<PAGE>
 
    AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 21, 1997
                                                REGISTRATION NO. 333-
-------------------------------------------------------------------------------
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                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
 
                               ----------------
 
                                   FORM S-3
                       REGISTRATION STATEMENT UNDER THE
                            SECURITIES ACT OF 1933
 
                               ----------------
 
                         KENT ELECTRONICS CORPORATION
            (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
                TEXAS                                   74-1763541
                                         
   (STATE OR OTHER JURISDICTION OF        (I.R.S. EMPLOYER IDENTIFICATION NO.) 
   INCORPORATION OR ORGANIZATION)   
 
          7433 HARWIN DRIVE                         STEPHEN J. CHAPKO
        HOUSTON, TEXAS 77036                        7433 HARWIN DRIVE
           (713) 780-7770                         HOUSTON, TEXAS 77036
  (ADDRESS, INCLUDING ZIP CODE, AND                  (713) 780-7770
          TELEPHONE NUMBER,                (NAME, ADDRESS, INCLUDING ZIP CODE,
INCLUDING AREA CODE, OF REGISTRANT'S              AND TELEPHONE NUMBER,
    PRINCIPAL EXECUTIVE OFFICES)            INCLUDING AREA CODE, OF AGENT FOR
                                                        SERVICE)
                                      
                                  COPIES TO:

            GENE G. LEWIS                              JOE S. POFF
    LIDDELL, SAPP, ZIVLEY, HILL &                 BAKER & BOTTS, L.L.P.
           LABOON, L.L.P.                            ONE SHELL PLAZA
      3400 TEXAS COMMERCE TOWER                       910 LOUISIANA
             600 TRAVIS                           HOUSTON, TEXAS 77002
        HOUSTON, TEXAS 77002                         (713) 229-1234
           (713) 226-1200
 
       APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
  As soon as practicable after this Registration Statement becomes effective.
 
                               ----------------
 
  If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
  If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]
  If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
  If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
  If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
 
                               ----------------
                        CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
                                   PROPOSED MAXIMUM
    TITLE OF EACH CLASS OF        AGGREGATE OFFERING     AMOUNT OF REGISTRATION
 SECURITIES TO BE REGISTERED         PRICE(1)(2)                  FEE
-------------------------------------------------------------------------------
 <S>                           <C>                      <C>
   % Convertible Subordinated
  Notes Due 2004                     $172,500,000               $52,273
-------------------------------------------------------------------------------
 Common Stock, without par
  value                                  (3)                       --
-------------------------------------------------------------------------------
 Rights                                  (4)                       --
-------------------------------------------------------------------------------
</TABLE>
-------------------------------------------------------------------------------
(1) Includes $22,500,000 principal amount of      % Convertible Subordinated
    Notes due 2004 (the "Notes") which may be purchased pursuant to an over-
    allotment option granted by the Registrant to the Underwriters.
(2) Estimated solely for the purpose of calculating the registration fee
    pursuant to Rule 457(o).
(3) Includes such indeterminate number of shares of Common Stock as may be
    issuable upon conversion of the Notes registered hereby.
(4) The Rights trade with and are evidenced by the Certificates representing
    the Common Stock. There is one-third of a Right associated with each share
    of Common Stock. Value attributable to such Rights, if any, is reflected
    in the market price of the Common Stock.
 
                               ----------------
 
  THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
 
-------------------------------------------------------------------------------
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<PAGE>
 
                  SUBJECT TO COMPLETION, DATED AUGUST 21, 1997
PROSPECTUS
 
                                  $150,000,000
                                     [LOGO]
 
                          KENT ELECTRONICS CORPORATION
 
                   % CONVERTIBLE SUBORDINATED NOTES DUE 2004
                    INTEREST PAYABLE MARCH 1 AND SEPTEMBER 1
 
                                   --------
 
  The   % Convertible Subordinated Notes due 2004 (the "Notes") offered hereby
(the "Offering") are convertible into common stock, without par value ("Common
Stock"), of Kent Electronics Corporation (the "Company") at any time at or
before maturity, unless previously redeemed, at a conversion price of $   per
share, subject to adjustment in certain events. The Common Stock is traded on
the New York Stock Exchange ("NYSE") under the symbol "KNT." On August 20,
1997, the last reported sale price of the Common Stock on the NYSE was $39.00
per share. The Company will apply for listing of the Notes on the NYSE.
 
  Interest on the Notes is payable semi-annually on March 1 and September 1 of
each year, commencing on March 1, 1998. The Notes do not provide for a sinking
fund. The Notes are redeemable, at the option of the Company, in whole or in
part, at any time on or after September 6, 2000 at the redemption prices set
forth in this Prospectus, together with accrued interest. The Notes are subject
to purchase by the Company at the option of the holder upon the occurrence of a
Repurchase Event (as defined herein) at 100% of the principal amount thereof,
plus accrued interest. See "Description of Notes."
 
  The Notes are unsecured obligations of the Company and are subordinated to
all present and future Senior Indebtedness (as defined herein) of the Company
and will be effectively subordinated to all indebtedness and other liabilities
of subsidiaries of the Company. At June 28, 1997, the Company did not have any
Senior Indebtedness. The Indenture (as defined herein) will not restrict the
incurrence of any other indebtedness or liabilities by the Company or its
subsidiaries. See "Description of Notes--Subordination."
 
  SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN RISKS
WHICH SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE NOTES OFFERED
HEREBY.
 
THESE SECURITIES HAVE  NOT BEEN APPROVED  OR DISAPPROVED BY  THE SECURITIES AND
EXCHANGE COMMISSION  OR ANY STATE SECURITIES COMMISSION NOR  HAS THE SECURITIES
 AND EXCHANGE COMMISSION  OR ANY  STATE SECURITIES COMMISSION  PASSED UPON  THE
 ACCURACY OR ADEQUACY  OF THIS PROSPECTUS. ANY  REPRESENTATION TO THE CONTRARY
 IS A CRIMINAL OFFENSE.
 
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                      UNDERWRITING
          PRICE TO   DISCOUNTS AND  PROCEEDS TO
          PUBLIC(1)  COMMISSIONS(2)  COMPANY(3)
-----------------------------------------------
<S>       <C>        <C>            <C>
Per Note          %             %            %
-----------------------------------------------
Total(4)  $             $            $
-----------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
(1) Plus accrued interest, if any, from the date of initial issuance.
(2) For information regarding indemnification of the Underwriters, see
    "Underwriting."
(3) Before deducting expenses estimated at $500,000, payable by the Company.
(4) The Company has granted the Underwriters a 30-day option to purchase up to
    $22,500,000 aggregate principal amount of additional Notes solely to cover
    over-allotments, if any. See "Underwriting." If such option is exercised in
    full, the total Price to Public, Underwriting Discounts and Commissions,
    and Proceeds to Company will be $  , $  , and $  , respectively.
 
                                   --------
 
  The Notes are being offered by the several Underwriters named herein, subject
to prior sale, when, as and if accepted by them and subject to certain
conditions. It is expected that delivery of the Notes will be made in book-
entry form through the facilities of The Depository Trust Company on or about
     , 1997.
 
                                   --------
 
SMITH BARNEY INC.
        ALEX. BROWN & SONS
            INCORPORATED
                   DONALDSON, LUFKIN & JENRETTE
                         SECURITIES
                         CORPORATION
                                                             MERRILL LYNCH & CO.
 
  , 1997
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.
<PAGE>
 
 
 
                                 [PHOTOGRAPH]
 
K*TEC CONTRACT MANUFACTURING FACILITY.
 
 
[Photograph]               [Photograph]               [Photograph]
 
 
 
ASSORTED ELECTRONIC        AUTOMATED, HIGH            VERTICALLY INTEGRATED
INTERCONNECT               TECHNOLOGY                 BOX BUILD PRODUCT.
ASSEMBLIES.                MANUFACTURING
                           EQUIPMENT.
 
                               ----------------
 
  CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE MARKET PRICE OF THE NOTES,
THE COMMON STOCK, OR BOTH. SPECIFICALLY, THE UNDERWRITERS MAY OVER-ALLOT IN
CONNECTION WITH THE OFFERING, MAY BID FOR, AND PURCHASE, THE NOTES, THE COMMON
STOCK, OR BOTH, IN THE OPEN MARKET AND MAY IMPOSE PENALTY BIDS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
 
                                       2
<PAGE>
 
                               PROSPECTUS SUMMARY
 
  The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and the Consolidated Financial
Statements, including the notes thereto, included elsewhere or incorporated by
reference in this Prospectus. The Company's fiscal year ends on the Saturday
closest to the end of March of each year resulting in either a 52- or 53-week
year. References to fiscal years refer to the fiscal year ending in that
calendar year; for example, "fiscal 1998" refers to the Company's fiscal year
ending March 28, 1998. Unless otherwise indicated, all information in this
Prospectus assumes that the over-allotment option granted to the Underwriters
is not exercised.
 
                                  THE COMPANY
 
  Kent Electronics Corporation is a national specialty distributor of
electronic products and a manufacturer of custom-made electronic products. In
fiscal 1997, the Company strategically aligned its operations into four
distinct, yet complementary, business units that seek to develop competitive
advantages within targeted markets.
 
  . Kent Components distributes electronic connectors, electronic wire and
    cable, and other passive and electromechanical products and interconnect
    assemblies used in assembling and manufacturing electronic products.
 
  . Kent Datacomm distributes a broad range of premise wiring products, such
    as fiber optic cable, patch panels and enclosures, and local area network
    ("LAN") and wide area network ("WAN") equipment, such as modems, hubs,
    switches and routers, directly to commercial end-users and professionals
    who install and service voice and data communications networks.
 
  . Futronix Systems is a redistributor of specialty wire and cable to
    electrical distributors nationwide. Futronix Systems was formed to
    conduct the businesses of Futronix Corporation and Wire & Cable
    Specialties Corporation ("Wire & Cable") which were acquired by the
    Company in January 1997.
 
  . K*TEC is a manufacturer whose capabilities include custom-made electronic
    interconnect assemblies, printed circuit board assemblies, sheet metal
    fabrication, plastic injection molding, specially fabricated battery
    power packs, other subassemblies that are built to customers'
    specifications and final system integration (box build).
 
The Company focuses on providing its customers a continuum of products and
services that emphasizes technology-based materials management and
manufacturing solutions. To successfully execute its strategy, during the nine
fiscal quarters ended June 28, 1997, the Company invested approximately $81.7
million in capital expenditures. These expenditures were primarily for
construction of its recently completed state-of-the-art K*TEC facility in Sugar
Land, Texas, consisting of approximately 420,000 square feet for manufacturing
and warehouse operations and its adjacent state-of-the-art 220,000 square foot
distribution facility that is scheduled for completion in spring 1998.
 
  Outsourcing is a rapidly growing trend in many industry sectors in the United
States as companies seek to reduce costs and improve operating efficiencies.
Electronics original equipment manufacturers ("OEMs") are increasingly
outsourcing materials management and manufacturing operations, ranging from
inventory management to complete box build combined with distribution to the
end customer. Manufacturers of electronic products are responding to this trend
by utilizing technology based materials management and logistical solutions
provided by distributors. In addition, the Company believes that there is an
emerging trend of OEMs to align with contract manufacturers who have
distribution capabilities and expertise. Because of its experience in both
distribution and manufacturing, the Company is particularly well-positioned to
capitalize on these trends. The potential benefits from outsourcing materials
management and manufacturing operations include: (i) focused resources; (ii)
improved inventory management and purchasing power; (iii) reduced time to
market; (iv) reduced costs and capital investment; and (v) access to leading
manufacturing technology.
 
  The Company is pursuing the following strategies to capitalize on current and
emerging electronics industry trends by: (i) providing a continuum of customer
services; (ii) remaining a key player in target markets; (iii) capitalizing on
industry consolidation; (iv) maximizing synergies between business units; and
(v) focusing on customer service.
 
                                       3
<PAGE>
 
                                  THE OFFERING
 
Securities Offered..........  $150,000,000 aggregate principal amount of   %
                              Convertible Subordinated Notes due 2004 (the
                              "Notes").
 
Maturity....................  September 1, 2004.
 
Payment of Interest.........  March 1 and September 1, commencing on March 1,
                              1998.
 
Conversion..................  The Notes are convertible at any time prior to
                              maturity, unless previously redeemed or
                              repurchased, into Common Stock, at the option of
                              the holder, at a conversion price of $    per
                              share, subject to certain adjustments. See
                              "Description of Notes--Conversion Rights."
 
Optional Redemption.........  The Notes are redeemable, in whole or in part, at
                              the option of the Company at any time on or after
                              September 6, 2000, at the redemption prices set
                              forth herein, plus accrued and unpaid interest,
                              if any, to the date of redemption. See
                              "Description of Notes-- Optional Redemption."
 
Repurchase Event............  Upon the occurrence of a Repurchase Event,
                              holders of the Notes will have the right, subject
                              to certain conditions and restrictions, to
                              require the Company to purchase all or part of
                              their Notes at 100% of the principal amount
                              thereof, plus accrued interest. See "Risk
                              Factors--Possible Limitations on Repurchase of
                              Notes" and "Description of Notes--Certain Rights
                              of Holders to Require Repurchase of Notes."
 
Subordination...............  The Notes will be unsecured obligations of the
                              Company, subordinated in right of payment to all
                              existing and future Senior Indebtedness of the
                              Company. In addition, the Notes will be
                              effectively subordinated to all indebtedness and
                              other liabilities (including trade payables) of
                              all subsidiaries of the Company. The Indenture
                              will not restrict the incurrence of Senior
                              Indebtedness or other indebtedness by the Company
                              or its subsidiaries. At June 28, 1997, the
                              Company did not have any Senior Indebtedness. See
                              "Risk Factors--Subordination of Notes,"
                              "Capitalization" and "Description of Notes--
                              Subordination."
 
Use of Proceeds.............  The Company currently intends to use the net
                              proceeds to pursue acquisition opportunities that
                              it believes will enhance its position as a
                              national distributor and contract manufacturer of
                              electronic products. In addition, the Company
                              intends to use the net proceeds for general
                              corporate purposes, including working capital and
                              capital expenditures. The Company has no current
                              agreement or understanding with respect to any
                              potential acquisition. See "Use of Proceeds."
 
Listing.....................  The Company will apply for listing of the Notes
                              on the NYSE.
 
Common Stock Trading........  The Common Stock is traded on the NYSE under the
                              symbol "KNT."
 
                                       4
<PAGE>
 
                      SUMMARY CONSOLIDATED FINANCIAL DATA
 
                (IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIO)
 
<TABLE>
<CAPTION>
                                                                         THIRTEEN WEEKS
                                       FISCAL YEARS ENDED                     ENDED
                         ---------------------------------------------- -----------------
                         APRIL 3, APRIL 2, APRIL 1, MARCH 30, MARCH 29, JUNE 29, JUNE 28,
                           1993     1994     1995     1996      1997(2)   1996     1997
                         -------- -------- -------- --------- --------- -------- --------
<S>                      <C>      <C>      <C>      <C>       <C>       <C>      <C>
STATEMENT OF EARNINGS
 DATA(1):
 Net sales.............. $164,541 $206,784 $279,676 $425,810  $516,757  $125,144 $152,080
 Gross profit...........   45,379   55,150   72,741  112,167   120,703    31,906   34,859
 Earnings before income
  taxes.................   12,632   15,902   23,511   49,095    45,100    15,556   14,497
 Net earnings...........    8,193   10,058   14,601   29,792    27,621     9,431    8,775
 Earnings per share..... $   0.40 $   0.48 $   0.68 $   1.21  $   1.00  $   0.34 $   0.32
 Weighted average
  shares................   20,393   20,804   21,475   24,696    27,551    27,592   27,762
 Ratio of earnings to
  fixed charges(3)......    18.6x    21.3x    22.7x    27.4x     20.1x     28.4x    45.1x
</TABLE>
 
<TABLE>
<CAPTION>
                                                               JUNE 28, 1997
                                                            --------------------
                                                                         AS
                                                             ACTUAL  ADJUSTED(4)
                                                            -------- -----------
<S>                                                         <C>      <C>
BALANCE SHEET DATA:
 Working capital........................................... $155,480  $301,230
 Total assets..............................................  343,906   493,906
 Long-term debt, less current portion......................       --   150,000
 Stockholders' equity...................................... $272,772  $272,772
</TABLE>
--------
(1) As a result of the acquisitions of Futronix Corporation and Wire & Cable in
    January 1997, each accounted for as a pooling of interests, selected
    consolidated financial data have been restated where appropriate to include
    the results of Futronix Corporation and Wire & Cable.
(2) Includes non-recurring merger and integration charges of $5.5 million ($3.4
    million, net of taxes, or $0.12 per share). Exclusive of such charges,
    fiscal 1997 net earnings were $31.0 million, or $1.12 per share, and the
    ratio of earnings to fixed charges was 22.4x.
(3) For purposes of computing the ratio of earnings to fixed charges,
    "earnings" consist of earnings before income taxes plus fixed charges.
    "Fixed charges" consist of interest expense, amortization of deferred
    financing costs and that portion of rental expense deemed representative of
    the interest factor.
(4) As adjusted to give effect to the sale by the Company of the Notes offered
    hereby and the application of the estimated net proceeds thereof after
    deducting underwriting discounts and commissions and estimated expenses of
    the Offering.
 
                                       5
<PAGE>
 
                                 RISK FACTORS
 
  An investment in the Notes (and Common Stock into which the Notes are
convertible) involves various risks. Prospective investors should carefully
consider the following factors in conjunction with the other information
contained or incorporated by reference in this Prospectus before making a
decision to purchase the Notes. This Prospectus, including documents
incorporated by reference, contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The Company's actual results could differ
materially from those set forth in the forward-looking statements. Certain
factors, among others, which may cause such a difference are set forth below.
 
CYCLES IN THE ELECTRONICS INDUSTRY; DEPENDENCE ON K*TEC CUSTOMERS
 
  The Company's business depends on sustained demand for the products it
distributes and manufactures. Although the Company has enjoyed strong growth
in sales in recent years, the electronics industry is cyclical, and there can
be no assurance that such growth will continue. Any downturn in the
electronics industry could have a material adverse effect on the Company's
business, results of operations or financial condition, especially if a
downturn occurred in the Company's distribution and manufacturing businesses
simultaneously. In addition, for many years K*TEC has strategically developed
long-term relationships with a select group of OEMs resulting in a
concentrated customer base. The Company expects that sales to a relatively
small number of customers will continue to account for a significant portion
of K*TEC's sales in the future. The loss of, or a significant decline in
orders from, one of K*TEC's key customers could have a material adverse effect
on the Company's business, results of operations or financial condition.
 
MANAGEMENT OF GROWTH
 
  In recent years, the Company has expanded its business through internal
growth and acquisitions, and the Company anticipates that it will continue
this expansion in the future. To effectively manage this expansion, the
Company will be required to attract and retain highly skilled managers and
personnel and to evaluate the adequacy of existing systems and procedures,
including, but not limited to, information management systems, financial and
internal control systems, and management structure. In addition, if the
Company enters new markets, it will be required to, among other things,
establish suitable distribution centers, hire personnel and establish
distribution channels. Moreover, the Company anticipates that in response to
the growing trend of OEMs to outsource manufacturing operations, the Company
will expand K*TEC's box build operations and increasingly combine those
operations with the Company's distribution capabilities. There can be no
assurance that management will adequately anticipate all of the changing
demands that growth and industry conditions and trends will impose on the
Company or that the Company will be able to adapt its pricing, costs, systems,
procedures and structure to such demands. Any failure to anticipate and
respond promptly and effectively to such changing demands and industry trends
could have a material adverse effect on the Company's business, results of
operations or financial condition.
 
RISKS ASSOCIATED WITH ACQUISITIONS
 
  The Company will continue to evaluate opportunities to acquire complementary
businesses, assets or technologies, and the Company expects to pursue
acquisitions that it believes will enhance its position as a national
distributor and contract manufacturer of electronic products. There can be no
assurance, however, that the Company will be able to identify and acquire
complementary businesses, assets or technologies. Among other things, the
Company may not be able to identify acquisition candidates in desirable
geographic or product markets on terms that are satisfactory to the Company.
Moreover, acquisitions require the expenditure of large amounts of capital,
and the Company's competitors for acquisitions may have significantly greater
financial resources than the Company. Therefore, to finance acquisitions, the
Company may have to raise additional funds through either public or private
financings, including the issuance of additional Common Stock that would
result in dilution to the Company's shareholders or the incurrence of Senior
Indebtedness with respect to which the Notes would be subordinated.
 
                                       6
<PAGE>
 
  In addition, there can be no assurance that the Company will be able to
integrate successfully the operations, facilities and management of any
acquired business or realize any expected synergies, including cost
reductions, from any acquisition. Moreover, there can be no assurance that any
acquisition will not have an adverse effect on the Company's relationships
with customers or suppliers of an acquired business. Failure to integrate
successfully any acquisition made by the Company could have a material adverse
effect on the Company's business, results of operations or financial
condition.
 
DEPENDENCE ON SIGNIFICANT SUPPLIERS
 
  As is customary in the electronics distribution industry, the Company
primarily operates under short-term contracts with its suppliers. In the
Company's past experience, such contracts have typically been renewed from
year to year. In the year ended March 29, 1997, the Company's purchases from
AMP Incorporated and Belden Inc. each represented approximately 14% of the
Company's total purchases. Although the Company believes that it may be able
to obtain competitive products of comparable quality from other suppliers, the
loss of such suppliers could have a material adverse effect on the Company's
business, results of operations or financial condition.
 
COMPETITION
 
  The markets for the Company's products and services are highly competitive.
The Company competes with a large number of distributors, suppliers and
domestic and foreign manufacturers. Foreign-manufactured products are often
sold at prices below the Company's prices for comparable products. The
Company's products are not protected from competition by any proprietary or
intellectual property rights such as trade secrets or patents. There can be no
assurance that the Company will continue to compete successfully against the
distributors, suppliers and manufacturers within its industry, some of which
are larger, have greater financial resources and broader name recognition, and
may, in some instances, have lower costs than the Company. In addition,
although the Company continues to focus on cost containment, there can be no
assurance that increasingly intense competition will not cause pricing or
marketing pressures that reduce gross profit margins or increase selling,
general and administrative expenses as a percentage of sales. Reduced gross
profit margins and increased selling, general and administrative expenses as a
percentage of sales, either alone or together, could have a material adverse
effect on the Company's business, results of operations or financial
condition.
 
SUBORDINATION OF NOTES
 
  The Notes will be unsecured and subordinated in right of payment in full to
all existing and future Senior Indebtedness of the Company. As a result of
such subordination, in the event of bankruptcy, liquidation or reorganization
of the Company, or upon the acceleration of any Senior Indebtedness, the
assets of the Company will be available to pay obligations under the Notes
only after all Senior Indebtedness has been paid in full, and there can be no
assurance the Company will have sufficient assets remaining to pay amounts due
under the Notes. The Notes are also effectively subordinated in right of
payment to all indebtedness and other liabilities, including trade payables,
of the Company's subsidiaries. The Indenture does not prohibit or limit the
incurrence of Senior Indebtedness or any other indebtedness by the Company or
its subsidiaries. The incurrence of Senior Indebtedness or any other
indebtedness by the Company or its subsidiaries could adversely affect the
Company's ability to pay its obligations under the Notes. At June 28, 1997,
the Company did not have any Senior Indebtedness. See "Description of Notes--
Subordination."
 
  In addition, the Notes are obligations exclusively of the Company and not of
any of its subsidiaries. The Company's cash flow and ability to service its
debt, including the Notes, may depend on, among other things, the earnings of
its subsidiaries and the distribution of those earnings to the Company, or on
other payments of funds by the subsidiaries to the Company. The subsidiaries
are separate and distinct legal entities and have no obligation, contingent or
otherwise, to pay any amounts due under the Notes or to make any funds
available
 
                                       7
<PAGE>
 
therefor, whether by dividends, loans or other payments. In addition, the
payment of dividends and the making of loans and advances to the Company by
its subsidiaries may be subject to statutory, contractual or other
restrictions, will be dependent on the earnings of those subsidiaries and will
be subject to various business considerations. Any right of the Company to
receive the assets of one of its subsidiaries upon the liquidation or
reorganization of such subsidiary (and the consequent right of the holders of
the Notes to participate in these assets) will be effectively subordinated to
the claims of that subsidiary's creditors (including trade creditors), except
to the extent that the Company is itself recognized as a creditor of such
subsidiary, in which case the claims of the Company would still be subordinate
to any security interests in the assets of such subsidiary and any
indebtedness of such subsidiary senior to that held by the Company and would
be subject to judicial powers to subordinate the Company's claim against such
subsidiary to that of other creditors of such subsidiary in certain cases. See
"Description of Notes--Subordination."
 
POSSIBLE LIMITATIONS ON REPURCHASE OF NOTES
 
  Upon a Repurchase Event, each holder of Notes will have the right, at the
holder's option, to require the Company to repurchase all or a portion of such
holder's Notes. If a Repurchase Event occurs, there can be no assurance that
the Company will have sufficient funds to pay the repurchase price for all
Notes tendered by the holders thereof. In addition, the right to require the
Company to repurchase Notes as a result of a Repurchase Event could create an
event of default under Senior Indebtedness of the Company as a result of which
any repurchase could, absent a waiver, be prohibited by the subordination
provisions of the Notes. See "Description of Notes--Certain Rights of Holders
to Require Repurchase of Notes."
 
ABSENCE OF EXISTING PUBLIC MARKET FOR THE NOTES
 
  Prior to the Offering, there has been no public market for the Notes. The
Company will apply for listing of the Notes on the NYSE, and assuming that
such listing is approved, there can be no assurance as to the liquidity of the
trading market for the Notes or that an active trading market for the Notes
will develop or be sustained. The Company has been advised by the Underwriters
that they presently intend to make a market in the Notes offered by this
Prospectus; however, they are not obligated to do so, and any market making
may be discontinued at any time without notice.
 
                                       8
<PAGE>
 
                                USE OF PROCEEDS
 
  The net proceeds to the Company from the sale of the Notes offered hereby
are estimated to be $145,750,000 ($167,687,500 if the Underwriters' over-
allotment option is exercised in full), after deducting underwriting discounts
and commissions and estimated expenses of the Offering payable by the Company.
The Company currently intends to use the net proceeds to pursue acquisition
opportunities that it believes will enhance its position as a national
distributor and contract manufacturer of electronic products. In addition, the
Company intends to use the net proceeds for general corporate purposes,
including working capital and capital expenditures.
 
  The Company evaluates opportunities to acquire complementary businesses,
assets or technologies on an ongoing basis. Although there is no current
agreement or understanding with respect to any such acquisition, the Company
desires to be able to respond to opportunities as they arise. Pending use of
the net proceeds from the Offering as described above, the Company intends to
invest the net proceeds in low-risk short-term investments.
 
                                       9
<PAGE>
 
                          PRICE RANGE OF COMMON STOCK
 
  The Company's Common Stock is listed and traded on the NYSE under the symbol
"KNT." The following table presents the high and low closing prices for the
Common Stock for each of the calendar periods indicated below, as reported by
the NYSE and as adjusted to reflect a three-for-two stock split to
shareholders of record on February 15, 1995 and a two-for-one stock split to
shareholders of record on February 15, 1996.
 
<TABLE>
<CAPTION>
                                                                   HIGH   LOW
                                                                  ------ ------
      <S>                                                         <C>    <C>
      1995
      First Quarter.............................................. $15.38 $12.92
      Second Quarter.............................................  18.94  14.06
      Third Quarter..............................................  22.38  18.75
      Fourth Quarter.............................................  29.25  19.31
      1996
      First Quarter.............................................. $35.38 $26.00
      Second Quarter.............................................  43.25  26.75
      Third Quarter..............................................  32.25  17.00
      Fourth Quarter.............................................  28.13  21.63
      1997
      First Quarter.............................................. $33.00 $23.00
      Second Quarter.............................................  36.69  22.13
      Third Quarter (through August 20)..........................  41.06  36.00
</TABLE>
 
  On August 20, 1997, the last reported sale price of the Common Stock on the
NYSE was $39.00 per share. At August 15 , 1997, the Common Stock was held by
1,297 holders of record. The number of record holders may not be
representative of the number of beneficial holders because many shares are
held by depositaries, brokers or other nominees.
 
                                DIVIDEND POLICY
 
  Historically, the Company has reinvested earnings available for distribution
to holders of Common Stock, and accordingly, the Company has not paid any cash
dividends on its Common Stock. Although the Company intends to continue to
invest future earnings in its business, it may determine at some future date
that payment of cash dividends on Common Stock would be desirable. The payment
of any such dividends would depend, among other things, upon the earnings and
financial condition of the Company.
 
                                      10
<PAGE>
 
                                CAPITALIZATION
 
  The following table sets forth the capitalization of the Company at June 28,
1997 and as adjusted to reflect the sale by the Company of the Notes offered
hereby. This table should be read in conjunction with the Consolidated
Financial Statements, including the notes thereto, included elsewhere or
incorporated by reference in this Prospectus.
 
<TABLE>
<CAPTION>
                                                               JUNE 28, 1997
                                                             ------------------
                                                                          AS
                                                              ACTUAL   ADJUSTED
                                                             --------  --------
                                                              (IN THOUSANDS)
<S>                                                          <C>       <C>
Long-term debt:
    % Convertible Subordinated Notes due 2004............... $     --  $150,000
Stockholders' equity:
  Preferred Stock, $1 par value per share, authorized
   2,000,000 shares, none issued............................       --        --
  Common Stock, without par value, authorized 60,000,000
   shares, 26,313,966 shares issued and 26,263,966 shares
   outstanding(1)...........................................   42,852    42,852
  Additional paid-in capital................................  116,648   116,648
  Retained earnings.........................................  114,249   114,249
                                                             --------  --------
                                                              273,749   273,749
  Less Common Stock in treasury--at cost, 50,000 shares.....     (977)    (977)
                                                             --------  --------
    Total stockholders' equity..............................  272,772   272,772
                                                             --------  --------
      Total capitalization.................................. $272,772  $422,772
                                                             ========  ========
</TABLE>
--------
(1) Does not include 3,526,438 shares of Common Stock reserved for issuance
    upon exercise of outstanding stock options, 512,465 shares available for
    future grants under the Company's stock option plans, or     shares
    initially issuable upon conversion of the Notes.
 
                                      11
<PAGE>
 
                     SELECTED CONSOLIDATED FINANCIAL DATA
 
  The following table summarizes selected consolidated financial data of the
Company for each fiscal year of the five-year period ended March 29, 1997, and
the consolidated financial data for the thirteen weeks ended June 29, 1996 and
June 28, 1997 and at June 28, 1997. The selected consolidated financial data
for the interim periods are unaudited, but include all adjustments, consisting
of normal recurring accruals, which management of the Company considers
necessary for a fair presentation. Interim results are not necessarily
indicative of results for the full fiscal year. The following selected
consolidated financial data should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Consolidated Financial Statements, including the notes thereto, included
elsewhere or incorporated by reference in this Prospectus.
 
<TABLE>
<CAPTION>
                                        FISCAL YEARS ENDED                    THIRTEEN WEEKS ENDED
                          --------------------------------------------------  ---------------------
                          APRIL 3,  APRIL 2,  APRIL 1,  MARCH 30,  MARCH 29,  JUNE 29,   JUNE 28,
                            1993      1994      1995      1996       1997(2)    1996       1997
                          --------  --------  --------  ---------  ---------  --------  -----------
                                    (IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIO)
<S>                       <C>       <C>       <C>       <C>        <C>        <C>       <C>
STATEMENT OF EARNINGS
 DATA(1):
 Net sales..............  $164,541  $206,784  $279,676  $425,810   $516,757   $125,144   $152,080
 Cost of sales..........   119,162   151,634   206,935   313,643    396,054     93,238    117,221
                          --------  --------  --------  --------   --------   --------   --------
 Gross profit...........    45,379    55,150    72,741   112,167    120,703     31,906     34,859
 Selling, general and
  administrative
  expenses..............    33,569    39,857    50,028    66,106     73,607     17,613     20,780
 Merger and integration
  costs.................        --        --        --        --      5,500         --         --
                          --------  --------  --------  --------   --------   --------   --------
 Operating profit.......    11,810    15,293    22,713    46,061     41,596     14,293     14,079
 Other income (expense):
 Interest expense.......       (79)     (156)     (340)     (898)    (1,192)      (304)        (7)
 Other--net (principally
  interest and dividend
  income)...............       901       765     1,138     3,932      4,696      1,567        425
                          --------  --------  --------  --------   --------   --------   --------
  Earnings before income
   taxes................    12,632    15,902    23,511    49,095     45,100     15,556     14,497
 Income taxes...........     4,439     5,844     8,910    19,303     17,479      6,125      5,722
                          --------  --------  --------  --------   --------   --------   --------
  Net earnings..........  $  8,193  $ 10,058  $ 14,601  $ 29,792   $ 27,621   $  9,431   $  8,775
                          ========  ========  ========  ========   ========   ========   ========
 Earnings per share.....  $   0.40  $   0.48  $   0.68  $   1.21   $   1.00   $   0.34   $   0.32
                          ========  ========  ========  ========   ========   ========   ========
 Weighted average
  shares................    20,393    20,804    21,475    24,696     27,551     27,592     27,762
 Ratio of earnings to
  fixed charges(3)......     18.6x     21.3x     22.7x     27.4x      20.1x      28.4x      45.1x
<CAPTION>
                                                                                 JUNE 28, 1997
                                                                              ---------------------
                          APRIL 3,  APRIL 2,  APRIL 1,  MARCH 30,  MARCH 29,                AS
                            1993      1994      1995      1996       1997      ACTUAL   ADJUSTED(4)
                          --------  --------  --------  ---------  ---------  --------  -----------
                                                    (IN THOUSANDS)
<S>                       <C>       <C>       <C>       <C>        <C>        <C>       <C>
BALANCE SHEET DATA(1):
 Working capital........  $ 48,336  $ 57,243  $ 71,817  $172,758   $150,884   $155,480   $301,230
 Total assets...........   102,755   120,970   148,276   305,174    325,594    343,906    493,906
 Long-term debt, less
  current portion.......        19        41     1,269     1,258         --         --    150,000
 Mandatorily redeemable
  preferred stock ......        --        --     2,200     2,200         --         --         --
 Stockholders' equity...  $ 83,888  $ 94,345  $112,224  $230,968   $262,367   $272,772   $272,772
</TABLE>
-------
(1) As a result of the acquisitions of Futronix Corporation and Wire & Cable
    in January 1997, each accounted for as a pooling of interests, selected
    consolidated financial data have been restated where appropriate to
    include the results of Futronix Corporation and Wire & Cable.
(2) Includes non-recurring merger and integration charges of $5.5 million
    ($3.4 million, net of taxes, or $0.12 per share). Exclusive of such
    charges, fiscal 1997 net earnings were $31.0 million, or $1.12 per share,
    and the ratio of earnings to fixed charges was 22.4x.
(3) For purposes of computing the ratio of earnings to fixed charges,
    "earnings" consist of earnings before income taxes plus fixed charges.
    "Fixed charges" consist of interest expense, amortization of deferred
    financing costs and that portion of rental expense deemed representative
    of the interest factor.
 
(4) As adjusted to give effect to the sale by the Company of the Notes offered
    hereby and the application of the estimated net proceeds thereof after
    deducting underwriting discounts and commissions and estimated expenses of
    the Offering.
 
                                      12
<PAGE>
 
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS
 
  The following discussion should be read in conjunction with the Consolidated
Financial Statements, including the notes thereto, included elsewhere or
incorporated by reference in this Prospectus. As a result of the acquisitions
of Futronix Corporation and Wire & Cable in January 1997, each accounted for
as a pooling of interests, all financial information has been restated where
appropriate to include the results of Futronix Corporation and Wire & Cable.
In the following discussion, all dollars are stated in thousands.
 
CORPORATE OVERVIEW
 
  In recent quarters, the Company has experienced downward pressure on its
gross profit margin primarily due to (i) an increase in distribution sales
relative to manufacturing sales, (ii) a lower percentage of certain high
margin sales within its manufacturing business, and, to a lesser extent, (iii)
a shift in its manufacturing business mix from building subassemblies to box
build. The Company's decrease in gross profit margin has been partially offset
by growth in sales and a reduction in selling, general and administrative
expenses ("SG&A") as a percentage of sales resulting from the Company's
continued focus on cost containment. The Company believes that these recent
margin trends will continue.
 
RESULTS OF OPERATIONS
 
  The following table presents, as a percentage of net sales, certain selected
consolidated financial data for each of the periods indicated.
 
<TABLE>
<CAPTION>
                                                               THIRTEEN WEEKS
                                      FISCAL YEARS ENDED            ENDED
                                 ---------------------------- -----------------
                                 APRIL 1, MARCH 30, MARCH 29, JUNE 29, JUNE 28,
                                   1995     1996      1997      1996     1997
                                 -------- --------- --------- -------- --------
<S>                              <C>      <C>       <C>       <C>      <C>
Distribution....................   65.6%     61.4%     65.6%    62.0%    65.1%
Manufacturing...................   34.4      38.6      34.4     38.0     34.9
                                  -----     -----     -----    -----    -----
  Net sales.....................  100.0     100.0     100.0    100.0    100.0
Cost of sales...................   74.0      73.7      76.6     74.5     77.1
                                  -----     -----     -----    -----    -----
  Gross profit..................   26.0      26.3      23.4     25.5     22.9
Selling, general and
 administrative expenses........   17.9      15.5      14.2     14.1     13.7
Merger and integration costs....    0.0       0.0       1.1      0.0      0.0
                                  -----     -----     -----    -----    -----
  Operating profit..............    8.1      10.8       8.1     11.4      9.2
Other income (expense)
  Interest expense..............   (0.1)     (0.2)     (0.2)    (0.2)     0.0
  Other--net (principally
   interest and dividend
   income)......................    0.4       0.9       0.9      1.2      0.3
                                  -----     -----     -----    -----    -----
    Earnings before income
     taxes......................    8.4      11.5       8.8     12.4      9.5
Income taxes....................    3.2       4.5       3.4      4.9      3.8
                                  -----     -----     -----    -----    -----
    Net earnings................    5.2%      7.0%      5.4%     7.5%     5.7%
                                  =====     =====     =====    =====    =====
</TABLE>
 
COMPARISON OF THIRTEEN WEEKS ENDED JUNE 28, 1997 WITH JUNE 29, 1996
 
  Net sales for the thirteen weeks ended June 28, 1997 increased $26,936, or
21.5%, compared to the same period of the prior year. The increase in net
sales resulted primarily from increased demand from existing customers and an
expanded customer base. The Company's distribution businesses, which accounted
for 65.1% of first quarter net sales, benefited from increased customer demand
of materials management and logistical services and the December 1996
acquisition of the EMC Distribution Division of Electronics
 
                                      13
<PAGE>
 
Marketing Corporation. The Company's contract manufacturing business increased
as a result of improving business conditions in markets served and as a result
of increased demand for the Company's recently expanded contract manufacturing
services.
 
  Gross profit increased $2,953, or 9.3%, compared to the corresponding period
a year ago. Gross profit as a percentage of sales decreased to 22.9% from
25.5% for the period. The increase in gross profit was primarily due to
increased sales, offset by a decrease in the gross profit percentage primarily
due to pricing pressures and product mix, with a lower percentage of certain
higher margin contract manufacturing business.
 
  SG&A expenses increased $3,167, or 18.0%, compared to the same period last
year. However, as a percentage of sales, SG&A declined to 13.7% from 14.1% in
the prior year period. The decline as a percentage of sales reflects the
Company's continued focus on cost containment to reduce such expenses as a
percentage of sales. The increase in SG&A expenses was primarily due to the
expenses necessary to support the growth in the Company's existing operations.
 
  Interest expense decreased due to the retirement, in the fourth quarter of
fiscal 1997, of all outstanding debt of Futronix Corporation and Wire & Cable.
 
  Other-net consists principally of interest and dividend income generated by
cash and cash equivalents. The decrease in interest and dividend income
resulted from a decrease in invested cash, cash equivalents and trading
securities, which were expended for capital expenditures, acquisitions and the
retirement of Futronix Corporation and Wire & Cable debt.
 
  Net earnings decreased $656, or 7.0%, compared to the same period a year
ago. The decrease was primarily due to a decrease in the gross profit
percentage and a decrease in interest and dividend income, partially offset by
lower SG&A expenses as a percentage of sales.
 
COMPARISON OF FISCAL 1997 WITH FISCAL 1996
 
  Net sales for the fiscal year ended March 29, 1997 were $516,757, an
increase of 21.4% over the $425,810 reported for fiscal 1996. The increase in
sales was primarily the result of continued gains in market share in the
Company's distribution operations, which had a 29.7% increase over fiscal
1996. Distribution sales also benefited from the December acquisition of the
EMC Distribution Division of Electronics Marketing Corporation and a full year
of operations in geographical markets entered during fiscal 1996 by Futronix
Corporation and Wire & Cable. The Company's contract manufacturing operations
posted an 8.2% increase over the prior year despite a significant downturn in
the semiconductor capital equipment sector during the September quarter of
fiscal 1997. The semiconductor capital equipment sector accounted for
approximately 26.7% of the manufacturing division revenue in fiscal 1997
compared to approximately 39.0% in fiscal 1996.
 
  Gross profit increased $8,536, or 7.6%, from fiscal 1996 to fiscal 1997 due
to an increase in net sales. The decrease in gross profit margin from 26.3% to
23.4% reflects continued pricing pressures and the transitioning of new
business services by the Company's contract manufacturing division.
 
  Excluding merger and integration charges associated with the acquisition of
Futronix Corporation and Wire & Cable, SG&A expenses increased $7,501, or
11.3%, compared to the prior year. This increase reflects the costs necessary
to support the continued growth in the Company's operations. As a percentage
of sales, however, expenses decreased to 14.2% from 15.5% in the prior year.
The decrease is the result of the Company's continued focus on cost
containment as well as specific cost reduction initiatives taken in response
to the difficult business conditions the Company experienced during the year.
SG&A expenses do not reflect the cost savings or synergies which may result
from the merger of Futronix Corporation and Wire & Cable.
 
  Merger and integration charges of $5,500 include abandoned registration
costs associated with the planned business combination of Futronix Corporation
and Wire & Cable, professional expenses associated with the acquisition, an
employee bonus and integration costs incurred to consolidate operations.
 
                                      14
<PAGE>
 
  Interest expense increased due to higher short-term borrowings by Futronix
Corporation and Wire & Cable prior to acquisition by the Company. All
outstanding debt was retired in the fourth quarter of 1997.
 
  Other-net consists principally of interest and dividend income generated by
cash, cash equivalents and trading securities. The increase in interest and
dividend income was primarily due to the net proceeds from the September 1995
public offering invested for approximately four months longer than the prior
year.
 
  Net earnings for 1997 were $27,621 compared to $29,792 for 1996. Net
earnings for 1997 included pre-tax merger and integration charges of $5,500.
Excluding these charges, net earnings increased $1,198, or 4.0%, to $30,990.
The improved profitability was primarily due to the incremental profit
associated with the increase in sales volume, offset by lower gross profit
margins, combined with the Company's continued focus on cost containment.
 
COMPARISON OF FISCAL 1996 WITH FISCAL 1995
 
  Net sales for the fiscal year ended March 30, 1996 increased $146,134, or
52.3%, to $425,810. The sales increase reflected internal growth primarily
from increased demand from existing customers, an expanded customer base and
expansion into new geographical markets by Futronix Corporation and Wire &
Cable.
 
  Gross profit increased $39,426, or 54.2%, compared to the preceding year.
Gross profit as a percentage of sales increased to 26.3% from 26.0% in the
prior year. The increase in gross profit was primarily due to increased sales
and an increase in the gross profit percentage that benefited from the gains
in contract manufacturing as a percentage of total sales. The Company believes
that its profit margins from sales of manufactured products are generally
greater than its profit margins on sales of distributed products.
 
  SG&A expenses increased $16,078, or 32.1%, compared to the prior fiscal
year. However, as a percentage of sales, expenses declined to 15.5% from 17.9%
in the preceding year. The decline as a percentage of sales reflects the
Company's continued focus on cost containment to reduce such expenses as a
percentage of sales. The increase in expenses was primarily due to the
expenses necessary to support the growth in the Company's existing operations
and expansion into new geographical markets by Futronix Corporation and Wire &
Cable.
 
  Interest expense increased due to higher short-term borrowings by Futronix
Corporation and Wire & Cable prior to acquisition by the Company.
 
  Other-net consists principally of interest and dividend income generated by
cash, cash equivalents and trading securities. The increase in interest and
dividend income was primarily due to the invested net proceeds from the
September 1995 public offering.
 
  Net earnings increased $15,191 or 104.0%, when compared to the prior year.
The improved profitability was primarily due to the incremental profit
associated with the increase in sales volume, the increase in the gross profit
percentage and the Company's continued focus on cost containment.
 
LIQUIDITY AND CAPITAL RESOURCES
 
  Working capital at June 28, 1997 was $155,480, an increase of $4,596, or
3.0%, from March 29, 1997. Included in the Company's working capital at June
28, 1997 are investments of $26,502. The Company's investment strategy is low-
risk and short-term, keeping the funds readily available to meet capital
requirements as they arise in the normal course of business. At June 28, 1997,
funds were invested primarily in a reverse repurchase agreement and an
institutional money market fund consisting primarily of taxable, high quality
money market type instruments. Both are compatible with the Company's stated
investment strategy.
 
  In June 1997, the Company obtained a $25,000 unsecured line of credit with a
bank. As of August 20, 1997, there was no indebtedness outstanding under the
line of credit.
 
                                      15
<PAGE>
 
  The Company intends to apply its capital resources to expand its business by
establishing or acquiring similar distribution and manufacturing operations in
geographic areas that are attractive to the Company, by acquiring new
facilities and by enlarging or improving existing facilities. In addition to
the capital required to purchase existing businesses or to fund start-up
operations, the expansion of the Company's operations at both new and existing
locations will require greater levels of capital to finance the purchase of
additional equipment, increased levels of inventory and greater accounts
receivable.
 
  In connection with the completion of its new 220,000 square foot
distribution facility at its Sugar Land, Texas location, the Company has
authorized fiscal 1998 capital expenditures of approximately $10,000 for
facility construction and equipment, of which approximately $3,000 had been
spent as of June 28, 1997. In addition, the Company has authorized fiscal 1998
capital expenditures of approximately $10,000 for specialized manufacturing
equipment for K*TEC, none of which had been spent as of June 28, 1997. The
Company believes that current resources, along with funds generated from
operations, should be sufficient to meet its current capital requirements and
those anticipated in fiscal 1998. With completion of this Offering, the
Company believes that it will have adequate capital to meet working capital
needs, fund capital expenditures and respond to acquisition opportunities that
may arise. See "Use of Proceeds."
 
                                      16
<PAGE>
 
                                   BUSINESS
 
THE COMPANY
 
  The Company is a national specialty distributor of electronic products and a
manufacturer of custom-made electronic products. In fiscal 1997, the Company
strategically aligned its operations into four distinct, yet complementary,
business units that seek to develop competitive advantages within targeted
markets.
 
  . Kent Components distributes electronic connectors, electronic wire and
    cable, and other passive and electromechanical products and interconnect
    assemblies used in assembling and manufacturing electronic products.
 
  . Kent Datacomm distributes a broad range of premise wiring products, such
    as fiber optic cable, patch panels and enclosures, and LAN and WAN
    equipment, such as modems, hubs, switches and routers, directly to
    commercial end-users and professionals who install and service voice and
    data communications networks.
 
  . Futronix Systems is a redistributor of specialty wire and cable to
    electrical distributors nationwide. Futronix Systems was formed to
    conduct the businesses of Futronix Corporation and Wire & Cable which
    were acquired by the Company in January 1997.
 
  . K*TEC is a manufacturer whose capabilities include custom-made electronic
    interconnect assemblies, printed circuit board assemblies, sheet metal
    fabrication, plastic injection molding, specially fabricated battery
    power packs, other subassemblies that are built to customers'
    specifications and final system integration (box build).
 
The Company focuses on providing its customers a continuum of products and
services that emphasizes technology-based materials management and
manufacturing solutions. To successfully execute its strategy, during the nine
fiscal quarters ended June 28, 1997, the Company invested approximately $81.7
million in capital expenditures. These expenditures were primarily for
construction of its recently completed state-of-the-art K*TEC facility in
Sugar Land, Texas, consisting of approximately 420,000 square feet for
manufacturing and warehousing operations and its adjacent state-of-the-art
220,000 square foot distribution facility that is scheduled for completion in
spring 1998.
 
INDUSTRY OVERVIEW
 
  Outsourcing is a rapidly growing trend in many industry sectors in the
United States as companies seek to reduce costs and improve operating
efficiencies. Electronics OEMs are increasingly outsourcing materials
management and manufacturing operations, ranging from inventory management to
complete box build combined with distribution to the end customer.
Manufacturers of electronic products are responding to this trend by utilizing
technology-based materials management and logistical solutions provided by
distributors. In addition, the Company believes that there is an emerging
trend of OEMs to align with contract manufacturers who have distribution
capabilities and expertise. Because of its experience in both distribution and
manufacturing, the Company is particularly well-positioned to capitalize on
these trends. The potential benefits from outsourcing materials management and
manufacturing operations include:
 
    FOCUSED RESOURCES. Because the electronics industry is experiencing
  greater levels of competition and more rapid technological change, many
  OEMs are focusing their resources on activities and technologies in which
  they add the greatest value. By offering comprehensive materials management
  solutions and integrated manufacturing services, the Company allows OEMs to
  focus on their core competencies, such as product development and
  marketing.
 
    IMPROVED INVENTORY MANAGEMENT AND PURCHASING POWER. Electronics OEMs are
  faced with increasing difficulties in efficiently planning, procuring and
  managing their inventories due to frequent design changes, short product
  life cycles, large investments in electronic components, component price
  fluctuations and the need to achieve economies of scale in materials
  procurement. By using the Company's volume purchasing capabilities and
  expertise in inventory management, an OEM can reduce production and
  inventory costs.
 
                                      17
<PAGE>
 
    REDUCED TIME TO MARKET. Due to intense competitive pressures and rapid
  technological developments in the electronics industry, OEMs are faced with
  increasingly shorter product life cycles and therefore have a growing need
  to reduce the time required to bring a product to market. OEMs can reduce
  their time to market by using the Company's expertise in providing
  materials management, logistical and manufacturing solutions.
 
    REDUCED COSTS AND CAPITAL INVESTMENT. As electronic products have become
  more technologically advanced and shipped in greater volumes, the
  distribution and manufacturing processes have become increasingly
  automated, requiring greater investments in technology and capital
  equipment on an ongoing basis. The Company's materials management services
  allow manufacturers to operate more efficiently by relying on scheduled
  deliveries of components at the time they are needed in the production
  process, thereby reducing inventory levels. K*TEC's contract manufacturing
  services enable an OEM to gain access to advanced, high-volume
  manufacturing and distribution capabilities while reducing the OEM's
  capital requirements.
 
    ACCESS TO LEADING MANUFACTURING TECHNOLOGY. Electronic products and
  electronics manufacturing technology have become increasingly sophisticated
  and complex, making it more difficult and expensive for OEMs to maintain
  the necessary technological expertise to manufacture products internally.
  OEMs are motivated to work with a contract manufacturer in order to gain
  access to specialized process expertise and manufacturing know-how.
 
COMPANY STRATEGY
 
  The Company is pursuing the following strategies to capitalize on current
and emerging electronics industry trends.
 
    PROVIDING A CONTINUUM OF CUSTOMER SERVICES. The Company provides a
  continuum of services to its customers, ranging from order fulfillment to
  box build combined with direct distribution to an OEM's customers. In
  response to evolving customer needs, the Company continues to shift from
  order fulfillment to technology-based materials management services. In
  addition, the Company continues to expand its manufacturing relationships
  from subassemblies to box build as OEMs increase their demand for
  outsourced supply chain management solutions.
 
    REMAINING A KEY PLAYER IN TARGET MARKETS. The Company has focused on
  markets where it strives to maintain and enhance its position as a national
  distributor of premier products. The Company believes it can strengthen its
  position within these markets by expanding its supplier relationships,
  capitalizing on OEMs' shift toward using distribution channels and
  redistributing existing Company product offerings through Futronix Systems.
 
    CAPITALIZING ON INDUSTRY CONSOLIDATION. The Company expects consolidation
  within the distribution and contract manufacturing sectors of the
  electronics industry to continue in response to increasing demands on
  suppliers by OEMs to provide integrated, technology-based materials
  management and manufacturing solutions. In addition, the Company
  anticipates increased opportunities to acquire the production capacity of
  OEMs following the trend toward outsourcing manufacturing operations. The
  Company will continue to evaluate and pursue acquisition opportunities that
  enhance its position as a national distributor and contract manufacturer of
  electronic products.
 
    MAXIMIZING SYNERGIES BETWEEN BUSINESS UNITS. The Company believes its
  four business units will continue to enjoy revenue and cost synergies and
  economies of scale. These benefits include: (i) greater product offerings
  to the Company's customers across business units, (ii) purchasing and
  volume procurement synergies, (iii) cost efficient opportunities to expand
  into new geographic markets by utilizing existing facilities and personnel,
  and (iv) shared warehousing and materials handling capabilities.
 
    FOCUSING ON CUSTOMER SERVICE. The Company continues to emphasize customer
  service as a competitive advantage. The Company's technology-based
  materials management services enable the Company to offer value-added
  solutions to its customers. Similarly, K*TEC customers have Internet access
  to K*TEC's intranet in order to place and track orders, inform K*TEC of
  demand forecasts and change
 
                                      18
<PAGE>
 
  product specifications. The Company believes that through these and other
  customer service innovations it will continue to strengthen and develop
  customer relationships.
 
DISTRIBUTION
 
  KENT COMPONENTS. Kent Components focuses primarily on providing its
industrial and OEM customers with rapid and reliable deliveries of
interconnect, passive and electromechanical products as well as a wide variety
of materials management services. This division also provides value-added
services such as cable assembly, fan assembly, taping and reeling, and
component modification. Kent Components utilizes a computerized inventory
control system to assist in the marketing of its products and to coordinate
purchases from suppliers with sales to customers. The division's computer
system provides detailed on-line information regarding the availability of the
Company's entire stock of inventory located at its stocking facilities as well
as on-line access to the inventories of most of the Company's major suppliers.
Through its integrated real-time information system, the Company can readily
track customers' orders through the entire process of entering the order,
reserving products to fill the order, ordering components from suppliers, if
necessary, and shipping products to customers on scheduled dates. Kent
Components is thus able to provide the type of distributor service required by
its OEM customers that have adopted the "just-in-time" method of inventory
procurement. Kent Components serves numerous markets, including the computer,
instrumentation, medical, networking systems and telecommunications markets.
 
  KENT DATACOMM. Kent Datacomm serves the voice and data communications after-
market by providing immediate off-the-shelf delivery of premise wiring
products and LAN and WAN equipment to commercial end-users and professionals
who install or service voice and data communications networks. Through a
focused sales effort, the Company believes it is able to participate directly
in the large and rapidly growing market for connection devices, reflecting the
increasing use of microcomputers in LANs and WANs and the continued growth in
networking and cabling needs of minicomputer and mainframe users. Kent
Datacomm serves numerous industries, including the aerospace, airline,
financial, food, government, manufacturing and medical industries.
 
  FUTRONIX SYSTEMS. In January 1997, the Company acquired Futronix Corporation
and Wire & Cable, and the businesses of both Futronix Corporation and Wire &
Cable are now conducted through Futronix Systems. Futronix Systems is a
redistributor of specialty wire and cable, serving more than 1,000 electrical
distributors throughout the United States. Futronix Systems seeks to serve as
an efficient single source of supply and as the distributor of choice for
electrical distributors by maintaining for immediate delivery large quantities
of over 10,000 specialty wire and cable products purchased from more than 50
manufacturers worldwide, as well as limited quantities of complementary
products. As a redistributor, Futronix Systems enables electrical distributors
to purchase exact quantities, gain immediate access to products, obtain a
wider variety of products and lower overall materials acquisition costs. The
products of Futronix Systems typically are used in industrial applications,
including computer systems, factory automation, "intelligent" buildings and
telecommunication systems. Futronix Systems generally does not sell commodity
wire and cable, such as that used in commercial and residential construction.
The Company believes that there are opportunities for redistribution of
existing Company product offerings through Futronix Systems.
 
MANUFACTURING
 
  K*TEC provides vertically integrated electronic manufacturing products and
services, including printed circuit board assembly and test, electronic
interconnect assemblies, specially fabricated battery power packs,
subassemblies, sheet metal fabrication, plastic injection molding and box
build. The Company has developed innovative material requirements planning
relationships with a select group of OEMs in the data processing, energy,
medical instrumentation and telecommunications industries. These relationships
are supported by sophisticated in-house product design and technical support
capabilities. K*TEC support teams work closely with K*TEC's customers through
all stages of product planning and production to apply advanced design and
 
                                      19
<PAGE>
 
production technology. K*TEC's computer systems have a computer aided design
capability that allows its engineers to be on-line with an OEM's engineers
when developing and changing product designs. In addition, K*TEC customers
have Internet access to K*TEC's intranet in order to place and track orders,
inform K*TEC of demand forecasts and change product specifications.
 
  K*TEC's quality control standards provide another means of serving the needs
of the Company's customers, since OEMs rely on suppliers to assure quality
control for subassemblies rather than providing such quality control
themselves. The Company believes that K*TEC's adherence to strict quality
control standards and investment in state-of-the-art production facilities and
equipment have attracted and retained important customers who have established
extremely rigid product quality standards.
 
MARKETING
 
  Each of the Company's business units maintains its own direct sales force.
At June 28, 1997, the Company employed approximately 310 sales representatives
operating out of sales offices in 32 cities in 25 states. The Company's sales
representatives undergo continuous training and attend classes in order to
enhance both their technical expertise and sales techniques. Sales associates
are compensated primarily on a commission basis. In the marketing of its
products, the Company supplements the efforts of its direct sales force with
direct mailings of brochures and catalogs as well as advertisements in trade
journals. The Company concentrates its efforts in certain targeted markets in
which it only distributes the products of a select group of leading suppliers.
This facilitates sales personnel specialization within related product
groupings, and permits sales representatives to develop a high degree of
technical expertise.
 
EMPLOYEES
 
  At June 28, 1997, the Company employed approximately 1,560 persons, all on a
full-time basis. The Company's employees are not subject to any collective
bargaining agreement. In addition to its employees, the Company uses other
workers on a contract basis, as its needs require.
 
                                      20
<PAGE>
 
                                  MANAGEMENT
 
  The following table sets forth certain information regarding the directors
and executive officers of the Company:
 
<TABLE>
<CAPTION>
            NAME              AGE                     POSITION
            ----              ---                     --------
<S>                           <C> <C>
Morrie K. Abramson...........  62 Chairman of the Board, Chief Executive Officer
                                   and President
Randy J. Corporron...........  40 President of K*TEC Electronics
Terrence M. Hunt.............  49 President of Futronix Systems, Director
Larry D. Olson...............  40 President of Kent Components
Mark A. Zerbe................  36 President of Kent Datacomm
Stephen J. Chapko............  43 Executive Vice President and Chief Financial
                                   Officer
Barbara A. Alberto...........  51 Vice President
Keith K. Ayers...............  59 Vice President
Frank M. Billone.............  52 Vice President
Rodney J. Corporron..........  40 Vice President
Carolyn S. Davis.............  49 Vice President
William H. Fountain..........  41 Vice President
Pamela P. Huffman............  39 Vice President
David D. Johnson.............  33 Vice President
Cathy L. O'Leary.............  45 Vice President
Max S. Levit.................  62 Director
David Siegel.................  71 Director
Richard C. Webb..............  64 Director
Alvin L. Zimmerman...........  54 Director
</TABLE>
 
  Mr. Abramson, a co-founder of the Company, has served as Chief Executive
Officer and a director since 1973 and Chairman of the Board since 1977. He has
been in the electronics distribution business since 1956. Mr. Abramson has
also been Chairman of the Board of K*TEC, the Company's wholly-owned
manufacturing subsidiary, since its incorporation in 1983.
 
  Mr. Randy Corporron has served as an Executive Vice President of the Company
since 1994 and became President of K*TEC in 1989. He previously served as Vice
President of the Company since 1987. He joined the Company in 1982 as General
Manager of K*TEC.
 
  Mr. Hunt has served as Executive Vice President of the Company, President of
Futronix Systems and as a director since January 1997. Mr. Hunt was elected to
serve as a director in connection with the Company's acquisition of Futronix
Corporation, which became effective January 17, 1997. Prior to joining the
Company, Mr. Hunt served as President of Futronix Corporation, which he
founded in 1991.
 
  Mr. Olson has served as an Executive Vice President of the Company since
1994 and became President of Kent Components in January 1997. He previously
served as Vice President of the Company since 1992, after the Company's
acquisition of Shelley-Ragon, Inc. Since 1991, he had been President of
Shelley-Ragon, Inc.
 
  Mr. Zerbe has served as an Executive Vice President of the Company since
1994 and became President of Kent Datacomm in January 1997. He previously
served as Vice President of the Company since 1988. Mr. Zerbe joined the
Company as a sales representative in 1985.
 
  Mr. Chapko was appointed Executive Vice President, Chief Financial Officer
in January 1997. He served as Vice President and Treasurer of the Company
since 1989, and he was appointed Secretary in 1993. He joined the Company as
Assistant Treasurer in 1987.
 
                                      21
<PAGE>
 
  Ms. Alberto joined the Company's credit department in 1978. In 1987, she was
appointed Vice President and has responsibilities for credit administration.
 
  Mr. Ayers joined the Company in 1976 as a purchasing agent. Since then, he
has served in various capacities, including manager of the management
information systems. Mr. Ayers currently serves as Vice President and has
responsibilities for training, special projects and administrative matters.
 
  Mr. Billone was appointed Vice President, Chief Information Officer in June
1997 and previously served as Vice President of Information Services--
Distribution since joining the Company in January 1996. Prior to joining the
Company, he held various Information Systems positions with General Electric
since 1967.
 
  Mr. Rodney Corporron directs and coordinates the multi-plant manufacturing
operations and was appointed Vice President of the Company and General Manager
of K*TEC in 1989. Prior to such time, he served the Company in a number of
capacities since 1974.
 
  Ms. Davis joined the Company in February 1995 as Information Services
Manager for K*TEC. She was appointed Vice President of Information Services--
Manufacturing in January 1997. Prior to joining the Company, Ms. Davis served
as Director of Information Systems at Anderson Greenwood & Co. since 1992.
 
  Mr. Fountain has been Vice President since 1987 and is responsible for
product management in the distribution operations. He joined the Company in
1980 as a purchasing agent.
 
  Ms. Huffman joined the Company as K*TEC Human Resources Manager in 1988 and
in 1989 was appointed Corporate Human Resources Manager. In January 1997, she
was appointed Vice President of Human Resources.
 
  Mr. Johnson was appointed Vice President, Corporate Controller in January
1996. He joined the Company in 1988 as Accounts Payable Supervisor.
 
  Ms. O'Leary became a Vice President of the Company in 1993. She joined the
Company in 1986 as a purchasing manager for K*TEC.
 
  Mr. Levit, President of Grocers Supply Company, Inc. since January 1992, has
served as a director of the Company since April 1995. Mr. Levit also serves on
the Board of M.D. Anderson Hospital and The University of Texas--Houston
Health Science Center.
 
  Mr. Siegel has served as a director of the Company since September 1990, and
has been in the electronics distribution business since 1954. Mr. Siegel is
Vice President, director and the founder of Great American Electronics, a
distribution company serving industrial distributors. He is also a director of
Micronetics and Surge Components.
 
  Mr. Webb, a founder of Harris Webb & Garrison, a Houston-based investment
banking and brokerage firm, has served as a director of the Company since June
1986. He has been involved in the investment banking business since 1960, and
was a founder of Lovett Underwood Neuhaus & Webb, Inc., a subsidiary of Kemper
Securities.
 
  Mr. Zimmerman has served as a director of the Company since June 1986. As a
judge he presided over the 309th Family District Court and the 269th Civil
District Court of Harris County, Texas from 1980 to 1984. Since 1984, he has
been a shareholder, officer and director in the law firm of Zimmerman,
Axelrad, Meyer, Stern & Wise, P.C. and its predecessor firms.
 
                                      22
<PAGE>
 
                             DESCRIPTION OF NOTES
 
  The Notes will be issued under an indenture dated as of September   , 1997
(the "Indenture") between the Company and Texas Commerce Bank National
Association, as trustee (the "Trustee"). The following summaries of certain
provisions of the Indenture and the Notes do not purport to be complete and
are subject to, and are qualified in their entirety by reference to, all of
the provisions of the Indenture, including the definition therein of certain
terms. Whenever terms defined in the Indenture are referred to in this
Prospectus, the applicable definition for such terms is incorporated herein by
reference. A copy of the proposed form of Indenture is filed as an exhibit to
the Registration Statement of which this Prospectus is a part.
 
GENERAL
 
  The Notes will be unsecured, subordinated obligations of the Company, will
be limited to $172,500,000 in aggregate principal amount (including the Notes
issuable under the Underwriters' over-allotment option) and will mature on
September 1, 2004. The Notes will bear interest at the rate per annum shown on
the front cover of this Prospectus from the date of original issuance of the
Notes pursuant to the Indenture, or from the most recent Interest Payment Date
to which interest has been paid or provided for, payable semi-annually on
March 1 and September 1 of each year, commencing March 1, 1998, to each person
in whose name a Note (or any predecessor Note) is registered at the close of
business on the preceding February 15 or August 15, as the case may be
(whether or not a Business Day). Interest on the Notes will be paid on the
basis of a 360-day year of twelve 30-day months.
 
  Principal of and premium, if any, and interest on the Notes will be payable
(i) in same day funds on or prior to the payment dates with respect to such
amounts in the case of Notes held of record by The Depository Trust Company
("DTC") or its nominee and (ii) at the offices of the Trustee in New York, New
York, in the case of Notes held of record by holders other than DTC or its
nominee, and the Notes may be surrendered for registration of transfer,
exchange or conversion at the offices of the Trustee in New York, New York.
The Company may, at its option, pay interest on Notes held of record by
holders other than DTC or its nominee by check mailed to the address of the
persons entitled thereto as it appears in the Register for the Notes on the
Regular Record Date for that interest.
 
  The Notes will be issued only in registered form, without coupons, and in
denominations of $1,000 or any integral multiple thereof. No service charge
will be made for any transfer or exchange of the Notes, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge and any other expenses (including the fees and expenses of the Trustee)
payable in connection therewith. The Company is not required (i) to issue or
register the transfer or exchange of any Notes during a period beginning at
the opening of business 15 days before the day of the mailing of a notice of
redemption and ending at the close of business on the day of such mailing,
(ii) to register the transfer of or exchange of any Note selected for
redemption in whole or in part, except the unredeemed portion of Notes being
redeemed in part or (iii) to register the transfer or exchange of any Notes
surrendered for conversion or repurchase upon the occurrence of a Repurchase
Event (as defined below).
 
  All monies paid by the Company to the Trustee or any Paying Agent for the
payment of principal of and premium, if any, and interest on any Note which
remain unclaimed for two years after such principal, premium or interest
becomes due and payable may be repaid to the Company. Thereafter, the holder
of such Note may, as an unsecured general creditor, look only to the Company
for payment thereof.
 
CONVERSION RIGHTS
 
  The Notes will be convertible, in whole or from time to time in part (in
denominations of $1,000 or integral multiples thereof), into shares of Common
Stock of the Company, at any time prior to redemption or final maturity on
September 1, 2004 at the conversion price set forth on the cover page of this
Prospectus, adjusted as described in the following paragraphs, except that if
a Note or portion thereof is earlier called for redemption,
 
                                      23
<PAGE>
 
the conversion right with respect thereto will terminate at the close of
business on the Business Day prior to the date fixed for redemption and will
be lost if not exercised prior to that time, unless the Company shall default
in payment of the redemption price.
 
  Fractional shares of Common Stock will not be delivered upon conversion, but
a cash adjustment will be paid in respect of such fractional interests based
on the closing price of the Company's Common Stock at the close of business on
the day of conversion.
 
  The initial conversion price will be subject to adjustment upon certain
events, including the following: (i) the issuance of Common Stock as a
dividend or distribution on capital stock, including the Common Stock; (ii) a
combination, subdivision or reclassification of Common Stock; (iii) the
issuance to all holders of Common Stock of rights, warrants or options
entitling them to subscribe for or purchase Common Stock (or securities
convertible into Common Stock) at a price per share less than the Current
Market Price; provided, however, that in the case of certain rights, warrants
or options that are not exercisable until the occurrence of a specified event
or events, the conversion price will not be adjusted until the occurrence of
the earliest such specified event; (iv) the distribution to all holders of
Common Stock of capital stock (other than Common Stock), evidences of
indebtedness of the Company, assets (excluding regular periodic cash dividends
paid from surplus), or rights, warrants or options to subscribe for or
purchase securities of the Company (excluding the dividends, distributions,
rights and warrants mentioned above); (v) a distribution consisting
exclusively of cash (excluding any cash distributions referred to in (iv)
above or made in connection with a merger or similar transaction) to all
holders of Common Stock in an aggregate amount that, together with (A) all
other cash distributions (excluding any cash distributions referred to in (iv)
above) made within the 12 months preceding such distribution and (B) any cash
and the fair market value of other consideration payable in respect of any
previous tender offer by the Company or a Subsidiary (as defined in the
Indenture) for the Company's Common Stock consummated within the 12 months
preceding such distribution, exceeds 10% of the Company's market
capitalization (being the Current Market Price times the number of shares of
Common Stock then outstanding) on the date fixed for determining the
shareholders entitled to such distribution; and (vi) the completion of a
tender offer made by the Company or any Subsidiary for the Company's Common
Stock involving an aggregate consideration that, together with (X) any cash
and the fair market value of any other consideration paid or payable in
respect of any previous tender offer by the Company or a Subsidiary for the
Company's Common Stock consummated within the 12 months preceding the
consummation of such tender offer and (Y) the aggregate amount of all cash
distributions (excluding any cash distributions referred to in (iv) above) to
all holders of Common Stock within the 12 months preceding the consummation of
such tender offer exceeds 10% of the Company's market capitalization on the
date of consummation of such tender offer.
 
  The Company will be permitted to make such reductions in the conversion
price as it determines to be advisable in order that any stock dividend,
subdivision of shares, distribution of rights to purchase stock or securities
or distribution of securities convertible into or exchangeable for stock made
by the Company to its shareholders will not be taxable to the recipients.
 
  Except as stated above, the conversion price will not be adjusted for the
issuance of Common Stock, or any securities convertible into or exchangeable
for Common Stock or carrying the right to purchase any of the foregoing, in
exchange for cash, property or services.
 
  If at any time (a) the Company makes a distribution of property to its
shareholders or purchases Common Stock in a tender offer and such distribution
or purchase would be taxable to such shareholders as a dividend for federal
income tax purposes (e.g., distributions of evidences of indebtedness, or
assets, of the Company but generally not stock dividends or rights to
subscribe for capital stock) and, pursuant to the antidilution provisions of
the Indenture, the conversion price of the Notes is reduced or (b) the
conversion price is reduced at the discretion of the Company, such reduction
may be deemed to be the receipt of taxable income by holders of the Notes.
Holders of Notes therefore could have taxable income as a result of an event
in which they receive no cash or property. See "Certain Federal Income Tax
Considerations--Constructive Dividend."
 
                                      24
<PAGE>
 
  Subject to any applicable right of the holders to cause the Company to
repurchase their Notes upon a Repurchase Event, in the case of certain
consolidations, mergers or statutory exchanges of securities with another
corporation to which the Company is a party, or the sale or conveyance of the
Company's assets substantially as an entirety, there will be no adjustment to
the conversion price, but each holder will have the right, at the holder's
option, to convert all or any portion of such holder's Notes into the kind and
amount of securities, cash or other property receivable upon the
consolidation, merger, statutory exchange or transfer by a holder of the
number of shares of Common Stock into which such Note might have been
converted immediately prior to such consolidation, merger, statutory exchange
or transfer (assuming such holder failed to exercise any rights of election
and received per share the kind and amount of consideration received per share
by a plurality of non-electing shares). In the case of a cash merger of the
Company into another corporation or any other cash transaction of the type
mentioned above, the effect of these provisions would be that thereafter the
Notes would be convertible at the conversion price in effect at such time into
the same amount of cash per share into which the Notes would have been
convertible had the Notes been converted into Common Stock immediately prior
to the effective date of such cash merger or transaction. Depending upon the
terms of such cash merger or transaction, the aggregate amount of cash into
which the Notes would be converted could be more or less than the principal
amount of the Notes.
 
  Notes surrendered for conversion after the close of business on a record
date for payment of interest and before the close of business on the next
succeeding interest payment date (unless there exists a default in the payment
of interest on such Notes or such Notes have been called for redemption) must
be accompanied by payment of an amount equal to the interest thereon that is
to be paid on such interest payment date. Subject to the foregoing, no
payments or adjustments will be made upon conversion on account of accrued
interest on the Notes or for any dividends or distributions on any shares of
Common Stock delivered upon such conversion. No adjustment of the conversion
price will be required to be made in any case until cumulative adjustments
amount to at least 1% of the conversion price, as last adjusted. Any
adjustment that would otherwise be required to be made shall be carried
forward and taken into account in any subsequent adjustment.
 
SUBORDINATION
 
  The payment of the principal of and premium, if any, and interest on the
Notes and any other payment obligations of the Company in respect of the
Notes, including any obligation to repurchase Notes at the option of a holder
upon the occurrence of a Repurchase Event, will be subordinated in right of
payment, as set forth in the Indenture, to the prior payment in full of all
Senior Indebtedness of the Company. Senior Indebtedness is defined as (a) the
principal of, premium, if any, and accrued and unpaid interest on (i)
indebtedness of the Company for money borrowed, whether outstanding on the
date of execution of the Indenture or thereafter created, incurred or assumed,
(ii) guarantees by the Company of indebtedness for money borrowed by any other
person, or reimbursement obligations under letters of credit, in either case,
whether outstanding on the date of execution of the Indenture or thereafter
created, incurred or assumed, (iii) indebtedness evidenced by notes (other
than the Notes), debentures, bonds or other instruments of indebtedness for
the payment of which the Company is responsible or liable, by guarantees or
otherwise, whether outstanding on the date of execution of the Indenture or
thereafter created, incurred or assumed, (iv) obligations of the Company under
interest rate and currency swaps, caps, floors, collars or similar agreements
or arrangements intended to protect the Company against fluctuations in
interest or currency rates, whether outstanding on the date of execution of
the Indenture or thereafter created, incurred or assumed, and (v) obligations
of the Company under any agreement to lease, or any lease of, any real or
personal property, which obligations, whether outstanding on the date of
execution of the Indenture or thereafter created, incurred or assumed, are
required to be capitalized on the books of the Company in accordance with
generally accepted accounting principles, or guarantees by the Company of
similar obligations of others, and (b) modifications, renewals, extensions and
refundings of any such indebtedness, obligations or guarantees; unless, in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that such indebtedness, obligations or guarantees,
or such modification, renewal, extension or refunding thereof, is not superior
in right of payment to the Notes; provided, however, that Senior Indebtedness
will not be deemed to include, and the Notes will rank pari passu in right of
payment with, any obligation of the Company to any of its Subsidiaries.
 
                                      25
<PAGE>
 
  In the event of (a) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding
in connection therewith, relative to the Company or to its creditors, as such,
or to its assets or (b) any liquidation, dissolution or other winding-up of
the Company, whether total or partial, whether voluntary or involuntary and
whether involving insolvency or bankruptcy, or (c) any assignment for the
benefit of creditors or any other marshaling of assets and liabilities of the
Company, the holders of all Senior Indebtedness will first be entitled to
receive payment in full of all amounts due or to become due thereon or in
respect thereof before the holders of the Notes are entitled to receive any
payment on account of the principal of, or premium, if any, or interest on the
Notes (other than payment (a "Permitted Payment") consisting solely of shares
of stock, securities or indebtedness subordinated at least to the extent of
the Notes provided by a plan of reorganization or adjustment that does not
adversely alter the rights of holders of Senior Indebtedness). Following the
occurrence of any of the events described above, if the Trustee or any holder
of the Notes receives any payment or distribution of assets of the Company of
any kind or character before all Senior Indebtedness is paid in full, then
such payment or distribution (other than a Permitted Payment) will be required
to be paid over or delivered to the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee, agent or other person making payment
or distribution of the assets of the Company for application to the payment of
all amounts payable on or in respect of Senior Indebtedness remaining unpaid,
to the extent necessary to pay such amounts in full after giving effect to any
concurrent payment or distribution to or for the holders of Senior
Indebtedness.
 
  The Indenture also provides that in the event there shall have occurred and
be continuing (i) any default in the payment when due of principal of,
premium, if any, or interest on any Senior Indebtedness or (ii) any other
event of default with respect to any Senior Indebtedness, then no payment
shall be made by the Company on account of the principal of, premium, if any,
or interest on the Notes or on account of the purchase or redemption or other
acquisition of the Notes (x) in the case of any event of default described in
clause (i) above, unless and until the Senior Indebtedness to which such
default relates is discharged or such event of default shall have been cured
or waived or shall have ceased to exist or the holders of such Senior
Indebtedness or their agents shall have waived the benefits of this provision,
and (y) in the case of any event of default specified in clause (ii) above,
from the date the Company or the Trustee receives written notice of such
default (a "Senior Default Notice") from (a) the lenders under the Company's
revolving credit facility from time to time in effect or any replacement
thereof or (b) the holders of at least 25% in principal amount of any other
kind or category of Senior Indebtedness to which such default relates or any
representative of such holders until the earlier of (A) 180 days after such
date or (B) the date, if any, on which the Senior Indebtedness to which such
default relates is discharged or such default shall have been cured or waived
or shall have ceased to exist or the holders of such Senior Indebtedness or
their agents shall have waived the benefits of this provision; provided,
however, that not more than one Senior Default Notice is permitted to be given
during any period of 360 consecutive days, regardless of the number of
defaults specified in clause (ii) above with respect to Senior Indebtedness
during such 360-day period. Subject to the payment in full of all Senior
Indebtedness, the holders of the Notes will be subrogated to the rights of the
holders of Senior Indebtedness to receive payments or distributions of assets
of the Company applicable to Senior Indebtedness until the Notes are paid in
full.
 
  Notwithstanding anything in the Indenture to the contrary, neither the
Trustee nor any holder of Notes may exercise any right either may have to
accelerate the maturity of the Notes at any time when payment of any amount
owing on the Notes is prohibited, in whole or in part, as described in the
preceding paragraphs; provided, however, that such right may nevertheless be
so exercised upon the earliest of the acceleration of the maturity of any
Senior Indebtedness, the exercise by any holder of Senior Indebtedness of any
remedies available to such holder upon a default or event of default with
respect to such Senior Indebtedness or the occurrence of an Event of Default
relating to certain events of bankruptcy, insolvency or reorganization.
 
  By reason of the subordination of the Notes, in the event of insolvency,
creditors of the Company who are holders of Senior Indebtedness may recover
more, ratably, than the holders of the Notes. In addition, the right of the
Company, and, therefore, the right of creditors of the Company (including
Noteholders), to participate in any distribution of assets of any subsidiary
of the Company upon its liquidation or reorganization or otherwise is
 
                                      26
<PAGE>
 
necessarily subject to the prior claims of creditors of the subsidiary, except
to the extent that claims of the Company itself as a creditor of the
subsidiary may be recognized.
 
  The Indenture will not limit the amount of other indebtedness or securities
that may be issued by the Company or any of its subsidiaries.
 
OPTIONAL REDEMPTION
 
  The Notes may not be redeemed by the Company prior to September 6, 2000.
Thereafter, the Notes may be redeemed at the option of the Company, in whole
or in part, at any time and from time to time, upon not less than 15 nor more
than 60 days' notice by mail at the applicable redemption prices (expressed in
percentages of principal amount) set forth below.
 
  If redeemed during the twelve-month period beginning September 1 in the year
indicated (September 6 in the case of the year 2000), the redemption price
shall be:
 
<TABLE>
<CAPTION>
                                                                      REDEMPTION
      YEAR                                                              PRICE
      ----                                                            ----------
      <S>                                                             <C>
      2000...........................................................       %
      2001...........................................................
      2002...........................................................
      2003...........................................................
</TABLE>
 
together with interest accrued and unpaid thereon to the date fixed for
redemption. If all accrued and payable interest on the Notes has not been
paid, the Notes may not be redeemed in part and the Company may not purchase
or acquire any Notes otherwise than pursuant to a purchase or exchange offer
made on the same terms to all holders of the Notes.
 
  If less than all the Notes are to be redeemed, the Trustee will select those
to be redeemed by lot or such other method as the Trustee in its discretion
shall deem appropriate and fair. Notice of redemption will be given to holders
of the Notes to be redeemed by first class mail at their last address
appearing on the Register for the Notes.
 
CONSOLIDATION, MERGER AND SALE OF ASSETS
 
  The Company will not consolidate with or merge into any other person or
convey, transfer or lease its properties and assets substantially as an
entirety to any person, and the Company will not permit any person to
consolidate with or merge into the Company unless (a) if applicable, the
person formed by such consolidation or into which the Company is merged or the
person or corporation which acquires the properties and assets of the Company
substantially as an entirety is a corporation, partnership or trust organized
and validly existing under the laws of the United States or any state thereof
or the District of Columbia and expressly assumes payment of the principal of
and premium, if any, and interest on the Notes and performance and observance
of each obligation of the Company under the Indenture, (b) after consummating
such consolidation, merger, transfer or lease, no Event of Default or event
which, after notice or lapse of time or both, would become an Event of Default
will occur and be continuing, (c) such consolidation, merger, conveyance,
transfer or lease does not adversely affect the validity or enforceability of
the Notes and (d) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, conveyance, transfer or lease complies with the provisions of the
Indenture.
 
CERTAIN RIGHTS OF HOLDERS TO REQUIRE REPURCHASE OF NOTES
 
  In the event of a Repurchase Event, each holder of Notes will have the
right, at the holder's option, subject to the terms and conditions of the
Indenture, to require the Company to repurchase all or any part (provided that
the principal amount must be $1,000 or an integral multiple thereof) of the
holder's Notes on the date that is 30
 
                                      27
<PAGE>
 
days after the date the Company gives notice of the Repurchase Event (the
"Repurchase Date") for a repurchase price equal to 100% of the principal
amount thereof, plus interest accrued and unpaid thereon to the Repurchase
Date (the "Repurchase Price"). On or prior to the Repurchase Date, the Company
shall deposit with the Trustee or a Paying Agent an amount of money in same
day funds sufficient to pay the Repurchase Price of the Notes that are to be
repaid on or promptly following the Repurchase Date.
 
  Failure by the Company to provide timely notice of a Repurchase Event, as
provided for below, or to repurchase the Notes when required under the
preceding paragraph, will result in an Event of Default under the Indenture
whether or not such repurchase is permitted by the subordination provisions of
the Indenture.
 
  On or before the 15th day after the occurrence of a Repurchase Event, the
Company will be obligated to mail to the Trustee and to each holder (and to
beneficial owners as required by law) a notice of the occurrence of the
Repurchase Event, setting forth, among other things, the type of Repurchase
Event, the Repurchase Date and the terms and conditions of, and the procedures
required for exercise of, the holder's right to require the repurchase of such
holder's Notes.
 
  To exercise the repurchase right, a holder must deliver written notice of
such exercise to the Trustee prior to the close of business on the Repurchase
Date, specifying the Notes with respect to which the right of repurchase is
being exercised, together with the certificates evidencing the Notes with
respect to which the right is being exercised, duly endorsed for transfer.
Such notice of exercise may be withdrawn by the holder by a written notice of
withdrawal delivered to the Trustee at any time prior to the close of business
on the Repurchase Date.
 
  A "Repurchase Event" will occur upon the occurrence of a Change in Control
(as defined below) or a Termination of Trading (as defined below).
 
  A "Change in Control" will occur when: (i) all or substantially all of the
Company's assets are sold as an entirety to any person or related group of
persons; (ii) there shall be consummated any consolidation or merger of the
Company (A) in which the Company is not the continuing or surviving
corporation (other than a consolidation or merger with a wholly owned
subsidiary of the Company in which all shares of Common Stock outstanding
immediately prior to the effectiveness thereof are changed into or exchanged
for the same consideration) or (B) pursuant to which the Common Stock would be
converted into cash, securities or other property, in each case, other than a
consolidation or merger of the Company in which the holders of the Common
Stock immediately prior to the consolidation or merger have, directly or
indirectly, at least a majority of the total voting power of all classes of
capital stock entitled to vote generally in the election of directors of the
continuing or surviving corporation immediately after such consolidation or
merger in substantially the same proportion as their ownership of Common Stock
immediately before such transaction; (iii) any person, or any persons acting
together which would constitute a "group" for purposes of Section 13(d) of the
Exchange Act, together with any affiliates thereof, shall beneficially own (as
defined in Rule 13d-3 under the Exchange Act) at least 40% of the total voting
power of all classes of capital stock of the Company entitled to vote
generally in the election of directors of the Company; (iv) at any time during
any consecutive two-year period, individuals who at the beginning of such
period constituted the Board of Directors of the Company (together with any
new directors whose election by such Board of Directors or whose nomination
for election by the shareholders of the company was approved by a vote of 66
2/3% of the directors then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors of the Company then in office; or (v) the Company is
liquidated or dissolved or adopts a plan of liquidation or dissolution.
 
  A "Termination of Trading" will occur if the Common Stock (or other common
stock into which the Notes are then convertible) is neither listed for trading
on a national securities exchange in the United States nor approved for
trading on an established automated over-the-counter trading market in the
United States.
 
  The Company will comply with the provisions of Rule 13e-4, Rule 14e-1 and
any other tender offer rules under the Exchange Act which may then be
applicable, and will file Schedule 13E-4 or any other schedule
 
                                      28
<PAGE>
 
required thereunder in connection with any offer by the Company to repurchase
Notes at the option of the holders upon a Repurchase Event.
 
  The repurchase feature of the Notes may in certain circumstances make more
difficult or discourage a takeover of the Company and, thus, the removal of
incumbent management. In addition, the foregoing provision may not afford
holders of Notes protection in the event of highly leveraged or other
transactions involving the Company that may adversely affect such holders. The
Company believes that the Repurchase Event repurchase feature is a standard
term contained in other similar debt offerings, and the terms of such feature
result from negotiations between the Company and the Underwriters.
 
  The right to require the Company to repurchase Notes as a result of a
Repurchase Event could create an event of default under Senior Indebtedness of
the Company as a result of which any repurchase could, absent a waiver, be
blocked by the subordination provisions of the Notes. The Company's Board of
Directors may not waive a Repurchase Event. Failure by the Company to
repurchase the Notes when required will result in an Event of Default with
respect to the Notes whether or not such a repurchase is permitted by the
subordination provisions.
 
  If a Repurchase Event were to occur, there can be no assurance that the
Company would have sufficient funds to pay the Repurchase Price for all Notes
tendered by the holders thereof. The Company's ability to make such payments
may be limited by the terms of its then-existing borrowing and other
agreements.
 
EVENTS OF DEFAULT
 
  Each of the following will be an Event of Default with respect to the Notes
under the Indenture: (i) default for 30 days in payment of any interest
installment of the Notes (even if such payment is prohibited by the
subordination provisions of the Indenture); (ii) default in payment of
principal of, or premium, if any, on the Notes either in connection with any
redemption or otherwise (even if such payment is prohibited by the
subordination provisions of the Indenture); (iii) default in the payment of
the Repurchase Price in respect of any Note on the Repurchase Date therefor
(even if such payment is prohibited by the subordination provisions of the
Indenture); (iv) failure to provide timely notice of a Repurchase Event as
required by the Indenture; (v) failure to observe or perform for 45 days after
notice thereof any other covenant in the Indenture; (vi) default under one or
more bonds, debentures, notes or other evidences of indebtedness for money
borrowed by the Company or any subsidiary of the Company or under one or more
mortgages, indentures or instruments under which there may be issued or by
which there may be secured or evidenced any indebtedness for money borrowed by
the Company or any subsidiary of the Company, whether such indebtedness now
exists or shall hereafter be created, which default individually or in the
aggregate constitutes a failure to pay the principal of indebtedness in excess
of $15,000,000 when due and payable after the expiration of any applicable
grace period with respect thereto or results in indebtedness in excess of
$15,000,000 becoming or being declared due and payable prior to the date on
which it would otherwise have become due and payable, without such
indebtedness having been discharged, or such acceleration having been
rescinded or annulled, within a period of 30 days after there shall have been
given to the Company by the Trustee or to the Company and the Trustee by the
holders of at least 25% in aggregate principal amount outstanding of the Notes
a written notice specifying such default and requiring the Company to cause
such indebtedness to be discharged or cause such acceleration to be rescinded
or annulled; (vii) entry of a final judgment or judgments against the Company
or any subsidiary of the Company in the amount of at least $15,000,000 that
remain undischarged and unstayed for a period of 30 days; or (viii) certain
events of bankruptcy, insolvency, reorganization, receivership or liquidation
involving the Company or any subsidiary of the Company.
 
  The Company will be required to file with the Trustee annually a written
statement as to the fulfillment of its obligations under the Indenture. The
Indenture will provide that the Trustee may withhold notice to the holders of
the Notes of any default (except in payment of principal of, premium, if any,
or interest on the Notes) if the Trustee considers it in the interest of the
holders of the Notes to do so. The Indenture will provide that, if an Event of
Default (other than an Event of Default resulting from bankruptcy, insolvency
or reorganization)
 
                                      29
<PAGE>
 
shall have occurred and be continuing, either the Trustee or the holders of
25% or more in aggregate principal amount of the Notes may declare the
principal of all the Notes and the interest accrued thereon to be due and
payable immediately, but if the Company cures all defaults (except the
nonpayment of principal of and premium, if any, and accrued interest on Notes
that shall have become due by acceleration) and certain other conditions are
met, such declaration may be annulled and past defaults may be waived by the
holders of a majority in aggregate principal amount of the Notes. Prior to a
declaration of acceleration, certain Events of Default and past defaults may
be waived by the holders of a majority in aggregate principal amount of the
Notes. In the case of an Event of Default resulting from certain events of
bankruptcy, insolvency or reorganization, all unpaid principal of and accrued
interest on the Notes then outstanding shall be due and payable immediately
without any declaration or other act on the part of the Trustee or the holders
of Notes.
 
  Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default occurs and is continuing, the Trustee will
be under no obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the Noteholders, unless such
Noteholders have offered to the Trustee reasonable security or indemnity.
Subject to such provision for security or indemnification, the holders of a
majority in aggregate principal amount of the Notes will have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee, provided that the Trustee will have the right to decline to follow
any such direction if the Trustee is advised by counsel that the action or
proceeding so directed may not lawfully be taken or the Trustee determines
that the action or proceeding so directed could involve the Trustee in
personal liability or would be unduly prejudicial to the rights of the holders
not joining in such directions or would conflict with the Indenture.
 
MODIFICATION OF THE INDENTURE
 
  The Indenture will contain provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority of the
aggregate principal amount of the Notes then outstanding, to execute a
supplemental indenture to add provisions to, or change in any manner or
eliminate any provisions of, the Indenture or modify in any manner the rights
of the holders of the Notes, provided that no such supplemental indenture may,
among other things, (i) extend the time for payment of principal of or any
premium or interest on any Note or reduce the principal amount thereof or the
interest thereon or any premium payable upon the redemption thereof or impair
the right of any holder to institute suit for payment of the Notes, or make
the principal thereof or any premium or interest thereon payable in any coin
or currency other than that provided in the Indenture, or modify the
subordination provisions of the Indenture in a manner adverse to the holders
or impair the right to convert the Notes into Common Stock or to require the
Company to repurchase the Notes upon the occurrence of a Repurchase Event
without the consent of the holder of each outstanding Note so affected, or
(ii) reduce the aforesaid percentage of the aggregate principal amount of
Notes, the holders of which must consent to authorize any such supplemental
indenture, without the consent of the holders of all outstanding Notes.
 
GOVERNING LAW
 
  The Indenture and the Notes will be governed by and construed in accordance
with the laws of the State of New York, without giving effect to such state's
conflicts of laws principles.
 
BOOK-ENTRY
 
  The Notes will be issued in the form of a global note or notes (together,
the "Global Note") deposited with, or on behalf of, DTC and registered in the
name of Cede & Co. as DTC's nominee. Owners of beneficial interests in the
Notes represented by the Global Note will hold such interests pursuant to the
procedures and practices of DTC and must exercise any rights in respect of
their interests (including any right to convert or require repurchase of their
interests) in accordance with those procedures and practices. Such beneficial
owners will not be deemed holders of Notes, and will not be entitled to any
rights under the Global Note or the Indenture, with respect to the Global
Note, and the Company and the Trustee, and any of their respective agents, may
treat DTC as the sole holder and owner of the Global Note.
 
                                      30
<PAGE>
 
  DTC has advised the Company as follows: DTC is a limited-purpose trust
company organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC holds securities that its
participants deposit with DTC. DTC also facilitates the settlement among
participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Direct participants include securities brokers and
dealers (including the Underwriters), banks, trust companies, clearing
corporations and certain other organizations. DTC is owned by a number of its
direct participants and by the NYSE, the American Stock Exchange, Inc. and the
National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others such as securities brokers and dealers, banks and
trust companies that clear through or maintain a custodial relationship with a
direct participant, either directly or indirectly. The rules applicable to DTC
and its participants are on file with the Securities and Exchange Commission.
 
  Unless and until it is exchanged in whole or in part for certificated Notes
in definitive form as set forth below, the Global Note may not be transferred
except as a whole by DTC to a nominee of DTC, or by a nominee of DTC to DTC or
another nominee of DTC.
 
  The Notes represented by the Global Note will not be exchangeable for
certificated Notes, provided that if DTC is at any time unwilling, unable or
ineligible to continue as depositary, the Company will issue individual Notes
in definitive form in exchange for the Global Note. In addition, the Company
may at any time and in its sole discretion determine not to have a Global
Note, and, in such event, will issue individual Notes in definitive form in
exchange for the Global Note previously representing all such Notes. In such
instances, an owner of a beneficial interest in a Global Note will be entitled
to physical delivery of Notes in definitive form equal in principal amount to
such beneficial interest and to have such Notes registered in its name.
Individual Notes so issued in definitive form will be issued in denominations
of $1,000 and any larger amount that is an integral multiple of $1,000 and
will be issued in registered form only, without coupons.
 
  Payments of principal of and interest on the Notes will be made by the
Company through the Trustee to DTC or its nominee, as the case may be, as the
registered owner of the Global Note. Neither the Company nor the Trustee will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests of the Global
Note or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests. The Company expects that DTC, upon receipt of
any payment of principal or interest in respect of the Global Note, will
credit the accounts of the related participants with payment in amounts
proportionate to their respective holdings in principal amount of beneficial
interest in the Global Note as shown on the records of DTC. The Company also
expects that payments by participants to owners of beneficial interests in the
Global Note will be governed by standing customer instructions and customary
practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of such participants.
 
  So long as the Notes are represented by a Global Note, DTC or its nominee
will be the only entity that can exercise a right to repayment pursuant to the
holder's option to elect repayment of its Notes or the right of conversion of
the Notes. Notice by participants or by owners of beneficial interests in a
Global Note held through such participants of the exercise of the option to
elect repayment, or the right of conversion, of beneficial interests in Notes
represented by the Global Note must be transmitted to DTC in accordance with
its procedures on a form required by DTC and provided to participants. In
order to ensure that DTC's nominee will timely exercise a right to repayment,
or the right of conversion, with respect to a particular Note, the beneficial
owner of such Notes must instruct the broker or other participant through
which it holds an interest in such Notes to notify DTC of its desire to
exercise a right to repayment, or the right of conversion. Different firms
have different cut-off times for accepting instructions from their customers
and, accordingly, each beneficial owner should consult the broker or other
participant through which it holds an interest in a Note in order to ascertain
the cut-off time
 
                                      31
<PAGE>
 
by which such an instruction must be given in order for timely notice to be
delivered to DTC. The Company will not be liable for any delay in delivery of
such notice to DTC.
 
LISTING
 
  The Company will apply for listing of the Notes on the NYSE.
 
CONCERNING THE TRUSTEE
 
  Texas Commerce Bank National Association will be the Trustee under the
Indenture. The Indenture permits the Trustee to become a creditor of the
Company and does not preclude the Trustee from enforcing its rights as a
creditor, including rights as a holder of Senior Indebtedness, subject,
however, to the provisions of the Trust Indenture Act regarding collection of
claims against the Company. Texas Commerce Bank National Association is the
lender under the Company's unsecured line of credit. As of August 20, 1997,
there was no indebtedness outstanding under the line of credit.
 
                                      32
<PAGE>
 
                         DESCRIPTION OF CAPITAL STOCK
 
  The following summary of the material terms and provisions of the Common
Stock and the Preferred Stock (as defined below) is qualified in its entirety
by reference to the Amended and Restated Articles of Incorporation of the
Company, which expressly include the terms of the Common Stock and the
Preferred Stock. The Company's Amended and Restated Articles of Incorporation
are incorporated by reference as an exhibit to the Registration Statement of
which this Prospectus is a part.
 
COMMON STOCK
 
  The Company is authorized to issue 60,000,000 shares of Common Stock.
Holders of Common Stock are entitled to one vote per share on all matters on
which they are entitled to vote. Because holders of Common Stock do not have
cumulative voting rights, holders of a majority of the shares voting for the
election of directors can elect all of the members of the Board of Directors.
Except as required by Texas law for certain extraordinary transactions and as
set forth below under "Charter and Bylaw Provisions," a majority vote is also
sufficient for other actions that require the vote or concurrence of
shareholders. The Common Stock is not redeemable and has no conversion or
preemptive rights. All of the outstanding shares of Common Stock are, and all
of the shares issuable upon conversion of the Notes will be, when issued in
accordance with the Indenture, fully paid and nonassessable. In the event of
the liquidation or dissolution of the Company, subject to the rights of the
holders of any outstanding shares of the Company's preferred stock, par value
$1.00 per share ("Preferred Stock"), the holders of Common Stock are entitled
to share pro rata in any balance of the corporate assets available for
distribution to them. The Company may pay dividends when and as declared by
the Board of Directors from funds legally available therefor. See "Dividend
Policy."
 
PREFERRED STOCK
 
  The Company's Board of Directors is authorized to issue up to 2,000,000
shares of Preferred Stock. No shares of Preferred Stock are currently
outstanding. The Company's Board of Directors is authorized to divide the
Preferred Stock into series and, with respect to each series, to determine the
dividend rights, dividend rate, conversion rights, voting rights, redemption
rights and terms, liquidation preferences, sinking fund provisions, the number
of shares constituting the series and the designation of such series. The
Board of Directors could, without shareholder approval, issue Preferred Stock
with voting rights and other rights that could adversely affect the voting
power of holders of Common Stock and could be used to prevent a hostile
takeover of the Company. The Board has set the terms and conditions of a
series of Preferred Stock consisting of 200,000 shares designated as Series A
Preferred Stock in connection with the adoption of a shareholder rights plan.
See "--Shareholder Rights Plan." Except in connection with the possible
triggering of such plan, the Company has no present plans to issue any shares
of Preferred Stock.
 
CHARTER AND BYLAW PROVISIONS
 
  The Company's charter has a "fair price" provision relating to certain
business combinations, including certain mergers, consolidations, asset and
stock conveyances, liquidations and reclassifications. The "fair price"
provision provides that, except in certain circumstances, any such business
combination between the Company and an interested shareholder (defined
generally as a person or entity that owns or has owned within the past two
years, directly or indirectly, 10% or more of the Company's outstanding voting
stock) must be approved by the affirmative vote of the holders of 80% of the
outstanding voting stock of the Company, unless certain pricing and procedural
requirements regarding the business combination are satisfied. For instance,
one such requirement is that the aggregate consideration to be paid for each
share of Common Stock must be at least equal to the highest per share price
paid by the interested shareholder to acquire any share of Common Stock during
a specified period. Additionally, the higher voting requirements do not apply
to transactions approved by a majority of the "continuing directors."
Generally, a director is deemed to be a continuing director if he was a
director on May 15, 1987, or was appointed by a majority of other continuing
directors or elected by the shareholders after
 
                                      33
<PAGE>
 
having been recommended by a majority of other continuing directors. The "fair
price" provision could make it more difficult for a third party to acquire
control of the Company.
 
  The Board of Directors of the Company is classified into three classes of
directors who serve staggered three-year terms. Vacancies or newly created
directorships on the Board may be filled only by a majority vote of directors
then in office, and directors may be removed during their term only for cause
and only by the affirmative vote of two-thirds of all shares of voting stock.
The Bylaws also require that the provisions described above may not be further
amended, altered, changed or appealed, nor may the number of directors be
increased, without either the affirmative vote of 80% of the shares of voting
stock or the approval of a majority of directors in office. These provisions
may have the effect of discouraging hostile or unsolicited takeover attempts
or proxy contests or, alternatively, may encourage persons considering such
actions to negotiate with the existing Board.
 
SHAREHOLDER RIGHTS PLAN
 
  The Board of Directors has created certain rights (the "Rights") and
authorized the issuance of one Right (subject to adjustment) for each
outstanding share of Common Stock to shareholders of record at the close of
business on May 24, 1990 (the "Record Date"). In addition, the related Rights
Agreement (as defined below) provides for the issuance of one Right for each
share of Common Stock issued after adoption of the Rights Agreement, which
would include shares of Common Stock issuable upon conversion of the Notes.
After adjustment for the Company's three-for-two stock split to shareholders
of record on February 15, 1995, and the Company's two-for-one stock split to
shareholders of record on February 15, 1996, there is currently one-third of a
Right associated with each share of Common Stock. Each Right entitles the
registered holder to purchase from the Company one one-hundredth of a share of
Series A Preferred Stock, $1.00 par value per share, of the Company (the
"Series A Preferred Stock") at a price of $40.00 per one one-hundredth of a
share (subject to adjustment), payable in cash. The description and terms of
the Rights are set forth in a Rights Agreement between the Company and
Ameritrust Company National Association, as Rights Agent, dated as of May 14,
1990 (the "Rights Agreement").
 
  Although the Rights are not intended to prevent a takeover of the Company at
a full and fair price, they have certain anti-takeover effects. They may deter
an attempt to acquire the Company in a manner which seeks to deprive the
Company's shareholders of the full and fair value of their investment and may
deter attempts by significant shareholders to take advantage of the Company
and its shareholders through certain self-dealing transactions. The Rights may
cause substantial dilution to a person or group that acquires or attempts to
acquire the Company without the rights being redeemed. Accordingly, the Rights
should encourage any potential acquiror to seek to negotiate with the
Company's Board of Directors. Unless the approval is first obtained from the
Board of Directors of the Company, or, in limited circumstances, the
shareholders of the Company, the Rights may deter transactions, including
tender offers, which the majority of shareholders may believe are beneficial
to them. Under the Rights Agreement, one-third of a Right (subject to
adjustment) will also be issued with each share of Common Stock issued upon
conversion of the Notes.
 
                                      34
<PAGE>
 
                   CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
 
  The following is a general discussion of certain material United States
federal income tax considerations relevant to initial holders of the Notes and
shares of Common Stock issuable upon conversion of the Notes. Liddell, Sapp,
Zivley, Hill & LaBoon, L.L.P. has issued to the Company and filed as an
exhibit to the Registration Statement, of which this Prospectus is a part, a
tax opinion that the following discussion of such tax considerations is
accurate and complete in all material respects and constitutes its opinion of
the material tax considerations to initial holders of the Notes and shares of
Common Stock issuable upon conversion of the Notes. This discussion is based
upon the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
Regulations, Internal Revenue Service ("IRS") rulings and judicial decisions
now in effect, all of which are subject to change (possibly with retroactive
effect) or different interpretations. This discussion does not purport to deal
with all aspects of federal income taxation that may be relevant to a
particular investor's decision to purchase the Notes or acquire shares of
Common Stock on conversion of Notes, and it is not intended to be wholly
applicable to all categories of investors, some of which, such as dealers in
securities, banks, insurance companies, persons that will hold the Notes as a
position in a "straddle" or as part of a hedging or "conversion" transaction
for tax purposes, tax-exempt organizations and non-United States holders of
Notes, may be subject to special rules. In addition, this discussion is
limited to persons who purchase the Notes pursuant to this Prospectus, and who
hold the Notes or shares of Common Stock issued on conversion of the Notes as
a "capital asset" within the meaning of section 1221 of the Code.
 
  ALL PROSPECTIVE PURCHASERS OF THE NOTES ARE ADVISED TO CONSULT THEIR OWN TAX
ADVISORS REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF
THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE NOTES AND THE SHARES OF COMMON
STOCK ISSUABLE ON CONVERSION OF THE NOTES.
 
OWNERSHIP BY U.S. PERSONS
 
  GENERAL. The following applies to a person (a "U.S. Holder") that is a
citizen or resident of the United States, a corporation or partnership created
or organized in the United States or any state thereof, an estate the income
of which is includible in income for United States federal income tax purposes
regardless of its source, or a trust as to which a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more United States fiduciaries have the authority to control
all substantial decisions of the trust.
 
  PAYMENTS OF INTEREST. Interest on a Note generally will be taxable to a U.S.
Holder as ordinary income at the time it is paid or accrued in accordance with
the holder's method of accounting for tax purposes.
 
  CONVERSION OF NOTES INTO COMMON STOCK. In general, a U.S. Holder will
recognize no gain or loss on a conversion of the Notes into shares of Common
Stock, except with respect to cash received in lieu of a fractional share. The
basis of the Common Stock received on conversion will be equal to the basis of
the Notes converted, reduced by the portion of such basis allocated to any
fractional share of Common Stock exchanged for cash. The holding period of a
U.S. Holder in the Common Stock received on conversion will include the period
during which the converted Notes were held.
 
  CONSTRUCTIVE DIVIDEND. A distribution to holders of Common Stock may cause a
deemed distribution (which will be a dividend to the extent of the Company's
current or accumulated earnings and profits) to U.S. Holders of the Notes if
the conversion price or conversion ratio of the Notes is adjusted to reflect
that distribution.
 
  MARKET DISCOUNT. Under the market discount rules of sections 1276 through
1278 of the Code, if a holder of a Note purchases the Note at market discount
(i.e., at a price below its stated redemption price at maturity) in excess of
a statutorily-defined de minimis amount and thereafter recognizes gain upon a
disposition or retirement of the Note, then the lesser of the gain recognized
or the portion of the market discount that accrued on a ratable
 
                                      35
<PAGE>
 
basis (or, if elected, on a constant interest rate basis) generally will be
treated as ordinary income at the time of the disposition. Moreover, any
market discount on a Note may be taxable to a U.S. Holder to the extent of
appreciation at the time of certain otherwise non-taxable transactions, such
as gifts. If a U.S. Holder converts a market discount Note into Common Stock,
the theretofore unrecognized accrued market discount on such Note will not, in
general, be recognized but will be treated as ordinary income on the later
disposition of the Common Stock to the extent of any gain recognized at that
time on the disposition of the Common Stock.
 
  DISTRIBUTIONS ON COMMON STOCK. Distributions on the Common Stock into which
Notes have been converted will be taxable as dividends to the extent of the
Company's current and/or accumulated earnings and profits. Such dividends may
be eligible for the dividends-received deduction in the case of U.S. Holders
which are domestic corporations, subject to applicable limitations.
 
  To the extent that the amount of any distribution exceeds the Company's
current and accumulated earnings and profits, the distribution first will be
treated as a tax-free return of capital until the U.S. Holder's adjusted basis
in the Common Stock is reduced to zero, and the balance in excess of adjusted
basis will be taxed as capital gain.
 
  DISPOSITION OF NOTES OR COMMON STOCK. Each U.S. Holder of Notes generally
will recognize gain or loss upon the sale, redemption, repurchase, retirement
or other disposition of those Notes measured by the difference (if any)
between (i) the amount of cash and the fair market value of any property
received (except to the extent that such cash or other property is
attributable to the payment of accrued interest not previously included in
income, which amount will be taxable as ordinary income) and (ii) the holder's
adjusted tax basis in the Notes. Each U.S. Holder of Common Stock into which
the Notes are converted will, in general, recognize gain or loss upon the sale
or other disposition of the Common Stock measured under rules similar to those
described in the preceding sentence in connection with the sale or other
disposition of the Notes. Special rules may apply to redemptions of Common
Stock which may result in different treatment. Any such gain or loss should be
capital gain or loss (except as discussed under "--Market Discount" above),
and would be long-term capital gain or loss if the holding period of the Note
and/or the Common Stock was more than one year. Under the Taxpayer Relief Act
of 1997, the maximum capital gains rate for individuals on gain on certain
assets which are sold after July 28, 1997 and which are held for more than
eighteen months is reduced to 20%. Each U.S. Holder of the Notes who is an
individual should consult the holder's tax advisor to determine the
application of this legislation to the holder.
 
  BACKUP WITHHOLDING. A U.S. Holder of Notes or Common Stock will be subject
to back-up withholding at a rate of 31% with respect to certain "reportable
payments," including interest payments, dividend payments and, under certain
circumstances, principal payments on the Notes unless the holder provides a
social security number or other taxpayer identification number in the manner
prescribed by the IRS or otherwise establishes an exemption. Any amount
withheld from a payment to a holder under the back-up withholding rules is
creditable against the holder's federal income tax liability, provided the
required information is furnished to the IRS.
 
  The Company will report to the holders of Notes and Common Stock and to the
IRS the amount of any such reportable payments for each calendar year and the
amount of tax withheld, if any, with respect to such payments.
 
OWNERSHIP BY NON-U.S. HOLDERS
 
  GENERAL. The following discussion applies to a person (a "Non-U.S. Holder")
that is not a U.S. Holder, as above defined, and is limited to items of income
with respect to the Notes and Common Stock, such as interest, dividends, and
gain or loss on disposition, which are not effectively connected with the
conduct by such Non-U.S. Holder of a trade or business within the United
States. Any effectively connected items of income will be subject to the
United States federal income tax that applies to U.S. Holders generally, and
in the case of such a Non-U.S. Holder which is a foreign corporation, such
items will also be subject to branch profits tax at 30% or such lower rate as
may be specified by an applicable income tax treaty. The tax treatment of Non-
U.S. Holders
 
                                      36
<PAGE>
 
may vary depending upon their particular situations. Prospective investors
that will be non-U.S. Holders are urged to consult their tax advisors
regarding the United States federal tax consequences of acquiring, holding and
disposing of Notes and Common Stock, as well as any tax consequences that may
arise under the laws of any foreign, state, local or other taxing
jurisdiction.
 
  INTEREST ON NOTES. Interest paid by the Company to a Non-U.S. Holder will
not be subject to United States federal income or withholding tax if (i) the
Non-U.S. Holder does not actually or constructively own 10% or more of the
total voting power of all voting stock of the Company and is not a controlled
foreign corporation with respect to which the Company is a "related person"
within the meaning of the Code and (ii) the beneficial owner of the Notes (or,
in certain cases, a specified financial institution) certifies, under
penalties of perjury, that the beneficial owner is not a United States person
and provides the beneficial owner's name and address.
 
  GAIN ON DISPOSITION OF NOTES OR COMMON STOCK. A Non-U.S. Holder generally
will not be subject to United States federal income tax on any gain recognized
on a sale, redemption or other disposition of a Note or on a sale or other
disposition of Common Stock unless (i) the Non-U.S. Holder is an individual
who is present in the United States for 183 days or more in the taxable year
of the disposition and certain other requirements are met or (ii) under
certain circumstances which the Company does not expect to apply, the Note or
Common Stock is a "United States real property interest," within the meaning
of section 897 of the Code.
 
  DIVIDENDS ON COMMON STOCK. Dividends paid on shares of Common Stock
generally will be subject to withholding of United States federal income tax
at a 30% rate or such lower rate as may be specified by an applicable income
tax treaty. Under current United States Treasury Regulations and practice,
dividends paid to a shareholder having an address outside the United States
are presumed to be paid to a resident of such country for purposes of
determining the applicability of a tax treaty rate. Under proposed United
States Treasury Regulations, however, which are presently expected to take
effect beginning in 1999, a Non-U.S. Holder of Common Stock that wishes to
claim the benefit of a treaty rate would be required to satisfy applicable
certification and other requirements. A Non-U.S. Holder of Common Stock that
is eligible for a reduced rate of United States withholding tax pursuant to a
tax treaty may obtain a refund of any excess amounts currently withheld by
filing an appropriate claim for refund with the IRS.
 
  FEDERAL ESTATE TAXES. If, at the time of death of a holder who is a
nonresident alien individual, interest on the Notes is not effectively
connected income to such holder and is otherwise exempt from withholding of
United States federal income tax under the rules described above, the Notes
will not be included in the estate of such holder for United States federal
estate tax purposes. Common Stock owned, or treated as owned, by a nonresident
alien individual at the time of death will be included in such holder's gross
estate for United States federal estate tax purposes, unless an applicable
estate tax treaty provides otherwise. The rules for determining whether an
individual is a nonresident alien for federal estate tax purposes are
different from those for determining whether such individual is a nonresident
alien for federal income tax purposes.
 
  INFORMATION REPORTING AND BACK-UP WITHHOLDING. The Company must report
annually to the IRS and to each Non-U.S. Holder the amount of interest and
dividends paid to such holder and the amount of any tax withheld, if any.
These information reporting requirements apply regardless of whether
withholding is required. Copies of the information returns reporting such
interest and dividends and withholding may also be made available to the tax
authorities in the country in which the Non-U.S. Holder resides under the
provisions of an applicable income tax treaty.
 
  Interest on a Note which is paid to a Non-U.S. Holder will be exempt from
back-up withholding if the Non-U.S. Holder has provided a certificate in the
form necessary to establish an exemption from withholding tax. See "--Interest
on Notes." Under current United States Treasury Regulations, dividends which
are paid to a Non-U.S. Holder at an address outside the United States are not
subject to back-up withholding. The payment of proceeds of a sale by a Non-
U.S. Holder of Notes or Common Stock will be subject to back-up withholding if
the sale is made through a United States office of a broker unless the holder
certifies that the holder is not a United States person or otherwise
establishes an exemption. In addition, in certain circumstances the payment of
 
                                      37
<PAGE>
 
proceeds of a sale by a Non-U.S. Holder of Notes or Common Stock will be
subject to information reporting if the sale is made through a foreign office
of a broker.
 
  Back-up withholding is not an additional tax. Any amounts withheld under the
back-up withholding rules may be refunded or credited against the Non-U.S.
Holder's United States federal income tax liability, provided that the
required information is furnished to the IRS.
 
  On April 15, 1996, the IRS issued proposed Treasury Regulations concerning
the withholding of tax and information reporting as to certain amounts paid to
nonresident individuals and foreign corporations. The proposed Treasury
Regulations would, among other changes, eliminate the presumption under
current regulations with respect to dividends paid to shareholders having
addresses outside the United States. See "--Dividends on Common Stock." It is
presently expected that the proposed Treasury Regulations will take effect
beginning in 1999. Prospective Note purchasers should consult their tax
advisors concerning the potential effect of such regulations to them with
respect to their ownership of the Notes and the Common Stock.
 
                                      38
<PAGE>
 
                                 UNDERWRITING
 
  Under the terms and subject to the conditions contained in the Underwriting
Agreement dated the date hereof (the "Underwriting Agreement"), each of the
underwriters named below (the "Underwriters"), has severally agreed to
purchase from the Company the principal amount of Notes set forth opposite the
name of such Underwriter below:
 
<TABLE>
<CAPTION>
                                                                    PRINCIPAL
                                                                    AMOUNT OF
      UNDERWRITERS                                                    NOTES
      ------------                                                 ------------
      <S>                                                          <C>
      Smith Barney Inc............................................ $
      Merrill Lynch, Pierce, Fenner & Smith
               Incorporated.......................................
      Alex. Brown & Sons Incorporated.............................
      Donaldson, Lufkin & Jenrette Securities Corporation.........
                                                                   ------------
        Total..................................................... $150,000,000
                                                                   ============
</TABLE>
 
  The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the Notes offered hereby are
subject to the approval of certain legal matters by counsel and to certain
other conditions. The Underwriters will be obligated to take and pay for all
of the Notes offered hereby (other than those covered by the over-allotment
option described below) if any of such Notes are purchased.
 
  The Underwriters initially propose to offer part of the Notes offered hereby
directly to the public at the public offering price set forth on the cover
page of this Prospectus and part of the Notes offered hereby to certain
dealers at a price which represents a concession not in excess of   % of the
principal amount per Note under the price to public. The Underwriters may
allow, and such dealers may reallow, a concession not in excess of   % of the
principal amount per Note to certain other dealers. After the Offering, the
public offering price and such concessions may be changed by the Underwriters.
 
  The Company has granted the Underwriters an option, exercisable for 30 days
from the date of this Prospectus, to purchase up to $22,500,000 principal
amount of additional Notes at the public offering price set forth on the cover
page hereof less underwriting discounts and commissions. The Underwriters may
exercise such option to purchase additional Notes solely for the purpose of
covering over-allotments, if any, incurred in connection with the sales of the
Notes offered hereby. To the extent such option is exercised, each Underwriter
will become obligated, subject to certain conditions, to purchase
approximately the same percentage of such additional Notes as the principal
amount of Notes set forth opposite such Underwriter's name in the preceding
Underwriters table bears to the total principal amount of Notes in such table.
 
  The Company and its directors and executive officers have agreed that, for a
period of 90 days from the date of this Prospectus, they will not, without the
prior written consent of Smith Barney Inc., offer, sell, contract to sell, or
otherwise dispose of, any shares of Common Stock (or any securities
convertible into or exercisable or exchangeable for, Common Stock), or grant
any options or warrants to purchase Common Stock, except in certain
circumstances.
 
  In connection with the Offering and in compliance with applicable law, the
Underwriters may engage in transactions which stabilize or maintain the market
price of the Notes, the Common Stock, or both at levels above those which
might otherwise prevail in the open market. Specifically, the Underwriters may
over-allot in connection with the Offering creating a short position in the
Notes for their own account. For the purposes of covering a syndicate short
position or stabilizing the price of the Notes, the Underwriters may place
bids for the Notes, the Common Stock, or both or effect purchases of the
Notes, the Common Stock, or both in the open market. A syndicate short
position may also be covered by exercise of the over-allotment option
described above. Finally, the Underwriters may impose a penalty bid on certain
Underwriters and dealers. This means that the
 
                                      39
<PAGE>
 
underwriting syndicate may reclaim selling concessions allowed to an
Underwriter or a dealer for distributing the Notes in the Offering if the
syndicate repurchases previously distributed Notes in transactions to cover
syndicate short positions, in stabilization transactions or otherwise. The
Underwriters are not required to engage in any of these activities and any
such activities, if commenced, may be discontinued at any time.
 
  Smith Barney Inc. has from time to time performed various investment banking
services for the Company and has received customary fees in respect of such
services.
 
  The Company and the Underwriters have agreed to indemnify each other against
certain liabilities, including liabilities under the Securities Act.
 
  The Company will apply for listing of the Notes on the NYSE. The Company has
been advised by the Underwriters that they currently intend to make a market
in the Notes. However, such entities are not obligated to do so, and any
market making may be discontinued at any time without any notice. There can be
no assurance as to whether an active trading market for the Notes will
develop.
 
                                 LEGAL MATTERS
 
  The validity of the Notes offered hereby will be passed upon for the Company
by Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P., Houston, Texas. Certain
matters relating to United States federal income tax considerations will also
be passed upon for the Company by Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.
Certain legal matters will be passed upon for the Underwriters by Baker &
Botts, L.L.P., Houston, Texas.
 
                                    EXPERTS
 
  The consolidated financial statements of the Company included in the
Company's Annual Report on Form 10-K, as amended by Form 10-K/A, for the
fiscal year ended March 29, 1997 have been audited by Grant Thornton LLP,
independent certified public accountants, as indicated in its report thereto
and are included herein in reliance upon the authority of such firm as experts
in accounting and auditing.
 
                             AVAILABLE INFORMATION
 
  The Company is subject to the information requirements of the Exchange Act,
and in accordance therewith, files reports, proxy statements, and other
information with the Securities and Exchange Commission ("SEC"). The reports,
proxy statements, and other information filed by the Company with the SEC can
be inspected and copied at the public reference facilities maintained by the
SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the following regional offices of the SEC: New York Regional
Office, Seven World Trade Center, Suite 1300, New York, New York 10048, and
Chicago Regional Office, Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material may be obtained from the
Public Reference Section of the SEC, 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates. The SEC also maintains an Internet web site
(http://www.sec.gov) that contains reports, proxy statements, and other
information filed electronically by the Company with the SEC. In addition, the
Company's Common Stock is listed on the NYSE and reports, proxy statements and
other information concerning the Company described above may be inspected at
the offices of the NYSE at 20 Broad Street, New York, New York 10005.
 
  The Company has filed with the SEC a registration statement on Form S-3 (the
"Registration Statement") under the Securities Act with respect to the Notes
offered hereby. This Prospectus does not contain all the information set forth
in the Registration Statement and the exhibits and schedules thereto. For
further information with respect to the Company and the Notes, reference is
made to the Registration Statement and the exhibits and schedules filed as a
part thereof. Statements made in this Prospectus as to the contents of any
contract or any other document referred to are not necessarily complete, and,
in each instance, reference is made to the copy of such contract or document
filed as an exhibit to the Registration Statement, each such statement being
qualified
 
                                      40
<PAGE>
 
in all respects by such reference to such exhibit. The Registration Statement,
including exhibits and schedules thereto, may be inspected without charge at
the public reference facilities maintained by the SEC at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at the SEC's New York
Regional Office, Seven World Trade Center, Suite 1300, New York, New York
10048, and at the SEC's Chicago Regional Office, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60621. Copies of the Registration Statement and
the exhibits and schedules thereto may be obtained from the SEC at such
offices upon payment of the charges prescribed by the SEC.
 
                INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
 
  The following documents, filed by the Company with the SEC under the
Exchange Act, are incorporated in this Prospectus by reference:
 
    (a) The Company's Annual Report on Form 10-K, as amended by Form 10-K/A,
  for the fiscal year ended March 29, 1997;
 
    (b) The Company's Quarterly Report on Form 10-Q for the fiscal quarter
  ended June 28, 1997;
 
    (c) The description of the Company's Common Stock contained in a
  registration statement on Form 8-A filed on May 20, 1986 under Section 12
  of the Exchange Act; and
 
    (d) The description of the Rights contained in a registration statement
  on Form 8-A filed on June 18, 1990 under Section 12 of the Exchange Act.
 
  All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the Offering will be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing
of such documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein will be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or
is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded will not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
 
  The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, on the written or oral
request of any such person, a copy of any or all of the documents incorporated
herein by reference (other than exhibits to such documents which are not
specifically incorporated by reference in such documents). Requests for such
copies should be directed to Mr. Stephen J. Chapko, Secretary, at the
Company's principal executive offices located at 7433 Harwin Drive, Houston,
Texas 77036; telephone number (713) 780-7770.
 
                                      41
<PAGE>
 
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
<TABLE>
<CAPTION>
                                                                           PAGE
                                                                           ----
<S>                                                                        <C>
Report of Independent Certified Public Accountants.......................  F-2
Consolidated Balance Sheets--March 30, 1996, March 29, 1997 and June 28,
 1997....................................................................  F-3
Consolidated Statements of Earnings for the Fiscal Years Ended April 1,
 1995, March 30, 1996 and March 29, 1997 and for the Thirteen Weeks Ended
 June 29, 1996 and June 28, 1997.........................................  F-5
Consolidated Statements of Cash Flows for the Fiscal Years Ended April 1,
 1995, March 30, 1996 and March 29, 1997 and for the Thirteen Weeks Ended
 June 29, 1996 and June 28, 1997.........................................  F-6
Consolidated Statement of Stockholders' Equity for the Fiscal Years Ended
 April 1, 1995, March 30, 1996 and March 29, 1997 and for the Thirteen 
 Weeks Ended June 28, 1997...............................................  F-7
Notes to Consolidated Financial Statements...............................  F-8
</TABLE>
 
                                      F-1
<PAGE>
 
              REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
 
Board of Directors and Stockholders
Kent Electronics Corporation
 
  We have audited the consolidated balance sheets of Kent Electronics
Corporation and Subsidiaries as of March 29, 1997 and March 30, 1996, and the
related consolidated statements of earnings, cash flows and stockholders'
equity for each of the three years in the period ended March 29, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
 
  We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Kent
Electronics Corporation and Subsidiaries as of March 29, 1997 and March 30,
1996, and the consolidated results of their operations and their cash flows
for each of the three years in the period ended March 29, 1997, in conformity
with generally accepted accounting principles.
 
                                          GRANT THORNTON LLP
 
Houston, Texas
May 5, 1997
 
                                      F-2
<PAGE>
 
                 KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
 
                          CONSOLIDATED BALANCE SHEETS
 
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                MARCH 30,  MARCH 29,   JUNE 28,
                    ASSETS                        1996       1997        1997
                    ------                      ---------  ---------  -----------
                                                                      (UNAUDITED)
<S>                                             <C>        <C>        <C>
CURRENT ASSETS
  Cash and cash equivalents (including
   temporary investments of $75,552 at March
   30, 1996, $28,728 at March 29, 1997 and
   $26,502 at June 28, 1997)................... $ 73,431   $ 25,050    $ 21,035
  Trading securities, net......................   38,747         --          --
  Accounts receivable, net.....................   60,210     88,835      92,476
  Inventories
    Materials and purchased products...........   62,177     91,100     101,868
    Work in process............................    3,414      3,394       5,268
                                                --------   --------    --------
                                                  65,591     94,494     107,136
  Other........................................    4,551      4,023       3,974
                                                --------   --------    --------
      Total current assets.....................  242,530    212,402     224,621
PROPERTY AND EQUIPMENT
  Land.........................................    7,422      7,439       7,439
  Buildings....................................   18,590     38,176      41,543
  Equipment, furniture and fixtures............   36,837     68,247      73,646
  Leasehold improvements.......................    2,392      2,543       2,574
                                                --------   --------    --------
                                                  65,241    116,405     125,202
    Less accumulated depreciation and
     amortization..............................  (18,358)   (25,515)    (28,030)
                                                --------   --------    --------
                                                  46,883     90,890      97,172
DEFERRED INCOME TAXES..........................    1,315      1,280       1,255
OTHER ASSETS...................................    1,644      4,618       4,603
COST IN EXCESS OF NET ASSETS ACQUIRED, less
 accumulated amortization of $1,994 at March
 30, 1996, $2,359 at March 29, 1997 and $2,508
 at June 28, 1997..............................   12,802     16,404      16,255
                                                --------   --------    --------
                                                $305,174   $325,594    $343,906
                                                ========   ========    ========
</TABLE>
 
                                      F-3
<PAGE>
 
                 KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
 
                          CONSOLIDATED BALANCE SHEETS
 
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 
<TABLE>
<CAPTION>
                                                MARCH 30, MARCH 29,   JUNE 28,
     LIABILITIES AND STOCKHOLDERS' EQUITY         1996      1997        1997
     ------------------------------------       --------- ---------  -----------
                                                                     (UNAUDITED)
<S>                                             <C>       <C>        <C>
CURRENT LIABILITIES
  Notes payable and current portion of long-
   term debt................................... $  9,740  $     --    $     --
  Accounts payable.............................   38,650    42,317      46,664
  Accrued compensation.........................   10,342     8,123       6,941
  Other accrued liabilities....................    5,750     8,051       9,696
  Income taxes.................................    5,290     3,027       5,840
                                                --------  --------    --------
    Total current liabilities..................   69,772    61,518      69,141
LONG-TERM DEBT, less current portion...........    1,258        --          --
LONG-TERM LIABILITIES..........................      976     1,709       1,993
MANDATORILY REDEEMABLE PREFERRED STOCK.........    2,200        --          --
COMMITMENTS AND CONTINGENCIES..................       --        --          --
STOCKHOLDERS' EQUITY
  Preferred stock, $1 par value per share;
   authorized 2,000 shares; none issued........       --        --          --
  Common stock, no par value; authorized 60,000
   shares; 26,027 shares issued and outstanding
   at March 30, 1996; 26,302 shares issued and
   26,252 shares outstanding at March 29, 1997;
   26,314 shares issued and 26,264 shares
   outstanding at June 28, 1997................   38,357    41,348      42,852
  Additional paid-in capital...................  112,702   116,522     116,648
  Retained earnings............................   79,909   105,474     114,249
                                                --------  --------    --------
                                                 230,968   263,344     273,749
  Less common stock in treasury--at cost, 50
   shares at March 29, 1997 and June 28, 1997..       --      (977)       (977)
                                                --------  --------    --------
                                                 230,968   262,367     272,772
                                                --------  --------    --------
                                                $305,174  $325,594    $343,906
                                                ========  ========    ========
</TABLE>
 
 
        The accompanying notes are an integral part of these statements.
 
                                      F-4
<PAGE>
 
                 KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
 
                      CONSOLIDATED STATEMENTS OF EARNINGS
 
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 
<TABLE>
<CAPTION>
                                                                THIRTEEN WEEKS
                                    FISCAL YEARS ENDED               ENDED
                               ------------------------------  ------------------
                               APRIL 1,  MARCH 30,  MARCH 29,  JUNE 29,  JUNE 28,
                                 1995      1996       1997       1996      1997
                               --------  ---------  ---------  --------  --------
                                                                  (UNAUDITED)
<S>                            <C>       <C>        <C>        <C>       <C>
Net sales....................  $279,676  $425,810   $516,757   $125,144  $152,080
Cost of sales................   206,935   313,643    396,054     93,238   117,221
                               --------  --------   --------   --------  --------
  Gross profit...............    72,741   112,167    120,703     31,906    34,859
Selling, general and
 administrative expenses.....    50,028    66,106     73,607     17,613    20,780
Merger and integration costs.        --        --      5,500         --        --
                               --------  --------   --------   --------  --------
  Operating profit...........    22,713    46,061     41,596     14,293    14,079
Other income (expense)
  Interest expense...........      (340)     (898)    (1,192)      (304)       (7)
  Other--net (principally
   interest and dividend
   income)...................     1,138     3,932      4,696      1,567       425
                               --------  --------   --------   --------  --------
    Earnings before income
     taxes...................    23,511    49,095     45,100     15,556    14,497
Income taxes.................     8,910    19,303     17,479      6,125     5,722
                               --------  --------   --------   --------  --------
    NET EARNINGS.............  $ 14,601  $ 29,792   $ 27,621   $  9,431  $  8,775
                               ========  ========   ========   ========  ========
Earnings per share...........  $   0.68  $   1.21   $   1.00   $   0.34  $   0.32
                               ========  ========   ========   ========  ========
Weighted average shares......    21,475    24,696     27,551     27,592    27,762
                               ========  ========   ========   ========  ========
</TABLE>
 
 
 
        The accompanying notes are an integral part of these statements.
 
                                      F-5
<PAGE>
 
                 KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                THIRTEEN WEEKS
                                    FISCAL YEARS ENDED               ENDED
                               ------------------------------  ------------------
                               APRIL 1,  MARCH 30,  MARCH 29,  JUNE 29,  JUNE 28,
                                 1995      1996       1997       1996      1997
                               --------  ---------  ---------  --------  --------
                                                                  (UNAUDITED)
<S>                            <C>       <C>        <C>        <C>       <C>
Cash flows from operating
 activities
 Net earnings................  $ 14,601  $ 29,792   $ 27,621   $  9,431  $  8,775
 Adjustments to reconcile net
  earnings to net cash
  provided by operating
  activities
  Depreciation and
   amortization..............     4,070     4,619      7,529      1,547     2,671
  Provision for losses on
   accounts receivable.......       171       249        409         38        81
  (Gain) loss on sale of
   property and equipment....        27        40         (2)        --         4
  Stock option expense.......       871     1,116        540        152       126
  (Gain) loss on sale of
   trading securities........       225       (45)      (169)        50        --
  Net sales (purchases) of
   trading securities........    (1,873)  (21,869)    38,916     11,870        --
  Change in assets and
   liabilities, net of
   effects from the
   acquisition accounted for
   as a purchase
  Increase in accounts
   receivable................   (10,180)  (22,474)   (26,828)   (10,259)   (3,722)
  Increase in inventories....   (14,878)  (23,758)   (23,904)    (4,254)  (12,642)
  (Increase) decrease in
   other.....................      (748)   (1,635)       507        (82)       49
  (Increase) decrease in
   deferred income taxes.....       459      (504)        89         79        25
  (Increase) decrease in
   other assets..............      (467)     (585)    (3,013)        22        15
  Increase (decrease) in
   accounts payable..........     1,623    19,709        699     (2,957)    4,347
  Increase (decrease) in
   accrued compensation......     2,184     5,534     (2,238)    (5,838)   (1,182)
  Increase in other accrued
   liabilities...............     1,444     2,136      2,419      1,646     1,645
  Increase (decrease) in
   income taxes..............       685     3,549     (2,230)     1,187     2,813
  Increase in long-term
   liabilities...............       281       695        733        539       284
                               --------  --------   --------   --------  --------
   Net cash provided (used)
    by operating activities..    (1,505)   (3,431)    21,078      3,171     3,289
Cash flows from investing
 activities
 Capital expenditures........   (11,135)  (22,125)   (50,816)   (14,658)   (8,813)
 Acquisition accounted for as
  a purchase.................        --        --     (7,000)        --        --
 Proceeds from related party
  receivable of pooled
  company....................       124        --         --         --        --
 Proceeds from sale of
  property and equipment.....        33        68         32         --         5
                               --------  --------   --------   --------  --------
   Net cash used by investing
    activities...............   (10,978)  (22,057)   (57,784)   (14,658)   (8,808)
Cash flows from financing
 activities
 Net (payments) borrowings
  under line of credit
  agreements of pooled
  companies..................      (147)    6,606    (11,550)     3,427        --
 Proceeds from issuance of
  long-term debt of pooled
  company....................     1,243        --         --         --        --
 Payment of long-term debt of
  pooled companies...........       (19)      (15)    (1,254)        (5)       --
 Net payments to shareholder
  of pooled company..........       (69)      (61)        --         --        --
 (Redemption of) proceeds
  from issuance of
  mandatorily redeemable
  preferred stock of pooled
  company....................     2,200        --     (2,200)        --        --
 Proceeds from issuance of
  convertible preferred stock
  of pooled company..........        --     1,000         --         --        --
 Proceeds from sale of stock
  warrants of pooled company.         7        --         --         --        --
 Issuance of common stock....     2,497    86,281      3,458        106       114
 Payment for fractional
  shares.....................       (16)       --         --         --        --
 Purchase of treasury stock..        --        --       (977)        --        --
 Tax effect of common stock
  issued upon exercise of
  employee stock options.....       514     1,137      1,154      1,406     1,390
 Distribution to shareholder
  of pooled company..........      (594)     (582)      (650)      (345)       --
                               --------  --------   --------   --------  --------
   Net cash (used) provided
    by financing activities..     5,616    94,366    (12,019)     4,589     1,504
                               --------  --------   --------   --------  --------
Net (decrease) increase in
 cash........................    (6,867)   68,878    (48,725)    (6,898)   (4,015)
Adjustment for change in
 pooled companies' fiscal
 year ends...................        --        --        344        344        --
Cash and cash equivalents at
 beginning of year...........    11,420     4,553     73,431     73,431    25,050
                               --------  --------   --------   --------  --------
Cash and cash equivalents at
 end of year.................  $  4,553  $ 73,431   $ 25,050   $ 66,877  $ 21,035
                               ========  ========   ========   ========  ========
Supplemental disclosures of
 cash flow information:
 Cash paid during the year
  for:
  Interest...................  $    302  $    893   $  1,285   $    296  $     --
  Income taxes...............  $  7,864  $ 16,537   $ 15,054   $  3,582  $  1,675
</TABLE>
 
        The accompanying notes are an integral part of these statements.
 
                                      F-6
<PAGE>
 
                 KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
 
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
 
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                    COMMON STOCK   ADDITIONAL
                                   ---------------  PAID-IN   RETAINED  TREASURY
                                   SHARES  AMOUNT   CAPITAL   EARNINGS   STOCK
                                   ------  ------- ---------- --------  --------
<S>                                <C>     <C>     <C>        <C>       <C>
Balance at April 2, 1994, as
 previously reported.............  19,375  $32,703  $ 24,359  $ 35,457   $  --
Adjustment for pooling of
 interests.......................   1,042       10       581     1,235      --
                                   ------  -------  --------  --------   -----
As restated......................  20,417   32,713    24,940    36,692      --
Issuance of common stock and
 warrants of pooled company......     657        7       970        --      --
Common stock issued upon exercise
 of employee stock options,
 including tax effect............     235    2,040        --        --      --
Common stock split for fractional
 shares..........................      (1)      --       (16)       --      --
Amortization of unearned
 compensation related to stock
 option plans....................      --       --       871        --      --
Distribution to shareholder of
 pooled company..................      --       --        --      (594)     --
Net earnings for the year........      --       --        --    14,601      --
                                   ------  -------  --------  --------   -----
Balance at April 1, 1995.........  21,308   34,760    26,765    50,699      --
Net proceeds from public stock
 offering........................   4,000       20    83,826        --      --
Issuance of common stock of
 pooled company..................     391        4       996        --      --
Common stock issued upon exercise
 of employee stock options,
 including tax effect............     328    3,572        --        --      --
Common stock split for fractional
 shares..........................      --        1        (1)       --      --
Amortization of unearned
 compensation related to stock
 option plans....................      --       --     1,116        --      --
Distribution to shareholder of
 pooled company..................      --       --        --      (582)     --
Net earnings for the year........      --       --        --    29,792      --
                                   ------  -------  --------  --------   -----
Balance at March 30, 1996........  26,027   38,357   112,702    79,909      --
Issuance of common stock of
 pooled company..................      19       --        47        --      --
Common stock issued under
 employee bonus and upon exercise
 of employee stock options,
 including tax effect............     256    2,991     1,574        --      --
Amortization of unearned
 compensation related to stock
 option plans....................      --       --       540        --      --
Purchase of treasury stock.......     (50)      --        --        --    (977)
Reclassification of undistributed
 subchapter "S" earnings of
 pooled company..................      --       --     1,659    (1,659)     --
Adjustment for change in fiscal
 year of pooled company..........      --       --        --       253      --
Distribution to shareholder of
 pooled company..................      --       --        --      (650)     --
Net earnings for the year........      --       --        --    27,621      --
                                   ------  -------  --------  --------   -----
Balance at March 29, 1997........  26,252   41,348   116,522   105,474    (977)
Common stock issued upon exercise
 of employee stock options,
 including tax effect
 (unaudited).....................      12    1,504        --        --      --
Amortization of unearned
 compensation related to stock
 option plans (unaudited)........      --       --       126        --      --
Net earnings for the period
 (unaudited).....................      --       --        --     8,775      --
                                   ------  -------  --------  --------   -----
Balance at June 28, 1997
 (unaudited).....................  26,264  $42,852  $116,648  $114,249   $(977)
                                   ======  =======  ========  ========   =====
</TABLE>
 
         The accompanying notes are an integral part of this statement.
 
                                      F-7
<PAGE>
 
                 KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
 
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
         INFORMATION AS OF JUNE 28, 1997 AND RELATING TO THE THIRTEEN
           WEEKS ENDED JUNE 29, 1996 AND JUNE 28, 1997 IS UNAUDITED
 
                                (IN THOUSANDS)
 
          DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
 
DESCRIPTION OF BUSINESS
 
  Kent Electronics Corporation (the "Company") is a national specialty
distributor of electronic products and a manufacturer of custom-made
electronic assemblies. The Company distributes electronic connectors,
electronic wire and cable, premise wiring products used in local area networks
and wide area networks, and other passive and electromechanical products and
interconnect assemblies used in assembling and manufacturing electronic
equipment. The Company's contract manufacturing services include printed
circuit board assembly, cable and harness assembly, sheet metal fabrication,
plastic injection, battery power packs and final system integration. The
Company's customers are primarily industrial users and original equipment
manufacturers.
 
BASIS OF PRESENTATION
 
  In 1997, the Company acquired Futronix Corporation ("Futronix") and Wire &
Cable Specialties Corporation ("Wire & Cable") in a transaction accounted for
as a pooling of interests. Accordingly, the consolidated financial statements
for 1996 and 1995 have been restated to include the operations of Futronix and
Wire & Cable.
 
PRINCIPLES OF CONSOLIDATION
 
  Kent Electronics Corporation consolidates its accounts with those of its
wholly owned subsidiaries. All material intercompany transactions have been
eliminated.
 
FISCAL YEAR
 
  The Company's fiscal year ends on the Saturday closest to the end of March.
The fiscal years ended April 1, 1995, March 30, 1996 and March 29, 1997 all
consisted of 52 weeks.
 
USE OF ESTIMATES
 
  In preparing the financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and revenues and expenses during the reporting period. Actual
results could differ from those estimates.
 
CASH AND CASH EQUIVALENTS
 
  The Company's presentation of cash includes cash equivalents. Cash
equivalents are defined as short-term investments with maturity dates at
purchase of ninety days or less.
 
  Securities purchased under agreements to resell (reverse repurchase
agreements) result from transactions that are collateralized by negotiable
securities and are carried at the amounts at which the securities will
subsequently be resold. It is the policy of the Company not to take possession
of securities purchased under agreements to resell. At March 29, 1997 and June
28, 1997, agreements to resell securities in the amount of $7,365 and $18,220,
respectively, with a two-day maturity were outstanding.
 
                                      F-8
<PAGE>
 
                 KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
         INFORMATION AS OF JUNE 28, 1997 AND RELATING TO THE THIRTEEN
           WEEKS ENDED JUNE 29, 1996 AND JUNE 28, 1997 IS UNAUDITED
 
                                (IN THOUSANDS)
 
  Temporary investments may be greater than the cash and cash equivalents
balance because they may be offset by individual bank accounts with a book
overdraft position within the same bank where multiple accounts are
maintained.
 
TRADING SECURITIES
 
  The Company has classified all investment securities as trading securities
which are measured at fair value in the financial statements with unrealized
gains and losses included in earnings. Realized and unrealized gains and
losses are reflected in the following table:
 
<TABLE>
<CAPTION>
                                                                     FISCAL
                                                                     YEARS
                                                                     ENDED
                                                                   -----------
                                                                   1996  1997
                                                                   ----  -----
      <S>                                                          <C>   <C>
      Net unrealized loss on trading securities at beginning of
       year....................................................... $302  $ 257
      Decrease in unrealized loss included in earnings during the
       year.......................................................  (45)  (169)
      Realized loss from sale of trading securities...............   --    (88)
                                                                   ----  -----
      Net unrealized loss on trading securities at end of year.... $257  $  --
                                                                   ====  =====
</TABLE>
 
ACCOUNTS RECEIVABLE
 
  The Company's allowance for doubtful accounts was $1,048 at March 30, 1996,
$1,256 at March 29, 1997 and $1,337 at June 28, 1997.
 
INVENTORIES
 
  Inventories are valued at the lower of cost (first-in, first-out) or market.
 
PROPERTY AND EQUIPMENT
 
  Property and equipment are stated at cost. Depreciation and amortization are
provided using the straight-line method over the estimated useful lives of the
related assets. Leasehold improvements are amortized over the life of the
lease or the service life of the improvements, whichever is shorter.
 
OTHER ASSETS
 
  Other assets at March 29, 1997 and June 28, 1997 include $1,804 and $1,834,
respectively, of receivables from certain officers and directors of the
Company.
 
COSTS IN EXCESS OF NET ASSETS ACQUIRED
 
  Costs in excess of net assets acquired represents the excess of the purchase
price over the value of net assets acquired and is being amortized on a
straight-line basis over 40 years. Management evaluates these costs for
impairment whenever events or changes in circumstances indicate that the
carrying amounts may not be recoverable. Impairment would be recognized if the
carrying amounts of such costs cannot be recovered by the net cash flows they
will generate.
 
                                      F-9
<PAGE>
 
                 KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
         INFORMATION AS OF JUNE 28, 1997 AND RELATING TO THE THIRTEEN
           WEEKS ENDED JUNE 29, 1996 AND JUNE 28, 1997 IS UNAUDITED
 
                                (IN THOUSANDS)
 
REVENUE RECOGNITION
 
  Revenue is recognized upon shipment of merchandise to customers.
 
FAIR VALUE OF FINANCIAL INSTRUMENTS
 
  The carrying amount of cash and cash equivalents, accounts receivable,
accounts payable, accrued expenses and amounts included in other assets and
liabilities meeting the definition of a financial instrument approximates fair
value.
 
NEW PRONOUNCEMENTS
 
  The Financial Accounting Standards Board (FASB) has issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share," which is
effective for financial statements issued after December 15, 1997. Early
adoption of the new standard is not permitted. The new standard eliminates
primary and fully diluted earnings per share and requires presentation of
basic and diluted earnings per share together with disclosure of how the per
share amounts were computed. The effect of adopting this new standard has not
been determined.
 
INTERIM FINANCIAL INFORMATION
 
  Financial information as of June 28, 1997 and for the thirteen weeks ended
June 29, 1996 and June 28, 1997, included herein, is unaudited. Such
information includes all adjustments (consisting only of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
statement of the financial information for the interim periods. The results of
operations for the thirteen weeks ended June 28, 1997 are not necessarily
indicative of the results for the full fiscal year.
 
                             BUSINESS ACQUISITIONS
 
FUTRONIX AND WIRE & CABLE
 
  In January 1997, the Company acquired all the outstanding equity instruments
of Futronix and Wire & Cable, both privately owned distributors of specialty
wire and cable, in exchange for 2,109 shares of the Company's common stock in
a merger transaction accounted for as a pooling of interests.
 
  Prior to the merger, Futronix and Wire & Cable used a calendar year end for
financial reporting purposes. The Futronix and Wire & Cable balance sheets and
results of operations for the years ended December 31, 1994 and 1995 have been
combined with those of the Company for the years ended April 1, 1995 and March
30, 1996, respectively. The Futronix and Wire & Cable balance sheet and
results of operations for the 52 weeks ending March 29, 1997 have been
included in the consolidated financial statements for fiscal 1997. During the
three-month period ended March 30, 1996, Futronix and Wire & Cable had net
sales of $16,177, net earnings of $372 and shareholder distributions of $119.
In order to reflect the change in fiscal year-ends, retained earnings for
these amounts has been increased by combined net earnings and decreased by
shareholder distributions.
 
                                     F-10
<PAGE>
 
                 KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
         INFORMATION AS OF JUNE 28, 1997 AND RELATING TO THE THIRTEEN
           WEEKS ENDED JUNE 29, 1996 AND JUNE 28, 1997 IS UNAUDITED
 
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 
  Combined and separate results of Kent, Futronix and Wire & Cable during the
periods preceding the merger were as follows:
 
<TABLE>
<CAPTION>
                                                   FISCAL   FISCAL
                                                    YEAR     YEAR   THIRTY-NINE
                                                   ENDED    ENDED   WEEKS ENDED
                                                  APRIL 1,  MARCH   DECEMBER 28,
                                                    1995   30, 1996     1996
                                                  -------- -------- ------------
                                                                    (UNAUDITED)
<S>                                               <C>      <C>      <C>
Net sales
  Kent........................................... $253,484 $372,019   $314,906
  Futronix.......................................    5,950   29,280     40,679
  Wire & Cable...................................   20,242   24,511     20,000
                                                  -------- --------   --------
    Combined..................................... $279,676 $425,810   $375,585
                                                  ======== ========   ========
Net earnings
  Kent........................................... $ 13,386 $ 27,975   $ 22,136
  Futronix.......................................      301      614        278
  Wire & Cable...................................      914    1,203        806
                                                  -------- --------   --------
    Combined..................................... $ 14,601 $ 29,792   $ 23,220
                                                  ======== ========   ========
</TABLE>
 
  In the fourth quarter of 1997, the Company recorded costs of $5,500
associated with the merger and integration of Futronix and Wire & Cable.
 
OBLIGATIONS OF FUTRONIX AND WIRE & CABLE
 
  Included in the accompanying balance sheet at March 30, 1996, are notes
payable to banks of $9,728 with interest rates approximating prime plus 1/2%
and long-term debt payable to shareholders of $1,270 with interest at 7%.
 
MANDATORILY REDEEMABLE PREFERRED STOCK OF FUTRONIX
 
  Included in the accompanying balance sheet at March 30, 1996, are 2,200
shares of issued and outstanding Futronix non-dividend paying mandatorily
redeemable preferred stock having a $1 par value and redemption value per
share. The stock was redeemed in 1997 in connection with the merger.
 
EMC DISTRIBUTION DIVISION OF ELECTRONICS MARKETING CORPORATION
 
  In December 1996, the Company acquired certain assets of the EMC
Distribution Division of Electronics Marketing Corporation, a privately owned
Ohio-based specialty distributor of connectors, passive and electromechanical
components, for $7,000 and the assumption of certain liabilities. The
acquisition has been accounted for as a purchase and, accordingly, the
acquired assets and liabilities have been recorded at their estimated fair
values at the date of acquisition. The operating results arising from the
acquisition are included in the consolidated statements of earnings from the
acquisition date. The excess of the purchase price over the value of the
assets acquired is classified in the accompanying balance sheet as cost in
excess of net assets acquired and is being amortized on a straight-line basis
over 40 years. Pro forma financial information is not presented, as the effect
of the acquisition was not significant to the financial statements.
 
                                     F-11
<PAGE>
 
                 KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
         INFORMATION AS OF JUNE 28, 1997 AND RELATING TO THE THIRTEEN
           WEEKS ENDED JUNE 29, 1996 AND JUNE 28, 1997 IS UNAUDITED
 
                                (IN THOUSANDS)
 
                                 INCOME TAXES
 
  The Company accounts for income taxes using the liability method. Under the
liability method, deferred tax assets and liabilities are determined based on
the difference between the financial statement and tax bases of assets and
liabilities as measured by the enacted tax rates which will be in effect when
these differences reverse. Deferred tax expense is the result of changes in
deferred tax assets and liabilities.
 
  The provision for income taxes consisted of the following:
 
<TABLE>
<CAPTION>
                                                               THIRTEEN WEEKS
                                       FISCAL YEARS ENDED           ENDED
                                     ------------------------ -----------------
                                                              JUNE 29, JUNE 28,
                                      1995    1996     1997     1996     1997
                                     ------  -------  ------- -------- --------
<S>                                  <C>     <C>      <C>     <C>      <C>
Current............................. $8,510  $19,934  $16,316  $4,694   $4,307
Tax reduction for exercise of stock
 options credited to stockholders'
 equity.............................    514    1,137    1,154   1,406    1,390
Deferred............................   (114)  (1,768)       9      25       25
                                     ------  -------  -------  ------   ------
                                     $8,910  $19,303  $17,479  $6,125   $5,722
                                     ======  =======  =======  ======   ======
</TABLE>
 
   A reconciliation of income taxes computed at the statutory federal income
tax rate and income taxes reported in the consolidated statements of earnings
follows:
 
<TABLE>
<CAPTION>
                                                               THIRTEEN WEEKS
                                      FISCAL YEARS ENDED            ENDED
                                    ------------------------  -----------------
                                                              JUNE 29, JUNE 28,
                                     1995    1996     1997      1996     1997
                                    ------  -------  -------  -------- --------
<S>                                 <C>     <C>      <C>      <C>      <C>
Tax at statutory rate.............. $8,214  $17,161  $15,785   $5,445   $5,074
Increases (reductions)
  State income taxes, net of
   federal tax effect..............    748    1,687    1,377      700      550
  Pre-acquisition earnings of
   acquired S corporation..........   (311)    (409)    (217)     (81)      --
  Non-deductible merger and
   integration costs...............     --       --      291       --       --
  Other-net........................    259      864      243       61       98
                                    ------  -------  -------   ------   ------
Income taxes as reported........... $8,910  $19,303  $17,479   $6,125   $5,722
                                    ======  =======  =======   ======   ======
</TABLE>
 
                                     F-12
<PAGE>
 
                 KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
         INFORMATION AS OF JUNE 28, 1997 AND RELATING TO THE THIRTEEN
           WEEKS ENDED JUNE 29, 1996 AND JUNE 28, 1997 IS UNAUDITED
 
                                (IN THOUSANDS)
 
  Net deferred tax assets at March 30, 1996 and March 29, 1997 consist of the
following:
 
<TABLE>
<CAPTION>
                                                               1996     1997
                                                              -------  -------
      <S>                                                     <C>      <C>
      Current deferred asset
        Allowance for doubtful accounts...................... $   405  $   493
        Capitalization of additional inventory costs.........     870      805
        Accrued expenses not currently deductible, net of
         reversals...........................................     522      641
        Net operating losses.................................     320      314
        Deferred compensation................................     616       --
        Other................................................     562      399
                                                              -------  -------
                                                              $ 3,295  $ 2,652
                                                              =======  =======
      Long-term deferred asset
        Depreciation......................................... $(2,061) $(2,766)
        Fixed asset bases differences........................     630      450
        Stock compensation...................................   1,291    1,495
        Net operating losses.................................     770      457
        Deferred compensation................................     685    1,644
                                                              -------  -------
                                                              $ 1,315  $ 1,280
                                                              =======  =======
</TABLE>
 
  Acquired net operating losses of approximately $2,201 at March 29, 1997,
expire in various amounts through 2003 and are subject to annual usage
limitations.
 
  The current deferred asset is included in other current assets in the
accompanying balance sheets.
 
                         COMMITMENTS AND CONTINGENCIES
 
  The Company conducts a portion of its operations in leased office,
warehouse, and manufacturing facilities and also leases transportation
equipment. Rent expense for 1995, 1996, and 1997 was approximately $2,234,
$2,877 and $3,512, respectively. For the thirteen weeks ended June 29, 1996
and June 28, 1997, rent expense was approximately $791 and $966, respectively.
 
  As of March 29, 1997, the Company's minimum rental commitments under
noncancelable operating leases were $3,336 in 1998; $2,581 in 1999; $1,805 in
2000; $1,114 in 2001; $744 in 2002; and $748 thereafter.
 
  In June 1997, the Company obtained a $25,000 unsecured line of credit with a
bank. At June 28, 1997, there was no indebtedness outstanding under the line
of credit.
 
  The Company has instituted a self-insurance program for employees' major
medical coverages. Claims under the self-insurance program are insured for
amounts greater than $50 per employee. The aggregate annual self-insured
amount varies based on participant levels and was limited to approximately
$3,000 as of March 29, 1997. Claims are accrued as incurred and the total
expense under the program was approximately $2,121, $2,103 and $2,809 in 1995,
1996 and 1997, respectively. For the thirteen weeks ended June 29, 1996 and
June 28, 1997, total expense under the program was approximately $841 and
$916, respectively.
 
  The Company is engaged in litigation occurring in the normal course of
business. In the opinion of management, based upon advice of counsel, the
ultimate outcome of these lawsuits will not have a material impact on the
Company's consolidated financial statements.
 
                                     F-13
<PAGE>
 
                 KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
         INFORMATION AS OF JUNE 28, 1997 AND RELATING TO THE THIRTEEN
           WEEKS ENDED JUNE 29, 1996 AND JUNE 28, 1997 IS UNAUDITED
 
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 
                           SALES TO MAJOR CUSTOMERS
 
  Sales to Compaq Computer Corporation represented 10.1% and 10.6% of net
sales in 1995 and 1996, respectively. Sales to Applied Materials, Inc.
represented 11.3% of net sales in 1995. No customer constituted 10% or more of
net sales in 1997 and in the thirteen weeks ended June 29, 1996 and June 28,
1997.
 
                             STOCKHOLDERS' EQUITY
 
FAIR PRICE PROVISION
 
  The Company has adopted a fair price provision relating to certain business
combinations. The fair price provision provides that, except in certain
circumstances, a business combination between the Company and an interested
shareholder must be approved by the affirmative vote of the holders of 80% of
the outstanding voting stock, unless certain pricing and procedural
requirements regarding the business combination are satisfied.
 
STOCKHOLDER RIGHTS PLAN
 
  The Company has adopted a stockholder rights plan, declaring a distribution
of one equity purchase right on each outstanding share of the Company's common
stock. Upon the occurrence of certain events, each right would entitle the
holder to purchase, at a price of $40, one one-hundredth of a share of the
Company's Series A Preferred Stock. Additionally, under certain circumstances,
the holder of rights may be entitled to purchase either the Company's common
stock or securities of an acquiring entity at half of market value.
 
STOCK SPLIT
 
  The Company's common stock was split three-for-two to stockholders of record
on February 15, 1995, and was effected as a 50% stock dividend. The Company's
common stock was split two-for-one to stockholders of record on February 15,
1996, and was effected as a 100% stock dividend. All issued and outstanding
shares, stock option data and earnings per share amounts in the consolidated
financial statements have been restated to give effect to the stock splits.
 
                                     F-14
<PAGE>
 
                 KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
         INFORMATION AS OF JUNE 28, 1997 AND RELATING TO THE THIRTEEN
           WEEKS ENDED JUNE 29, 1996 AND JUNE 28, 1997 IS UNAUDITED
 
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 
                                 BENEFIT PLANS
 
STOCK OPTIONS
 
  At March 29, 1997 and June 28, 1997, the Company had nonqualified stock
option plans which allow for the grant of 4,060 and 4,039 common shares for
options, respectively, of which 621 and 512, respectively, are available for
future grants. Options granted under the plans have a maximum term of 15 years
and are exercisable under the terms of the respective option agreements. Under
some plans, options may be granted with exercise prices of less than the
stock's market value at the date of grant. Options on 358, 450 and 1,553
shares were exercisable at April 1, 1995, March 30, 1996 and March 29, 1997
with a weighted average exercise price of $7.27, $7.51 and $7.68,
respectively. A summary of the Company's stock option activity, and related
information follows:
 
<TABLE>
<CAPTION>
                                             FISCAL YEARS ENDED
                             --------------------------------------------------
                                   1995             1996             1997
                             ---------------- ---------------- ----------------
                                     WEIGHTED         WEIGHTED         WEIGHTED
                                     AVERAGE          AVERAGE          AVERAGE
                                     EXERCISE         EXERCISE         EXERCISE
                             OPTIONS  PRICE   OPTIONS  PRICE   OPTIONS  PRICE
                             ------- -------- ------- -------- ------- --------
<S>                          <C>     <C>      <C>     <C>      <C>     <C>
Outstanding at beginning of
 year.......................  2,316   $ 5.30   2,181   $ 5.25   2,570   $ 8.44
Granted.....................    143     7.75     803    17.58   1,144    19.72
Exercised...................   (235)    6.96    (328)    7.58    (208)    8.49
Lapsed/forfeited............    (43)    6.96     (86)   16.09     (71)   17.84
                              -----   ------   -----   ------   -----   ------
Outstanding at end of year..  2,181   $ 5.25   2,570   $ 8.44   3,435   $12.00
                              =====   ======   =====   ======   =====   ======
</TABLE>
 
  The following table summarizes the weighted average fair value per share of
options granted during the year:
 
<TABLE>
<CAPTION>
                                                     FISCAL YEARS ENDED
                                             -----------------------------------
                                                   1996              1997
                                             ----------------- -----------------
                                             WEIGHTED WEIGHTED WEIGHTED WEIGHTED
                                             AVERAGE  AVERAGE  AVERAGE  AVERAGE
                                               FAIR   EXERCISE   FAIR   EXERCISE
                                              VALUE    PRICE    VALUE    PRICE
                                             -------- -------- -------- --------
<S>                                          <C>      <C>      <C>      <C>
Exercise price equals market price..........  $ 4.44   $20.73   $ 5.00   $19.73
Exercise price is below market price........    9.67     7.25    26.11    19.31
</TABLE>
 
  The following table summarizes significant ranges of outstanding and
exercisable options at March 29, 1997:
 
<TABLE>
<CAPTION>
                                                                   OPTIONS
                                       OPTIONS OUTSTANDING       EXERCISABLE
                                    -------------------------- ----------------
                                            WEIGHTED
                                             AVERAGE  WEIGHTED         WEIGHTED
                                            REMAINING AVERAGE          AVERAGE
                                            LIFE (IN  EXERCISE         EXERCISE
RANGE OF EXERCISE PRICES            OPTIONS  YEARS)    PRICE   OPTIONS  PRICE
------------------------            ------- --------- -------- ------- --------
<S>                                 <C>     <C>       <C>      <C>     <C>
$3.63-$5.45........................  1,155    10.76    $ 3.63    855    $ 3.63
$5.46-$6.96........................    467     1.24      6.96    429      6.96
$7.25-$10.88.......................    210    12.49      7.56     23     10.17
$17.00-$25.63......................  1,520     4.51     19.55    176     20.18
$28.75-$32.50......................     83     4.45     29.86     70     29.36
</TABLE>
 
                                     F-15
<PAGE>
 
                 KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
          INFORMATION AS OF JUNE 28, 1997 AND RELATING TO THE THIRTEEN
            WEEKS ENDED JUNE 29, 1996 AND JUNE 28, 1997 IS UNAUDITED
 
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 
  The Company has adopted only the disclosure provisions of Financial
Accounting Standard No. 123, "Accounting for Stock-Based Compensation" (FAS
123). The Company applies APB Opinion No. 25, "Accounting for Stock Issued to
Employees," and related interpretations in accounting for its plans and does
not recognize compensation expense for its stock-based compensation plans other
than for options granted with exercise prices of less than the stock's market
value at the date of grant.
 
  The fair value of options at the date of grant was estimated using the Black-
Scholes option pricing model with the following weighted average assumptions:
 
<TABLE>
<CAPTION>
                                                            FISCAL YEARS ENDED
                                                           ---------------------
                                                              1996       1997
                                                           ---------- ----------
<S>                                                        <C>        <C>
Expected life.............................................  3.1 years  2.3 years
Interest rate.............................................  6.0%       6.3%
Volatility................................................ 26.5%      34.6%
Dividend yield............................................  0.0%       0.0%
</TABLE>
 
  Stock-based compensation costs would have reduced net earnings by
approximately $488 and $1,434 in 1996 and 1997 and $0.02 and $0.05 per share if
the fair values of the options granted in those years had been recognized as
compensation expense over the vesting period of the grant. The pro forma
disclosures only include the effects of options granted in the fiscal years
ended 1996 and 1997.
 
TAX-DEFERRED SAVINGS AND RETIREMENT PLAN AND TRUST
 
  The Company sponsors a Tax-Deferred Savings and Retirement Plan (the Plan)
covering substantially all employees. Under the Plan, a participating employee
may allocate up to 12% of salary, and the Company makes matching contributions
of up to 3% thereof. Additionally, the Company may elect to make additional
contributions at its option. Such contributions accrue to employee accounts
regardless of whether they have elected to participate in the salary deferral
option of the Plan. The Company contributed approximately $639, $618 and $870
to the Plan in fiscal years ended April 1, 1995, March 30, 1996 and March 29,
1997, respectively. The Company contributed approximately $252 and $331 to the
Plan for the thirteen weeks ended June 29, 1996 and June 28, 1997,
respectively.
 
  The Company has deferred compensation plans for management and highly
compensated associates of the Company. Under one plan, a participant may elect
to defer a minimum of 3% of their compensation. The Company has agreed to match
the participant's compensation amount, limited to 50% of the first 6% of
compensation deferred. Participants become vested in the Company matching
contributions at the rate of 10% per plan year or vest fully at age 60. Under
another deferred benefit plan, the participant will receive minimum annual
payments subsequent to retirement of the participant for the greater of 15
years or life.
 
  Under the first plan, the Company has accrued at March 30, 1996, March 29,
1997 and June 28, 1997, approximately $976, $1,703 and $1,987, respectively,
for participant and Company contributions which are recorded as long term
liabilities on the balance sheet. Under the second plan, annual expense will
range from $1,200 to $1,600 through March 31, 2001, based on accruing the
present value of the minimum benefits through the date the participant vests in
the payments.
 
                                      F-16
<PAGE>
 
                 KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
         INFORMATION AS OF JUNE 28, 1997 AND RELATING TO THE THIRTEEN
           WEEKS ENDED JUNE 29, 1996 AND JUNE 28, 1997 IS UNAUDITED
 
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 
                              EARNINGS PER SHARE
 
  Earnings per share are based upon the weighted average number of common
shares outstanding during each year. Options are included in periods where
they have a dilutive effect.
 
                     QUARTERLY FINANCIAL DATA (UNAUDITED)
 
  The following is a summary of unaudited quarterly financial data for fiscal
years 1995, 1996 and 1997:
 
<TABLE>
<CAPTION>
                                              FIRST    SECOND   THIRD    FOURTH
                                             QUARTER  QUARTER  QUARTER  QUARTER
                                             -------- -------- -------- --------
<S>                                          <C>      <C>      <C>      <C>
Year ended April 1, 1995
  Net sales................................. $ 61,516 $ 66,117 $ 71,563 $ 80,480
  Gross profit..............................   16,004   17,204   18,564   20,969
  Net earnings..............................    3,164    3,439    3,774    4,224
  Earnings per share........................      .15      .16      .18      .19
Year ended March 30, 1996
  Net sales................................. $ 87,255 $102,776 $116,064 $119,715
  Gross profit..............................   22,940   27,035   30,673   31,519
  Net earnings..............................    5,254    6,346    8,652    9,540
  Earnings per share........................      .24      .28      .32      .35
Year ended March 29, 1997
  Net sales................................. $125,144 $124,034 $126,407 $141,172
  Gross profit..............................   31,906   28,018   28,840   31,939
  Net earnings..............................    9,431    6,852    6,937    4,401
  Earnings per share........................      .34      .25      .25      .16
</TABLE>
 
                                     F-17
<PAGE>
 
 
                               INSIDE BACK COVER
                                 OF PROSPECTUS
 
                                  [PHOTOGRAPH]
 
Houston distribution center.
 
 
      [PHOTOGRAPH]                [PHOTOGRAPH]             [PHOTOGRAPH]
 
 
 
 Kent Datacomm technical        Futronix Systems'   Kent sales representatives
 support center provides     specialized inventories    undergo continuous
     troubleshooting           supplied by leading           training.
       assistance.               manufacturers.
<PAGE>
 
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
 
  NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHO-
RIZED BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY OF THE NOTES OF-
FERED HEREBY IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAW-
FUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY OFFER OR SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS
PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
 
                                  -----------
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
Prospectus Summary........................................................    3
Risk Factors..............................................................    6
Use of Proceeds...........................................................    9
Price Range of Common Stock...............................................   10
Dividend Policy...........................................................   10
Capitalization............................................................   11
Selected Consolidated Financial Data......................................   12
Management's Discussion and Analysis of Financial Condition and Results of
 Operations...............................................................   13
Business..................................................................   17
Management................................................................   21
Description of Notes......................................................   23
Description of Capital Stock..............................................   33
Certain Federal Income Tax Considerations.................................   35
Underwriting..............................................................   39
Legal Matters.............................................................   40
Experts...................................................................   40
Available Information.....................................................   40
Incorporation of Certain Documents by Reference ..........................   41
Index to Consolidated Financial Statements................................  F-1
</TABLE>
 
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
 
                                  $150,000,000
 
                          KENT ELECTRONICS CORPORATION
 
                            % CONVERTIBLE SUBORDINATED
                                 NOTES DUE 2004
 
                                     [Logo]
 
                                    -------
 
 
                                   PROSPECTUS
 
                                         , 1997
 
                                    -------
 
                               SMITH BARNEY INC.
 
                               ALEX. BROWN & SONS
            INCORPORATED
 
                          DONALDSON, LUFKIN & JENRETTE
      SECURITIES CORPORATION
 
                              MERRILL LYNCH & CO.
 
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
 
                    INFORMATION NOT REQUIRED IN PROSPECTUS
 
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
 
  The estimated expenses payable by the Company in connection with the
offering described in this Registration Statement are as follows:
 
<TABLE>
       <S>                                                              <C>
       SEC registration fee............................................ $52,273
       NYSE listing fee ...............................................       *
       NASD fee........................................................       *
       Blue sky fees and expenses......................................       *
       Printing expenses...............................................       *
       Accounting fees and expenses....................................       *
       Legal fees and expenses.........................................       *
       Transfer agent fees.............................................       *
       Trustee fees and expenses.......................................       *
       Rating agency fees..............................................       *
       Miscellaneous expenses..........................................       *
                                                                        -------
           Total....................................................... $     *
                                                                        =======
</TABLE>
--------
* To be filed by amendment
 
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
 
  Section 6.10 of the Amended and Restated Bylaws of the Company provides for
indemnification of present and former officers and directors of the Company to
the maximum extent permissible under applicable provisions of the Texas
Business Corporation Act and expressly authorizes the Company to purchase
insurance on behalf of its directors, officers and employees. The Company has
purchased a directors and officers liability insurance policy which provides
for insurance of the directors and officers of the Company against certain
liabilities they may incur in their capacities as such.
 
ITEM 16. EXHIBITS.
 
<TABLE>
 <C>   <S>
 1.1** --Form of Underwriting Agreement.
 4.1   --Amended and Restated Articles of Incorporation of Kent Electronics
        Corporation. Incorporated by reference to Exhibit 3.1 to the Company's
        Registration Statement on Form S-3 (Registration No. 333-20265) filed
        with the Securities and Exchange Commission ("SEC") on January 23,
        1997.
 4.2   --Certificate of Designation, Preferences and Rights of Series A
        Preferred Stock. Incorporated by reference to Exhibit 3.3 to the
        Company's Annual Report on Form 10-K for the Fiscal Year Ended March
        30, 1991.
 4.3   --Amended and Restated Bylaws of Kent Electronics Corporation.
        Incorporated by reference to Exhibit 3.5 to the Company's Annual Report
        on Form 10-K for the Fiscal Year Ended March 30, 1996.
 4.4** --Form of Indenture between Kent Electronics Corporation, as issuer, and
        Texas Commerce Bank National Association, as Trustee, including the
        form of Note.
 4.5   --Specimen stock certificate for the Common Stock of Kent Electronics
        Corporation. Incorporated by reference to Exhibit 4.1 to the Company's
        Registration Statement on Form S-2 (Registration No. 33-40066) filed
        with the SEC on April 19, 1991.
 4.6   --Rights Agreement dated as of May 14, 1990 between Kent Electronics
        Corporation and Ameritrust Company National Association. Incorporated
        by reference to Exhibit 4 to the Company's Current Report on Form 8-K
        dated May 14, 1990.
</TABLE>
 
                                     II-1
<PAGE>
 
<TABLE>
 <C>    <S>
  4.7   --First Amendment to Rights Agreement dated as of May 14, 1990 between
         Kent Electronics Corporation and Ameritrust Company National
         Association. Incorporated by reference to Exhibit 4.3 to the Company's
         Annual Report on Form 10-K for the Fiscal Year Ended March 28, 1992.
  5.1** --Opinion of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.
  8.1** --Opinion of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.
 12.1*  --Statement of Computation of Ratio of Earnings to Fixed Charges.
 23.1*  --Consent of Grant Thornton LLP.
 23.2** --Consents of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. (included as
         part of Exhibits 5.1 and 8.1).
 24.1   --Powers of Attorney (included on signature page of this Registration
         Statement).
 25.1** --Statement of Eligibility of Trustee on Form T-1.
 27.1*  --Financial Data Schedule.
</TABLE>
--------
 * Filed herewith.
** To be filed by amendment.
 
ITEM 17. UNDERTAKINGS.
 
  The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Company's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
 
  Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under Item 15 above, or
otherwise, the registrant has been advised that, in the opinion of the SEC,
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
 
  The undersigned registrant hereby undertakes that:
 
    (1) For purposes of determining any liability under the Securities Act,
  the information omitted from the form of prospectus filed as part of this
  registration statement in reliance upon Rule 430A and contained in a form
  of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
  497(h) under the Securities Act shall be deemed to be part of this
  registration statement as of the time it was declared effective.
 
    (2) For the purpose of determining any liability under the Securities
  Act, each post-effective amendment that contains a form of prospectus shall
  be deemed to be a new registration statement relating to the securities
  offered therein, and the offering of such securities at that time shall be
  deemed to be the initial bona fide offering thereof.
 
                                     II-2
<PAGE>
 
                                  SIGNATURES
 
  PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF HOUSTON, THE STATE OF TEXAS, ON AUGUST 20, 1997.
 
                                          KENT ELECTRONICS CORPORATION
 
 
 
                                                 /s/ Morrie K. Abramson
                                          By: _________________________________
                                                   Morrie K. Abramson
                                              (Chairman of the Board, Chief
                                                    Executive Officer
                                                     and President)
 
  THE UNDERSIGNED DIRECTORS AND OFFICERS OF KENT ELECTRONICS CORPORATION DO
HEREBY CONSTITUTE AND APPOINT MORRIE K. ABRAMSON AND STEPHEN J. CHAPKO (THE
"ATTORNEYS-IN-FACT"), AND EACH OF THEM, WITH FULL POWER TO ACT WITHOUT THE
OTHER AND WITH FULL POWER OF SUBSTITUTION, AS TRUE AND LAWFUL ATTORNEYS-IN-
FACT AND AGENTS TO DO ANY AND ALL ACTS AND THINGS IN OUR NAME AND BEHALF IN
OUR CAPACITIES AS DIRECTORS AND OFFICERS, AND TO EXECUTE ANY AND ALL
INSTRUMENTS FOR US AND IN OUR NAMES IN THE CAPACITIES INDICATED BELOW WHICH
THE ATTORNEYS-IN-FACT MAY DEEM NECESSARY OR ADVISABLE TO ENABLE KENT
ELECTRONICS CORPORATION TO COMPLY WITH THE SECURITIES ACT OF 1933, AS AMENDED,
AND ANY RULES, REGULATIONS AND REQUIREMENTS OF THE SECURITIES AND EXCHANGE
COMMISSION IN CONNECTION WITH THIS REGISTRATION STATEMENT OR ANY ADDITIONAL
REGISTRATION STATEMENT FILED PURSUANT TO RULE 462(B) IN CONNECTION WITH THE
OFFERING CONTEMPLATED BY THIS REGISTRATION STATEMENT, INCLUDING SPECIFICALLY,
BUT NOT LIMITED TO, POWER AND AUTHORITY TO SIGN FOR US, OR ANY OF US, IN THE
CAPACITIES INDICATED BELOW, ANY AND ALL (I) AMENDMENTS (INCLUDING POST-
EFFECTIVE AMENDMENTS) HERETO AND (II) REGISTRATION STATEMENTS UNDER RULE
462(B) RELATING HERETO; AND WE DO HEREBY RATIFY AND CONFIRM ALL THAT THE
ATTORNEYS-IN-FACT SHALL DO OR CAUSE TO BE DONE UNDER AUTHORITY GRANTED HEREIN.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON
THE DATES INDICATED.
 
<TABLE>
<CAPTION>
             SIGNATURE                           TITLE                    DATE
             ---------                           -----                    ----
 
<S>                                  <C>                           <C>
     /s/  Morrie K. Abramson         Chairman of the Board, Chief   August 20, 1997
____________________________________ Executive Officer, President
         Morrie K. Abramson          and Director (Principal
                                     Executive Officer)
 
      /s/ Stephen J. Chapko          Executive Vice President,      August 20, 1997
____________________________________ Chief Financial Officer,
         Stephen J. Chapko           Treasurer and Secretary
                                     (Principal Financial Officer)
 
     /s/  David D. Johnson           Vice President, Corporate      August 20, 1997
____________________________________ Controller (Principal
          David D. Johnson           Accounting Officer)
</TABLE>
 
                                     II-3
<PAGE>
 
<TABLE>
<CAPTION>
             SIGNATURE                           TITLE                    DATE
             ---------                           -----                    ----
 
<S>                                  <C>                           <C>
   /s/    Terrence M. Hunt           Director                       August 20, 1997
____________________________________
          Terrence M. Hunt
 
        /s/ Max S. Levit             Director                       August 20, 1997
____________________________________
           Max S. Levit
 
        /s/ David Siegel             Director                       August 20, 1997
____________________________________
           David Siegel
 
      /s/ Richard C. Webb            Director                       August 20, 1997
____________________________________
          Richard C. Webb
 
     /s/ Alvin L. Zimmerman          Director                       August 20, 1997
____________________________________
         Alvin L. Zimmerman
</TABLE>
 
                                      II-4