<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                            ------------------------

                                   FORM 10-K

                 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  FOR THE FISCAL YEAR ENDED: DECEMBER 31, 1996

                         COMMISSION FILE NUMBER 1-5731

                            ------------------------

                                  REXEL, INC.

               (Exact name of registrant as specified in charter)

<TABLE>
<S>                    <C>
      NEW YORK                   13-1474527
      (State of        (I.R.S. employer identification
   incorporation)                   no.)
</TABLE>

                  150 ALHAMBRA CIRCLE, CORAL GABLES, FL 33134
                    (Address of principal executive offices)
                                  305-446-8000
                               (Telephone Number)

                            ------------------------

          Securities registered pursuant to Section 12(b) of the Act:

<TABLE>
<CAPTION>
                  TITLE OF EACH CLASS                            NAME OF EACH EXCHANGE ON WHICH REGISTERED
--------------------------------------------------------  --------------------------------------------------------
<S>                                                       <C>
                   Common stock, par                                   New York Stock Exchange, Inc.
                   value $1 per share
                                                                  The Pacific Stock Exchange, Incorporated
</TABLE>

Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes /X/  No / /

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.   / /

As of March 3, 1997: 25,733,290 shares of Common Stock were outstanding; and the
aggregate market value of shares held by non-affiliates was $234,496,587 (For
these purposes, a reported closing market price of $18.375 per share on March 3,
1997 has been used and "affiliates" have been arbitrarily determined to be
Rexel, S.A., International Technical Distributors, Inc. (see Item 1 of this
Report) and all directors and officers, although the Company does not
acknowledge that any such entity or person is actually an "affiliate" within the
meaning of the federal securities laws.)

Documents Incorporated By Reference: definitive proxy statement for 1997 Annual
Meeting of Stockholders (Part III).

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
                                     PART I

ITEM 1. BUSINESS

    Rexel, Inc. (the "Company") is a New York corporation that was incorporated
in 1866. Rexel, S. A., a French company listed on the Paris Stock Exchange, owns
approximately 50.3% of the stock of the Company. In 1995, the Company changed
its name from Willcox & Gibbs, Inc. to Rexel, Inc. Management believes that the
Company is the fifth largest distributor of electrical parts and supplies in the
United States and that Rexel, S. A., operating through its affiliated companies
including that Company, is the largest electrical supplies distributor in the
world, based on 1996 sales.

    During the last several years, the Company has undertaken a major
restructuring. On April 22, 1992, the Company, Rexel, S.A., International
Technical Distributors, Inc. ("ITD"), a subsidiary of Rexel, S. A. and Southern
Electric Supply Company, Inc. ("SES"), a subsidiary of ITD engaged in the
distribution of electrical materials, entered into a Purchase Agreement (the
"Purchase Agreement"). Pursuant to the Purchase Agreement, the Company issued to
Rexel, S. A. and ITD 6,284,301 shares of Company Common Stock in exchange for
all of the stock of SES and approximately $10 million in cash. In addition,
pursuant to the Purchase Agreement, the Company declared a dividend consisting
of one share of common stock of the Company's subsidiary Worldtex, Inc.
("Worldtex") for each share of Company Common Stock outstanding on November 23,
1992 (the "Distribution"). In August 1992, the Company transferred to Worldtex
all of the stock of the Company's subsidiaries engaged in the manufacture of
covered elastic yarn.

    Also during 1992, the Company disposed of its data communications equipment
distribution business, conducted by Data Net, Inc. and Dataspan Systems, Inc.,
and its Montrose Supply and Equipment Division, which distributed equipment to
the knitting trade. In July 1994, the Company sold its apparel parts and
supplies distribution businesses. As a result of these transactions and the
Distribution, the Company became engaged solely in the distribution of
electrical goods and supplies.

    In April 1993, the Company acquired Sacks Electrical Supply Co. ("Sacks"), a
distributor of electrical supplies and components with three locations in Ohio,
for $13,635,000. On December 17, 1993, the Company acquired Summers Group Inc.,
("Summers"), a distributor of electrical parts and supplies with locations
principally in Texas, Oklahoma, Louisiana, California and Arkansas. The
consideration for the Summers acquisition was $60,000,000 in cash and a
$25,000,000 three year note issued to the seller, plus contingent consideration
to be determined based on Summers' profits before interest and taxes for 1993
and 1994, subject to a maximum purchase price of $120,000,000. In December 1994,
the Company agreed to prepay such note and cancel the contingent consideration
in exchange for cash payments that brought the total cash purchase price for
Summers to $90,950,000 (including $0.7 million of acquisition costs).

    In March, 1994, the Company sold 3,491,280 newly-issued shares of Company
Common Stock to Rexel, S. A. for $31,421,520 in cash. In connection with that
sale, the size of the Company's Board of Directors was reduced from twelve to
nine and two additional nominees of Rexel, S. A. became directors of the
Company.

    During the last half of 1994, the Company also realigned the management of
its electrical distribution operations. The operations of the Company's
principal subsidiaries, Summers, Sacks, SES and the Consolidated Electric Supply
group ("CES"), were reorganized along geographic lines into two regions: the
Eastern Region and the Western Region. In addition, substantially all of the
Company's operating subsidiaries were merged into either SES, which operates the
Eastern Region, or Summers, which operates the Western Region.

    On August 7, 1996, the Company acquired Utility Products Supply of Denver,
Colorado ("UPS"), a distributor of electrical products to the utility industries
with locations in Colorado, Arizona, California and Kansas, for cash and
deferred payments totaling $5.6 million (including acquisition costs of $0.1
million). UPS operates as part of the Western Region.

                                       2
<PAGE>
    On November 12, 1996, the Company acquired Cable & Connector Warehouse, Inc.
of Dallas, Texas ("CCW"), a distributor of electronic wire, cable, connectors
and related apparatus to manufacturers of data and telecommunication products
with locations in Louisiana, Texas, Colorado, California, Oregon and Kansas, for
cash of $20.2 million (including $0.2 million of acquisition costs). CCW
operates as an independent business unit and is not part of the Eastern or
Western Regions.

    In 1995 and 1996, the Company has focused on integrating its operations,
reducing costs and developing new sourcing and marketing programs.

ELECTRICAL DISTRIBUTION OPERATIONS

    The Company is engaged in the wholesale distribution of electrical parts and
supplies, operating 190 electrical distribution locations in 20 states and the
Bahamas. The Company manages its business through two principal regional
organizations: the Eastern Region and the Western Region.

    The Eastern Region operates 97 distribution centers in 11 states, of which
45 are in Florida, 14 in Ohio, 10 in Mississippi, 8 in Alabama, 4 in Louisiana,
5 in Georgia, 3 in Delaware, 2 in Maryland, 2 in Tennessee, 2 in Oklahoma, 1 in
Virginia and 1 in Freeport, Grand Bahamas.

    The Western Region operates 82 locations in 9 states, consisting of 37 in
Texas, 13 in California, 9 in Louisiana, 8 in Arkansas, 6 in Oklahoma, 2 in
Missouri, 3 in Arizona, 2 in Colorado and 1 in each of Kansas and New Mexico.

    CCW operates 11 distribution centers in 6 states, of which 3 are in
California, 3 in Texas, 2 in Louisiana and 1 in each of Colorado, Kansas and
Oregon.

    Each of the Company's electrical distribution locations serves an area with
approximately a 50 mile radius and serves the needs of electrical contractors
engaged in construction work on commercial and residential structures. The
Company also provides materials to industrial customers for maintenance and
repairs and for the manufacture of equipment. In addition, the Company has two
divisions focused on specialty markets: the DataCom division, which distributes
products used to interconnect voice, data and video systems, and the Cummins
division, which distributes supplies to the utility industry. These two
divisions generated approximately 11.6% of the Company's sales in 1996.

    In 1996, the Company served over 82,000 customers, with no single customer
accounting for more than 2% of total annual sales. The Company's ten largest
customers in 1996 represented less than 7% of sales. Management believes that
approximately 51% of the Company's sales are from the construction-based
electrical contractor market. The remainder are sold to industrial,
governmental, municipal and utility company customers.

    Management believes that the Company is the fifth largest distributor of
electrical parts and supplies in the United States, although there are other
companies which account for significantly greater national volume. The Company
competes with national chains (some of which are affiliated with manufacturing
companies) and other independent distributors operating single or multiple
outlets. Because the electrical supply business is fragmented and highly
competitive, service and price are essential components of success. A typical
Company electrical distribution location consists of a 20,000 sq. ft. warehouse
and office facility, ten inside and outside sales representatives, one technical
specialist, six warehouse and delivery personnel, and four management and
support personnel. An average branch has approximately 400 customers, maintains
an inventory of about 15,000 items, and makes deliveries within a 50-mile
radius. Small branches are often grouped to constitute a profit center.

    The Company's extensive product line includes electrical supplies, such as
cable, cords, boxes, covers, wiring devices, conduit, raceway duct, safety
switches, motor controls, breakers, panels, lamps, fuses and related supplies
and accessories, residential, commercial and industrial electrical fixtures and
other special use fixtures, as well as materials and special cables for
computers and advanced communications systems.

                                       3
<PAGE>
The products sold by the Company are purchased from over 4,300 manufacturers and
other suppliers, the two largest of which accounted in the aggregate for
approximately 15% of the Company's total purchases during 1996, with none of the
remainder accounting for more than 4%.

DISCONTINUED OPERATIONS

    APPAREL PARTS AND SUPPLIES DISTRIBUTION

    In July 1994, the Company sold its apparel parts and supplies distribution
businesses, which are described below, for consideration valued at approximately
$44 million.

    The Company's former Sunbrand Division marketed to the apparel industry a
wide range of sewing equipment parts, supplies and other equipment, including
pressing and finishing equipment, fabric spreading machines and reconditioned
equipment. Its product line included needles, tools, electric and electronic
devices and warehouse equipment. Sunbrand's executive offices were located in
Atlanta. Sunbrand had seven office/distribution centers located near major
apparel manufacturing areas in Atlanta, El Paso, Fall River (Massachusetts),
Miami, Mexico City, Nashville, and Santo Domingo (Dominican Republic).

    The Company's former Unity Sewing Supply Division ("Unity"), an importer and
distributor of non-trademarked ("generic") parts for industrial sewing machines,
was headquartered in New York with branch offices in Los Angeles and Miami. It
sold to dealers, not to manufacturers or end users. The majority of Unity's
parts were manufactured in Japan, Germany and the United States.

    The Company's former subsidiary, Willcox & Gibbs, Ltd., a wholly-owned
United Kingdom subsidiary, marketed sewing equipment in certain Common Market
countries and sold generic sewing equipment parts in the United Kingdom.

    The Company's former subsidiary, Leadtec Systems, Inc. ("Leadtec"),
distributed to the apparel industry a computer-based real-time production
control system, marketed under the name "Satellite Plus", which utilized
hardware manufactured by others and proprietary software designed by Leadtec.

    COVERED ELASTIC YARN

    Prior to 1993, the Company owned Worldtex and its subsidiaries, which
engaged in the manufacture of covered elastic yarn. These operations were
disposed of by the Company pursuant to the Distribution on November 12, 1992.
While owned by the Company, Worldtex's principal product was nylon covered
spandex used in the manufacture of women's pantyhose, which accounted for 58% of
Worldtex's 1992 sales. Worldtex also sold covered spandex and covered latex
rubber for use in the manufacture of men's, women's and children's socks.

EMPLOYEES

    As of December 31, 1996, the Company had a total of approximately 2,850
employees. Approximately 38 employees are covered by collective bargaining
agreements. The Company has experienced no significant labor problems during
recent years and considers that its employee relations are good.

ITEM 2. PROPERTIES

    The Company's executive offices are located in leased office space at 150
Alhambra Circle, Coral Gables, Florida. Of the Company's distribution centers,
43 are owned by subsidiaries of the Company and 147 are leased. These leases are
classified as operating leases and expire in various years through 2005. The
Company's distribution centers generally range from 4,000 to 105,000 square feet
and include office and warehouse facilities.

                                       4
<PAGE>
    Twelve of the Company's distribution centers are leased from Robert Merson,
a Senior Vice President of the Company and/or members of his or his wife's
family, for terms extending through 2002. The Company believes that these leases
are on terms at least as favorable as could have been obtained from an
unaffiliated third party.

ITEM 3. LEGAL PROCEEDINGS

    There are no material pending legal proceedings as of the date of this
Report to which the Company or any of its subsidiaries is a party or to which
any of their property is subject.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    During the last quarter of the Company's fiscal year, no matters were
submitted to a vote of the Company's security holders.

ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT

<TABLE>
<CAPTION>
NAME                                                       AGE                   TITLE AND PERIOD OF SERVICE
-----------------------------------------------------      ---      -----------------------------------------------------
<S>                                                    <C>          <C>

Alain Viry...........................................          48   President and Chief Executive Officer (March 1994 to
                                                                    present).

Robert M. Merson.....................................          58   Senior Vice President (May 1994 to present); Vice
                                                                    President (November 1992 to May 1994)

Jon O. Fullerton.....................................          54   Vice President, General Counsel and Secretary (July
                                                                    1994 to present)

Steven M. Hitt.......................................          46   Vice President and Chief Financial Officer (July 1994
                                                                    to present)

Allan M. Gonopolsky..................................          52   Vice President and Corporate Controller (May 1991 to
                                                                    November 1992 and July 1994 to present); Vice
                                                                    President, Chief Financial Officer and Corporate
                                                                    Controller (November 1992 to July 1994); Corporate
                                                                    Controller (1978 to April 1991).

William J. Jett......................................          52   Vice President, Corporate Development (March 1996 to
                                                                    present).

Steven W. Barker.....................................          49   Vice President, Marketing and Communications (March
                                                                    1996 -present).
</TABLE>

    The officers of the Company are elected annually by the Board of Directors.

    Mr. Viry also serves as a director of the Company. Effective April 12, 1997,
Mr. Viry's resignation as an officer and director of the Company will become
effective and Gilles Guinchard, 49, will become President, Chief Executive
Officer and a director of the Company.

                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

    The Company's Common Stock is listed on the New York Stock Exchange and the
Pacific Stock Exchange. The following table sets forth the high and low per
share sales prices for the Common Stock on

                                       5
<PAGE>
the New York Stock Exchange as reported by the Dow Jones Historical Stock Quote
Reporter Service for each quarter since December 31, 1994.

<TABLE>
<CAPTION>
                                                                                                   HIGH        LOW
                                                                                                 ---------  ---------
<S>                                                                                              <C>        <C>

1995:

  1st Quarter..................................................................................  $    7.38  $    5.75

  2nd Quarter..................................................................................       9.75       6.75

  3rd Quarter..................................................................................      10.88       9.38

  4th Quarter..................................................................................      14.88       9.88

1996:

  1st Quarter..................................................................................      14.25      11.50

  2nd Quarter..................................................................................      14.63      11.25

  3rd Quarter..................................................................................      15.88      13.63

  4th Quarter..................................................................................      15.88      13.13

1997:

  1st Quarter (through March 7, 1997)..........................................................      20.38      15.50
</TABLE>

    At March 7, 1997, there were approximately 1,181 holders of record of Common
Stock.

    No cash dividends have been paid on the Company's Common Stock since the
last quarter of 1991. Future payment of cash dividends by the Company will be
dependent on such factors as business conditions, earnings and the financial
condition of the Company.

    The terms of the Company's 9.78% Senior Notes, dated as of April 2, 1991, as
amended, restrict dividends and certain other payments with respect to the
Company's capital stock if the sum thereof for the period since August 8, 1995,
exceeds the sum of (i) $26,000,000 plus (ii) 15% of net cash proceeds from the
sale of stock for such period, plus (iii) 50% of consolidated net income (as
defined) for such period. In addition, the Note Agreement and the Company's
Amended and Restated Revolving Credit and Reimbursement Agreement, dated as of
August 8, 1995, require that the Company meet certain financial tests that could
have the effect of restricting the Company's ability to pay dividends.

                                       6
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA

    REXEL, INC. AND SUBSIDIARIES

    The following tables set forth certain consolidated financial data of the
Company and its subsidiaries for the five fiscal years ended December 31, 1996,
which has been derived from the Company's audited financial statements, and
should be read in conjunction with the Consolidated Financial Statements and
Notes thereto of the Company appearing elsewhere in this Report on Form 10-K.

    The selected financial data of the Company for the years set forth below are
not directly comparable due to acquisitions and dispositions during such
periods, including the distribution of Worldtex on November 12, 1992, the sale
of the Apparel Division on July 13, 1994, and the acquisitions of SES on
November 12, 1992, Sacks on April 12, 1993, Summers on December 17, 1993,
Utility Products Supply on August 7, 1996 and Cable & Connector Warehouse, Inc.
on November 12, 1996.

<TABLE>
<CAPTION>
                                                                     1996       1995       1994       1993       1992
                                                                   ---------  ---------  ---------  ---------  ---------
<S>                                                                <C>        <C>        <C>        <C>        <C>
                                                                     (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Net sales........................................................  $1,159,446 $1,120,688 $1,065,543 $ 521,519  $ 359,080
                                                                   ---------  ---------  ---------  ---------  ---------
                                                                   ---------  ---------  ---------  ---------  ---------
Income (loss) from continuing operations
  before income taxes............................................  $  51,124  $  37,679  $  16,528  $  11,928  $ (17,588)
Income tax provision (benefit)...................................     21,728     16,579      7,270      5,038     (5,186)
                                                                   ---------  ---------  ---------  ---------  ---------
Income (loss) from continuing operations.........................     29,396     21,100      9,258      6,890    (12,402)
Income (loss) from discontinued operations.......................     --         --           (327)     1,517      7,527
                                                                   ---------  ---------  ---------  ---------  ---------
Income (loss) before extraordinary charge and cumulative effect
  of accounting
  change.........................................................     29,396     21,100      8,931      8,407     (4,875)
Extraordinary charge(a)..........................................     --         (1,325)    --         --         --
Cumulative effect of accounting change(b)........................     --         --         --            660     --
                                                                   ---------  ---------  ---------  ---------  ---------
Net income (loss)................................................  $  29,396  $  19,775  $   8,931  $   9,067  $  (4,875)
                                                                   ---------  ---------  ---------  ---------  ---------
                                                                   ---------  ---------  ---------  ---------  ---------
Earnings per common share(c)
Primary:
  Income (loss) from continuing
    operations...................................................  $    1.13  $     .85  $     .39  $     .33  $    (.85)
  Income (loss) from discontinued
    operations...................................................     --         --           (.01)       .07        .52
                                                                   ---------  ---------  ---------  ---------  ---------
  Income (loss) before extraordinary charge and cumulative effect
    of accounting change.........................................       1.13        .85        .38        .40       (.33)
  Extraordinary charge(a)........................................     --           (.05)    --         --         --
  Cumulative effect of accounting
    change(b)....................................................     --         --         --            .03     --
                                                                   ---------  ---------  ---------  ---------  ---------
  Net income (loss)..............................................  $    1.13  $     .80  $     .38  $     .43  $    (.33)
                                                                   ---------  ---------  ---------  ---------  ---------
                                                                   ---------  ---------  ---------  ---------  ---------
Fully Diluted(c):
  Income (loss) from continuing
    operations...................................................             $     .79
  Extraordinary charge(a)........................................                  (.05)
                                                                              ---------
  Net Income.....................................................             $     .74
                                                                              ---------
                                                                              ---------
  Total assets...................................................  $ 428,938  $ 374,659  $ 414,487  $ 428,519  $ 285,309
                                                                   ---------  ---------  ---------  ---------  ---------
                                                                   ---------  ---------  ---------  ---------  ---------
  Long-term obligations..........................................  $  33,058  $  40,582  $  99,201  $ 129,503  $ 114,251
                                                                   ---------  ---------  ---------  ---------  ---------
                                                                   ---------  ---------  ---------  ---------  ---------
Cash dividends per common share..................................  $     -0-  $     -0-  $     -0-  $     -0-  $     -0-
                                                                   ---------  ---------  ---------  ---------  ---------
                                                                   ---------  ---------  ---------  ---------  ---------
</TABLE>

------------------------------

(a) Loss on early extinguishment of debt.

(b) Cumulative effect of accounting change for income taxes in connection with
    SFAS No. 109, "Accounting for Income Taxes."

(c) Fully diluted amounts are equivalent to primary in 1996 and anti-dilutive in
    all years prior to 1995.

                                       7
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
  OF OPERATIONS

    SIGNIFICANT TRANSACTIONS

    On November 12, 1992, pursuant to a purchase agreement dated April 22, 1992
among the Company and Rexel, S.A. and certain affiliates of Rexel, S.A.
("Rexel") the Company issued to Rexel 6,284,301 shares of the Company's common
stock in exchange for all of the stock of an affiliated company and
approximately $10 million in cash. In addition, pursuant to such purchase
agreement, the Company declared a dividend consisting of one share of common
stock of Worldtex, Inc., its subsidiary engaged in the manufacture of covered
yarn, for each share of Company common stock outstanding on November 23, 1992.

    On March 1, 1994, the Company sold 3,491,280 newly-issued shares of Company
common stock to Rexel, S. A. for a total purchase price of $31.4 million.

    On July 13, 1994, the Company sold its apparel parts and supplies
distribution businesses (the "Apparel Division") for consideration of
approximately $44 million, including cash, debt of the purchaser and warrants of
the purchaser. On July 26, 1995, the Company sold such debt, warrants and
certain other assets to the purchaser for $4.1 million in cash. The Apparel
Division is shown as a discontinued operation in the Company's Consolidated
Financial Statements.

    In April 1993, the Company acquired Sacks Electrical Supply Co. ("Sacks"), a
distributor of electrical supplies and components with three locations in Ohio,
for $13.6 million. On December 17, 1993, the Company acquired Summers Group,
Inc. ("Summers"), an electrical parts distributor with locations principally in
Texas, Oklahoma, Louisiana, Arkansas, Arizona, Colorado and California, for
$90.95 million (including $0.7 million of acquisition costs).

    On August 7, 1996, the Company acquired Utility Products Supply of Denver,
Colorado, a distributor of electrical products to the utility industries with
locations in Colorado, Arizona, California and Kansas, for cash and deferred
payments totaling $5.6 million (including acquisition costs of $0.1 million).

    On January 17, 1997, the Company acquired the assets of Southland Electrical
Supply, a distributor of electrical parts and supplies with eight locations in
Kentucky for a cash purchase price of approximately $25.0 million.

    On November 12, 1996, the Company acquired Cable & Connector Warehouse, Inc.
of Dallas, Texas, a distributor of electronic wire, cable, connectors and
related apparatus to manufacturers of data and telecommunication products with
locations in Louisiana, Texas, Colorado, California, Oregon and Kansas, for cash
of $20.2 million (including $0.2 million of acquisition costs) plus contingent
consideration of up to $4.0 million based upon achieving certain operating
results in 1997.

    As a result of the aforementioned transactions and discontinuances, the
Company became engaged in only one business segment: the distribution of
electrical parts and supplies, principally in the southern United States.

    RESULTS OF CONTINUING OPERATIONS

    The following tables set forth the operating results from continuing
operations before income taxes and the percentages which certain income and
expense items bear to net sales:

<TABLE>
<CAPTION>
                                                                                   1996       1995       1994
                                                                                 ---------  ---------  ---------
<S>                                                                              <C>        <C>        <C>
Net sales......................................................................  $ 1,159.4  $ 1,120.7  $ 1,065.5
                                                                                 ---------  ---------  ---------
                                                                                 ---------  ---------  ---------
Gross profit...................................................................  $   241.5  $   230.1  $   212.5
Selling & administrative expense...............................................      185.7      184.7      187.4
                                                                                 ---------  ---------  ---------
Operating profit...............................................................       55.8       45.4       25.1
Interest expense...............................................................        5.1        7.7        9.6
Other income...................................................................        0.4     --            1.0
                                                                                 ---------  ---------  ---------
Income from continuing operations before income taxes..........................  $    51.1  $    37.7  $    16.5
                                                                                 ---------  ---------  ---------
                                                                                 ---------  ---------  ---------
</TABLE>

                                       8
<PAGE>

<TABLE>
<CAPTION>
                                                                                   1996       1995       1994
                                                                                 ---------  ---------  ---------
<S>                                                                              <C>        <C>        <C>
Net sales......................................................................      100.0%     100.0%     100.0%
                                                                                 ---------  ---------  ---------
                                                                                 ---------  ---------  ---------
Gross profit...................................................................       20.8%      20.5%      19.9%
Selling & administrative.......................................................       16.0       16.4       17.6
                                                                                 ---------  ---------  ---------
Operating profit...............................................................        4.8        4.1        2.3
Interest expense...............................................................         .4         .7         .9
Other income...................................................................     --         --             .1
                                                                                 ---------  ---------  ---------
Income from continuing operations before income taxes..........................        4.4%       3.4%       1.5%
                                                                                 ---------  ---------  ---------
                                                                                 ---------  ---------  ---------
</TABLE>

    OPERATING RESULTS 1996 VS. 1995

    SALES

    Sales in 1996 increased $38.8 million to $1,159.4 million, or 3.5% over
1995. Same branch sales increased 1.9% for the year. Sales by geographic region
in 1996 were as follows:

<TABLE>
<CAPTION>
                                                                  AMOUNT         PERCENTAGE
                                                                    (IN           INCREASE/
                                                                 MILLIONS)       (DECREASE)
                                                                -----------  -------------------
<S>                                                             <C>          <C>
Eastern Region:
  Southeast...................................................   $   419.5              3.4%
  Midwest.....................................................       160.7              (4.0)%
Western Region:
  Southwest...................................................       476.8               5.8%
  Pacific Coast...............................................       102.4               5.7%
                                                                -----------              ---
      Total...................................................  $  1,159.4               3.5%
                                                                -----------              ---
                                                                -----------              ---
</TABLE>

    The 1996 increase in sales was attributable to favorable construction
markets, particularly in the second half of the year, improvements in certain
industrial markets, and growth of sales in the utility and data communications
markets. The acquisitions of Utility Products Supply and Cable & Connector
Warehouse, Inc. contributed $18.6 million in sales in 1996 or 1.7% of the sales
increase for the year. The decrease in sales in the Midwest region was the
result of tighter credit policies implemented to improve the quality of trade
receivables and a slowdown in industrial and construction projects relative to
1995. During 1996, 10 new branches were opened while 3 branches were closed. The
branches closed during 1996 were marginally profitable or loss branches.

    GROSS PROFIT

    Gross profit in 1996 increased $11.5 million, or 5.0%, to $241.5 million. As
a percentage of sales, gross profit improved to 20.8% from 20.5% in 1995. The
improvement in gross profit percentage of 0.3 percentage points can be analyzed
as follows:

<TABLE>
<CAPTION>
                                                                                     PERCENTAGE
                                                                                      INCREASE/
                                                                                     (DECREASE)
                                                                                    -------------
<S>                                                                                 <C>
Effect of margin improvement initiatives..........................................          0.2%
Effect of LIFO....................................................................          0.3%
Pricing pressures in utility markets..............................................         (0.2%)
                                                                                            ---
Total Increase....................................................................          0.3%
                                                                                            ---
                                                                                            ---
</TABLE>

                                       9
<PAGE>
    In 1996, the Company gained the benefit of several gross margin improvement
initiatives which were implemented in 1995. These initiatives centered around
improved pricing capabilities through enhanced access to inventory information
attributable to the new MIS system in two of our Eastern Region operating
divisions, improved controls over price change authority within our branches and
improved inventory purchasing through implementation of our sourcing and
marketing program.

    In 1995, margins were unfavorably impacted by a LIFO increment, resulting
from product cost inflation of 1.3%, mainly in copper wire and conduit. As of
December 31, 1996, product deflation was 1.4% driven by 5.8% deflation in copper
wire. This resulted in a LIFO decrement of $2.1 million in 1996. LIFO had the
impact of improving margins by 0.3% in 1996 compared to 1995.

    Many utility companies have been consolidating purchasing by their operating
units and reducing the number of their electrical product suppliers. This
consolidation process, while increasing sales for surviving distributors such as
the Company's utility division, has resulted in a lower gross profit percentage
on the Company's utility sales. Accordingly, although sales for the Company's
utility division were up 20.8% in 1996 over 1995, declining margins from these
sales resulted in a decrease of 0.2% in the Company's gross profit percentage
compared to 1995.

    SELLING AND ADMINISTRATIVE EXPENSE

    Selling and administrative expense increased $1.0 million or 0.5% in 1996.
As a percentage of sales, selling and administrative expense improved to 16.0%
in 1996 compared to 16.5% in 1995, reflecting the results of cost reduction
initiatives implemented in the second half of 1995 and in 1996 and a favorable
reduction in bad debts in 1996.

    Depreciation and amortization costs decreased $0.5 million in 1996 compared
to 1995. The reduction occurred in computer depreciation as a result of
accelerated depreciation on old computer systems replaced in 1995.

    The provisions for doubtful accounts decreased $1.1 million in 1996 compared
to 1995 as a result of a continued improvement in the quality of trade accounts
receivable.

    In 1996, the Company paid to Rexel, S. A. $0.8 million pursuant to the
Services Agreement entered into in November 1995 compared to $0.9 million paid
in 1995.

    INTEREST EXPENSE

    Interest expense decreased $2.6 million or 33.5% in 1996 compared to 1995.
The Company reduced its debt by $66.6 million during 1995 with existing cash
balances, operating cash flow and the conversion of $14.5 million of 7%
Convertible Subordinated Debentures Due 2014 into Common Stock of the Company
(see Note 7 of the Notes to the Consolidated Financial Statements). In 1996,
debt increased $9.8 million, related to the acquisitions of Utility Products
Supply and Cable & Connector Warehouse, Inc. occurring late in the third and
fourth quarters.

    OTHER INCOME (EXPENSE)--NET

    Other income (expense)--net increased from expense in 1995 of $0.03 million
to income in 1996 of $0.4 million. In 1995, $0.4 million in costs were incurred
for the early termination of The Sacks Group Pension Plan in association with
the consolidation of the Company's various benefit plans into one plan.

    INCOME FROM CONTINUING OPERATIONS

    Income from continuing operations increased to $29.4 million in 1996 from
$21.1 million in 1995 or 39.3%.

                                       10
<PAGE>
    OPERATING RESULTS 1995 VS. 1994

    SALES

    Sales in 1995 increased $55.1 million to $1,120.7 million, or 5.2% over
1994. Same branch sales increased 7.1% for the year. Sales by geographic region
in 1995 were as follows:

<TABLE>
<CAPTION>
                                                                  AMOUNT         PERCENTAGE
                                                                    (IN           INCREASE/
                                                                 MILLIONS)       (DECREASE)
                                                                -----------  -------------------
<S>                                                             <C>          <C>
Eastern Region:
  Southeast...................................................   $   405.8              5.4%
  Midwest.....................................................       167.4              9.0%
Western Region:
  Southwest...................................................       450.7              7.7%
  Pacific Coast...............................................        96.8             (10.7)%
                                                                -----------            -----
      Total...................................................  $  1,120.7               5.2%
                                                                -----------            -----
                                                                -----------            -----
</TABLE>

    The 1995 increase in sales was attributable to favorable construction
markets, particularly in the first half of the year, improvements in industrial
markets, and growth of sales in the utility and data communications markets. The
decrease in sales in the Pacific Coast region was the result of branch closures
and tighter credit policies implemented to improve the quality of trade
receivables. During 1995, 7 new branches were opened while 12 branches were
closed. The effect on sales in 1995 of openings and closings of branches during
the year was a reduction of sales of $18.4 million, or 1.7% of 1994 sales. The
branches closed during 1995 were marginally profitable or loss branches.

    GROSS PROFIT

    Gross profit in 1995 increased $17.6 million, or 8.3%, to $230.1 million. As
a percentage of sales, gross profit improved to 20.5% from 19.9% in 1994. The
improvement in gross profit percentage of 0.6 percentage points can be analyzed
as follows:

<TABLE>
<CAPTION>
                                                                                     PERCENTAGE
                                                                                      INCREASE/
                                                                                     (DECREASE)
                                                                                    -------------
<S>                                                                                 <C>
Change in the mix of sales from inventory vs. direct sales........................         (0.2%)
Effect of margin improvement initiatives..........................................          0.7%
Effect of LIFO....................................................................          0.3%
Pricing pressures in utility markets..............................................         (0.2%)
                                                                                            ---
Total Increase....................................................................          0.6%
                                                                                            ---
                                                                                            ---
</TABLE>

    Compared to 1994, the percentage of total sales from inventory decreased by
two percentage points. Inventory sales have historically had a gross margin
percentage roughly twice the gross margin percentage attributable to direct
sales. The impact of the change in the percentage of inventory sales to total
sales on the total gross profit percentage was a reduction of 0.2% compared to
1994. The percentages of sales from inventory sales and direct sales to total
sales can vary year to year and is influenced by the level and type of
construction activity in our marketplaces.

    During 1995, several gross margin improvement initiatives were implemented
which improved the total gross profit percentage by 0.7%. These initiatives
centered around improved pricing capabilities through enhanced access to
inventory information attributable to the new MIS system in two of our Eastern
Region operating divisions, improved controls over price change authority within
our branches and improved inventory purchasing through implementation of our
sourcing and marketing program.

                                       11
<PAGE>
    In 1994, margins were unfavorably impacted by the LIFO increment resulting
primarily from the 36% increase in the price of copper, an important component
of certain products distributed by the Company. As of December 31, 1995, copper
prices had decreased 4.8% compared to a year ago. Combined with a $7.4 million
decrease in inventory (before LIFO reserves), the lower inflation in copper and
other product prices had a favorable 0.3% impact on 1995 margins compared to
1994.

    Many utility companies have been consolidating purchasing by their operating
units and reducing the number of their electrical product suppliers. This
consolidation process, while increasing sales for surviving distributors such as
the Company's utility division, has resulted in a lower gross profit percentage
on the Company's utility sales. Accordingly, although sales for the Company's
utility division were up 14.6% in 1995 over 1994, declining margins from these
sales resulted in a decrease of 0.2% in the Company's gross profit percentage
compared to 1994.

    SELLING AND ADMINISTRATIVE EXPENSE

    Selling and administrative expense decreased $3.7 million or 2.0% in 1995.
Included in selling and administrative expense for 1994 were nonrecurring
charges totaling $4.9 million. Excluding these nonrecurring charges, selling and
administrative expense increased $1.2 million or 0.7% in 1995 primarily as a
result of certain expenses that increase with increased sales. As a percentage
of sales, selling and administrative expense improved to 16.4% in 1995 compared
to 17.6% in 1994 (17.1% excluding 1994 nonrecurring charges), reflecting the
results of cost reduction initiatives implemented in the second half of 1995 and
in 1996.

    Depreciation and amortization costs decreased $0.8 million in 1995 compared
to 1994. Included in depreciation expense for 1994 was $2.1 million related to
the replacement of certain computer systems in the Company's Eastern Region.
Excluding this nonrecurring charge, depreciation and amortization costs
increased $1.3 million in 1995 primarily as a result of depreciation on the new
computer systems installed in the Eastern Region.

    The provisions for doubtful accounts decreased $2.8 million in 1995 compared
to 1994 as a result of initiatives in 1995 to improve the quality of trade
accounts receivable.

    INTEREST EXPENSE

    Interest expense decreased $1.9 million or 19.7% in 1995 compared to 1994.
The Company reduced its debt by $66.6 million during 1995 with existing cash
balances, operating cash flow and the conversion of $14.5 million of 7%
Convertible Subordinated Debentures Due 2014 into Common Stock of the Company
(see Note 6 of the Notes to the Consolidated Financial Statements). In 1994,
interest expense of $2.0 million was allocated to the discontinued apparel
operating results based upon net assets of the apparel operation.

    OTHER INCOME (EXPENSE)--NET

    Other income (expense)--net decreased from income in 1994 of $1.0 million to
expense in 1995 of $1.0 million. Earnings from interest bearing investments
decreased in 1995 by $0.3 million as a result of using cash funds to reduce
debt. The Company paid to Rexel, S. A. $0.9 million in 1995 pursuant to the
Services Agreement entered into in November 1995 (see Note 14 of the Notes to
the Consolidated Financial Statements). Additionally, $0.4 million in costs were
incurred for the early termination of The Sacks Group Pension Plan in
association with the consolidation of the Company's various benefit plans into
one plan in 1995.

                                       12
<PAGE>
    INCOME FROM CONTINUING OPERATIONS

    Income from continuing operations increased to $21.1 million in 1995 from
$9.3 million in 1994 or 127.9%. Excluding the $4.9 million ($2.7 million after
tax), in nonrecurring costs in 1994, income from continuing operations increased
76.0% in 1995 compared to 1994.

    INCOME TAXES

    The Company had effective income tax rates of 42.5% in 1996 and 44% in 1995
and 1994. The 1996 rate reflects the impact of state and local taxes,
non-deductible goodwill amortization and a decrease in the deferred tax asset
valuation allowance (related to estimates of state and local net operating loss
utilization). The 1995 rate reflects the above except for the decrease in the
deferred tax asset valuation allowance.

    As of December 31, 1996 and 1995, the Company had recognized deferred tax
assets of $7.6 million (see Note 10 of the Notes to Consolidated Financial
Statements) arising primarily from basis differences between the recorded value
for financial reporting purposes and tax basis of accounts receivable, inventory
and various liabilities and reserves, including costs incurred in connection
with the Rexel, S. A. acquisition of Rexel, Inc. Such deferred tax assets have
been reduced by a valuation allowance of $0.8 million and $1.1 million in 1996
and 1995, respectively. In addition, the Company has recognized deferred tax
liabilities totaling $6.8 million and $5.0 million in 1996 and 1995,
respectively, arising principally from a higher recorded value over tax basis of
property, plant and equipment and certain acquisitions.

    FUTURE IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

    In February 1997, the Financial Accounting Standards Board (the FASB) issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" (FAS
128). FAS 128 specifies new standards designed to improve the earnings per share
("EPS") information provided in financial statements by simplifying the existing
computational guidelines, revising the disclosure requirements, and increasing
the comparability of EPS data on an international basis. Some of the changes
made to simplify the EPS computations include: (a) eliminating the presentation
of primary EPS and replacing it with basic EPS, with the principal difference
being that common stock equivalents (CSEs) are not considered in computing basic
EPS, (b) eliminating the modified treasury stock method and the three percent
materiality provision, and (c) revising the contingent share provisions and the
supplemental EPS data requirements. FAS 128 also makes a number of changes to
existing disclosure requirements. FAS 128 is effective for financial statements
issued for periods ending after December 15, 1997, including interim periods.
The Company has not yet determined the impact of the implementation of FAS 128.

    FINANCIAL CONDITION

    ASSETS

    Total assets at year end 1996 increased $54.3 million or 14.5% of which
$38.3 million or 10.2% was related to the acquisitions of Utility Product Supply
and Cable & Connector Warehouse. Trade accounts and notes receivable increased
$17.8 million or 12.9% of which $9.3 million or 6.7% was due to acquisitions.
Trade accounts receivable days remained flat with last year at 46 days. The
allowances for doubtful accounts to trade accounts and notes receivable was 1.9%
as of December 31, 1996 and 1995. Inventory increased $15.4 million or 15.1% of
which $11.6 million or 11.4% was due to acquisitions made in the year and $2.1
million or 2.0% was due to a decrement in LIFO in 1996. Inventory days improved
to 74 days at December 31, 1996 from 78 days at December 31, 1995. The
improvement in inventory days was partly related to a reduction in obsolete
inventory.

                                       13
<PAGE>
    LIABILITIES

    Total liabilities at year end 1996 increased $24.5 million or 11.8% compared
to year end 1995. Debt increased $9.8 million or 18.5% during 1996 mainly as a
result of the acquisitions made during the year, net of the operating cash flow
generated. The increase in other liabilities of $14.7 million was primarily due
to liabilities assumed as a result of acquisitions made during the year.

    FINANCIAL LEVERAGE

    The Company's amended and restated Revolving Credit and Reimbursement
Agreement with NationsBank of Florida, N.A., Credit Lyonnais New York Branch and
Societe Generale provides for borrowings through August 1, 2000 of up to $100
million. Interest on borrowings under such facility is at NationsBank's prime
rate, or at a rate based on rates in the certificate of deposit market or LIBOR
plus a margin, which margin varies depending on the Company's financial
performance. The credit agreement includes various covenants, including
restrictions on liens, debt and lease obligations and requirements that certain
financial ratios be maintained.

    In June 1995, to offset the variable rate characteristic of its revolving
line of credit, the Company entered into interest rate swap agreements with
major banks resulting in fixed interest rates on $30 million. During 1996, the
Company and the banks agreed to terminate these interest rate swap agreements
resulting in a net gain to the Company. As of December 31, 1996, approximately
40.6% of the Company's debt was exposed to variable interest rates, up from
15.2% at December 31, 1995.

    The Company's debt to equity ratio (defined as the ratio of debt including
capital lease obligations to total stockholders' equity) was 0.3 to 1 at both
December 31, 1996 and 1995.

    STOCKHOLDERS' EQUITY

    Stockholders' Equity at year end 1996 increased to $196.1 million or 17.9%
from year end 1995. The increase is due primarily to a 58.1% increase in
retained earnings resulting from net income of $29.4 million. Based on income
from continuing operations, the Company's return on average stockholders' equity
was 16.3% compared to 13.5% for 1995.

    CASH FLOWS

    NET CASH PROVIDED BY OPERATING ACTIVITIES

    Net cash provided by operating activities in 1996 decreased $14.8 million or
35.3% compared to 1995 and in 1995 increased $8.6 million or 26.1% over 1994.
The decrease in 1996 was primarily the result of an increase in inventory in the
fourth quarter in response to a strong sales trend in the quarter and an
increase in trade accounts receivable driven by increased sales volume.

    The improvement in 1995 over 1994 was primarily the result of improved
profitability, improvement in the quality of trade accounts receivable and
reduction in inventory through better management which was offset to some degree
by a reduction in trade accounts payable associated with the reduction in
inventory and a change in payment terms of a significant vendor.

    NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

    Investing activities over the past three years reflect cash used to upgrade
fixed assets and make acquisitions and cash provided through the sale of certain
operating segments. In August 1996, the Company acquired all of the outstanding
common stock of Utility Products Supply for $5.6 million, requiring a cash
outlay at closing of $4.5 million. In November 1996, the Company acquired Cable
& Connector Warehouse, Inc. for $20.0 million plus contingent consideration of
up to $4.0 million based upon achievement of certain operating results in 1997,
requiring a cash outlay at closing of $20 million (see

                                       14
<PAGE>
"Significant Transactions" for further details). In November 1995, the Company
acquired the assets of Davies Electric, Little Rock, Arkansas for $2.4 million,
requiring a cash outlay of $1.7 million at closing. In 1994, capital
expenditures were up as a result of upgrading computer systems in the Eastern
Region. Additionally, $37.2 million in cash was generated from the sale of the
Apparel Division.

    On January 17, 1997, the Company acquired Southland Electrical Supply, a
distributor of electrical parts and supplies with eight locations in Kentucky,
for a cash purchase price of approximately $25.0 million.

    NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES

    In 1996, the Company incurred net borrowings of $15.2 million to finance the
acquisitions of Utility Products Supply and Cable & Connector Warehouse, Inc. As
of December 31, 1996, the Company had $25.5 million outstanding on its revolving
line of credit.

    In 1995, the Company used cash to redeem $35.5 million of 7% Convertible
Subordinated Debentures and pay off the 4.375% Senior Note Due June 30, 1995
which was associated with the acquisition of Summers. As of December 31, 1995,
the Company had $8.1 million outstanding on its revolving line of credit. In
1994, the Company received a capital infusion from the sale of common stock to
Rexel, S. A. totaling $31.0 million. These funds, along with cash generated from
operating activities and investing activities, were used to repay $61.5 million
in revolving credit and $15.6 million in other financial debt.

    LIQUIDITY AND CAPITAL RESOURCES

    The Company's working capital requirements are generally met by internally
generated funds and short-term borrowings under the Credit Agreement. Management
believes sufficient cash resources will be available to support its long-term
growth strategies through internally generated funds, credit arrangements and
the ability of the Company to obtain additional financing. However, no assurance
can be given that financing will continue to be available on attractive terms.

    On September 19, 1995, the Company announced its intention to repurchase up
to two million shares of its common stock on the open market. As of December 31,
1996, 1,600 shares have been purchased.

    The Company regularly reviews possible acquisitions of businesses, and may
from time to time, in the future, acquire other businesses. The Company expects
to make $5.5 million of capital expenditures (excluding acquisitions) in 1997.

    The Company continually reviews the impact of inflation. Pricing policies
are reviewed regularly and, to the extent permitted by competition, the Company
passes increased costs on by increasing the sales price. The Company will
continue to monitor the impact of inflation and will consider these matters in
setting its pricing policies.

                                       15
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

    The following financial statements, supplementary financial information and
schedules are filed as part of this Report:

    Report of Independent Accountants

    Financial Statements:

        Consolidated Balance Sheets, December 31, 1996 and 1995

        Consolidated Statements of Income, Years Ended December 31, 1996, 1995
    and 1994

       Consolidated Statement of Changes in Stockholders' Equity, Years Ended
        December 31, 1996, 1995 and 1994

        Consolidated Statements of Cash Flows, Years Ended December 31, 1996,
    1995 and 1994

        Notes to Consolidated Financial Statements

    Supplementary Financial Information

    Financial Statement Schedule:

        Schedule II-- Valuation and Qualifying Accounts, Years Ended
                   December 31, 1996, 1995 and 1994

    All schedules not mentioned above are omitted for the reason that they are
not required or are not applicable, or the information is included in the
Consolidated Financial Statements or the Notes thereto.

    The foregoing financial statements are incorporated by reference in certain
registration statements on Form S-8 of the Company and the prospectuses relating
thereto in reliance upon the report of Coopers & Lybrand L. L. P. pertaining to
such financial statements given upon the authority of such firm as experts in
accounting and auditing.

                                       16
<PAGE>
                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
Rexel, Inc.:

    We have audited the consolidated financial statements and the financial
statement schedule of Rexel, Inc. and subsidiaries listed in Item 8 of this Form
10-K. These financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and financial statement schedule based on
our audits.

    We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

    In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Rexel, Inc. and
subsidiaries as of December 31, 1996 and 1995 and the consolidated results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1996 in conformity with generally accepted accounting
principles. In addition, in our opinion, the financial statement schedule
referred to above, when considered in relation to the basic financial statements
taken as a whole, presents fairly, in all material respects, the information
required to be included therein.

                                          /s/ COOPERS & LYBRAND L. L. P.
--------------------------------------------------------------------------------
                                          Coopers & Lybrand L. L. P.

Miami, Florida
February 14, 1997

                                       17
<PAGE>
                                  REXEL, INC.

                          CONSOLIDATED BALANCE SHEETS

                           DECEMBER 31, 1996 AND 1995
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                             1996       1995
                                                                                           ---------  ---------
<S>                                                                                        <C>        <C>
                                                    ASSETS
Current assets:
  Cash and cash equivalents..............................................................  $  14,396  $  10,013
  Accounts and notes receivable, less allowance for doubtful accounts of $3,004 in 1996
    and $2,680 in 1995...................................................................    156,450    138,604
  Inventories............................................................................    117,657    102,239
  Prepaid expenses and other current assets..............................................     10,423      8,344
  Deferred income taxes..................................................................      3,747      3,849
                                                                                           ---------  ---------
    Total current assets.................................................................    302,673    263,049
Investments and noncurrent receivables...................................................        814      1,069
Fixed assets, at cost:
  Land...................................................................................      8,196      8,196
  Buildings and leasehold improvements...................................................     28,485     26,531
  Machinery, equipment and other tangible property.......................................     45,010     37,861
                                                                                           ---------  ---------
                                                                                              81,691     72,588
  Less, accumulated depreciation and amortization........................................     33,473     23,135
                                                                                           ---------  ---------
  Fixed assets -- net....................................................................     48,218     49,453
                                                                                           ---------  ---------
Other assets.............................................................................      3,286      2,135
Goodwill, net of accumulated amortization of $8,695 in 1996 and $6,996 in 1995...........     73,947     58,953
                                                                                           ---------  ---------
                                                                                           $ 428,938  $ 374,659
                                                                                           ---------  ---------
                                                                                           ---------  ---------
                                     LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Short-term debt........................................................................  $  25,500  $   8,050
  Current portion of long-term debt......................................................      7,737      7,757
  Accounts and notes payable -- trade, and other liabilities.............................    161,377    147,031
  Income taxes payable...................................................................      2,186      3,725
                                                                                           ---------  ---------
    Total current liabilities............................................................    196,800    166,563
Long-term debt...........................................................................     29,582     37,219
Other long-term liabilities..............................................................      3,476      3,363
Deferred income taxes....................................................................      2,973      1,195
Commitments and contingencies (Note 11)
Stockholders' equity:
  Preferred stock (authorized 2,000,000 shares, none issued).............................     --         --
  Common stock (26,313,633 and 26,258,133 shares issued in 1996 and 1995)................     26,314     26,258
  Capital surplus........................................................................     94,706     94,206
  Retained earnings......................................................................     79,976     50,580
  Treasury stock, at cost (621,243 and 609,143 shares in 1996 and 1995)..................     (4,889)    (4,725)
                                                                                           ---------  ---------
  Total stockholders' equity.............................................................    196,107    166,319
                                                                                           ---------  ---------
                                                                                           $ 428,938  $ 374,659
                                                                                           ---------  ---------
                                                                                           ---------  ---------
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       18
<PAGE>
                                  REXEL, INC.

                       CONSOLIDATED STATEMENTS OF INCOME

                  YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                              1996          1995          1994
                                                                          ------------  ------------  ------------
<S>                                                                       <C>           <C>           <C>
Net sales...............................................................  $  1,159,446  $  1,120,688  $  1,065,543
Cost of goods sold......................................................       917,907       890,605       853,041
                                                                          ------------  ------------  ------------
  Gross profit..........................................................       241,539       230,083       212,502
Selling and administrative expense......................................       185,699       184,687       187,423
                                                                          ------------  ------------  ------------
  Operating profit......................................................        55,840        45,396        25,079
Interest expense........................................................         5,110         7,688         9,577
Other income/(expense)--net.............................................           394           (29)        1,026
                                                                          ------------  ------------  ------------
Income from continuing operations before income taxes...................        51,124        37,679        16,528
Income tax provision....................................................        21,728        16,579         7,270
                                                                          ------------  ------------  ------------
  Income from continuing operations.....................................        29,396        21,100         9,258
Loss from discontinued operations, net of income tax benefit of $256....       --            --               (327)
                                                                          ------------  ------------  ------------
Income before extraordinary charge......................................        29,396        21,100         8,931
Extraordinary charge, net of income tax benefit of $837.................       --             (1,325)      --
                                                                          ------------  ------------  ------------
  Net income............................................................  $     29,396  $     19,775  $      8,931
                                                                          ------------  ------------  ------------
                                                                          ------------  ------------  ------------
Income (loss) per common share:
  Primary
    Income from continuing operations...................................  $       1.13  $        .85  $        .39
    Loss from discontinued operations, net of income taxes..............       --            --               (.01)
    Extraordinary charge................................................       --               (.05)      --
                                                                          ------------  ------------  ------------
    Net income..........................................................  $       1.13  $        .80  $        .38
                                                                          ------------  ------------  ------------
                                                                          ------------  ------------  ------------
  Fully Diluted (a)
    Income before extraordinary charge..................................                $        .79
    Extraordinary charge................................................                        (.05)
                                                                                        ------------
    Net Income..........................................................                $        .74
                                                                                        ------------
                                                                                        ------------
Average number of common and common equivalent shares
  Primary...............................................................        25,986        24,949        23,765
                                                                          ------------  ------------  ------------
                                                                          ------------  ------------  ------------
  Fully Diluted.........................................................                      28,214
                                                                                        ------------
                                                                                        ------------
</TABLE>

------------------------

(a) Fully diluted income (loss) per common share was consistent with primary
    earnings per share in 1996 and 1994.

          See accompanying notes to consolidated financial statements.

                                       19
<PAGE>
                                  REXEL, INC.
           CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

                  YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                          UNREALIZED
                                                                            CUMULATIVE     LOSSES ON
                                                                              FOREIGN     MARKETABLE     TREASURY
                                         COMMON      CAPITAL    RETAINED    TRANSLATION     EQUITY       STOCK, AT
                                          STOCK      SURPLUS    EARNINGS    ADJUSTMENT    SECURITIES       COST        TOTAL
                                       -----------  ---------  -----------  -----------  -------------  -----------  ---------
<S>                                    <C>          <C>        <C>          <C>          <C>            <C>          <C>
Balance at January 1, 1994...........   $  21,214   $  53,818   $  21,874    $  (1,333)    $    (625)    $  (2,426)  $  92,522
Net income...........................                               8,931                                                8,931
Issuance of 3,491,280 shares.........       3,491      27,536                                                           31,027
Foreign translation adjustment.......                                              378                                     378
Sale of apparel parts and supplies
  distribution business..............                                              955                      (2,111)     (1,156)
Marketable equity security
  adjustment.........................                                                           (250)                     (250)
                                       -----------  ---------  -----------  -----------        -----    -----------  ---------
Balance at December 31, 1994.........      24,705      81,354      30,805       --              (875)       (4,537)    131,452
Net Income...........................                              19,775                                               19,775
Issuance of 1,517,000 shares upon
  conversion of 7% Convertible
  Subordinated Debentures............       1,517      13,001                                                           14,518
Expenses incurred in connection with
  redemption of 7% Convertible
  Subordinated Debentures............                    (352)                                                            (352)
Issuance of 35,900 shares pursuant to
  Stock Incentive Plan and 18,048
  treasury shares acquired as
  payment............................          36         203                                                 (188)         51
Marketable equity security
  adjustment.........................                                                            875                       875
                                       -----------  ---------  -----------  -----------        -----    -----------  ---------
Balance at December 31, 1995.........      26,258      94,206      50,580       --            --            (4,725)    166,319
Net Income...........................                              29,396                                               29,396
Issuance of 55,500 shares pursuant to
  Stock Incentive Plan and 10,500
  treasury shares acquired as
  payment............................          56         315                                                 (146)        225
Acquisition of 1,600 treasury
  shares.............................                                                                          (18)        (18)
Tax benefit on exercise of
  nonqualified stock options.........                     185                                                              185
                                       -----------  ---------  -----------  -----------        -----    -----------  ---------
Balance at December 31, 1996.........   $  26,314   $  94,706   $  79,976    $  --         $  --         $  (4,889)  $ 196,107
                                       -----------  ---------  -----------  -----------        -----    -----------  ---------
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       20
<PAGE>
                                  REXEL, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                  YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                          1996       1995       1994
                                                                                        ---------  ---------  ---------
<S>                                                                                     <C>        <C>        <C>
Cash flows from operating activities:
  Net income..........................................................................  $  29,396  $  19,775  $   8,931
                                                                                        ---------  ---------  ---------
  Adjustments to reconcile net income to net cash provided by operating activities
    Depreciation and amortization.....................................................      8,494      8,949      9,718
    Provision for losses on accounts receivable.......................................       (303)       827      3,600
    Deferred income taxes.............................................................      1,428     (4,773)     3,070
    Loss on redemption of 7% Convertible Subordinated Debentures......................     --          2,162     --
    Gain on sale of investments.......................................................     --           (991)    --
    Provision for loss on investment and noncurrent receivable........................     --          1,975     --
    Loss on sale of apparel division..................................................     --         --          1,200
    Changes in assets and liabilities, net of effect of acquisitions and sale of net
     assets:
        Accounts and notes receivable.................................................     (7,434)     4,651    (17,209)
        Inventories...................................................................     (4,802)    10,008      5,209
        Prepaid expenses and other current assets.....................................     (1,811)       590        114
        Accounts and notes payable--trade, and other liabilities......................      2,410     (9,997)    20,434
        Income taxes payable..........................................................       (282)     8,712     (1,931)
    Other, net........................................................................        (85)      (125)       (19)
                                                                                        ---------  ---------  ---------
      Total adjustments...............................................................      2,385     21,988     24,186
                                                                                        ---------  ---------  ---------
      Net cash provided by operating activities.......................................     27,011     41,763     33,117
                                                                                        ---------  ---------  ---------
Cash flows from investing activities:
  Capital expenditures................................................................     (4,634)    (5,052)   (12,094)
  Acquisitions of businesses, net of cash acquired....................................    (24,490)    (1,720)    --
  Proceeds from sale of net assets....................................................     --          4,050     37,199
  Contingent payments to former shareholders of acquired businesses...................     --         --         (5,250)
  Other investing activities..........................................................       (199)       761     (2,211)
                                                                                        ---------  ---------  ---------
  Net cash (used in) provided by investing activities.................................    (29,323)    (1,961)    17,644
                                                                                        ---------  ---------  ---------
Cash flows from financing activities:
  Net borrowings (payments) under line of credit arrangements.........................     15,150      8,050    (61,500)
  Proceeds from exercise of stock options.............................................        225         51     --
  Redemption of 7% Convertible Subordinated Debentures................................     --        (36,780)    --
  Proceeds from issuance of common stock to Rexel, net of issuance costs..............     --         --         31,027
  Other debt payments and financing activities, net...................................     (8,680)   (24,953)   (15,576)
                                                                                        ---------  ---------  ---------
  Net cash provided by (used in) financing activities.................................      6,695    (53,632)   (46,049)
                                                                                        ---------  ---------  ---------
  Net increase (decrease) in cash and cash equivalents................................      4,383    (13,830)     4,712
Cash and cash equivalents at beginning of year........................................     10,013     23,843     19,131
                                                                                        ---------  ---------  ---------
Cash and cash equivalents at end of year..............................................  $  14,396  $  10,013  $  23,843
                                                                                        ---------  ---------  ---------
                                                                                        ---------  ---------  ---------
Supplemental disclosure of cash flow information:
        Cash paid during the year for:
        Interest......................................................................  $   5,272  $   9,427  $  11,660
                                                                                        ---------  ---------  ---------
                                                                                        ---------  ---------  ---------
        Income taxes..................................................................  $  20,110  $  11,352  $   5,660
                                                                                        ---------  ---------  ---------
                                                                                        ---------  ---------  ---------
Supplemental information of businesses acquired:
        Fair value of assets acquired, other than cash................................  $  40,283  $   3,350  $  --
        Liabilities assumed...........................................................    (14,743)      (972)    --
        Liability issued to seller....................................................     (1,050)      (658)    --
                                                                                        ---------  ---------  ---------
        Cash paid.....................................................................  $  24,490  $   1,720  $  --
                                                                                        ---------  ---------  ---------
                                                                                        ---------  ---------  ---------
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       21
<PAGE>
                                  REXEL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    (A) CONSOLIDATION

    The consolidated financial statements include the accounts of the Company
and all of its subsidiaries. All significant intercompany transactions and
balances have been eliminated. The Company's continuing operations consist
solely of the distribution of electrical parts and supplies, principally in the
southern United States.

    (B) USE OF ESTIMATES

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

    (C) CASH AND CASH EQUIVALENTS

    Highly liquid investments with a maturity of three months or less when
purchased are generally considered to be cash equivalents. The Company maintains
its cash in bank deposit accounts which at times exceed federally insured
limits. The Company has not experienced any losses in such accounts.

    (D) INVENTORIES

    Inventories are stated at the lower of LIFO cost or market. Had the FIFO
method been used to value inventories, total inventories would have increased
$12,464 and $14,514 at December 31, 1996 and 1995, respectively.

    (E) INVESTMENTS AND NONCURRENT RECEIVABLES

    Investments and noncurrent receivables are stated at the lower of cost or
net realizable value.

    (F) LONG-LIVED ASSETS

    Long-lived assets and certain identifiable intangible assets held or used by
the Company are reviewed for impairment of the carrying amount of such assets.
An impairment loss is recognized in the event that facts and circumstances
indicate that the carrying amount of an asset may not be recoverable, and an
estimate of future undiscounted cash flows is less than the carrying amount of
the assest. Impairments are recognized as losses in the current period.

    (G) DEPRECIATION AND AMORTIZATION

    Depreciation, computed by means of straight-line and accelerated methods, is
based on the estimated useful lives of the related assets. Leasehold
improvements are amortized over their respective lease terms or their estimated
useful lives, if shorter.

    Goodwill, representing the cost in excess of net assets of acquired
businesses, is being amortized over 40 years. At each balance sheet date, the
Company reviews the carrying value of goodwill in relation to current and
expected operating results of the businesses which benefit therefrom in order to
assess whether there has been a permanent impairment of goodwill.

    (H) EARNINGS PER SHARE

    Primary earnings per share are based on the weighted average number of
common and common equivalent shares outstanding during the year. Fully diluted
earnings per share in 1995 assume the

                                       22
<PAGE>
                                  REXEL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
conversion of the convertible debentures at the beginning of the year and the
resultant reduction in interest costs, net of tax.

    (I) ACCOUNTING FOR STOCK BASED COMPENSATION

    Statement of Financial Accounting Standards ("SFAS") No.123, "Accounting for
Stock Based Compensation" encourages but does not require companies to record
compensation cost for stock based compensation plans at fair value. The Company
has choosen to continue to account for stock based compensation using the
intrinsic value method prescribed in Accounting Principles Board ("APB") Opinion
No. 25, "Accounting for Stock Issued to Employees," and related interpretations.
Accordingly, compensation cost for stock options is measured based on the
excess, if any, of the quoted market price of the Company's stock at the date of
the grant over the exercise price of the option. Any income tax benefit from the
exercise and early disposition of stock options is accounted for as a credit to
capital surplus.

    (J) FUTURE IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

    In February 1997, the Financial Accounting Standards Board (the FASB) issued
Statement of Financial Accounting Standard No. 128, "Earnings Per Share" (FAS
128). FAS 128 specifies new standards designed to improve the earnings per share
(EPS) information provided in financial statements by simplifying the existing
computational guidelines, revising the disclosure requirements, and increasing
the comparability of EPS data on an international basis. Some of the changes
made to simplify the EPS computations include: (a) eliminating the presentation
of primary EPS and replacing it with basic EPS, with the principal difference
being that common stock equivalents (CSEs) are not considered in computing basic
EPS, (b) eliminating the modified treasury stock method and the three percent
materiality provision, and (c) revising the contingent share provisions and the
supplemental EPS data requirements. FAS 128 also makes a number of changes to
existing disclosure requirements. FAS 128 is effective for financial statements
issued for periods ending after December 15, 1997, including interim periods.
The Company has not yet determined the impact of the implementation of FAS 128.

2. SIGNIFICANT TRANSACTIONS

    On November 12, 1992, pursuant to a purchase agreement dated April 22, 1992
among the Company and Rexel, S.A. and certain affiliates of Rexel, S. A.
("Rexel"), the Company issued to Rexel 6,284,301 shares of the Company's common
stock in exchange for all of the stock of an affiliated company and $9,885 in
cash. As a result, Rexel obtained beneficial ownership of 30% of the outstanding
common stock of the Company.

    On March 1, 1994, the Company sold to Rexel 3,491,280 newly issued shares of
Company common stock for a total cash purchase price of $31,422. As a result,
Rexel increased its beneficial ownership to 40%. As of March 1, 1997, Rexel had
further increased its beneficial ownership to approximately 50.2% through open
market purchases.

3. ACQUISITIONS

    On August 7, 1996, the Company acquired the common stock of Utility Products
Supply of Denver, Colorado ("UPS"), a distributor of electrical products to the
utility industries with locations in Colorado, Arizona, California and Kansas,
for cash and deferred payments totaling $5.6 million (including acquisition
costs of $0.1 million).

    On November 12, 1996, the Company acquired the common stock of Cable &
Connector Warehouse, Inc. of Dallas, Texas ("CCW"), a distributor of electronic
wire, cable, connectors and related apparatus to

                                       23
<PAGE>
                                  REXEL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

3. ACQUISITIONS (CONTINUED)
manufacturers of data and telecommunication products with locations in
Louisiana, Texas, Colorado, California, Oregon and Kansas, for cash
consideration of $20.2 million (including $0.2 million of acquisition costs),
plus contingent consideration of up to $4.0 million based upon achieving certain
operating results in 1997. Any contingent payments will be recorded as
additional purchase price

    Each of these acquisitions has been recorded as a purchase, and the excess
of the total purchase price over the fair value of the net assets acquired ($3.0
million for UPS and $13.7 million for CCW) is being amortized over 40 years.
Results of operations of both companies are included in the Company's financial
statements from the respective dates of acquisition.

    The following table summarizes the effect on consolidated sales and income
from continuing operations of the Company for 1996 and 1995, on an unaudited pro
forma basis, assuming the acquisitions had been consummated as of January 1,
1995, the year preceding the year of acquisition:

<TABLE>
<CAPTION>
                                                                        1996          1995
                                                                    ------------  ------------
<S>                                                                 <C>           <C>
Net sales.........................................................  $  1,212,403  $  1,185,760
                                                                    ------------  ------------
                                                                    ------------  ------------
Income before extraordinary charge................................  $     30,043  $     21,731
                                                                    ------------  ------------
                                                                    ------------  ------------
Net income........................................................  $     30,043  $     20,406
                                                                    ------------  ------------
                                                                    ------------  ------------
Income per share before extraordinary charge......................  $       1.16  $        .87
                                                                    ------------  ------------
                                                                    ------------  ------------
Net income per share..............................................  $       1.16  $        .82
                                                                    ------------  ------------
                                                                    ------------  ------------
</TABLE>

    The pro forma results are not necessarily indicative of what actually would
have occurred if the acquisitions had been in effect at the beginning of the
period or are they necessarily indicative of future consolidated results.

4. DISCONTINUED OPERATIONS

    On July 13, 1994 the Company sold its apparel parts and supplies
distribution business ("Apparel")for consideration valued at approximately $44.0
million, including a subordinated note from the buyer and warrants to purchase
approximately 15% of the buyer. The net proceeds from the sale approximated book
value of the net assets sold, but resulted in a loss on disposal of $0.7
million, net of taxes, due primarily to the recognition of previously
established deferred foreign translation adjustments. On July 26, 1995, the
Company sold the note, warrant and certain other assets with a total aggregate
book value of approximately $3.1 million to the buyer for cash of approximately
$4.1 million. The operating results of this business are included in the
Consolidated Statements of Income as discontinued operations in 1994. Summarized
results of the discontinued operations for 1994 (excluding the loss on disposal)
are as follows:

<TABLE>
<S>                                                                  <C>
Sales..............................................................  $  40,819
                                                                     ---------
                                                                     ---------
Net income.........................................................  $     345
                                                                     ---------
                                                                     ---------
</TABLE>

    Interest expense of $1,983 was allocated to Apparel operating results based
upon net assets of the Apparel operation.

5. SHORT-TERM DEBT

    The Company entered into a Revolving Credit and Reimbursement Agreement,
dated as of December 17, 1993 (the "Credit Agreement"), with NationsBank of
Florida, N.A., and Credit Lyonnais New York

                                       24
<PAGE>
                                  REXEL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

5. SHORT-TERM DEBT (CONTINUED)
Branch. The Credit Agreement was amended on August 8, 1995 to add Societe
Generale as a participant in the facility and to provide for borrowings through
August 1, 2000 of up to $100 million. Interest on borrowings under such facility
is at a rate based on rates in the certificate of deposit market or LIBOR plus a
margin, which margin varies depending on the Company's financial performance.
The Credit Agreement includes various covenants, including restrictions on
liens, debt and lease obligations and requirements that certain financial ratios
be maintained.

    In June 1995, to offset the variable rate characteristic of its revolving
line of credit, the Company entered into interest rate swap agreements with
major banks resulting in fixed interest rates on $30 million. During 1996, the
Company and the banks agreed to terminate these interest rate swap agreements,
resulting in an immaterial net gain to the Company.

6. LONG-TERM DEBT

    Long-term debt, less current installments, consists of:

<TABLE>
<CAPTION>
                                                                              DECEMBER 31,
                                                                          --------------------
                                                                            1996       1995
                                                                          ---------  ---------
<S>                                                                       <C>        <C>
9.78% Senior Notes due March 15, 2001...................................  $  35,720  $  42,860
Other notes payable.....................................................      1,599      2,116
                                                                          ---------  ---------
                                                                             37,319     44,976
Less, current installments..............................................      7,737      7,757
                                                                          ---------  ---------
                                                                          $  29,582  $  37,219
                                                                          ---------  ---------
                                                                          ---------  ---------
</TABLE>

    The 9.78% Senior Notes are payable ratably over a seven-year period
commencing March 15, 1995 with interest payable semi-annually at a rate of 9.78%
per annum. Under the terms of the Senior Notes (as amended), the Company may pay
dividends and make other restricted payments (as defined) to the extent of
$26,000 plus 50% of consolidated net income (as defined) plus certain other
amounts and is subject to certain restrictions on the incurrence of additional
debt and other transactions and to other covenants calling for minimum levels of
working capital and certain financial ratios.

    On August 11, 1995, the Company redeemed all of its outstanding 7%
Convertible Subordinated Debentures Due 2014, which had an original principal
amount of $50 million. Of such principal amount, $35.5 million was redeemed for
cash at a redemption price of 102.8% of principal, plus accrued and unpaid
interest to the redemption date, or a total redemption payment of $36.5 million.
The balance of the Debentures was converted in accordance with the terms thereof
into Common Stock of the Company at a conversion price of $9.57 per share, or a
total of 1,517,000 shares. Results for 1995 include an extraordinary charge of
approximately $2.2 million ($1.3 million after tax or $.05 per share) in
connection with the redemption. These charges result primarily from the premium
paid to redeem the Debentures and the acceleration of unamortized financing
costs associated with the issuance of the Debentures in 1989.

                                       25
<PAGE>
                                  REXEL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

6. LONG-TERM DEBT (CONTINUED)
Assuming the conversions and redemption occurred as of January 1, 1995, primary
income per share would have been as follows:

<TABLE>
<CAPTION>
                                                                                    YEAR ENDED
                                                                                  ---------------
                                                                                   DECEMBER 31,
                                                                                       1995
                                                                                  ---------------
<S>                                                                               <C>
Income from continuing operations...............................................     $     .84
Discontinued operations.........................................................        --
Extraordinary charge............................................................          (.05)
                                                                                           ---
Net income......................................................................     $     .79
                                                                                           ---
                                                                                           ---
</TABLE>

    Long-term debt maturities during the next five years are as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,                                                       AMOUNT
----------------------------------------------------------------------------  ---------
<S>                                                                           <C>
      1997..................................................................  $   7,737
      1998..................................................................      7,691
      1999..................................................................      7,447
      2000..................................................................      7,284
      2001..................................................................      7,160
</TABLE>

    Based on borrowing rates currently available to the Company for long-term
debt with similar terms and average maturities, the fair value of the Company's
long-term indebtedness was approximately $39,744 and $50,197 as of December 31,
1996 and 1995.

7. STOCKHOLDERS' EQUITY

    The authorized capital stock of the Company is 47,000,000 shares, consisting
of 2,000,000 shares of Preferred Stock and 45,000,000 shares of Common Stock
with a par value of $1 per share.

    At December 31, 1996, 1,724,353 shares of common stock are reserved for
issuance pursuant to the Company's Stock Incentive Plan.

    On September 19, 1995, the Board of Directors authorized the purchase of up
to 2,000,000 shares of its outstanding common stock from time to time, in open
market transactions or otherwise. Such purchases, if commenced, may be suspended
or discontinued at any time. As of December 31, 1996, 1,600 shares have been
purchased under this program.

8. STOCK OPTION PLANS

    Under the Company's 1988 and 1985 Stock Option Plans, options to purchase up
to 2,266,667 shares and 829,630 shares of common stock, respectively, were
available to be granted to key employees of the Company. The 1985 plan
terminated on January 15, 1995. The 1988 Plan also provides that each director
of the Company, other than one who is an officer or employee, be granted a
non-qualified stock option to purchase 10,000 shares of Company common stock and
provides for annual grants to directors if defined levels of income are achieved
by the Company. For each plan, the option period is either ten or eleven years
from the date of grant, and options may be exercised at various times depending
on the provisions of the grant.

                                       26
<PAGE>
                                  REXEL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

8. STOCK OPTION PLANS (CONTINUED)
    Information regarding the Company's stock option plans is summarized below:

<TABLE>
<CAPTION>
                                                                                   NUMBER OF
                                                     NUMBER OF    OPTION PRICE      SHARES
                                                       SHARES       PER SHARE     EXERCISABLE
                                                     ----------  ---------------  -----------
<S>                                                  <C>         <C>              <C>
Outstanding at January 1, 1994.....................     617,118  $    3.80-$7.00      20,118
  Granted..........................................     160,000        6.50-8.06
  Terminated and cancelled.........................    (207,118)       3.80-7.00
                                                     ----------
Outstanding at December 31, 1994...................     570,000        6.50-8.06     237,200
  Granted..........................................     399,000        6.00-7.25
  Terminated and cancelled.........................     (70,000)            6.69
  Exercised........................................     (35,900)       6.63-6.69
                                                     ----------
Outstanding at December 31, 1995...................     863,100        6.00-8.06     352,040
  Granted..........................................     196,000    13.125-13.875
  Terminated and cancelled.........................      (1,200)            6.00
  Exercised........................................     (55,500)      6.00-8.065
                                                     ----------
Outstanding at December 31, 1996...................   1,002,400  $  6.00-$13.875     462,800
                                                     ----------
</TABLE>

    All options were granted at market value on the date of grant.

    As of December 31, 1996, options for the purchase of 721,953 shares were
available for future grant under the 1988 plan.

    Had compensation costs for the Company's 1988 stock option plan been
determined based upon the fair value at the grant date for awards under the plan
consistent with the methodology prescribed under SFAS 123 for options granted in
1996 and 1995, the Company's net income and earnings per share for those years
would have been reduced by approximately $321 and $232, respectively, or $.01
per share for both years. The fair value of the options granted during 1996 and
1995 is estimated as $1,594 and $1,460, respectively, on the dates of grant
using the Black-Scholes option-pricing model with the following assumptions:
volatility of 40%, expected dividends of 0, risk-free interest rates of 5.6% to
7.6%, and terms of 10 years.

9. EMPLOYEE BENEFIT PLANS

    The Rexel, Inc. Section 401(k) Savings Plan, whereby participants may
contribute a percentage of compensation, but not in excess of the maximum
allowed under the Internal Revenue Code, became effective January 1, 1995. The
Company matches 50% of employee contributions to the plan up to 6% of an
employee's base compensation ("Matching Contributions"). In addition, the
Company may make additional contributions at the discretion of the Board of
Directors. Employees who complete one year of service are eligible to
participate and are always vested 100% in the Matching Contributions. Vesting in
discretionary contributions is based on years of service with 100% vesting after
seven years.

    This plan replaced all other plans of the Company with the exception of a
nonqualified defined benefit supplemental retirement plan.

    The nonqualified defined benefit supplemental retirement plan covers certain
key employees and is not funded. Benefits under this plan are based on years of
service and defined levels of compensation. No new enrollments are permitted
into the plan and salary levels under the plan have been frozen.

                                       27
<PAGE>
                                  REXEL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

9. EMPLOYEE BENEFIT PLANS (CONTINUED)
    The Company had a qualified noncontributory defined benefit pension plan
covering certain eligible domestic employees of a subsidiary. This plan was
terminated on February 22, 1995 and all obligations were settled. The Company
also had a qualified noncontributory defined benefit pension plan covering
certain eligible domestic employees in the discontinued apparel operation. As
part of the agreement to sell the apparel operation, the purchaser assumed all
obligations under this plan. The Company's funding policy was to contribute
annually the maximum amount that could be deducted for Federal income tax
purposes.

    The Company also had a defined benefit plan maintained for eligible
employees of certain United Kingdom subsidiaries included in the discontinued
apparel operation. The plan was funded annually for the maximum amount permitted
by statute. The benefits were based on years of service and defined levels of
compensation.

    The following table sets forth the funded status of the nonqualified defined
supplemental retirement plan at December 31, 1996 and 1995:

<TABLE>
<CAPTION>
                                                                         1996
                                                                      -----------      1995
                                                                         NON-      -------------
                                                                       QUALIFIED   NON-QUALIFIED
                                                                      -----------  -------------
<S>                                                                   <C>          <C>
Actuarial present value of benefit obligations:
  Vested benefit obligation.........................................   $  (1,419)    $  (1,450)
                                                                      -----------  -------------
                                                                      -----------  -------------
  Accumulated benefit obligation....................................   $  (1,429)    $  (1,514)
                                                                      -----------  -------------
                                                                      -----------  -------------
Projected benefit obligation........................................   $  (1,429)    $  (1,514)
Unrecognized net loss (gain)........................................          20           (32)
Unrecognized net transition obligation..............................      --                26
                                                                      -----------  -------------
  Accrued pension liability.........................................   $  (1,409)    $  (1,520)
                                                                      -----------  -------------
                                                                      -----------  -------------
</TABLE>

                                       28
<PAGE>
                                  REXEL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

9. EMPLOYEE BENEFIT PLANS (CONTINUED)
    Net periodic pension cost for 1996, 1995 and 1994 (excluding the United
Kingdom Plan assumed in the Apparel sale) includes the following components:

<TABLE>
<CAPTION>
                                                   INTEREST COST                                     NET
                                                   ON PROJECTED      ACTUAL           NET         PERIODIC
                                       SERVICE        BENEFIT       RETURN ON    AMORTIZATION      PENSION
                                        COST        OBLIGATIONS      ASSETS      AND DEFERRAL       COST
                                     -----------  ---------------  -----------  ---------------  -----------
<S>                                  <C>          <C>              <C>          <C>              <C>
1996
  Non-Qualified....................   $      12      $     104      $      --      $      26      $     142
                                                                                                      -----

1995
  Non-Qualified....................   $      31      $     133             --      $      26      $     190
  Qualified........................   $      --      $      12      $     (26)     $      (5)     $     (19)
                                                                                                      -----
                                                                                                  $     171
                                                                                                      -----
                                                                                                      -----
1994
  Non-Qualified....................   $      44      $     131             --      $      10      $     185
  Qualified........................   $     158            222           (173)             6      $     213
  Qualified Subsidiary Plan........   $      59            123           (130)           (17)     $      35
                                                                                                      -----
                                                                                                  $     433
                                                                                                      -----
                                                                                                      -----
</TABLE>

    The actuarial assumptions used for each of the plans for 1996, 1995 and 1994
are as follows:

<TABLE>
<CAPTION>
                                                                             QUALIFIED        NON
                                                               QUALIFIED    SUBSIDIARY     QUALIFIED
                                                                 PLAN          PLAN          PLAN
                                                              -----------  -------------  -----------
<S>                                                           <C>          <C>            <C>
1996
Weighted average discounts used in determining the actuarial
  present value of the projected benefit obligation.........         N/A           N/A          7.25
Rates of increase in future compensation levels.............         N/A           N/A           N/A
Expected long-term rates of return on assets................         N/A           N/A           N/A

1995
Weighted average discounts used in determining the actuarial
  present value of the projected benefit obligation.........         N/A           N/A           7.0%
Rates of increase in future compensation levels.............         N/A           5.0%          N/A
Expected long-term rates of return on assets................         N/A           8.5%          N/A

1994
Weighted average discounts used in determining the actuarial
  present value of the projected benefit obligation.........        7.25%         8.25%         8.50%
Rates of increase in future compensation levels.............        4.50%         5.00%          N/A
Expected long-term rates of return on assets................        7.25%         8.50%          N/A
</TABLE>

                                       29
<PAGE>
                                  REXEL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

9. EMPLOYEE BENEFIT PLANS (CONTINUED)
    Prior to January 1, 1995, certain subsidiaries had noncontributory
profit-sharing plans and defined contribution pension plans providing for
minimum contributions based upon defined levels of subsidiary income or employee
compensation.

    Pension and profit-sharing expense for the years ended December 31, 1996,
1995 and 1994 amounted to approximately $3,761, $3,553 and $2,880, respectively.

    A subsidiary of the Company, acquired in 1993, provides certain health care
benefits for eligible retired employees. The status of the plan at December 31,
1996 and 1995 is as follows:

<TABLE>
<CAPTION>
                                                                               1996       1995
                                                                             ---------  ---------
<S>                                                                          <C>        <C>
Accumulated postretirement benefit obligation ("APBO").....................  $   1,376  $   1,323
Unrecognized prior service cost............................................       (260)      (279)
Unrecognized net loss......................................................       (336)      (264)
                                                                             ---------  ---------
Accrued postretirement benefit cost........................................  $     780  $     780
                                                                             ---------  ---------
</TABLE>

    The postretirement benefit cost in 1996 and 1995 included the following
components:

<TABLE>
<CAPTION>
                                                                                  1996       1995
                                                                                ---------  ---------
<S>                                                                             <C>        <C>
Interest cost on APBO.........................................................  $      84  $      98
Net amortization and deferral.................................................         29         22
                                                                                ---------  ---------
                                                                                $     113  $     120
                                                                                ---------  ---------
                                                                                ---------  ---------
</TABLE>

    The plan is unfunded. The discount rate used in determining APBO was 6.50%
at December 31, 1996 and 1995. The assumed health care trend rate assumed for
1997 was 9.5%. Increasing assumed health care trends one percentage point will
increase the APBO by $167 as of December 31, 1996.

    The Company's Employee Stock Ownership Plan provided eligible employees with
an opportunity to purchase the Company's common stock through payroll
deductions, which were matched by the Company, subject to certain limitations.
Contributions to the plan were invested by an independent trustee in common
stock of the Company. The Company's contributions to the plan, net of
forfeitures, charged to income for 1994 was $592. Effective January 1, 1995,
this plan was merged into the Rexel, Inc. Section 401(k) Savings Plan.

10. INCOME TAXES

    The Company and its U.S. subsidiaries file Federal income tax returns on a
consolidated basis. The provision (benefit) for income taxes has been classified
as follows in the consolidated statements of income:

<TABLE>
<CAPTION>
                                                                  1996       1995       1994
                                                                ---------  ---------  ---------
<S>                                                             <C>        <C>        <C>
Tax provision from continuing operations......................  $  21,728  $  16,579  $   7,270
Tax benefit for discontinued operations.......................     --         --           (256)
Tax benefit for extraordinary charge..........................     --           (837)    --
                                                                ---------  ---------  ---------
                                                                $  21,728  $  15,742  $   7,014
                                                                ---------  ---------  ---------
                                                                ---------  ---------  ---------
</TABLE>

                                       30
<PAGE>
                                  REXEL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

10. INCOME TAXES (CONTINUED)
    The provision (benefit) for income taxes is comprised of the following:

<TABLE>
<CAPTION>
                                                                       1996       1995       1994
                                                                     ---------  ---------  ---------
<S>                                                                  <C>        <C>        <C>
Federal:
  Current..........................................................  $  17,486  $  17,019  $   2,473
  Deferred.........................................................      1,230     (4,465)     3,141
State and local:
  Current..........................................................      2,814      3,496      1,396
  Deferred.........................................................        198       (308)      (111)
Foreign:
  Current..........................................................     --         --             75
  Deferred.........................................................     --         --             40
                                                                     ---------  ---------  ---------
                                                                     $  21,728  $  15,742  $   7,014
                                                                     ---------  ---------  ---------
                                                                     ---------  ---------  ---------
</TABLE>

    Deferred income taxes result from temporary differences in the recognition
of revenue and expenses for financial statement and income tax reporting
purposes. The tax effects of each as of December 31, 1996 and 1995 are as
follows:

<TABLE>
<CAPTION>
                                                                              1996       1995
                                                                            ---------  ---------
<S>                                                                         <C>        <C>
Deferred tax assets:
  Accounts receivable.....................................................      1,228  $   1,562
  Inventory...............................................................      2,348      1,896
  Other liabilities and reserves..........................................      2,437      2,745
  Costs incurred in connection with the Rexel, S. A. acquisition of Rexel,
    Inc...................................................................      1,406      1,233
  Federal foreign tax credit carryforward.................................         22     --
  State net operating loss carryforwards..................................        892      1,278
  Valuation allowance.....................................................       (760)    (1,097)
                                                                            ---------  ---------
  Total deferred tax assets...............................................      7,573      7,617
                                                                            ---------  ---------
Deferred tax liabilities:
  Property, plant and equipment...........................................      4,939      2,295
  Book/tax difference on asset valuation upon acquisition.................      1,860      2,668
                                                                            ---------  ---------
  Total deferred tax liabilities..........................................      6,799      4,963
                                                                            ---------  ---------
  Net deferred tax assets.................................................  $     774  $   2,654
                                                                            ---------  ---------
                                                                            ---------  ---------
</TABLE>

    The change in the valuation allowance between 1996 and 1995 of $337 resulted
from updating estimates of state and local net operating loss utilization.

                                       31
<PAGE>
                                  REXEL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

10. INCOME TAXES (CONTINUED)
    Income before income taxes is comprised of the following:

<TABLE>
<CAPTION>
                                                                 1996       1995       1994
                                                               ---------  ---------  ---------
<S>                                                            <C>        <C>        <C>
Continuing operations:
  Domestic...................................................  $  51,062  $  37,607  $  16,501
  Foreign....................................................         63         72         23
                                                               ---------  ---------  ---------
                                                                  51,125     37,679     16,524
  Discontinued operations....................................     --         --           (583)
  Extraordinary charge.......................................     --         (2,162)    --
                                                               ---------  ---------  ---------
                                                               $  51,125  $  35,517  $  15,941
                                                               ---------  ---------  ---------
                                                               ---------  ---------  ---------
</TABLE>

    A reconciliation for 1996, 1995 and 1994 between the amount computed using
the Federal income tax rate and the effective rate of tax on income (loss),
including discontinued operations, but excluding extraordinary charge, is as
follows:

<TABLE>
<CAPTION>
                                                                            1996       1995       1994
                                                                          ---------  ---------  ---------
<S>                                                                       <C>        <C>        <C>
Statutory Federal income tax rate.......................................       35.0%      35.0%      35.0%
State and local income taxes, net of Federal income tax effect..........        3.8        5.2        4.5
Amortization of goodwill................................................        0.7        0.8        2.0
Costs incurred in connection with the Rexel, S. A. acquisition of Rexel,
  Inc...................................................................     --         --           (1.2)
(Decrease) in taxes resulting from foreign income subject to foreign
  income tax but not expected to be subject to U.S. tax in foreseeable
  future................................................................     --           (0.1)      (0.1)
Increase (decrease) in deferred tax asset valuation allowance...........       (0.7)    --            1.2
Other, net..............................................................        3.7        3.1        2.6
                                                                                ---        ---        ---
  Effective tax rate....................................................       42.5%      44.0%      44.0%
                                                                                ---        ---        ---
                                                                                ---        ---        ---
</TABLE>

11. COMMITMENTS AND CONTINGENCIES

    At December 31, 1996, annual minimum rental commitments under noncancelable
operating leases, primarily for real property, are summarized as follows:

<TABLE>
<S>                                                              <C>
1997...........................................................  $  10,133
1998...........................................................      8,058
1999...........................................................      5,942
2000...........................................................      4,366
2001...........................................................      2,916
2002 and thereafter............................................      6,069
                                                                 ---------
                                                                 $  37,384
                                                                 ---------
                                                                 ---------
</TABLE>

    The minimum annual commitments include amounts payable to an officer of the
Company and/or members of his and his wife's family for certain of the Company's
distribution centers as follows: 1997-- $737; 1998--$727; 1999 - $717;
2000--$717; 2001--$694; thereafter--$172.

                                       32
<PAGE>
                                  REXEL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

11. COMMITMENTS AND CONTINGENCIES (CONTINUED)
    Total rent expense charged to operations for the years ended December 31,
1996, 1995 and 1994 amounted to approximately $10,783, $9,498 and $6,589,
respectively.

    In the normal course of business, the Company is sometimes named as a
defendant in litigation. In the opinion of management, based upon the advice of
counsel, any uninsured liability which may result from the resolution of any
present litigation or asserted claim will not have a material effect on the
Company's financial position, results of operations or cash flows.

12. ACCOUNTS AND NOTES PAYABLE -- TRADE, AND OTHER LIABILITIES

    Accounts and notes payable -- trade and other liabilities consist of the
following:

<TABLE>
<CAPTION>
                                                                             DECEMBER 31,
                                                                        ----------------------
<S>                                                                     <C>         <C>
                                                                           1996        1995
                                                                        ----------  ----------
Accounts and other payables -- trade..................................  $  122,620  $  107,341
Salaries, wages and other compensation................................      15,441      16,794
Pensions, profit sharing and employee benefits........................       5,231       4,781
Taxes, other than income taxes........................................       3,906       2,371
Interest..............................................................       1,105       1,267
Other.................................................................      13,074      14,477
                                                                        ----------  ----------
                                                                        $  161,377  $  147,031
                                                                        ----------  ----------
                                                                        ----------  ----------
</TABLE>

13. RESULTS OF OPERATIONS

    In connection with the resignation of an executive of the Company on March
18, 1994, the Company entered into an agreement with such executive that
provided, among other things, certain payments and acceleration of certain other
payments in connection with the executive's related employment agreement.
Results for 1994 include charges of $1.7 million in connection with this
agreement.

14. RELATED PARTY TRANSACTIONS

    The Company and Rexel, S. A. have entered into a Services Agreement, dated
as of November 1, 1995. The Service Agreement was negotiated and approved by a
special committee of the Board of Directors consisting of persons who are
neither officers nor directors of Rexel, S.A. or its affiliates nor have a
material financial relationship with Rexel, S. A. and its affiliates. Under this
Agreement, in consideration for the benefits to the Company arising from its
association with the worldwide business of Rexel, S. A., including without
limitation, in matters relating to customers, suppliers, employers,
businessmethods and know-how and financial expertise, the Company has agreed to
pay to Rexel, S. A. $600 per year (commencing with 1995). In addition, Rexel, S.
A. has agreed to provide consulting services to the Company relating to specific
projects at the request of the Company at a rate 10% higher than the costs to
Rexel, S. A. of providing such services (including, in the case of employees of
Rexel, S. A., costs based on the wages, social insurance payments and allocated
overhead and general corporate expenses attributable to such employees). Any
payment for consulting services must be approved by the Audit Committee of the
Board of Directors (excluding any member thereof who is an officer or director
of Rexel, S. A. or any of its affiliates or a person that has a material
financial relationship with Rexel, S. A. or any of its affiliates). During 1996
and 1995, the Company requested from Rexel, S. A. services valued at $200 and
$340, respectively, relating to the development of training programs, logistics,
marketing and accounting

                                       33
<PAGE>
                                  REXEL, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

14. RELATED PARTY TRANSACTIONS (CONTINUED)
consulting, enhancement of cash management and treasury systems and a global
agreement on implementation of an inventory management system. In addition,
pursuant to the agreement, Rexel, S. A. consented to the use by the Company of
the name "Rexel". The Services Agreement is effective through December 31, 1996,
subject to automatic renewal for successive one year terms unless terminated on
30 days notice given by either party prior to the commencement of a renewal
term.

15. SUBSEQUENT EVENT

    On January 17, 1997, the Company acquired the assets of Southland Electrical
Supply, a distributor of electrical parts and supplies with eight locations in
Kentucky for a cash purchase price of approximately $25.0 million.

                                       34
<PAGE>
                                  REXEL, INC.

                      SUPPLEMENTARY FINANCIAL INFORMATION

                     YEARS ENDED DECEMBER 31, 1996 AND 1995
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
                                                                                                         FULLY DILUTED
                                                                               PRIMARY EARNINGS             EARNING
                                                                                  PER SHARE                PER SHARE
UNAUDITED                                                                ----------------------------  -----------------
QUARTERLY                                      INCOME BEFORE              INCOME BEFORE                  INCOME BEFORE
FINANCIAL                            GROSS     EXTRAORDINARY     NET      EXTRAORDINARY       NET        EXTRAORDINARY
DATA(1)               NET SALES      PROFIT       CHARGE       INCOME        CHARGE         INCOME          CHARGE
-------------------  ------------  ----------  -------------  ---------  ---------------  -----------  -----------------
<S>                  <C>           <C>         <C>            <C>        <C>              <C>          <C>
1996:
  First............  $    264,757  $   56,260    $   5,619    $   5,619     $     .22      $     .22
  Second...........       291,891      61,065        7,558        7,558           .29            .29
  Third............       297,375      60,869        7,522        7,522           .29            .29
  Fourth...........       305,423      63,345        8,697        8,697           .33            .33
                     ------------  ----------  -------------  ---------         -----          -----
                     $  1,159,446  $  241,539    $  29,396    $  29,396     $    1.13      $    1.13
                     ------------  ----------  -------------  ---------         -----          -----
                     ------------  ----------  -------------  ---------         -----          -----
1995:
  First............  $    278,828  $   55,316    $   4,230    $   4,230     $     .18      $     .18       $     .16
  Second...........       288,686      56,778        4,942        4,942           .20            .20             .18
  Third............       282,263      57,297        5,707        4,165           .23            .17             .22
  Fourth...........       270,911      60,692        6,221        6,438           .24            .25             .24
                     ------------  ----------  -------------  ---------         -----          -----             ---
                     $  1,120,688  $  230,083    $  21,100    $  19,775     $     .85      $     .80       $     .80
                     ------------  ----------  -------------  ---------         -----          -----             ---
                     ------------  ----------  -------------  ---------         -----          -----             ---

<CAPTION>

UNAUDITED
QUARTERLY
FINANCIAL                 NET
DATA(1)                 INCOME
-------------------  -------------
<S>                  <C>
1996:
  First............
  Second...........
  Third............
  Fourth...........

1995:
  First............    $     .16
  Second...........          .18
  Third............          .16
  Fourth...........          .25
                             ---
                       $     .75
                             ---
                             ---
</TABLE>

------------------------

(1) Primary and fully diluted earnings are equivalent in 1996.

          See accompanying notes to consolidated financial statements.

                                       34
<PAGE>
                                  SCHEDULE II

                                  REXEL, INC.

                       VALUATION AND QUALIFYING ACCOUNTS

                  YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                      COLUMN A                          COLUMN B             COLUMN C            COLUMN D      COLUMN E
----------------------------------------------------  -------------  ------------------------  -------------  -----------
<S>                                                   <C>            <C>          <C>          <C>            <C>
                                                                            ADDITIONS
                                                                     ------------------------
                                                       BALANCE AT    CHARGES TO                               BALANCE AT
                                                      BEGINNING OF    COSTS AND                 DEDUCTIONS     CLOSE OF
DESCRIPTION                                              PERIOD       EXPENSES       OTHER     FROM RESERVES    PERIOD
----------------------------------------------------  -------------  -----------  -----------  -------------  -----------
Year ended December 31, 1996:
  Allowance for doubtful accounts...................    $   2,680     $    (303)   $     341(B)   $    (286)(A)  $   3,004
                                                           ------    -----------       -----        ------    -----------
                                                           ------    -----------       -----        ------    -----------
Year ended December 31, 1995:
  Allowance for doubtful accounts...................    $   4,149     $     827    $  --         $   2,296(A)  $   2,680
                                                           ------    -----------       -----        ------    -----------
                                                           ------    -----------       -----        ------    -----------
Year ended December 31, 1994:
  Allowance for doubtful accounts...................    $   4,023     $   3,600    $  --         $   3,474(A)  $   4,149
                                                           ------    -----------       -----        ------    -----------
                                                           ------    -----------       -----        ------    -----------
</TABLE>

------------------------

(A) Accounts charged off, recoveries, and other adjustments, net.

(B) Additions resulting primarily from acquired companies.

                                       35
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
  FINANCIAL DISCLOSURE

    None.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

ITEM 11. EXECUTIVE COMPENSATION

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    Reference is made to the information responsive to the Items comprising this
Part III that is contained in the Company's definitive proxy statement for its
1997 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A under
the Securities Exchange Act of 1934, which is incorporated herein by reference.

                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

    FINANCIAL STATEMENTS AND SCHEDULES

    The financial statements and financial statement schedules included in this
Report are listed in the introductory portion of Item 8.

EXHIBITS

    The following exhibits are filed as part of this Report (for convenience of
reference, exhibits are listed according to numbers assigned in the exhibit
tables of Item 601 of Regulation S-K under the Securities Exchange Act of 1934
and management contracts and compensatory plans are indicated by an asterisk):

<TABLE>
<CAPTION>
  EXHIBIT
    NO.                                                     DESCRIPTION
-----------  ---------------------------------------------------------------------------------------------------------
<C>          <S>

       3.1   Amended and restated certificate of incorporation -- filed as Exhibit 3.1 to the Company's annual report
             on Form 10-K for 1995 and incorporated herein by reference.

       3.2   By-laws of the Company -- filed as exhibit 3.2 to the Company's annual report on Form 10-K for 1993 and
             incorporated herein by reference.

       4.1   Note Agreement, dated as of April 2, 1991, between the Company and The Prudential Insurance Company of
             America -- filed as Exhibit 4.1 to the Company's report on Form 10-Q for the quarter ended March 31, 1991
             and incorporated herein by reference.

       4.2   Amendment No. 2, dated as of November 11, 1992, to the Note Agreement, dated as of April 2, 1991 -- filed
             as Exhibit 4.2 to the Company's annual report on Form 10-K for 1992 and incorporated herein by reference.
</TABLE>

                                       36
<PAGE>
<TABLE>
<C>          <S>
       4.3   Amendment No. 3, dated as of March 30, 1993, to the Note Agreement, dated as of April 2, 1991 -- filed as
             Exhibit 4.3 to the Company's annual report on Form 10-K for 1993 and incorporated herein by reference.

       4.4   Amendment No. 4, dated as of December 17, 1993, to the Note Agreement, dated as of April 2, 1991 -- filed
             as Exhibit 4.4 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein as reference.

       4.5   Amendment No. 5, dated as of December 31, 1994, to the Note Agreement, dated as of April 2, 1991 -- filed
             as exhibit 4.5 to the Company's Annual Report on Form 10-K for 1994 and incorporated herein by reference.

       4.6   Amendment No. 7, dated as of August 8, 1995, to the Note Agreement, dated as of April 2, 1991 -- filed as
             Exibit 10.2 to the Company's report on Form 10-Q for the quarter ended September 30, 1995 and
             incorporated herein by reference.

      10.1   Amended and Restated Revolving Credit and Reimbursement Agreement dated as of August 8, 1995, among the
             Company and NationsBank of Florida, National Association, as agent, and the lenders named therein --
             filed as exhibit 10.1 to the Company's report on Form 10-Q for the quarter ended September 30, 1995 and
             incorporated herein by reference.

      10.2   1988 Stock Incentive Plan, as amended and restated effective March 16, 1995 -- filed as Exhibit 10.2 to
             the Company's annual report on Form 10-K for 1995 and incorporated herein by reference.*

      10.3   Form of indemnification agreement, dated as of November 18, 1986, between the Company and its directors
             and officers -- filed as Exhibit 10.30 to the Company's annual report on Form 10-K for 1986 and
             incorporated herein by reference.

      10.4   Distribution Agreement, dated as of November 12, 1992, between the Company and Worldtex, Inc. -- filed as
             Exhibit 10.25 to the Company's annual report on Form 10-K for 1992 and incorporated herein by reference.

      10.5   Tax Sharing Agreement, dated as of November 12, 1992, between the Company and Worldtex, Inc. -- filed as
             Exhibit 10.26 to the Company's annual report on Form 10-K for 1992 and incorporated herein by reference.

      10.6   Services Agreement, dated as of November 1, 1995, between the Company and Rexel, S. A. -- filed as
             Exhibit 10.7 to the Company's annual report on Form 10-K for 1995 and incorporated herein by reference.

      10.7   Severance Agreement, dated as of March 18, 1994, between the Company, Steinthal Sample Co., Inc. and John
             K. Ziegler -- filed as exhibit 10.19 to the Company's annual report on Form 10-K for 1993 and
             incorporated herein by reference.*

      10.8   Employment Contract, dated as of March 18, 1994, between the Company and Alain C. Viry -- filed as
             Exhibit 10.20 to the Company's annual report or Form 10-K for 1994 and incorporated herein by reference.*

      10.9   Employment Contract, dated as of June 26, 1994, between the Company and Steven M. Hitt -- filed as
             Exhibit 10.21 to the Company's annual report or Form 10'K for 1994 and incorporated herein by reference.*

     10.10   Employment Contract, dated as of April 12, 1993, between Sacks Electrical Supply Co., Inc. and Jules
             Altshuler -- filed as Exhibit 10.22 to the Company's annual report or Form 10-K for 1994 and incorporated
             herein by reference.*
</TABLE>

                                       37
<PAGE>
<TABLE>
<C>          <S>
     10.11   Employment Contract, dated as of May 27, 1994, between the Company and Jon O. Fullerton -- filed as
             Exhibit 10.23 to the Company's annual report or Form 10'K for 1994 and incorporated herein by reference.*

     10.12   Employment Contract, dated as of June 27, 1994, between the Company and Allan M. Gonopolsky -- filed as
             Exhibit 10.24 to the Company's annual report or Form 10'K for 1994 and incorporated herein by reference.*

     10.13   Employment Contract dated as of July 12, 1988 between the Company and Allan M. Gonopolsky -- filed as
             Exhibit 10.2 to the Company's annual report on Form 10-K for 1988 and incorporated herein by reference.*

     10.14   Letter Agreement, dated April 22, 1992, between the Company and Allan M. Gonopolsky relating to his
             Employment Contract -- filed as Exhibit G to the Company's Proxy Statement, dated September 2, 1992, and
             incorporated herein by reference.*

     10.15   Employment Contract dated April 22, 1992, between the Company and Robert M. Merson -- filed as Exhibit D
             to the Company's Proxy Statement, dated September 2, 1992, and incorporated herein by reference.*

      11.1   Statement re computation of per share earnings -- filed herewith.

      21.1   Subsidiaries of the Company -- filed herewith.

      23.1   Consent of Coopers & Lybrand L.L.P. -- filed herewith.

      24.1   Powers of Attorney executed by Messrs. Fullerton, Hitt and Redheuil -- filed herewith.

      24.2   Powers of Attorney executed by certain directors and officers of the Company -- filed as Exhibit 24.1 to
             the Company's annual report on Form 10-K for 1993 and incorporated herein by reference.

      27.1   Financial Data Schedule -- filed with EDGAR filing only.
</TABLE>

    8-K REPORTS

    During the last quarter of the Company's 1996 fiscal year, the Company did
not file a Current Report on Form 8-K.

                                       38
<PAGE>
                                   SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Dated: March 31, 1997           REXEL, INC.

                                By:           /s/ ALLAN M. GONOPOLSKY
                                     -----------------------------------------
                                                Allan M. Gonopolsky
                                                   VICE PRESIDENT
                                              AND CORPORATE CONTROLLER

    Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on March 31, 1997 by the following persons on
behalf of the registrant and in the capacities indicated.

NAME                                       TITLE
------------------------------  ---------------------------

         ALAIN VIRY*            President and Chief
------------------------------    Executive Officer and
          Alain Viry              Director

       STEVEN M. HITT*
------------------------------  Vice President and Chief
        Steven M. Hitt            Financial Officer

                                Vice President and
   /s/ ALLAN M. GONOPOLSKY        Corporate Controller and
------------------------------    Attorney for persons
     Allan M. Gonopolsky          indicated by asterisk

     FREDERIC DE CASTRO*
------------------------------  Director
      Frederic de Castro

       JOHN B. FRASER*
------------------------------  Director
        John B. Fraser

       R. GARY GENTLES*
------------------------------  Director
       R. Gary Gentles

         AUSTIN LIST*
------------------------------  Director
         Austin List

         ERIC LOMAS*
------------------------------  Director
          Eric Lomas

      GERALD E. MORRIS*
------------------------------  Director
       Gerald E. Morris

       ALAIN REDHEUIL*
------------------------------  Director
        Alain Redheuil

       NICOLAS SOKOLOW*
------------------------------  Director
       Nicolas Sokolow

       SERGE WEINBERG*
------------------------------  Director
        Serge Weinberg

                                       39
<PAGE>
                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
  EXHIBIT
    NO.                                                     DESCRIPTION
-----------  ---------------------------------------------------------------------------------------------------------
<C>          <S>

       3.1   Amended and restated certificate of incorporation -- filed as Exhibit 3.1 to the Company's annual report
             on Form 10-K for 1995 and incorporated herein by reference.

       3.2   By-laws of the Company -- filed as exhibit 3.2 to the Company's annual report on Form 10-K for 1993 and
             incorporated herein by reference.

       4.1   Note Agreement, dated as of April 2, 1991, between the Company and The Prudential Insurance Company of
             America -- filed as Exhibit 4.1 to the Company's report on Form 10-Q for the quarter ended March 31, 1991
             and incorporated herein by reference.

       4.2   Amendment No. 2, dated as of November 11, 1992, to the Note Agreement, dated as of April 2, 1991 -- filed
             as Exhibit 4.2 to the Company's annual report on Form 10-K for 1992 and incorporated herein by reference.

       4.3   Amendment No. 3, dated as of March 30, 1993, to the Note Agreement, dated as of April 2, 1991 -- filed as
             Exhibit 4.3 to the Company's annual report on Form 10-K for 1993 and incorporated herein by reference.

       4.4   Amendment No. 4, dated as of December 17, 1993, to the Note Agreement, dated as of April 2, 1991 -- filed
             as Exhibit 4.4 to the Company's Annual Report on Form 10-K for 1993 and incorporated herein as reference.

       4.5   Amendment No. 5, dated as of December 31, 1994, to the Note Agreement, dated as of April 2, 1991 -- filed
             as exhibit 4.5 to the Company's Annual Report on Form 10-K for 1994 and incorporated herein by reference.

       4.6   Amendment No. 7, dated as of August 8, 1995, to the Note Agreement, dated as of April 2, 1991 -- filed as
             Exibit 10.2 to the Company's report on Form 10-Q for the quarter ended September 30, 1995 and
             incorporated herein by reference.

      10.1   Amended and Restated Revolving Credit and Reimbursement Agreement dated as of August 8, 1995, among the
             Company and NationsBank of Florida, National Association, as agent, and the lenders named therein --
             filed as exhibit 10.1 to the Company's report on Form 10-Q for the quarter ended September 30, 1995 and
             incorporated herein by reference.

      10.2   1988 Stock Incentive Plan, as amended and restated effective March 16, 1995 -- filed as Exhibit 10.2 to
             the Company's annual report on Form 10-K for 1995 and incorporated herein by reference.*

      10.3   Form of indemnification agreement, dated as of November 18, 1986, between the Company and its directors
             and officers -- filed as Exhibit 10.30 to the Company's annual report on Form 10-K for 1986 and
             incorporated herein by reference.

      10.4   Distribution Agreement, dated as of November 12, 1992, between the Company and Worldtex, Inc. -- filed as
             Exhibit 10.25 to the Company's annual report on Form 10-K for 1992 and incorporated herein by reference.

      10.5   Tax Sharing Agreement, dated as of November 12, 1992, between the Company and Worldtex, Inc. -- filed as
             Exhibit 10.26 to the Company's annual report on Form 10-K for 1992 and incorporated herein by reference.
</TABLE>

                                       40
<PAGE>
<TABLE>
<C>          <S>
      10.6   Services Agreement, dated as of November 1, 1995, between the Company and Rexel, S. A. -- filed as
             Exhibit 10.7 to the Company's annual report on Form 10-K for 1995 and incorporated herein by reference.

      10.7   Severance Agreement, dated as of March 18, 1994, between the Company, Steinthal Sample Co., Inc. and John
             K. Ziegler -- filed as exhibit 10.19 to the Company's annual report on Form 10-K for 1993 and
             incorporated herein by reference.*

      10.8   Employment Contract, dated as of March 18, 1994, between the Company and Alain C. Viry -- filed as
             Exhibit 10.20 to the Company's annual report or Form 10-K for 1994 and incorporated herein by reference.*

      10.9   Employment Contract, dated as of June 26, 1994, between the Company and Steven M. Hitt -- filed as
             Exhibit 10.21 to the Company's annual report or Form 10'K for 1994 and incorporated herein by reference.*

     10.10   Employment Contract, dated as of April 12, 1993, between Sacks Electrical Supply Co., Inc. and Jules
             Altshuler -- filed as Exhibit 10.22 to the Company's annual report or Form 10-K for 1994 and incorporated
             herein by reference.*

     10.11   Employment Contract, dated as of May 27, 1994, between the Company and Jon O. Fullerton -- filed as
             Exhibit 10.23 to the Company's annual report or Form 10'K for 1994 and incorporated herein by reference.*

     10.12   Employment Contract, dated as of June 27, 1994, between the Company and Allan M. Gonopolsky -- filed as
             Exhibit 10.24 to the Company's annual report or Form 10'K for 1994 and incorporated herein by reference.*

     10.13   Employment Contract dated as of July 12, 1988 between the Company and Allan M. Gonopolsky -- filed as
             Exhibit 10.2 to the Company's annual report on Form 10-K for 1988 and incorporated herein by reference.*

     10.14   Letter Agreement, dated April 22, 1992, between the Company and Allan M. Gonopolsky relating to his
             Employment Contract -- filed as Exhibit G to the Company's Proxy Statement, dated September 2, 1992, and
             incorporated herein by reference.*

     10.15   Employment Contract dated April 22, 1992, between the Company and Robert M. Merson -- filed as Exhibit D
             to the Company's Proxy Statement, dated September 2, 1992, and incorporated herein by reference.*

      11.1   Statement re computation of per share earnings -- filed herewith.

      21.1   Subsidiaries of the Company -- filed herewith.

      23.1   Consent of Coopers & Lybrand L.L.P. -- filed herewith.

      24.1   Powers of Attorney executed by Messrs. Fullerton, Hitt and Redheuil -- filed herewith.

      24.2   Powers of Attorney executed by certain directors and officers of the Company -- filed as Exhibit 24.1 to
             the Company's annual report on Form 10-K for 1993 and incorporated herein by reference.

      27.1   Financial Data Schedule -- filed with EDGAR filing only.
</TABLE>

                                       41