<PAGE>

                                                                      EXHIBIT 13



Wyle Electronics            1996: Financial Review








<TABLE>
<S>                                                                                     <C>
Management's Discussion and Analysis of Financial Condition and Results of Operations   14


Consolidated Statements of Income                                                       17


Consolidated Balance Sheets                                                             18


Consolidated Statements of Cash Flows                                                   20


Consolidated Statements of Shareholders' Equity                                         21


Notes to Consolidated Financial Statements                                              22


Report of Independent Public Accountants                                                31


Selected Financial Data                                                                 32


Results by Quarter and Capital Stock Information                                        34
</TABLE>


                                                                              13
<PAGE>

Wyle Electronics    Management's Discussion and Analysis of
                    Financial Condition and Results of Operations


Results of Operations

Sales and income from continuing operations for the year ended December 31, 1996
totaled $1.25 billion and $40.2 million, respectively. In comparison to 1995,
sales rose by 16% and income from continuing operations advanced 11%. The growth
in sales for 1996, compared to 1995, resulted primarily from increased shipments
of computer products, mainly computer systems and peripherals, and mass storage
devices. Semiconductor revenues in 1996 rose slightly from 1995 due mainly to
increased shipments of application-specific integrated circuits (ASICs).
Semiconductor orders slowed significantly in the second and third quarters of
1996 as customers reduced excess inventory levels in light of shorter product
lead times. In the fourth quarter of 1996, customer inventory levels came more
in line with market conditions and certain customers began returning to more
normal ordering patterns.

The company's increase in income from continuing operations for 1996 versus 1995
can be attributed mainly to sales growth along with a higher aggregate gross
margin percentage. The improved gross margin primarily reflects a change in the
mix of products and services sold. Earnings in 1996 also reflect a higher level
of interest expense compared to the prior year.

On January 2, 1996, the company purchased all the outstanding capital stock of
Sylvan Ginsbury, Ltd., a New Jersey corporation, and certain affiliated entities
("Ginsbury"), an international distributor of active, passive and interconnect
electronic products with operations in the United States and six European
countries (see Note 8 of Notes to Consolidated Financial Statements herein).
Revenues generated from Ginsbury also contributed to the company's 1996 sales
growth and earnings.

During October 1996, the company was notified by Advanced Micro Devices ("AMD")
and Philips Semiconductor that they would be terminating their distribution
agreements with the company. AMD and Philips combined represented approximately
7% of the company's consolidated sales immediately prior to the termination. The
company believes it has the opportunity to recover a significant portion of
these sales from comparable products offered by its existing suppliers, along
with incremental sales from the newly acquired lines of National Semiconductor
and Fairchild Semiconductor, which were announced in August of 1996.

For the year ended December 31, 1995, the company reported sales of $1.08
billion and income from continuing operations of $36.2 million. Compared to
1994, sales rose by 36% and income from continuing operations increased 159%.
The growth in sales for 1995, in comparison to 1994, resulted mainly from
increased shipments of semiconductor products, particularly those offered
through the company's value-added activities such as design of ASICs, and other
semiconductor design/programming services, along with kitting, turnkey
manufacturing and autoreplenishment. Shipments of lower-margin PC
microprocessors in 1995 were down from 1994. The company also registered
significantly higher shipments of computer systems and mass storage devices in
1995 versus 1994.

14
<PAGE>

The increase in income from continuing operations in 1995 over 1994 primarily
reflects the company's growth in sales. Additionally, the company's aggregate
gross margin percentage increased in comparison to the prior year, due mainly to
a change in the mix of products sold. Earnings for 1995 benefited from lower
selling and administrative expense as a percentage of sales, due in part to an
increase in sales for the company's new expansion branches, which began
operations in mid-1993. Operating results for 1995 reflected a higher level of
interest expense due to an increased level of credit line borrowings.

For the year ended December 31, 1994, the company reported sales of $792.3
million and income from continuing operations of $14.0 million. In 1994, the
company recorded a special charge to continuing operations of $1.9 million ($1.2
million after income taxes) primarily for anticipated legal expenses associated
with a certain litigation matter (see Note 11 of Notes to Consolidated Financial
Statements herein). Additionally, on December 23, 1994, the company completed
the sale of its Scientific Services & Systems Group, which it accounted for as a
discontinued operation (see Note 10 of Notes to Consolidated Financial
Statements herein), and recorded a loss on the sale of $15.8 million, after
income taxes. After recording the loss on sale and income from discontinued
operations, the company reported a net loss of $381,000 for 1994.

In May 1993, the company initiated a major geographic expansion program to open
ten new facilities in key eastern and midwestern markets within the United
States. As anticipated, the expansion operations incurred quarterly operating
losses through June 30, 1994 during this initial investment period. Sales for
the new expansion divisions increased steadily from inception and aggregate
operating losses for these divisions continued to decline throughout the quarter
ended June 30, 1994. During the second half of 1994, the expansion divisions, as
a whole, began providing a positive income contribution.

The company's business is affected by the cyclical nature of the electronics
industry and the effect of general economic and market conditions, industry
market conditions caused by changes in the supply and demand for semiconductors
and computer products, intense industry competition and other risks. There is
hereby incorporated by reference the information appearing under the caption
"Risk Factors" in Part I of the Company's Annual Report on Form 10-K.

Discontinued Operations

Operating results for the Scientific Services & Systems Group are classified as
discontinued operations in the company's consolidated statements of income. The
company's sales and income from continuing operations for all periods reflect
only the operating results of its electronics distribution business.

Other

Net interest expense for 1996 of $7.6 million increased in comparison to 1995,
due mainly to higher borrowing levels that were incurred primarily to finance
additional working capital in support of higher sales levels, as well as the
cash portion of the Ginsbury acquisition.

Net interest expense for 1995 of $3.3 million increased from 1994, due to higher
borrowing levels resulting mainly from funding working capital requirements
associated with sales growth and to finance the construction of a new
warehouse/value-added distribution center.

The company's effective income tax rate for continuing operations was 39.5%,
39.7% and 38.5% for the years ended December 31, 1996, 1995 and 1994,
respectively.

                                                                              15
<PAGE>

Wyle Electronics    Management's Discussion and Analysis of
                    Financial Condition and Results of Operations



In October 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS No. 123"), which encourages, but does not require, a fair
value based method of accounting for stock-based compensation plans. On January
1, 1996, as permitted under SFAS No. 123, the company elected to comply with the
statement's pro forma disclosure requirements and to continue to account for its
stock-based compensation plans in accordance with Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees." The adoption of this
statement did not have a material effect on the company's net income (loss) or
financial position.

Liquidity and Capital Resources

The company's working capital at December 31, 1996 of $280.3 million rose by
$24.8 million from December 31, 1995. Working capital growth resulted primarily
from an increase in trade receivables and inventories due to higher sales
levels, offset partially by higher accrued expenses. The current ratio was 3.1
to 1 at December 31, 1996 compared with 3.0 to 1 at December 31, 1995. The ratio
of long-term debt to total capital was 32% and 31% at December 31, 1996 and
1995, respectively.

Capital expenditures for 1996 aggregated $13.5 million, which are lower than
1995 due mainly to capital outlays incurred in 1995 for the construction of a
new value-added distribution center that became fully operational during the
first half of 1996. The company expects its total capital expenditures for 1997
to be approximately $10-12 million.

Many factors affect the company's cash requirements such as changes in its sales
level and inventory turnover rate. During electronics industry growth periods,
increases in receivable and inventory balances have typically been financed
through cash on hand and cash flow from operations as well as borrowings. During
electronics industry recessionary periods, cash has been generated through
receivable and inventory reductions.

In April 1996, the company issued $30 million of senior unsecured notes due
2001, which bear interest at 6.98%. In November 1996, the company issued an
additional $20 million of senior unsecured notes due 2006, which bear interest
at 7.18%. The proceeds from both issuances were used to repay bank borrowings.

In April 1996, the company amended its $140 million three-year revolving credit
agreement by reducing the committed credit line to $110 million. In December
1996, the company amended its $110 million revolving credit agreement by
increasing its term from three to five years, extending the maturity of the
agreement to December 2001. In addition, the company has arrangements with a
number of other banks to provide short-term financing on a non-committed basis.
The company's near-term cash requirements are expected to be financed through a
combination of internally generated cash flow, bank borrowings and other sources
of available capital.

16
<PAGE>

Wyle Electronics       Consolidated Statements of Income

<TABLE>
<CAPTION>
                                                                                        Years ended December 31,
                                                                                 -------------------------------------
In thousands, except per share amounts                                               1996          1995        1994
----------------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>            <C>           <C>
Net sales                                                                         $1,244,504    $1,077,467    $792,309
                                                                                --------------------------------------
Costs and expenses
 Cost of sales                                                                     1,020,796       890,693     663,741
 Selling and administrative expenses                                                 150,287       124,603     103,253
 Special charge                                                                            -             -       1,900
 Interest expense, net                                                                 7,623         3,315       1,289
 Miscellaneous, net                                                                     (673)       (1,193)       (604)
                                                                                --------------------------------------
                                                                                   1,178,033     1,017,418     769,579
                                                                                --------------------------------------
Income from continuing operations before income taxes                                 66,471        60,049      22,730
 Income taxes                                                                         26,256        23,839       8,750
                                                                                --------------------------------------
Income from continuing operations                                                     40,215        36,210      13,980
Discontinued operations
 Income from operations, net of taxes                                                      -             -       1,418
 Loss on sale, net of taxes                                                                -             -     (15,779)
                                                                                --------------------------------------
Net income (loss)                                                                 $   40,215    $   36,210    $   (381)
                                                                                ======================================

Income (loss) per share
 Income from continuing operations                                                     $3.12         $2.86      $ 1.13
                                                                                ======================================
 Discontinued operations
  Income from operations, net of taxes                                                 $   -         $   -      $  .11
                                                                                ======================================
  Loss on sale, net of taxes                                                           $   -         $   -      $(1.27)
                                                                                ======================================
 Net income (loss)                                                                     $3.12         $2.86      $ (.03)
                                                                                ======================================
 Average common and common equivalent shares                                          12,893        12,664      12,425
                                                                                ======================================
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                                                              17
<PAGE>

Wyle Electronics          Consolidated Balance Sheets


<TABLE>
<CAPTION>
                                                                                      December 31,
                                                                                ------------------------
In thousands, except shares                                                        1996           1995
--------------------------------------------------------------------------------------------------------
<S>                                                                              <C>            <C>
Assets

Current assets
 Cash and cash equivalents                                                       $ 13,857       $ 15,694
 Receivables (less allowances of $8,487 and $6,423, respectively)                 174,530        159,829
 Inventories                                                                      216,544        203,413
 Prepaid expenses and deferred tax assets                                           8,563          7,295
                                                                                ------------------------
 Total current assets                                                             413,494        386,231
                                                                                ------------------------
Property, plant & equipment
 Land                                                                                 862            862
 Buildings and improvements                                                        24,480         22,394
 Machinery and equipment                                                           39,821         29,581
                                                                                ------------------------
                                                                                   65,163         52,837
 Less accumulated depreciation and amortization                                    27,324         18,508
                                                                                ------------------------
                                                                                   37,839         34,329
                                                                                ------------------------
Goodwill, net of amortization                                                      28,236            241
                                                                                ------------------------
Other assets and deferred tax assets                                               26,683         18,543
                                                                                ------------------------
 Total assets                                                                    $506,252       $439,344
                                                                                ========================
</TABLE>

The accompanying notes are an integral part of these financial statements.

18
<PAGE>

<TABLE>
<CAPTION>
                                                                                        December 31,
                                                                                 ------------------------
                                                                                    1996           1995
---------------------------------------------------------------------------------------------------------
<S>                                                                               <C>            <C>
Liabilities and Shareholders' Equity

Current liabilities
 Current maturities of long-term debt                                             $    575       $  3,000
 Accounts payable                                                                   93,111         97,697
 Accrued expenses                                                                   39,465         30,032
                                                                                 ------------------------
 Total current liabilities                                                         133,151        130,729
                                                                                 ------------------------
Long-term debt, less current maturities                                            111,845         87,600
                                                                                 ------------------------
Other liabilities                                                                   25,111         25,345
                                                                                 ------------------------

Commitments and contingencies

Shareholders' Equity
 Common stock, 25,000,000 shares authorized
  (shares outstanding: December 31, 1996 - 12,588,609
  and December 31, 1995 - 12,447,946)                                               97,091         90,482
 Retained earnings                                                                 139,006        105,188
 Foreign currency translation adjustment                                                48              -
                                                                                 ------------------------
                                                                                   236,145        195,670
                                                                                 ------------------------
 Total liabilities and shareholders' equity                                       $506,252       $439,344
                                                                                 ========================
</TABLE>

                                                                              19
<PAGE>

Wyle Electronics          Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                                       Years ended December 31,
                                                                                 -----------------------------------
In thousands                                                                       1996          1995         1994
--------------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>            <C>           <C>
Operating Activities
 Net income (loss)                                                               $ 40,215      $ 36,210    $   (381)
 Adjustments to reconcile net income (loss) to net cash
  provided by (used for) operating activities:
  Depreciation and amortization                                                     9,609         5,007       6,761
  Provision for losses on receivables                                               3,490         2,794       2,143
  Provision for deferred income taxes                                              (1,294)         (943)       (161)
  Loss on sale of discontinued operations                                               -             -      15,779
 (Increase) in receivables                                                         (9,098)      (47,541)    (44,529)
 (Increase) in inventories                                                         (9,855)      (63,081)    (39,636)
 (Increase) decrease in prepaid expenses                                              (12)        1,157       1,354
 Increase (decrease) in accounts payable                                           (9,044)       27,253      12,232
 Increase in accrued expenses                                                       6,648           215       4,790
 Other, net                                                                           959           770      (1,003)
                                                                                 -----------------------------------
 Net cash provided by (used for) operating activities                               31,618      (38,159)    (42,651)
                                                                                 -----------------------------------
Financing activities
 Additions to long-term debt                                                       50,000        72,798      14,802
 Payments of long-term debt                                                       (29,311)       (3,000)     (4,120)
 Exercise of stock options                                                          3,331         3,686         684
 Dividends on common stock                                                         (4,033)       (3,457)     (3,431)
 Purchase of common stock                                                          (2,977)         (847)     (1,634)
                                                                                 -----------------------------------
 Net cash provided by financing activities                                         17,010        69,180       6,301
                                                                                 -----------------------------------
Investing activities
 Cash consideration paid for acquired business, net of
  $1,302 cash received                                                            (30,971)            -           -
 Additions to property, plant and equipment                                       (13,453)      (21,561)     (7,905)
 Additions to capitalized software costs                                           (3,171)       (2,563)       (677)
 Proceeds from sale of discontinued operations                                          -             -      30,000
 Other non-current assets and liabilities, net                                     (2,918)         (522)        503
                                                                                 -----------------------------------
 Net cash provided by (used for) investing activities                             (50,513)      (24,646)     21,921
                                                                                 -----------------------------------
Foreign currency translation adjustment                                                48             -           -
                                                                                 -----------------------------------
Increase (decrease) in cash and cash equivalents                                   (1,837)        6,375     (14,429)
Cash and cash equivalents at beginning of year                                     15,694         9,319      23,748
                                                                                 -----------------------------------
Cash and cash equivalents at end of year                                         $ 13,857      $ 15,694    $  9,319
                                                                                 ===================================

Supplemental disclosures of cash flow information
 Cash paid during the year for:
  Interest                                                                       $  7,414      $  3,710    $  1,542
  Income taxes                                                                     29,730        21,708      10,168
                                                                                 -----------------------------------
</TABLE>

The accompanying notes are an integral part of these financial statements.

20
<PAGE>

Wyle Electronics       Consolidated Statements of Shareholders' Equity



<TABLE>
<CAPTION>



                                                                                                                         Foreign
                                                                                Common Stock                             Currency
For the years ended December 31, 1996, 1995                                ------------------------         Retained    Translation
and 1994 (in thousands, except shares)                                       Shares         Amount          Earnings     Adjustment
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>            <C>               <C>            <C>

Balance, December 31, 1993                                                 12,216,923      $86,348          $ 78,008       $  -
 Net loss                                                                                                       (381)
 Dividends on common stock                                                                                    (3,431)
 Exercise of stock options                                                     61,368          780               (96)
 Restricted stock awards, net                                                   3,950          152
 Purchase of common stock                                                     (89,200)        (633)           (1,001)
                                                                           --------------------------------------------------------
Balance, December 31, 1994                                                 12,193,041       86,647            73,099          -
 Net income                                                                                                   36,210
 Dividends on common stock                                                                                    (3,457)
 Exercise of stock options                                                    215,341        3,800              (114)
 Restricted stock awards, net                                                  80,464          326                 6
 Purchase of common stock                                                     (40,900)        (291)             (556)
                                                                           --------------------------------------------------------
Balance, December 31, 1995                                                 12,447,946       90,482           105,188          -
 Net income                                                                                                   40,215
 Dividends on common stock                                                                                    (4,033)
 Exercise of stock options                                                    148,068        3,403               (72)
 Restricted stock awards, net                                                   2,990          913               (22)
 Issuance of restricted stock for an acquisition                               81,605        3,000
 Purchase of common stock                                                     (92,000)        (707)           (2,270)
 Foreign currency translation adjustment                                                                                     48
                                                                           --------------------------------------------------------
Balance, December 31, 1996                                                 12,588,609      $97,091          $139,006       $ 48
                                                                           ========================================================
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                                                              21

<PAGE>

Wyle Electronics    Notes to Consolidated Financial Statements



Note 1. Summary of Significant Accounting Policies

Nature of Operations  The company is a leading international electronics
distributor marketing semiconductors and computer products, as well as providing
value-added services. These services include complex materials management
systems and engineering design for application-specific integrated circuits,
including field programmable logic devices.

Principles of Consolidation  The consolidated financial statements include the
accounts of Wyle Electronics and its subsidiaries. All significant intercompany
accounts and transactions have been eliminated.

Discontinued Operations  On December 23, 1994, the company completed the sale of
its Scientific Services & Systems ("SS&S") business (see Note 10). Operating
results for SS&S are classified as discontinued operations in the company's
consolidated statements of income.

Change in Accounting Principles  In October 1995, the Financial Accounting
Standards Board ("FASB") issued Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation" ("SFAS No. 123"), which
encourages, but does not require, a fair value based method of accounting for
stock-based compensation plans. On January 1, 1996, as permitted under SFAS No.
123, the company elected to comply with the statement's pro forma disclosure
requirements and continue to account for its stock-based compensation plans in
accordance with Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees." The adoption of this statement did not have a
material effect on the company's net income (loss) or financial position (see
Note 6).

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

Revenue Recognition  Sales are generally recognized at the time of shipment of
the product.

Interest Income  Interest income earned on short-term investments is classified
in the consolidated statements of income as a reduction of interest expense.
Interest income for the years presented was immaterial.

Income (Loss) per Share  Income (loss) per share is computed based on the
average number of shares of common stock and common equivalent shares (stock
options) outstanding, after giving effect to the assumed exercise of dilutive
stock options. Dual presentation of primary and fully diluted earnings per share
has not been made on the consolidated statements of income because the
differences are immaterial.

Receivables  Receivables include amounts billed to customers for products
shipped or services performed which are anticipated to be collected within one
year. Concentrations of credit risk with respect to trade receivables are
limited by the large number of customers comprising the company's customer base
and their dispersion across different industries.

Inventories  Inventories are stated at the lower of cost (first-in first-out or
average cost) or market.

Property, Plant and Equipment  Property, plant and equipment are stated at cost.
Major improvements and betterments are capitalized. Maintenance, repairs and
minor refurbishments are expensed as incurred. Depreciation is provided using
the straight-line method based on estimated useful lives. Useful lives range
from 2 to 40 years for buildings and improvements and from 2 to 10 years for
machinery and equipment. Leasehold improvements are amortized over the lesser of
the lease term or estimated useful life.

Goodwill  Goodwill represents the excess of the purchase price over the
estimated fair value of net assets acquired, and is being amortized over 40
years on a straight-line basis. The company evaluates the carrying value and the
remaining useful life of its goodwill, and will adjust the carrying value and
related amortization period if appropriate.

22

<PAGE>

Capitalized Software Costs  The company capitalizes the purchase costs and
certain internal development costs of computer software. Such costs include
vendor design, testing and implementation consulting fees. Capitalized internal
development costs consist primarily of direct labor attributable to
implementation.

Foreign Currency Translation  The functional currency of the company's foreign
operations is the applicable local currency. The assets and liabilities of
foreign operations are translated at the exchange rates in effect at the balance
sheet date, while the results of foreign operations are translated at the
weighted average exchange rate for the period. The related translation gains or
losses are reported as a separate component of shareholders' equity.

Gains or losses resulting from foreign currency transactions, which were
immaterial, are included in results of operations.

Consolidated Statements of Cash Flows  For the purpose of reporting cash flows,
cash and cash equivalents include cash on hand and cash invested in short-term
securities with original maturities of three months or less. The company places
its temporary cash investments in high-quality securities and, by policy, limits
the amount that can be invested in any one particular instrument.

Note 2. Detail of Certain Balance Sheet Amounts

A detail of certain balance sheet amounts at December 31 follows:

<TABLE>
<CAPTION>
                                                              ------------------
In thousands                                                    1996      1995
--------------------------------------------------------------------------------
<S>                                                           <C>        <C>

Accrued expenses:
 Payroll and employee benefits                                $12,112    $12,144
 Other                                                         27,353     17,888
                                                              ------------------
 Total                                                        $39,465    $30,032
                                                              ==================
Accounts payable:
 Trade and other                                              $84,650    $67,320
 Checks outstanding                                             8,461     30,377
                                                              ------------------
 Total                                                        $93,111    $97,697
                                                              ==================
</TABLE>

Note 3. Bank Loans and Long-Term Debt

Long-term debt at December 31 consists of the following:

<TABLE>
<CAPTION>
                                                              ------------------
In thousands                                                    1996      1995
--------------------------------------------------------------------------------
<S>                                                           <C>        <C>
Non-committed credit line borrowings                          $ 61,600   $57,600
Revolving credit agreement                                           -    30,000
Senior unsecured notes:
 At 6.98% due 2001                                              30,000         -
 At 7.18% due 2006                                              20,000         -
 At 8.95% due 1996                                                   -     3,000
Other obligations                                                  820         -
                                                              ------------------
                                                               112,420    90,600
Less current maturities                                            575     3,000
                                                              ------------------
                                                              $111,845   $87,600
                                                              ==================
</TABLE>

At December 31, 1996, the company had credit line arrangements with a number of
banks that provide short-term borrowings on a non-committed basis. The non-
committed credit line borrowings outstanding at December 31, 1996 bear interest
at rates ranging from 6.13 - 7.35%, and mature on various dates through January
6, 1997. Such unsecured amounts are classified as long-term debt on the
consolidated balance sheets, since they may be refinanced at any time with
borrowings under the company's multi-year revolving credit agreement.

In April 1996, the company amended its $140 million three-year revolving credit
agreement by reducing the committed credit line to $110 million. In December
1996, the company amended its $110 million revolving credit agreement by
increasing its term from three to five years, extending the maturity of the
agreement to December 2001. The credit agreement provides for borrowings at
either the agent bank's reference rate or the Eurodollar rate plus .25% to .55%,
depending on the company's leverage ratio. An annual facility fee of .125% to
 .20%, also based on the company's leverage ratio, is payable on the amount of
the commitment.

                                                                              23

<PAGE>

Wyle Electronics    Notes to Consolidated Financial Statements



In April 1996, the company issued $30 million of senior unsecured notes due
2001, which bear interest at 6.98%. In November 1996, the company issued an
additional $20 million of senior unsecured notes due 2006, which bear interest
at 7.18%. The proceeds from both issuances were used to repay bank borrowings.

Other obligations consist mainly of borrowings to support the working capital
requirements of the company's foreign operations. Such borrowings have various
interest rates and due dates.

Terms of certain borrowing agreements of the company provide, among other
things, for the maintenance of certain amounts or ratios relating to working
capital, debt, tangible net worth and fixed charge coverage. The agreements also
provide for restrictions on additional debt, payment of dividends, purchase of
company stock and capital expenditures. Pursuant to the most restrictive
covenants of these agreements, retained earnings of $44,208,000 were available
at December 31, 1996 for the payment of cash dividends on common stock. The
company is in full compliance with the restrictive covenants contained in the
borrowing agreements.

Aggregate maturities of long-term debt are: $575,000 for 1997; $245,000 for
1998; $91,600,000 for 2001; and $20,000,000 thereafter.

Note 4. Income Taxes

The provision for income taxes from continuing operations was computed using
effective tax rates calculated as follows:

<TABLE>
<CAPTION>
                                                       --------------------
                                                       1996    1995    1994
---------------------------------------------------------------------------
<S>                                                    <C>     <C>     <C>
Federal statutory tax rate                             35.0%   35.0%   35.0%
State income taxes, net
 of federal tax benefit                                 4.7     5.2     5.3
Other, net                                              (.2)    (.5)   (1.8)
                                                       --------------------
Effective tax rate                                     39.5%   39.7%   38.5%
                                                       ====================
</TABLE>

The provision for income taxes from continuing operations consists of:

<TABLE>
<CAPTION>
                                              -----------------------------
In thousands                                    1996       1995        1994
---------------------------------------------------------------------------
<S>                                           <C>        <C>        <C>

Current
 Federal                                      $22,718    $20,069     $7,074
 State                                          4,460      4,713      1,837
 Foreign                                          372          -          -
                                              -----------------------------
                                               27,550     24,782      8,911
                                              -----------------------------

Deferred taxes arising
 from temporary
 differences:
 State income taxes                              (164)      (755)      (112)
 Receivables allowance                           (649)      (273)      (440)
 Inventory valuation                           (1,465)      (767)      (487)
 Depreciation and
  amortization                                   (138)      (122)       (87)
 Accruals and other                             1,122        974        965
                                              -----------------------------
                                               (1,294)      (943)      (161)
                                              -----------------------------
                                              $26,256    $23,839     $8,750
                                              =============================
</TABLE>

Net deferred tax assets (liabilities) at December 31 were composed of the
following:

<TABLE>
<CAPTION>
                                                         ------------------
In thousands                                              1996       1995
---------------------------------------------------------------------------
<S>                                                      <C>        <C>
Employee benefit programs                                $ 3,134    $ 2,799
Inventory valuation                                        4,080      2,616
Receivables allowance                                      2,624      1,974
Postretirement benefits                                    2,077      2,206
Depreciation and amortization                                184        152
Discontinued operations                                    4,053      4,741
Operating accruals and other                                (964)      (594)
                                                         ------------------
                                                         $15,188    $13,894
                                                         ==================
</TABLE>

Net deferred tax assets at December 31, 1996 of $15,188,000 consisted of
deferred tax assets of $25,412,000 and deferred tax liabilities of $10,224,000.
Net deferred tax assets at December 31, 1995 of $13,894,000 consisted of
deferred tax assets of $19,540,000 and deferred tax liabilities of $5,646,000.
Deferred taxes are classified in the consolidated balance sheets as current or
noncurrent based on the classification of the related asset or liability. Net
current deferred tax assets of $6,707,000 and $5,675,000 are included in prepaid
expenses at December 31, 1996 and 1995, respectively. No valuation allowance was
required for the deferred tax assets.

24

<PAGE>

Note 5. Capital Stock and Dividends

Common stock authorized is 25,000,000 shares. The company declared and paid
dividends on common stock of $.32 and $.28 per share during 1996 and 1995,
respectively. Preference stock authorized is 500,000 shares. No preference stock
was outstanding at December 31, 1996 or 1995.

The company has a Shareholder Rights Plan (the "Plan") which provides for one
stock purchase right (the "Rights") to be traded initially in tandem with each
share of its common stock. The Plan provides that if any person becomes the
beneficial owner of 15% or more of the outstanding shares of common stock of the
company, each Right (other than Rights held by the 15% shareholder) will be
exercisable, on or after the close of business on the tenth business day
following such event, to purchase common stock having a market value equal to
two times the then current exercise price of the Rights (currently $85.00), or
may be exchangeable for one share of common stock.

The Plan further provides that if, on or after the occurrence of such event, the
company is merged into any other corporation or if 50% or more of the company's
assets or earning power are sold, appropriate provision shall be made so that
each Right (other than Rights held by the 15% shareholder) will be exercisable
to purchase common stock of the acquiring corporation having a market value
equal to two times the exercise price of the Rights. The Rights expire on
February 23, 2005, and are subject to redemption by the Board of Directors at
$.01 per Right at any time prior to the first date upon which they become
exercisable.

In October 1996, the company's Board of Directors authorized a plan to purchase
from time to time up to 1,000,000 shares of the corporation's common stock in
the open market or through negotiated purchases and revoked prior repurchase
authorizations. During 1996, 92,000 shares were purchased, all of which were
acquired in the fourth quarter. Under a previous plan initiated in 1993, the
company purchased 40,900 shares during 1995.

Note 6. Stock Options and Awards

Under the company's stock option and stock incentive plans, non-qualified and
incentive stock options, restricted stock, performance awards and stock
appreciation rights may be granted to selected key employees. Provisions of the
company's stock option plans, prior to its 1995 Stock Incentive Plan, allow non-
qualified stock options to be granted at prices less than 100% of the fair
market value of the company's common stock on the date of grant. Through
December 31, 1996, no stock options have been granted at less than fair market
value and no stock appreciation rights have been awarded under any of the plans.
Options generally become exercisable beginning one year from the date of grant
in equal annual installments over a five-year period. Options are exercisable on
a cumulative basis and expire ten years from the date of grant.

A summary of changes in the shares under option follows:

<TABLE>
<CAPTION>
                                                      Weighted-Average
                                            Shares     Exercise Price
---------------------------------------------------------------------
<S>                                        <C>             <C>

December 31, 1993                           900,097        $14.59
 Granted                                    156,000         17.80
 Canceled                                   (23,800)        14.87
 Exercised                                  (68,497)        10.13
                                           --------------------------
December 31, 1994                           963,800         15.42
 Granted                                    141,500         38.56
 Canceled                                   (12,000)        14.63
 Exercised                                 (223,444)        13.96
                                           --------------------------

December 31, 1995                           869,856         19.57
 Granted                                    257,000         36.68
 Canceled                                   (32,200)        27.55
 Exercised                                 (150,286)        13.80
                                           --------------------------
December 31, 1996                           944,370        $24.87
                                           ==========================
</TABLE>

At December 31, 1996, 1995 and 1994, exercisable options aggregated 395,751,
399,168 and 425,171, respectively. Options available for future grant at
December 31, 1996, 1995 and 1994 totaled 351,909, 335,387 and 53,702,
respectively. No amounts have been reflected in the company's consolidated
statements of income with respect to these stock options.

                                                                              25

<PAGE>

Wyle Electronics    Notes to Consolidated Financial Statements



Stock options outstanding at December 31, 1996:

<TABLE>
<CAPTION>
                                                     Weighted-Average
                                                 ------------------------
                                                  Remaining
   Range of                          Number      Contractual     Exercise
Exercise Prices                   Outstanding       Life          Price
-------------------------------------------------------------------------
<S>                                 <C>             <C>           <C>
$ 9.00 to 17.00                      292,090        5.10          $14.50
 17.25 to 19.75                      272,380        6.96           18.36
 20.00 to 37.88                      172,900        9.03           35.81
 38.50 to 44.38                      207,000        9.87           38.93
-------------------------------------------------------------------------
$ 9.00 to 44.38                      944,370        7.40          $24.87
=========================================================================
</TABLE>

Stock options exercisable at December 31, 1996:

<TABLE>
<CAPTION>
   Range of                          Number             Weighted-Average
Exercise Prices                   Exercisable            Exercise Price
-------------------------------------------------------------------------
<S>                                 <C>                      <C>
$ 9.00 to 17.00                     219,192                  $13.68
 17.25 to 19.75                     144,056                   18.28
 20.00 to 37.88                      27,502                   36.45
 38.50 to 44.38                       5,001                   44.38
-------------------------------------------------------------------------
$ 9.00 to 44.38                     395,751                  $17.32
=========================================================================
</TABLE>

In October 1996, the Board of Directors adopted the "1996 Eligible Directors'
Stock Option Plan," (the "1996 Plan") subject to shareholder approval, under
which current non-employee directors will receive an annual grant of 4,000 non-
qualified stock options. New non-employee directors after October 1, 1996 will
each receive a one-time grant of 10,000 non-qualified stock options along with
an annual grant thereafter of 6,000 non-qualified stock options. Under the 1996
Plan, non-qualified stock options are exercisable six months after the date of
grant. Under the "1993 Eligible Directors' Stock Option Plan," (the "1993 Plan")
non-employee members of the company's Board of Directors received a grant of
5,000 non-qualified stock options annually up to a maximum of 10,000 that are
exercisable in equal annual installments over a three-year period. No additional
non-qualified stock options will be granted under the 1993 Plan. Stock options
under both plans are exercisable at prices equal to the fair market value on the
date of grant. Stock options granted under these plans, which are included in
the tables above, totaled 37,000 for 1996, 15,000 for 1995 and 50,000 for 1994.

Restricted stock awards of the company's common stock are subject to certain
restriction periods from the date of grant, during which they may not be sold,
assigned, pledged or otherwise encumbered. Restricted stock awards of 13,778,
80,997 and 3,950 shares were granted during 1996, 1995 and 1994, respectively.
The unvested portion of restricted stock is included as an offset to common
stock in the consolidated statements of shareholders' equity and is amortized as
vesting occurs. Certain key employees can elect to receive a portion or all of
their annual incentive in restricted stock awards in lieu of cash. Such
restricted stock awards, which are included in the total number of restricted
stock awards granted above, aggregated 7,918 and 49,047 in 1996 and 1995,
respectively. The weighted average market price of restricted stock awards on
the date of grant was $29.53 in 1996, $35.69 in 1995 and $18.37 in 1994.

Based on provisions of SFAS No. 123, the company has calculated the fair value
of options granted utilizing the Black-Scholes option-pricing model. The
weighted average fair value of options granted in 1996 and 1995 was $14.16 and
$14.57, respectively. The following assumptions were used in determining the
weighted average fair value of options granted in 1996 and 1995, respectively:
dividend yield of .83% and .85%; expected volatility of 33% for both years;
risk-free interest rate of 6.16% and 5.77%; and an expected term of 6 years for
both years.

If the company had elected to adopt SFAS No. 123 by recognizing the fair value
of stock-based compensation, the company's pro forma net income and net income
per share would have approximated $39,551,000 and $3.07 for 1996 and $36,147,000
and $2.85 for 1995. The impact of applying SFAS No. 123 in this pro forma
disclosure is not necessarily indicative of the effect on income in the future.
SFAS No. 123 does not apply to awards granted prior to 1995. The company
anticipates making additional stock-based compensation awards in the future.

26

<PAGE>

Note 7. Retirement and Other Employee Benefits Plans

The company has a defined benefit pension plan covering substantially all of its
employees. Plan benefits are generally based on employees' years of service and
average compensation during the final years of employment. Funding of retirement
costs for the plan complies with the funding requirements specified by the
Employee Retirement Income Security Act. At December 31, 1996, plan assets were
invested in diversified equity portfolios (60%), pooled funds of fixed income
securities (34%) or in guaranteed income contracts (6%).

Pension expense, including discontinued operations, consists of the following
components:

<TABLE>
<CAPTION>
                                  -----------------------------
In thousands                        1996       1995       1994
---------------------------------------------------------------
<S>                               <C>        <C>        <C>
Service cost-benefits earned
 during the period                $ 1,611    $ 1,355    $ 2,504
Interest cost on projected
 benefit obligation                 4,313      4,133      4,134
Actual return on plan assets       (5,714)    (9,387)      (626)
Net amortization and
 deferral                             521      4,419     (3,833)
                                  -----------------------------
Net periodic pension cost             731        520      2,179
Curtailment gain                        -          -     (1,880)
                                  -----------------------------
Net pension expense               $   731    $   520    $   299
                                  =============================
</TABLE>

In 1996, the company amended its defined benefit pension plan by reducing the
plan benefit formula. The company's pension expense for 1994 included a
curtailment gain, which was included in the loss on sale of discontinued
operations (see Note 10).

The pension plan's funded status and amounts recognized in the company's
consolidated balance sheets at December 31 were as follows:

<TABLE>
<CAPTION>
                                           --------------------
In thousands                                 1996        1995
---------------------------------------------------------------
<S>                                        <C>         <C>
Actuarial present value of
 benefit obligations:
 Vested benefits                           $(58,670)   $(53,645)
 Nonvested benefits                          (1,574)       (994)
                                           --------------------
Accumulated benefit obligation              (60,244)    (54,639)
Effect of projected future
 compensation increases                      (1,934)     (4,706)
                                           --------------------
Projected benefit obligation                (62,178)    (59,345)
Market value of plan assets                  60,393      56,352
                                           --------------------
Plan assets (less than) projected
 benefit obligation                          (1,785)     (2,993)
Unrecognized actuarial net loss               6,455       5,388
Unrecognized prior service cost              (2,327)       (415)
Unrecognized net asset at
 February 1, 1987                            (1,052)     (1,169)
                                           --------------------
Prepaid pension liability                  $  1,291    $    811
                                           ====================
</TABLE>

In determining the actuarial present value of the projected benefit obligation
under the pension plan at December 31, 1996 and 1995, the discount rate used was
7.5% and the rate of increase in future compensation levels was 5.0%. The
expected long-term rate of return on pension plan assets was 9.5% for 1996 and
1995.

The company's pension plan provides that in the event the plan is terminated
following an involuntary change of control any excess plan assets over plan
liabilities would be used to provide increased benefits under the pension plan
or other employee benefit plans.

At December 31, 1996, Ginsbury had a defined benefit pension plan covering
substantially all of its U.S. employees, which was subsequently merged with the
company's defined benefit pension plan on January 1, 1997. Assets and
obligations related to this plan were immaterial.

The company has a supplemental executive retirement plan ("SERP") which provides
benefits to certain employees whose benefits under the defined benefit pension
plan are reduced as a result of limitations

                                                                              27

<PAGE>

Wyle Electronics    Notes to Consolidated Financial Statements



imposed by the Internal Revenue Code. The present value of the accumulated
benefit obligation related to this plan totaled $4,219,000 at December 31, 1996
and $3,437,000 at December 31, 1995. Expense under the SERP was $696,000,
$641,000 and $393,000 for 1996, 1995 and 1994, respectively.

The company maintains an employee savings plan under Section 401(k) of the
Internal Revenue Code for employees meeting certain service requirements.
Eligible employees can contribute up to 15% of their annual compensation,
subject to certain restrictions. In July of 1996, the company modified its
method of matching employee contributions by increasing the company match to 50%
of the first 6% contributed by an employee compared to a previous match of 25%
on the first $1,200 contributed. Company matching contributions for 1996, 1995
and 1994 aggregated $887,000, $182,000 and $316,000, respectively.

The company has Rabbi trusts to fund benefit payments under its SERP and other
executive and director deferred compensation plans. Trust assets are irrevocable
to the company but are subject to creditor claims under certain conditions.
Assets held in the trusts at December 31, 1996 and 1995 totaled $4,379,000 and
$3,724,000, respectively.

The company amended its unfunded retirement plan for non-employee directors by
limiting participation in the plan to present participants and directors as of
October 1, 1996. Amounts expensed related to this plan, which were immaterial
for the periods presented, are accrued over the estimated service period for
each covered director.

The company has a Voluntary Employees' Beneficiary Association ("VEBA'') trust
to fund certain employee benefit payments. Trust assets, which are irrevocable
to the company, totaled $702,000 and $734,000 at December 31, 1996 and 1995,
respectively.

The company provides postretirement medical coverage to qualifying employees.
Upon retirement the company's employees may become eligible for benefits if they
meet certain age and length of service requirements as specified in the plan.

The provision for postretirement benefits, including discontinued operations,
consists of the following components:

<TABLE>
<CAPTION>
                                  -----------------------
In thousands                       1996     1995    1994
---------------------------------------------------------
<S>                               <C>      <C>     <C>

Service cost-benefits earned
 during the period                $ 109     $199   $ 292
Interest cost on accumulated
 postretirement benefit
 obligation ("APBO")                296      473     449
Net amortization and deferral      (210)      19      15
                                  ----------------------
Net periodic postretirement
 benefit cost                       195      691     756
Curtailment gain                   (115)       -    (827)
                                  ----------------------
Net postretirement medical
 expense (income)                 $  80     $691   $ (71)
                                  ======================
</TABLE>

In 1996, the company's postretirement benefits provision included a curtailment
gain due mainly to an amendment which, among other things, limited participation
in the plan to present participants and employees as of July 1, 1996 meeting
specified age and service requirements. In 1994, the company's postretirement
benefits provision included a curtailment gain, which was included in the loss
on sale of discontinued operations (see Note 10). The company will continue to
be responsible for certain postretirement benefit obligations relating to the
discontinued operations.

Components of the APBO recognized in the consolidated balance sheets at December
31 were as follows:

<TABLE>
<CAPTION>
                                      -------------------
In thousands                            1996       1995
---------------------------------------------------------
<S>                                   <C>        <C>

Actuarial present value of
 benefit obligations:
 Retirees and beneficiaries           $(1,611)   $(3,558)
 Fully eligible active plan
  participants                           (332)      (674)
 Other active plan participants          (426)    (2,286)
                                      ==================
Total APBO                             (2,369)    (6,518)
Unrecognized (gain) loss               (2,652)     1,160
                                      ==================
Accrued postretirement
 benefit liability                    $(5,021)   $(5,358)
                                      ==================
</TABLE>

28

<PAGE>

In determining the actuarial present value of the APBO as of December 31, 1996
and 1995, the assumed health care cost trend rate was 10%, reducing gradually to
an ultimate rate of 5.5% in 2001, and the discount rate was 7.5%. If the health
care cost trend rate were increased by 1% in each year, the effect on the APBO
and the net periodic postretirement benefits provision would be insignificant at
December 31, 1996.

Note 8. Acquisition

On January 2, 1996, the company purchased all the outstanding capital stock (the
"Stock") of Sylvan Ginsbury, Ltd., a New Jersey corporation, and certain
affiliated entities ("Ginsbury"), an international distributor of active,
passive and interconnect electronic products with operations in the United
States and six European countries. The assets represented by the Stock generally
included personal property, inventory, accounts receivable, intellectual
property, assigned contracts, permits and other identifiable intangible assets.
The negotiated purchase price of the Stock was approximately $38.8 million
consisting of $30.8 million in cash paid on the closing date, $3.0 million of
restricted stock issued at closing and up to $5.0 million in cash for an earnout
provision, which is potentially payable based on the future financial
performance of Ginsbury over a five-year period. For 1996, no amount was due
under the earnout provision. The acquisition was financed mainly through
borrowings under the company's revolving credit agreement.

The results of operations of the company for 1996 include the results of
Ginsbury. If the acquisition of Ginsbury had taken place at the beginning of
1995 rather than on January 2, 1996, unaudited pro forma consolidated net sales,
net income and net income per share for 1995 would have approximated
$1,122,009,000, $36,907,000 and $2.90, respectively. Such pro forma amounts are
not necessarily indicative of what the actual consolidated results would have
been for the full year of 1995.

Note 9. Accord Contract Services Joint Venture

On August 8, 1996, the company announced the formation of a joint venture with
Marshall Industries ("Marshall"), another distributor of electronic components
and computer products. The venture, known as Accord Contract Services LLC
("Accord"), is 50% owned by each of the company and Marshall (the "members").
Accord provides value-added services to each of its members, including component
kitting, turnkey manufacturing solutions and autoreplenishment systems.

The joint venture is subject to termination under various circumstances,
including the election by either member. Upon a change in control of one of the
members, either member may elect to terminate the joint venture, but the member
subject to the change in control would then be required to pay the other member
a fee as compensation for the termination of the venture. The fee, which can
range from $25 million to $40 million, is based on the value of the venture at
the time of termination considering its sales volume and other factors. In
connection with the establishment of Accord, each member initially agreed to
grant certain warrants to the other member and entered into other related
agreements. The warrant agreements and certain of the related agreements were
subsequently rescinded.

Note 10. Discontinued Operations

On December 23, 1994, the company completed the sale of its SS&S business to
WESS Investment Corporation ("WESS"), a buyout group led by William E. Simon &
Sons and certain members of the SS&S management along with a current and two
former members of the company's Board of Directors. Under the terms of the
agreement, WESS acquired certain assets and liabilities of SS&S for a negotiated
purchase price of $30 million in cash, subject to adjustment, plus additional
amounts that may be paid to the company under a five-year earnout provision.
Certain excess real properties of SS&S were excluded from the sale to WESS. Such
assets are stated at their estimated net realizable value of $3,156,000 and
$3,433,000 at December 31, 1996 and 1995, respectively, and are classified in
other assets. The company intends to sell these assets in the future.

                                                                              29

<PAGE>

Wyle Electronics    Notes to Consolidated Financial Statements



During 1994, the company recorded a loss on sale of discontinued operations of
$15.8 million, after income tax benefits of $9.9 million. The loss on sale
included certain transaction costs and reserves associated with the disposition,
and was reduced by certain curtailment gains as discussed in Note 7. Operating
results for SS&S are classified as discontinued operations on the company's
consolidated statement of income for 1994. Long-term liabilities related to
discontinued operations totaled $12,651,000 and $14,574,000 at December 31, 1996
and 1995, respectively.

Note 11. Commitments and Contingencies

Commitments  The minimum aggregate rentals payable on long-term leases
subsequent to December 31, 1996 approximate $24,997,000. The amounts are payable
as follows: 1997 - $6,269,000; 1998 - $5,376,000; 1999 - $4,502,000; 2000 -
$3,440,000; 2001 - $2,353,000; and thereafter - $3,057,000. Rental expense
(including month to month rentals) approximated $8,336,000, $7,300,000 and
$8,096,000 for 1996, 1995 and 1994, respectively. Certain facilities occupied by
Ginsbury in the U.S. and Europe are leased from a member of Ginsbury's
management and his family at costs that approximate market rates. The minimum
aggregate rentals payable on these related party leases to December 31, 1996,
included above, approximated $1,733,000. Rental expense related to these
facilities in 1996 approximated $406,000.

Contingencies  In May 1993, Avnet, Inc. ("Avnet") and Hall-Mark Electronics
Corporation ("Hall-Mark") filed a civil action against the company and a former
employee of Hall-Mark in the Superior Court of Fulton County, Georgia, seeking
injunctive relief and monetary damages, and alleging, inter alia, that the
company conspired with Hall-Mark employees to tortiously interfere with the
employment relations of Hall-Mark and its employees and with a proposed business
combination between the plaintiffs, which combination was consummated
subsequently. Plaintiffs' motion for a preliminary injunction was denied in part
by the trial court and affirmed by the Georgia Supreme Court in December 1993.
In October 1995, plaintiffs voluntarily dismissed their claims in Georgia
without prejudice.

In September 1995, Avnet refiled the same action against the company and certain
company employees in the Circuit Court of Hillsborough County, Florida, which
litigation is still pending. The company believes that plaintiffs' complaint is
without merit and will contest it vigorously. The company recorded a special
charge of $1,900,000 during the third quarter of 1994, primarily for anticipated
legal expenses associated with the defense of this litigation. Although
management cannot predict the ultimate outcome with any certainty, management
believes that a result adverse to the company in this matter is unlikely.

The company also has other contingent liabilities arising in the ordinary course
of business. In the opinion of management, the ultimate disposition of such
matters will not materially affect the company's results of operations or
financial position.

30

<PAGE>

Wyle Electronics    Report of Independent Public Accountants



                    To the Board of Directors and Shareholders of Wyle
                    Electronics:

                    We have audited the accompanying consolidated balance sheets
                    of Wyle Electronics (a California corporation) and
                    subsidiaries as of December 31, 1996 and 1995 and the
                    related consolidated statements of income, shareholders'
                    equity and cash flows for the years ended December 31, 1996,
                    1995 and 1994. These financial statements are the
                    responsibility of the company's management. Our
                    responsibility is to express an opinion on these financial
                    statements based on our audits.

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

                    In our opinion, the consolidated financial statements
                    referred to above present fairly, in all material respects,
                    the financial position of Wyle Electronics and subsidiaries
                    as of December 31, 1996 and 1995, and the results of their
                    operations and their cash flows for the years ended December
                    31, 1996, 1995 and 1994 in conformity with generally
                    accepted accounting principles.

                                                         /s/ Arthur Andersen LLP

                    Los Angeles, California                 Arthur Andersen LLP
                    February 14, 1997


                                                                              31

<PAGE>

Wyle Electronics          Selected Financial Data

<TABLE>
<CAPTION>
                                                                               Years ended December 31,
                                                                       ---------------------------------------
In thousands, except per share amounts and percentages                    1996           1995          1994
--------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>           <C>           <C>

Operating results
 Net sales                                                             $1,244,504    $1,077,467      $792,309
 Cost of sales                                                          1,020,796       890,693       663,741
 Interest expense, net                                                      7,623         3,315         1,289
 Income (loss) from continuing operations before income taxes              66,471        60,049        22,730
 Income from continuing operations                                         40,215        36,210        13,980
 Net income (loss)                                                         40,215        36,210          (381)/(a)/
 Income (loss) per share
   Primary
     Continuing operations                                                   3.12          2.86          1.13
     Net income (loss)                                                       3.12          2.86          (.03)/(a)/
   Fully diluted
     Continuing operations                                                      -             -             -
     Net income (loss)                                                          -             -             -
 Dividends per common share                                                   .32           .28           .28
 Dividends paid                                                             4,033         3,457         3,431
                                                                       ======================================

Year-end financial data
 Working capital                                                       $  280,343    $  255,502      $170,773
 Net investment in property, plant and equipment                           37,839        34,329        15,497
 Total assets                                                             506,252       439,344       305,913
 Long-term debt, including subordinated debentures                        111,845        87,600        17,802
 Shareholders' equity                                                     236,145       195,670       159,746
 Book value per common share                                                18.76         15.72         13.10
 Income from continuing operations as a % of sales                            3.2%          3.4%          1.8%
 Annualized return from continuing operations on average
   shareholders' equity                                                      18.6%         20.4%          8.6%
                                                                       ======================================
</TABLE>

/(a)/Includes a net loss on sale of discontinued operations of $15.8 million,
     or $1.27 per share (see Note 10).


32
<PAGE>

<TABLE>
<CAPTION>
Eleven months
    ended                                             Years ended January 31,
 December 31,     ---------------------------------------------------------------------------------------------------
     1993           1993           1992           1991           1990           1989           1988           1987
---------------------------------------------------------------------------------------------------------------------
   <S>            <C>            <C>            <C>            <C>            <C>            <C>            <C>


   $473,443       $446,609       $359,868       $358,921       $319,061       $318,107       $265,395       $224,559
    382,513        353,558        280,414        273,374        246,368        246,502        207,992        174,294
        174          2,283          2,426          2,668          3,240          3,770          3,140          2,413
     12,734         18,310          7,793         14,688          5,859          6,463          1,989         (1,187)
      8,336         11,787          5,275          9,350          3,782          3,957          1,136             65
      8,136         15,428          9,668         12,694          7,478          7,800          5,779          4,307


        .67           1.11            .52            .94            .38            .39            .11            .01
        .66           1.45            .95           1.28            .75            .77            .57            .44

          -           1.03            .53            .89            .41            .42            .16            .02
          -           1.33            .90           1.18            .72            .74            .56            .43
        .28            .28            .28            .28            .28            .28            .27            .26
      3,412          2,990          2,792          2,728          2,791          2,837          2,673          2,461
====================================================================================================================


   $143,432       $141,970       $133,074       $115,268       $101,611       $ 96,220       $106,466       $ 81,256
     30,606         29,884         30,513         30,902         31,306         30,243         25,860         27,137
    260,571        236,213        216,530        194,341        176,142        182,913        175,761        148,574
      6,000         10,120         41,991         36,039         36,571         32,405         43,724         25,882
    164,356        158,897        115,303        105,535         94,286         93,851         88,522         80,612
      13.45          13.09          11.48          10.79           9.77           9.26           8.78           8.37
        1.8%           2.6%           1.5%           2.6%           1.2%           1.2%            .4   %          -

        5.6%           8.6%           4.8%           9.4%           4.0%           4.3%           1.3   %         .1%
====================================================================================================================
</TABLE>


                                                                              33

<PAGE>

Wyle Electronics           Results by Quarter and Capital Stock Information
                           Unaudited


<TABLE>
<CAPTION>
                                       Year ended December 31, 1996                        Year ended December 31, 1995
                                                by Quarter                                          by Quarter
In thousands, except          --------------------------------------------         -----------------------------------------
per share amounts               First      Second       Third      Fourth            First     Second      Third     Fourth
----------------------------------------------------------------------------------------------------------------------------
<S>                           <C>         <C>         <C>         <C>              <C>        <C>        <C>        <C>

Net sales                     $326,506    $306,881    $295,191    $315,926         $250,036   $254,899   $273,499   $299,033
Gross profit                    57,886      58,452      53,632      53,738           40,337     45,203     49,120     52,114
Net income                      11,003      11,113       8,613       9,486            6,730      8,774     10,139     10,567
Net income per share              $.86        $.86        $.67        $.74             $.54       $.70       $.80       $.83
                              ==============================================================================================
</TABLE>



Wyle Electronics common stock is traded on the New York Stock Exchange under the
symbol WYL. The high and low price ranges and dividends paid per share for each
quarterly period during the past two years are as follows:

<TABLE>
<CAPTION>
                              Price Range                                                       Price Range
Year ended               --------------------     Dividends          Year ended            ---------------------     Dividends
December 31, 1996          High        Low        Per Share          December 31, 1995       High         Low        Per Share
------------------------------------------------------------------------------------------------------------------------------
<S>                      <C>         <C>            <C>             <C>                    <C>          <C>            <C>

Quarter ended                                                        Quarter ended
 March 31, 1996          $35 5/8     $27 5/8        $.08              March 31, 1995       $24 1/2      $19 3/8        $.07
 June 30, 1996            44 1/4      33 1/8         .08              June 30, 1995         29 1/4       23             .07
 September 30, 1996       34 1/8      28 5/8         .08              September 30, 1995    45 3/8       27 3/8         .07
 December 31, 1996        39 1/2      29 7/8         .08              December 31, 1995     46 1/2       33 1/2         .07
------------------------------------------------------------------------------------------------------------------------------
</TABLE>


34