Six-Year Summary 
Comdisco, Inc. and Subsidiaries
(in millions except per share data)


<TABLE>
<CAPTION>
                                                                                    1996    1995    1994     1993    1992     1991
                                                                                  ------  ------  ------   ------   -----   ------ 
<S>                                                                               <C>     <C>     <C>      <C>      <C>     <C>  

CONSOLIDATED SUMMARY OF EARNINGS
 Revenue
    Leasing                                                                       $1,797  $1,573  $1,538   $1,583  $1,662   $1,633
    Sales                                                                            262     358     271      313     311      360
    Business continuity and network services                                         318     267     242      216     193      150
    Other                                                                             54      42      47       41      39       31
                                                                                  ------  ------  ------   ------   -----   ------
     Total revenue                                                                 2,431   2,240   2,098    2,153   2,205    2,174
                                                                                  ------  ------  ------   ------   -----   ------
  Costs and expenses
    Leasing                                                                        1,246   1,023   1,004    1,040   1,094    1,026
    Sales                                                                            218     304     225      275     274      313
    Business continuity and network services                                         277     238     224      206     175      132
    Selling, general and administrative                                              244     233     213      197     198      201
    IBM litigation settlement                                                         --       -      70        -       -        -
    Litigation and receivables charge                                                 --       -      10        -      45        -
    Restructuring charge                                                              --       -       -        -      35        -
    Interest                                                                         262     274     263      291     350      366
                                                                                  ------  ------  ------   ------   -----   ------ 
     Total costs and expenses                                                      2,247   2,072   2,009    2,009   2,171    2,038
                                                                                  ------  ------  ------   ------   -----   ------
                                                                                       
  Earnings from continuing operations before income taxes, extraordinary loss 
    and cumulative effect of change in accounting principle                          184     168      89      144      34      136
  Income taxes                                                                        70      64      36       57      14       53
                                                                                  ------  ------  ------   ------   -----   ------
  Earnings from continuing operations before extraordinary loss and cumulative
    effect of change in accounting principle                                         114     104      53       87      20       83
  Loss from discontinued operations (net of income taxes)                              -       -       -      (20)      -      (14)
                                                                                  ------  ------  ------   ------   -----   ------
  Earnings before extraordinary loss and cumulative effect of change in 
    accounting principle                                                             114     104      53       67      20       69
  Extraordinary loss (net of income taxes)                                             -       -       -        -     (29)       -
                                                                                  ------  ------  ------   ------   -----   ------
  Earnings (loss) before cumulative effect of change in accounting principle         114     104      53       67      (9)      69
  Cumulative effect of change in accounting principle                                  -       -       -       20       -        -
                                                                                  ------  ------  ------   ------   -----   ------
  Net earnings (loss) before preferred dividends                                     114     104      53       87      (9)      69
 
  Preferred dividends                                                                 (8)     (8)     (9)      (7)      -        -
                                                                                  ------  ------  ------   ------   -----   ------
  Net earnings (loss) to common stockholders                                      $  106  $   96 $    44  $    80  $   (9)  $   69
                                                                                  ======  ======  ======   ======   =====   ======
  COMMON AND COMMON EQUIVALENT SHARE DATA
  Earnings from continuing operations                                             $ 2.00  $ 1.73 $   .77  $  1.31  $  .33   $ 1.35
  Loss from discontinued operations                                                    -       -       -     (.33)      -     (.23)
  Extraordinary loss                                                                   -       -       -        -    (.47)       -
  Cumulative effect of change in accounting principle                                  -       -       -      .33       -        -
                                                                                  ------  ------  ------   ------   -----   ------
  Net earnings (loss) to common stockholders                                      $ 2.00  $ 1.73 $   .77  $  1.31 $  (.14)  $ 1.12
                                                                                  ======  ======  ======   ======   =====   ======
  Common stockholders' equity (per common share outstanding)                      $14.31  $13.10 $ 11.65  $ 11.03 $ 10.25   $10.42
  Cash dividends paid on common stock                                                .28     .24     .23      .19     .19      .18
  Average common and common equivalent shares (in thousands)                      53,228  55,167  57,758   60,312  61,286   61,373
 
  FINANCIAL POSITION
  Total assets                                                                    $5,591  $5,039 $ 4,807  $ 4,960 $ 5,236   $5,006
  Notes payable                                                                    1,127     661     593      655     766      353
  Total long-term debt                                                             2,145   1,796   1,364    1,325   1,314    1,502
  Discounted lease rentals                                                           781   1,124   1,548    1,670   1,823    1,900
  Stockholders' equity                                                               799     776     741      739     699      634

  LEASING DATA
  Total noncancelable rents of new leases                                         $2,800  $2,300 $ 1,800  $ 1,900 $ 2,400   $2,400
  Future noncancelable lease rentals and business continuity subscription fees     4,903   4,380   4,185    4,265   4,601    4,363
</TABLE>
                                     24-25
<PAGE>
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations

SUMMARY
Net  Earnings:  Fiscal  1996 net  earnings to common  stockholders  (hereinafter
referred to as "net  earnings")  were $106  million,  or $2.00 per common share,
compared to $96 million,  or $1.73 per common share,  and $44 million,  or $ .77
per common  share,  in fiscal 1995 and 1994,  respectively.  The increase in net
earnings in fiscal 1996 compared to the prior year is due to increased  earnings
contributions from operating leases and business continuity  activities,  offset
by  decreases  in  earnings  contributions  from  direct  financing  leases  and
remarketing activities.  The increase in net earnings in fiscal 1995 compared to
the prior  period is due to fiscal  1994  charges of $70  million  ($42  million
after-tax,  or $.73 per common share) for the  settlement  and resolution of the
IBM litigation,  and charges of $10 million ($6 million  after-tax,  or $.11 per
common share)  (collectively,  the  "Charges")  for increases to the  litigation
reserve to cover IBM litigation costs. The IBM litigation is discussed in Note 8
of Notes to  Consolidated  Financial  Statements.  In fiscal 1995,  increases in
earnings   contributions   from   operating   leases   were  offset  by  reduced
contributions  from sales-type and direct  financing  leases and higher selling,
general and  administrative  expenses.  Earnings per common share in fiscal 1996
and 1995  benefited  from the  company's  stock  repurchase  program,  which has
reduced the average common equivalent shares  outstanding.  Fiscal  year-to-year
net earnings  comparisons are also affected by the following  fiscal 1994 items:
receipt of key-man life  insurance  proceeds of $20 million,  or $.35 per common
share  (the  "Insurance  Proceeds"),  as a result of the death of the  company's
Founder,  Chairman of the Board and President, Mr. Kenneth N. Pontikes, in June,
1994.   During  the  quarter  ended  June  30,  1994,  the  company  recorded  a
contribution  charge of $10 million ($6  million  after-tax,  or $.11 per common
share) to establish and fund the Comdisco Foundation (the  "Contribution")  (see
"Costs and Expenses" for a discussion  of the  Contribution).  A decrease in the
effective tax rate from 40% in fiscal 1994 to 38% for fiscal 1995 and 1996.

Business:  There  have been a number of changes  in the  information  technology
industry  in the last five  years,  including  the  emergence  of  technological
alternatives to traditional  mainframe processing and applications.  While there
are few clear trends, it appears that traditional  mainframes remain the primary
platform  for   enterprisewide   computing   and,   for  highly   data-intensive
applications, mainframe applications are still the most cost effective. However,
the new  reality of the  information  technology  industry  is that the power of
computing is moving from a centralized  platform onto the desktop.  The disaster
recovery business has expanded  significantly since its infancy in the 1980s and
now encom- passes far more than the raised floor mainframe environment that gave
rise  to the  industry.  The  development  of wide  area  networks,  local  area
networks,   client/server   technologies,    workflow   automation   and   other
technologies,    coupled   with   the    importance    of    workstations    and
telecommunications,  has changed  the  industry.  Reflecting  this  change,  the
company refers to this business segment as business continuity services.
   The company  believes that customers will choose business  partners that know
the  technology,  understand  the product trends and offer  financial  solutions
tailored  to their  business  and  technology  plans.  Accordingly,  just as the
company's  industry and customers  have changed,  so has the company,  which has
restructured,  refocused and  realigned its  businesses to meet the needs of its
customers and to compete in today's environment.  Additionally,  the company has
diversified  into  specific  niche   industries,   such  as  the   semiconductor
manufacturing  industry, to expand its customer and earnings base. The company's
realigned businesses are designed to bring solutions to the customer, redefining
the  company  as a  "technology  services  company."  These  businesses  are  1)
information  technology  services,  which  includes  distributed  systems  (PCs,
servers, networks and asset management services),  large systems (mainframes and
related equipment) and technology  integration  services; 2) business continuity
services,  which  includes  workarea  recovery,  large and  distributed  systems
recovery and network and data protection; and 3) diversified technology services
provided in such industries as healthcare, semiconductor manufacturing (referred
to as  the  company's  "electronics  group")  and  early-stage  high  technology
companies.
   The company has always  operated in a  constantly  changing  and  competitive
marketplace.    The   company    believes    that    having    interdisciplinary
skills--traditional legacy systems, business continuity, distributed processing,
asset management tools, network  technology--is the key to successful technology
integration  and that such skills are an important  component  of the  company's
long-term growth strategy.

FINANCIAL CONDITION
The company's  operating  activities  during the year ended  September 30, 1996,
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 $9.2
billion.  Expenditures for equipment in fiscal 1996 totaled  approximately  $2.5
billion,  the highest annual total in the company's history,  and an increase of
33% compared to the prior year. Expenditures
                                       26
<PAGE>
for equipment are currently  estimated at approximately  $2.8 billion for fiscal
1997.
   During  fiscal  1996,  the  company  purchased  3.7  million  shares  of  its
outstanding  common stock at an aggregate cost of $80 million.  These purchases,
when added to the shares  purchased  in prior  years,  bring the total number of
common shares purchased to 27.8 million (.5 million shares were issued in fiscal
1996 in connection with the company's  acquisition of  NetforceMTI,  1.5 million
shares were issued upon conversion of a 6% convertible  subordinated  promissory
note in fiscal 1995 and an additional 2.9 million  shares were  distributed as a
common stock dividend on March 30, 1992),  at an aggregate cost of $363 million.
An  additional  1.1  million  shares  of common  stock  were  purchased  between
September 30, 1996 and November 5, 1996 at a cost of $25 million.
   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 Flows:  Net cash provided by operating  activities  was $2.2 billion,  $2.0
billion and $1.7 billion in fiscal 1996, 1995 and 1994,  respectively.  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  lease  portfolio.  The  company
estimates that existing lease and business continuity contracts at September 30,
1996 may  generate  gross cash  receipts of  approximately  $4.9  billion in the
future,  including  $2.3  billion in fiscal  1997.  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 $1.4 billion.

Credit Lines:  At September 30, 1996,  the company had $1.3 billion of available
domestic and international borrowing capacity under various lines of credit from
commercial banks and commercial paper facilities,  of which  approximately  $363
million was unused.  The company had  committed  credit lines  established  with
thirty-two banks at September 30, 1996 of $1.0 billion.

Senior Notes:  In October,  1995, the company filed a Registration  Statement on
Form S-3 with the Securities  and Exchange  Commission for a shelf offering (the
"1995 Shelf") of up to $750 million of senior debt  securities  with terms to be
set at the time of each  sale.  Pursuant  to the 1995  Shelf,  the  company,  on
January 12, 1996,  designated $400 million of medium-term notes. On February 15,
1996,  the  company,  pursuant to the 1995 Shelf,  issued $250  million of 5.75%
Notes due February 15, 2001 (the "5.75% Notes").  The net proceeds from the sale
of the 5.75% Notes were used for general corporate purposes.
   Pursuant to the 1995  Shelf,  the company  sold $310  million of  medium-term
notes between January 12, 1996 and September 30, 1996. At September 30, 1996, an
aggregate of $90 million of medium-term  notes  remained  available for issuance
under the 1995 Shelf, all of which was subsequently issued between September 30,
1996 and November 5, 1996.
   On November 1, 1996, the company filed a  registration  statement on Form S-3
with the Securities  and Exchange  Commission for a shelf offering of up to $950
million  of senior  debt  securities  (which  amount  includes  $100  million of
undesignated  securities  from the 1995 Shelf) 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.
The company plans to continue to be active in issuing  senior debt during fiscal
1997,  primarily  to support the  anticipated  growth of the leased  assets and,
where appropriate,  to refinance maturities of interest-bearing  liabilities. In
addition,   the  company's  8.75%  Cumulative  Preferred  Stock,  Series  A,  is
redeemable in September,  1997, and the company will evaluate, based on existing
business  and market  conditions,  the  redemption  of all or a portion  of, the
outstanding Series A Preferred Stock.

Secured Debt:  Proceeds from the discounting of lease rentals were $253 million,
$279  million  and $725  million in fiscal  1996,  1995 and 1994,  respectively.
Beginning  in  fiscal  1995,  the  company   de-emphasized  secured  debt  as  a
significant source of liquidity. 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.

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.  At  September  30,  1996,  the company  had debt of $2.2  billion
scheduled to mature in fiscal 1997,  including $1.1 billion of commercial  paper
and short-term bank borrowings.  At September 30, 1996, the company had expected
future  net cash to be  provided  by  existing  lease  and  business  continuity
contracts  of $2.3  billion  in  fiscal  1997.  See  Notes 5 and 6 of  Notes  to
Consolidated  Financial  Statements  for  information  on  the  lease  base  and
interest-bearing liabilities, respectively.
                                       27
<PAGE>
   The ratio of debt to total stockholders' equity was 5.1:1, 4.6:1 and 4.7:1 at
September 30, 1996, 1995 and 1994,  respectively.  The increase at September 30,
1996  reflects  the  expenditure  of $80 million to  repurchase  common stock in
fiscal 1996 coupled with the record levels of equipment purchased for lease.

REVENUE
Total revenue of approximately  $2.4 billion and $2.2 billion in fiscal 1996 and
1995  represented  increases  of 9% and 7%  respectively,  over the  prior  year
periods.  The  increases in leasing  revenue in fiscal 1996 and 1995 compared to
prior periods is due to increased operating lease revenue, offset by declines in
direct  financing lease revenue and, for fiscal 1995,  sales-type  revenue.  The
declines in direct financing revenue in both fiscal 1996 and 1995 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 "Business  Continuity"  for a discussion of business  continuity and network
services  revenue and margins and "Sales" for a discussion  of sales revenue and
margins.

Leasing:  Leasing  volume  increased in both fiscal 1996 and 1995 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,  thereby  reducing  the  company's
dependence on large systems activity.
   In September,  1996, the company  expanded its commitment to asset management
with the announcement of an alliance with Asset Software  International ("ASI").
Under the agreement, the company will be a distributor of ASI software products.
Additionally,  ASI  and  Comdisco  will  co-develop  an  interface  between  the
company's  own asset  management  software,  CLASS,  and ASI's  product  and the
companies will coordinate future development strategies.
   Cost of equipment  placed on lease was $2.6 billion in fiscal 1996,  compared
to cost of equipment  placed on lease of $2.1 billion and $1.6 billion in fiscal
1995 and 1994,  respectively.  Among other factors,  the continued growth of the
electronics  group had a favorable  impact on volume in the current  year period
compared to the prior year periods. The company's distributed systems activities
also had year-to-year increases in equipment volume. In Europe, equipment volume
declined  compared to the prior year period.  Equipment  volume in the company's
medical  equipment  group also declined,  reflecting a continued soft market for
new equipment in the health-care  industry.  Remarketing  activity,  which is an
important  contributor to earnings,  was below prior year levels  throughout the
first three  quarters of fiscal  1996.  The company  believes  the  reduction in
remarketing activity reflects, in part, delays in hardware acquisition decisions
by customers pending release of additional information  concerning  capabilities
and delivery  schedules of recent  product  announcements  from major  mainframe
manufacturers.  Additionally,  strong  remarketing in prior years,  coupled with
equipment  volume  declines in fiscal 1993 and 1994,  resulted in less equipment
available for remarketing in the current year.  Remarketing was at record levels
in the fourth  quarter of fiscal 1996,  however,  there can be no assurance that
such levels can be sustained in fiscal 1997.
   Operating  lease revenue  minus  operating  lease costs was $328 million,  or
24.0% of  operating  lease  revenue (the  "Operating  Lease  Margin"),  and $293
million,  or 26.2%  of  operating  lease  revenue,  in  fiscal  1996  and  1995,
respectively.  The lower  margin  in  fiscal  1996  compared  to the prior  year
reflects the increase in lease volume and lower  margins on large  systems.  The
company  expects the  Operating  Lease Margin to decline from current  levels in
fiscal 1997.  The Sales-type  Lease Margin  decreased in fiscal 1996 compared to
the prior year primarily because of a change in the mix of equipment remarketed.
The following graph presents the Lease Margin for total leasing,  operating, and
sales-type leases for the five years ended September 30, 1996.


                              1992  1993  1994  1995  1996
                              ----  ----  ----  ----  ----

Total Leasing                  34%   34%   35%   35%   31%
Sales-Type Lease .......       26%   26%   26%   26%   26%
Operating Lease ........       25%   23%   26%   26%   24%


Sales:  Revenue from sales, which includes  remarketing and buy/sell activities,
totaled $262  million in fiscal 1996,  compared to $358 million and $271 million
in fiscal 1995 and 1994,  respectively.  The decrease in sales revenue in fiscal
1996  compared  to the prior year is  primarily  due to  reduced  sales and sale
revenue per unit on large systems. The increase in fiscal 1995 was primarily due
to sales by the  electronics and  distributed  systems groups.  Margins on sales
were 17% in  fiscal  1996  compared  to 15% and 17% in  fiscal  1995  and  1994,
respectively. The higher margins
                                       28
<PAGE>
in fiscal 1996 reflect  improved  margins from  remarketing  by the  distributed
systems group.

Business  Continuity and Network Services:  Revenue from business continuity and
network  services  (hereinafter  referred to as "business  continuity")  of $318
million in fiscal 1996 and $267 million in fiscal 1995 represented  increases of
19% and 10%,  respectively,  over each of the preceding years. The increases are
primarily the result of the growth in customer base,  products and services.  As
of September 30, 1996, the company had strategically located recovery facilities
throughout North America and Europe connected by advanced network capabilities.
   Business  continuity costs of $277 million for fiscal 1996 increased 16% over
business  continuity costs of $238 million in fiscal 1995. Fiscal 1995 costs and
expenses  were 6% higher  than  fiscal  1994.  Cost  containment  efforts by the
company,  primarily  as a result  of its  capital  investment  strategy,  called
"Project  2000," slowed the growth of business  continuity  costs in both fiscal
1996 and 1995, and improved margins significantly over the prior year.
   The company's  business  continuity  segment  expanded  during fiscal 1996 to
include the results of Netforce-  MTI, a network  services  business,  which was
acquired in December,  1995 for shares of the  company's  common stock valued at
approximately  $9  million.  Additionally,  during the latter part of the second
quarter,  the company acquired the assets and contracts of the disaster recovery
division  of CSC  Compusource  ("CSC")  for  approximately  $9  million in cash.
NetforceMTI's   services   include   network   assessment,   design,   planning,
implementation,  configuration,  installation,  and  management.  These services
complement and expand the company's network experience in leasing,  remarketing,
and business continuity,  and play an important role in the company's technology
integration  and  desktop  asset  management  services.  The  company's  network
services group, including the NetforceMTI operations,  incurred a pretax loss in
fiscal 1996. The impact of the CSC acquisition on business  continuity  earnings
was immaterial.
   In October,  1995,  the company  announced  the opening of its  Chicago-based
client/server  supersite.  The  addition  expands the  company's  commitment  to
workarea  recovery  and  the  evolving  business  continuity  needs  across  all
platforms.

Other  Revenue:  Other  revenue was $54 million,  $42 million and $47 million in
fiscal  1996,  1995 and 1994,  respectively.  Revenue from the sale of ownership
positions   generated  in  conjunction   with  the  company's   lease  financing
transactions  with  early-stage  high  technology  companies  was $13 million in
fiscal  1996  compared  to $11  million  and $9 million in fiscal 1995 and 1994,
respectively.  Fiscal  1996  and  1995  includes  $6  million  and  $5  million,
respectively,  of gains generated from the sale of stock, 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. Fiscal 1994 includes the
receipt of the  Insurance  Proceeds  of $20  million.  Excluding  the  Insurance
Proceeds,  the  increase  in fiscal  1995  compared  to the prior year period is
primarily due to revenue from managing the Promodata S.A.  portfolio,  which was
acquired in June, 1994.

COSTS AND EXPENSES
Total costs and  expenses  were $2.2 billion and $2.1 billion in fiscal 1996 and
1995,  respectively.  The  increase  in fiscal  1996  compared to fiscal 1995 is
primarily due to increased leasing and business  continuity costs related to the
increasing   operating   lease   revenue  and   business   continuity   revenue,
respectively.  Excluding the IBM litigation settlement, total costs and expenses
increased 7% in fiscal 1995 compared to fiscal 1994,  primarily due to increased
leasing costs and cost of sales related to  increasing  operating  lease revenue
and sales revenue,  respectively.  Other factors contributing to the increase in
fiscal  1995  compared  to fiscal  1994  include  higher  selling,  general  and
administrative  costs (excluding the  Contribution)  and an increase in interest
expense.

Selling,  General  and  Administrative:   Selling,  general  and  administrative
expenses  totaled $244 million in fiscal 1996,  $233 million in fiscal 1995, and
$213 million in fiscal 1994.  Factors  contributing  to the  increases in fiscal
1996 and 1995  compared  to the  prior  years  include  the  development  of the
company's  technology  integration  activities,  and, in general, its technology
services, offset by reduced expenditures resulting from improved efficiencies in
the company's  administrative  operations.  The Contribution was recorded in the
quarter  ended June 30,  1994 to  establish  and fund the  Comdisco  Foundation.
Excluding  the  Contribution,   selling,  general  and  administrative  expenses
increased 15% in fiscal 1995 compared to fiscal 1994.  The increase is primarily
due to the acquisition of Promodata S.A. in June, 1994, which increased selling,
general and administrative expenses by approximately $15 million in fiscal 1995.

Interest: Interest expense for fiscal 1996 totaled $262 million in comparison to
$274 million in fiscal 1995 and $263 million in fiscal 1994,  respectively.  The
decrease in fiscal 1996 compared to fiscal 1995 is due to lower average interest
rates. The company expects average daily
                                       29
<PAGE>

borrowings to increase in fiscal 1997 because of higher average daily borrowings
resulting from increased  leased assets at September 30, 1996 and an increase in
equipment  purchased  for lease in fiscal  1997.  The  increase  in fiscal  1995
compared to fiscal 1994 is due to higher  average  daily  borrowings  and higher
interest rates.  Generally,  a higher interest rate  environment does not impact
the  company's  margins  since the  effects of higher  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.  In fiscal 1994,
net cash from  operations  exceeded  equipment  purchases,  and the  excess  was
utilized  to  reduce  debt  (see  Note  6 of  Notes  to  Consolidated  Financial
Statements  for  information  on the  company's  average  daily  borrowings  and
effective interest rates).

INCOME TAXES
Note 9 of Notes to Consolidated Financial Statements on page 42 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 business
continuity operations,  was $595 million in fiscal 1996 compared to $518 million
and $390 million in fiscal 1995 and 1994,  respectively.  International revenues
represented  24% of the company's  total  revenue in fiscal 1996,  23% in fiscal
1995 and 19% in fiscal 1994.

Canada:  The  company's  Canadian  operations,   excluding  business  continuity
activities,  had pretax  earnings  of $19 million and $13 million in fiscal 1996
and 1995,  respectively.  Total  leasing  and sales  revenue  for fiscal 1996 in
Canada was $75  million  compared  to $50 million and $62 million in fiscal 1995
and 1994,  respectively.  Cost of  equipment  placed on lease in fiscal 1996 and
1995 was $68 million and $57 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.

Europe:  The  company's  European  operations,   excluding  business  continuity
activities, had pretax earnings of $10 million and $8 million in fiscal 1996 and
1995,  respectively,  compared to $3 million in fiscal 1994.  Total  leasing and
sales revenue from European  operations was $420 million in fiscal 1996 compared
to $369  million  in  fiscal  1995 and $231  million  in  fiscal  1994.  Cost of
equipment  placed on lease in  fiscal  1996 and 1995 was $492  million  and $511
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.  Geographic  area data is included in Note 14 of Notes to  Consolidated
Financial Statements on page 46.

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

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 52 of this annual
report to stockholders for  identification of important factors which may affect
the forward-looking statements contained herein.

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, 1996,  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 1996 and 1995.


                           96                         95
                 -----------------------    -----------------------
                                    Divi-                      Divi-
  Quarter         High      Low    dends     High      Low    dends
  -------    ---------  -------    -----  -------  -------    -----
  First      $   23.75  $ 19.67     $.07  $ 15.59  $ 12.92    $ .06
  Second         22.50    19.88      .07    18.25    14.67      .06
  Third          28.63    21.25      .07    20.59    17.59      .06
  Fourth         29.75    22.63      .07    21.67    18.83      .06

                                       30
<PAGE>
Consolidated Statements of Earnings
Comdisco, Inc. and Subsidiaries
(in millions except per share data)
<TABLE>
<CAPTION>


                                                                  Years ended September 30,
                                                                 -----------------------------
                                                                    1996       1995       1994
                                                                 -------    -------    -------
  <S>                                                            <C>        <C>        <C>

  Revenue
  Leasing:
   Operating .................................................   $ 1,365    $ 1,117    $ 1,002
   Direct financing ..........................................       149        180        186
   Sales-type ................................................       283        276        350
                                                                 -------    -------    -------
     Total leasing ...........................................     1,797      1,573      1,538
                                                                 -------    -------    -------
  Sales ......................................................       262        358        271
  Business continuity and network services ...................       318        267        242
  Other ......................................................        54         42         47
                                                                 -------    -------    -------
   Total revenue .............................................     2,431      2,240      2,098
                                                                 -------    -------    -------
  Costs and expenses
  Leasing:
   Operating .................................................     1,037        824        746
   Sales-type ................................................       209        199        258
                                                                 -------    -------    -------
     Total leasing ...........................................     1,246      1,023      1,004
                                                                 -------    -------    -------
  Sales ......................................................       218        304        225
  Business continuity and network services ...................       277        238        224
  Selling, general and administrative ........................       244        233        213
  IBM litigation settlement ..................................         -          -         70
  Litigation charge ..........................................         -          -         10
  Interest ...................................................       262        274        263
                                                                 -------    -------    -------
   Total costs and expenses ..................................     2,247      2,072      2,009
                                                                 -------    -------    -------
  Earnings before income taxes ...............................       184        168         89
  Income taxes ...............................................        70         64         36
                                                                 -------    -------    -------
  Net earnings before preferred dividends ....................       114        104         53
  Preferred dividends ........................................        (8)        (8)        (9)
                                                                 -------    -------    -------
  Net earnings available to common stockholders ..............   $   106    $    96    $    44
                                                                 =======    =======    =======
  Net earnings per common and common equivalent share ........   $  2.00    $  1.73    $   .77
                                                                 =======    =======    =======
  See accompanying notes to consolidated financial statements. 
</TABLE>
                                       31
<PAGE>
Consolidated Balance Sheets   
Comdisco, Inc. and Subsidiaries
(in millions except number of shares and per share data)
<TABLE>
<CAPTION>

                                                                                                                    September 30,
                                                                                                                1996           1995
                                                                                                           ----------    ----------
  <S>                                                                                                      <C>            <C>

  Assets
  Cash and cash equivalents ............................................................................   $       29    $        85
  Cash - legally restricted ............................................................................           27             30
  Receivables, net .....................................................................................          218            176
  Inventory of equipment ...............................................................................          155            133
  Leased assets:
   Direct financing and sales-type .....................................................................        1,768          1,968
                                                                                                           ----------    -----------
   Operating (net of accumulated depreciation) .........................................................        2,842          2,107
                                                                                                           ----------    -----------
     Net leased assets .................................................................................        4,610          4,075
  Buildings, furniture and other, net ..................................................................          149            163
  Other assets .........................................................................................          403            377
                                                                                                           ----------    -----------
                                                                                                           $    5,591    $     5,039
                                                                                                           ==========    ===========
  Liabilities and Stockholders' Equity
  Notes payable ........................................................................................   $    1,127    $       661
  Term notes payable ...................................................................................          374            507
  Senior and subordinated debt .........................................................................        1,771          1,289
  Accounts payable .....................................................................................          135            111
  Income taxes:
   Current .............................................................................................            5             --
   Deferred ............................................................................................          274            244
  Other liabilities ....................................................................................          325            327
  Discounted lease rentals .............................................................................          781          1,124
                                                                                                           ----------    -----------
                                                                                                                4,792          4,263
                                                                                                           ----------    -----------
  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 (3,625,800 in 1995) ............................................................            89             91
   Common stock $.10 par value. Authorized 200,000,000 shares;
      issued 72,519,209 shares (71,936,982 in 1995) ....................................................            7              5
   Additional paid-in capital ..........................................................................          165            154
   Deferred compensation (ESOP) ........................................................................           (5)           (8)
   Deferred translation adjustment .....................................................................            5             13
   Retained earnings ...................................................................................          856            764
                                                                                                           ----------    -----------
                                                                                                                1,117          1,019
   Common stock held in treasury, at cost; 22,886,451 shares (19,666,386 in 1995) ......................         (318)         (243)
                                                                                                           ----------    -----------
     Total stockholders' equity ........................................................................          799            776
                                                                                                           ----------    -----------
                                                                                                           $    5,591    $     5,039
                                                                                                           ==========    ===========
  See accompanying notes to consolidated financial statements.
</TABLE>
                                       32
<PAGE>


Consolidated Statements of Stockholders' Equity
Comdisco, Inc. and Subsidiaries
Years ended September 30, 1996, 1995 and 1994
(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, 1993 ...............................   $ 100    $   5    $ 138     $ (12)   $  (7)      $ 650   $(135)
  Net earnings ................................................                                                       53
  Cash dividends - preferred ..................................                                                       (9)
  Cash dividends - common ($.23 per share) ....................                                                      (13)
  Stock options exercised .....................................                         1
  Translation adjustment ......................................                                            7
  Reduction of guaranteed ESOP debt ...........................                                   2
  Purchase of common stock ....................................                                                              (39)
  ----------------------------------------------------------------------------------------------------------------------------------
  Balance at September 30, 1994 ...............................     100        5      139       (10)      --         681    (174)
  Net earnings ................................................                                                      104
  Cash dividends - preferred ..................................                                                       (8)
  Cash dividends - common ($.24 per share) ....................                                                      (13)
  Stock options exercised .....................................                        12
  Translation adjustment ......................................                                           13
  Issuance of common stock upon
   conversion of subordinated debt ............................                         3                                     17
  Reduction of guaranteed ESOP debt ...........................                                   2
  Purchase of preferred stock .................................      (9)
  Purchase of common stock ....................................                                                              (86)
  ----------------------------------------------------------------------------------------------------------------------------------
  Balance at September 30, 1995 ...............................      91        5      154        (8)      13         764    (243)
  Net earnings ................................................                                                      114
  Cash dividends - preferred ..................................                                                       (8)
  Cash dividends - common ($.28 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)
                                                                  =====    =====    =====     =====    =====      =====   =====
  See accompanying notes to consolidated financial statements. 
</TABLE>

                                       33
<PAGE>



Consolidated Statements of Cash Flows   
Comdisco, Inc. and Subsidiaries
(in millions)
<TABLE>
<CAPTION>


                                                                                    Years ended September 30,

                                                                                   1996       1995       1994
                                                                                -------    -------    -------
 INCREASE  (DECREASE) IN CASH AND CASH  EQUIVALENTS:
 Cash flows from operating activities:
   <S>                                                                          <C>        <C>        <C>

   Operating lease and other leasing receipts ..................................$ 1,465    $ 1,282    $ 1,122
   Direct financing and sales-type leasing receipts ............................    907        973        907
   Leasing costs, primarily rentals paid .......................................    (34)       (33)       (49)
   Sales .......................................................................    246        352        283
   Sales costs .................................................................   (117)      (196)      (147)
   Business continuity and network services receipts ...........................    311        266        240
   Business continuity and network services costs ..............................   (174)      (171)      (169)
   Other revenue ...............................................................     54         42         48
   Selling, general and administrative expenses ................................   (222)      (228)      (193)
   IBM litigation settlement ...................................................     --         --        (70)
   Interest ....................................................................   (260)      (272)      (268)
   Income taxes ................................................................    (23)       (32)       (34)
                                                                                -------    -------    -------
     Net cash provided by operating activities .................................  2,153      1,983      1,670
                                                                                -------    -------    -------
  Cash flows from investing activities:
   Equipment purchased for leasing ............................................. (2,486)    (1,865)    (1,433)
   Investment in business continuity and network services facilities ...........    (74)       (78)       (49)
   Other .......................................................................    (17)        (1)       (12)
                                                                                -------    -------    -------
     Net cash used in investing activities ..................................... (2,577)    (1,944)    (1,494)
                                                                                -------    -------    -------
  Cash flows from financing activities:
   Discounted lease proceeds ...................................................    253        279        725
   Net increase (decrease) in notes payable ....................................    466         68        (62)
   Issuance of term notes, senior notes, and subordinated debt .................    834      1,268        300
   Maturities and repurchases of term notes, senior notes and subordinated debt.   (485)      (816)      (262)
   Principal payments on secured debt ..........................................   (596)      (703)      (849)
   Decrease in legally restricted cash .........................................      3          7         11
   Preferred stock purchased ...................................................     (2)        (9)        --
   Common stock purchased and placed in treasury ...............................    (80)       (86)       (39)
   Dividends paid on common stock ..............................................    (14)       (13)       (13)
   Dividends paid on preferred stock ...........................................     (8)        (8)        (9)
   Other .......................................................................     (3)         8          3
                                                                                -------    -------    -------
     Net cash provided by (used in) financing activities .......................    368         (5)      (195)
                                                                                -------    -------    -------
  Net increase (decrease) in cash and cash equivalents .........................    (56)        34        (19)
  Cash and cash equivalents at beginning of year ...............................     85         51         70
                                                                                -------    -------    -------
  Cash and cash equivalents at end of year .....................................$    29    $    85    $    51
                                                                                =======    =======    =======
  See accompanying notes to consolidated financial statements. 
</TABLE>
                                       34
<PAGE>


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

                                                                                           1996       1995       1994
                                                                                       --------    -------    -------

  RECONCILIATION OF NET EARNINGS TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
  <S>                                                                                   <C>        <C>        <C>
  Net earnings ......................................................................   $   114    $   104    $    53
  Adjustments to reconcile net earnings to net cash provided by operating activities:
   Leasing costs, primarily depreciation and amortization ...........................     1,212        990        955
   Leasing revenue, primarily principal portion of direct
     financing and sales-type lease rentals .........................................       575        682        491
   Cost of sales ....................................................................       101        108         78
   Business continuity and network services costs,
     primarily depreciation and amortization ........................................       103         67         55
   Income taxes .....................................................................        47         32          2
   Interest .........................................................................         2          2         (5)
   Other, net .......................................................................        (1)        (2)        41
                                                                                       --------    -------    -------
   Net cash provided by operating activities ........................................  $  2,153    $ 1,983    $ 1,670
                                                                                       ========    =======    =======
  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    $     -
                                                                                       ========    =======    =======
   Assumption of discounted lease rentals in lease portfolio acquisition ............  $      -    $     -    $     2
                                                                                       ========    =======    =======
  See accompanying notes to consolidated financial statements 
</TABLE>


                                       35
<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 business  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  accumulated  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 36 through 38 for a description
of lease accounting policies, lease revenue recognition and related costs.

Business  continuity:  Revenue from business 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.

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, 1996, 1995 and 1994 were 53,228,341,  55,167,389,  and
57,758,144, 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 1994
financial statements to conform to the 1996 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.

Leased Assets:
     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
     (col-
                                       36
<PAGE>
     lectively  referred to as the net  investment).  Residual is the  estimated
     fair market value at lease termination.  In estimating the  equipment'sfair
     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.

     Operating  leased  assets  consist of the equipment  cost,  less the amount
     depreciated to date. Revenue, Costs and Expenses:

Revenue, Costs and Expenses:
     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.

     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.

     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,  how
     ever the amounts the company will ultimately  realize could differ from the
     amounts  assumed  in  determining  deprecia  tion on the  equipment  in the
     operating leased portfolio at September 30, 1996.

     Equity  transactions  - The company  enters into equity  transactions  with
     third-party  investors  who obtain  ownership  rights,  which  include  tax
     depreciation deductions and residual interests. The company retains control
     and the use of the  equipment  generally  throughout  its economic  life by
     leasing back the equipment from the third-party investor.  Accordingly, the
     leased asset cost  related to the period of control  remains on the balance
     sheet. Revenue consists of the profit recognized on equity transactions and
     is  included  in  operating  lease  revenue.  Profit  is  recognized  on  a
     straight-line basis over the leaseback term (life of the transaction).

     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)

                                           1996       1995
                                         ------     ------
   Minimum lease payments receivable     $1,802     $2,014
  Estimated residual values ........        193        216
  Less: unearned revenue ...........       (227)      (262)
                                         ------     ------
  Net investment in direct financing
   and sales-type leases ...........     $1,768     $1,968
                                         ======     ======

     Unearned  revenue is  recorded  as leasing  revenue  over the lease  terms.
Operating leased assets include the following as of September 30:
   
 (in millions)                            1996        1995
 ------------                           ------      ------
  Operating leased assets ......        $4,665      $3,685
  Less: accumulated depreciation
   and amortization ............        (1,823)     (1,578)
                                        ------      ------
  Net ..........................        $2,842      $2,107
                                        ======      ======


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 
                                       37
<PAGE>
lease  commencement and by year projected lease  termination,  the cost at lease
inception for all leased assets recorded at September 30, 1996 (in millions):

                            Projected year of lease termination
                            -----------------------------------
                  Cost at                               2001
  Year lease        lease                                and
  commenced     inception      97     98     99    00  after
-----------     ---------   -----  -----  -----  ----  -----
  1992
  and prior     $   1,149   $ 733  $ 229  $ 127  $ 30  $  30
  1993                755     378    286     46    35     10
  1994              1,076     580    235    233    20      8
  1995              1,746     385    792    297   258     14
  1996              2,589      74    461  1,226   454    374
                ---------  ------ ------ ------  ----  -----
                $   7,315  $2,150 $2,003 $1,929  $797  $ 436
                =========  ====== ====== ======  ====  =====

   The  following  table  summarizes  the  estimated  net  book  value  at lease
termination  for all leased assets  recorded at September 30, 1996. 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                           2001
  Year lease        lease                            and
  commenced   termination    97   98     99    00  after
-----------   -----------   ---  ---   ----   ---  -----    
  1992
   and prior       $   44   $33 $  5   $  2   $ -    $ 4
  1993                 68    34   32      1     1      -
  1994                131    71   26     33     1      -
  1995                268    68  129     36    34      1
  1996                491    40   95    227    62     67
              -----------   ---  ---   ----   ---  -----
                   $1,002  $246 $287   $299   $98    $72
              ===========  ==== ====   ====   ===  =====



Note 5 Owned  Equipment  -  Future  Noncancelable  Lease  Rentals  and  Business
Continuity   Subscription   Fees   Presented   below  is  a  summary  of  future
noncancelable  lease rentals on owned equipment and future  subscription fees on
noncancelable business 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, 1996. 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,
                                                       ---------------------------------------------------
                                                                                                      2001
                                                                                                       and
 (in millions)                                         1997          1998       1999       2000      after      Total
-------------                                        ------        ------       ----      -----      -----     ------
  <S>                                                <C>           <C>          <C>        <C>       <C>       <C>
  Expected future cash in-flows:
   Operating leases ............................     $1,217        $  784       $354       $113       $ 53     $2,521
   Direct financing and sales-type leases ......        821           522        302        127         30      1,802
   Business continuity contracts ...............        240           176        105         42         17        580
                                                     ------        ------       ----       ----       ----     ------
      Total ....................................      2,278         1,482        761        282        100      4,903
  Less: To be received by financial institutions
   Operating leases ............................        237           140         70         29          5        481
   Direct financing and sales-type leases ......        204           119         61         18         --        402
                                                     ------        ------       ----       ----       ----     ------
      Total ....................................        441           259        131         47          5        883
                                                     ------        ------       ----       ----       ----     ------
       To be received by the company ...........     $1,837        $1,223       $630       $235       $ 95     $4,020
                                                     ======        ======       ====       ====       ====     ======
</TABLE>
                                       39
<PAGE>
FINANCING

Note 6 Interest-Bearing  Liabilities  
Interest-bearing liabilities include the following (dollars in millions):
<TABLE>
<CAPTION>
                                                                      96                                      95
                                                    ----------------------------------     ------------------------------------
                                                    At September 30        Average         At September 30          Average
                                                    ---------------     --------------     ---------------      ---------------
                                                    Balance    Rate     Balance   Rate     Balance   Rate       Balance   Rate
                                                    -------    ----     -------   ----     -------   ----       -------   ----    
  Notes payable:
  <S>                                               <C>        <C>      <C>       <C>      <C>       <C>        <C>       <C>

     Credit lines and loan participation
      contracts .................................   $  664     5.62%    $  390    5.79%    $  365   6.20%       $  321    6.10%
     Commercial paper ...........................      463     5.62%       474    5.77%       296   5.94%          417    6.33%
  Term notes ....................................      374     6.49%       322    6.67%       507   6.83%          385    7.01%
  Senior notes ..................................    1,771     7.16%     1,460    7.64%     1,276   7.80%        1,140    8.26%
  Subordinated debt .............................        -        -%         9    9.05%        13  11.00%           21    8.85%
  Discounted lease rentals ......................      781     7.19%       938    7.24%     1,124   7.08%        1,340    7.25%
                                                    ------     ----     ------    ----     ------   ----        ------    ----
                                                    $4,053     6.68%    $3,593    7.00     $3,581   7.13%       $3,624    7.34%
                                                    ======     ====     ======    ====     ======   ====        ======    ====    
</TABLE>

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

                                                           96                                                  95
                                    --------------------------------------------------  -------------------------------------------
                                          Out-                             Out-             Out-                         Out-
                                      standing            Maturities   standing          standing        Maturities  standing
                                     beginning    Issu-          and        end   Fair  beginning  Issu-        and       end  Fair
   (in millions)                       of year    ances  repurchases    of year  Value    of year  ances repurchase   of year value
----------------                     ---------   ------   --------      -------  -----  ---------  -----  --------   -------- -----
  Notes payable:
   <S>                                <C>        <C>      <C>           <C>      <C>     <C>       <C>    <C>        <C>      <C>

   Credit lines and loan
      participation contracts .....   $365      $ 299    $   -          $  664   $ 664   $  223   $ 142   $  --     $  365   $  365
   Commercial paper ...............    296        167        -             463     463      370      --     (74)       296      296
  Term notes ......................    507        100     (233)            374     377      291     731    (515)       507      511
  Senior notes ....................  1,276        734     (239)          1,771   1,623    1,040     537    (301)     1,276    1,323
  Subordinated debt ...............     13         --      (13)             --      --       33      --     (20)        13       13
  Discounted lease rentals ........  1,124        253     (596)            781     778    1,548     279    (703)     1,124    1,121
                                    ------     ------  -------          ------  ------  -------  ------ -------     ------   ------
                                    $3,581     $1,553  $(1,081)         $4,053  $3,905  $ 3,505  $1,689 $(1,613)    $3,581   $3,629
                                    ======     ======  =======          ======  ======  =======  ====== =======     ======   ======
</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,
1996 were as follows:

                                            Years ending September 30,
                                            --------------------------
                                                                   2001
                                                                    and
   (in millions)                           1997  1998  1999 2000  after   Total
   --------------                         -----  ----  ---- ----  -----  ------ 
   Notes payable:
   Credit lines and loan participation
      contracts ........................  $ 664  $  -  $  - $  - $    -  $  664
  Commercial paper .....................    463     -     -    -      -     463
  Term notes ...........................    327    47     -    -      -     374
  Senior notes .........................    386   540   248  292    305   1,771
  Discounted lease rentals .............    385   230   116   45      5     781
                                         ------  ----  ---- ---- ------  ------
                                         $2,225  $817  $364 $337 $  310  $4,053
                                         ======  ====  ==== ==== ======  ======

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

   (in millions)                     1996     1995
   -------------                  -------   ------
  Total credit lines:
    Committed ..................  $ 1,016   $  950
     Uncommitted ..............       319      265
                                  -------   ------
                                  $ 1,335   $1,215
                                  =======   ======
  Utilized at September 30:
     Committed ................   $   766   $  595
     Uncommitted ..............       206       66
                                  -------   ------
     Total credit lines .......       972      661
                                  -------   ------
   Loan participation contracts       155        -
                                  -------   ------
     Total notes payable ......   $ 1,127   $  661
                                  =======   ======
  Credit lines available at
   September 30 ...............   $   363   $  554
                                  =======   ======
  Maximum amount outstanding
     at any month end .........   $ 1,131   $  922
                                  =======   ======

   The  company  had  outstanding  interest  rate caps  totaling  $47 million on
short-term borrowings to mitigate interest rate risks.
                                       39
<PAGE>
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, 1996,  the company had
committed domestic and foreign unsecured lines of credit as follows:

                                      Number
   Facility                         of banks             Expiration date
-------------------------          ---------             ---------------
  Multi-Option Facilities                 11  
   $300 million facility                                  December, 1998
   $150 million facility                                  December, 1996
  Global Facilities                       18
   $300 million facility                                  December, 1998
   $150 million facility                                  December, 1996
  Other credit agreements:
   $ 50 million - domestic
   and foreign                             1                 April, 1997
   $66 million - foreign                   6                     Various

   There are no compensating balance requirements on any of the committed lines.
At  September  30,  1996,  the company had $766  million  outstanding  under its
committed  lines,  including $463 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-seven and one half basis points or, for the two $150 million  facilities,
thirty basis points,  or at the banks' then current base rates.  The  Facilities
call for the  company  to pay:  1) an annual  fee of twelve  and one half  basis
points per annum on $600  million of the  committed  amount and ten basis points
per annum on $300  million  of the  committed  amount,  plus 2) letter of credit
usage or fronting fees. The two $150 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, 1997.

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  $319  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,  1996,  the company  had $500  million of
commercial  paper facilities (of which $463 million was outstanding at September
30,  1996)  all of  which  are  supported  by its  committed  lines  of  credit.
Domestically,  the facilities were rated,  D-2 by Duff & Phelps,  P-2 by Moody's
and A-2 by Standard & Poor's.

Term notes payable: Term notes payable include the following at September 30:
  
   (in millions)                          1996       1995
  --------------                          ----       ----
  Receivable backed commercial
   paper (floating rate; due 1997)        $325       $225
  Floating rate; due 1996                    -        230
  Building mortgage (9.70%; due 1998)       44         44
  Guaranteed senior ESOP
   notes (8.19%; due 1998)                   5          8
                                          ----       ----
                                          $374       $507
                                          ====       ====

   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 12 of Notes to Consolidated
Financial Statements regarding the senior ESOP notes.
                                       40
<PAGE>
Senior notes and subordinated  debt:  Senior notes and subordinated debt include
the following at September 30:
<TABLE>
<CAPTION>

   (in millions)                                              1996     1995
 --------------                                             ------   ------
   <S>                                                      <C>      <C>
  Senior notes:
   Medium term notes (5.22% to 9.99%)<F1>                   $  834   $  569
   9.38% Senior Notes, Series C, due 1996                        -       19
   9.75% Senior Notes due 1997<F2>                             200      200
   7.25% Senior Notes due 1998 .                               200      200
   7.75% Senior Notes due 1999 .                                89       89
   6.50% Senior Notes due 2000 .                               199      199
   5.75% Senior Notes due 2001 .                               249        -
         Total senior notes ....                             1,771    1,276
  Subordinated debt ............                                 -       13
                                                            ------   ------
                                                            $1,771   $1,289
                                                            ======   ======
<FN>
<F1>The company had  outstanding  interest rate swap agreements at September 30,
1996  and  1995  that  effectively   converted  $25  million  and  $76  million,
respectively,  of medium-term fixed rate borrowings to floating rate obligations
with an effective interest rate of 6.650% and 5.965%, respectively.  The company
also had interest rate swap  agreements  at September 30, 1996 that  effectively
converted  $25 million of  medium-term  floating  rate  borrowings to fixed rate
obligations  with an effective  interest rate of 5.850%.  The average  remaining
terms of these swap  agreements  was more than one year at  September  30, 1996.
<F2>Subsequent  to the  issuance of these  notes,  the company  entered  into an
interest rate swap agreement to  effectively  convert $50 million of these notes
to a floating rate obligation.
</FN>
</TABLE>

   There are no sinking fund  requirements  associated with any of the company's
senior notes.  At September 30, 1996,  $190 million,  including  $100 million of
undesignated  senior debt,  remains  available  for the sale of debt  securities
under the Form S-3 registration statement filed October, 1995.

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, 1996 are as follows (in millions):

                        Rentals to be
                          received by      Discounted
  Years ending              financial           lease          Interest
  September 30,          institutions         rentals           expense
--------------          -------------      ----------          --------
 
  1997                           $441            $385              $ 56
  1998                            259             230                29
  1999                            131             116                15
  2000                             47              45                 2
  2001                              5               5                 -
                                 ----            ----              ----
                                 $883            $781              $102
                                 ====            ====              ====

   Interest  expense on discounted  lease rentals was $68 million,  $98 million,
and $118 million in fiscal 1996, 1995, and 1994, 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.

   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:

                                  1996                    1995
                            ----------------       -----------------
                            Notional    Fair       Notional     Fair
  (in millions)              amount    value         amount    value
  -----------------------   --------   -----       --------    -----
  Interest rate swap 
   agreements                 $165       $(1)          $230       $(3)
                              ====       ===           ====       ===
  Cross-currency interest
   rate swap agreements         95        (1)            70        (5)
                              ====       ===           ====       ===
  Interest rate caps            47         -             23         -
                              ====       ===           ====       ===
  Forwards and futures         147         6            112         -
                              ====       ===           ====       ===
                                       41
<PAGE>
     The impact of these contracts on interest expense for fiscal years 1996 and
1995 was immaterial.  The average  notional  amount  outstanding of the floating
rate to fixed  rate  contracts  in fiscal  1996,  including  those  noted in the
discussions  above, was $114 million,  with an average pay rate of 5.734% and an
average receive rate of 5.334%.  The average notional amount  outstanding of the
fixed rate to floating rate contracts in fiscal 1996,  including  those noted in
the discussions  above, was $69 million,  with an average pay rate of 7.850% and
an average receive rate of 6.250%.  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 $21 million in 1996 and
$17 million in 1995) include the following as of September 30 (in millions):

                   1996   1995
                   ----   ---- 
  Accounts, net    $128   $106
  Income taxes .      5     15
  Notes ........     23     13
  Other ........     62     42
                   ----   ----
                   $218   $176
                   ====   ====

   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,  1996,
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 IBM Litigation Settlement and Contingencies

Note 16 to the 1993 Consolidated Financial Statements discussed contingencies of
the  company  arising  out of three  legal  actions  filed  against  Comdisco by
International  Business Machines  Corporation  ("IBM"),  IBM Credit  Corporation
("ICC") and certain IBM-related limited partnerships. On August 26, 1994, all of
the parties to the three lawsuits entered into a settlement agreement.  Pursuant
to the settlement,  Comdisco and all of the parties to the litigation  exchanged
mutual general  release;  the company agreed not to engage in the future sale or
lease  of  altered  IBM  parts  except  pursuant  to  the  requirements  of  the
Stipulation and Order for Permanent  Injunction entered into between the parties
and ordered by the Court in IBM v. Comdisco,  91 C6777 (N.D.  Ill.); the company
agreed not to lease, sublease,  sell or relocate any ICC-owned equipment without
IBM's prior written consent;  the company agreed not to copy any IBM copyrighted
microcode  and  software  other  than  in  accordance  with  license  agreements
pertaining  thereto;  and the company paid IBM $70 million.  During the quarters
ended March 31, 1992 and June 30,  1994,  the  company  recorded  charges of $20
million  ($12  million  after-tax)  and  $10  million  ($6  million  after-tax),
respectively,  for the establishment of, and increases to, a litigation  reserve
to cover estimated costs associated with the litigation.
   The company has guaranteed approximately $60 million in lease payments, which
are secured by the  underlying  lease  obligations,  equipment and a like amount
held in trust;  and the company entered into a co-obligation  for  approximately
$90 million, which is secured by a like amount held in trust.
   The company is also party to various other legal  actions and  administrative
proceedings  and subject to various  claims  arising in the  ordinary  course of
business.  The company  believes that the  disposition of these matters will not
have a material adverse effect on the financial position of the company.

Note 9   Income Taxes
The  geographical  sources of earnings  before  income taxes were as follows (in
millions):

                          1996       1995     1994
                          ----       ----     ----
  United States           $155       $154      $63
  Outside United States     29         14       26
                          ----       ----     ----
                          $184       $168      $89
                          ====       ====     ====

   Cumulative unremitted earnings of foreign operations amounting to $72 million
after  foreign  taxes at September  30, 1996,  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
                                       42
<PAGE>
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)            1996      1995     1994
  ----------------------   ----      ----     ----
  Current:
   U.S. Federal             $20       $16     $(11)
   U.S. state and local       6        10        8
   Outside United States     14         9        7
                           ----      ----     ----
                             40        35        4
                           ====      ====     ====
  Deferred:
   U.S. Federal              32        30       32
   U.S. state and local       3        (1)      (4)
   Outside United States     (5)        -        4
                           ----      ----     ----
                             30        29       32
                           ----      ----     ----
     Total tax provision    $70       $64     $ 36
                           ====      ====     ====


   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
                                           -----------------------------
                                             1996       1995       1994
                                             ----       ----       ----
  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 .........      3.3        3.6        2.8
    Foreign income tax rate differential      1.3         .1        6.4
    Tax effect of foreign losses
     (utilized)/deferred ...............     (1.9)       2.2       (4.8)
    Insurance proceeds ........                --         --       (8.7)
    Changes in estimates of previously
     provided taxes ....................       --       (2.0)      12.1
   Utilization of capital loss                 --         --       (2.7)
    Other, net ................                .3        (.9)       (.1)
                                             ----       ----       ----
                                             38.0%      38.0%      40.0%
                                             ====       ====       ====


   Deferred tax assets and  liabilities  at September  30, 1996 and 1995 were as
follows:

   (in millions)                                  1996     1995
   --------------------------------------        -----    -----
   Deferred tax assets:
    Equity transactions ..........               $ 318    $ 431
    Foreign loss carryforwards ...                  32       34
    U.S. net operating loss carryforwards ....      32       67
    AMT credit carryforwards .....                  91       78
    Deferred income ..............                  22       30
    Other, net ...................                  24       --
                                                 -----    -----
    Gross deferred tax assets ....                 519      640
    Less: valuation allowance ....                 (32)     (34)
                                                 -----    -----
    Total deferred tax assets ....                 487      606
                                                 -----    -----
  Deferred tax liabilities:
    Lease accounting .............                 719      803
    Foreign ......................                  34       39
    Deferred expenses ............                   8        8
                                                 -----    -----
    Total deferred tax liabilities                 761      850
                                                 -----    -----
     Net deferred tax liabilities                $ 274    $ 244
                                                 =====    =====

   For financial reporting  purposes,  the company has approximately $74 million
of foreign net operating  loss  carryforwards,  most of which have no expiration
date. The company has recognized a valuation  allowance of $32 million to offset
this deferred tax asset.  During fiscal 1996, changes in the valuation allowance
included  decreases of $1 million from  utilizing  foreign losses and $1 million
from foreign exchange rate and tax rate changes.
   At September 30, 1996, 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                                          70
  2008                                           3
                                         ---------
                                               $85
                                         =========

   For U.S.  Federal  income tax  purposes,  the company has  approximately  $91
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.
                                       43
<PAGE>
   All years  prior to fiscal  1989 are  closed to  further  as-sessment  by the
Internal Revenue Service (the "Service") due to the expiration of the Statute of
Limitations.
   In February, 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 $9.8 million and $2.5 million for fiscal
years 1989 and 1990, respectively.  In August, 1994, the company filed a Protest
with  the  Service  and  is  currently  discussing  with  the  Appeals  Division
("Appeals") the resolution of all unagreed  issues.  To facilitate this process,
the company and Appeals are currently  developing a Technical Advice Request for
submission 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.  The company believes that all issues will be resolved with no
material impact on the company's financial condition.
   During  March,  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
relate to the inventory/depreciation issue being addressed at Appeals and in the
Technical  Advice  Request  for the  1989  and  1990  fiscal  years.  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 once
again  agreed  to  forego  the turn  around  calculations  as part of the  above
assessments.   If  the  inventory/depreciation   turn  around  adjustments  were
included,  the company believes 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.  The
company believes that all issues raised will be resolved with no material impact
on the company's financial condition. Additionally, in August, 1996, the company
made tax payments of $1.7 million and $1.6 million and interest payments of $0.6
million  and  $0.4  million  in   anticipation  of  expected  tax  and  interest
liabilities for fiscal years 1992 and 1993, respectively.
   In July,  1996,  the company and the Service held an Opening  Conference  for
fiscal  years 1994 and 1995 income tax audit.  Field work has  commenced  with a
routine income tax audit expected.
   The  company  also  undergoes   audits  by  foreign,   state  and  local  tax
jurisdictions.  As of September 30, 1996, no material assessments have been made
by these tax authorities.

Note 10   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,  $8 million and $9 million in fiscal
1996, 1995 and 1994 respectively.

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.
   The  Series A  Preferred  Stock  and the  Series B  Preferred  Stock  are not
redeemable  prior to September 24, 1997 and July 12, 1998,  respectively.  After
September 24, 1997 and July 12, 1998, respectively, the Series A Preferred Stock
and the Series B Preferred  Stock are  subject to  redemption  at the  company's
option, at any time, at $25 per share (plus accrued dividends).

Note 11   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 December,
1995.
     Cash dividends  paid were $.28 per share in fiscal 1996,  $.24 per share in
fiscal 1995, and $.23 per share in fiscal 1994.
     The company purchased 3.7 million and 5.3 million shares of common stock at
an  aggregate  cost of $80  million  and $86  million  in fiscal  1996 and 1995,
respectively.  On March 1, 1995,  the  company  issued
                                       44
<PAGE>
1.5  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 $16.67 per share.
     In November,  1987, the company  adopted a  "Shareholder  Rights Plan" (the
"Rights  Plan") to deter  coercive  takeover  tactics and to prevent an acquirer
from gaining control of the company without  offering a fair price to all of the
company's  stockholders.  Under  the  Rights  Plan,  stockholders  of  record on
November 27, 1987 received a dividend  distribution  of one right for each share
of the company's  common  stock.  The Rights Plan was amended and restated as of
November 7, 1994. The Rights Plan is  incorporated by reference in the company's
Form 10-K for  fiscal  1994 and the  company's  filing on Form 8-K in  December,
1994.

Note 12   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  1.5 million  shares of common stock held in treasury by the company
at a market price at the date of purchase of $13.25 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.  Commencing  November 1, 1989 and continuing
over the period of the ESOP Debt,  the  shares  purchased  by the Trust with the
ESOP  Debt  proceeds  will  be  allocated  to  plan  participants  and  deferred
compensation  will be reduced by the amount of the principal payment on the ESOP
Debt. The company's annual contribution to the Trust plus dividends  accumulated
on the  unallocated  common  stock  held by the Trust are used to repay the ESOP
Debt. The amount of the company's annual  contribution is  discretionary  except
that it must be sufficient to enable the Trust to meet its current obligations.
   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.  Total expense under the Plans for each of the years ended  September 30,
1996, 1995 and 1994,  including  interest expense of $1 million on the ESOP Debt
in each fiscal  year,  amounted to $4 million.  The company  utilizes the shares
allocated  method for  recognizing  compensation on the Employee Stock Ownership
Plan. The amount contributed in fiscal 1996, 1995, and 1994 was $3 million,  net
of dividends, and was used for debt service in each fiscal year.
   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 3,000 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)                   1996       1995
  ---------------------------------------------        -----      -----
  Net earnings available to common stockholders
   As reported .......................                 $ 106      $  96
                                                       =====      =====
   Pro forma .........................                 $ 105      $  95
                                                       =====      =====
  Earnings per common and common equivalent share
   As reported .......................                 $2.00      $1.73
                                                       =====      =====
   Pro forma .........................                 $1.97      $1.72
                                                       =====      =====

Under the stock  option  plans,  the  exercise  price of each option  equals the
market  price of the  company's  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  1996 and 1995,  respectively:  dividend  yield of 1.0% for all
years;  expected  volatility  of 29 percent and 30 percent;  risk free  interest
rates of 5.94% and 7.47%; and expected lives of five years.
                                       45
<PAGE>
   Additional information on shares subject to options is as follows:
<TABLE>
<CAPTION>
                                                                                 
                                                                1996                 1995                   1994
                                                        ---------------------   ------------------     -------------------  
                                                                    Weighted-            Weighted-               Weighted-
                                                         Number       average   Number     average     Number      average
                                                             of      exercise       of    exercise         of     exercise
  (in thousands except weighted average exercise price)  shares         price   shares       price      shares       price
  ---------------------------------------------------- --------     ---------   ------      ------     -------      ------
  <S>                                                  <C>          <C>         <C>         <C>         <C>         <C>

  Outstanding at beginning of year ...................  5,478       $     12     6,162       $  12       5,786      $   12
  Granted ............................................  1,632             20       714          14       3,093          12
  Exercised ..........................................   (608)            12    (1,033)         11        (166)          7
  Forfeited ..........................................   (137)            14      (365)         11      (2,551)         14
                                                      -------       --------    ------       -----     -------      ------
  Outstanding at the end of year .....................  6,365       $     14     5,478       $  12       6,162      $   12
                                                      =======       ========    ======       =====     =======      ======
  Options exercisable at year-end ....................  3,703                    3,126                   3,392
                                                      =======                   ======                 =======
  Weighted-average fair value of options
   granted during the year .........................   $ 6.73                   $ 5.01
                                                      =======                   ======
</TABLE>
<PAGE>

The following table summarizes  information  about stock options  outstanding at
September 30, 1996 (number of shares in thousands):
<TABLE>
<CAPTION>


                                                    Options outstanding                      Options exercisable
                                             ----------------------------------------      ---------------------
                                                               Weighted-    Weighted-                  Weighted-
                                                                average      average       Number       average
                                                Number     emaining con-    exercise           of      exercise
   Range of exercise prices .................of shares    tractual life        price       shares         price
                                             ---------    -------------     --------       ------      --------
  <S>                                            <C>          <C>               <C>         <C>           <C>

  $8 to 11 ..................................    1,585        5.5 years        $   9        1,306         $   9
  $11 to 14 .................................    1,879        6.5 years           13        1,170            12
  $14 to 17 .................................    1,292        6.5 years           15          744            15
  $17 to 20 .................................    1,405        9.0 years           20          471            20
  $20 to 23 .................................      204        9.0 years           22           12            21
                                                ------        ---------        -----        -----         -----
                                                 6,365        7.0 years        $  14        3,703         $  13
                                                ======        ========         =====        =====         =====
</TABLE>

Note 13   Quarterly Financial Data (Unaudited)

Summarized  quarterly  financial  data for the fiscal years ended  September 30,
1996 and 1995, is as follows (in millions except for per share amounts):
<TABLE>
<CAPTION>

                                                                      Quarter ended
                                                -----------------------------------------------------------
                                                December 31,      March 31,      June 30,     September 30,
                                                ------------    ------------  --------------  -------------- 
                                               1995     1994   1996    1995   1996      1995   1996     1995
  <S>                                          <C>      <C>    <C>     <C>    <C>      <C>    <C>      <C>

  Total revenue                                $530     $524   $581    $593   $592     $ 539  $ 728    $ 584

  Net earnings to common stockholders          $ 25     $ 23   $ 26    $ 24   $ 27     $  24  $  28    $  25

  Net earnings  per common and
     common equivalent share                   $.47     $.41   $.49    $.43   $.51     $ .44  $ .53    $ .45
</TABLE>



Note 14   Segment Information
The company operates predominantly in the leasing industry. The company operated
in four  principal  geographic  locations  during fiscal 1996.  The company also
operates in South America.
     Transfers  between  geographic  areas  include a reasonable  profit that is
eliminated in consolidation.
   Presented  on page  47 is  financial  information  reflecting  the  company's
leasing and business  continuity and network  services  operations by geographic
area for the years ended September 30, 1996, 1995 and 1994.
                                       46
<PAGE>

<TABLE>
<CAPTION>

                                                       United                     Pacific     Export     Elimin-   Consol-
    (in millions)                                      States     Europe   Canada     Rim      sales     ations    idated
  -------------------------------------------------    ------     ------   ------ -------     ------     ------    ------
  <S>                                                  <C>         <C>       <C>    <C>          <C>      <C>     <C>
  1996
  Revenue from unaffiliated customers
    Leasing .......................................   $1,573       $ 420     $ 75   $  45        $ -      $   -   $ 2,113
    Business 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
    Business 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
    Business 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  
  Business 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
    Business 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   
  Business continuity and network services ........      239          61       19       -          -        (24)      295
                                                      ------       -----     ----   -----        ---      -----   -------
      Total assets ................................   $4,161       $ 741     $145   $ 100        $23      $(131)  $ 5,039
                                                      ======       =====     ====   =====        ===      =====   =======
  1994
  Revenue from unaffiliated customers
    Leasing .......................................   $1,507       $ 231     $ 62   $  56        $ -      $   -   $ 1,856
    Business continuity and network services ......      201          25       16       -          -          -       242
                                                      ------       -----     ----   -----        ---      -----   -------
  Total revenue from unaffiliated customers .......    1,708         256       78      56          -          -     2,098
                                                      ------       -----     ----   -----        ---      -----   -------
  Transfers between geographic areas ..............        9          37        6       4          3        (59)        -
                                                      ------       -----     ----   -----        ---      -----   -------
        Total revenue .............................   $1,717       $ 293     $ 84   $  60        $ 3      $ (59)  $ 2,098
                                                      ======       =====     ====   =====        ===      =====   =======
  Earnings (loss) before income taxes
    Leasing .......................................   $   57       $   3     $ 12   $   1        $ -      $  (2)  $    71   
  Business continuity and network services ........       19          (2)       1       -          -          -        18
                                                      ------       -----     ----   -----        ---      -----   -------
  Total earnings (loss) before income taxes .......   $   76       $   1     $ 13   $   1        $ -      $  (2)  $    89
                                                      ======       =====     ====   =====        ===      =====   =======
  Total assets (end of year)
    Leasing .......................................   $3,814       $ 545     $143   $ 100        $22      $ (66)  $ 4,558
    Business continuity and network services ......      211          42       16       -          -        (20)      249
                                                      ------       -----     ----   -----        ---      -----   -------
      Total assets ................................   $4,025       $ 587     $159   $ 100        $22      $ (86)  $ 4,807
                                                      ======       =====     ====   =====        ===      =====   =======
</TABLE>

                                       47
<PAGE>


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, 1996 and 1995, 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, 1996.  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, 1996 and 1995, and the results of their
operations and their cash flows for each of the years in the  three-year  period
ended  September  30, 1996 in  conformity  with  generally  accepted  accounting
principles.

                                                  /s/ KMPG PEAT MARWICK LLP

Chicago, Illinois
November 5, 1996