Six-Year Summary
Comdisco, Inc. and Subsidiaries

(in millions except per share data)
<TABLE>
<CAPTION>

                                                                                     Years ended September 30,
                                                                   ---------------------------------------------------------------
                                                                          97         96         95         94         93        92
                                                                   ---------  ---------  ---------  ---------  ---------  --------
<S>                                                                  <C>        <C>        <C>        <C>        <C>        <C>
CONSOLIDATED SUMMARY OF EARNINGS
Revenue
    Leasing ......................................................   $ 2,116    $ 1,797    $ 1,573    $ 1,538    $ 1,583    $ 1,662
    Sales ........................................................       269        262        358        271        313        311
    Continuity and network services ..............................       354        318        267        242        216        193
    Other ........................................................        80         54         42         47         41         39
                                                                     -------    -------    -------    -------    -------    -------
Total revenue ....................................................     2,819      2,431      2,240      2,098      2,153      2,205
                                                                     -------    -------    -------    -------    -------    -------
Costs and expenses
    Leasing ......................................................     1,534      1,246      1,023      1,004      1,040      1,094
    Sales ........................................................       210        218        304        225        275        274
    Continuity and network services ..............................       296        277        238        224        206        175
    Selling, general and administrative ..........................       244        244        233        213        197        198
    IBM litigation settlement ....................................        --         --         --         70         --         --
    Litigation and receivables charge ............................        --         --         --         10         --         45
    Restructuring charge .........................................        --         --         --         --         --         35
    Interest .....................................................       299        262        274        263        291        350
    Other ........................................................        25         --         --         --         --         --
                                                                     -------    -------    -------    -------    -------    -------
       Total costs and expenses ..................................     2,608      2,247      2,072      2,009      2,009      2,171
                                                                     -------    -------    -------    -------    -------    -------
Earnings from continuing operations before
    income taxes, extraordinary loss and
    cumulative effect of change in accounting principle ..........       211        184        168         89        144         34
Income taxes .....................................................        80         70         64         36         57         14
                                                                     -------    -------    -------    -------    -------    -------
Earnings from continuing operations before extraordinary
    loss and cumulative effect of change in accounting principle .       131        114        104         53         87         20
Loss from discontinued operations (net of income taxes) ..........        --         --         --         --        (20)        --
                                                                     -------    -------    -------    -------    -------    -------
Earnings before extraordinary loss and cumulative effect of change
    in accounting principle ......................................       131        114        104         53         67         20
Extraordinary loss (net of income taxes) .........................        --         --         --         --         --        (29)
Earnings (loss) before cumulative effect of change in a accounting
                                                                     -------    -------    -------    -------    -------    -------
    principle ....................................................       131        114        104         53         67         (9)
Cumulative effect of change in accounting principle ..............        --         --         --         --         20         --
                                                                     -------    -------    -------    -------    -------    -------
Net earnings (loss) before preferred dividends ...................       131        114        104         53         87         (9)
Preferred dividends ..............................................        (8)        (8)        (8)        (9)        (7)        --
                                                                     -------    -------    -------    -------    -------    -------
    Net earnings (loss) to common stockholders ...................   $   123    $   106    $    96    $    44    $    80    $    (9)
                                                                     =======    =======    =======    =======    =======    =======
COMMON AND COMMON EQUIVALENT SHARE DATA
Earnings from continuing operations ..............................   $  1.56    $  1.33    $  1.15    $   .51    $   .87    $   .22
Loss from discontinued operations ................................        --         --         --         --       (.22)        --
Extraordinary loss ...............................................        --         --         --         --         --       (.31)
Cumulative effect of change in accounting principle ..............        --         --         --         --        .22         --
                                                                      ------    -------    -------    -------    -------    -------
Net earnings (loss) to common stockholders .......................   $  1.56    $  1.33    $  1.15    $   .51    $   .87    $  (.09)
                                                                      ======    =======    =======    =======    =======    =======
Common stockholders' equity (per common share outstanding) .......   $ 10.48    $  9.54    $  8.73    $  7.77    $  7.35    $  6.83
Cash dividends paid on common stock...............................       .20        .19        .16        .15        .13        .13
Average common and common equivalent shares (in thousands)........    78,795     79,842     82,751     86,637     90,468     91,929

FINANCIAL POSITION
Total assets .....................................................   $ 6,350    $ 5,591    $ 5,039    $ 4,807    $ 4,960   $  5,236
Notes payable ....................................................     1,024      1,127        661        593        655        766
Total long-term debt .............................................     2,918      2,145      1,796      1,364      1,325      1,314
Discounted lease rentals .........................................       742        781      1,124      1,548      1,670      1,823
Stockholders' equity .............................................       865        799        776        741        739        699
LEASING DATA
Total noncancelable rents of new leases ..........................    $3,200    $ 2,800    $ 2,300    $ 1,800    $ 1,900   $  2,400
Future noncancelable lease rentals and continuity
 subscription fees ...............................................     5,440      4,903      4,380      4,185      4,265      4,601

</TABLE>
                                  -16 and 17-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

SUMMARY
Comdisco,  Inc.  achieved record revenues,  earnings,  equipment volume and cash
flow  from  operating   activities  in  fiscal  1997.  The  year's   performance
demonstrates the ability of the company's businesses to deliver strong financial
results.

Net  Earnings:  Fiscal  1997 net  earnings to common  stockholders  (hereinafter
referred to as "net  earnings")  were $123  million,  or $1.56 per common share,
compared to $106 million,  or $1.33 per common share, and $96 million,  or $1.15
per common  share,  in fiscal 1996 and 1995,  respectively.  The increase in net
earnings  in fiscal  1997  compared  to the prior  year is due to  increases  in
earnings contributions from remarketing and continuity services. The increase in
net  earnings in fiscal 1996  compared to the prior  period is due to  increased
earnings contributions from operating leases and continuity  activities,  offset
by  decreases  in  earnings  contributions  from  direct  financing  leases  and
remarketing  activities.  Earnings  per  common  share in  fiscal  1997 and 1996
benefited from the company's  stock  repurchase  program,  which has reduced the
average common equivalent shares outstanding.

Business:  The company's  businesses are designed to bring solutions that reduce
technology cost and risk to the customer.  These  businesses are: 1) information
technology  services,  which  include the leasing of  distributed  systems (PCs,
servers and routers) and large  systems  (mainframes  and related  equipment) 2)
diversified technology services for the healthcare,  semiconductor manufacturing
("electronics  group") and venture capital  industries,  and 3) services,  which
include continuity services, asset management and network management.
         Leasing  volume  increased  in both fiscal 1997 and 1996 as compared to
the prior years. During the last three fiscal years, the company's large systems
portfolio   decreased,   while   its   portfolio   of  other   high   technology
assets-distributed  systems and electronics equipment in particular-increased as
a percentage of the total portfolio. Lease volume in the current fiscal year was
the highest annual volume in the company's history.
         Cost of  equipment  placed on lease was $3.1  billion  in fiscal  1997,
compared to cost of  equipment  placed on lease of $2.6 billion and $2.1 billion
in fiscal 1996 and 1995, respectively.  During fiscal 1997 and 1996, information
technology  services had cost of  equipment  placed on lease of $2.6 billion and
$2.1 billion worldwide, including distributed systems volume of $1.6 billion and
$1.0  billion,  respectively.  Internationally,  cost of  equipment of all types
placed on lease  increased  from $595  million in fiscal 1996 to $757 million in
fiscal  1997.  The growth in leasing  volume  has the effect of  increasing  the
proportion  of leases for new  equipment  ("New  Leases") to total  leases.  New
Leases   traditionally  have  lower  earnings   contributions  than  leases  for
remarketed  equipment.  As a result,  increasing  lease volume initially has the
impact of reducing leasing margins.  However,  the increase in leasing volume in
fiscal  1997  will have a  positive  impact on  leasing  revenue,  cash flow and
margins in future periods and will result in future  earnings  opportunities  by
providing equipment for remarketing.
         Remarketing activity, an important contributor to earnings,  was strong
throughout  fiscal 1997,  and, in the fourth  quarter of fiscal 1997,  reached a
record level of quarterly  earnings  contribution.  To meet  earnings  goals for
fiscal 1998,  remarketing  contributions  have to be at approximately  the level
achieved  in the current  fiscal  year.  While the  company  has a larger  lease
portfolio  for  remarketing  and  is  devoting   resources  to  its  remarketing
activities,  there  can be no  assurance  that  the  company  will  achieve  the
appropriate level of activity  necessary to meet the company's desired operating
results.
         Continuity and network  services had a record year with pretax earnings
of $58 million.  This compares to pretax earnings of $41 million and $29 million
in  fiscal  1996  and  1995,  respectively.  The  company  continued  to  invest
additional  capital to upgrade  products and enhance future  revenue.  In fiscal
1997,  capital  expenditures were $61 million,  including $11 million in Europe.
This includes additions in large systems,  mid-range  systems,  network products
and expansion of workareas to more than thirty  locations.  It also includes the
company's  entry into trading floor  continuity  operations with the addition of
facilities in New Jersey, New York and Minnesota.  Additionally,  continuity and
network services  continues to focus on cost containment to maintain and improve
margins. The company believes that the earnings  contributions from services can
be greater than the company is currently achieving, and accordingly, the company
is devoting additional resources and efforts to increasing service revenue.

FINANCIAL CONDITION
The company's  operating  activities  during the year ended  September 30, 1997,
including capital expenditures for equipment, were funded primarily by cash flow
from  operations  (primarily  lease  receipts),  including  the  realization  of
residual values through remarketing activities, and external financing. See Note
6 of Notes to Consolidated Financial Statements for information on the company's
interest-bearing  liabilities,  including  average daily  borrowings,  effective
interest rates and maturities.
         During the last five years,  equipment  purchased  for leasing  totaled
$10.3 billion.  Expenditures for equipment in fiscal 1997 totaled  approximately

                                      -18-
<PAGE>
$2.9 billion, the highest annual total in the company's history, and an increase
of 18% compared to the prior year.  Expenditures  for  equipment  are  currently
estimated at approximately $3.5 billion for fiscal 1998.
         The company  believes that its estimated cash flow from  operations and
current financial resources will be sufficient to fund anticipated future growth
and  operating  requirements.  In addition,  the company  expects to continue to
utilize a variety of  financial  instruments  to fund its  short- and  long-term
needs.

Cash provided by operating activities: Net cash provided by operating activities
was $2.5 billion,  $2.2 billion and $2.0 billion in fiscal 1997,  1996 and 1995,
respectively.  During  the last  five  years,  net cash  provided  by  operating
activities totaled $10.3 billion.
         Net cash  provided  by  operating  activities  has been used to finance
equipment purchases and, accordingly,  has had a positive impact on the level of
borrowing  required to support the  company's  investment  in its growing  lease
portfolio. The company estimates that existing lease and continuity contracts at
September  30,  1997 may  generate  gross cash  receipts of  approximately  $5.4
billion in the future,  including  $2.5  billion in fiscal 1998.  The  company's
liquidity is augmented by the realization of cash from the future remarketing of
leased equipment.  Utilizing  independent forecasts of equipment values at lease
termination  or management  estimates,  the estimated  gross cash receipts to be
provided from remarketing in future years totals $1.7 billion.

Credit Lines:  At September 30, 1997,  the company had $1.6 billion of available
domestic and international borrowing capacity under various lines of credit from
commercial banks and commercial paper facilities,  of which  approximately  $729
million was unused.  The company had  committed  credit lines  established  with
thirty-two banks at September 30, 1997 of $1.1 billion.

Senior Notes: In November,  1996, the company filed a registration  statement on
Form S-3 with the  Securities  and Exchange  Commission  (the "SEC") for a shelf
offering of up to $950 million of senior debt securities with terms to be set at
the time of each  sale (the  "1996  Shelf").  Pursuant  to the 1996  Shelf,  the
company, in fiscal 1997 issued the following senior notes:
         o $250  million of 6.375% Notes Due November 30, 2001 
         o $250 million of 6.50% Notes Due April 30, 1999 
         o $377 million of medium-term notes
         At September 30, 1997, an aggregate of $73 million of medium-term notes
remained available for issuance under the 1996 Shelf.

         On June 23, 1997,  the company filed a  registration  statement on Form
S-3 with the SEC for a shelf  offering  of up to $1.2  billion  of  senior  debt
securities  on terms to be set at the time of each sale (the "1997  Shelf").  No
senior debt has been sold  pursuant to the 1997 Shelf,  however,  on November 6,
1997,  the  company  designated  $600  million  of  senior  debt  securities  as
medium-term  notes,  Series G. The  company  plans to  continue  to be active in
issuing  senior debt during  fiscal 1998,  primarily to support the  anticipated
growth of the leased assets and, where appropriate,  to refinance  maturities of
interest-bearing liabilities.

Secured Debt:  Proceeds from the discounting of lease rentals were $430 million,
$253  million  and $279  million in fiscal  1997,  1996 and 1995,  respectively.
Secured  debt  is  currently  utilized  as a tool  to  manage  credit  risk  and
concentration  risk. The company's  credit committee  establishes  concentration
levels by credit rating and customer.

Maturities:  At  September  30,  1997,  the  company  had  debt of $2.5  billion
scheduled to mature in fiscal 1998,  including $1.0 billion of commercial  paper
and short-term bank borrowings.  At September 30, 1997, the company had expected
future net cash to be provided by existing  lease and  continuity  contracts  of
$2.5  billion  in  fiscal  1998.  See  Notes 5 and 6 of  Notes  to  Consolidated
Financial  Statements  for  information  on the lease base and  interest-bearing
liabilities, respectively.

Asset/Liability  and Risk  Management:  The company  has an on-going  program to
manage its assets and liabilities.  This program includes establishing levels of
fixed and floating rate debt, liquidity and duration analysis, monitoring credit
quality  of the lease  portfolio  and  related  account  review  procedures  and
oversight of interest rate and foreign exchange hedging  policies.  This program
includes the use of  derivatives  in certain  identifiable  situations to manage
risk. The company does not speculate on interest  rates,  but rather manages its
portfolio  of assets and  liabilities  to mitigate  the impact of interest  rate
fluctuations.  See Note 6 of Notes to  Consolidated  Financial  Statements for a
discussion  of interest  rate swap  agreements  and other  derivative  financial
instruments.

Ratios:  The ratio of debt to total  stockholders'  equity was 5.4:1,  5.1:1 and
4.6:1 at  September  30,  1997,  1996 and 1995,  respectively.  The  increase at
September 30, 1997 reflects the record levels of equipment  purchased for lease,
and the impact of a strong  United  States  dollar  during  fiscal  1997,  which
reduced   stockholders'   equity  by  $25  million  from  deferred   translation
adjustments. The company also

                                      -19-
<PAGE>

purchased 2.5 million shares of its common stock at a total cost of $45 million.
The company expects the ratio to increase in fiscal 1998,  primarily  because of
the redemption, in October, 1997, of the Series A Preferred Stock, which reduced
stockholders' equity by $68 million.

REVENUE
Total revenue of approximately  $2.8 billion and $2.4 billion in fiscal 1997 and
1996  represented  increases  of 16% and 9%  respectively,  over the prior  year
periods.  The  increases in leasing  revenue in fiscal 1997 and 1996 compared to
prior periods is due to increased operating lease revenue, offset by declines in
direct financing lease revenue. The declines in direct financing revenue in both
fiscal 1997 and 1996 as compared to the prior year reflect a decline in interest
rates and a change in the mix of leases  written,  with a higher  percentage  of
operating  leases to total leases.  See "Continuity and Network  Services" for a
discussion of continuity  and network  services  revenue and margins and "Sales"
for a discussion of sales revenue and margins.

Leasing:  The  increase  in New  Leases,  particularly  during the last  sixteen
months,  coupled with lower margins on large systems transactions,  has resulted
in lower margins on leasing,  particularly for operating leases. Operating lease
revenue  minus  operating  lease costs was $338  million,  or 20.7% of operating
lease revenue (the  "Operating  Lease  Margin"),  and $328 million,  or 24.0% of
operating  lease  revenue,  in fiscal 1997 and 1996,  respectively.  The company
expects the Operating Lease Margin to decline from current levels in fiscal 1998
because of  continued  pressure  from New Leases and the lower  margins on large
systems.  The Sales-type  Lease Margin  increased in fiscal 1997 compared to the
prior year  primarily  because of a change in the mix of  equipment  remarketed,
with a higher  percentage of distributed  equipment  remarketing.  The following
graph  presents the Lease Margin for total  leasing,  operating,  and sales-type
leases for the five years ended September 30, 1997:

                           93       94      95       96       97
Total leasing              34%      35%     35%      31%      27%
Operating lease            26%      26%     26%      24%      21%
Sales-type lease           23%      26%     28%      26%      30%


Sales:  Revenue from sales, which includes  remarketing and buy/sell activities,
totaled $269  million in fiscal 1997,  compared to $262 million and $358 million
in fiscal  1996 and 1995,  respectively.  In fiscal 1997 and 1996 sales and sale
revenue per unit on large systems declined.  Margins on sales were 22% in fiscal
1997 compared to 17% and 15% in fiscal 1996 and 1995,  respectively.  Sales from
distributed  systems  equipment,  which have higher  margins  than large  system
sales, increased in the current year compared to the year earlier period.

Continuity and Network  Services:  Revenue from continuity and network  services
(hereinafter  referred to as  "continuity")  of $354  million in fiscal 1997 and
$318 million in fiscal 1996 represented increases of 11% and 19%,  respectively,
over each of the preceding  years. The increases are primarily the result of the
growth in products and services.
         Continuity  costs of $296  million  in fiscal  1997  increased  7% over
continuity costs of $277 million in fiscal 1996.  Fiscal 1996 costs and expenses
were 16% higher than  fiscal  1995.  Cost  containment  efforts by the  company,
primarily as a result of its capital investment  strategy,  slowed the growth of
continuity   costs  in  both  fiscal  1997  and  1996,   and  improved   margins
significantly over the prior years.

Other  Revenue:  Other  revenue was $80 million,  $54 million and $42 million in
fiscal 1997, 1996 and 1995, respectively. Other revenue for fiscal 1997 includes
a gain of $25 million ($16 million after-tax,  or $.20 per share) resulting from
the receipt of amounts in settlement  of  litigation.  In addition,  fiscal 1997
other revenue includes approximately $11 million of gains from the sale of other
investments owned by the company.  Revenue from the sale of ownership  positions
generated in conjunction  with the company's lease financing  transactions  with
early-stage high technology companies was $18 million in fiscal 1997 compared to
$13 million and $11 million in fiscal 1996 and 1995,  respectively.  Fiscal 1996
and 1995 includes $6 million and $5 million,  respectively,  of gains  generated
from the sale of securities,  originally  received by the company in fiscal 1993
in connection with the sale of all of the assets of its wholly-owned subsidiary,
Comdisco Systems, Inc.

COSTS AND EXPENSES
Total costs and  expenses  were $2.6 billion and $2.2 billion in fiscal 1997 and
1996,  respectively.  The  increase  in fiscal  1997  compared to fiscal 1996 is
primarily due to the growth in leasing volume including higher interest expense,
increased  leasing costs  related to increased  operating  lease and  sales-type
revenue and a one-time charge of $25 million (see "Other"  below).  The increase
in fiscal 1996 compared to fiscal 1995 is primarily due to increased leasing and
continuity  costs related to increasing  operating  lease revenue and continuity
revenue, respectively.

                                      -20-
<PAGE>

Selling,  General  and  Administrative:   Selling,  general  and  administrative
expenses  totaled $244 million in fiscal 1997,  $244 million in fiscal 1996, and
$233  million in fiscal 1995.  Despite the level of growth in fiscal 1997,  cost
containment  efforts  begun in fiscal  1996  allowed  the company to control its
selling,  general and administrative  costs in fiscal 1997. Factors contributing
to the  increase  in  fiscal  1996  compared  to the  prior  years  include  the
development of the company's technology services, offset by reduced expenditures
resulting from improved efficiencies in the company's administrative operations.

Interest: Interest expense for fiscal 1997 totaled $299 million in comparison to
$262 million in fiscal 1996 and $274 million in fiscal 1995,  respectively.  The
increase  in interest  expense in fiscal 1997  compared to fiscal 1996 is due to
higher  average  daily  borrowings  resulting  from the  increase  in  equipment
purchased for lease in fiscal 1997 compared to the prior period, offset by lower
average  rates.  The  decrease in fiscal 1996  compared to fiscal 1995 is due to
lower average interest rates.  Generally,  a changing  interest rate environment
does not  impact  the  company's  margins  since the  effects of higher or lower
borrowing  costs would be  reflected  in the rates on newly  leased  assets.  In
addition,  the company  attempts to match the maturities of its borrowings  with
the cash flows from its leased assets,  thereby reducing the company's  interest
rate  exposure.  See Note 6 of Notes to  Consolidated  Financial  Statements for
information on the company's  average daily  borrowings  and effective  interest
rates.

Other:  In the second  quarter of fiscal 1997,  the company  recorded a noncash,
non-operating  charge of $25 million ($16 million after-tax,  or $.20 per common
share) as a one-time addition to the equipment valuation allowance. The addition
to the equipment valuation allowance reflects the surge in distributed equipment
volume  during the last three  fiscal  quarters  (a trend  that is  expected  to
continue in the near-term),  the rapid level of technological  change associated
with such  equipment  and  continued  declines in the fair market value of large
systems.

INCOME TAXES
Note 8 of Notes to Consolidated Financial Statements on page 34 provides details
about the company's income tax provision.

INTERNATIONAL OPERATIONS
The company  operates  principally in four geographic  areas: the United States,
Europe, Canada and the Pacific Rim. The company also operates in South America.
         Revenue  from  international  operations,  including  export  sales and
continuity operations,  was $646 million in fiscal 1997 compared to $595 million
and $518 million in fiscal 1996 and 1995,  respectively.  International revenues
represented  23% of the company's  total  revenue in fiscal 1997,  24% in fiscal
1996 and 23% in fiscal 1995.

Europe: The company's European operations,  excluding continuity activities, had
pretax  earnings  of $21  million  and $10  million  in  fiscal  1997 and  1996,
respectively, compared to $6 million in fiscal 1995. Total revenue from European
operations  was $537  million in fiscal 1997  compared to $461 million in fiscal
1996 and $402  million  in fiscal  1995.  Cost of  equipment  placed on lease in
fiscal 1997 and 1996 was $563 million and $492  million,  respectively.  Cost of
equipment placed on lease in Europe includes  electronics  group equipment.  The
European lease base has been financed primarily by utilizing existing short-term
lines of credit,  parent company loans and where  required,  additional  capital
investment from the parent, and discounted lease rentals.

Canada: The company's Canadian operations,  excluding continuity activities, had
pretax  earnings  of $16  million  and $19  million  in  fiscal  1997 and  1996,
respectively.  Total leasing and sales revenue for fiscal 1997 in Canada was $63
million  compared  to $75  million  and $50  million  in  fiscal  1996 and 1995,
respectively.  Cost of equipment placed on lease in fiscal 1997 and 1996 was $66
million  and $68  million,  respectively.  Cost of  equipment  placed  on  lease
includes  electronics  group  equipment.  Net cash provided by operations is the
company's  primary  source of funds for its  Canadian  operations,  although the
company has short-term lines of credit in Canada to support short-term liquidity
requirements.
         Geographic  area data is included  in Note 13 of Notes to  Consolidated
Financial Statements on page 39.

OTHER MATTERS
Safe Harbor  Statement  under the Private  Securities  Litigation  Reform Act of
1995:  With the exception of historical  information,  the matters  discussed in
this annual report to stockholders are  forward-looking  statements that involve
risks and  uncertainties  and actual results could differ  materially from those
discussed.  See "Note on Forward-Looking  Information" on page 44 of this annual
report to stockholders for  identification of important factors which may affect
the forward-looking statements contained herein.

Recently  Issued  Professional  Accounting  Standards:  Statement  of  Financial
Accounting  Standards  ("SFAS")  No.  128,  Earnings  Per  Share,  was issued in

                                      -21-
<PAGE>
February 1997. The company will be required to adopt the standard in fiscal 1998
(earlier  adoption is  prohibited).  The standard  adopts a simpler  calculation
methodology for determining number of shares outstanding. Had earnings per share
been determined  consistent with SFAS No. 128, the company's earnings per common
and  common  equivalent  share  ("EPS")  would have  increased  to the pro forma
amounts indicated below:

                                        97         96          95
As reported                          $1.56      $1.33       $1.15
Pro forma - basic EPS                 1.67       1.40        1.21
Pro forma - diluted EPS               1.56       1.33        1.15


SFAS No. 130, Reporting Comprehensive Income and SFAS No. 131, Disclosures about
Segments of an Enterprise  and Related  Information,  which become  effective in
fiscal  1999,  will  not  have a  material  impact  on the  company's  financial
statements.

Year 2000: The company is aware of the issues  associated  with the  programming
code in existing computer systems as the millennium  approaches.  The company is
utilizing  both  internal  and  external  resources  to  identify,   correct  or
reprogram, and test the systems for the Year 2000 compliance. Management has not
yet assessed the Year 2000 compliance  expense and related  potential  effect on
the company's earnings.

Inflation: The company does not consider the present rate of inflation to have a
significant impact on the businesses in which it operates.




Price Range of Common Stock
The  company's  common  stock is listed on the New York Stock  Exchange  and the
Chicago Stock Exchange  under the symbol CDO. At September 30, 1997,  there were
approximately  1,900  holders  of  record of the  company's  common  stock.  The
following table shows the quarterly  price range of the company's  common stock,
as traded on the New York  Stock  Exchange,  and cash  dividends  paid on common
stock for fiscal 1997 and 1996,  adjusted for the three-for-two stock split (See
Note 10 of Notes to Consolidated Financial Statements).


<TABLE>
<CAPTION>


                                    97                                           96
                -----------------------------------          ------------------------------------
Quarter           High            Low     Dividends            High            Low      Dividends
-------         ------         ------          ----          ------         ------           ----
<S>             <C>            <C>             <C>           <C>            <C>              <C>
First           $21.83         $19.33          $.05          $15.83         $13.11           $.04
Second           21.41          20.41           .05           15.00          13.25            .05
Third            26.00          18.67           .05           19.09          14.17            .05
Fourth           32.81          26.13           .05           19.83          15.09            .05
</TABLE>


                                      -22-
<PAGE>


Consolidated Statements of Earnings
Comdisco, Inc. and Subsidiaries
Years ended September 30, 1997, 1996 and 1995
(in millions except per share data)
<TABLE>
<CAPTION>


                                                           97         96         95
                                                      -------    -------    -------
<S>                                                   <C>        <C>        <C>
REVENUE
Leasing:
    Operating .....................................   $ 1,635    $ 1,365    $ 1,117
    Direct financing ..............................       145        149        180
    Sales-type ....................................       336        283        276
                                                      -------    -------    -------
      Total leasing ...............................     2,116      1,797      1,573
Sales .............................................       269        262        358
Continuity and network services ...................       354        318        267
 Other ............................................        80         54         42
                                                      -------    -------    -------
    Total revenue .................................     2,819      2,431      2,240
                                                      -------    -------    -------
COSTS AND EXPENSES
Leasing:
    Operating .....................................     1,297      1,037        824
    Sales-type ....................................       237        209        199
                                                      -------    -------    -------
      Total leasing ...............................     1,534      1,246      1,023
Sales .............................................       210        218        304
Continuity and network services ...................       296        277        238
Selling, general and administrative ...............       244        244        233
Interest ..........................................       299        262        274
Other .............................................        25         --         --
                                                      -------    -------    -------
    Total costs and expenses ......................     2,608      2,247      2,072
                                                      -------    -------    -------
Earnings before income taxes ......................       211        184        168
Income taxes ......................................        80         70         64
                                                      -------    -------    -------
Net earnings before preferred dividends ...........       131        114        104
Preferred dividends ...............................        (8)        (8)        (8)
                                                      -------    -------    -------
Net earnings available to common stockholders .....   $   123    $   106    $    96
                                                      =======    =======    =======
Net earnings per common and common equivalent share   $  1.56    $  1.33    $  1.15
                                                      =======    =======    =======

See accompanying notes to consolidated financial statements.
</TABLE>

                                      -23-
<PAGE>

Consolidated Balance Sheets
Comdisco, Inc. and Subsidiaries
September 30, 1997 and 1996
(in millions except number of shares and per share data)
<TABLE>
<CAPTION>


                                                                                          97         96
                                                                                     -------    -------
<S>                                                                                  <C>        <C>
ASSETS
Cash and cash equivalents ........................................................   $    37    $    29
Cash - legally restricted ........................................................        45         27
Receivables, net .................................................................       262        218
Inventory of equipment ...........................................................       157        155
Leased assets:
    Direct financing and sales-type ..............................................     1,717      1,768
    Operating (net of accumulated depreciation) ..................................     3,571      2,842
                                                                                     -------    -------
      Net leased assets ..........................................................     5,288      4,610
Buildings, furniture and other, net ..............................................       140        149
Other assets .....................................................................       421        403
                                                                                     -------    -------
                                                                                     $ 6,350    $ 5,591
                                                                                     =======    =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable ....................................................................   $ 1,024    $ 1,127
Term notes payable ...............................................................       497        374
Senior debt ......................................................................     2,421      1,771
Accounts payable .................................................................       170        135
Income taxes:
    Current ......................................................................        --          5
    Deferred .....................................................................       306        274
Other liabilities ................................................................       325        325
Discounted lease rentals .........................................................       742        781
                                                                                     -------    -------
                                                                                       5,485      4,792
                                                                                     -------    -------
Stockholders' equity:
    Preferred stock $.10 par value. Authorized 100,000,000 shares:
      8.75% Cumulative Preferred Stock, Series A and Series B
      $25 stated value and liquidation preference, issued 3,562,600 shares .......        89         89
    Common stock $.10 par value. Authorized 200,000,000 shares;
      issued 110,132,686 shares (108,778,814 in 1996) ............................        11          7
    Additional paid-in capital ...................................................       178        165
    Deferred compensation (ESOP) .................................................        (3)        (5)
    Deferred translation adjustment ..............................................       (20)         5
    Retained earnings ............................................................       965        856
                                                                                     -------    -------
                                                                                       1,220      1,117
    Common stock held in treasury, at cost; 36,092,025 shares (34,329,677 in 1996)      (355)      (318)
                                                                                     -------    -------
      Total stockholders' equity .................................................       865        799
                                                                                     -------    -------
                                                                                     $ 6,350    $ 5,591
                                                                                     =======    =======

See accompanying notes to consolidated financial statements.

</TABLE>

                                      -24-
<PAGE>



Consolidated Statements of Stockholders' Equity
Comdisco, Inc. and Subsidiaries
Years ended September 30, 1997, 1996 and 1995
(in millions except per share data)
<TABLE>
<CAPTION>

                                                               Additional  Deferred    Deferred              Common
                                           Preferred     Common   paid-in   compen- translation  Retained  stock in
                                               stock      stock   capital    sation  adjustment  earnings  treasury
                                           ---------     ------   -------    ------   --------   --------  --------
<S>                                           <C>         <C>       <C>       <C>         <C>       <C>       <C>

BALANCE AT SEPTEMBER 30, 1994 ............    $ 100       $   5     $ 139     $ (10)      $ --      $ 681     $(174)
Net earnings .............................                                                            104
Cash dividends - preferred ...............                                                             (8)
Cash dividends - common ($.16 per share) .                                                            (13)
Stock options exercised ..................                             12
Translation adjustment ...................                                                  13
Issuance of common stock upon
     conversion of subordinated debt .....                              3                                        17
Reduction of guaranteed ESOP debt ........                                        2
Purchase of preferred stock ..............       (9)
Purchase of common stock .................                                                                      (86)
                                              -----       -----     -----     -----      -----     -----      -----
BALANCE AT SEPTEMBER 30, 1995 ............       91           5       154        (8)        13       764       (243)
Net earnings .............................                                                           114
Cash dividends - preferred ...............                                                            (8)
Cash dividends - common ($.19 per share)..                                                           (14)
Stock options exercised ..................                              7
Translation adjustment ...................                                                  (8)
Reduction of guaranteed ESOP debt ........                                        3
Purchase of preferred stock ..............       (2)
Purchase of common stock .................                                                                      (80)
Issuance of treasury stock ...............                              4                                             5
Stock split ..............................                    2        (2)
Income tax benefits resulting from the
  exercise of non-qualified stock options.                              2
                                              -----       -----     -----     -----      -----     -----      -----
BALANCE AT SEPTEMBER 30, 1996 ............       89           7       165        (5)         5       856       (318)
Net earnings..............................                                                           131
Cash dividends - preferred................                                                            (8)
Cash dividends - common ($.20 per share)..                                                           (14)
Stock options exercised...................                             10                                         6
Translation adjustment....................                                                 (25)
Reduction of guaranteed ESOP debt.........                                        2
Purchase of common stock..................                                                                      (45)
Retire treasury stock.....................                             (2)                                        2
Stock split...............................                    4        (4)
Income tax benefits resulting from the
  xercise of non-qualified stock options..                              9
                                              -----       -----     -----     -----      -----      -----     -----
BALANCE AT SEPTEMBER 30, 1997                 $  89       $  11     $ 178     $  (3)     $ (20)     $ 965     $(355)
                                              =====       =====     =====     =====      =====      =====     =====

See accompanying notes to consolidated financial statements.

</TABLE>
                                      -25-
<PAGE>


Consolidated Statements of Cash Flows
Comdisco, Inc. and Subsidiaries
Years ended September 30, 1997, 1996 and 1995
(in millions)
<TABLE>
<CAPTION>


                                                                                                     97            96            95
                                                                                                -------       -------       -------
<S>                                                                                             <C>           <C>           <C>

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS:
Cash flows from operating activities:
    Operating lease and other leasing receipts ...........................................      $ 1,727       $ 1,465       $ 1,282
    Direct financing and sales-type leasing receipts .....................................          861           907           973
    Sale of direct financing and sales-type receivables ..................................           81            --            --
    Leasing costs, primarily rentals paid ................................................          (32)          (34)          (33)
    Sales ................................................................................          264           246           352
    Sales costs ..........................................................................          (84)         (117)         (196)
    Continuity and network services receipts .............................................          343           311           266
    Continuity and network services costs ................................................         (204)         (174)         (171)
    Other revenue ........................................................................           55            54            42
    Selling, general and administrative expenses .........................................         (225)         (222)         (228)
    Litigation settlement ................................................................           25            --            --
    Interest .............................................................................         (291)         (260)         (272)
    Income taxes .........................................................................          (44)          (23)          (32)
                                                                                                -------       -------       -------
      Net cash provided by operating activities ..........................................        2,476         2,153         1,983
                                                                                                -------       -------       -------
Cash flows from investing activities:
    Equipment purchased for leasing ......................................................       (2,940)       (2,486)       (1,865)
    Investment in continuity and network services facilities .............................          (61)          (74)          (78)
    Other ................................................................................          (19)          (17)           (1)
                                                                                                -------       -------       -------
      Net cash used in investing activities ..............................................       (3,020)       (2,577)       (1,944)
                                                                                                -------       -------       -------
Cash flows from financing activities:
    Discounted lease proceeds ............................................................          430           253           279
    Net increase (decrease) in notes payable .............................................         (103)          466            68
    Issuance of term notes, senior notes, and subordinated debt ..........................        1,151           834         1,268
    Maturities and repurchases of term notes, senior notes and subordinated debt .........         (378)         (485)         (816)
    Principal payments on secured debt ...................................................         (469)         (596)         (703)
    Decrease (increase) in legally restricted cash .......................................          (18)            3             7
    Preferred stock purchased ............................................................           --            (2)           (9)
    Common stock purchased and placed in treasury ........................................          (45)          (80)          (86)
    Dividends paid on common stock .......................................................          (14)          (14)          (13)
    Dividends paid on preferred stock ....................................................           (8)           (8)           (8)
    Other ................................................................................            6            (3)            8
                                                                                                -------       -------       -------
      Net cash provided by (used in) financing activities ................................          552           368            (5)
                                                                                                -------       -------       -------
Net increase (decrease) in cash and cash equivalents .....................................            8           (56)           34
Cash and cash equivalents at beginning of year ...........................................           29            85            51
                                                                                                -------       -------       -------
Cash and cash equivalents at end of year .................................................      $    37       $    29       $    85
                                                                                                =======       =======       =======
</TABLE>


See accompanying notes to consolidated financial statements.

                                      -26-
<PAGE>



Consolidated Statements of Cash Flows
Comdisco, Inc. and Subsidiaries
Years ended September 30, 1997, 1996 and 1995
(in millions)
<TABLE>
<CAPTION>


                                                                                              97               96                95
                                                                                          ------           ------            ------
<S>                                                                                       <C>              <C>               <C>
RECONCILIATION OF NET EARNINGS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net earnings ..................................................................           $  131           $  114            $  104
Adjustments to reconcile net earnings to net cash
provided by operating activities:
   Leasing costs, primarily depreciation and amortization .....................            1,502            1,212               990
   Leasing revenue, primarily principal portion of direct
      financing and sales-type lease rentals ..................................              472              575               682
   Sale of direct financing and sales-type receivables ........................               81               --                --
   Cost of sales ..............................................................              126              101               108
   Continuity and network services costs,
      primarily depreciation and amortization .................................               92              103                67
   Income taxes ...............................................................               36               47                32
   Interest ...................................................................                8                2                 2
   Other, net .................................................................               28               (1)               (2)
                                                                                          ------           ------            ------
   Net cash provided by operating activities ..................................           $2,476           $2,153            $1,983
                                                                                          ======           ======            ======
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITIES:
Issuance of treasury stock for acquisition of NetforceMTI .....................           $   --           $    9            $   --
                                                                                          ======           ======            ======
Common stock issued upon conversion of
   6% convertible subordinated promissory note ................................           $   --           $   --            $   20
                                                                                          ======           ======            ======

See accompanying notes to consolidated financial statements.
</TABLE>
                                      -27-
<PAGE>
Notes to Consolidated Financial Statements

NOTE 1 Summary of Significant Accounting Policies

Nature of operations: Comdisco, Inc. is a technology services company, providing
solutions that help  organizations  reduce technology cost and risk. The company
provides technology planning and asset management services,  integrating leasing
and continuity  services with customized  asset  acquisition,  asset  management
software  tools and data center moves  and/or  consolidations,  disposition  and
migration  strategies.  Its  principal  markets are the United  States,  Europe,
Canada and the Pacific Rim.

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

Principles of consolidation:  The consolidated  financial statements include the
accounts of the company and its wholly-owned subsidiaries. Intercompany accounts
and transactions have been eliminated.

Translation  adjustments:  All assets  and  liabilities  denominated  in foreign
currencies  are  translated  at the  exchange  rate on the  balance  sheet date.
Revenues,  costs and  expenses  are  translated  at  average  rates of  exchange
prevailing during the period. Translation adjustments are deferred as a separate
component  of  stockholders'  equity.  Gains and losses  resulting  from foreign
currency transactions are included in the consolidated statements of earnings.

Income  taxes:  The company uses the asset and  liability  method to account for
income taxes.  Deferred tax assets and liabilities are recognized for the future
tax  consequences  attributable to differences  between the financial  statement
carrying  amounts of existing assets and  liabilities  and their  respective tax
basis.  The  measurement of deferred tax assets is reduced,  if necessary,  by a
valuation  allowance  for  any tax  benefits  of  which  future  realization  is
uncertain.

Lease accounting: See "Leasing" section on pages 28 through 30 for a description
of lease accounting policies, lease revenue recognition and related costs.

Continuity services:  Revenue from continuity contracts is recognized monthly as
subscription fees become due.

Cash and cash equivalents:  Cash equivalents are comprised of highly liquid debt
instruments with original maturities of 90 days or less.

Cash - legally  restricted:  Legally  restricted  cash  represents cash and cash
equivalents  that  are  restricted  solely  for  use as  collateral  in  secured
borrowings and are not available to other creditors.

Inventory of equipment: Inventory of equipment is stated at the lower of cost or
market by categories of similar equipment.

Derivatives:  Interest rate differentials on swaps are accrued as interest rates
change over the contract period.  Premiums paid for purchased  interest rate cap
agreements are amortized to interest expense over the terms of the caps. Amounts
receivable under cap agreements are accrued as a reduction of interest  expense.
Unrealized  gains and losses on forward  contracts  are  deferred on the balance
sheet  until  they  are  exercised.  See  Note 6 of the  Notes  to  Consolidated
Financial Statements for financial information concerning derivatives.

Earnings per common share:  Earnings per common and common  equivalent share are
computed based on the weighted  average  number of common and common  equivalent
shares outstanding during each period.
    Dilutive  stock  options  included  in  the  number  of  common  and  common
equivalent  shares are based on the treasury stock method.  The number of common
and common  equivalent  shares used in the  computation  of earnings  per common
share for the years ended  September  30, 1997,  1996 and 1995 were  78,794,651,
79,842,512 and 82,751,084, respectively.

Stock-based compensation:  The company utilizes the intrinsic value based method
of accounting for its stock-based compensation arrangements.

Reclassifications: Certain reclassifications have been made in the 1995 and 1996
financial statements to conform to the 1997 presentation.

LEASING
NOTE 2
Lease Accounting Policies

FASB Statement of Financial  Accounting  Standards No. 13 requires that a lessor
account for each lease by either the direct  financing,  sales-type or operating
method.
                                      -28-

Leased Assets:
o Direct financing and sales-type  leased assets consist of the present value of
the  future  minimum  lease  payments  plus the  present  value of the  residual
(collectively referred to as the net investment). Residual is the estimated fair
market value at lease  termination.  In estimating the equipment's fair value at
lease termination, the company relies on historical experience by equipment type
and  manufacturer  and, where available,  valuations by independent  appraisers,
adjusted for known trends. The company's estimates are reviewed  continuously to
ensure  realization,  however the amounts the company  will  ultimately  realize
could differ from the estimated amounts.

o  Operating  leased  assets  consist  of the  equipment  cost,  less the amount
depreciated to date.

Revenue, Costs and Expenses:
o Direct  financing  leases - Revenue consists of interest earned on the present
value of the lease  payments and residual.  Revenue is  recognized  periodically
over the lease term as a constant percentage return on the net investment. There
are no costs and  expenses  related to direct  financing  leases  since  leasing
revenue is recorded on a net basis.

o  Sales-type  leases -  Revenue  consists  of the  present  value of the  total
contractual  lease  payments which is recognized at lease  inception.  Costs and
expenses consist of the equipment's net book value at lease inception,  less the
present value of the residual. Interest earned on the present value of the lease
payments and residual, which is recognized periodically over the lease term as a
constant  percentage  return  on the  net  investment,  is  included  in  direct
financing lease revenue in the statement of earnings.

o Operating leases - Revenue  consists of the contractual  lease payments and is
recognized on a straight-line  basis over the lease term. Costs and expenses are
principally  depreciation  of the  equipment.  Depreciation  is  recognized on a
straight-line  basis  over  the  lease  term to the  company's  estimate  of the
equipment's fair market value at lease termination, also commonly referred to as
"residual" value. In estimating the equipment's fair value at lease termination,
the company relies on historical  experience by equipment type and  manufacturer
and, where available,  valuations by independent appraisers,  adjusted for known
trends. The company's estimates are reviewed continuously to ensure realization,
however the amounts the company will  ultimately  realize  could differ from the
amounts  assumed in determining  depreciation  on the equipment in the operating
leased portfolio at September 30, 1997.

o Initial  direct  costs  related  to  operating  and direct  financing  leases,
including  salesperson's  commissions,  are  capitalized  and amortized over the
lease term.

NOTE 3 Leased Assets

The components of the net investment in direct  financing and sales-type  leases
as of September 30 are as follows:

(in millions)
                                             97              96
                                         ------          ------
Minimum lease payments receivable        $1,759          $1,802
Estimated residual values                   180             193
Less: unearned revenue                     (222)           (227)
                                         ------          ------
Net investment in direct financing
  and sales-type leases                  $1,717          $1,768
                                         ======          ======


    Unearned  revenue is  recorded  as  leasing  revenue  over the lease  terms.
    Operating leased assets include the following as of September 30:

(in millions)
                                             97              96
                                        -------         -------
Operating leased assets                 $ 5,763         $ 4,665
Less: accumulated depreciation
   and amortization                      (2,192)         (1,823)
                                        -------         -------
Net                                     $ 3,571         $ 2,842
                                        =======         =======

                                      -29-
<PAGE>

NOTE 4 Lease Portfolio Information

The size of the company's  lease portfolio can be measured by the cost of leased
assets at the date of lease inception. Cost at lease inception represents either
the  equipment's  original cost or its net book value at  termination of a prior
lease. The following table summarizes, by year of lease commencement and by year
of  projected  lease  termination,  the cost at lease  inception  for all leased
assets recorded at September 30, 1997 (in millions):

                              Projected year of lease termination
                           --------------------------------------------
                Cost at                                            2002
Year lease        lease                                             and
commenced     inception        98        99       00       01     after
---------        ------    ------    ------   ------     ----      ----
1993
  and prior      $1,113    $  617    $  249   $  171     $ 18      $ 58
1994                587       323       213       23       10        18
1995              1,311       717       298      254       16        26
1996              2,493       524     1,075      459      334       101
1997              3,081       156       744    1,457      383       341
                 ------    ------    ------   ------     ----      ----
                 $8,585    $2,337    $2,579   $2,364     $761      $544
                 ======    ======    ======   ======     ====      ====

    The  following  table  summarizes  the  estimated  net  book  value at lease
termination  for all leased assets  recorded at September 30, 1997. The table is
presented  by  year  of  lease  commencement  and by  year  of  projected  lease
termination (in millions):

                               Projected year of lease termination
                              ------------------------------------
                  Net book
                  value at                                    2002
Year lease           lease                                     and
commenced      termination       98     99      00       01  after
                    ------     ----   ----    ----     ----    ---
1993
  and prior         $   39     $ 34   $  4    $  1     $  -    $ -
1994                    46       23     22       1        -      -
1995                   149       91     30      28        -      -
1996                   398       91    200      52       51      4
1997                   628       49    135     327       67     50
                    ------     ----   ----    ----     ----    ---
                    $1,260     $288   $391    $409     $118    $54
                    ======     ====   ====    ====     ====    ===


NOTE 5 Owned  Equipment - Future  Noncancelable  Lease  Rentals  and  Continuity
Subscription Fees

Presented  below is a summary  of future  noncancelable  lease  rentals on owned
equipment and future  subscription  fees on noncancelable  continuity  contracts
(collectively, "cash in-flows").
    The summary  presents  expected  cash  in-flows due in  accordance  with the
contractual terms in existence as of September 30, 1997. The table also presents
the amounts to be received by financial  institutions for leases discounted on a
nonrecourse  basis (see Note 6 of Notes to Consolidated  Financial  Statements).
<TABLE> 
<CAPTION>

                                                           Years ending September 30,
                                            ------------------------------------------------------------
                                                                                         2002
(in millions)                                   98         99        00         01  and after      Total
                                            ------     ------      ----       ----        ---     ------
<S>                                         <C>        <C>         <C>        <C>         <C>     <C>
Expected future cash in-flows:
    Operating leases                        $1,473     $  964      $456       $133        $30     $3,056
    Direct financing and sales-type leases     782        560       278        102         37      1,759
    Continuity contracts                       265        182       100         54         24        625
                                            ------     ------      ----       ----        ---     ------
      Total                                  2,520      1,706       834        289         91      5,440
                                            ------     ------      ----       ----        ---     ------
  Less: To be received by
        financial institutions
    Operating leases                           225        154        71         28          5        483
    Direct financing and sales-type leases     181        107        35          4          2        329
      Total                                    406        261       106         32          7        812
                                            ------     ------      ----       ----        ---     ------
         To be received by the company      $2,114     $1,445      $728       $257        $84     $4,628
                                            ======     ======      ====       ====        ===     ======
</TABLE>
                                      -30-
<PAGE>
FINANCING

NOTE 6 Interest-Bearing Liabilities

Interest-bearing liabilities include the following:

(in millions)
<TABLE>
<CAPTION>
                                                 97                                          96
                              ---------------------------------------  ---------------------------------------
                                At September 30          Average          At September 30         Average
                              ------------------    -----------------   ----------------     -----------------
                               Balance      Rate    Balance      Rate   Balance      Rate    Balance      Rate
                                ------      ----     ------      ----    ------      ----     ------      ----
<S>                             <C>         <C>      <C>        <C>      <C>         <C>      <C>         <C>
Notes payable:
    Credit lines and loan
      participation contracts   $  505      5.67%    $  603     6.40%    $  664      5.62%    $  443      6.56%
    Commercial paper               519      5.82%       552     5.77%       463      5.62%       474      5.77%
Term notes                         497      5.98%       430     6.16%       374      6.49%       322      6.67%
Senior notes                     2,421      6.62%     2,125     6.93%     1,771      7.16%     1,524      7.57%
Subordinated debt                    -         -%         -        -%         -         -%         9      9.05%
Discounted lease rentals           742      7.19%       773     7.13%       781      7.19%       938      7.24%
                                ------      ----     ------     ----     ------      ----     ------      ----
                                $4,684      6.45%    $4,483     6.68%    $4,053      6.68%    $3,710      7.06%
                                ======      ====     ======     ====     ======      ====     ======      ====

</TABLE>

The changes in  financing  activities  for the years ended  September 30 were as
follows (notes payable changes are shown net):

(in millions)
<TABLE>
<CAPTION>

                                                97                                              96
                            ------------------------------------------      -------------------------------------------
                              Out-                         Out-               Out-                         Out-
                          standing         Maturities  standing           standing         Maturities  standing
                         beginning   Issu-        and       end    Fair  beginning  Issu-        and        end    Fair
                           of year  ances repurchases   of year   value    of year  ances repurchases   of year   value
                            ------  ------    -------    ------  ------     ------ ------    --------    ------  ------
<S>                         <C>     <C>       <C>        <C>     <C>        <C>    <C>       <C>         <C>     <C>
Notes payable:
  Credit lines and loan
   participation contracts  $  664  $    -    $  (159)   $  505  $  505     $  365 $  299    $     -     $  664  $  664
    Commercial paper           463      56          -       519     519        296    167          -        463     463
Term notes                     374     125         (2)      497     499        507    100       (233)       374     377
Senior notes                 1,771   1,026       (376)    2,421   2,440      1,276    734       (239)     1,771   1,623
Subordinated debt                -       -          -         -       -         13     -         (13)         -       -
Discounted lease rentals       781     430       (469)      742     743      1,124    253       (596)       781     778
                            ------  ------    -------    ------  ------     ------ ------     -------    ------  ------
                            $4,053  $1,637    $(1,006)   $4,684  $4,706     $3,581 $1,553     $(1,081)   $4,053  $3,905
                            ======  ======    =======    ======  ======     ====== ======     =======    ======  ======
</TABLE>


    The fair value of the company's  interest-bearing  liabilities was estimated
based  generally on quoted market prices for the same or similar  instruments or
on current rates offered the company for similar debt of the same maturity.
    The annual maturities of all  interest-bearing  liabilities at September 30,
1997 are shown in the table at right:

(in millions)
                                                           2002
                                                            and
                      98         99       00        01    after      Total
                  ------     ------     ----      ----     ----     ------
Notes payable:
  Credit lines
   and loan
   participation
   contracts      $  505     $    -     $  -      $  -     $  -     $  505
  Commercial
   paper             519          -        -         -        -        519
Term notes           497          -        -         -        -        497
Senior notes         610        853      379       289      290      2,421
Discounted
  lease rentals      365        240      100        30        7        742
                  ------     ------     ----      ----     ----     ------
                  $2,496     $1,093     $479      $319     $297     $4,684
                  ======     ======     ====      ====     ====     ======

                                      -31-
<PAGE>
Notes payable:  The company had the following  unsecured bank lines available in
the United States and foreign countries at September 30:

(in millions)                           97           96
                                    ------       ------
Total credit lines:
  Committed                         $1,139       $1,016
  Uncommitted                          451          319
                                    ------       ------
                                    $1,590       $1,335
                                    ======       ======
Utilized at September 30:
  Committed                         $  760       $  766
  Uncommitted                          101          206
    Total credit lines                 861          972
  Loan participation contracts         163          155
                                    ------       ------
    Total notes payable             $1,024       $1,127
                                    ======       ======
Credit lines available at
  September 30                      $  729       $  363
                                    ======       ======
Maximum amount outstanding
  at any month end                  $1,302       $1,131
                                    ======       ======

    The company  had  outstanding  interest  rate caps  totaling  $44 million on
short-term borrowings to mitigate interest rate risks at September 30, 1997.

Committed  lines:  The  company's  committed  lines have been  established  with
thirty-two  banks,  eight of which are U.S.  banks.  A majority of the banks are
rated AA or better by rating  agencies.  At September 30, 1997,  the company had
committed domestic and foreign unsecured lines of credit as follows:

                           Number         Expiration
Facility                 of banks               date
----------------------   --------     --------------
Multi-Option Facilities       13
    $300 million facility             December, 1999
    $200 million facility             December, 1997
Global Facilities              17
    $300 million facility             December, 1999
    $200 million facility             December, 1997
Other credit agreements:
    $ 75 million - domestic
      and foreign               1        April, 1998
    $ 64 million - foreign      4            Various

    There  are no  compensating  balance  requirements  on any of the  committed
lines. At September 30, 1997, the company had $760 million outstanding under its
committed  lines,  including $519 million  supporting  the company's  commercial
paper program.
    The multi-option revolving credit agreements and the global revolving credit
agreements (collectively, the "Facilities") permit the company to borrow in U.S.
dollars or in other currencies,  on a revolving credit basis.  Interest rates on
debt  outstanding  under  the  Facilities  are  negotiated  at the  time  of the
borrowings based either on "bid rates" from the participating  banks, LIBOR plus
twenty basis points or, for the two $200 million  facilities,  twenty-two  basis
points,  or at the banks' then current base rates.  The Facilities  call for the
company  to pay an annual fee of ten basis  points per annum on $600  million of
the  committed  amount and eight basis  points per annum on $400  million of the
committed  amount.  The two $200 million  facilities are renewable  annually and
should the banks decide not to renew,  include provisions to convert any amounts
then outstanding to term loans with a final maturity of December, 1998.

Uncommitted lines and loan participation contracts: In addition to the committed
lines, the company maintains various domestic and international  lines of credit
for  short-term  debt  with  banks,  including  approximately  $451  million  of
uncommitted lines of credit,  under which the company can borrow on an unsecured
basis on such terms as the company and banks may mutually agree. The majority of
these  arrangements  do not have  maturity  dates,  and can be  withdrawn at the
banks' option. There are no fees or compensating balances associated with either
the uncommitted lines or the loan participation contracts.

Commercial  paper:  At  September  30,  1997,  the company  had $700  million of
commercial  paper facilities (of which $519 million was outstanding at September
30,  1997) all of which are  supported  by its  committed  lines of credit.  The
facilities were rated D-2 by Duff & Phelps,  P-2 by Moodys and A-2 by Standard &
Poors.

Term notes payable: Term notes payable include the following at September 30:

(in millions)                                      97       96
                                                 ----     ----
Receivable backed commercial
    paper (floating rate; due 1998)              $450     $325
Building mortgage (9.70%; due 1998)                44       44
Guaranteed senior ESOP notes (8.12%; due 1998)      3        5
                                                 ----     ----
                                                 $497     $374
                                                 ====     ====

    Subsequent  to the  issuance of the  mortgage,  the company  entered into an
interest rate swap agreement  that  effectively  converted this  obligation to a
floating rate obligation through maturity.  See Note 11 of Notes to Consolidated
Financial Statements regarding the senior ESOP notes.

                                      -32-
<PAGE>

Senior notes: Senior notes include the following at September 30:
<TABLE>

(in millions)                        97        96
                                 ------    ------
<S>                              <C>       <C> 
Medium term notes (5.22% to
  9.99%)<F1>                     $1,184    $  834
9.75%  Senior Notes due 1997          -       200
7.25%  Senior Notes due 1998        200       200
7.75%  Senior Notes due 1999         89        89
6.50%  Senior Notes due 1999        250         -
6.50%  Senior Notes due 2000        199       199
5.75%  Senior Notes due 2001        249       249
6.375% Senior Notes due 2002        250         -
                                 ------    ------
    Total senior notes           $2,421    $1,771
                                 ======    ======
<FN>
<F1>The  company had interest  rate swap  agreements  at September 30, 1997 that
effectively  converted $25 million of  medium-term  floating rate  borrowings to
fixed rate  obligations  with an effective  interest rate of 6.65%.  The average
remaining terms of these swap agreements was less than one year at September 30,
1997. 
</FN>
</TABLE>
    On November 1, 1996, the company filed a registration  statement on Form S-3
with the Securities and Exchange  Commission (the "SEC") for a shelf offering of
up to $950 million of senior debt securities (which amount includes $100 million
of  undesignated  securities  from a previous shelf  registration  statement) on
terms to be set at the time of each sale (the  "1996  Shelf").  Pursuant  to the
1996 Shelf,  the company,  on November  21, 1996,  issued $250 million of 6.375%
Notes Due  November  30,  2001,  and, on December  6, 1996,  filed a  Prospectus
Supplement   designating   $500  million  of  the  senior  debt   securities  as
"Medium-Term  Notes,  Series F." On May 1, 1997,  the company  redesignated  $50
million of the then remaining $310 million of medium-term  notes, which together
with the $200 million  previously  unallocated under the 1996 Shelf, were issued
by the company on May 6, 1997 as $250 million of 6.50% Notes Due April 30, 1999.
During fiscal 1997, the company sold $377 million of Medium-Term  Notes,  Series
F. As a result of these sales and the redesignation, an aggregate of $73 million
of  medium-term  notes remain  available for issuance under the 1996 Shelf as of
September 30, 1997.
    On June 23, 1997,  the company  filed a  registration  statement on Form S-3
with  the  SEC  for a  shelf  offering  of up to $1.2  billion  of  senior  debt
securities  on terms to be set at the time of each sale (the "1997  Shelf").  On
November 6, 1997,  the company filed a Prospectus  Supplement  designating  $600
million of the senior debt securities as "Medium-Term Notes, Series G."
    There are no sinking fund requirements  associated with any of the company's
senior notes.

Discounted lease rentals:  The company utilizes its lease rentals receivable and
underlying  equipment  in leasing  transactions  as  collateral  to borrow  from
financial institutions at fixed rates on a nonrecourse basis. In return for this
secured interest,  the company receives a discounted cash payment.  In the event
of a default  by a lessee,  the  financial  institution  has a first lien on the
underlying  leased  equipment,  with no further  recourse  against the  company.
Proceeds from  discounting are recorded on the balance sheet as discounted lease
rentals;  as lessees make  payments to  financial  institutions,  lease  revenue
(i.e.,  interest  income on direct  financing and  sales-type  leases and rental
revenue on operating leases) and interest expense are recorded. Discounted lease
rentals are reduced by the interest method.
    Future minimum lease payments and interest  expense on leases that have been
discounted as of September 30, 1997 are as follows (in millions):

                Rentals to be
                  received by    Discounted
Years ending        financial         lease   Interest
September 30,    institutions       rentals    expense
-------------            ----          ----        ---
1998                     $406          $365        $41
1999                      261           240         21
2000                      106           100          6
2001                       32            30          2
2002                        7             7          -
                         ----          ----        ---
                         $812          $742        $70
                         ====          ====        ===

    Interest expense on discounted  lease rentals was $55 million,  $68 million,
and $98 million in fiscal 1997, 1996, and 1995, respectively.

Interest rate swap agreements and other derivative  financial  instruments:  The
company is a party to a variety of  interest  rate and  cross-currency  interest
rate swap  agreements  and  other  financial  instruments  in order to limit its
exposure to a loss  resulting  from  adverse  fluctuations  in foreign  currency
exchange and interest rates.  Interest rate swap contracts  generally  represent
the  contractual  exchange  of fixed  and  floating  rate  payments  of a single
currency.  Cross-currency  interest rate swap  contracts  generally  involve the
exchange of payments which are based on the interest  reference  rates available
at the inception of the contract on two different  currency  principal  balances
that are exchanged.  The principal  balances are  re-exchanged at an agreed upon
rate at a specified  future  date.  Credit and market risk exist with respect to
these instruments.

                                      -33-
<PAGE>
    The  following  table  presents  the  contract  or notional  (face)  amounts
outstanding  and the  fair  value  of the  contracts  based  generally  on their
termination values at September 30:

(in millions)
                             97                    96
                     ----------------    ------------------
                     Notional    Fair    Notional      Fair
                       amount   value      amount     value
                          ---     ---        ----       ---
Interest rate swap
  agreements              $95     $(1)       $165       $(1)
 Cross-currency interest
  rate swap agreements     85       9          95        (1)
Interest rate caps         44       -          47         -
Forwards and futures        3       -         147         6

    The impact of these  contracts  on interest  expense for fiscal  years 1997,
1996 and 1995 was immaterial.  The average  notional  amount  outstanding of the
floating rate to fixed rate contracts in fiscal 1997,  including  those noted in
the discussions above, was $74 million, with an average pay rate of 6.82% and an
average receive rate of 5.92%.  The average  notional amount  outstanding of the
fixed rate to floating  rate  contracts in fiscal 1997 was $29 million,  with an
average pay rate of 5.67% and an average  receive rate of 5.45%.  The company is
exposed to credit loss in the event of  non-performance  by the other parties to
the interest rate swap agreements. However, because of the credit quality of the
counterparties,   the  company  does  not  anticipate   non-performance  by  the
counterparties.

OTHER FINANCIAL INFORMATION

NOTE 7  Receivables

Receivables  (net of allowance for doubtful  accounts of $22 million in 1997 and
$21 million in 1996) include the following as of September 30:

(in millions)                        97        96
                                   ----      ----
Accounts, net                      $160      $128
Income taxes                          6         5
Notes                                41        23
Other                                55        62
                                   ----      ----
                                   $262      $218
                                   ====      ====

    The allowance for doubtful  accounts includes  management's  estimate of the
amounts  expected to be lost on specific  accounts and for losses on other as of
yet  unidentified  accounts  included in  receivables  at  September  30,  1997,
including   estimated   losses  on  future   noncancelable   lease  rentals  and
subscription  fees,  net of estimated  recoveries  from  remarketing  of related
leased equipment.  In estimating the reserve  component for unidentified  losses
within the  receivables  and lease  portfolio,  management  relies on historical
experience,  adjusted for any known trends,  including  industry trends,  in the
portfolio.

NOTE 8  Income Taxes

The geographical sources of earnings before income taxes were as follows:

(in millions)                97       96       95
                           ----     ----     ----
United States              $163     $155     $154
Outside United States        48       29       14
                           ----     ----     ----
                           $211     $184     $168
                           ====     ====     ====

    Cumulative  unremitted  earnings  of foreign  operations  amounting  to $104
million after  foreign taxes at September 30, 1997,  were expected by management
to be reinvested.  Accordingly,  no provision has been made for additional  U.S.
taxes which would be payable if such  earnings were to be remitted to the parent
company as dividends.  The amount of U.S.  taxes, if any, are  impracticable  to
determine.
    The components of the income tax provision  (benefit) charged  (credited) to
operations were as follows:

(in millions)                      97           96          95
                                  ---          ---         ---
Current:
  U.S. Federal                    $24          $20         $16
  U.S. state and local              7            6          10
  Outside United States             8           14           9
                                  ---          ---         ---
                                   39           40          35
                                  ---          ---         ---
Deferred:
  U.S. Federal                     35           32          30
  U.S. state and local              2            3          (1)
  Outside United States             4           (5)          -
                                   41           30          29
                                  ---          ---         ---
    Total tax provision           $80          $70         $64
                                  ===          ===         ===

                                      -34-
<PAGE>
    The reasons for the difference  between the U.S. Federal income tax rate and
the effective income tax rate for earnings were as follows:

                                     Percentage of pretax earnings
                                 --------------------------------------
                                   97                 96             95
                                 ----               ----           ----
U.S. Federal income
  tax rate                       35.0%              35.0%          35.0%
Increase (reduction)
  resulting from:
   State income taxes, net
     of U.S. Federal tax
     benefit                      3.0                3.3            3.6
   Foreign income tax rate
     differential                  .8                1.3             .1
   Tax effect of foreign
     losses (utilized)/
     deferred                    (2.9)              (1.9)           2.2
   Changes in estimates of
     previously provided
     taxes                          -                  -           (2.0)
   Other, net                     2.1                 .3            (.9)
                                 ----               ----           ----
                                 38.0%              38.0%          38.0%
                                 ====               ====           ====

    Deferred tax assets and  liabilities  at September 30, 1997 and 1996 were as
follows:

(in millions)                        97        96
                                   ----      ----
Deferred tax assets:
  Equity transactions              $266      $318
  Foreign loss carryforwards         24        32
  U.S. net operating loss
    carryforwards                    44        32
  AMT credit carryforwards          111        91
  Deferred income                    34        22
  Other, net                         58        24
                                   ----      ----
    Gross deferred tax assets       537       519
    Less: valuation allowance       (24)      (32)
                                   ----      ----
    Total deferred tax assets       513       487
                                   ----      ----
Deferred tax liabilities:
  Lease accounting                  782       719
  Foreign                            37        34
  Deferred expenses                   -         8
                                   ----      ----
   Total deferred tax liabilities   819       761
                                   ----      ----
    Net deferred tax liabilities   $306      $274
                                   ====      ====

    For financial reporting purposes,  the company has approximately $56 million
of foreign net operating  loss  carryforwards,  most of which have no expiration
date. The company has recognized a valuation  allowance of $24 million to offset
this deferred tax asset.  During fiscal 1997, changes in the valuation allowance
included  decreases  of $6 million from  utilizing  foreign net  operating  loss
carryforwards and $2 million from foreign exchange rate and tax rate changes.
    At September 30, 1997, the company has available for U.S. Federal income tax
purposes, the following carryforwards (in millions):

                                            Net
                                      operating
Year scheduled to expire                   loss
----                                       ----
2004                                       $  2
2005                                          5
2006                                          5
2007                                        102
2009                                          3
                                           ----
                                           $117
                                           ====

    For U.S.  Federal income tax purposes,  the company has  approximately  $111
million of  alternative  minimum tax ("AMT") credit  carryforwards  available to
reduce regular taxes in future years.  AMT credit  carryforwards  do not have an
expiration date.
    All years prior to fiscal year 1989 are closed to further  assessment by the
Internal Revenue Service (the "Service") due to the expiration of the Statute of
Limitations.
    In 1992, the Service commenced an income tax audit for fiscal years 1989 and
1990. In May, 1994, a 30-Day Letter was received by the company proposing income
tax  deficiencies  of $10 million and $3 million for fiscal years 1989 and 1990,
respectively. In August, 1994, the company filed a Protest with the Service. The
Appeals  Division  ("Appeals")  returned  the  case  to the  field  for  further
development.  In May,  1997,  the company and the  Service  jointly  submitted a
Technical Advice Request to the Service's National Office requesting guidance on
the proper treatment of assets for inventory and tax depreciation purposes while
not under a lease contract.  In August,  1997, the company met with the National
Office to discuss the Technical Advice and submitted additional information that
had been requested. Management believes that all issues will be resolved with no
material impact on the company's financial condition or results of operations.
    During  1994,  the Service  commenced  an income tax audit for fiscal  years
1991, 1992 and 1993. In June,  1996, a 30-Day Letter was received by the company
proposing  tax  deficiencies  of $14  million,  $28  million and $30 million for
fiscal years 1991,  1992 and 1993,  respectively.  These  assessments  primarily

                                      -35-
<PAGE>
relate to the  inventory/depreciation  issue.  Due to the  complexity and costly
calculations    relating    to   the   turn   around    adjustments    for   the
inventory/depreciation  issue as proposed, the company and the Service agreed to
forego the turn around  calculations  as part of the above  assessments.  If the
inventory/depreciation   turn  around   adjustments   were  included,   the  tax
assessments  would be substantially  less. In August,  1996, the company filed a
Protest with the Service  requesting  a  conference  with Appeals to discuss the
issues  which are in  disagreement.  However,  Appeals  returned the case to the
field for further  development.  Once the  additional  field work is  completed,
management anticipates the case will be returned to Appeals. Management believes
that all issues raised will be resolved with no material impact on the company's
financial condition or results of operations. Additionally, in August, 1996, the
company made tax payments  totaling $4 million and interest payments totaling $1
million in  anticipation  of expected  tax and interest  liabilities  for fiscal
years 1992 and 1993.
    In July,  1996,  the Service  commenced an income tax audit for fiscal years
1994 and 1995.  Field work is  expected to be  completed  by the end of calendar
year 1997 and the  company  expects  to receive a 30-Day  Letter in early  1998.
Management  believes  all issues will  eventually  be resolved  with no material
impact on the company's financial condition or results of operations.
    The  company  also  undergoes  audits  by  foreign,   state  and  local  tax
jurisdictions.  As of September 30, 1997, no material assessments have been made
by these tax authorities.

NOTE 9  Preferred Stock

There are 100,000,000 authorized shares of preferred stock - $.10 par value. The
board of directors establishes and designates the series and fixes the number of
shares and the relative  rights,  preferences  and limitations of the respective
series.  Whenever  dividends on  preferred  stock are in arrears six quarters or
more,  holders  of such stock  (voting  as a class)  have the right to elect two
directors  of the  company  until  all  cumulative  dividends  have  been  paid.
Dividends  on  outstanding  preferred  stock must be  declared  and paid  before
dividends  may be paid or set apart for payment on the common  stock.  Dividends
paid on preferred stock were $8 million in fiscal 1997, 1996 and 1995.

8.75%   Cumulative   Preferred  Stock  (at  $25  stated  value  and  liquidation
preference):  The Series A and B Preferred Stock have no preemptive  rights, are
not  convertible  into shares of common stock or any other class of stock of the
company,  and are not subject to any  sinking  fund or other  obligation  of the
company to repurchase or retire the Series A and B Preferred Stock.
    On September  19, 1997,  the company  announced  the  redemption,  effective
October  20,  1997,  of all shares of the Series A  Preferred  Stock  (2,738,200
shares)  at the  redemption  price per share of $25,  plus  accrued  and  unpaid
dividends.  The Series B  Preferred  Stock is not  redeemable  prior to July 12,
1998. After July 12, 1998, the Series B Preferred Stock is subject to redemption
at the company's option, at any time, at $25 per share (plus accrued dividends).

NOTE 10  Common Stock

All  references in the financial  statements and notes to common share data have
been  adjusted to reflect the  three-for-two  stock split  distributed  in June,
1997.
    Cash  dividends  paid were $.20 per share in fiscal 1997,  $.19 per share in
fiscal  1996,  and $.16 per share in fiscal  1995.  The  company  purchased  2.5
million  and 5.6  million  shares of common  stock at an  aggregate  cost of $45
million and $80 million in fiscal 1997 and 1996, respectively. On March 1, 1995,
the company issued 2.3 million shares from Treasury upon the conversion of a $20
million convertible  subordinated promissory note. These shares were repurchased
on the same day at a price of $11.11 per share.
      On November 4, 1997,  the board of directors of the company  adopted a new
shareholder  rights  plan  (the "New  Rights  Plan") to  replace  the  company's
existing  plan,  which expired on November 17, 1997.  Under the New Rights Plan,
shareholders of record on November 17, 1997 received a dividend  distribution of
one preferred stock purchase right for each share of the company's  common stock
then held.  Like the  shareholder  rights plan it replaced,  the New Rights Plan
continues the company's policy of ensuring fair value to all shareholders in the
event of an unsolicited takeover offer for the company. The New Rights Plan will
expire on November 17, 2007. The New Rights Plan is incorporated by reference in
the company's Form 10-K for fiscal 1997 and the company's  filing on Form 8-K in
November, 1997.

                                      -36-
<PAGE>

NOTE 11  Employee Benefits Plans

In fiscal 1988,  the company  established  the  Comdisco,  Inc.  Employee  Stock
Ownership Trust (the "Trust").  The Trust borrowed $20 million (the "ESOP Debt")
to purchase  2.3 million  shares of common stock held in treasury by the company
at a market price at the date of purchase of $8.83 per share.
    The ESOP Debt is guaranteed by the company.  The outstanding  balance of the
ESOP Debt has been  recorded in term notes payable in the  consolidated  balance
sheet  and a like  amount  of  deferred  compensation  has  been  recorded  as a
reduction of stockholders'  equity.  Shares purchased by the Trust with the ESOP
Debt  proceeds  are  allocated   annually  to  plan  participants  and  deferred
compensation is reduced by the amount of the principal payment on the ESOP Debt.
The company has a profit  sharing plan which,  together with the Employee  Stock
Ownership  Plan (the  "Plans"),  covers  substantially  all domestic  employees.
Company  contributions  to the  Plans are based on a  percentage  of  employees'
compensation,  as defined.  Benefits are  accumulated on an individual  employee
basis.
    The company's stock option plans provide for the granting of incentive stock
options and/or  nonqualified  options to employees and agents to purchase shares
of common stock.
    Additionally, under the 1989 Non-Employee Directors' Stock Option Plan, each
October 1, each individual who is a Non-Employee Director during the fiscal year
shall  automatically  be  granted an option  for 4,500  shares of the  company's
common stock at the then fair market value.
    The  company  applies APB  Opinion  No. 25 and  related  Interpretations  in
accounting for its plans. Accordingly,  no compensation cost has been recognized
for its fixed stock option plans. Had compensation  cost for the company's stock
option  plans  been  determined  consistent  with FASB  Statement  of  Financial
Accounting  Standards No. 123 ("FAS 123"), the company's net earnings  available
to common stockholders and earnings per common and common equivalent share would
have been reduced to the pro forma amounts indicated below:

(in millions except per share data)
                                      97       96
                                   -----    -----
Net earnings available
  to common stockholders
  As reported                      $ 123    $ 106
  Pro forma                          120      105
Earnings per common and
  common equivalant share
  As reported                      $1.56    $1.33
  Pro forma                         1.53     1.31

    Under the stock option plans,  the exercise  price of each option equals the
market price of the company's common stock on the date of grant. For purposes of
calculating  the  compensation  cost  consistent with FAS 123, the fair value of
each option  grant is  estimated  on the date of grant  using the  Black-Scholes
option-pricing  model with the following  weighted-average  assumptions used for
grants in fiscal  1997 and 1996,  respectively:  dividend  yield of 1.0% for all
years;  expected  volatility  of 26 percent and 29 percent;  risk free  interest
rates of 6.19% and 5.94%; and expected lives of five years.

                                      -37-




<PAGE>

    Additional information on shares subject to options is as follows:


<TABLE>
<CAPTION>

(in thousands except weighted average exercise)
                                            97                  96                    95
                                    -------------------   -----------------    -----------------
                                              Weighted-           Weighted-            Weighted-
                                    Number      average   Number    average    Number    average
                                        of     exercise       of   exercise        of   exercise
                                    shares        price   shares      price    shares      price
                                     ------         ---    -----        ---   -------         --
<S>                                   <C>           <C>    <C>          <C>    <C>            <C>
Outstanding at beginning of year      9,548         $ 9    8,217        $ 8     9,243         $8
Granted                               2,641          18    2,448         13     1,071          9
Exercised                            (2,144)          8     (912)         8    (1,549)         7
Forfeited                              (453)         11     (205)         9      (548)         7
                                     ------         ---    -----        ---    ------         --
Outstanding at the end of year        9,592         $12    9,548        $ 9     8,217         $8
                                     ======         ===    =====        ===   =======         ==
Options exercisable at year-end       6,289         $11    5,555        $ 9     4,689         $8
                                     ======         ===    =====        ===   =======         ==
Weighted-average fair value of
 options granted during the year     $ 5.77                $4.49              $  3.34
                                     ======                =====              =======
</TABLE>

    The following table summarizes  information about stock options  outstanding
at September 30, 1997 (number of shares in thousands):
<TABLE>
<CAPTION>
                                            Options outstanding             Options exercisable
                                    ----------------------------------     ---------------------
                                                  Weighted-  Weighted-                 Weighted-
                                    Number         average     average     Number        average
                                        of  remaining con-    exercise         of       exercise
Range of exercise prices            shares   tractual life       price     shares          price
------------------------              -----       ---------        ---      -----            ---
<S>                                   <C>         <C>              <C>      <C>              <C>
$6 to 9                               2,634       5.5 years        $ 7      2,262            $ 7
$9 to 12                              2,433       5.5 years         10      1,612             10
$12 to 15                             2,625       8.0 years         14      1,769             14
$15 to 22                             1,900       9.0 years         19        646             19
                                      -----       ---------        ---      -----            ---
                                      9,592       7.0 years        $12      6,289            $11
                                      =====       =========        ===      =====            ===
</TABLE>

NOTE 12  Quarterly Financial Data (Unaudited)

Summarized  quarterly  financial  data for the fiscal years ended  September 30,
1997 and 1996, is as follows (in millions except for per share amounts):

<TABLE>
<CAPTION>

                                  Quarter ended
                                        -----------------------------------------------------------------
                                         December 31,       March 31,        June 30,       September 30,
                                           96      95       97       96       97     96        97      96
                                         ----    ----     ----     ----     ----   ----      ----    ----
<S>                                      <C>     <C>      <C>      <C>      <C>    <C>       <C>     <C>
Total revenue                            $633    $530     $690     $581     $712   $592      $784    $728
Net earnings to common stockholders      $ 28    $ 25     $ 31     $ 26     $ 32   $ 27      $ 32    $ 28
Net earnings per common and
    common equivalent share              $.37    $.31     $.38     $.33     $.40   $.34      $.41    $.35
</TABLE>

NOTE 13  Segment Information

The company operates predominantly in the leasing industry. The company operated
in four  principal  geographic  locations  during fiscal 1997.  The company also
operates in South America.
    Transfers  between  geographic  areas  include a  reasonable  profit that is
eliminated in consolidation.
    Presented  on page 39 is  financial  information  reflecting  the  company's
leasing and continuity and network  services  operations by geographic  area for
the years ended September 30, 1997, 1996 and 1995.

                                      -38-
<PAGE>


<TABLE>
<CAPTION>

(in millions)
                                           United                   Pacific    Export Elimin-    Consol-
                                           States   Europe   Canada     Rim     sales  ations     idated
                                           ------     ----     ----    ----      ---    -----     ------
<S>                                        <C>        <C>      <C>     <C>       <C>    <C>       <C>
1997
Revenue from unaffiliated customers
    Leasing                                $1,880     $489     $ 63    $ 33      $ -    $   -     $2,465
    Continuity and network services           293       48       13       -        -        -        354
                                           ------     ----     ----    ----      ---    -----     ------
Total revenue from unaffiliated customers   2,173      537       76      33        -        -      2,819
Transfers between geographic areas             12       14        3       5        4      (38)         -
                                           ------     ----     ----    ----      ---    -----     ------
       Total revenue                       $2,185     $551     $ 79    $ 38      $ 4    $ (38)    $2,819
                                           ======     ====     ====    ====      ===    =====     ======
Earnings (loss) before income taxes
    Leasing                                $  119     $ 21     $ 16    $ (1)     $ -    $  (2)    $  153
    Continuity and network services            51        6        1       -        -        -         58
                                           ------     ----     ----    ----      ---    -----     ------
Total earnings (loss) before income taxes  $  170     $ 27     $ 17    $ (1)     $ -    $  (2)    $  211
                                           ======     ====     ====    ====      ===    =====     ======
Total assets (end of year)
    Leasing                                $5,058     $790     $162    $164      $23    $(159)    $6,038
    Continuity and network services           270       62       20       -        -      (40)       312
                                           ------     ----     ----    ----      ---    -----     ------
       Total assets                        $5,328     $852     $182    $164      $23    $(199)    $6,350
                                           ======     ====     ====    ====      ===    =====     ======
1996
Revenue from unaffiliated customers
    Leasing                                $1,573     $420     $ 75    $ 45      $ -    $   -     $2,113
    Continuity and network services           263       41       14       -        -        -        318
                                           ------     ----     ----    ----      ---    -----     ------
Total revenue from unaffiliated customers   1,836      461       89      45        -        -      2,431
Transfers between geographic areas              8        4        4       3        5      (24)         -
                                           ------     ----     ----    ----      ---    -----     ------
       Total revenue                       $1,844     $465     $ 93    $ 48      $ 5    $ (24)    $2,431
                                           ======     ====     ====    ====      ===    =====     ======
Earnings (loss) before income taxes
    Leasing                                $  113     $ 10     $ 19    $  1      $ 1    $  (1)    $  143
    Continuity and network services            40        -        1       -        -        -         41
                                           ------     ----     ----    ----      ---    -----     ------
Total earnings (loss) before income taxes  $  153     $ 10     $ 20    $  1      $ 1    $  (1)    $  184
                                           ======     ====     ====    ====      ===    =====     ======
Total assets (end of year)
    Leasing                                $4,397     $723     $151    $ 83      $23    $ (89)    $5,288
    Continuity and network services           264       60       19       -        -      (40)       303
                                           ------     ----     ----    ----      ---    -----     ------
       Total assets                        $4,661     $783     $170    $ 83      $23    $(129)    $5,591
                                           ======     ====     ====    ====      ===    =====     ======
1995
Revenue from unaffiliated customers
    Leasing                                $1,503     $369     $ 50    $ 51      $ -    $   -     $1,973
    Continuity and network services           219       33       15       -        -        -        267
                                           ------     ----     ----    ----      ---    -----     ------
Total revenue from unaffiliated customers   1,722      402       65      51        -        -      2,240
Transfers between geographic areas             13       24       12       3        8      (60)         -
                                           ------     ----     ----    ----      ---    -----     ------
       Total revenue                       $1,735     $426     $ 77    $ 54      $ 8    $ (60)    $2,240
                                           ======     ====     ====    ====      ===    =====     ======
Earnings (loss) before income taxes
    Leasing                                $  124     $  8     $ 13    $ (5)     $ -    $  (1)    $  139
    Continuity and network services            30       (2)       1       -        -        -         29
                                           ------     ----     ----    ----      ---    -----     ------
Total earnings (loss) before income taxes  $  154     $  6     $ 14    $ (5)     $ -    $  (1)    $  168
                                           ======     ====     ====    ====      ===    =====     ======
Total assets (end of year)
    Leasing                                $3,922     $680     $126    $100      $23    $(107)    $4,744
    Continuity and network services           239       61       19       -       -       (24)       295
                                           ------     ----     ----    ----      ---    -----     ------
       Total assets                        $4,161     $741     $145    $100      $23    $(131)    $5,039
                                           ======     ====     ====    ====      ===    =====     ======
</TABLE>
                                      -39-
<PAGE>



Independent Auditors' Report

The Stockholders and Board of Directors, Comdisco, Inc.:

We have audited the accompanying  consolidated balance sheets of Comdisco,  Inc.
and subsidiaries as of September 30, 1997 and 1996, and the related consolidated
statements  of earnings,  stockholders'  equity,  and cash flows for each of the
years in the  three-year  period ended  September 30, 1997.  These  consolidated
financial  statements are the  responsibility of the company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.
    We conducted  our audits in  accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
    In our opinion,  the  consolidated  financial  statements  referred to above
present fairly, in all material  respects,  the financial  position of Comdisco,
Inc. and  subsidiaries  at September 30, 1997 and 1996, and the results of their
operations and their cash flows for each of the years in the  three-year  period
ended  September  30, 1997 in  conformity  with  generally  accepted  accounting
principles.


/s/KPMG PEAT MARWICK LLP

Chicago, Illinois
November 7, 1997


                                      -40-