SIX-YEAR SUMMARY
COMDISCO, INC. AND SUBSIDIARIES
(IN MILLIONS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>

                                                                                        YEARS ENDED SEPTEMBER 30,
                                                             ---------------------------------------------------------------------
                                                                  2000        1999        1998        1997        1996        1995
                                                             ---------   ---------   ---------   ---------   ---------   ---------
<S>                                                         <C>         <C>         <C>         <C>         <C>         <C>
CONSOLIDATED SUMMARY OF EARNINGS
Revenue
    Leasing ..............................................   $   2,259   $   2,643   $   2,428   $   2,113   $   1,797   $   1,573
    Sales ................................................         440         293         329         269         262         358
    Mainframe, medical and vendor portfolio sale .........           -         598           -           -           -           -
    Technology services ..................................         637         522         433         354         318         267
    Other ................................................         531         122          53          83          54          42
                                                             ---------   ---------   ---------   ---------   ---------   ---------
       Total revenue .....................................       3,867       4,178       3,243       2,819       2,431       2,240
                                                             ---------   ---------   ---------   ---------   ---------   ---------
Costs and expenses
    Leasing ..............................................       1,653       1,969       1,791       1,534       1,246       1,023
    Sales ................................................         358         250         275         210         218         304
    Mainframe, medical and vendor portfolio sale .........           -         596           -           -           -           -
    Technology services ..................................         572         440         362         296         277         238
    Selling, general and administrative ..................         532         326         249         244         244         233
    Interest .............................................         354         337         326         299         262         274
    Other ................................................           -         150           -          25           -           -
                                                             ---------   ---------   ---------   ---------   ---------   ---------
       Total costs and expenses ..........................       3,469       4,068       3,003       2,608       2,247       2,072
                                                             ---------   ---------   ---------   ---------   ---------   ---------

Earnings from continuing operations before income taxes ..         398         110         240         211         184         168
Income taxes .............................................         143          40          87          80          70          64
                                                             ---------   ---------   ---------   ---------   ---------   ---------
Earnings from continuing operations ......................         255          70         153         131         114         104
Loss from discontinued operations (net of income taxes) ..        (322)        (22)          -           -           -           -
Preferred dividends ......................................           -           -          (2)         (8)         (8)         (8)
                                                             ---------   ---------   ---------   ---------   ---------   ---------
    Net earnings (loss) to common stockholders ...........   $     (67)  $      48   $     151   $     123   $     106   $      96
                                                             =========   =========   =========   =========   =========   =========
COMMON SHARE DATA
Earnings from continuing operations-diluted ..............   $    1.58   $     .44   $     .93   $     .78   $     .67   $     .57
Loss from discontinued operations-diluted ................       (1.99)       (.14)          -           -           -           -
                                                             ---------   ---------   ---------   ---------   ---------   ---------
    Net earnings (loss) to common stockholders-diluted ...   $    (.41)  $     .30   $     .93   $     .78   $     .67   $     .57
                                                             =========   =========   =========   =========   =========   =========

Common stockholders' equity (per common share outstanding)   $    7.96   $    6.94   $    6.44   $    5.24   $    4.77   $    4.37
Cash dividends paid on common stock ......................         .10         .10         .10         .10         .09         .08
Average common shares (in thousands)-diluted .............     161,782     161,787     162,770     157,590     159,684     165,502

FINANCIAL POSITION
Total assets .............................................   $   8,754   $   7,807    $   7,063  $   6,350    $   5,591  $   5,039
Notes payable ............................................       1,314         820        1,121      1,024        1,127        661
Total long-term debt .....................................       4,147       4,236        3,318      2,918        2,145      1,796
Discounted lease rentals .................................         794         515          596        742          781      1,124
Stockholders' equity .....................................       1,214       1,060          979        865          799        776

OTHER DATA
Total rents of new leases ................................   $   2,800   $   3,100    $   3,400  $   3,200    $   2,800  $   2,300
Future contractual cash flows ............................       7,063       6,731        6,089      5,440        4,903      4,380

</TABLE>

                                  -22 and 23-
<PAGE>

MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Report and the discussion below contain forward-looking statements that are
based on the beliefs of Comdisco's  management,  as well as assumptions made by,
and information currently available to, Comdisco's management. See "Risk Factors
That  May  Affect  Future  Results"  on  page  31 for  reference  to the  risks,
uncertainties  and  events  that  could  cause  those  underlying   beliefs  and
assumptions to change and cause Comdisco's results, performance and achievements
in the  current  fiscal  periods  and  beyond to differ  materially  from  those
expressed in, or implied by, any forward-looking statements.

BUSINESS

The company's  businesses are designed to bring solutions that reduce technology
cost  and risk to the  customer  and in  supporting  the  customer's  technology
infrastructure.

     The  industry in which the company  operates has become  service  oriented,
with the business driven by service  capabilities.  Accordingly,  the company is
aligned into three primary business lines: 1) technology services  ("Services"),
which includes  continuity  services,  storage services,  web services,  network
services,  desktop  management  services  (marketed  under the  company's IT CAP
Solutions  brand name),  and software  tools to support  these areas;  2) global
leasing  ("Leasing"),  in  sectors  such  as  electronics,   telecommunications,
pharmaceutical,   biotechnology,   manufacturing   and  other  high   technology
businesses,  which includes the leasing and remarketing of distributed  systems,
such  as PCs,  servers,  workstations  and  routers,  communications  equipment,
equipment leasing and technology lifecycle  management services;  and 3) venture
financing,  referred to as  Comdisco  Ventures  group,  which  provides  venture
leases,  venture  debt and direct  equity  financing  to venture  capital-backed
companies. Services and Leasing are referred to as Comdisco group.

     In addition to  originating  new  equipment  lease  financing,  the company
remarkets used equipment  from its lease  portfolio.  Remarketing is the sale or
re-lease  of  equipment  either at  original  lease  termination  or during  the
original  lease.  These  transactions  may be with  existing  lessees  or,  when
equipment is returned, with new customers.  Remarketing activities are comprised
of earnings from follow-on leases and gross profit on equipment sales.

     On March  24,  1999,  the  company  announced  a major  shift in  corporate
strategy,  focusing on high-margin  service  businesses and shedding  low-margin
businesses,  including its mainframe leasing portfolio and medical  refurbishing
business.  In the fiscal quarter ended June 30, 1999, the company  completed the
sale of its mainframe computer leasing portfolio (hereinafter referred to as the
"Sale")  and the sale of the medical  refurbishing  business.  The company  also
completed  the sale of the majority of its vendor  lease  portfolio in September
1999.

NET EARNINGS

On October 2, 2000,  the  company's  board of directors  voted to cease  funding
ongoing  operations  of  Prism  Communication   Services,   Inc.  ("Prism"),   a
majority-owned  subsidiary.  As a result of this  decision,  the Prism  board of
directors  voted to cease  operations  and pursue the immediate  sale of Prism's
assets. As a result of this discontinuance, the company's fourth quarter results
for  fiscal  2000  reflected  after-tax  charges of $238  million,  or $1.49 per
share-diluted, for the expected loss on disposal as well as the operating losses
on the  discontinued  operations  during the  quarter.  All  periods  presented,
including  restatement of previously  published results,  reflect the results of
Prism as discontinued operations.

     In conjunction with its  repositioning in fiscal 1999, the company recorded
a one-time pre-tax charge (the "Charge") of $150 million, $96 million after-tax,
or approximately  $.59 per  share-diluted,  in the quarter ended March 31, 1999.
The  components  of the 1999 Charge  include  $100 million  associated  with the
company's plans to exit the mainframe residual leasing business,  $20 million to
exit  the  medical  refurbishing  business  and $30  million  associated  with a
realignment  of the service  businesses.  The 1999 Charge is shown as "Other" on
the Consolidated Statements of Earnings.

     Net earnings from  continuing  operations  were $255 million,  or $1.58 per
share-diluted   in  fiscal  2000,   compared  to  $70   million,   or  $.44  per
share-diluted,  and $151 million,  or $.93 per  share-diluted in fiscal 1999 and
1998, respectively. Excluding the Charge, earnings from continuing operations in


                                      -24-
<PAGE>

fiscal 1999 were $166 million,  or $1.03 per share-diluted.  The increase in net
earnings from  continuing  operations in fiscal 2000 compared to fiscal 1999 was
due to higher earnings contributions from Comdisco Ventures group. Excluding the
Charge,  the increase in net earnings from continuing  operations in fiscal 1999
compared  to the prior year was  primarily  due to  remarketing  activities  and
higher earnings contributions from Comdisco Ventures group.

     Earnings  per common  share  (basic and  diluted)  in fiscal  2000 and 1999
benefited from the company's  stock  repurchase  program,  which has reduced the
average common shares outstanding.

FINANCIAL CONDITION
The company's  operating  activities  during the year ended  September 30, 2000,
including  capital  expenditures,  were  funded  primarily  by  cash  flow  from
operations  (primarily  lease  receipts),  including the realization of residual
values through remarketing activities, and external financing.

     The company's capital expenditures are primarily on equipment purchased for
leasing,  facilities  expansion  and  service  upgrades,  venture  financing  by
Comdisco Ventures group and, in fiscal 2000 and 1999, Prism.

     o During the last five years, equipment purchased for leasing totaled $13.9
     billion.  Expenditures  for equipment in fiscal 2000 totaled  approximately
     $2.6 billion,  including $438 million by Comdisco  Ventures group.  Cost of
     leased  equipment at lease inception  totaled $9.2 billion at September 30,
     2000 (see Note 6 of Notes to Consolidated Financial Statements).

     o The company continues to invest additional capital to upgrade its service
     capabilities and enhance future continuity and other services revenues.  In
     fiscal  2000,  capital  expenditures  were $202  million,  compared to $151
     million  and $87  million  in  fiscal  1999 and  1998,  respectively.  This
     includes additions in large systems,  mid-range  systems,  network products
     and expansion of its work areas, as well as continued investment in Advance
     Recovery Services ("ARS").  ARS is designed to reduce the risk of data loss
     as well as recovery time across all market-leading  platforms.  The company
     is also  investing in the  development  of its Web Hosting  Services and in
     additional  personnel to expand its other technology services offerings and
     to ensure  the  quality of its  services  offerings.

     o Comdisco Ventures group's  operating  activities in fiscal 2000 and 1999,
     including capital expenditures for equipment, venture debt originations and
     direct  equity  investment,   were  funded  primarily  by  cash  flow  from
     operations and inter-group loans from Comdisco.  Total net cash provided to
     Comdisco  Ventures group was $405 million,  $327 million and $33 million in
     fiscal 2000, 1999 and 1998, respectively.

     o During fiscal 2000, the company  invested  approximately  $377 million in
     Prism,  including  $257 million in the  development  and  expansion of this
     business.  The company ceased funding Prism  effective  October,  2000 (see
     Note 2 of Notes to Consolidated Financial Statements).

     The company's  liquidity  depends on cash provided by operating  activities
and on its access to capital markets, specifically medium-term and senior notes,
commercial paper, and on its lines of credit and the willingness of the banks to
renew these lines.

     Following the announcement that the company would cease funding the ongoing
operations of Prism,  Moody's Investors Service  ("Moody's"),  Standard & Poor's
("S&P"),  and Fitch IBCA ("Fitch") lowered the company's senior unsecured credit
ratings from Baa1/BBB+/A- to  Baa2/BBB/BBB+.  The company's  short-term  ratings
were reaffirmed at P-2/A-2/F2.  Following is a summary of the company's  ratings
as of October 3, 2000:

               Long-term               Short-term
           -----------------        ----------------
Agency     Rating    Outlook        Rating   Outlook
-------    --------  -------        ------   -------
Moody's    Baa2      Stable         P-2      Stable
S&P        BBB       Stable         A-2      Stable
Fitch      BBB+      Negative       F2       Stable

     On December 4, 2000, the company renewed a $275 million,  364-day revolving
credit  facility  for another  year to 2001.  Negotiations  for the renewal of a
second $275  million,  364-day  facility  continue,  and the company  expects to
complete these negotiations by late December, 2000.

CASH PROVIDED BY OPERATING ACTIVITIES: Net cash provided by operating activities
was $3.2 billion,  $3.2 billion and $2.9 billion in fiscal 2000,  1999 and 1998,
respectively.  During  the last  five  years,  net cash  provided  by  operating
activities totaled $14.0 billion.

     As of September 30, 2000,  the company  estimates  that future  contractual
cash flows from leasing, services and Comdisco Ventures group could

                                      -25-
<PAGE>

generate  gross cash  receipts of  approximately  $7.1 billion,  including  $3.1
billion in fiscal 2001. The company's  liquidity has typically been augmented by
the  realization  of cash  from the  future  remarketing  of  leased  equipment.
Assuming  realization  of  independent  forecasts of  equipment  values at lease
termination  and management  estimates,  the estimated gross cash receipts to be
provided from remarketing in future years totals $1.4 billion.

     The company's cash flow from operating  activities is dependent on a number
of  variables,  including,  but not  limited  to, the  ability of the company to
implement  its strategic  plan and respond to external  market  conditions,  the
ability of the company to dispose of the  securities  held by Comdisco  Ventures
group,  timely payment by its customers,  global economic conditions and control
of operating costs and expenses.

CREDIT LINES:  At September 30, 2000,  the company had $1.6 billion of available
domestic and international borrowing capacity under various lines of credit from
commercial banks and commercial paper facilities,  of which  approximately  $661
million was  unused.  The company had  committed  credit  lines of $1.4  billion
established with twenty-nine banks at September 30, 2000. Interest rates on debt
outstanding  under  the  committed  lines  are  negotiated  at the  time  of the
borrowings  based  either on "bid rates" from  participating  banks,  LIBOR plus
twenty-to-twenty-two  basis  points  or,  for the two  $275  million  facilities
expiring December,  2000, forty basis points, or at the banks' then current base
rates.  Average daily  borrowings  under committed and uncommitted  lines,  loan
participation  contracts  and other bank  borrowings  was $1.1 billion in fiscal
2000,  compared  to $1.2  billion  and $1.1  billion  in  fiscal  1999 and 1998,
respectively. Average interest rates were 5.82%, 5.07% and 5.95% in fiscal 2000,
1999 and 1998, respectively.

SENIOR NOTES:  The company  issued $145 million of  medium-term  notes in fiscal
2000 pursuant to a  registration  statement  filed in October 1998. In September
1999, the company filed a registration statement on Form S-3 with the Securities
and Exchange  Commission  (the "SEC") for a shelf offering of up to $1.5 billion
of senior  debt  securities  with  terms to be set at the time of each sale (the
"1999 Shelf").  Pursuant to the 1999 Shelf,  the company,  in fiscal 2000 issued
the following senior notes:

     o $500 million of 9.5% Notes Due August 15, 2003

     o $75 million of medium-term notes

     At September  30, 2000, an aggregate of $462 million of  medium-term  notes
remained available for issuance under the 1999 and 1998 Shelfs.

     Subject to market conditions, the company plans to continue to be active in
issuing  senior debt during  fiscal 2001,  primarily to support the  anticipated
growth of the leased  assets,  services,  Comdisco  Ventures  group,  and, where
appropriate, to refinance maturities of interest-bearing  liabilities.  However,
market  conditions  during the fourth  quarter of fiscal 2000 were not favorable
for the company, primarily as a result of increasing interest rates and investor
uncertainty and concerns about the continued cash requirements of Prism, and, to
a lesser extent,  Comdisco  Ventures  group.  There can be no assurance that the
company will be able to raise sufficient capital utilizing senior debt in fiscal
2001 or that such capital would be available on terms  considered  acceptable by
the company. If the company is unable to issue senior debt in sufficient amounts
or at  appropriate  interest  rates in fiscal 2001,  the company  expects to use
secured  nonrecourse  debt as its  primary  source  of long  term  funding.  See
"Secured Nonrecourse Debt."

     Although  the  company  has  ceased   funding   Prism  (see   "Discontinued
Operations"),  lowered senior unsecured  credit ratings,  coupled with continued
investor concerns about the company's financial  commitment to Comdisco Ventures
group, are expected to have a negative impact on the company's cost of borrowing
in fiscal 2001.

SECURED  NONRECOURSE  DEBT:  Proceeds from the discounting of lease rentals were
$619  million,  $341  million and $279  million in fiscal  2000,  1999 and 1998,
respectively.  Secured  nonrecourse  debt was  primarily  utilized  as a tool to
manage credit risk and concentration risk. However, the company believes that in
a changing rate environment (see "Senior Notes"),  secured  nonrecourse debt may
offer  attractive  financing  rates and  availability  during  fiscal 2001.  The
company's credit committee establishes concentration levels by credit rating and
customer.

MATURITIES:  At  September  30,  2000,  the  company  had  debt of $3.1  billion
scheduled to mature in fiscal 2001,  including $1.3 billion of commercial  paper

                                      -26-
<PAGE>

and short-term bank borrowings.  At September 30, 2000, the company had expected
future  contractual  cash flows  from  existing  lease,  services  and  Comdisco
Ventures  group  contracts of $3.1 billion in fiscal 2001.  See Notes 7 and 8 of
Notes to Consolidated Financial Statements for information on future contractual
cash flows and interest-bearing liabilities, respectively.

     If the  company is not able to  refinance  its  indebtedness  or obtain new
financing  (either  through the issuance of senior notes,  commercial  paper, or
secured  nonrecourse  debt),  the company would have to consider  other options,
including:  sales of some assets; sales of equity;  negotiations with lenders to
restructure applicable  indebtedness;  or other options available to the company
under applicable law.

     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.

RATIOS: The ratio of debt to total stockholders' equity (the "Ratio") was 5.2:1,
5.3:1 and 5.1:1 at  September  30,  2000,  1999 and 1998,  respectively.  During
fiscal 1998, the company redeemed its outstanding preferred stock, which reduced
stockholders'  equity by $89 million.  The 1998 Ratio was positively impacted by
the  company's  Shared  Investment  Plan (see  Note 14 of Notes to  Consolidated
Financial Statements),  under which 106 senior managers of the company purchased
over six million  shares of the company's  common stock for  approximately  $109
million.


RESULTS OF OPERATIONS

OVERVIEW

SERVICES:  The company's  technology services attained record revenues in fiscal
2000, however,  higher costs,  primarily associated with higher personnel costs,
European  expansion  and  investment in new service  development,  primarily Web
Services,  negatively  impacted  margins on the  company's  technology  services
business.

     Technology services had pre-tax earnings of $65 million compared to pre-tax
earnings of $82 million (excluding the Charge in fiscal 1999, see below) and $71
million in fiscal 1999 and 1998, respectively.

     The company's business continuity services are its principal contributor to
its services  pre-tax  earnings.  Network  services had pre-tax losses in fiscal
2000, 1999 and 1998, with its losses  increasing in each fiscal year.  Although,
the company believes that network services remain an important service offering,
the  company  will  continue to evaluate  alternatives  to its network  services
strategies.  Managed desktop services,  marketed under the company's IT CAP, had
solid growth during fiscal 2000,  particularly in the fourth fiscal quarter. The
company expects IT CAP to continue to provide pre-tax earnings in fiscal 2001.

     Included  in the fiscal 1999  Charge was $30  million  associated  with the
realignment of the company's service businesses, including costs associated with
the  relocation  of  its  network   management   center  and  consolidation  and
reconfiguration of some of its continuity services facilities worldwide.

     See "Risk Factors That May Affect  Future  Results" for a discussion of the
factors that may affect earnings contributions from services.

LEASING:  Leasing  volume  decreased  in fiscal 2000 and 1999 as compared to the
prior years.  The  decreases in fiscal 2000 and 1999 compared to the prior years
is primarily as a result of the company's decision to exit the mainframe leasing
business and its focus on technology services (such as IT CAP).

     Cost of equipment placed on lease was $2.6 billion in fiscal 2000, compared
to cost of equipment  placed on lease of $2.9 billion and $3.3 billion in fiscal
1999 and 1998, respectively.

     In fiscal 2000, a change in the mix of leases written  resulted in a higher
percentage  of new leases  classified  as direct  financing  leases  rather than
operating  leases when compared to prior years.  This is primarily the result of
the company's  decision to reduce its residual  exposure in personal  computers,
workstations and other related desktop  equipment.  Accordingly,  leases written
for desktop  equipment in fiscal 2000 were  generally full payout leases (leases
in which the company recovers through lease payments,  all acquisition and other
costs  incurred  with respect to the lease plus an  acceptable  rate of return),
which resulted in their classification as direct financing leases.

     Remarketing activity,  an important contributor to earnings,  was at record
levels  throughout  fiscal  2000 and was  strong in  fiscal  1999.  The  company
believes that remarketing activity will continue to be an important  contributor
to  quarterly  earnings  in the near and long  term  because  of the size of the
company's lease portfolio at September 30, 2000, and as a result of the residual
leasing   business   for   electronics,    telecommunication,    pharmaceutical,
biotechnology,  and manufacturing  equipment.  See "Risk Factors That May Affect
Future  Results"  for a discussion  of the factors  that may affect  remarketing
activities.

                                      -27-
<PAGE>

COMDISCO  VENTURES  GROUP:  Fiscal  2000 was a high  growth  year  for  Comdisco
Ventures  group,  with record  levels of new fundings  for all of its  financing
products.  Total new fundings  for fiscal  2000,  1999 and 1998 by product was a
follows:

(IN MILLIONS)            2000     1999     1998
                       ------    -----    -----
Leases .........       $  438    $ 206    $ 114
Debt ...........          621      334       57
Equity .........          145       40        8
                       ------    -----    -----
Total ..........       $1,204    $ 580    $ 179
                       ======    =====    =====


REVENUE

Total  revenue in fiscal 2000 was  approximately  $3.9 billion  compared to $4.2
billion in fiscal 1999 and $3.2  billion in fiscal  1998.  The decrease in total
revenue in fiscal 2000  compared to fiscal 1999 and the  increase in fiscal 1999
compared to fiscal 1998 was primarily  due to the Sale,  which  increased  sales
revenue by $485  million.  See "Sales"  for a  discussion  of sales  revenue and
margins.

     Technology services revenue increased 22% in fiscal 2000 compared to fiscal
1999. See "Services" for a discussion of technology services revenue.

LEASING:  Total leasing revenue was $2.3 billion,  $2.6 billion and $2.4 billion
in fiscal  2000,  1999 and 1998,  respectively.  The  decrease in total  leasing
revenue in fiscal  2000  compared  to fiscal  1999 is  primarily  due to reduced
revenue  from  sales-type  transactions,  and a  reduction  in  operating  lease
revenue.  Remarketing  activity  was  strong in both  fiscal  2000 and 1999 and,
although  sales-type  revenue  decreased  in  fiscal  2000,  sales,  which  also
represent  remarketing  activity,  increased  in the current  year  period.  The
increase in total leasing revenue in fiscal 1999 compared to fiscal 1998 was due
to an increase of 44% in sales-type  revenue,  reflecting the company's emphasis
on, and the importance of, remarketing activities.

     Operating lease revenue minus  operating  lease costs was $332 million,  or
19.5% of  operating  lease  revenue (the  "Operating  Lease  Margin"),  and $375
million,  or 19.3%  of  operating  lease  revenue,  in  fiscal  2000  and  1999,
respectively. The Operating Lease Margin was $369 million, or 19.5% of operating
lease revenue in fiscal 1998. The company  expects the Operating Lease Margin to
be at approximately  current levels throughout fiscal 2001, depending on the mix
of  equipment  leased  and the  volume of  operating  leases.  The  decrease  in
operating lease revenue minus operating lease cost in the current year is due to
the change in the mix of leases written,  with a higher percentage of new leases
classified  as direct  financing  leases.  The  relatively  modest  increase  in
operating  lease revenue minus  operating  lease cost in fiscal 1999 compared to
fiscal  1998 was due to the  Sale.  See "Risk  Factors  that May  Affect  Future
Results" for a  discussion  of factors  that could  affect the  Operating  Lease
Margin.

     The following graph presents the Lease Margin for total leasing,  operating
and sales-type leases for the five years ended September 30, 2000:

                              1996   1997   1998   1999   2000
                              ----   ----   ----   ----   ----

Total leasing .............    31%    27%    26%    26%    27%
Operating lease ...........    24%    21%    20%    19%    20%
Sales-type lease ..........    26%    30%    30%    25%    25%


SALES:  Revenue from sales, which includes  remarketing and buy/sell activities,
in fiscal 2000, 1999 and 1998 is shown in the table below:

<TABLE>
<CAPTION>

                                           2000                          1999                      1998
                                 ------------------------    -------------------------   ------------------------
(IN MILLIONS)                    Revenue  Expense  Margin    Revenue   Expense  Margin   Revenue  Expense  Margin
                                 -------  -------  ------    -------   -------  ------   -------  -------  ------
<S>                                <C>      <C>       <C>      <C>       <C>       <C>     <C>      <C>       <C>
Sales ..........................    $440     $358      19%      $293      $250      15%     $329     $275      16%
Sale of mainframe portfolio ....       -        -       -        485       485       -         -        -       -
Sale of vendor portfolio .......       -        -       -         95        93       2%        -        -       -
Sale of medical
    refurbishment business .....       -        -       -         18        18       -         -        -       -
                                    ----     ----     ---       ----      ----    ----      ----     ----     ----
                                    $440     $358      19%      $891      $846       5%     $329     $275      16%
                                    ====     ====     ===       ====      ====    ====      ====     ====     ====

</TABLE>
                                      -28-
<PAGE>


SERVICES:  Revenue from technology  services was $637 million,  $522 million and
$433 million in fiscal 2000,  1999 and 1998,  respectively.  The  increases  are
primarily  the result of the  growth in  products  and  services.  Revenue  from
continuity  contracts,  which is  recognized  monthly  during the  noncancelable
continuity   contract  and  is  therefore   recurring   and   predictable,   was
approximately  $362 million,  $325 million and $298 million  during fiscal 2000,
1999 and 1998,  respectively,  representing  approximately  57%,  62% and 69% of
technology services revenue.

COMDISCO VENTURES GROUP:  Comdisco Ventures group revenue of approximately  $673
million in fiscal 2000 and $229 million in fiscal 1999  represent an increase of
194% and 100%, respectively, over the prior year periods. The increases were due
to  higher  revenue  from the sale of equity  investments,  and  higher  leasing
revenue and interest income on venture debt.

     Total leasing revenue of $197 million for the year ended September 30, 2000
represented an increase of 67% compared to the prior year.

     Revenue from the sale of equity interests  obtained in conjunction with the
company's  financing  transactions,  which is included in "Other revenue" on the
Statement of Earnings,  was $406 million in fiscal 2000  compared to $81 million
and $15 million in fiscal 1999 and 1998, respectively. Warrant sale proceeds and
capital gains for fiscal 2000, 1999 and 1998 were as follows:

(IN MILLIONS)                   2000     1999    1998
                                ----     ----    ----
Proceeds from sale of
    equity securities .......   $226     $ 11   $  2
Less: cost of equity
    securities ..............     24        5      1
                                ----     ----   ----
Capital gains ...............    202        6      1
Warrant sale proceeds .......    204       75     14
                                ----     ----   ----
Net revenue from the sale
    of equity holdings ......   $406     $ 81   $ 15
                                ====     ====   ====

     During  fiscal 2000,  approximately  one  hundred-thirteen  companies  were
acquired  or merged  or  completed  an  initial  public  offering,  compared  to
sixty-two companies and thirty companies in fiscal 1999 and 1998,  respectively.
Comdisco  Ventures group records the proceeds from the sale of warrants received
in  conjunction  with  its  financing  transactions  as  income  when  received.
Historically,  Comdisco  Ventures  group's  general  policy has been to sell its
equity  positions  in an orderly  manner as soon as  possible  after a liquidity
event.  See "Risk  Factors that May Affect  Future  Results" for a discussion of
factors  that could  affect the timing of, and the  amounts  received,  from the
sales of the company's equity interests in these companies.

OTHER REVENUE:  Other revenue was $531 million,  $122 million and $53 million in
fiscal 2000, 1999 and 1998,  respectively.  The components of other revenue were
as follows:

(IN MILLIONS)                        2000    1999     1998
                                     ----    ----     ----
Comdisco Ventures group:
    Sale of equity holdings ....     $406    $ 81     $ 15
    Interest income on notes ...       56      23        7
    Other ......................        3       1        -
                                     ----    ----     ----
                                      465     105       22
                                     ----    ----     ----
Comdisco group:
    Equity sales ...............       42      (5)       -
    Sale of receivables ........        -       -        5
    Investment income ..........       16      17        7
    Other ......................        8       5       19
                                     ----    ----     ----
                                       66      17       31
                                     ----    ----     ----
    Total other revenue ........     $531    $122     $ 53
                                     ====    ====     ====

     Investment  income is primarily  from the  overnight  investment  of excess
funds.

COSTS AND EXPENSES
Total costs and  expenses  were $3.5  billion,  $4.1 billion and $3.0 billion in
fiscal 2000, 1999 and 1998,  respectively.  The decrease in fiscal 2000 compared
to the prior year is  primarily  due to the Sale and the Charge.  Excluding  the
Charge, factors contributing to the higher costs and expenses in fiscal 2000 and
1999  compared  to the prior  years were  increased  costs  associated  with the
company's  technology  services and higher selling,  general and  administrative
expenses.

LEASING COSTS:  Leasing costs totaled $1.7 billion in fiscal 2000,  $2.0 billion
in fiscal 1999 and $1.8 billion in fiscal 1998.  The decrease in the fiscal 2000
compared to fiscal 1999 is due to reduced operating lease revenue resulting from
the change in the mix of leases  written and a  reduction  in  sales-type  lease
transactions.  The  decrease in  sales-type  lease  transactions  is primarily a
result of a higher  percentage of remarketing  transactions done as sales rather
than as leases.  The  increase in fiscal 1999  compared to fiscal 1998 is due to
related increases in operating lease revenue and sales-type lease revenue.

                                      -29-
<PAGE>

SALES  COSTS:  Sales costs were $358  million,  $846 million and $275 million in
fiscal 2000, 1999 and 1998,  respectively.  The decrease in fiscal 2000 compared
to fiscal  1999,  and the increase in fiscal 1999  compared to fiscal  1998,  is
primarily  due to the Sale in fiscal  1999.  Excluding  the Sale and the sale of
vendor portfolio,  the increase in sales costs in fiscal 2000 compared to fiscal
1999 is due to increased remarketing transactions recorded as sales, rather than
as sales-type leases. These remarketing transactions had higher margins than the
sales activity in fiscal 1999. See "Sales" for information on sales margins.

SERVICES COSTS: Technology services costs were $572 million in fiscal 2000, $440
million in fiscal 1999 and $362 million in fiscal 1998.  The increases  were due
to higher personnel costs and continued  investment in new service  development,
including, in fiscal 2000, Web Hosting services.

SELLING,  GENERAL  AND  ADMINISTRATIVE:   Selling,  general  and  administrative
expenses  totaled $532 million in fiscal 2000,  $326 million in fiscal 1999, and
$249 million in fiscal 1998. The increase in fiscal 2000 compared to fiscal 1999
is  primarily  due  to  an  increase  in  Comdisco   Ventures  group   incentive
compensation  costs  as a  result  of  gains  realized  on the  sale  of  equity
positions,  and an increase in bad debt expense.  The following table summarizes
selling, general and administrative expenses:

(IN MILLIONS)                          2000        1999        1998
                                       ----        ----        ----
Incentive compensation                 $139        $ 69        $ 49
Other compensation
    and benefits                        132         120         103
Outside services                         60          40          31
Bad debt expense
    Comdisco Ventures group             112          23           5
Bad debt expense
    Comdisco group                       36          13           7
Other expenses                           53          61          54
                                       ----        ----        ----
                                       $532        $326        $249
                                       ====        ====        ====


INTEREST: Interest expense for fiscal 2000 totaled $354 million in comparison to
$337 million in fiscal 1999 and $326 million in fiscal 1998,  respectively.  The
increase  in interest  expense in fiscal 2000  compared to fiscal 1999 is due to
higher  average  daily  borrowings   resulting  from  the  company's   increased
investment  in leasing,  Comdisco  Ventures  group and Prism (see  "Discontinued
Operations")  compared  to the prior  period,  and  higher  average  rates.  The
increase  in interest  expense in fiscal 1999  compared to fiscal 1998 is due to
higher average daily borrowings, offset by lower average rates.

     See  "Financial  Condition" for a discussion of credit ratings and expected
impact on interest  expense in fiscal 2001. See "Qualitative  Information  About
Market Risk" for a discussion of the anticipated  impact of a changing  interest
rate environment on the company.

     The company borrowed significant amounts to invest in the infrastructure of
its  discontinued  operations.  In fiscal 2000 and 1999,  the  interest  expense
associated  with  these  borrowings  is  included  in the  loss on  discontinued
operations  through the anticipated wind down date.  Subsequent to the wind down
date,  interest  costs  associated  with these  borrowings  will be  included in
interest  expense until such borrowing is paid off by cash flow from  continuing
operations.  Accordingly,  the  company  expects  interest  expense to  increase
significantly  in fiscal 2001. See "Risk Factors That May Affect Future Results"
for a discussion of the factors that may affect interest expense.

OTHER:  See "Net earnings" for a discussion of the Charge recorded in the second
quarter of fiscal 1999.

DISCONTINUED  OPERATIONS:  Loss from  discontinued  operations at Prism was $120
million,  in fiscal 2000  compared to a loss of $22 million in fiscal  1999.  In
addition,  the company  recorded an estimated  after-tax loss on disposal in the
fourth  quarter of fiscal 2000 of $202 million.  The estimated  loss on disposal
represents the company's  estimate of operational  losses to be incurred through
December 31, 2000 (the expected wind down date) and the expected losses from the
disposition of the assets.  Through November 6, 2000, Prism had received letters
of intent from buyers on a portion of the equipment  totaling  approximately $40
million.  Discussions with other potential  buyers  continue.  Proceeds from the
sale of assets,  expected to total  approximately  $80 million,  will be used to
fund  operating  costs  during  its  phase out  period  and for  payment  of its
obligations to creditors,  including  Comdisco.  Actual losses could differ from
those  estimates  and will be  reflected  as  adjustments  in  future  financial
statements.  No  assurances  can be  given  that  the  recorded  losses  will be
sufficient  to cover the actual  operational  losses and  losses  incurred  upon
disposition or winding down of the discontinued operations.

                                      -30-
<PAGE>

INCOME TAXES
Note 10 of  Notes  to  Consolidated  Financial  Statements  on page 48  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. In its  operations,  the company works with
multinational corporations and provides global solutions in its services.

     Revenue from  international  operations,  excluding  export sales, was $828
million in fiscal 2000  compared to $905 million and $659 million in fiscal 1999
and 1998, respectively.  International revenues represented 21% of the company's
total revenue in fiscal 2000, 22% in fiscal 1999 and 20% in fiscal 1998.

     Geographic  area  data is  included  in Note 18 of  Notes  to  Consolidated
Financial Statements on page 56.

RISK FACTORS THAT MAY AFFECT FUTURE RESULTS
This  Report  contains   forward-looking   statements  that  involve  risks  and
uncertainties.  The company's  actual  revenues and results of operations  could
differ materially from those anticipated in these forward-looking  statements as
a result of certain  factors,  including  those set forth in the following  risk
factors.

POTENTIAL FLUCTUATIONS IN OPERATING RESULTS: The company's operating results are
subject to quarterly fluctuations resulting from a variety of factors, including
earnings contributions from Comdisco Ventures group,  remarketing activities and
services,  the timing and  ability of  Comdisco  Ventures  group to sell  equity
positions  (see  "Comdisco  Ventures  group" below),  product  announcements  by
manufacturers, economic conditions and variations in the financial mix of leases
written.  The  financial mix of leases  written is a result of a combination  of
factors,  including,  but not limited to,  changes in  customer  demands  and/or
requirements,  new product  announcements,  price  changes,  changes in delivery
dates,   changes  in  the   maintenance   and  pricing   policies  of  equipment
manufacturers, and price competition from other lessors and finance companies.

DEPENDENCE  ON PRODUCT AND  MARKET:  The  markets  for the  company's  principal
products are  characterized by rapidly changing  technology,  evolving  industry
standards,  and declining prices. The company's operating results will depend to
a significant extent on its ability to continue to introduce new services and to
control and/or reduce costs on existing services. The success of these and other
new offerings is dependent on several factors,  including proper  identification
of customer needs,  cost, timely  completion and  introduction,  differentiation
from offerings of the company's competitors and market acceptance.

EARNINGS  CONTRIBUTIONS  FROM  LEASING:  The market for leasing and  services is
characterized by rapid technological developments, evolving customer demands and
frequent new product  announcements and  enhancements.  Failure to anticipate or
adapt  to  new  technological  developments  or  to  recognize  changing  market
conditions  could adversely affect the company's  business,  including its lease
volume, leasing revenue and earnings contributions from leasing.

    Remarketing  has  been  and  will  continue  to be an  important  factor  in
determining  quarterly  earnings.  To  meet  earnings  goals  for  fiscal  2001,
remarketing contributions,  primarily for the company's global equipment leasing
businesses,  must be at or above the level  achieved in fiscal  2000.  Quarterly
operating results depend substantially upon the remarketing  transactions within
the quarter,  which are difficult to forecast  accurately.  While the company is
devoting resources to its remarketing activities, there can be no assurance that
the company will achieve the appropriate level of activity  necessary to meet or
match the company's prior and desired operating results.

    The  emergence of the  communications  market -  facilities-based  broadband
communications    companies,    Internet    Service    Providers    and    other
telecommunications  carriers - and the growth of broadband  networks provide the
company  with an  industry  in which  leasing is an  attractive  alternative  to
ownership.  The  company's  communications  equipment  customers  are  generally
companies with accumulated net deficits and extensive liquidity requirements. To
the extent that these  companies  are unable to meet their  business  plans,  or
unable to obtain  funding or  funding  at  reasonable  rates to  complete  their
business plans,  there could be an increase in the company's credit losses above
historical levels.

EARNINGS  CONTRIBUTIONS FROM SERVICES: As a result of the evolving nature of its
services business,  the company has limited meaningful  historical data on which
to base its planned operating  expenses.  Accordingly,  a significant portion of

                                      -31-
<PAGE>

the company's expense levels (investment in continuity  facilities and hardware,
consultants,  experts  and  back  office  personnel)  is  based  in  part on its
expectations as to future services revenues,  and is, to a large extent,  fixed.
Conversely,  the company's  revenue base has become more diverse with the growth
of other  technology  services  revenue,  and therefore  less recurring and less
predictable than in prior years.

    To attain its services  earnings  contribution  goals for fiscal  2001,  the
company must meet its obligations under the agreements  underlying  transactions
in process at September 30, 2000 (also  referred to by the company as its "sales
backlog");  expand its contract subscription base (through new contract signings
and contract  renewals);  increase its revenues from other technology  services;
develop, promote and sell additional service products, such as IT CAP Solutions,
advanced recovery services,  availability options, remote computing services and
web hosting;  and contain costs. The company must also successfully compete with
organizations offering similar services.

    The  company's  ability to obtain new  business  and realize  revenue on its
sales  backlog  depends on its  ability  to  anticipate  technological  changes,
develop services to meet customer  requirements and achieve delivery of services
that meet customer requirements. In addition, there can be no assurance that the
company  will be able to maintain  and/or  increase  its  margins on  technology
services in fiscal 2001.

    Comdisco's  business is becoming  more service  oriented,  with the business
driven by the company's service offerings.  These transactions,  which generally
include a  combination  of  services  and  leasing,  are more  complex  than the
company's  traditional  leasing  business.  In addition,  because  these service
offerings represent new services,  the company has to spend more time explaining
the value of these services to the customer.  Accordingly, one of the impacts of
the company's  changing  business model is the  lengthening of the sales cycle -
the length of time between initial sales contact and final delivery of contracts
- as compared to its traditional  leasing  business.  This increase in the sales
cycle  results in an  increase in  negotiations  in  progress  which  ultimately
impacts the timing of revenue, earnings and volume recognition.

COMDISCO  VENTURES GROUP:  Comdisco  Ventures group has made loans to and equity
investments in various privately held companies.  These companies,  typically in
an early stage of development with limited  operating  histories,  limited or no
resources,  may be  expected  to incur  substantial  losses and may be unable to
complete their business plans.  Accordingly,  investments in these companies may
not result in any return and the company may lose its entire  investment  and/or
principal balance.  Equity instruments held by the company are generally subject
to lockups restricting its ability to sell until several months after an initial
public offering. The public market for high technology and other emerging growth
companies is extremely volatile, increasing the risk of such equity investments.
Such  volatility  may adversely  affect the ability of the company to dispose of
the equity  securities and the value of those securities on the date of sale. To
the extent  these  companies do not meet their plans or the company is unable to
dispose of its equity  securities,  the company's business and financial results
may suffer.

    There can be no  assurance  that the  company's  relationships  with venture
capital  organizations  can be maintained  or sustained.  To the extent that the
company is unable to  maintain  these  relationships,  its  ability to  identify
potential customers may be substantially impaired.

    Comdisco  Ventures  group policy with respect to  disposition  of its equity
holdings is not intended to, and does not,  assure that Comdisco  Ventures group
will maximize its return on any  particular  holding.  Furthermore,  because the
creation of a public market or an acquisition/merger is beyond Comdisco Ventures
group's control and is difficult,  if not impossible,  to predict, its operating
results  are  subject  to  significant  and  material  quarterly   fluctuations.
Fluctuations  in future  quarters may be greater than those  experienced in past
quarters  as a result of the  growth in the number of direct  equity  financings
made by the company,  market  volatility for emerging  growth  companies and the
company's focus on  Internet-related,  communications and other  high-technology
companies.  For those securities without a public trading market, the realizable
value of  Comdisco  Ventures  group's  interests  may prove to be lower than the
carrying value currently reflected in the financial statements.

    Comdisco Ventures group depends on certain important  employees and the loss
of those employees could harm and disrupt Comdisco Ventures group's business.

INTEREST  RATES:  Historically,  a changing  interest rate  environment  did not
impact the  company's  margins  since the  effects of higher or lower  borrowing
costs would be reflected in the rates on newly leased  assets or in the fees for

                                      -32-
<PAGE>

technology  services.  If the company's borrowing costs increase in fiscal 2001,
there  can be no  assurance  that  the  company  will be able  to  reflect  such
increases  in its lease  rates or  service  fees.  Factors  which may impact the
company's  ability  to adjust  its rates or  otherwise  mitigate  the  impact of
increasing  cost of funds in fiscal 2001 are the market for secured  nonrecourse
debt,  interest rate spreads on company  borrowings  compared to similarly rated
companies  and  organizations,  changes,  if any,  in the  company's  terms  and
conditions  under its lines of credit and other market  concerns,  including the
company's  commitments to Comdisco  Ventures  group.  Many, if not all, of these
factors are beyond the control of the company.

    The company borrowed  significant amounts to invest in the infrastructure of
its discontinued operations. After the wind down date, interest costs associated
with these  borrowings will be included in interest expense until such borrowing
is paid off by cash flow  from  operations.  Accordingly,  the  company  expects
interest  expense to increase  significantly  in fiscal  2001.  In order to meet
earnings  goals for fiscal 2001,  the company must increase  (compared to fiscal
2000) its  earnings  contributions  from  leasing,  including  from  remarketing
activities,  margins on services,  and cash flow from operating  activities.  In
addition,  the company  must  dispose of its equity  securities  (See  "Comdisco
Ventures group" above),  manage its capital  expenditures  and control costs and
expenses.

ECONOMIC  CONDITIONS:  The economic environment has been sustained over a number
of years and was the longest  period of continuous  economic  growth in the last
thirty years. This environment encouraged entrepreneurs to conceive, develop and
bring to market new products and  services.  Comdisco  Ventures  group  targeted
these early-stage companies for its services and products.  The recent slow down
in economic growth could materially affect the market in which Comdisco Ventures
group operates.

    Many of the companies to which the company provides  financing are dependent
on third parties for liquidity.  Any significant  change in the  availability of
funds  would  have a  material  impact  on the  company's  customer  base,  and,
potentially,  the  collectability of its lease and venture debt receivables,  as
well as, the fair market value of its equity holdings.

    In the present economic climate, Comdisco Ventures group's customers may not
be able to complete securities  offerings and Comdisco Ventures group may not be
able to generate gains or receive proceeds from the sale of equity holdings.

    A slow down in economic growth may result in companies either reducing their
capital budgets, or delaying equipment upgrades and enhancements.

OTHER FACTORS: Other uncertainties include continued business conditions,  trend
of movement to client/server  environment,  competition,  including  competition
from other technology  service  providers,  reductions in technology budgets and
related  spending  plans and price  competition  from other  technology  service
providers.

    Due to all of the foregoing  factors,  in some future  quarter the company's
operating  results may fall below the  expectations  of securities  analysts and
investors.  In such an event,  the trading price of the  company's  common stock
would likely be materially and adversely affected. Many of the factors that will
determine  results of  operations  are beyond  Comdisco's  ability to control or
predict.

    The  company  undertakes  no  obligation  to  publicly  update or revise any
forward-looking  statements  whether  as a result  of new  information,  further
events or otherwise.

OTHER MATTERS

QUALITATIVE  INFORMATION  ABOUT MARKET RISK:  The company's  primary market risk
exposures  are equity  security  price risk and  interest  rate risk,  primarily
related to the company's interest-bearing obligations.

    Generally,  a  changing  interest  rate  environment  does  not  impact  the
company's  margins since the effects of higher or lower borrowing costs would be
reflected in the rates on newly leased assets. In addition, the company attempts
to match the  maturities of its  borrowings  with the cash flows from its leased
assets and notes  receivables,  thereby  reducing the  company's  interest  rate
exposure.

    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.  The company

                                      -33-
<PAGE>

does  not  use  derivatives  for  trading  purposes.  See  Note  8 of  Notes  to
Consolidated Financial Statements for information on the company's average daily
borrowings,  the  company's  derivative  financial  instruments,  comprising  of
interest  rate  swaps and  foreign  currency  forward  exchange  contracts,  and
effective interest rates.

    The table  below  presents  principal  (or  notional)  amounts  and  related
weighted-average  interest  rates by year of maturity  for the  company's  notes
payable, term notes and senior notes.



(IN MILLIONS)                 2001       2002       2003      2004      2005+
                              ----       ----       ----      ----      ----
Notes payable
    Fixed rate ........     $1,314      $   -      $   -     $   -     $   -
    Average
       interest rate ..       6.53%
Term notes
    Floating rate .....        428        193         59        15         -
    Average
       interest rate ..       6.58%      6.58%      6.58%     6.58%        -
Senior notes
    Fixed rate ........      1,009      1,406        770         -       267
    Average
       interest rate ..       6.67%      6.42%      8.43%        -      6.13%


    As  the  above  table  incorporates  only  the  company's   interest-bearing
obligations and not its lease portfolio,  the information  presented therein has
limited predictive value.

    The  company's  investment  in equity  securities is subject to market price
risk as of September  30, 2000. A 10% decrease in market values would reduce the
carrying  value  of the  company's  publicly  traded  equity  securities  by $85
million. Many of these equity securities are highly volatile stocks.

RECENTLY ISSUED PROFESSIONAL ACCOUNTING STANDARDS: In June 1998, the FASB issued
Statement  No.  133,   "Accounting   for  Derivative   Instruments  and  Hedging
Activities",  which was later  amended by  Statement  No. 137,  "Accounting  for
Derivative  Instruments and Hedging  Activities - Deferral of the Effective Date
of FASB  Statement  No. 133" and by Statement No. 138,  "Accounting  for Certain
Derivative  Instruments  and Certain  Hedging  Activities - an Amendment of FASB
Statement No. 133  (collectively,  SFAS No. 133 or the  Standard).  The Standard
requires  companies  to record  derivatives  on the  balance  sheet as assets or
liabilities measured at fair value. The accounting treatment of gains and losses
resulting  from  changes in the value of  derivatives  depends on the use of the
derivatives and whether they qualify for hedge  accounting.  The company adopted
the new Standard on October 1, 2000.  Adoption of the Standard  will be recorded
as a cumulative  effect of a change in accounting  principle and will not result
in  restatement  of  previously  issued  financial  statements.  The company has
assessed the impact of adoption on its  consolidated  financial  statements  and
believes the impact will not be material.

    In December  1999,  the  Securities  and  Exchange  Commission  issued Staff
Accounting   Bulletin   (SAB)  No.  101,   "Revenue   Recognition  in  Financial
Statements,"  which was later  amended by SAB No. 101A and SAB No.  101B.  These
SABs, which provide guidance on the recognition,  presentation and disclosure of
revenue in financial  statements,  are  effective in the first quarter of fiscal
2001  and  are  not  expected  to  have  a  material  impact  on  the  company's
consolidated financial statements.

    In September  2000,  the Emerging  Issues Task Force (EITF) of the Financial
Accounting Standards Board reached a consensus on Issue 00-19, "Determination of
Whether  Share  Settlement  is Within the Control of the Issuer for  Purposes of
Applying  Issue No.  96-13,  Accounting  for  Derivative  Financial  Instruments
Indexed to, and  Potentially  Settled in, a Company's  Own Stock." The consensus
provides specific guidance  regarding when a contract indexed to a company's own
stock must be classified in stockholders'  equity versus  classified as an asset
or liability.  Any new contracts  entered into after the date of consensus  must
comply with the  consensus,  and any contracts  outstanding  as of the September
2000  consensus  date are  grandfathered  until June 2001 before  compliance  is
required.  Management  anticipates  that  compliance with the consensus will not
have a material impact on the company's consolidated financial statements.

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

                                      -34-
<PAGE>

CONSOLIDATED STATEMENTS OF EARNINGS
COMDISCO, INC. AND SUBSIDIARIES
YEARS ENDED SEPTEMBER 30,
(IN MILLIONS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
                                                                 2000       1999       1998
                                                               -------    -------    -------
<S>                                                           <C>        <C>        <C>
REVENUE
Leasing:
    Operating ..............................................   $ 1,700    $ 1,938    $ 1,897
    Direct financing .......................................       178        162        155
    Sales-type .............................................       381        543        376
                                                               -------    -------    -------
       Total leasing .......................................     2,259      2,643      2,428

Sales ......................................................       440        891        329
Technology services ........................................       637        522        433
Other ......................................................       531        122         53
                                                               -------    -------    -------
    Total revenue ..........................................     3,867      4,178      3,243
                                                               -------    -------    -------

COSTS AND EXPENSES
Leasing:
    Operating ..............................................     1,368      1,563      1,528
    Sales-type .............................................       285        406        263
                                                               -------    -------    -------
       Total leasing .......................................     1,653      1,969      1,791

Sales ......................................................       358        846        275
Technology services ........................................       572        440        362
Selling, general and administrative ........................       532        326        249
Interest ...................................................       354        337        326
Other ......................................................         -        150          -
                                                               -------    -------    -------
    Total costs and expenses ...............................     3,469      4,068      3,003
                                                               -------    -------    -------
Earnings from continuing operations before income taxes ....       398        110        240
Income taxes ...............................................       143         40         87
                                                               -------    -------    -------
Earnings from continuing operations ........................       255         70        153
Loss from discontinued operations (net of taxes) ...........      (322)       (22)         -
Preferred dividends ........................................         -          -         (2)
                                                               -------    -------    -------
Net earnings (loss) to common stockholders .................   $   (67)   $    48    $   151
                                                               =======    =======    =======
Basic earnings (loss) per common share:
    Earnings from continuing operations ....................   $  1.68    $   .46    $   .99
    Loss from discontinued operations ......................     (2.12)      (.14)         -
                                                               -------    -------    -------
    Net earnings (loss) ....................................   $  (.44)   $   .32    $   .99
                                                               =======    =======    =======
Diluted earnings (loss) per common share:
    Earnings from continuing operations ....................   $  1.58    $   .44    $   .93
    Loss from discontinued operations ......................     (1.99)      (.14)         -
                                                               -------    -------    -------
    Net earnings (loss) ....................................   $  (.41)   $   .30    $   .93
                                                               =======    =======    =======
See accompanying notes to consolidated financial statements

</TABLE>

                                      -35-
<PAGE>

CONSOLIDATED BALANCE SHEETS
COMDISCO, INC. AND SUBSIDIARIES
(IN MILLIONS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>

                                                                           YEARS ENDED SEPTEMBER 30,
                                                                               2000       1999
                                                                           ----------- ------------
<S>                                                                        <C>        <C>
ASSETS
Cash and cash equivalents ...............................................   $   316    $   361
Cash-legally restricted .................................................        54         46
Receivables, net ........................................................     1,181        735
Inventory of equipment ..................................................       127        115
Leased assets:
    Direct financing and sales-type .....................................     2,316      2,107
    Operating (net of accumulated depreciation) .........................     3,161      3,516
                                                                            -------    -------
       Net leased assets ................................................     5,477      5,623
                                                                            -------    -------
Property, plant and equipment, net ......................................       287        229
Equity securities .......................................................       899        252
Other assets ............................................................       413        446
                                                                            -------    -------
                                                                            $ 8,754    $ 7,807
                                                                            =======    =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable ...........................................................   $ 1,314    $   820
Term notes ..............................................................       695        550
Senior notes ............................................................     3,452      3,686
Accounts payable ........................................................       182        263
Income taxes:
    Current .............................................................        11         15
    Deferred ............................................................       404        367
Other liabilities .......................................................       688        531
Discounted lease rentals ................................................       794        515
                                                                            -------    -------
                                                                              7,540      6,747
                                                                            -------    -------
Stockholders' equity:
    Preferred stock $.10 par value
       Authorized 100,000,000 shares; Series C and Series D .............         -          -
    Comdisco stock $.10 par value. Authorized 750,000,000 shares;
       issued 225,151,420 (223,464,344 in 1999) .........................        23         22
    Comdisco Ventures stock $.10 par value. Authorized 750,000,000 shares
       (none issued) ....................................................         -          -
    Additional paid-in capital ..........................................       360        302
    Accumulated other comprehensive income ..............................       317         58
    Retained earnings ...................................................     1,051      1,134
                                                                            -------    -------
                                                                              1,751      1,516
    Comdisco stock held in treasury, at cost; 72,582,053 shares
       (70,672,094 in 1999) .............................................      (537)      (456)
                                                                            -------    -------
       Total stockholders' equity .......................................     1,214      1,060
                                                                            -------    -------
                                                                            $ 8,754    $ 7,807
                                                                            =======    =======

</TABLE>

See accompanying notes to consolidated financial statements.

                                      -36-
<PAGE>

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
COMDISCO, INC. AND SUBSIDIARIES
YEARS ENDED SEPTEMBER 30, 2000, 1999 AND 1998
(IN MILLIONS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>

                                                                                          Accumulated
                                                                     Additional  Deferred    other                  Common
                                                  Preferred   Common    paid-in   compen- comprehensive  Retained   stock in
                                                      stock    stock    capital    sation    income      earnings   treasury  Total
                                                  ---------   ------   --------  -------- -------------  --------   --------  -----
<S>                                                 <C>      <C>       <C>       <C>         <C>         <C>        <C>      <C>
BALANCE AT SEPTEMBER 30, 1997 ....................   $   89   $   11    $  178    $   (3)     $  (20)     $  965     $ (355)  $ 865
Net earnings .....................................                                                           153                153
Translation adjustment ...........................                                                 7                              7
    Total comprehensive income ...................                                                                              160
Cash dividends-preferred .........................                                                            (2)                (2)
Cash dividends-common ($.10 per share) ...........                                                           (15)               (15)
Shared Investment Program ........................                          77                                           31     108
Stock options exercised ..........................                          (4)                                          24      20
Reduction of guaranteed ESOP debt ................                                     3                                          3
Purchase of preferred stock ......................      (89)                                                                    (89)
Purchase of common stock .........................                                                                      (88)    (88)
Stock split ......................................                11       (11)
Income tax benefits resulting from the
    exercise of non-qualified stock options ......                          17                                                   17
                                                     ------   ------    ------    ------      ------      ------     ------   -----
BALANCE AT SEPTEMBER 30, 1998 ....................       --       22       257        --         (13)      1,101       (388)    979
                                                     ------   ------    ------    ------      ------      ------     ------   -----
Net earnings .....................................                                                            48                 48
Translation adjustment ...........................                                               (21)                           (21)
Change in unrealized gain ........................                                                92                             92
    Total comprehensive income ...................                                                                              119
Cash dividends-common ($.10 per share) ...........                                                           (15)               (15)
Stock options exercised ..........................                          21                                           14      35
Purchase of common stock .........................                                                                      (82)    (82)
Income tax benefits resulting from the
    exercise of non-qualified stock options ......                          24                                                   24
                                                     ------   ------    ------    ------      ------      ------     ------   -----
BALANCE AT SEPTEMBER 30, 1999 ....................       --       22       302        --          58       1,134       (456)  1,060
                                                     ------   ------    ------    ------      ------      ------     ------   -----
Net loss .........................................                                                           (67)               (67)
Translation adjustment ...........................                                               (64)                           (64)
Change in unrealized gain ........................                                               323                            323
    Total comprehensive income ...................                                                                              192
Cash dividends-common ($.10 per share) ...........                                                           (16)               (16)
Stock options exercised ..........................                 1        26                                           10      37
Purchase of common stock .........................                                                                      (91)    (91)
Income tax benefits resulting from the
    exercise of non-qualified stock options ......                          32                                                   32
                                                     ------   ------    ------    ------      ------      ------     ------   -----
BALANCE AT SEPTEMBER 30, 2000 ....................   $   --   $   23    $  360    $   --      $  317      $1,051     $ (537) $1,214
                                                     ======   ======    ======    ======      ======      ======     ======   =====
</TABLE>
See accompanying notes to consolidated financial statements

                                      -37-
<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOWS
COMDISCO, INC. AND SUBSIDIARIES
(IN MILLIONS)
<TABLE>
<CAPTION>

                                                                   YEARS ENDED SEPTEMBER 30,
                                                                  2000       1999       1998
                                                               -------    -------    -------
<S>                                                           <C>        <C>        <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS:
Cash flows from operating activities:
    Operating lease and other leasing receipts .............   $ 1,789    $ 2,002    $ 2,013
    Direct financing and sales-type leasing receipts .......     1,107        958        905
    Sale of direct financing and sales-type receivables ....         -          -        125
    Sale of portfolio ......................................         -        502          -
    Leasing costs, primary rentals paid ....................       (10)       (14)       (20)
    Sales ..................................................       467        316        335
    Sales costs ............................................      (116)      (105)       (69)
    Technology services receipts ...........................       609        485        408
    Technology services costs ..............................      (470)      (390)      (278)
    Notes receivable receipts ..............................       272         66         33
    Warrant proceeds .......................................       470         55         15
    Other revenue ..........................................        13         22         29
    Selling, general and administrative expenses ...........      (384)      (309)      (249)
    Interest ...............................................      (351)      (338)      (326)
    Income taxes ...........................................       (57)       (12)       (34)
                                                               -------    -------    -------
       Net cash provided by continuing operations ..........     3,339      3,238      2,887
       Net cash used by discontinued operations ............      (120)       (19)         -
                                                               -------    -------    -------
       Net cash provided by operating activities ...........     3,219      3,219      2,887
                                                               -------    -------    -------
Cash flows from investing activities:
    Equipment purchased for leasing ........................    (2,558)    (2,838)    (3,026)
    Investment in continuity and network services facilities      (202)      (151)       (87)
    Notes receivable .......................................      (626)      (334)       (57)
    Equity investments .....................................      (176)       (43)        (8)
    Capital expenditures on discontinued operations ........      (257)      (117)        (8)
    Other ..................................................       (31)        22          6
                                                               -------    -------    -------
       Net cash used in investing activities ...............    (3,850)    (3,461)    (3,180)
                                                               -------    -------    -------
Cash flows from financing activities:
    Discounted lease proceeds ..............................       619        341        279
    Net increase (decrease) in notes and term notes payable        639       (301)        97
    Issuance of senior notes ...............................       802      1,842      1,017
    Maturities and repurchases of senior notes .............    (1,036)      (924)      (617)
    Principal payments on secured debt .....................      (340)      (322)      (425)
    Common stock purchased and placed in treasury ..........       (91)       (82)       (88)
    Preferred stock purchased ..............................         -          -        (89)
    Dividends paid on common stock .........................       (16)       (15)       (15)
    Dividends paid on preferred stock ......................         -          -         (2)
    Shared Investment Program ..............................         -          -        109
    Issuance of Prism Communication Services common stock ..        11          -          -
    Decrease (increase) in legally restricted cash .........        (8)       (16)        15
    Other ..................................................         6         17         38
                                                               -------    -------    -------
       Net cash provided by financing activities ...........       586        540        319
                                                               -------    -------    -------
Net increase (decrease) in cash and cash equivalents .......       (45)       298         26
Cash and cash equivalents at beginning of period ...........       361         63         37
                                                               -------    -------    -------
Cash and cash equivalents at end of period .................   $   316    $   361    $    63
                                                               =======    =======    =======
</TABLE>

See accompanying notes to consolidated financial statements

                                      -38-
<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOWS
COMDISCO, INC. AND SUBSIDIARIES
(IN MILLIONS)
<TABLE>
<CAPTION>

                                                                             YEARS ENDED SEPTEMBER 30,
                                                                            2000       1999       1998
                                                                         -------    -------    -------
<S>                                                                     <C>        <C>        <C>
RECONCILIATION OF EARNINGS FROM CONTINUING OPERATIONS
TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Earnings from continuing operations ..................................   $   255    $    70    $   153
Adjustments to reconcile earnings from continuing operations to
    net cash provided by operating activities:
    Leasing costs, primarily depreciation and amortization ...........     1,643      1,954      1,771
    Leasing revenue, primarily principal portion of direct
       financing and sales-type lease rentals ........................       637        327        452
    Sale of direct financing and sales-type receivables ..............         -          -        125
    Cost of sales ....................................................       242        641        193
    Technology services costs, primarily depreciation and amortization       103         50         84
    Interest .........................................................         3          -          -
    Income taxes .....................................................        86         15         45
    Principal portion of notes receivable ............................       216         43         26
    Selling, general, and administrative expenses ....................       148         16          -
    Income tax benefit resulting from the exercise of
       non-qualified stock options ...................................        32         24         17
    Other expense ....................................................         -        150          -
    Other, net .......................................................       (26)       (52)        21
                                                                         -------    -------    -------
       Net cash provided by continuing activities ....................     3,339      3,238      2,887
       Net cash used by discontinued operations ......................      (120)       (19)         -
                                                                         -------    -------    -------
       Net cash provided by operating activities .....................   $ 3,219    $ 3,219    $ 2,887
                                                                         =======    =======    =======
SUPPLEMENTAL SCHEDULE OF NONCASH
FINANCING ACTIVITIES:
    Reduction of discounted lease rentals in lease portfolio sale ....   $     -    $   100    $     -
                                                                         =======    =======    =======
</TABLE>

See accompanying notes to consolidated financial statements

                                      -39-
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN MILLIONS, EXCEPT SHARE AND PER SHARE DATA)


NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS:  Comdisco provides global technology  services to help its
customers maximize  technology  functionality,  predictability and availability.
The company offers a complete suite of information technology services including
business continuity,  storage services,  network services, web hosting services,
and IT Control and  Predictability  Solutions.  Comdisco  also offers  equipment
services to key vertical industries, including electronics,  telecommunications,
pharmaceutical,  biotechnology  and  manufacturing.  Through  Comdisco  Ventures
group, it provides equipment leasing and other financing and services to venture
capital-backed companies.

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

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

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

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

LEASE ACCOUNTING:  See "Leasing" section on pages 42 and 43 for a description of
lease accounting policies, lease revenue recognition and related costs.

TECHNOLOGY SERVICES:  Revenue from continuity contracts is recognized monthly as
subscription  fees  become  due.  Revenue  from  other  technology  services  is
recognized  over  the  terms  of the  related  contracts  or as the  service  is
provided.

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.

PROPERTY,  PLANT AND  EQUIPMENT:  Property,  plant and equipment are recorded at
cost.  Depreciation  of  property,  plant and  equipment  is  calculated  on the
straight-line  method over the estimated  useful lives of the assets.  Leasehold
improvements  are amortized  over the shorter of the lease term or the estimated
useful life of the asset. The carrying value of property, plant and equipment is
assessed annually and/or when factors  indicating an impairment are present.  If
an impairment is present,  the assets are reported at the lower cost of carrying
value or fair value.

    The company  capitalized costs associated with the design and implementation
of the Prism network,  including  internally and externally  developed software.
Capitalized  external  software  costs  included  the actual  costs to  purchase
existing  software from vendors.  Capitalized  internal software costs generally
included  personnel  costs incurred in the  enhancement  and  implementation  of
purchased software packages.

INVESTMENT  IN  EQUITY  SECURITIES:   The  company  determines  the  appropriate
classification of marketable  securities at the time of purchase and reevaluates
such designation at each balance sheet date. Marketable securities classified as

                                      -40-
<PAGE>

available-for-sale are carried at fair value, based on quoted market prices, net
of estimated commission expenses, with unrealized gains and losses excluded from
earnings  and  reported  in  accumulated  other  comprehensive   income.  Equity
investments for which there is no readily determinable fair value are carried at
cost.

WARRANTS: The company's investments in warrants (received in connection with its
lease or other  financings)  are initially  recorded at zero cost and carried in
the financial statements as follows:

     o    Warrants    that   meet   the   criteria   for    classification    as
          available-for-sale  are carried at fair value  based on quoted  market
          prices with  unrealized  gains  excluded from earnings and reported in
          accumulated other comprehensive income.

     o    Warrants  that  do not  meet  the  criteria  for  classification  as a
          marketable security are carried at zero value.

The proceeds received from the sale or liquidation are recorded as income on the
trade date.

DERIVATIVES:  Interest rate differentials on swaps are accrued as interest rates
change over the contract  period.  Amounts  receivable  under cap agreements are
accrued as a  reduction  of  interest  expense.  Unrealized  gains and losses on
forward contracts are deferred on the balance sheet until they are realized. See
Note  8  of  the  Notes  to  Consolidated  Financial  Statements  for  financial
information concerning derivatives.

EARNINGS  PER COMMON  SHARE:  Earnings  per common  share-basic  are computed by
dividing the net earnings to common  stockholders by the weighted average number
of common shares outstanding for the period.  Earnings per common  share-diluted
reflect the maximum dilution that would have resulted from the exercise of stock
options.  Earnings  per common  share-diluted  are  computed by dividing the net
earnings to common  stockholders by the weighted average number of common shares
outstanding and all dilutive stock options  (dilutive stock options are based on
the treasury  stock  method).  Anti-dilutive  stock options were  immaterial for
fiscal 2000, 1999 and 1998.

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 1998 and 1999
financial statements to conform to the 2000 presentation.


NOTE 2
DISCONTINUED OPERATIONS

The company acquired Prism Communication Services, Inc. ("Prism"), a provider of
dedicated high-speed connectivity,  on February 28, 1999, for a cash purchase of
approximately $53 million, of which approximately $45 million was paid in fiscal
1999.  From the date of  acquisition  through  September  30, 2000,  the company
provided  Prism with cash totaling $478 million for the expansion of its network
and for its operating costs.

    On October 1, 2000, the company's  board of directors voted to cease funding
ongoing  operations of Prism.  As a result of this decision,  the Prism board of
directors  voted to cease  operations  and pursue the immediate  sale of Prism's
assets. As of October 2, 2000, Prism had thirty-three carrier class switches and
over three hundred  collocations.  Through  November 6, 2000, Prism had received
letters  of  intent  from  buyers  on  a  portion  of  the  equipment   totaling
approximately  $40 million.  Discussions  with other potential  buyers continue.
Proceeds from the sale of assets,  estimated to total approximately $80 million,
will be used to fund operating costs during its phase out period and for payment
of its obligations to creditors, including Comdisco.

    Prism's  results of operations  have been shown as  discontinued  operations
through the expected disposition in the first quarter of fiscal 2001.

    Following is summary  financial  information for the company's  discontinued
operations:

(IN MILLIONS)                         2000     1999     1998
                                     -----    -----     ----

Revenue ..........................   $   4    $   1    $   -
Loss from discontinued operations:
  Before income taxes ............    (196)     (35)       -
  Income tax benefit .............     (76)     (13)       -
                                     -----    -----    -----
  Net ............................    (120)     (22)       -
Estimated loss on disposal:
  Before income taxes ............    (331)       -        -
  Income tax benefit .............    (129)       -        -
                                     -----    -----    -----
  Net ............................    (202)       -        -
                                     -----    -----    -----
  Total ..........................   $(322)   $ (22)   $   -
                                     =====    =====    =====

    Interest  expense charged to discontinued  operations was $29 million and $2
million  in 2000  and  1999,  respectively.  Interest  expense  for  the  period
subsequent to the measurement date included in the estimated loss on disposal of
$9 million was calculated based on debt attributed to the Prism operations.

                                      -41-
<PAGE>

    The  estimated  loss on disposal  before  income  taxes of the  discontinued
operations includes the following:

(IN MILLIONS)
Carrying value of net assets in excess of
  anticipated proceeds ......................   $256
Expenses of asset disposal and anticipated
operating loss for the period October 3, 2000
through the estimated date of disposal ......     75
                                                ----
Loss on disposal before income taxes ........   $331
                                                ====

Goodwill written off totaled $52 million.

    Expenses of asset disposal and anticipated  operating  losses  represent the
company's  estimate of operational losses to be incurred and the expected losses
from  disposition  of the  operations.  Actual  losses  could  differ from those
estimates and will be reflected as adjustments in future  financial  statements.
No assurances can be given that the recorded  losses will be sufficient to cover
the actual  operational  losses and losses  incurred upon asset  disposition  or
winding down of the discontinued operations.

NOTE 3
SALE OF ASSETS

On March 24, 1999,  the company  announced a major shift in corporate  strategy,
focusing on high-margin service businesses and shedding  low-margin  businesses,
including  its  mainframe  leasing and vendor lease  portfolios  and its medical
refurbishing  business.  In  conjunction  with this  repositioning,  the company
recorded  a  pre-tax  charge  of  $150  million,   $96  million  after  tax,  or
approximately  $.59  per  share,  in the  quarter  ended  March  31,  1999.  The
components  of the pre-tax  charge  included  $100 million  associated  with the
company's plan to exit the mainframe  residual leasing business,  $20 million to
exit the  medical  refurbishing  business  and $30 million  associated  with the
realignment of the company's  services  businesses.  On May 3, 1999, the company
announced  it had  reached  an  agreement  in  principle  to sell its  mainframe
computer leasing portfolio.  The sale of the mainframe portfolio and the sale of
the medical  refurbishing  business  were both  concluded in the fiscal  quarter
ended June 30, 1999.  The sale of a majority of the vendor lease  portfolio  was
completed in the quarter ended September 30, 1999.

    The  primary  component  of the pre-tax  charge for  selling  its  mainframe
residual  leasing  business  and its  medical  refurbishing  business  was asset
writedowns, which totaled $90 million and $20 million, respectively. The primary
components of the pre-tax charge for  realignment of the services  business were
asset  writedowns  totaling $20 million and lease  termination  fees totaling $5
million,  both as a result of closing  facilities.  At September  30, 1999,  the
company had $4 million included in other  liabilities  related to the charge ($0
at September 30,  2000),  consisting of the $150 million  pre-tax  charge,  less
asset  writedowns  totaling  $130  million,  other costs of $15 million and cash
payments of $1 million.

LEASING

NOTE 4
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:
o Direct financing and sales-type  leased assets consist of the present value of
the  future  minimum  lease  payments  plus the  present  value of the  residual
(collectively referred to as the net investment). Residual is the estimated fair
market value at lease  termination.  In estimating the equipment's fair value at
lease termination, the company relies on historical experience by equipment type
and  manufacturer  and, where available,  valuations by independent  appraisers,
adjusted for known trends. The company's estimates are reviewed  continuously to
ensure  realization,  however the amounts the company  will  ultimately  realize
could differ from the estimated amounts.

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

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

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

                                      -42-
<PAGE>

o Operating leases - Revenue  consists of the contractual  lease payments and is
recognized on a straight-line  basis over the lease term. Costs and expenses are
principally  depreciation  of the  equipment.  Depreciation  is  recognized on a
straight-line  basis  over  the  lease  term to the  company's  estimate  of the
equipment's fair market value at lease termination, also commonly referred to as
"residual" value. In estimating the equipment's fair value at lease termination,
the company relies on historical  experience by equipment type and  manufacturer
and, where available,  valuations by independent appraisers,  adjusted for known
trends. The company's estimates are reviewed continuously to ensure realization,
however the amounts the company will  ultimately  realize  could differ from the
amounts  assumed in determining  depreciation  on the equipment in the operating
lease portfolio at September 30, 2000.

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

NOTE 5
LEASED ASSETS

The components of the net investment in direct  financing and sales-type  leases
as of September 30 are as follows:
(IN MILLIONS)
                                        2000       1999
                                      ------     ------
Minimum lease payments receivable     $2,400     $2,162
Estimated residual values ........       218        219
Less: unearned revenue ...........      (302)      (274)
                                      ------     ------
Net investment in direct financing
  and sales-type leases ..........    $2,316     $2,107
                                      ======     ======
    Unearned  revenue is  recorded  as  leasing  revenue  over the lease  terms.


Operating leased assets include the following as of September 30:
(IN MILLIONS)
                                        2000       1999
                                      ------    -------
Operating leased assets ......        $5,693     $6,054
Less: accumulated depreciation
   and amortization ..........        (2,532)    (2,538)
                                      ------    -------
Net ..........................        $3,161    $ 3,516
                                      ======    =======

NOTE 6
LEASE PORTFOLIO INFORMATION

The size of the company's  lease portfolio can be measured by the cost of leased
assets at the date of lease inception. Cost at lease inception represents either
the  equipment's  original cost or its net book value at  termination of a prior
lease. The following table summarizes, by year of lease commencement and by year
of  projected  lease  termination,  the cost at lease  inception  for all leased
assets recorded at September 30, 2000 (in millions):

                    Cost at
YEAR LEASE            lease            PROJECTED YEAR OF LEASE TERMINATION
COMMENCED         inception       01       02        03        04       05+
----------        ---------    ------   ------    ------    ------    ------
1996
  and prior          $  870    $  541   $  233    $   56    $   20     $  20
1997                    967       541      231       156         3        36
1998                  1,949     1,070      363       408        67        41
1999                  2,614       601    1,100       436       321       156
2000                  2,844        87      323     1,150       996       288
                     ------    ------   ------    ------    ------    ------
                     $9,244    $2,840   $2,250    $2,206    $1,407    $  541
                     ======    ======   ======    ======    ======    ======

    The  following  table  summarizes  the  estimated  net  book  value at lease
termination  for all leased assets  recorded at September 30, 2000. The table is
presented  by  year  of  lease  commencement  and by  year  of  projected  lease
termination (in millions):

                   Net book
                      value
YEAR LEASE         at lease       PROJECTED YEAR OF LEASE TERMINATION
COMMENCED       termination       01         02        03        04       05+
----------      -----------    ------    ------    ------    ------    ------
1996
  and prior          $   41    $   32    $    8    $    1    $    -    $    -
1997                     83        56        26         1         -         -
1998                    251       160        58        32         1         -
1999                    395        91       148       105        44         7
2000                    318        16        39        92       129        42
                     ------    ------    ------    ------    ------    ------
                     $1,088    $  355    $  279    $  231    $  174    $   49
                     ======    ======    ======    ======    ======    ======

                                      -43-
<PAGE>

LIQUIDITY

NOTE 7
FUTURE CONTRACTUAL CASH FLOWS

Presented  below is a summary  of future  noncancelable  lease  rentals on owned
equipment,   future  technology   services  revenue,   including   noncancelable
continuity contracts,  and maturities of notes receivable  (collectively,  "cash
in-flows").

    The summary  presents  expected  cash  in-flows due in  accordance  with the
contractual terms in existence as of September 30, 2000.

<TABLE>
<CAPTION>


                                                                    YEARS ENDING SEPTEMBER 30,
                                                    -----------------------------------------------------
(IN MILLIONS)                                           01       02       03       04       05+     Total
                                                    ------   ------   ------   ------    ------    ------
<S>                                                <C>      <C>      <C>      <C>       <C>       <C>
Expected future cash in-flows:
    Operating leases-leasing ....................   $  980   $  559   $  277   $  109    $   30    $1,955
    Operating leases-Comdisco Ventures group ....      264      228      120       15         -       627
    Notes receivable-Comdisco Ventures group ....      296      320      170        4         -       790
    Direct financing and sales-type
      leases-leasing ............................    1,066      721      388      128       106     2,409
    Direct financing and sales-type
      leases-Comdisco Ventures group ............        3        1        -        -         -         4
    Technology services .........................      469      342      231      128       108     1,278
                                                    ------   ------   ------   ------    ------    ------
      Total .....................................   $3,078   $2,171   $1,186   $  384    $  244    $7,063
                                                    ======   ======   ======   ======    ======    ======

</TABLE>



FINANCING

NOTE 8
INTEREST-BEARING LIABILITIES

Interest-bearing liabilities include the following:
<TABLE>
<CAPTION>


                                                        2000                              1999
                                        --------------------------------   --------------------------------
                                         At September 30       Average     At September 30        Average
(IN MILLIONS)                            Balance   Rate   Balance   Rate   Balance    Rate    Balance     Rate
                                         -------  -----  --------  -----   -------   -----    -------    -----
<S>                                    <C>       <C>    <C>       <C>     <C>       <C>      <C>       <C>
Notes payable:
    Credit lines and loan
    participation contracts .........   $  729    6.44%  $  491    5.77%    $  369    4.19%    $  593    5.04%
    Commercial paper ................      585    6.64%     567    5.87%       451    5.42%       586    5.11%
Term notes ..........................      695    6.58%     596    6.69%       550    5.25%       550    5.52%
Senior notes ........................    3,452    6.92%   3,629    6.72%     3,686    6.45%     3,155    6.59%
Discounted lease rentals ............      794    6.82%     579    5.59%       515    6.60%       576    6.76%
                                        ------    -----  ------   ------    ------    -----    ------   ------
                                        $6,255    6.79%  $5,862    6.44%    $5,571    6.11%    $5,460    6.17%
                                        ======    =====  ======   ======    ======    =====    ======   ======
</TABLE>

                                      -44-
<PAGE>

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

<TABLE>
<CAPTION>
                                         2000                                                         1999
                     ------------------------------------------------    ---------------------------------------------------------
                     Outstanding              Maturities  Outstanding    Outstanding               Maturities          Outstanding
                       beginning                     and          end      beginning                      and                  end
(IN  MILLIONS)          of  year  Issuances  repurchases     of  year       of  year   Issuances  repurchases   Other      of year
                     -----------  ---------  -----------  -----------    -----------   ---------  -----------   -----  -----------
<S>                      <C>        <C>         <C>           <C>          <C>          <C>         <C>        <C>        <C>
Notes payable:
   Credit lines and
   loan participation
   contracts ........     $  369     $  360      $     -       $  729       $  774       $    -      $  (405)   $    -     $   369
   Commercial paper .        451        134            -          585          347          104            -         -         451
Term notes ..........        550        145            -          695          550            -            -         -         550
Senior notes ........      3,686        802       (1,036)       3,452        2,768        1,842         (924)        -       3,686
Discounted
   lease rentals ....        515        619         (340)         794          596          341         (322)     (100)        515
                          ------     ------      -------       ------       ------       ------      -------    ------      ------
                          $5,571     $2,060      $(1,376)      $6,255       $5,035       $2,287      $(1,651)   $ (100)     $5,571
                          ======     ======      =======       ======       ======       ======      =======    ======      ======

</TABLE>

    The annual maturities of all  interest-bearing  liabilities at September 30,
2000 are shown in the table below:

                                 YEARS ENDING SEPTEMBER 30,
                      ------------------------------------------------
(IN MILLIONS)           01      02      03      04      05+      Total
                      ----    ----    ----    ----     ----      -----
Notes payable:
  Credit lines
   and loan
   participation
   contracts ...    $  729  $    -   $   -   $   -   $    -    $  729
  Commercial
   paper .......       585       -       -       -        -       585
Term notes .....       428     193      59      15        -       695
Senior notes ...     1,009   1,406     770       -      267     3,452
Discounted
  lease rentals        348     250     149      45        2       794
                     -----   -----   -----   -----    -----    ------
                    $3,099  $1,849   $ 978   $  60    $ 269    $6,255
                     =====   =====   =====   =====    =====    ======


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



(IN MILLIONS)                      2000     1999
                                 ------   ------
Total credit lines:
  Committed ..................   $1,372   $1,312
  Uncommitted ................      248      289
                                 ------   ------
                                 $1,620   $1,601
                                 ======   ======

Utilized at September 30:
  Committed ..................   $  915   $  756
  Uncommitted ................       44       44
                                 ------   ------
    Total credit lines .......      959      800
  Loan participation contracts
    and other bank borrowings       355       20
                                 ------   ------
    Total notes payable ......   $1,314   $  820
                                 ======   ======

Credit lines available at
  September 30 ...............   $  661   $  801
                                 ======   ======
Maximum amount outstanding
  at any month end ...........   $1,537   $1,441
                                 ======   ======


                                      -45-
<PAGE>


COMMITTED  LINES:  The  company's  committed  lines have been  established  with
twenty-nine  banks,  six of which are U.S.  banks.  A majority  of the banks are
rated AA or better by rating  agencies.  At September 30, 2000,  the company had
committed domestic and foreign unsecured lines of credit as follows:

                              Number
FACILITY                     of banks     Expiration date
------------------------     --------     ---------------
Multi-Option Facilities           12
    $275 million facility                 December, 2002
    $275 million facility                 December, 2000
Global Facilities                 16
    $275 million facility                 December, 2002
    $275 million facility                 December, 2000
Other credit agreements:
    $100 million - domestic
       and foreign                 1         April, 2001
    $172 million - foreign         7             Various

    There  are no  compensating  balance  requirements  on any of the  committed
lines. At September 30, 2000, the company had $915 million outstanding under its
committed  lines,  including $585 million  supporting  the company's  commercial
paper program.

    The multi-option revolving credit agreements and the global revolving credit
agreements (collectively, the "Facilities") permit the company to borrow in U.S.
dollars or in other currencies,  on a revolving credit basis.  Interest rates on
debt  outstanding  under  the  Facilities  are  negotiated  at the  time  of the
borrowings based either on "bid rates" from the participating  banks, LIBOR plus
twenty basis points or, for the two $275 million  facilities  expiring December,
2000,  forty  basis  points,  or at the banks'  then  current  base  rates.  The
Facilities  call for the  company  to pay a weighted  average  annual fee of ten
basis  points  per annum on the total  committed  amount.  The two $275  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, 2001.

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  $248  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,  2000,  the company  had $900  million of
commercial  paper facilities (of which $585 million was outstanding at September
30,  2000) all of which are  supported  by its  committed  lines of credit.  The
facilities  were rated F2 by Fitch  IBCA,  P-2 by Moodys  and A-2 by  Standard &
Poors.

TERM NOTES:  At September  30, 2000,  the company had $695 million of receivable
backed commercial paper.

SENIOR NOTES: Senior notes include the following at September 30:

(IN MILLIONS)                              2000       1999
                                         ------    -------
Medium term notes (5.72% to 9.95%)...    $1,045     $1,461
6.500%   Senior Notes due 2000 ......         -        200
5.750%   Senior Notes due 2001 ......       250        250
6.375% Senior Notes due 2002 ........       250        250
6.000% Senior Notes due 2002 ........       345        350
5.950% Senior Notes due 2002 ........       345        350
7.250%   Senior Notes due 2002 ......       257        300
6.125%   Senior Notes due 2003 ......       194        250
9.500% Senior Notes due 2003 ........       499          -
6.130% Senior Notes due 2006 ........       267        275
                                         ------     ------
    Total senior notes ..............    $3,452     $3,686
                                         ======     ======

    On October 9, 1998 the company  filed a  registration  statement on Form S-3
with the Securities and Exchange  Commission (the "SEC") for a shelf offering of
up to $1.5 billion of senior debt  securities  on terms to be set at the time of
each sale (the "1998 Shelf").  On January 19, 1999, the company  designated $600
million in Senior Debt Securities as "Senior  Medium-Term Notes, Series H" to be
issued  under  the 1998  Shelf,  of which $37  million  remained  available  for
issuance as of September 30, 2000.  Pursuant to the 1998 Shelf, the company,  on
January 26, 1999, issued $350 million of 6.0% Senior Notes due January 30, 2002,
and,  on April 21,  1999,  $350  million of 5.95% Notes due April 30,  2002.  On
August  26,  1999,  the  company  redesignated  $100  million  of the  Series  H
Medium-Term  Notes, which together with the remaining $200 million in securities
previously unallocated under the shelf registration,  were issued by the company
as $300 million of 7.25% Notes due September 1, 2002.

    On September 24, 1999 the company filed a registration statement on Form S-3
with  the  SEC  for a  shelf  offering  of up to $1.5  billion  of  senior  debt
securities  on terms to be set at the time of each sale (the "1999  Shelf").  On
February 29, 2000, the company designated $500 million in Senior Debt Securities
as "Senior  Medium-Term  Note,  Series I" to be issued under the 1999 Shelf,  of
which $425 million  remained  available  for issuance as of September  30, 2000.
Pursuant to the 1999 Shelf,  the company on August 3, 2000,  issued $500 million
of 9.5% Senior Notes due August 15, 2003.

                                      -46-
<PAGE>

    There are no sinking fund requirements  associated with any of the company's
senior notes.

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

    Future minimum lease payments and interest  expense on leases that have been
discounted as of September 30, 2000 are as follows (in millions):

                  Rentals to be
                    received by    Discounted
YEARS ENDED           financial         lease     Interest
SEPTEMBER 30,      institutions       rentals      expense
-------------     -------------    ----------     --------
2001                       $389          $348          $41
2002                        271           250           21
2003                        156           149            7
2004                         46            45            1
2005                          2             2            -
                           ----          ----          ---
                           $864          $794          $70
                           ====          ====          ===

       Interest  expense  on  discounted  lease  rentals  was $32  million,  $38
million, and $49 million in fiscal 2000, 1999 and 1998, respectively.

INTEREST RATE SWAP AGREEMENTS AND OTHER DERIVATIVE  FINANCIAL  INSTRUMENTS:  The
company  is a party to  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  notional 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:

                                  2000                      1999
                         -------------------       ---------------------
                         Notional       Fair       Notional         Fair
(IN MILLIONS)              amount      value         amount        value
                         --------     ------       --------       ------
Interest rate swap
  agreements ..........      $477     $   -            $820          $ 5
Cross-currency interest
  rate swap agreements         87        (5)             96           (6)
Forwards .............         74         11             86            6

    The impact of these  contracts  on interest  expense for fiscal  years 2000,
1999 and 1998 was immaterial.  The average  notional  amount  outstanding of the
floating rate to fixed rate  contracts in fiscal 2000 was $134 million,  with an
average  pay rate of 5.87% and an average  receive  rate of 5.73%.  The  average
notional  amount  outstanding  of the fixed rate to floating  rate  contracts in
fiscal 2000 was $302  million,  with an average pay rate of 6.20% and an average
receive  rate of 6.46%.  The  company is exposed to credit  loss in the event of
non-performance  by the other  parties  to the  interest  rate swap  agreements.
Although contract or notional amounts provide one measure of the volume of these
transactions,  they do not  represent  the amount of the  company's  exposure to
credit  risk.  The amounts  subject to credit risk  (arising  from the  possible
inability  of the  counterparties  to meet the  terms of  their  contracts)  are
generally  limited  to  the  amounts,  if  any,  by  which  the  counterparties'
obligation(s)  exceed the  obligation(s)  of the company.  The company  controls
credit risk through credit approvals,  limits and monitoring procedures. Note 16
of Notes to Consolidated  Financial Statements on page 54 provides details about
the company's fair value of financial instruments.

                                      -47-
<PAGE>

OTHER FINANCIAL INFORMATION

NOTE 9
RECEIVABLES

Receivables include the following as of September 30:

(IN MILLIONS)                      2000       1999
                                  -----      -----
Notes .......................    $  724     $  367
Accounts ....................       378        297
Unsettled equity transactions        67         26
Income taxes ................        15          6
Other .......................       121         82
                                  -----      -----
Total receivables ...........     1,305        778
Allowance for credit losses .      (124)       (43)
                                  -----      -----
Total .......................    $1,181     $  735
                                  =====      =====

NOTES:  The company  provides  loans to privately  held  venture  capital-backed
companies  in  networking,   optical   networking,   software,   communications,
Internet-based   and  other  industries.   The  company's  loans  are  generally
structured as equipment loans or subordinated loans.

    The amount of each loan varies,  but generally  does not exceed $10 million.
The loans bear fixed  interest rates with coupons  currently  ranging from 8% to
13% per annum. In addition,  loan processing fees typically ranging from .75% to
1.5% of the principal  amount of the loan commitment may be paid at closing.  As
part of the  transaction,  the company  receives  warrants to purchase an equity
interest  in its  customer,  or a  conversion  option,  in each case at a stated
exercise  price based on the price paid by venture  capitalists.  Loans  provide
current income from interest and fees.

    Contractual  maturities of total notes receivables as of September 30, 2000,
were as follows:  2001 - $296 million; 2002 - $320 million; 2003 - $170 million;
2004 - $4 million.  Actual cash flows will vary from contractual  maturities due
to prepayments and charge-offs.

ALLOWANCE:  The allowance for credit loss 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,  2000,
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.

    Changes in the  allowance  for credit  losses  (combined  notes and accounts
receivable) for the year ended September 30 were as follows:

                                                Comdisco
                           Consolidated      Ventures group
                           ------------      --------------
(IN MILLIONS)               2000   1999       2000     1999
                           -----  -----      -----    -----

Balance at beginning
  of year ............     $  43   $ 24      $  17    $   6
Provision for
  credit losses ......       156     41        112       23
Net credit losses ....       (75)   (22)       (34)     (12)
                           -----  -----      -----    -----
Balance at end of year     $ 124  $  43      $  95    $  17
                           =====  =====      =====    =====

    Provision for credit losses incurred by technology  services and included in
the  statements of earnings in technology  services  expenses were $8 million in
fiscal 2000 and $5 million in fiscal 1999.

NOTE 10
INCOME TAXES

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

(IN MILLIONS)              2000   1999   1998
                           ----   ----   ----

United States ..........   $329   $ 47   $183
Outside United States ..     69     63     57
                           ----   ----   ----
                           $398   $110   $240
                           ====   ====   ====

    Cumulative  unremitted  earnings  of foreign  operations  amounting  to $210
million after  foreign taxes at September 30, 2000,  were expected by management
to be reinvested.  Accordingly,  no provision has been made for additional  U.S.
taxes which would be payable if such  earnings were to be remitted to the parent
company as dividends.  The amount of U.S.  taxes, if any, are  impracticable  to
determine.

    Income taxes  included in the  consolidated  statements  of earnings were as
follows:

(IN MILLIONS)              2000   1999   1998
                           ----   ----   ----
Continuing operations ..   $143   $ 40   $ 87
Discontinued operations    (205)   (13)     -
                           ----   ----   ----
                           $(62)  $ 27   $ 87
                           ====   ====   ====

                                      -48-
<PAGE>


    The components of the income tax provision  (benefit) charged  (credited) to
continuing operations were as follows:

(IN MILLIONS)              2000     1999     1998
                           ----     ----     ----
Current:
  U.S. Federal ........    $ 66     $  8     $ 28
  U.S. state and local       21        5        2
  Outside United States       6       13       36
                           ----     ----     ----
                             93       26       66

Deferred:
  U.S. Federal ........      36        7       33
  U.S. state and local       (3)      (2)       9
  Outside United States      17        9      (21)
                           ----     ----     ----
                             50       14       21
                           ----     ----     ----
    Total tax provision    $143     $ 40     $ 87
                           ====     ====     ====

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

                           2000     1999      1998
                           ----     ----      ----
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 ...........    3.2       .7      3.0
   Foreign income tax rate
     differential .......    .9      2.8      2.0
   Tax effect of foreign
     losses utilized ....  (1.1)    (2.2)    (4.0)
   Other, net ...........  (2.0)     (.3)       -
                           ----     ----     ----
                           36.0%    36.0%    36.0%
                           ====     ====     ====

    Deferred tax assets and  liabilities  at September 30, 2000 and 1999 were as
follows:

(IN MILLIONS)                              2000      1999
                                           ----      ----
Deferred tax assets (liabilities):
  Foreign loss carryforwards .......      $  15     $  13
  U.S. net operating loss
    carryforwards ..................         14        68
  AMT credit carryforwards .........        144       120
  Deferred income ..................         49        44
  Deferred expenses ................        151       (20)
  Other, net .......................         92       101
  Lease accounting .................       (566)     (579)
  Other comprehensive income .......       (234)      (60)
  Foreign ..........................        (43)      (26)
                                           ----      ----
Gross deferred tax liabilities .....       (378)     (339)
  Less: valuation allowance ........        (26)      (28)
                                           ----      ----
Net deferred tax liabilities .......      $(404)    $(367)
                                           ====      ====

    For financial reporting purposes,  the company has approximately $40 million
of foreign net operating  loss  carryforwards,  most of which have no expiration
date. The company has recognized a valuation  allowance of $15 million to offset
this deferred tax asset.

    During fiscal 2000,  changes in the valuation  allowance included a decrease
of $4 million from utilizing foreign net operating loss carryforwards, increases
totalling $3 million  from foreign  exchange  rate and tax rate  changes,  and a
decrease of $1 million from  utilizing  Prism's  pre-acquisition  net  operating
losses. These losses are subject to certain limitations under Section 382 of the
Internal Revenue Code of 1986 as amended. The company believes it is more likely
than not the deferred tax assets, less the valuation allowance, will be realized
in the future.

    At September 30, 2000, the company has available for U.S. Federal income tax
purposes, the following carryforwards (in millions):


YEAR SCHEDULED           Net
TO EXPIRE          operating loss
--------------     --------------
2004                   $  2
2005                      5
2006                      3
2018                     28
                       ----
                        $38
                       ====

    For U.S.  Federal income tax purposes,  the company has  approximately  $144
million of  alternative  minimum tax ("AMT") credit  carryforwards  available to
reduce regular taxes in future years.  AMT credit  carryforwards  do not have an
expiration date.

    All years prior to fiscal year 1989 are closed to further  assessment by the
Internal Revenue Service (the "Service") due to the expiration of the Statute of
Limitations.

    The company and the Service have settled  fiscal  years  1989-1995  for $7.7
million  of tax plus  interest  thereon.  As a  result  of the  above  mentioned
settlement,  amended  federal income tax returns for fiscal years 1996, 1997 and
1998  were  filed  requesting  tax  refunds  of   approximately   $8.2  million.
Additionally,   the  company  has  requested  interest  netting  for  the  above
deficiencies  and refunds which would  substantially  reduce any cash payment of
tax and interest.

    The  Service  commenced  a routine  income tax audit for fiscal  years 1996,
1997, and 1998 in November, 2000.

    The  company  also  undergoes  audits  by  foreign,   state  and  local  tax
jurisdictions.  As of September 30, 2000, no material assessments have been made
by these tax authorities.


                                      -49-
<PAGE>

NOTE 11
PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following assets at September 30:

                                                                  SEPTEMBER 30,
(IN MILLIONS)                                                    2000      1999
                                                                 ----      ----
TECHNOLOGY SERVICES PROPERTY, PLANT AND EQUIPMENT
Land .......................................................    $   9     $   8
Buildings ..................................................       50        62
Leasehold improvements .....................................      118       110
Computers and telecom equipment ............................       58        58
Furniture, fixtures and office equipment ...................       33        32
                                                                -----     -----
       Total ...............................................      268       270
Less: Accumulated depreciation and amortization ............     (160)     (162)
                                                                -----     -----
                                                                  108       108
Assets of technology services held for resale, net .........       14         -
                                                                -----     -----
Technology services property, plant and equipment, net .....      122       108
                                                                -----     -----
PRISM PROPERTY, PLANT AND EQUIPMENT
Network, communication and customer premise equipment ......      170        27
Uninstalled customer premise equipment .....................       20         3
Computers and software .....................................       45        10
Leasehold improvements .....................................       67        24
Furniture, fixtures and office equipment ...................        5         1
Construction work-in-progress ..............................        7         1
                                                                -----     -----
       Total ...............................................      314        66
Less: Accumulated depreciation and amortization ............      (32)       (3)
                                                                -----     -----
       Prism property, plant and equipment, net ............      282        63
Less: Assets written off ...................................     (202)        -
                                                                -----     -----
Assets of discontinued operations held for resale ..........       80        63
                                                                -----     -----
OTHER PROPERTY, PLANT AND EQUIPMENT, NET ...................       85        58
                                                                -----     -----
       Total property, plant and equipment, net ............    $ 287     $ 229
                                                                =====     =====

    Depreciation and amortization  expenses,  excluding Prism, were $20 million,
$14  million  and $13  million  in fiscal  2000,  1999 and  1998,  respectively.
Depreciation  and  amortization  expenses  for Prism,  included in the loss from
discontinued  operations,  were $36  million  and $6 million in fiscal  2000 and
1999, respectively.


                                      -50-
<PAGE>

NOTE 12
EQUITY SECURITIES

The company  provides  financing to privately  held  companies,  in  networking,
optical   networking,   software,   communications,   Internet-based  and  other
industries through the purchase of equity securities. Substantially all of these
investments are made by Comdisco Ventures group. For equity  investments,  which
are  non-quoted  investments,  the company's  policy is to regularly  review the
assumptions  underlying  the operating  performance  and cash flow  forecasts in
assessing the carrying  values.  The company  identifies and records  impairment
losses on equity  securities  when events and  circumstances  indicate that such
assets might be impaired.  During 2000 and 1999, certain of these investments in
privately held companies became  available-for-sale  securities when the issuers
completed initial public offerings.

    Equity securities at September 30, 2000 were as follows:

                                                    Gross       Gross
                                               unrealized  unrealized    Market
(IN MILLIONS)                           Cost        gains      losses     value
                                       -----   ----------  ----------    ------
Comdisco Ventures group
  public holdings
  and other strategic
  investments ....................      $ 34         $653        $ (4)     $683
Preferred stock
  and other equity ...............       216            -           -       216
                                       -----        -----       -----     -----
                                        $250         $653        $ (4)     $899
                                       =====        =====       =====     =====


    Equity securities at September 30, 1999 were as follows:

                                                    Gross       Gross
                                               unrealized  unrealized    Market
(IN MILLIONS)                           Cost        gains      losses     value
                                       -----   ----------  ----------    ------
Comdisco Ventures group
  public holdings
  and other strategic
  investments ....................      $ 49         $174        $(22)     $201
Preferred stock
  and other equity ...............        51            -           -        51
                                       -----        -----       -----     -----
                                        $100        $ 174        $(22)     $252
                                       =====        =====       =====     =====

    Realized  gains or losses  are  recorded  on the trade  date  based upon the
difference between the proceeds and the cost basis determined using the specific
identification method. Changes in the valuation of available-for-sale securities
are included as changes in the  unrealized  holding gains in  accumulated  other
comprehensive  income.  Net realized  gains from the sale of equity  investments
were $233  million in fiscal  2000 and $1 million in both  fiscal 1999 and 1998.
Gross realized gains from the sales of equity  securities were $252 million,  $9
million, and $3 million in fiscal years 2000, 1999 and 1998, respectively.

    The company  records the proceeds  received from the sale or  liquidation of
warrants received in conjunction with its lease or other financings as income on
the trade date. These proceeds were $215 million, $75 million and $14 million in
fiscal 2000, 1999 and 1998, respectively.

NOTE 13
PREFERRED STOCK

There are 100,000,000  authorized shares of preferred stock - $.10 par value, of
which none were  outstanding  at  September  30,  2000.  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. Dividends
paid on preferred stock were $2 million in fiscal 1998.

    On November 4, 1997,  the board of  directors  of the company  adopted a new
shareholder  rights  plan  (the "New  Rights  Plan") to  replace  the  company's
existing  plan,  which expired on November 17, 1997.  Under the New Rights Plan,
shareholders of record on November 17, 1997 received a dividend  distribution of
one preferred stock purchase right for each share of the company's  common stock
then held.  Like the  shareholder  rights plan it replaced,  the New Rights Plan
continues the company's policy of ensuring fair value to all shareholders in the
event of an unsolicited  takeover offer for the company. The New Rights Plan was
amended in May, 2000 to reflect the company's  tracking stock structure and will
expire on November 17, 2007. The New Rights Plan is incorporated by reference in
the company's Form 8-K filed with the SEC on June 14, 2000.

8.75% CUMULATIVE  PREFERRED  STOCK: On July 13, 1998, the company  announced the
redemption,  effective  July 13,  1998,  of all shares of the Series B Preferred
Stock (824,000  shares) at the redemption  price of $25, plus accrued and unpaid
dividends.

    At a special  meeting  of  stockholders  on April 20,  2000,  the  company's
stockholders authorized the company to amend and restate its current certificate
of  incorporation.   The  Amended  and  Restated  Certificate  of  Incorporation
designated  200,000 shares of the  authorized  and unissued  shares of preferred
stock as Series C Junior Participating Preferred Stock and an additional 200,000
shares of the  authorized  and unissued  shares of  preferred  stock as Series D
Junior  Participating  Preferred  Stock.  See Note 14 for further  detail of the
special meeting of stockholders on April 20, 2000.

                                      -51-
<PAGE>

NOTE 14
COMMON STOCK

All  references in the financial  statements and notes to common share data have
been adjusted to reflect the two-for-one stock split distributed in June, 1998.

    On February 2, 1998, the company  announced that 106 senior  managers of the
company  purchased  over six million  shares of the  company's  common stock for
approximately  $109 million.  Under the voluntary  program,  the senior managers
took out full recourse,  personal loans to purchase the shares.  The company has
guaranteed  repayment of the loans in the event of default. The purchased shares
represented over 4% of the then current total shares outstanding.

    At a special  meeting  of  stockholders  on April 20,  2000,  the  company's
stockholders  approved the company's  tracking stock proposal,  which authorized
the company to amend and restate its current  certificate  of  incorporation  to
increase  the total  authorized  shares  of common  stock  from  750,000,000  to
1,800,000,000;  authorized  the  board of  directors  to issue  common  stock in
multiple  series,  with the  initial two series of common  stock being  Comdisco
stock and Comdisco  Ventures stock; and reclassified  each outstanding  share of
existing common stock as one share of Comdisco stock. No Comdisco Ventures stock
has been issued to date.

    The share amounts for basic and diluted earnings per share  calculations was
as follows:

                                                   YEARS ENDED SEPTEMBER 30,
                                              ---------------------------------
(IN THOUSANDS)                                 2000          1999          1998
                                              -----         -----         -----
Average shares issued ................      224,259       222,454       220,910
Average shares held in treasury ......      (72,374)      (70,376)      (69,663)
                                            -------       -------       -------
Basic shares outstanding .............      151,885       152,078       151,247
Stock options ........................        9,897         9,709        11,523
                                            -------       -------       -------
Diluted shares outstanding ...........      161,782       161,787       162,770
                                            =======       =======       =======

    There are no  adjustments to net earnings to common  stockholders  for basic
and diluted earnings per share calculations for any of the years ended September
30, 2000, 1999 and 1998.

    During  fiscal 2000 and 1999,  the company  entered into a series of forward
purchase transactions on its common stock. These transactions can be settled, at
the option of the company,  by paying cash for the forward  purchase  amount and
receiving the underlying  shares of common stock, or on a net basis in shares of
the company's stock.

    Information on these forward transactions is as follows:
<TABLE>
<CAPTION>

                                                          2000                                1999
                                             -------------------------------    -------------------------------
                                                                  Average                            Average
                                                               forward price                      forward price
(IN MILLIONS EXCEPT PER SHARE DATA)          Amount   Shares    per  share      Amount   Shares      per share
                                             ------   ------   -------------    ------   ------   -------------
<S>                                           <C>        <C>         <C>          <C>       <C>         <C>
Transactions in place at September 30 .....    $80         3          $28.42       $61        3          $20.41
Settlements during fiscal year ............     91         4           20.41        59        4           16.26

</TABLE>


    In June 1997, FASB issued  Statement of Financial  Accounting  Standards No.
130-   Reporting   Comprehensive   Income,   which  requires   presentation   of
comprehensive  earnings (net earnings (loss) plus all changes in net assets from
non-owner sources) and its components in the financial statements.

    Components of other comprehensive earnings (loss) consists of the following:

(IN MILLIONS)                                      2000        1999        1998
                                                   ----        ----        ----
Foreign currency
  translation adjustments ...................      $(64)       $(21)        $ 7
Unrealized gains on securities:
  Unrealized holding gains
   arising during the period ................       945         228           -
  Reclassification adjustments
   for gains included in earnings
   (loss) before income taxes ...............      (448)        (76)          -
                                                   ----        ----        ----
Net unrealized gains, before
  income taxes ..............................       497         152           -
Income taxes ................................      (174)        (60)          -
                                                   ----        ----        ----
Net unrealized gains ........................       323          92           -
                                                   ----        ----        ----
Other comprehensive income ..................       259          71           7
Net earnings (loss) .........................       (67)         48         153
                                                   ----        ----        ----
Total comprehensive income ..................      $192        $119        $160
                                                   ====        ====        ====

                                      -52-
<PAGE>

    Accumulated   other   comprehensive   income  presented  below  and  in  the
accompanying  balance sheets  consists of the accumulated net unrealized loss on
foreign currency translation adjustments and the accumulated net unrealized gain
on available-for-sale securities:

<TABLE>
<CAPTION>

                                          Foreign         Unrealized        Accumulated
                                         currency            gain on              other
                                      translation     available-for-      comprehensive
(IN MILLIONS)                          adjustment    sale securities             income
                                      -----------    ---------------      -------------
<S>                                       <C>                  <C>                <C>
Balance at
  September 30, 1997 ...............        $(20)               $  -               $(20)
Pretax amount ......................           7                   -                  7
Income taxes .......................           -                   -                  -
                                            ----                ----               ----
Balance at
  September 30, 1998 ...............         (13)                  -                (13)
Pretax amount ......................         (21)                152                131
Income taxes .......................           -                  60                 60
                                            ----                ----               ----
Balance at
  September 30, 1999 ...............         (34)                 92                 58
Pretax amount ......................         (64)                497                433
Income taxes .......................          --                 174                174
                                            ----                ----               ----
Balance at
  September 30, 2000 ...............        $(98)               $415               $317
                                            ====                ====               ====

</TABLE>


NOTE 15
EMPLOYEE BENEFIT PLANS

The company has a profit  sharing plan which,  together with the Employee  Stock
Ownership  Plan (the  "Plans"),  covers  substantially  all domestic  employees.
Company  contributions  to the  Plans are based on a  percentage  of  employees'
compensation,  as defined.  Benefits are  accumulated on an individual  employee
basis.

    The company's stock option plans provide for the granting of incentive stock
options and/or  nonqualified  options to employees and agents to purchase shares
of common stock.

    Additionally, under the 1999 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 9,450  shares of the  company's
common stock at the then fair market value.

    Under  the  1996  Deferred  Fee  Option  Plan,   each  Non-Employee Director
received 2,714 shares on October 1, 1999 at an option price of $1.00.

    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)                             2000          1999         1998
                                            ----          ----         ----
Net earnings (loss)
 -to common stockholders
 -As reported .......................      $ (67)         $ 48         $151
  Pro forma .........................        (76)           42          147

Earnings (loss) per common share:
 As reported-basic ..................      $(.44)         $.32         $.99
 Pro forma-basic ....................       (.50)          .27          .97
 As reported-diluted ................       (.41)          .30          .93
 Pro forma-diluted ..................       (.47)          .26          .90

    Under the stock option plans,  the exercise  price of each option equals the
market price of the company's common stock on the date of grant. For purposes of
calculating  the  compensation  cost  consistent with FAS 123, the fair value of
each option  grant is  estimated  on the date of grant  using the  Black-Scholes
option-pricing  model with the following  weighted-average  assumptions used for
grants in fiscal 2000, 1999 and 1998,  respectively:  dividend yield of 1.0% for
all years;  expected volatility of 49%, 40% and 32%; risk free interest rates of
5.51%, 5.26% and 6.07%; and expected lives of five years.

                                      -53-
<PAGE>

    Additional information on shares subject to options is as follows:
<TABLE>
<CAPTION>

                                               2000                    1999                     1998
                                       --------------------    --------------------    ---------------------
                                                  Weighted-               Weighted-                Weighted-
(IN THOUSANDS EXCEPT                                average                 average                  average
WEIGHTED-AVERAGE                        Number     exercise       Number   exercise       Number    exercise
EXERCISE PRICE)                        of shares      price    of shares      price    of shares       price
--------------------                   ---------  ---------    ---------  ---------    ---------  ----------

<S>                                      <C>          <C>        <C>          <C>        <C>           <C>
Outstanding at beginning of year .....    16,977       $ 10       17,983       $  7       19,185        $  6
Granted ..............................     3,839         18        5,001         15        3,274          13
Exercised ............................    (4,254)         8       (5,198)         7       (3,953)          5
Forfeited ............................      (944)        10         (809)         9         (523)          7
                                          ------       ----       ------       ----       ------        ----
Outstanding at the end of year .......    15,618       $ 12       16,977       $ 10       17,983        $  7
                                          ======       ====       ======       ====       ======        ====
Options exercisable at year-end ......    11,207       $ 10       11,930       $  8       12,858        $  6
                                          ======       ====       ======       ====       ======        ====
Weighted-average fair value of options
    granted during the year ..........    $ 8.35                  $ 5.46                  $ 4.72
                                          ======                  ======                  ======

</TABLE>


    The following table summarizes  information about stock options  outstanding
at September 30, 2000 (number of shares in thousands):

<TABLE>
<CAPTION>


                                    OPTIONS OUTSTANDING                OPTIONS EXERCISABLE
                       -------------------------------------------    ----------------------
                                          Weighted-      Weighted-                 Weighted-
                                            average        average                   average
RANGE OF EXERCISE         Number          remaining       exercise       Number     exercise
EXERCISE PRICES        of shares   contractual life          price    of shares        price
-----------------      ---------   ----------------      ---------    ---------    ---------
<S>                       <C>            <C>                 <C>         <C>           <C>
$0  to  6                  3,180          3.1 years           $  4        3,180         $  6
$6  to 10                  3,758          5.6 years              8        3,758            8
$10 to 16                  3,501          7.3 years             14        2,199           14
$16 to 30                  5,179          8.3 years             18        2,070           17
                          ------          ---------           ----       ------         ----
                          15,618          6.4 years           $ 12       11,207         $ 10
                          ======          =========           ====       ======         ====
</TABLE>


NOTE 16
FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair value of the company's financial instruments are as follows:

<TABLE>
<CAPTION>

                                                                2000                  1999
                                                       -------------------   ------------------
                                                        Carrying      Fair   Carrying      Fair
(IN MILLIONS)                                            amount      value     amount     value
                                                       --------      -----   --------     -----
<S>                                                     <C>        <C>        <C>       <C>
Assets:
Cash and cash equivalents ...........................    $  316     $  316     $  361    $  361
Equity securities ...................................       899        899        252       252
Notes receivable including noncurrent portion .......       724        724        367       367

Liabilities:
Notes payable and commercial paper ..................     1,314      1,314        820       820
Term notes, senior notes and discounted lease rentals     4,941      4,738      4,751     4,681
Off-balance sheet financial instruments:
 Interest rate swap agreements .......................        -          -          -         5
 Cross-currency interest rate swap agreements ........        -         (5)         -        (6)
 Forwards ............................................        -         11          -        (6)

</TABLE>

                                      -54-
<PAGE>

Fair values were determined as follows:

    The  carrying  amounts  of cash  and cash  equivalents,  notes  payable  and
commercial paper  approximates fair value because of the short-term  maturity of
these instruments.

    Equity instruments are based on quoted market prices for  available-for-sale
securities,  and,  for  non-quoted  equity  instruments,  based on the  lower of
management's  estimates  of fair  value or cost.  The  company's  investment  in
warrants of public companies were valued at the bid quotation.

    Notes  receivable are estimated by  discounting  future cash flows using the
current  rates at which  similar  loans would be made to borrowers  with similar
business profiles.

    The fair value of term notes,  senior notes and discounted lease rentals 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.

    Off-balance  sheet financial  instruments were estimated by obtaining quotes
from brokers.

NOTE 17
QUARTERLY FINANCIAL DATA (UNAUDITED)

Summarized  quarterly  financial  data for the fiscal years ended  September 30,
2000 and 1999, is as follows:

<TABLE>
<CAPTION>

                                                                                QUARTER ENDED
                                                 --------------------------------------------------------------------
(IN MILLIONS EXCEPT                               DECEMBER 31,         MARCH 31,            JUNE 30,         SEPTEMBER 30,
PER SHARE DATA)                                  --------------     ----------------    ---------------    ----------------
                                                    99       98         00        99       00        99        00        99
                                                 -----    -----     ------    ------    -----    ------    ------    ------
<S>                                             <C>      <C>       <C>       <C>       <C>      <C>       <C>       <C>
Total revenue ..............................     $ 876    $ 921     $1,012    $  952    $ 952    $1,302    $1,027    $1,003
Earnings (loss) from continuing operations .     $  59    $  38     $   69    $  (54)   $  58    $   43    $   70    $   44
Loss from discontinued operations ..........       (17)       -        (26)       (2)     (41)       (7)     (238)      (14)
                                                 -----    -----     ------    ------    -----    ------    ------    ------
Net earnings (loss) to common stockholders       $  42    $  38     $   43    $  (56)   $  17    $   36    $ (168)   $   30
                                                 =====    =====     ======    ======    =====    ======    ======    ======
Earnings (loss) from continuing
   operations-diluted ......................     $ .36    $ .24     $  .42    $ (.36)   $ .36    $  .26    $  .44    $  .27
Loss from discontinued operations-diluted ..      (.10)       -       (.16)     (.01)    (.26)     (.04)    (1.49)     (.08)
                                                 -----    -----     ------    ------    -----    ------    ------    ------
Net earnings (loss) per common share-diluted     $ .26    $ .24     $  .26    $ (.37)   $ .10    $  .22    $(1.05)   $  .19
                                                 =====    =====     ======    ======    =====    ======    ======    ======

</TABLE>

                                      -55-
<PAGE>

NOTE 18
INDUSTRY SEGMENT AND OPERATIONS BY GEOGRAPHIC AREAS

The company adopted SFAS No. 131,  "Disclosures  about Segments of an Enterprise
and  Related  Information"  in fiscal  1999 which  changes  the way the  company
reports information about its operating  segments.  The information for 1999 and
1998 has been restated from the prior year's presentation in order to conform to
the 2000 presentation.

   The company's  operations are conducted  through its principal  office in the
Chicago area and approximately one hundred offices in North America,  Europe and
the Pacific Rim.  Coordination of the business units is accomplished through the
Office of the President,  which is responsible  for overall  corporate  control,
coordination  and  strategic  planning,   regional  reporting   structures  that
coordinate  marketing and support efforts across business units, and through the
home office with centralized budgeting and shared services.

LEASING: This segment provides leasing, asset management,  equipment remarketing
and equipment  refurbishment  services.  The principal  markets for this segment
include  North  America,  Europe and the Pacific Rim.  Customers  include  major
multi-national corporations,  independent and national or state-owned companies,
"Fortune  500"  corporations  or  companies of a similar size as well as smaller
organizations.

TECHNOLOGY  SERVICES:  This segment consists of four business units - Continuity
Services,  Web Services,  Network Management and IT CAP Solutions - that provide
platform-based  hotsite  recovery,  mobile,  workarea and trade floor  recovery,
continuity  and  recovery  planning  services   (services  that  emphasize  data
availability   across  data   centers,   networks  and  work   areas);   secure,
production-hosting  environment  to deliver a continuous  web presence;  network
assessment,  design,  implementation and professional  management services;  and
services  designed to help  companies  plan,  manage,  and  accomplish  their IT
initiatives  through  increased  control  and  predictability  of  spending  and
infrastructure  to a broad range of industries.  The principal  markets for this
segment include all major  manufacturing and financial services regions of North
America and Europe.

COMDISCO  VENTURES  GROUP:  Comdisco  Ventures  group provides  venture  leases,
venture debt and direct equity  financing to venture  capital-backed  companies.
The existing  venture leases,  venture debt and equity portfolio are diversified
across  many  sectors,  including  networking,  optical  networking,   software,
communications,  Internet-based and other industries.  The principal markets for
this segment are the high-tech regions in California and Massachusetts.

   The  accounting  policies of the  reportable  segments  are the same as those
described in Note 1 of Notes to Consolidated  Financial Statements.  The company
evaluates  the  performance  of its  operating  segments  based on earnings from
continuing   operations  before  income  taxes.   Intersegment   sales  are  not
significant.

                                      -56-
<PAGE>

   Summarized   financial   information   (excluding   loss  from   discontinued
operations)  concerning  the  company's  reportable  segments  is  shown  in the
following table.

<TABLE>
<CAPTION>

                                                    Comdisco
                                                    Ventures    Discontinued
(IN MILLIONS)                  Leasing   Services      group      operations       Total
                               -------   --------   --------    ------------       -----
<S>                            <C>        <C>        <C>               <C>       <C>
2000
Revenues  ...................   $2,557     $  637     $  673            $  -      $3,867
Segment profit ..............       87         65        246               -         398
Total assets ................    5,942        586      2,141              85       8,754
Investing activities ........    2,185        202      1,206             257       3,850
Depreciation and amortization    1,493        103        150              36       1,782

1999
Revenues ....................   $3,427     $  522     $  229            $  -      $4,178
Segment profit (loss) .......      (13)        52         71               -         110
Total assets ................    6,332        479        872             124       7,807
Investing activities ........    2,613        151        580             117       3,461
Depreciation and amortization    1,866         50         88               6       2,010

1998
Revenues ....................   $2,696     $  433     $  114            $  -      $3,243
Segment profit ..............      140         71         29               -         240
Total assets ................    6,403        379        281               -       7,063
Investing activities ........    2,916         87        177               -       3,180
Depreciation and amortization    1,711         84         60               -       1,855

</TABLE>

    The following  table  presents  revenue by geographic  location based on the
location of the company's local office:

(IN MILLIONS)                    2000        1999       1998
                               ------      ------     ------
North America ...............  $3,039      $3,273     $2,584
Europe ......................     673         628        592
Pacific Rim .................     155         277         67
                               ------      ------     ------
Total .......................  $3,867      $4,178     $3,243
                               ======      ======     ======

  The following table presents total assets by geographic  location based on the
location of the asset:

(IN MILLIONS)                    2000        1999       1998
                               ------      ------     ------
North America ...............  $6,961      $6,272     $5,556
Europe ......................   1,201       1,029      1,181
Pacific Rim .................     592         506        326
                               ------      ------     ------
Total .......................  $8,754      $7,807     $7,063
                               ======      ======     ======

                                      -57-
<PAGE>

NOTE 19
SUPPLEMENTAL FINANCIAL INFORMATION (UNAUDITED)

<TABLE>
<CAPTION>
                                                                            2000
                                                       ---------------------------------------
                                                       Consolidated                   Comdisco
                                                        Comdisco,        Comdisco     Ventures
                                                            Inc.            group        group
(IN MILLIONS)                                          ------------      --------     --------
Consolidating Condensed Summary of Earnings

<S>                                                         <C>           <C>            <C>
REVENUE
Leasing and sales .....................................      $2,699        $2,491         $208
Services ..............................................         637           637            -
Other
    Warrant sale proceeds and capital gains ...........         448            42          406
    Interest income on notes ..........................          56             -           56
    Other .............................................          27            24            3
                                                              -----         -----         ----
       Total revenue ..................................       3,867         3,194          673
                                                              -----         -----         ----
COSTS AND EXPENSES
Leasing and sales .....................................       2,011         1,851          160
Services ..............................................         572           572            -
Selling, general and administrative ...................         532           326          206
Interest ..............................................         354           293           61
Other .................................................           -             -            -
                                                              -----         -----         ----
    Total expenses ....................................       3,469         3,042          427
                                                              -----         -----         ----
Earnings from continuing operations before income taxes         398           152          246
Income taxes ..........................................         143            45           98
                                                              -----         -----         ----
Earnings from continuing operations ...................         255           107          148
Loss from discontinued operations .....................        (322)         (322)           -
                                                              -----         -----         ----
Net earnings (loss) ...................................      $  (67)       $ (215)        $148
                                                              =====         =====         ====

Consolidating Condensed Cash Flows
From Operating Activities
Cash flows from operating activities:
    Leasing and sales .................................      $3,237        $3,033         $204
    Services ..........................................         139           139            -
    Other .............................................         (37)         (659)         622
                                                              -----         -----         ----
       Net cash provided by continuing operations .....       3,339         2,513          826
       Net cash used by discontinued operations .......        (120)         (120)           -
                                                              -----         -----         ----
       Net cash provided by operating activities ......      $3,219        $2,393         $826
                                                              =====         =====         ====

</TABLE>
                                      -58-
<PAGE>

<TABLE>
<CAPTION>



                                                                            1999
                                                       ---------------------------------------
                                                       Consolidated                   Comdisco
                                                        Comdisco,        Comdisco     Ventures
                                                            Inc.            group        group
(IN MILLIONS)                                          ------------      --------     --------
Consolidating Condensed Summary of Earnings

<S>                                                         <C>           <C>            <C>
REVENUE
Leasing and sales .....................................      $3,534        $3,410         $124
Services ..............................................         522           522            -
Other
    Warrant sale proceeds and capital gains ...........          76            (5)          81
    Interest income on notes ..........................          23             -           23
    Other .............................................          23            22            1
                                                              -----         -----         ----
       Total revenue ..................................       4,178         3,949          229
                                                              -----         -----         ----
COSTS AND EXPENSES
Leasing and sales .....................................       2,815         2,722           93
Services ..............................................         440           440            -
Selling, general and administrative ...................         326           285           41
Interest ..............................................         337           313           24
Other .................................................         150           150            -
                                                              -----         -----         ----
    Total expenses ....................................       4,068         3,910          158
                                                              -----         -----         ----
Earnings from continuing operations before income taxes         110            39           71
Income taxes ..........................................          40            12           28
                                                              -----         -----         ----
Earnings from continuing operations ...................          70            27           43
Loss from discontinued operations .....................         (22)          (22)           -
                                                              -----         -----         ----
Net earnings (loss) ...................................      $   48        $    5         $ 43
                                                              =====         =====         ====

Consolidating Condensed Cash Flows
From Operating Activities
Cash flows from operating activities:
    Leasing and sales .................................      $3,659        $3,534         $125
    Services ..........................................          95            95            -
    Other .............................................        (516)         (644)         128
                                                              -----         -----         ----
       Net cash provided by continuing operations .....       3,238         2,985          253
       Net cash used by discontinued operations .......         (19)          (19)           -
                                                              -----         -----         ----
       Net cash provided by operating activities ......      $3,219        $2,966         $253
                                                              =====         =====         ====

</TABLE>
                                      -59-

<PAGE>

<TABLE>
<CAPTION>



                                                                            1998
                                                       ---------------------------------------
                                                       Consolidated                   Comdisco
                                                        Comdisco,        Comdisco     Ventures
                                                            Inc.            group        group
(IN MILLIONS)                                          ------------      --------     --------
Consolidating Condensed Summary of Earnings

<S>                                                         <C>           <C>            <C>
REVENUE
Leasing and sales .....................................      $2,757        $2,665         $ 92
Services ..............................................         433           433            -
Other
    Warrant sale proceeds and capital gains ...........          15             -           15
    Interest income on notes ..........................           7             -            7
    Other .............................................          31            31            -
                                                              -----         -----         ----
       Total revenue ..................................       3,243         3,129          114
                                                              -----         -----         ----
COSTS AND EXPENSES
Leasing and sales .....................................       2,066         2,002           64
Services ..............................................         362           362            -
Selling, general and administrative ...................         249           239           10
Interest ..............................................         326           315           11
Other .................................................           -             -            -
                                                              -----         -----         ----
    Total expenses ....................................       3,003         2,918           85
                                                              -----         -----         ----
Earnings from continuing operations before income taxes         240           211           29
Income taxes ..........................................          87            75           12
                                                              -----         -----         ----
Earnings from continuing operations ...................         153           136           17
Loss from discontinued operations .....................          (2)           (2)           -
                                                              -----         -----         ----
Net earnings (loss) ...................................      $  151       $   134         $ 17
                                                              =====         =====         ====

Consolidating Condensed Cash Flows
From Operating Activities
Cash flows from operating activities:
    Leasing and sales .................................      $3,289        $3,193         $ 96
    Services ..........................................         130           130            -
    Other .............................................        (532)         (580)          48
                                                              -----         -----         ----
       Net cash provided by continuing operations .....       2,887         2,743          144
       Net cash used by discontinued operations .......           -             -           -
                                                              -----         -----         ----
       Net cash provided by operating activities ......      $2,887        $2,743         $144
                                                              =====         =====         ====


</TABLE>
                                      -59-
<PAGE>

<TABLE>
<CAPTION>

                                                       2000                                           1999
                             -----------------------------------------------   ---------------------------------------------
                             Consolidated                           Comdisco    Consolidated                        Comdisco
                               Comdisco,       Elimi-   Comdisco    Ventures     Comdisco,      Elimi-   Comdisco   Ventures
                                 Inc.         nations      group       group       Inc.        nations      group      group
(IN MILLIONS)                ------------     -------   --------   ---------   ------------    -------   --------  ---------
Consolidating Condensed
Balance Sheet Data
<S>                               <C>       <C>         <C>          <C>            <C>        <C>        <C>          <C>
ASSETS
Cash ........................      $  370     $     -     $  345      $   25         $  407     $    -     $  407       $  -
Receivables .................       1,181           -        458         723            735          -        355        380
Inter-group receivable ......           -      (1,142)     1,142           -              -       (559)       559          -
Equity securities ...........         899           -         67         832            252          -         55        197
Leased assets ...............       5,477           -      4,922         555          5,623          -      5,335        288
Other .......................         827           -        821           6            790          -        783          7
                                   ------     -------     ------      ------         ------     ------     ------       ----
                                   $8,754     $(1,142)    $7,755      $2,141         $7,807     $ (559)    $7,494       $872
                                   ======     =======     ======      ======         ======     ======     ======       ====
LIABILITIES AND
STOCKHOLDERS' EQUITY
Interest-bearing liabilities       $6,255     $     -     $6,255      $    -         $5,571     $    -     $5,571       $  -
Inter-group payable .........           -      (1,142)         -       1,142              -       (559)         -        559
Income taxes ................         415           -        155         260            382          -        310         72
Other .......................         870           -        785          85            794          -        753         41
                                   ------     -------     ------      ------         ------     ------     ------       ----
                                    7,540      (1,142)     7,195       1,487          6,747       (559)     6,634        672
                                   ------     -------     ------      ------         ------     ------     ------       ----
Stockholders' equity ........       1,214           -        560         654          1,060          -        860        200
                                   ------     -------     ------      ------         ------     ------     ------       ----
                                   $8,754     $(1,142)    $7,755      $2,141         $7,807     $ (559)    $7,494       $872
                                   ======     =======     ======      ======         ======     ======     ======       ====
</TABLE>

    The  previous  schedules  present  consolidating  financial  information  of
Comdisco,  Inc. The financial  information  reflects the  businesses of Comdisco
group and Comdisco Ventures group,  including the allocation of expenses between
Comdisco  group and Comdisco  Ventures  group in accordance  with our allocation
policies.  We have  presented  this  information  to illustrate  the  respective
financial results of Comdisco group and Comdisco  Ventures group,  including the
impact of inter-group allocated expenses, and how the financial results of those
groups  relate to the  consolidated  financial  results of Comdisco,  Inc.  This
information,  which has been  prepared in  accordance  with  generally  accepted
accounting  principles,  should be read together with the consolidated financial
statements of Comdisco,  Inc. beginning on page 35 and "Management's  Discussion
and Analysis of Financial Condition and Results of Operations of Comdisco, Inc."
beginning on page 24.

    The  consolidating  statements of earnings of Comdisco,  Inc. for the fiscal
years ended  September  30, 2000,  1999 and 1998 and the  consolidating  balance
sheets at September  30, 2000 and 1999 have been derived from audited  financial
statements.

    In the accompanying consolidating statements of earnings, earnings per share
for Comdisco  group and for Comdisco  Ventures  group are not presented  because
neither group has been a "stand-alone entity" and, as a result, the presentation
of earnings per share is not applicable.


                                      -60-
<PAGE>


INDEPENDENT AUDITORS' REPORT

The  Stockholders  and Board of Directors,  Comdisco,  Inc.: We have audited the
accompanying  consolidated balance sheets of Comdisco,  Inc. and subsidiaries as
of  September  30, 2000 and 1999,  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,  2000.  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  auditing  standards  generally
accepted in the United States of America.  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, 2000 and 1999, and the results of their
operations and their cash flows for each of the years in the  three-year  period
ended  September 30, 2000 in conformity  with  accounting  principles  generally
accepted in the United States of America.

Chicago, Illinois
November 7, 2000


                                      -61-
<PAGE>


PRICE RANGE OF COMMON STOCK

The company's  outstanding common stock is listed on the New York Stock Exchange
and the Chicago  Stock  Exchange  under the symbol CDO. At  September  30, 2000,
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 2000 and 1999,  adjusted for the two-for-one stock split
(See Note 14 of Notes to Consolidated Financial Statements).

                             2000                               1999
                 ----------------------------       ----------------------------
QUARTER             High      Low   Dividends         High       Low   Dividends
-------          -------   ------   ---------       ------    ------   ---------
First             $43.00   $17.44       $.025       $19.44    $12.50       $.025
Second             53.69    30.88        .025        17.88     10.75        .025
Third              44.75    22.31        .025        30.88     15.81        .025
Fourth             33.50    18.00        .025        26.94     17.50        .025




                                      -64-