended May 2, 1998 compared to
consolidated operating profit of $27,950,000, or 3.0% of net sales, for the
three months ended May 3, 1997. Operating profit for the product distribution
segment increased as a percentage of net sales to $39,898,000, or 4.4% of
product distribution net sales, in the three months ended May 2, 1998, from
$21,779,000, or 3.1% of product distribution net sales, in the three months
ended May 3, 1997. The increase in operating profit as a percentage of net sales
for the product distribution segment primarily reflects successful consolidation
of operations which decreased expenses and improved focus on vendor support.
Operating profit for the services segment decreased to $1,945,000, or 1.0% of
services net sales, in the three months ended May 2, 1998 from $6,171,000, or
2.8% of services net sales, in the three months ended May 3,


                                     -11-
<PAGE>
 
1997. The decrease in operating profit as a percentage of net sales for the
services segment reflects lower than expected performance at several delivery
locations and expenses related to integration projects, partially offset by cost
savings from the elimination of redundant personnel.

         Operating profit for international operations increased to 2.6% of
international net sales in the three months ended May 2, 1998 from 0.9% in the
three months ended May 3, 1997 primarily reflecting improved performance in
Australia and Canada.

         Interest Expense. Net interest expense of $12,791,000 in the three
months ended May 2, 1998 increased from $8,953,000 in the three months ended May
3, 1997 primarily due to increased borrowings under the Senior Credit Facility
including the borrowings to finance the repurchase of 35,000,000 shares of the
Company's common stock. See "Liquidity and Capital Resources."

         Minority Interest. Minority interest expense of $196,000 in the three
months ended May 2, 1998 compares to minority interest income of $911,000 in the
three months ended May 3, 1997. The minority interest expense for the three
months ended May 2, 1998 reflects a 47.6% minority interest in Corporate Express
Australia.

         Extraordinary Item. The extraordinary loss of $1,104,000, net of tax of
$706,000, reflects the write-off of deferred financing costs related to the
terminated Senior Credit Facility.

         Net Income. Net income of $14,708,000 in the three months ended May 2,
1998 increased 18.5% from net income of $12,408,000 for the three months ended
May 3, 1997. This increase reflects increased profits from the Company's mature
product distribution operations and corporate expense leverage offset in part by
higher goodwill amortization, decreased services profits, a higher effective tax
rate and loss on extinguishment of debt. The increase in the effective tax rate
primarily reflects increased amortization of non-deductible goodwill and the
absence of operating loss carryforwards.

         Other. Goodwill at May 2, 1998 of $860,357,000 increased from
$847,544,000 at January 31, 1998 reflecting net additions from acquisitions
offset by current year amortization.

         The inventory balance at May 2, 1998 of $275,453,000 increased
$24,345,000 from $251,108,000 at January 31, 1998 as a result of inventory
growth to support increased sales and acquired inventories.

         Accrued purchase costs at May 2, 1998 of $9,087,000 decreased by
$291,000 from the January 31, 1998 balance of $9,378,000, reflecting acquisition
additions of $712,000 and usage of $1,003,000.

         The accrued merger and related costs balance at May 2, 1998 of
$12,846,000 decreased by $2,666,000 from the January 31, 1998 balance of
$15,512,000, reflecting current period usage.

Liquidity and Capital Resources

     Historically, the Company has financed its operations through internally
generated funds and borrowings from commercial banks and has financed its
acquisitions through the use of such funds and the issuance of equity and debt
securities.

     On February 5, 1998 the Company commenced a Dutch Auction issuer tender
offer to purchase for cash up to 35,000,000 shares of its issued and outstanding
common stock, par value $.0002 per share. The terms of the tender offer invited
the Company's shareholders to tender up to 35,000,000 shares of the Company's
common stock to the Company at prices not greater than $11.50 nor less than
$10.00 per share, as specified by the tendering shareholders. On April 10, 1998,
the Company closed the tender offer and purchased 35,000,000 shares tendered at
a price of $10.75 per share. Shares tendered at prices in excess of the purchase
price and shares not purchased because of proration were returned to
shareholders. The Company funded the purchase of such shares and the payment of
related fees and expenses through its new $1.0 billion Senior Secured

                                     -12-
<PAGE>
 
Credit Facility. This Senior Secured Credit Facility consists of a $250,000,000,
seven-year term loan and a $750,000,000 five-year revolving credit facility. The
Senior Secured Credit Facility is guaranteed by substantially all domestic
subsidiaries of the Company and is collateralized by all tangible and intangible
property of the guarantors including inventory and receivables. At the
borrower's option interest rates are at a base rate or a Eurodollar rate plus an
applicable margin determined by a leverage ratio as defined in the loan
agreements. The term loan's interest rate ranges from 0.25% to 0.75% above the
revolving loan interest rate. The Company is subject to usual covenants
customary for this type of facility including financial covenants. The available
funds may be used for general corporate purposes including permitted
acquisitions and permitted share repurchases. As of June 8, 1998, the Company
had $420,106,000 outstanding under the Senior Secured Credit Facility and an
unused borrowing capacity of $579,894,000.

     The Company Board of Directors has recently authorized the repurchase of
shares of common stock from time to time in open market transactions, block
purchases, privately negotiated transactions and otherwise, at prevailing
prices. Financing for such purchases is available through the Senior Secured
Credit Facility, as well as from cash flow from operations.

     On April 22, 1998 the Company's previous Senior Credit Facility was
replaced and paid in full with proceeds from the new Senior Secured Credit
Facility. Approximately $1,810,000 of deferred financing costs related to the
previous Senior Credit Facility were expensed in the first quarter of fiscal
1998 and are shown as an extraordinary item of $1,104,000, net of tax of
$706,000.

     On May 29, 1998 the Company issued $350,000,000 principal amount of
unsecured 9 5/8% Senior Subordinated Notes due 2008. The notes are guaranteed by
all material domestic subsidiaries of the Company and are subordinated in right
of payment to all senior debt. On or after June 1, 2003 through maturity the
notes may be redeemed at the option of the Company, in whole or in part, at
redemption rates ranging from 104.813% to 100%. At any time on or before June 1,
2001 the Company may redeem up to 35% of the notes with the net cash proceeds of
one or more public equity offerings at a redemption price equal to 109.625% of
the principal amount thereof, subject to certain restrictions. Semi-annual
interest payments are due on June 1 and December 1 commencing on December 1,
1998. A portion of the proceeds from the sale of these notes was used to repay
the $90,000,000 9 1/8% Senior Subordinated Notes Series B due 2004 and to repay
a portion of the Senior Secured Credit Facility. The Company settled an interest
rate hedging contract based on $300,000,000 of U.S. Treasury notes related to
the completed debt offering. The cost of the settlement of the contract will be
amortized over the ten-year term of the Senior Secured Credit Facility as an
adjustment to the effective interest rate of the debt agreement.

     The Company does not enter into financial instrument contracts for trading
or speculative purposes. The counterparties to all contracts are major financial
institutions and the Company does not have significant exposure to any one
counterparty. The Company has no financial instrument contracts currently
outstanding.

     During the three months ended May 2, 1998, the Company had capital
expenditures of $21,501,000 for computer systems and software, warehouse
reconfigurations, telecommunications equipment, delivery vehicles, leasehold
improvements and investments in facilities. The Company continues to invest in
advanced facilities, the development of its proprietary computer software, and
the upgrade of its computer systems.

     Significant uses of cash in the three months ended May 2, 1998 were as
follows: repurchase of common stock of $379,250,000, capital expenditures of
$21,501,000, cash paid for acquisitions of $21,047,000, debt issuance costs of
$15,150,000 and other uses of $430,000, partially offset by net proceeds from
debt of $244,356,000, cash provided by net borrowings on lines of credit of
$153,752,000 and operating activities of $31,814,000.

     The Company expects net capital expenditures for fiscal 1998 of
approximately $80,000,000 comprised of approximately $59,000,000 to be used for
upgrading and enhancing its information systems and telecommunications equipment
and approximately $21,000,000 for warehouse reconfiguration and equipment.
Actual capital expenditures for fiscal 1998 may be greater or less than budgeted
amounts.


                                     -13-
<PAGE>
 
     The Company believes that the borrowing capacity under the Senior Secured
Credit Facility, together with proceeds from future debt and equity financings,
in addition to the Company's cash on hand, capital resources and cash flows from
operations, will be sufficient to fund the Company's ongoing operations,
anticipated capital expenditures and acquisition activity for the next twelve
months. However, actual capital needs may change, particularly in connection
with acquisitions which the Company may complete in the future.

Inflation

     Certain of the Company's product offerings, particularly paper products,
have been and are expected to continue to be subject to significant price
fluctuations due to inflationary and other market conditions. The Company
generally is able to pass such increased costs on to its customers through price
increases, although it may not be able to adjust its prices immediately.
Significant increases in paper, fuel and other costs in the future could
materially affect the Company's profitability if these costs cannot be passed on
to customers. In general, the Company does not believe that inflation has had a
material effect on its results of operations in recent years. However, there can
be no assurance that the Company's business will not be affected by inflation in
the future.


                                     -14-
<PAGE>
 
Item 3  --  Quantitative and Qualitative Disclosure About Market Risk

         Pursuant to Regulation S-K registrants are required to disclose certain
information about market risk. The Company is primarily exposed to currency
exchange-rate risk with respect to its transactions and net assets denominated
in Canadian and Australian Dollars, U.K. Pound Sterling, French Francs, German
Marks, Irish Pounds, Swiss Francs and Italian Lira. Business activities in
various currencies expose the Company to the risk that the eventual net dollar
cash inflows resulting from transactions with foreign customers and suppliers
denominated in foreign currencies may be adversely affected by changes in
currency exchange rates. Based on debt balances at May 2, 1998, a hypothetical
10% change in the Company's weighted average interest rate on its variable rate
debt would have an immaterial effect on the Company's fiscal 1998 pretax
earnings and on the fair value of the Company's fixed-rate financial
instruments.


                                     -15-
<PAGE>
 
PART II -- OTHER INFORMATION


Item 1.  Legal Proceedings

         Not applicable.

Item 2.  Changes in Securities

On May 18, 1998, CEX Holdings, Inc. ("CEX"), a wholly-owned subsidiary of the
Company, entered into a Second Supplemental Indenture with respect to its 9 1/8%
Senior Subordinated Notes Series B due 2004 ("Notes"), which supplemental
indenture amended the Indenture governing the Notes (the "Indenture") to
eliminate certain covenants in the Indenture that restricted the activities of
CEX for the benefit of the holders of the Notes. The amendments to the Indenture
were consented to by a majority of the holders of the outstanding Notes pursuant
to a consent solicitation that was commenced by CEX on April 29, 1998 and which
terminated on May 13, 1998. The Consent Solicitation was conducted in
conjunction with a tender offer for all of the outstanding Notes. Approximately
98% of the outstanding Notes consented to the aforementioned amendments to the
Indenture, which amendments were effective upon the acceptance for payment of
all Notes tendered pursuant to the tender offer on May 28, 1998.

Item 3.  Defaults Upon Senior Securities

         Not applicable.

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

         See Item 2 above.

Item 5.  Other Information

         Not applicable.

Item 6.  Exhibits and Reports on Form 8-K

         (a)   Exhibits

               4.1 Second Supplemental Indenture dated as of May 18, 1998 by and
among CEX Holdings, Inc., the Guarantors named therein and U.S. Bank Trust
National Association relating to the 9 1/8% Senior Subordinated Notes Series B
due 2004.

               27.1 Financial Data Schedule

         (b)   Reports on Form 8-K

               Form 8-K filed on January 21, 1998 - Change in year end.



                                     -16- 
<PAGE>
 
                                   SIGNATURE





   Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                             CORPORATE EXPRESS, INC.



                             By:    /s/ Sam R. Leno
                                  ---------------------------
                                  Sam R. Leno
                                  Executive Vice President and  Chief Financial
                                  Officer
Date:  June 15, 1998              (Principal Financial Officer and  Duly 
                                  Authorized Officer)


                                     -17-