<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 August 1, 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 September 8, 1998 was 105,387,191.
<PAGE>
PART I - FINANCIAL INFORMATION

Item 1 - FINANCIAL STATEMENTS

                                   CORPORATE EXPRESS, INC.

                                 CONSOLIDATED BALANCE SHEETS
                      (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
ASSETS
<TABLE> 
<CAPTION> 

                                                               August 1,         January 31,
                                                                  1998               1998
                                                             ---------------    ---------------
                                                              (Unaudited)
<S>                                                             <C>                <C> 
Current assets:
  Cash and cash equivalents                                     $    30,327        $    44,362
  Trade accounts receivable, net of allowance
    of $14,687 and $14,523, respectively                            653,190            616,574
  Notes and other receivables                                        91,286             86,687
  Inventories                                                       269,535            251,108
  Deferred income taxes                                              34,922             40,729
  Other current assets                                               46,607             41,713
                                                                -----------        -----------
          Total current assets                                    1,125,867          1,081,173

Property and equipment:
  Land                                                               17,424             17,540
  Buildings and leasehold improvements                              133,872            126,006
  Furniture and equipment                                           370,756            339,577
                                                                -----------        -----------
                                                                    522,052            483,123
  Less accumulated depreciation                                    (150,266)          (131,756)
                                                                -----------        -----------
                                                                    371,786            351,367

Goodwill, net of $70,130 and $57,558 of accumulated
  amortization, respectively                                        856,680            847,544
Other assets, net                                                   100,609             69,575 
                                                                -----------        -----------
          Total assets                                          $ 2,454,942        $ 2,349,659 
                                                                ===========        ===========


</TABLE> 
                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> 
                                                                  August 1,            January 31,
                                                                    1998                  1998
                                                                -------------        --------------
                                                                 (Unaudited)
<S>                                                               <C>                   <C> 
 
Current liabilities:
  Accounts payable - trade                                        $   360,745           $   354,915
  Accounts payable - acquisitions                                         985                 6,106
  Accrued payroll and benefits                                         58,504                61,308
  Accrued purchase costs                                                8,968                 9,378
  Accrued merger and related costs                                     10,323                15,512
  Other accrued liabilities                                            88,170                80,214
  Current portion of long-term debt and capital leases                 64,433                36,264 
                                                                -------------        --------------
     Total current liabilities                                        592,128               563,697

Capital lease obligations                                               7,556                 9,414
Long-term debt                                                      1,183,289               753,829
Deferred income taxes                                                  61,175                52,515
Minority interest in subsidiaries                                      19,147                20,791
Other non-current liabilities                                          16,591                16,980 
                                                                -------------        --------------
     Total liabilities                                              1,879,886             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, 143,172,963 and 142,392,845 shares
    issued and outstanding, respectively                                   29                    28
  Common stock, non-voting, $.0002 par value, 3,000,000
    shares authorized, none issued or outstanding                           -                     -
  Additional paid-in capital                                          858,498               852,507
  Retained earnings                                                   114,392                91,887
  Accumulated other comprehensive expense                             (13,883)              (11,989)
                                                                -------------        -------------- 
                                                                      959,036               932,433

Less:
  Treasury stock, at cost, 35,430,000 shares at August 1, 1998       (383,980)                   - 
                                                                -------------        --------------
     Total shareholders' equity                                       575,056               932,433

          Total liabilities and shareholders' equity              $ 2,454,942           $ 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)
                                  (Unaudited)

<TABLE> 
<CAPTION> 

                                                             Three Months Ended                  Six Months Ended
                                                       ------------------------------       ------------------------------ 
                                                       August 1,         August 2,          August 1,          August 2,
                                                         1998               1997              1998               1997
                                                       -----------          ---------       -----------        -----------
<S>                                                    <C>                  <C>             <C>                <C> 
Net sales                                              $ 1,118,162          $ 925,084       $ 2,226,222        $ 1,846,538
Cost of sales                                              858,683            708,560         1,708,973          1,412,210
                                                       -----------          ---------       -----------        -----------
   Gross profit                                            259,479            216,524           517,249            434,328
Warehouse operating and selling expenses                   180,262            160,426           363,087            321,183
Corporate general and administrative expenses               33,771             26,618            66,873             55,712
                                                       -----------          ---------       -----------        -----------  
   Operating profit                                         45,446             29,480            87,289             57,433
Interest expense and other, net                             21,787              9,530            34,578             18,483
                                                       -----------          ---------       -----------        -----------
   Income before income taxes                               23,659             19,950            52,711             38,950
Income tax expense                                          10,623              8,298            23,667             15,798
                                                       -----------          ---------       -----------        -----------
   Income before minority interest                          13,036             11,652            29,044             23,152
Minority interest expense (income)                             761               (612)              957             (1,522)
                                                       -----------          ---------       -----------        ----------- 
   Income before extraordinary item                         12,275             12,264            28,087             24,674

Extraordinary item, net of tax:
  Loss on early extinguishment of debt                       4,477                  -             5,581                  -
                                                       -----------          ---------       -----------        -----------
   Net income                                          $     7,798          $  12,264       $    22,506        $    24,674
                                                       ===========          =========       ===========        ===========

Net income per share - Basic:
     Net income before extraordinary item              $      0.11          $    0.10       $      0.23        $      0.19
     Extraordinary item                                      (0.04)                 -             (0.04)                 -
                                                       -----------          ---------       -----------        -----------
     Net income                                        $      0.07          $    0.10       $      0.19        $      0.19
                                                       ===========          =========       ===========        ===========
Net income per share - Diluted:
     Net income before extraordinary item              $      0.11          $    0.09       $      0.22        $      0.19
     Extraordinary item                                      (0.04)                 -             (0.04)                 -
                                                       -----------          ---------       -----------        -----------
     Net income                                        $      0.07          $    0.09       $      0.18        $      0.19
                                                       ===========          =========       ===========        ===========


Weighted average common shares outstanding:
    Basic                                                  107,869            128,389           121,142            127,268
    Diluted                                                112,863            134,700           125,156            133,015


</TABLE> 
                THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
                    THE CONSOLIDATED FINANCIAL STATEMENTS.

                                      -4-
<PAGE>

                             CORPORATE EXPRESS, INC.

                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                      (In thousands, except share amounts)
                                   (Unaudited)

<TABLE> 
<CAPTION> 
                                                                                    Accumulated
                                            Common Stock          Additional           Other                         Treasury
                                      ------------------------      Paid-In        Comprehensive       Retained        Stock
                                         Shares       Amount        Capital       Income (Expense)     Earnings       Amount
                                         ------       ------        -------       ----------------     --------       ------
<S>                                  <C>              <C>         <C>             <C>                  <C>           <C>  
Balance, January 31, 1998             142,392,845      $ 28        $ 852,507      $      (11,989)      $ 91,887
Issuance of common stock                  780,118         1            5,706
Repurchase of 35,430,000 shares
  common stock                                                                                                       (383,980)
Tax benefit on non-qualified
   stock options exercised                                               285
Net income                                                                                               22,505
Other comprehensive income                                                                (1,894)
                                     -----------------------      -----------    -----------------    ----------  -------------
Balance, August 1, 1998               143,172,963      $ 29        $ 858,498      $      (13,883)      $114,392    $ (383,980)
                                     =======================      ===========    =================    ==========  =============
</TABLE> 

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

                                      -5-
<PAGE>
 
                            CORPORATE EXPRESS, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (In thousands)
                                  (Unaudited)

<TABLE> 
<CAPTION> 

                                                                            Six Months Ended
                                                                      -----------------------------
                                                                      August 1,          August 2,
                                                                         1998               1997
                                                                      -----------       -----------
<S>                                                                   <C>               <C>            
Cash flows from operating activities:
      Net income                                                      $  22,506          $  24,674
      Adjustments to reconcile net income to net cash
            provided by (used in) operating activities:
        Depreciation                                                     25,860             19,734
        Amortization                                                     13,751             10,973
        Loss on early extinguishment of debt                              5,581                  -
        Minority interest (income) expense                                  957             (1,522)
        Other                                                             2,632              2,098
    Changes in assets and liabilities, excluding acquisitions:
        (Increase) decrease in accounts receivable                      (13,190)            10,768
        (Increase) decrease in inventory                                (11,798)            (9,778)
        (Increase) decrease in other current assets                      (7,905)             3,250
        (Increase) decrease in other assets                              (1,880)              (541)
        Increase (decrease) in accounts payable                         (17,704)           (10,307)
        Increase (decrease) in accrued liabilities                        8,642            (26,147)  
                                                                      ---------          ---------
    Net cash provided by operating activities                            27,452             23,202
                                                                      ---------          --------- 
    Cash flows from investing activities:
        Proceeds from sale of assets                                      1,146              1,837
        Capital expenditures                                            (46,878)           (53,609)
        Payment for acquisitions, net of cash acquired                  (25,664)           (20,484)
        Investment in marketable securities                                (270)            (3,870) 
        Other, net                                                         (606)               (43)  
                                                                      ---------          ---------
        Net cash used in investing activities                           (72,272)           (76,169)
                                                                      ---------          ---------
    Cash flows from financing activities:
        Issuance of common stock                                          2,412             10,907
        Repurchase of common stock                                     (383,980)                 -
        Debt issuance costs                                             (32,188)              (273)
        Proceeds from long-term borrowings                              616,012             20,929
        Repayments of long-term borrowings                              (20,470)           (33,402)
        Proceeds from short-term borrowings                               5,392              4,011
        Repayments of short-term borrowings                              (1,218)            (6,749)
        Net  proceeds from (payments on) line of credit                 (61,497)            26,802
        Cash paid to retire bonds                                       (93,747)                 -
        Other                                                                (9)               163
                                                                      ---------          ---------
    Net cash provided by financing activities                            30,707             22,388
                                                                      ---------          ---------
    Effect of foreign currency exchange rate changes on cash                 78               (572)
                                                                      ---------          ---------
    (Decrease) increase in cash and cash equivalents                    (14,035)           (31,151)
    Cash and cash equivalents, beginning of period                       44,362             58,993
                                                                      ---------          ---------
    Cash and cash equivalents, end of period                          $  30,327          $  27,842
                                                                      =========          =========
</TABLE> 
                THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
                    THE CONSOLIDATED FINANCIAL STATEMENTS.

                                      -6-
<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 second quarter have been restated to conform to
the new fiscal year and, accordingly, reflect the three-month and six-month
periods ended August 2, 1997.  Certain reclassifications have been made to the
consolidated financial statements for the three-month and six-month periods
ended August 2, 1997 to conform to the three-month and six-month periods ended
August 1, 1998 presentation.  These reclassifications had no impact on net
income.

    The Company capitalizes certain internal and external software acquisition
and development costs that benefit future years. The amortization commencement
is dependent on when the software is placed in service (for purchased software)
or when the software is ready for its intended use (for internally developed
software). All software is amortized over its economic useful life, which is
three to seven years, using the straight-line method. Capitalized costs include,
primarily, payments to outside firms for purchased software and for direct
services related to the development of proprietary software (external costs),
salaries and wages of individuals dedicated to the development of software
(internal costs), and capitalized interest. The following table summarizes the
periodic changes to capitalized software costs:
<TABLE>
<CAPTION>
 
                             External  Internal  Interest   Gross    Amortization       Net
                             --------  --------  --------  --------  -------------   --------
                                                     (In thousands)
<S>                          <C>       <C>       <C>       <C>       <C>             <C>
 
Balance, January 31, 1998     $62,469   $27,143    $6,070  $ 95,682       $(10,330)  $ 85,352
Additions                       9,629     8,676     2,393    20,698         (4,886)    15,812
                              -------   -------    ------  --------       --------   --------
Balance, August 1, 1998       $72,098   $35,819    $8,463  $116,380       $(15,216)  $101,164
</TABLE>

    New Accounting Standards:

    In the first quarter of fiscal 1998, the Company adopted Statement of 
Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive 
Income:" Comprehensive income consists of net income, the change in the foreign
currency translation adjustment and an unrealized holding gain or loss on
marketable securities. Total comprehensive income for the three-month and six
month-periods ended August 1, 1998 and August 2, 1997 were as follows:

<TABLE> 
<CAPTION> 
                                                           Three Months Ended          Six Months Ended
                                                         ----------------------     ----------------------
                                                         August 1,    August 2,     August 1,    August 2,
                                                           1998         1997          1998         1997
                                                         ----------------------     ----------------------

<S>                                                      <C>           <C>          <C>           <C> 
Net income                                               $7,798        $12,264      $22,506       $24,674 
Other comprehensive income:
    Unrealized foreign currency translation loss         (5,944)        (4,252)      (3,202)       (6,192)
    Unrealized gain (loss) on securities                   (254)         2,973        2,144        (1,066)
    Income tax expense related to items of other   
      comprehensive income                                   99         (1,159)        (836)          416
                                                         ------         ------      -------       -------
Total comprehensive income (SFAS No. 130)                $1,699         $9,826      $20,612       $17,832
                                                         ======         ======      =======       =======
</TABLE> 

    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


                                      -7-
<PAGE>
 
                           Corporate Express, Inc.
                  Notes to Consolidated Financial Statements
 
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. 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 Data Documents Incorporated ("DDI")
consolidation plans.

    The following table sets forth activity in the Company's accrued purchase
costs liability account for the six months ended August 1, 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                           1,840          217          494       1,095        34
Payments/Utilization               (2,250)        (179)        (719)     (1,035)     (317)
                                 --------        -----       ------     -------    ------
Balance, August 1, 1998          $  8,968        $ 502       $2,903     $ 4,460    $1,103
                                 ========        =====       ======     =======    ======
 
</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.

                                      -8-
<PAGE>
 
                           Corporate Express, Inc.
                  Notes to Consolidated Financial Statements
 
    The following table sets forth activity in the Company's accrued merger and
other non-recurring charges liability account for the six months ended August 1,
1998:
<TABLE>
<CAPTION>
 
                                                  Balance     Cash        Non-      Balance
                                                   1/31/98  Payments   Cash Usage    8/1/98
                                                  --------  --------   ----------   -------
                                                            (In thousands)
<S>                                               <C>       <C>        <C>          <C> 
  Merger transaction costs (1)                    $    611   $  (322)               $   289
  Employee severance and
   termination costs (2)                             9,696    (3,431)                 6,265
  Facility closure and consolidation costs (3)       5,205    (1,436)                 3,769
                                                  --------   -------                -------
  Accrued merger and related costs, balance         15,512    (5,189)                10,323
  Other asset write-downs and costs (4)              2,759       ---        $(265)    2,494
                                                  --------   -------        -----   -------
     Total                                        $ 18,271   $(5,189)       $(265)  $12,817
                                                  ========   =======        -----   =======
</TABLE>
     There were no reversals of accrued merger and other non-recurring charges
during the six months ended August 1, 1998.

(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.
(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, 830 have been terminated as of August 1, 1998. The
     Company expects to complete the facility closures and related terminations
     for the fiscal 1995 charge, which balance totals $1,396,000, and the fiscal
     1996 charge, which balance totals $649,000, 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 $4,220,000, 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, 152
     have been closed or consolidated as of August 1, 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 and six-month periods ended August 2, 1997
and is further adjusted to reflect goodwill amortization, revaluation of debt
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.

                                      -9-
<PAGE>
 
                           Corporate Express, Inc.
                  Notes to Consolidated Financial Statements
 
                                  Three Months Ended    Six Months Ended
                                    August 2, 1997       August 2, 1997
                                 --------------------  ------------------
                                 (In thousands, except per share amounts)
                                                 (Unaudited)
 
Net sales                                    $989,152          $1,974,455
Net income                                     14,494              28,884
Net income per share - Basic                     0.10                0.21
Net income per share  Diluted                    0.10                0.20
 

5.  REPURCHASE OF COMMON STOCK

        On April 10, 1998 the Company closed the Dutch Auction tender offer and
purchased 35,000,000 shares tendered at a price of $10.75 per share. The
35,000,000 treasury shares resulting from this transaction are reflected on the
balance sheet at cost of $376,250,000 plus applicable fees and expenses of
approximately $3,000,000.

        The Company's Board of Directors 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 (see Note 6), as well as from cash flow from operations.
Accordingly, as of August 31, 1998, the Company purchased approximately
2,473,000 shares of its issued and outstanding common stock, par value $.0002
per share, of which 430,000 shares were purchased in the second fiscal quarter
of 1998, and the balance was purchased in August 1998. These treasury shares are
reflected on the balance sheet at cost. The Company intends to periodically
purchase additional shares in open market transactions.

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 

                                     -10-
<PAGE>
 
                           Corporate Express, Inc.
                  Notes to Consolidated Financial Statements
 
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.

     The Company settled an interest rate hedging contract based on $300,000,000
of U.S. Treasury notes related to the completed offering of the 9 5/8% Notes.
The cost of the settlement of the contract was $7,271,000 and will be amortized
over the ten-year term of the 9 5/8% Notes, bringing the effective interest rate
of the debt instrument to 9.83%.

     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 "9 5/8% Notes"). The 9
5/8% Notes are guaranteed by all material domestic subsidiaries of the Company
and are subordinated in right of payment to all senior debt, which totals
approximately $540,000,000 on August 1, 1998. On or after June 1, 2003 through
maturity, the 9 5/8% 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 9 5/8% 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 the 9 5/8% 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 ("the 9
1/8% Notes") and to repay $245,000,000 on the Senior Secured Credit Facility.
As a result of the early extinguishment of the 9 1/8% Notes, the Company
recorded an extraordinary loss of $4,477,000, net of tax of $2,862,000, in the
second quarter of fiscal 1998.

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:

<TABLE>
<CAPTION>
                                                               (unaudited)
                                            ----------------------------------------------- 
                                              Three Months Ended        Six Months Ended
                                            -----------------------  ----------------------
                                             August 1,    August 2,   August 1,   August 2,
                                                1998        1997        1998        1997
                                            -----------------------  ----------------------
                                                 (In thousands, except per share data)

<S>                                         <C>           <C>        <C>          <C>
  Numerator for basic and diluted EPS:
     Income before extraordinary item       $    12,275    $ 12,264  $   28,087    $ 24,674
     Extraordinary item                           4,477         ---       5,581          --
                                            -----------    --------  ----------    --------
     Net income                             $     7,798    $ 12,264  $   22,506    $ 24,674
                                            ===========    ========  ==========    ========
 
  Basic EPS Calculation:
  Denominator:
     Average common shares outstanding          107,869 (1) 128,389     121,142(1)  127,268
                                            ===========    ========  ==========    ========
 
  Earnings per common share:
     Income before extraordinary item       $      0.11    $   0.10  $     0.23    $   0.19
     Extraordinary item                           (0.04)         --       (0.04)         --
                                            -----------    --------  ----------    --------
     Net income                             $      0.07    $   0.10  $     0.19    $   0.19
                                            ===========    ========  ==========    ========
 
  Diluted EPS Calculation:
  Denominator (2):
     Basic shares                               107,869     128,389     121,142     127,268
     Dilutive stock options and warrants          4,994       6,311       4,014       5,747
                                            -----------    --------  ----------    --------
     Diluted shares                             112,863     134,700     125,156     133,015
                                            ===========    ========  ==========    ========
 
  Earnings per common share:
     Income before extraordinary item       $      0.11    $   0.09  $     0.22    $   0.19
     Extraordinary item                           (0.04)        ---       (0.04)         --
                                            -----------    --------  ----------    --------
</TABLE> 

                                     -11-
<PAGE>
 
                           Corporate Express, Inc.
                  Notes to Consolidated Financial Statements

<TABLE> 
<S>                                         <C>            <C>       <C>           <C>  
     Net income                             $      0.07    $   0.09  $     0.18    $   0.19
                                            ===========    ========  ==========    ========
</TABLE>
(1)  Reflects the shares repurchased on the April 10, 1998 and June 16, 1998
     purchase dates.
(2)  The number of antidilutive stock options omitted from the denominator was
     approximately 5,278,000 and 6,714,000 for the three-month periods ended
     August 1, 1998 and August 2, 1997, respectively, and approximately
     5,964,000 and 7,221,000 for the corresponding six-month periods.  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.

                                      -12-
<PAGE>
 
ITEM 2  --  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
            RESULTS OF OPERATIONS

  The following discussion should be read in conjunction with the audited
consolidated financial statements and related notes thereto included in the
Company's Annual Report on Form 10-K for the eleven months ended January 31,
1998 and the consolidated financial statements and related notes thereto
appearing elsewhere in this Form 10-Q.

  Some of the information presented in this Form 10-Q constitutes forward-
looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995.  Although the Company believes that its expectations are
based on reasonable assumptions within the bounds of the Company's knowledge of
its business and operations, there can be no assurance that actual results of
the Company's operations and acquisition activities, and their effect on the
Company's results of operations, will not differ materially from its
expectations.

RESULTS OF OPERATIONS

  Net Sales.  Consolidated net sales increased 20.9% to $1,118,162,000 in the
three months ended August 1, 1998 from $925,084,000 in the three months ended
August 2, 1997 and increased 20.6% to $2,226,222,000 from $1,846,538,000 for the
respective six-month periods.  Net sales for the Company's product distribution
segment increased 29.3% to $931,004,000 in the three months ended August 1, 1998
from $720,130,000 in the same period last year, and increased 29.8% to
$1,844,661,000 from $1,420,749,000 for the respective six-month periods.  Net
sales for the services segment decreased 8.7% to $187,158,000 in the three
months ended August 1, 1998 from $204,954,000 in the same period last year and
decreased 10.4% to $381,561,000 from $425,789,000 in the respective six-month
periods.  The overall increases were primarily attributable to strong internal
growth reflecting increased market penetration in the Company's product
distribution segment, the acquisition of DDI completed on November 26, 1997,
increased international sales and increased sales of computer software.  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 19.8% of consolidated net sales, or
$221,724,000, in the three months ended August 1, 1998 and 18.7% of consolidated
net sales, or $173,242,000, in the same period last year and 19.9% of
consolidated net sales, or $443,651,000, for the six  months ended August 1,
1998 compared to 18.8% of net sales, or $347,932,000, for the same period last
year.  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.  Gross profit as a percentage of sales was 23.2% for the three months
ended August 1, 1998 and 23.4% for the same period last year compared to 23.2%
and 23.5% for the respective six-month periods.  The slight decrease in the
gross profit percentage reflects increased gross profit margins in the domestic
office products business primarily attributed to enhanced vendor programs offset
by lower gross profit margins in the services segment and international
operations.  The decrease in the services segment gross profit margins is
primarily attributable to consolidation costs, increases in driver and vehicle
related costs, and reductions in pricing.  The decrease in the international
gross profit margins primarily reflects expansions in Switzerland and Italy 
which have lower gross margins on their product mix compared to the product mix
traditionally sold by the Company, and lower gross profit margins in the United
Kingdom due to continuation of inefficiencies resulting from facility and system
integration and the addition of certain lower margin accounts.

  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.  Warehouse operating and
selling expenses as a percentage of sales decreased to 16.1% for the three
months ended August 1, 1998 from 17.3% for the same period last year and
decreased to 16.3% from 17.4% for the respective six-month periods.  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.

                                     -13-
<PAGE>
 
  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 increased slightly to 3.0% of net sales in the three months ended
August 1, 1998 from 2.9% in the three months ended August 2, 1997 (the increase
of 0.1% reflects increased goodwill amortization expense primarily from the DDI
acquisition) and were consistent at 3.0% of net sales for the respective six-
month periods. Consolidated corporate general and administrative expenses
increased to $33,771,000 in the three months ended August 1, 1998 from
$26,618,000 in the three months ended August 2, 1997 and to $66,873,000 from
$55,712,000 for the respective six-month periods reflecting increased support
for the Company's expanded operations.

  Operating Profit.  Consolidated operating profit increased to $45,446,000, or
4.1% of net sales, for the three months ended August 1, 1998 from $29,480,000, 
or 3.2% of net sales, in the same period last year. Consolidated operating
profit increased to $87,289,000, or 3.9% of net sales, for the six months ended
August 1, 1998 from $57,433,000, or 3.1% of net sales, in the same period last
year. Operating profit for the product distribution segment increased to
$47,010,000, or 5.0% of product distribution net sales, in the three months
ended August 1, 1998 from $23,478,000, or 3.3% in the three months ended August
2, 1997, and increased to $86,908,000, or 4.7% from $45,261,000, or 3.2% for the
corresponding six-month periods. 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 continued
focus on vendor support. Operating losses for the services segment of
$1,564,000, or 0.8% of services net sales, in the three months ended August 1,
1998 compared to operating profit of $6,002,000, or 2.9% in the three months
ended August 2, 1997, and operating profit decreased to $381,000, or 0.1% of
services net sales, from $12,172,000, or 2.9% in the corresponding six-month
periods. The decrease in operating profit as a percentage of net sales for the
services segment reflects lower than expected performance at several delivery
locations, expenses related to integration projects, enhanced employee benefit
plans, and investments to hire and relocate many new members of the management
team, partially offset by cost savings from the elimination of redundant
personnel.

  Operating profit for international operations increased to 2.4% of
international net sales in the three months ended August 1, 1998 from 1.2% in
the three months ended August 2, 1997, and to 2.5% from 1.0% in the respective
six-month periods, primarily reflecting improved performance in Australia,
Germany and Canada, partially offset by reduced operating profits in the United
Kingdom reflecting business disruptions from prior consolidation efforts.

  Interest Expense.  Net interest expense of $21,787,000 in the three months
ended August 1, 1998 increased from $9,530,000 in the three months ended August
2, 1997 and to $34,578,000 from $18,483,000 in the respective six-month periods
primarily due to issuance of the new $350,000,000 9 5/8% Notes and increased
borrowings under the new Senior Secured Credit Facility to fund the borrowings
to finance the repurchase of common stock.

  Minority Interest.  Minority interest expense of $761,000 in the three months
ended August 1, 1998 compares to $612,000 in the three months ended August 2,
1997, and expense of $957,000 compares to income of $1,522,000 in the
corresponding six-month periods. Minority interest for the current year reflects
a 47.6% minority interest in Corporate Express Australia and in the prior period
it also reflects a 49.0% minority interest in Corporate Express United Kingdom.
The Company acquired the remaining ownership interest in Corporate Express
United Kingdom in June 1997.

  Extraordinary Item.  The extraordinary loss of $4,477,000, net of tax of
$2,862,000, in the three months ended August 1, 1998 represents the cost of
early repayment of the 9 1/8% Senior Subordinated Notes Series B due 2004. The
extraordinary loss of $5,581,000 in the six months ended August 1, 1998 also
includes $1,104,000, net of tax of $706,000, reflecting the first quarter write-
off of deferred financing costs related to the early extinguishment of the
Company's former Senior Credit Facility.

  Net Income.  Excluding the extraordinary item, net income of $12,275,000 in
the three months ended August 1, 1998 compared to $12,264,000 for the three
months ended August 2, 1997 and increased to $28,087,000 from $24,674,000 in the
corresponding six-month periods. Including the extraordinary item, net income of
$7,798,000 in the three months ended August 1, 1998 compared to $12,264,000 for
the three months ended August 2, 1997 and $22,506,000 compared to $24,674,000 in

                                     -14-
<PAGE>
 
the corresponding six-month periods. The increase in the effective tax rate
primarily reflects increased amortization of non-deductible goodwill and the
absence of operating loss carryforwards which were recorded in prior year 
periods.

  Other.  Goodwill at August 1, 1998 of $856,680,000 increased from $847,544,000
at January 31, 1998 reflecting net additions from acquisitions offset by current
year amortization.

  The inventory balance at August 1, 1998 of $269,535,000 increased $18,427,000
from $251,108,000 at January 31, 1998 as a result of acquired inventories and
inventory growth to support increased sales.

  Accrued purchase costs at August 1, 1998 of $8,968,000 decreased by $410,000
from the January 31, 1998 balance of $9,378,000, reflecting acquisition
additions of $1,840,000 and usage of $2,250,000.

  The accrued merger and related costs balance at August 1, 1998 of $10,323,000
decreased by $5,189,000 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.

  The Company's Board of Directors 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 (described below), as well as from cash flow from operations.  In 
addition to the 35,000,000 shares repurchased on April 10, 1998 (described
below), the Company repurchased (through August 31, 1998) approximately
2,473,000 shares in total, of which 430,000 shares were purchased in the second
fiscal quarter of 1998.

  On April 10, 1998, the Company closed the Dutch Auction tender offer it
commenced on February 5, 1998, and purchased 35,000,000 shares tendered at a
price of $10.75 per share. The Company funded the purchase of such shares and
the payment of related fees and expenses through its new $1.0 billion Senior
Secured 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 August 31, 1998, the Company
had $480,597,000 outstanding under the Senior Secured Credit Facility and an
unused borrowing commitment of $519,403,000.

  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.

                                     -15-
<PAGE>
 
  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 "9 5/8% Notes"). The
notes are guaranteed by all material domestic subsidiaries of the Company and
are subordinated in right of payment to all senior debt which totaled
approximately $540,000,000 at August 1, 1998. 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 (the "9 1/8% Notes") and to repay
$245,000,000 on the Senior Secured Credit Facility. As a result of the early
extinguishment of the 9 1/8% Notes, the Company recorded an extraordinary loss
of $4,477,000, net of tax of $2,862,000, in the second quarter of fiscal 1998.
The Company settled an interest rate hedging contract based on $300,000,000 of
U.S. Treasury notes related to the completed offering of the 9 5/8% Notes. The
cost of the settlement of the contract was $7,271,000 and will be amortized over
the ten-year term of the 9 5/8% Notes, bringing the effective interest rate of
the debt instrument to 9.83%.

  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 six months ended August 1, 1998, the Company had capital
expenditures of $46,878,000,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 six months ended August 1, 1998 were as
follows:  repurchase of common stock of $383,980,000, capital expenditures of
$46,878,000, cash paid for acquisitions of $25,664,000, debt issuance costs of
$32,188,000, net payments on lines of credit of $61,497,000 and other uses of
$2,246,000, partially offset by net proceeds from debt of $510,966,000, and
operating activities of $27,452,000.

  The Company expects net capital expenditures for fiscal 1998 of approximately
$80,000,000 comprised of approximately $59,000,000 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 expected
amounts.

  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.

                                     -16-
<PAGE>
 
IMPACT OF THE YEAR 2000 ISSUE

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

  The Company's ISIS computer software has been designed with the Year 2000
issue in mind, and the Company believes it is Year 2000 compliant; however,
Corporate Express utilizes many different systems and software programs to
process and summarize business transactions.  The Company is continuing the
evaluation of its various operating systems and determining the additional
remediation efforts required to ensure that its computer systems will properly
utilize dates beyond December 31, 1999.  Preliminary results of this assessment
have revealed that remediation efforts required will vary from system to system.
For example, it appears some systems will not require any additional programming
efforts, while others may require significant programming changes.

  The Company has initiated formal communications with all of its significant
suppliers and large customers to determine the extent to which the Company is
vulnerable to those third parties' failure to remediate their own Year 2000
issue.  However, there can be no guarantee that the systems of other companies
on which the Company's systems rely will be timely converted, or that a failure
to convert by another company, or a conversion that is incompatible with the
Company's systems, would not have a material adverse effect on the Company.

  For those systems identified as non-compliant, the Company has begun and, in
certain cases, completed remediation efforts.  The Company will utilize both
internal and external resources to reprogram, or replace, and test the software
for Year 2000 modifications.  The Company plans to complete the Year 2000
project before January 31, 1999.  The total estimated cost of the Year 2000
project is estimated to be between $6,000,000 and $8,000,000 and is being funded
through operating cash flows.  These costs are not expected to be material to
the Company's consolidated results of operations.  Of the total project cost,
approximately $2,000,000 is attributable to the purchase of new software or
equipment which will be capitalized.  The remaining $4,000,000 to $6,000,000
will be expensed as incurred.  In a number of instances, the Company may decide
to install new software or upgraded versions of current software programs which
are Year 2000 compliant.  In these instances, the Company may capitalize certain
costs of the new system in accordance with current accounting guidelines.

  The Company presently believes that, with modifications to existing software
and conversions to new software for those sites which it believes may be
affected, the Year 2000 issue can be mitigated.  However, if such modifications
and conversions are not made, or are not completed timely, the Year 2000 issue
could have a material adverse impact on the operations of the Company.

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

                                     -17-
<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 August 1, 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.

                                     -18-
<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 (the "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

         The annual meeting of the shareholders of the Company was held on 
July 14, 1998. Of the 108,031,021 shares of the Company's common stock issued
and outstanding and entitled to vote at the meeting, there were present, in
person or by proxy, the holders of 92,362,618 shares, or 85.5% of those shares
eligible to vote, such percentage representing a quorum.

         The matter voted upon at the annual meeting was the election of
directors of the Company to serve until the next meeting of shareholders or
until their successors are duly elected and qualified. The votes cast for and
withheld were as follows:
 
                Name                          Votes For   Votes Withheld
                ----                          ---------   --------------
 
             Jirka Rysavy                    87,668,058        4,694,560
             Janet A. Hickey                 87,706,756        4,655,862
             Robert L. King                  87,676,768        4,685,850
             Mo Siegel                       87,842,215        4,520,403
             James P. Argyropoulos           87,861,426        4,501,192

ITEM 5.  OTHER INFORMATION

         Not applicable.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

        (a)  Exhibits

             27.1 Financial Data Schedule

        (b)  Reports on Form 8-K

             Form 8-K filed on July 29, 1998.

                                     -19-
<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:  September 14, 1998           (Principal Financial Officer and 
                                     Duly Authorized Officer)

                                     -20-