SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE
____ ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
____ EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____________ TO
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Commission file number

0-21796

CDW Computer Centers, Inc.
(Exact name of registrant as specified in its charter)
Illinois 36-3310735
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

200 N. Milwaukee Ave.,
Vernon Hills, Illinois 60061
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code : (847) 465-6000
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Securities registered pursuant to Section 12(b) of the Act :

Title of each class Name of each exchange on which registered
- ------------------- -----------------------------------------
None N/A

Securities registered pursuant to Section 12 (g) of the Act :
Common Stock
------------

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 the 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. X

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The aggregate market value of the Common Stock held by non-affiliates as of
March 2, 2000 was approximately $1.333 billion, based upon the market price per
share of $59.50.

As of March 3, 2000, the registrant had 43,317,973 shares of Common Stock, $0.01
par value, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the following documents are incorporated by reference into the parts
of this Form 10-K designated to the right of the document listed.

Incorporated Document Location in Form 10-K

Definitive Proxy Statement for Part III, Items 10, 11, 12 and 13
Annual Meeting of Shareholders to be
held on May 24, 2000, to be filed
pursuant to Regulation 14 A not
later than April 30, 2000.

An Index to Exhibits appears at pages Part IV, Item 14
19 - 21 herein

CDW COMPUTER CENTERS, INC.

1999 FORM 10-K ANNUAL REPORT

FOR THE YEAR ENDED DECEMBER 31, 1999

INDEX

PART I 10-K Page No

Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . .1

Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . 9

Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . 9

Item 4. Submission of Matters to a Vote of Security Holders . . . 9

PART II

Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters . . . . . . . . . . . . . . . . . . .10

Item 6. Selected Financial Data . . . . . . . . . . . . . . . . 11

Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . 12

Item 7A. Quantitative and Qualitative Disclosure About
Market Risk. . . . . . . . . . . . . . . . . . . .. . . .18

Item 8. Financial Statements and Supplementary Data . . . . . . .18

Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . . . . . .18

PART III

Item 10. Directors and Executive Officers of the Registrant. . . .18

Item 11. Executive Compensation . . . . . . . . . . . . . . . . . 19

Item 12. Security Ownership of Certain Beneficial Owners
and Management . . . . . . . . . . . . . . . . . . . . . 19

Item 13. Certain Relationships and Related Transactions . . . . . 19

PART IV

Item 14. Exhibits, Financial Statement Schedule and Reports
on Form 8-K. . . . . . . . . . . . . . . . . . . . . . .19

Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

PART I

Item 1. Business.

General

CDW Computer Centers, Inc. and its Subsidiaries (collectively 'CDW' or the
"Company") is a leading direct marketer of microcomputer products, primarily to
business, government, educational, institutional and home office users in the
United States. The Company sells a broad range of multi-brand microcomputer
products, including hardware and peripherals, software, networking/communication
products and accessories through knowledgeable sales account managers. In May
1998, the Company formed CDW Government, Inc. (CDW-G), a wholly owned
subsidiary. CDW-G sells microcomputer products and related software, peripherals
and accessories and focuses exclusively on serving government and educational
accounts. In April 1999, CDW Capital Corporation, a wholly-owned subsidiary of
CDW established in 1999, and First Portland Corporation formed CDW Leasing,
L.L.C. ("CDW-L"), a 50/50 joint venture. CDW-L provides captive leasing services
to CDW customers. The Company offers popular brand name microcomputer products
from Apple, Canon, Cisco, Compaq, Computer Associates, Epson, Hewlett-Packard,
IBM, Intel, Lotus, Microsoft, NEC, Novell, Toshiba and 3Com, among others. The
Company's high volume, cost-efficient operation, supported by its proprietary
information technology systems, enables it to offer these products at
competitive prices combined with a high level of service.

The Company directs its marketing efforts toward current and prospective
customers with a particular focus on commercial accounts, including business,
government, educational and institutional users. The Company believes that these
entities and persons have a high level of product knowledge and are most likely
to purchase sophisticated systems and products on a repetitive basis through the
Company's direct marketing format. The Company markets to prospective customers
through its catalog and other direct mailing programs, through national
advertising in computer magazines and through electronic commerce via the
Internet. During the year ended December 31, 1999, the Company serviced
approximately 285,000 commercial accounts which comprised 93% of total sales.
The Company continues to focus on generating repeat sales from existing
customers while attracting sales from new customers. The Company has
consistently maintained a high annual rate of repeat purchases from current
customers by offering excellent customer service and competitive pricing on a
broad range of microcomputer products. The Company enhances repeat purchases by
offering add-on and replacement products through its relationship oriented
account managers who are knowledgeable about a customer's needs.

Additionally, the Company focuses significant efforts on developing and
expanding its E-business initiatives. The Company's strategy is to implement
E-business initiatives that are an extension of its "high tech, high touch"
relationship based business model. These initiatives include the Company's
Internet website, www.cdw.com, and cdw@work which provides customized websites
for commercial customers. Details of these initiatives are included in the
section titled www.cdw.com below.

The Microcomputer Products Industry Evolution

The microcomputer industry has evolved as a result of, among other things,
the development of new technologies that have been translated by manufacturers
into new products and applications. The Company has been and will continue to be
dependent on the continued development of new technologies and products by its
vendors, including but not limited to Cisco, Compaq, Hewlett Packard, IBM, Intel
and Microsoft, as well as the acceptance of such technologies and new products
by end-users. A decrease in the rate of development of new technologies and new
products by manufacturers, or the lack of acceptance of such technologies and
products by end-users, could have a material adverse effect on the Company's
growth prospects and results of operations.

The sophistication and value consciousness of the Company's customer base,
combined with the evolution of industry standards for microcomputers, has also
resulted in heightened end-user interest in, and acceptance of, microcomputers,
peripherals and software which use the Microsoft operating platform, and other
operating platforms offered by the Company, and are manufactured by high quality
manufacturers. In addition, the intense competition among manufacturers has
generally reduced prices and increased the number of microcomputers and related
products being used by businesses and sold by direct marketing organizations
such as CDW. The Company believes that its business model, which promotes the
sale of high quality, brand name products at competitive prices combined with a
high level of personal and technical service, is well suited to serve an
increasingly sophisticated and value conscious customer base.

Competition

The microcomputer products industry is highly competitive. The Company
competes with a large number and variety of resellers of microcomputer and
related products as well as manufacturers that sell direct to customers. In the
hardware category, the Company competes with traditional microcomputer
retailers, computer superstores, consumer electronic and office supply
superstores, mass merchandisers, national direct marketers, Internet retailers,
corporate resellers and value-added resellers. In the software and accessories
categories, the Company generally competes with these same resellers as well as
specialty retailers and resellers. In addition, as a result of improving
technology, certain software manufacturers have developed and may continue to
develop sales methods that allow customers to download software programs and
packages directly onto the customer's system through the use of the Internet.
The Company also competes with manufacturers that sell hardware and software
directly to certain customers. Several manufacturers that sell product to the
Company for resale have initiated or expanded their efforts to sell directly to
end users. Several of the Company's current and potential competitors are larger
and have substantially greater resources than the Company. Additionally, several
competitors in the direct marketing and Internet commerce industries have raised
capital in the public markets through initial and subsequent public offerings.
The increased visibility of these companies and their access to the capital
markets may improve their market position and their ability to compete with the
Company. Although the Company offers products for sale via electronic commerce,
there can be no assurance that the Company's sales via electronic commerce will
meet or exceed sales levels generated by competitors. As competition intensifies
the Company intends to improve the value-added service provided to its
customers,strengthen its customer relationships and broaden its marketing
activities. If the Company's efforts are not successful the Company's growth
rates and operating margins could be negatively impacted.

The current industry configuration, including the proliferation of Internet
resellers with access to capital markets, may result in increased pricing
pressures. Decreasing prices of microcomputers and related products, resulting
in part from technological changes, may require the Company to sell a greater
number of products to achieve the same level of net sales and gross profit. Such
a trend could make it more difficult for the Company to continue to increase its
net sales and earnings growth. In addition, if the growth rate of microcomputer
sales were to slow down, the Company's operating results could be adversely
affected.

The CDW Philosophy

The Company adheres to a central philosophy known as the CDW CIRCLE OF
SERVICE which places the customer at the center of all of the Company's actions.
The philosophy is based upon the premise, promoted by management, that "People
Do Business With People They Like." The CDW CIRCLE OF SERVICE is a graphic
reminder to the Company and its personnel that good service leads to good
experiences and increased sales, and, alternatively, that bad experiences lead
to lost sales and job uncertainty.

Business Strategy

The Company's business strategy is to be a high volume, cost-efficient
direct solutions provider of multi-brand, competitively priced, microcomputer
products and to provide a high level of customer service. The

Company believes that the following factors are of principal importance in its
ability to implement this "high tech, high touch" business strategy:

Breadth and Depth of Selection. The Company offers a wide range of products
from many manufacturers, providing its customers with the convenience of
one-stop shopping for their microcomputer-related needs. The Company carries
brand name products and regularly reviews and modifies its mix of product
offerings.

Commercial Customer Focus. The Company focuses the majority of its sales
and marketing efforts on attracting and servicing commercial customers rather
than individual or consumer users. Commercial customers includes businesses,
government and institutional customers. The Company believes commercial
customers provide a higher rate of repeat sales at volume levels as opposed to
the low volume typically experienced with consumer sales. In 1999,sales to
commercial customers comprised 93% of sales revenue, an increase from 88% in
1998.

Competitive Pricing. The Company believes that its high volume,
cost-efficient direct marketing format allows it to provide a high level of
value added service to its customers with competitive pricing.

Marketing. The Company uses a marketing mix of direct response activities,
including its catalog formats and trade magazine advertising combined with a
multifaceted branding campaign. These activities are intended to create customer
response and a high level of awareness of CDW. The Company's marketing
activities are directed to commercial users and the decision makers in
commercial organizations.

Sales. The Company has adopted a relationship oriented sales approach with
a high level of technical and skill based training for its account managers. New
account managers function in a corporate development mode designed to target and
develop a steady customer base.

Customer Service - Custom Configuration and Technical Support. As of
December 31, 1999, the Company custom configures approximately 4,000 units per
week and ships the majority of its orders the day the order is placed. The
Company offers technical support by telephone for the life of the product 24
hours a day, seven days a week. The Company employs a technical staff with over
200 manufacturer certifications to assist the customer with technical questions
and issues. The Company believes that its commitment to service at the time of
sale and after the purchase maximizes sales and encourages repeat customers.

Information Technology. The Company uses proprietary, real-time information
technology systems which centralize management of key functions and generate
daily operating control reports enabling management to identify and respond
quickly to internal changes and trends in the industry and to provide high
levels of customer satisfaction. The Company integrates its real-time systems
with www.cdw.com, its Internet website, providing real-time information for its
customers.

Effective Inventory Control. The Company's management information systems,
"just-in-time" purchasing system, radio frequency based cycle counting system
and use of vendor stock balancing and price protection programs allow it to
minimize its investment in inventory, reduce inventory discrepancies and the
risk of obsolescence while meeting customer needs. These systems resulted in the
Company achieving approximately 23 inventory turns during 1999.

High Quality Personnel. The Company strives to attract, retain and motivate
high quality personnel and provides its coworkers with financial incentives
designed to maximize performance and productivity. The Company and Mr. Krasny,
its majority shareholder, Chairman and CEO, have instituted short-term incentive
programs and stock-based compensation programs to reward and motivate all of the
Company's coworkers. In 1999, the Company established an on-site child care and
fitness center facility on its Vernon Hills, Illinois, campus as an additional
coworker benefit.

Merchandise

The Company offers microcomputer products including hardware and
peripherals, software, networking and communication products and accessories for
use with microcomputers based on a variety of operating platforms including
Microsoft, Apple, Linux, Novel, Oracle and others. The Company's just-in-time
purchasing system and aggressive inventory management allows it to limit its
on-hand inventory and ship orders generally on a same-day basis.

The following is a listing of selected hardware and peripheral and software
manufacturers:

Product Categories Selected Product Manufacturers
------------------ ------------------------------

Hardware and Peripherals:
3Com Fujitsu Maxell Seagate
3M Hewlett-Packard Maxtor Simple
Acer IBM Memorex SMC
Adaptec Imation Microtek Sony
APC Infocus Minolta Targus
Apple Intel NEC TDK
ATI Iomega Netgear Tectronix
Belkin Kingston Nikon Toshiba
Canon Kodak Okidata Tripp Lite
Cisco Lexmark Olympus Verbatim
Compaq Linksys Palm Viewsonic
Creative Labs Logitech Philips Visiontek
CTX Lucent Princeton Western Digital
Graphics
Epson Magnavox Quantum Yamaha

Software:
Adobe Intuit Network Red Hat
Associates
Borland Lotus Novell Seagate
Computer Associates Macromedia Oracle Symantec
Corel Microsoft Quark Visio

The Company continually seeks to expand and improve its relationships with
manufacturers as well as increase the number of products which it is authorized
to sell.

Purchasing and Vendor Selection; Inventory Management

The Company believes that effective purchasing is a key element of its
business strategy of providing name brand products at competitive prices. The
Company's purchasing staff works to identify reliable high quality suppliers of
products, then actively negotiates to decrease the Company's cost and expand
vendor support programs, permitting the Company to improve the competitiveness
of selling prices of its products. The Company seeks to establish strong
relationships with its vendors, and employs a policy of paying vendors within
terms stated and taking advantage of all appropriate discounts.

During 1999, CDW purchased approximately 62% of its merchandise from
distributors and aggregators and the balance direct from manufacturers,
substantially all of which ship directly to the Company's distribution facility.
Products purchased through distributors and aggregators are a combination of
products

which are only sold by the manufacturers through distribution and products that
are acquired as part of the Company's just-in-time purchasing model. The Company
is generally authorized by manufacturers to sell via direct marketing all or
selected products offered by the manufacturer. The Company's authorization with
each manufacturer provides for certain terms and conditions, which may include
one or more of the following: product return privileges, price protection
policies, purchase discounts and vendor support programs, such as purchase or
sales rebates and cooperative advertising reimbursements. The Company's business
and results of operations may be adversely affected if the terms and conditions
of the Company's authorizations were significantly modified or if certain
products become unavailable to the Company, whether such unavailability is
because the manufacturer terminates the Company's authorization or the product
is subject to allocation or otherwise. Vendor support programs are at the
discretion of the manufacturers and usually require achieving a specified sales
volume or growth rate to qualify for all, or some, of the incentive program.

For the year ended December 31, 1999, Tech Data, Ingram Micro/Ingram
Alliance and Merisel were the only vendors from whom purchases exceeded 10% of
total purchases. Additionally, in 1999 Compaq and Hewlett Packard products each
comprised more than 10% of total Company sales. The loss of any of these
vendors, or any other key vendors, could have an adverse effect on the Company.

The Company believes that the Chicago metropolitan area is an excellent
location for its business as it is centrally located for purposes of shipping
products throughout the United States and provides same day access to its
principal distributors and aggregators, including Ingram Micro/Ingram Alliance,
Merisel, and Tech Data. The relocation of key distributors utilized in the
Company's just-in-time purchasing model could adversely impact the Company's
results of operations. Although brand names and individual products are
important to the Company's business, the Company believes that competitive
sources of supply are available in substantially all of the merchandise
categories the Company carries.

CDW also applies its proprietary information technology systems to the task
of managing its inventory. At December 31, 1999, the Company maintained an
investment in inventory of approximately $126 million with approximately $1.1
million of inventory on hand over 90 days old. The Company turned its inventory
approximately 23 times during 1999.

Marketing and Advertising Activities

The Company utilizes a variety of advertising and marketing media to
attract and retain customers, including national advertising in computer related
publications, catalogs and certain other direct marketing activities, as well as
electronic marketing via the Internet. In 1999, the Company continued the
national branding campaign it initiated in 1998 which includes national print
media, national cable television advertisements and other activities. Due to its
relationships with its product suppliers and others, a substantial portion of
its advertising and marketing expenses are reimbursed through cooperative
advertising reimbursement programs. These cooperative advertising programs are
at the discretion of the Company's vendors and are typically tied to certain
purchasing volumes and other commitments required by the Company. The Company's
approach to its marketing and advertising activities is proprietary in nature,
as is its strategy in managing its files of current, prior and prospective
customers. In order to measure the effectiveness of its marketing activities,
the Company tracks responses to its various efforts by a variety of means. This
information is used to further refine its strategy and develop more effective
programs in the future.

www.cdw.com

The Company's Internet strategy, executed through www.cdw.com, is to
utilize the web as an extension of its "high tech, high touch" business model.
The Company's objective is to make it easy for its customers to transact
business and ultimately enhance customer relationships. The web site includes
many advanced features to attract new customers and produce sales, including
more than 50,000 computer products to search

9
and order on-line, advanced search capabilities, product specifications on over
25,000 products, product availability and pricing. It also offers side-by-side
product comparisons, links to product reviews, newsworthy announcements,
personalized access and customized two-way interaction that allows for checking
order status at will. CDW has expanded its successful www.cdw.com site to
include CDW@work, a customized, secure extranet site for business customers.
CDW@work allows customers to track order status, manage current assets, order
configured systems, obtain purchase history and get access to up-to-the-minute
availability of their dedicated CDW account team. In addition, the Company has,
through its excellent relations with vendors, arranged for links between
vendors' web sites and the Company's. The Company believes the website is an
excellent complement to its business model, providing information and
convenience for its customers, while also serving as another source for new
customers. During 1999, the Company generated $163.4 million of direct on-line
sales over its web site, of which $9.9 million were generated by CDW@work
extranet sites. Many customers use www.cdw.com to gather product information,
pricing and availability and follow up with their account manager to access the
account manager's knowledge base regarding product compatibility and other
information. Many of these customers ultimately place their orders with their
account manager rather than using www.cdw.com.

Sales Activities and Order Fulfillment

The Company's success is due in part to the strength of its account
managers who manage customer relationships by responding to customer inquiries
and proactively calling existing and potential new customers. The Company's
account managers are trained in Company systems and philosophies, are product
knowledgeable and motivated to maximize sales and provide high levels of
customer service. All account managers are graduates of CDW University, the
Company's proprietary sales training program. The program includes four weeks of
classroom training followed by several weeks of sales experience in one of the
Company's retail showrooms, followed by one month of training on the phones. CDW
seeks to build customer relations by assigning each customer to the account
manager who first services the customer. Upon subsequent calls to CDW, the
customer is directed to their account manager for assistance. In the spirit of
teamwork, account managers are encouraged to cooperate and work together to
maximize sales and customer satisfaction.

Each catalog and advertisement distributed by the Company bears a toll-free
number to be used by customers in phoning CDW to place a product order.
Telephone calls are answered by account managers who utilize on-line computer
terminals to retrieve information regarding product characteristics, cost and
availability and to enter customer orders. Account managers enter orders on-line
into a computerized order fulfillment system which updates the Company's
customer purchase history. Computer processing of orders is performed
immediately following the placement of the order and upon receipt of credit
approval. The Company ships most credit approved orders received by 9:00 p.m.,
exclusive of orders for products not in stock or subject to allocation by the
manufacturer, on the day the order was received. Orders are shipped by Federal
Express, Airborne Express, RPS, Chicago Messenger Service, United Parcel
Service, U.S. Mail, common carrier or any other acceptable manner requested by
the customer. The Company charges customers for shipping but may offer
promotional shipping programs from time to time. The average invoice size was
$918 in 1999 and $780 in 1998.

CDW account managers are generally compensated pursuant to a commission
schedule based upon the gross profit generated by them. CDW account managers
have the authority to negotiate and adjust prices for products, provided that
the account manager sells the product at a price which meets established
management guidelines. The Company's account managers have the opportunity to
achieve relatively high compensation levels and have historically shown
increased productivity as training and experience levels increase.

Customers

CDW currently maintains a database of over 3.8 million active and
prospective names of which approximately 588,000 were serviced by the Company in
1999, including 285,000 commercial customers.

The Company believes that its customers consist principally of businesses,
government institutions and home business users, which tend to purchase
higher-end equipment. For the year ended December 31, 1999, sales to business,
government and institutional customers accounted for approximately 93% of the
Company's net sales.

CDW's customers are located principally throughout the United States. In
1999, approximately 20% of the Company's net sales were generated by sales to
customers in Illinois, approximately 30% were generated to customers in the
eastern United States, approximately 15% were generated by sales to customers in
the southern United States, approximately 21% were generated by sales to
customers in the western United States and approximately 14% were generated by
sales to residents of the Midwestern United States (other than Illinois). Less
than 1% of sales were made to customers outside the United States.

Custom Configuration and Technical Support

The Company offers custom configuration services including installation of
accessories or expansion products, software loading, network configuration and
custom application loading. During 1999, the Company's custom configuration
center processed approximately 171,000 custom configured units. The Company
employs a technical staff that is trained and maintains the highest levels of
professional certification from manufacturers including that of 'Novell
Certified Network Engineer' and 'Certified Microsoft Engineer'. The Company's
trained technical support personnel are available by telephone 24 hours a day,
seven days a week to assist the customer with technical problems or questions in
order to reduce product returns and increase customer satisfaction. CDW has
developed a proprietary customer service tracking system to ensure that
customer-initiated service requests are responded to rapidly.

Information Technology Systems

CDW has installed and operates customized information technology systems
based upon IBM AS/400, Microsoft NT, Lucent and other platforms. Collectively,
these systems allow for centralized management of key functions, including
inventory and accounts receivable management, purchasing, sales and
distribution, and the preparation of daily operating control reports which
provide concise and timely information regarding key aspects of the business.
The Company's proprietary information technology systems enable the Company to
enhance its productivity, ship customer orders on a same-day basis, respond
quickly to changes in its industry and provide high levels of customer service.

The Company's success is dependent on the accuracy and proper utilization
of its information technology systems, including its telephone systems. The
Company's ability to manage its inventory and accounts receivable collections;
to purchase, sell and ship its products efficiently and on a timely basis; and
to maintain its cost-efficient operation is dependent upon the quality and
utilization of the information generated by its information technology systems.
In that regard, the Company anticipates that it will continue to require
software and hardware upgrades for its present information technology systems.
In addition, the ability of the Company to adapt its systems to changes in the
competitive environment or to take advantage of additional automation is
dependent upon its ability to recruit and retain qualified IT professionals. If
the Company were unable to develop or purchase future enhancements to its
information technology hardware or software, or continue to hire and retain
qualified IT professionals, the Company's operating results could be adversely
affected. See Management's Discussion and Analysis of Financial Condition and
Results of Operations for information regarding the impact of the Year 2000
issue on the Company's business.

The Company's entire information technology system is located at its Vernon
Hills campus. The integrity of the system is vulnerable to certain forms of
disaster including, but not limited to, natural disasters such as tornadoes. The
Company has established a disaster recovery plan which will utilize a backup
system for its information technology and telephones. The hardware for the
backup system is currently being installed at the new sales office located in
downtown Chicago and will be operational in the second quarter of 2000.

Personnel and Training

At December 31, 1999, the Company employed 1,937 coworkers. Of these, 1,563
were employed at the Company's headquarters in Vernon Hills, Illinois, 39 were
employed at the Company's retail showroom in Chicago, Illinois, 321 were
employed at the Buffalo Grove, Illinois sales facility and 14 were employed at
the government sales office in Chantilly, Virginia. The Company considers its
coworker relations to be excellent. The Company's level of net sales per
coworker increased approximately 5.0% to $1.46 million in 1999 as compared to
$1.39 million in 1998. No coworkers are covered by collective bargaining
agreements.

CDW emphasizes the recruiting and training of high quality personnel and,
to the extent possible, promotes people to positions of increased responsibility
from within the Company. Each coworker initially receives training appropriate
for his or her position and a complete CDW orientation. This is followed by
varying levels of training in information technology. New account managers
participate in an intensive four-week long classroom training program known as
'CDW University,' followed by hands-on, face-to-face showroom training during
which time they are introduced to the Company's philosophy, systems, and
products and services. Finally, the account managers receive one month of
training while working on the telephones. Training for specific product lines
and continuing education programs for all account managers are conducted on an
ongoing basis, supplemented by vendor sponsored training programs for all
account managers and technical support personnel.

During 1999, the Company initiated a company-wide training program called
L.E.A.D. (Leadership, Excellence, Attitude, Development) which provides
professional development training to all coworkers. The program includes a
series of instructional courses taught by CDW personnel and outside
professionals based on professional development themes including areas such as
communication skills and coaching for the Company's managers. The Company also
offers Internet based online training (L.E.A.D. Online) for all its coworkers
with a course library of 181 courses relating to professional development.

Incentive and Regular Compensation Arrangements

Compensation Arrangements. The Company's coworkers are generally
compensated on a basis that rewards performance and the achievement of
identified goals. For example, account managers receive compensation pursuant to
a commission schedule which is based upon aggregate gross profit dollars,
accounts receivable personnel are eligible for monthly bonuses if late balances
are held below target levels, and operations personnel are eligible for monthly
bonuses based upon such factors as prompt vendor returns and order fulfillment
rates. The Company believes that these incentives positively impact its
performance and profitability.

Coworker Incentive Stock Option, MPK Stock Option and Restricted Stock
Plans. In addition to regular compensation, the Company, and Mr. Krasny
individually, provide Company coworkers with additional long-term incentives
designed to maximize performance and productivity. To this end, the Company and
Mr. Krasny have adopted various stock-based compensation plans which enable
Company coworkers to share in the success of the Company through appreciation in
the value of the Company's stock.

Retail Showrooms

The Company currently operates two retail showrooms allowing customers an
opportunity to examine products prior to purchase or to talk directly with CDW
sales or technical personnel. One showroom is located within the Company's main
distribution facility and headquarters in Vernon Hills, Illinois, and the other
is located in downtown Chicago, Illinois. These showrooms occupy approximately
5,100 square feet each.

The Company's retail showrooms, which generated approximately 4.1% of the
Company's net sales for 1999, inclusive of orders placed by telephone and picked
up at the retail showroom, provide an environment in which to further train the
Company's account managers before they join its sales department.

Trademarks

The Company conducts its business under the trade names and service marks
"CDW", "Computer Discount Warehouse", "CDW-G", "CDW@work" ,"CDW-L", "Direct
Solutions Provider" and "Computing Solutions Built for Business". The Company
has taken steps to register and protect these marks and believes they have
significant value and are important factors in its marketing programs.

Item 2. Properties.

The Company's primary location and headquarters is in Vernon Hills,
Illinois, and includes its main distribution center, sales office, a retail
showroom and corporate offices. The facility consists of a combined total of
approximately 200,000 square feet of warehouse space and 125,000 square feet of
office space, and is located on approximately 27 acres of land. The Company owns
a total of 45 acres of land at the Vernon Hills site, of which approximately 17
are vacant and available for future expansion. The Company's Chicago retail
showroom is under lease through June 2001.

The Company is obligated under a lease through 2004 for a combined 104,000
square foot office and warehouse facility in Buffalo Grove, Illinois, that
previously served as its main facility. In October 1998, the Company reopened
the office portion of the Buffalo Grove facility as a sales office. In June
1999, the Company sublet the warehouse and showroom portions of the Buffalo
Grove facility to a third party through December 2003. However, the third party
sublessee filed a Chapter 11 petition for reorganization under the bankruptcy
laws in August 1999, and subsequently decided to liquidate the business
operating from the sublet space. As a result of the liquidation, the sublessee
is not likely to affirm or complete the lease. If the lease is terminated, the
Company will reevaluate the future use of the warehouse space and adjust the
remaining exit liability as necessary depending on whether the Company pursues a
new sublease, uses the space for its operations or leaves the space vacant. See
Note 7 of Notes to Consolidated Financial Statements.

In October 1999, the Company executed an operating lease agreement for two
floors of office space totaling approximately 72,000 square feet in Chicago,
Illinois. The Company plans to establish a sales office in the facility with the
lease commencing for one floor on April 1, 2000, and for the second floor on
September 1, 2000. The lease provides a ten year term, with certain expansion
and renewal options.

The Company plans to construct a second warehouse on approximately 6 to 8
acres of its Vernon Hills, Illinois campus by the end of 2000. The new warehouse
will provide approximately 250,000 square feet of additional capacity and is
estimated to cost between $12 million and $13 million for construction and
equipment. Upon completion, the Company's total warehouse capacity will be
approximately 450,000 square feet.

Based upon its planned growth the Company will likely require additional
office capacity in early 2001. The Company is currently evaluating the
alternatives to accommodate future capacity requirements including additional
leased space and building expansion at its Vernon Hills campus.

Item 3. Legal Proceedings.

The Company is not currently party to any material legal proceedings.

Item 4. Submission of Matters to a Vote of Security Holders.

There were no matters submitted during the fourth quarter of 1999 to a vote
of security holders.

PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters.

The following table sets forth the high and low sales prices for the
Company's Common Stock on The Nasdaq Stock Market (R) for the periods indicated.
These quotations were obtained from Nasdaq, and have been adjusted to reflect
the two-for-one stock split paid on May 19, 19999 to common shareholders of
record on May 5, 1999. The Company believes that as of February 24, 2000 there
were approximately 10,620 beneficial owners of the Company's stock. Except for
distributions prior to May 25, 1993, the date of termination of the Company's
election to be taxed as an S Corporation, the Company has neither declared nor
paid any cash dividends on its Common Stock. The Company currently intends to
retain earnings for use in the operation and expansion of its business and
therefore does not anticipate paying cash dividends in the foreseeable future.

1999 1998
------------------------- --------------------------
Quarter Ended Low High Low High
- ----------------------- ----------- ----------- ----------- -----------
March 31............... $30 31/32 $61 5/8 $23 3/4 $35 3/8
June 30................ 27 15/16 38 1/4 19 1/8 30 3/4
September 30 .......... 36 3/8 42 1/2 18 27 1/2
December 31............ 47 80 21 5/8 51 15/16

Item 6. Selected Financial Data.

CDW Computer Centers, Inc. and Subsidiaries
Selected Financial and Operating Data
(in thousands, except per share and selected operating data)

Year Ended December 31,
----------------------------------------------------------------------------
1999 1998 1997 1996 1995
----------------------------------------------------------------------------

INCOME STATEMENT DATA :
Net sales $ 2,561,239 $ 1,733,489 $ 1,276,929 $ 927,895 $ 628,721
Cost of sales 2,237,700 1,513,314 1,106,124 805,413 548,568
----------------------------------------------------------------------------
Gross profit 323,539 220,175 170,805 122,482 80,153
Selling and administrative expenses 165,627 115,537 90,315 64,879 49,175
Exit charge (1) - - - 4,000 -
----------------------------------------------------------------------------
Income from operations 157,912 104,638 80,490 53,603 30,978
Interest income, net 4,931 4,708 4,259 3,469 1,973
Other income (expense), net (450) (335) (241) (188) 47
----------------------------------------------------------------------------
Income before income taxes 162,393 109,011 84,508 56,884 32,998
Income tax provision 64,308 43,170 33,507 22,484 12,939
----------------------------------------------------------------------------
Net income $ 98,085 $ 65,841 $ 51,001 $ 34,400 $ 20,059
----------------------------------------------------------------------------

Net income per share
Basic $ 2.27 $ 1.53 $ 1.18 $ 0.80 $ 0.48
----------------------------------------------------------------------------
Diluted $ 2.22 $ 1.51 1.17 $ 0.79 $ 0.48
----------------------------------------------------------------------------
Weighted average number of common
shares outstanding
Basic 43,135 43,062 43,050 43,050 42,052
Diluted 44,152 43,504 43,408 43,570 42,160

SELECTED OPERATING DATA :
Number of invoices processed (in thousands) 2,934 2,367 1,822 1,318 998
Average invoice size $ 918 $ 780 $ 756 $ 765 $ 685
% of sales to commercial customers 93% 88% 81% 80% 77%
Commercial Customers serviced (in thousands) 285 246 209 164 142
Net sales per coworker (in thousands) $ 1,462 $ 1,392 $ 1,490 $ 1,459 1,364
Inventory turnover 23 24 21 23 22
Accounts receivable - days sales outstanding 33 32 25 23 22

December 31,
----------------------------------------------------------------------------
1999 1998 1997 1996 1995
----------------------------------------------------------------------------
FINANCIAL POSITION:
Working capital $ 340,117 $ 228,730 167,421 $ 123,614 $ 99,127
Total assets 505,915 341,821 269,641 198,830 132,929
Total debt and capitalization lease obligations - - - - -
Total shareholders' equity 390,984 270,763 199,866 141,622 106,161

(1) The exit charge provides for estimated costs associated with vacating the
Company's leased facility. See Note 7 of Notes to the Consolidated
Financial Statements.

Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.

The following discussion and analysis of the Company's financial condition
and results of operations should be read in conjunction with the Company's
Consolidated Financial Statements and the Notes thereto.

Results of Operations

The following table sets forth for the periods indicated information derived
from the Company's statements of income expressed as a percentage of net sales:

- --------------------------------------------------------------------------------
PERCENTAGE OF NET SALES
FINANCIAL RESULTS YEARS ENDED DECEMBER 31,
- --------------------------------------------------------------------------------
1999 1998 1997
--------- -------- --------
Net sales 100.0 % 100.0 % 100.0 %
Cost of sales 87.4 87.3 86.6
--------- -------- --------
Gross profit 12.6 12.7 13.4
Selling and administrative expenses 6.5 6.7 7.1
--------- -------- --------
Income from operations 6.1 6.0 6.3
Interest and other income 0.2 0.3 0.3
--------- -------- --------
Income before income taxes 6.3 6.3 6.6
Income tax provision 2.5 2.5 2.6
--------- -------- --------
Net income 3.8 % 3.8 % 4.0 %

The following table sets forth for the periods indicated a summary of certain of
the Company's operating statistics:

OPERATING STATISTICS YEARS ENDED DECEMBER 31,
-----------------------------------
1999 1998 1997
--------- --------- ---------
Number of invoices processed 2,934,286 2,366,778 1,822,173
Average invoice size $918 $780 $756
Commercial customers serviced (1) 285,000 246,000 209,000
% of sales to commercial customers 93% 88% 81%
Number of account managers, end of period 798 622 399
Annualized inventory turnover 23 24 21

(1) Commercial customers includes businesses, government and institutional
customers.

The following table represents sales by product line as a percentage of net
sales for each of the periods indicated. Product lines are based upon internal
product code classifications and are not retroactively adjusted for the addition
of new categories or changes in individual product categorization.

Analysis of Product Mix
Years Ended December 31,

------------------------------------------------
1999 1998 1997
-------- -------- --------
Notebook & Laptop Computers 21.6 % 19.8 % 25.0 %
Desktop Computers and Servers 14.1 15.7 13.2
-------- -------- --------
Subtotal Computer Products 35.7 35.5 38.2
Software 12.5 13.4 12.6
Printers 10.5 12.6 12.1
Data Storage Devices 10.8 11.0 10.4
Net/Comm Products 9.2 9.3 8.5
Video 7.5 7.8 7.8
Add-On Boards/Memory 5.6 4.1 4.8
Supplies, Accessories and Other 8.2 6.3 5.6
--------- --------- ---------
Total 100.0 % 100.0 % 100.0 %

Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

Net sales in 1999 increased 47.8% to a record $2.561 billion compared to
$1.733 billion in 1998. The growth in net sales is primarily attributable to a
higher concentration of commercial accounts and a higher level of sales per
active commercial account. Net sales per active commercial account grew 35.5% in
1999. The Company believes that spending by customers for networking and
Internet capabilities, as well as Year 2000 (Y2K) compliance, positively
impacted net sales in 1999. Additionally, the expansion of the sales force by
28.5% in 1999 to 798 account managers at December 31, 1999 enabled the Company
to expand its customer base and the level of sales per active customer. Notebook
computers and desktop computers and servers continue to represent the largest
portion of the Company's sales. Notebook dollar volume increased more than 55%
from 1998 and desktop computers and servers dollar volume increased more than
42% from 1998.

The average selling price of desktop CPU's decreased 5.5% and the average
selling price of notebook CPU's declined 2.4% from 1998. The Company believes
there may be additional decreases in prices for personal computers and related
products in 2000. Such decreases require the Company to sell more units in order
to maintain or increase the level of sales. Should future manufacturer price
reductions or the Company's marketing efforts fail to increase the level of unit
sales, the Company's sales growth rate and operating results could be adversely
affected. Sales of Compaq, Hewlett Packard, IBM, Microsoft and Toshiba products
comprise a substantial portion of the Company's sales. The loss of any of these,
or any other key vendors, could have an adverse effect on the Company's results
from operations. The above statements concerning future prices, sales and
results from operations are forward looking statements that involve certain
risks and uncertainties such as those stated above.

The fastest growing product categories in terms of sales dollars in 1999
were add-on boards and memory at 82.7%, notebook computers at 54.6%, network and
communication products at 50.8%, software at 44.4% and data storage devices at
44%. Sales of add-on boards and memory were aided by increases in memory pricing
during the year. Demand for certain products offered by the Company, and the
growth of certain product categories, are driven by advances in technology and
the development of new products and applications by industry manufacturers, and
acceptance of these new technologies and products by end-users. Any slowdown in
the rate of technological advancement and new product development by industry
manufacturers could have a material adverse effect on the Company's future sales
growth.

Gross profit decreased as a percentage of net sales to 12.6% in 1999,
compared to 12.7% in 1998. The decrease in gross profit as a percentage of net
sales is primarily the result of lower selling margins achieved on certain
product lines and lower levels of inventory price protection and rebates from
vendors.

On a forward-looking basis, the gross profit margin achieved in 2000 may be
less than the 12.6% achieved in 1999. The statement concerning future gross
profit is a forward looking statement that involves certain risks and
uncertainties such as the continued participation by vendors in inventory price
protection and rebate programs, product mix, market conditions and other factors
which could result in a fluctuation of gross margins below recent experience.
Although the Company believes it provides a higher level of value and added
services, pricing and gross profit could be negatively impacted by the
activities of Internet only resellers. Price protection and rebate programs are
at the discretion of the manufacturers, who may make changes that limit the
amount of price protection or rebates for which the Company is eligible. Such
changes could have a negative impact on gross margin in future periods.
Additionally, vendor rebate programs are generally dependent on achieving
certain goals and objectives. Accordingly, there is no certainty that the
established goals and objectives will be attained.

Selling and administrative expenses, which include net advertising expense,
other selling administrative expenses and the executive incentive bonus pool,
decreased to 6.5% of net sales in 1999 versus 6.7% in 1998.

Net advertising expense increased $4.0 million in 1999 while decreasing as
a percentage of net sales to 0.6% from 0.7% in 1998. Gross advertising expense
increased $13.4 million in 1999 while decreasing as a percentage of net sales to
2.6% versus 3.0% in 1998. The Company decreased catalog circulation and the
number of national advertising pages from the prior year, while expanding its
spending on branding and electronic commerce activities. Based upon the
Company's planned marketing initiatives, future levels of gross advertising
expense as a percentage of net sales are likely to be relatively consistent with
or higher than the level achieved in 1999. Cooperative advertising
reimbursements increased $9.3 million in 1999 and decreased as a percentage of
net sales to 1.9% from 2.3% in 1998. Cooperative advertising reimbursements as a
percentage of net sales may fluctuate in future periods depending on the level
of vendor participation achieved and collection experience. The statements
concerning future advertising expense and cooperative advertising reimbursements
are forward looking statements that involve certain risks and uncertainties,
including the ability to identify and implement cost effective incremental
advertising and marketing programs, as well as the continued participation of
vendors in the cooperative advertising reimbursement program.

Other selling and administrative costs decreased to 5.5% of net sales in
1999 from 5.7% in the prior year due primarily to decreases in payroll and
related costs as a percentage of net sales. Increases in coworker productivity
offset increased payroll and associated costs related to expansion of the sales
force. Approximately 76% of the 798 sales account managers at December 31, 1999
had fewer than 24 months experience and 53% had fewer than 12 months, as
compared to 76% and 61% at December 31, 1998. The Company plans to increase the
number of sales account managers to more than 1,050 by December 31, 2000.

In October 1999, the Company agreed to lease approximately 72,000 square
feet of office space in Chicago, Illinois as an additional sales office (see the
discussion of Working Capital and Footnote 7 to the financial statements).
Average annual future minimum lease expense for the new sales office is
approximately $1.1 million. Additionally, the Company will incur depreciation
expense related to approximately $8 million to $10 million in capital
expenditures for computer and telecommunication equipment, furniture and
improvements related to the facility. As a result of the planned expansion of
the sales force and the new sales office, the Company's selling and
administrative costs may increase as a percentage of net sales in future
periods.

The by-laws of the Company provide for an executive incentive bonus pool of
a maximum of 20% of the increase in year over year income from operations. For
1999 and 1998 the Compensation Committee of the Board of Directors established
the bonus pool with a maximum eligible amount of 15% of the year over year

increase in income from operations. The executive incentive bonus pool increased
to $8.8 million in 1999 from $3.3 million in 1998.

Interest income, net of other expenses, increased to $4.5 million in 1999
compared to $4.4 million in 1998, primarily due to higher levels of available
cash.

The effective income tax rate, expressed as a percentage of income before
income taxes, was 39.6% in 1999 and 1998.

Net income in 1999 was $98.1 million, a 49.0% increase over $65.8 million
in 1998. Diluted earnings per share were $2.22 in 1999 and $1.51 in 1998, an
increase of 47.0%. All per share amounts have been adjusted to reflect the
two-for-one stock split effected in the form of a stock dividend paid on May 19,
1999.

Year Ended December 31, 1998 Compared to Year Ended December 31, 1997

Net sales in 1998 increased 35.8% to $1.733 billion compared to $1.277
billion in 1997. The growth in net sales is primarily attributable to a higher
concentration of commercial accounts, a higher level of sales per active account
and an increase in the number of orders processed. Net sales per active
commercial account grew 22.9% in 1998. Desktop computers and servers were the
fastest growing product category with unit volume increasing 86% and dollar
volume 62%. Notebook computers represented the largest portion of the Company's
sales at 20%, with dollar volume increasing more than 7% from 1997.

The average selling price of desktop CPU's decreased 15.5% and the average
selling price of notebook CPU's declined 3.5% from 1997. The fastest growing
product categories in terms of sales dollars in 1998 were desktop computers at
62%, network and communication products at 48%, software at 45%, data storage
devices at 44%, and printers at 41%.

Gross profit decreased as a percentage of net sales to 12.7% in 1998,
compared to 13.4% in 1997. The decrease in gross profit as a percentage of net
sales is primarily the result of lower selling margins achieved on certain
product lines, lower levels of inventory price protection from vendors and
increased shipping costs. The lower levels of price protection in 1998 were the
result of changes by certain manufacturers in the terms and conditions of their
inventory price protection programs.

Selling and administrative expenses, which include net advertising expense,
other selling administrative expenses and the executive incentive bonus pool,
decreased to 6.7% of net sales in 1998 versus 7.1% in 1997.

Net advertising expense decreased as a percentage of net sales to 0.7% in
1998 from 1.3% in 1997. Gross advertising expense decreased to 3.0% of net sales
in 1998 versus 3.5% in 1997. The Company decreased catalog circulation and the
number of national advertising pages versus the prior year, while expanding its
spending on branding and electronic commerce activities. The decline in gross
advertising spending as a percentage of net sales was consistent with the
Company's strategy of shifting resources in 1998 to an aggressive sales force
expansion. Cooperative advertising reimbursements as a percentage of net sales
were consistent with the level achieved in 1997 at 2.3% of net sales.

Other selling and administrative costs increased to 5.7% of net sales in
1998 from 5.4% in the prior year due primarily to increases in payroll and
related costs. The increase in payroll costs as a percentage of sales is due
primarily to investment in the recruiting, training and development of new
account managers. As of December 31, 1998, there were 622 account managers, an
increase of 56% from 399 account managers as of December 31, 1997. Of the 622
account managers, approximately 73% had fewer than 24 months experience and 58%
had fewer than 12 months, as compared to 70% and 42% at the end of 1997.

The executive incentive bonus pool decreased to $3.3 million in 1998 from
$5.3 million in 1997. Of the $2.0 million decrease in the bonus pool from the
prior year, $800,000 results from an effective increase in

18
the pool in 1997 due to the $4.0 million exit charge taken in 1996, $100,000 is
due to a lower level of growth in operating income and the remaining $1.1
million is due to a change in the bonus pool rate. For 1998, the Compensation
and Stock Option Committee established the bonus pool at 15% of the increase in
operating income over the prior year, versus 20% in prior periods.

Legal costs incurred by the majority shareholder, Chairman and CEO, Michael
P. Krasny, in connection with the lawsuit filed by a former shareholder were
$1.3 million and $379,000, in 1998 and 1997, respectively. Mr. Krasny reimbursed
the Company for these costs, which were recorded by the Company as expenses with
an offsetting increase to paid-in capital, net of tax effects. Although the
Company and Mr. Krasny believe their actions were honest and proper, they agreed
to a settlement of the suit in December 1998, whereby all pending litigation was
dismissed. Under terms of the settlement the Company and Mr. Krasny agreed to
make a one time payment to the former shareholder of approximately $4.4 million,
which amount was paid by Mr. Krasny. The Company recorded the payment by Mr.
Krasny to the former shareholder as a capital contribution, with an offsetting
reduction of paid-in capital for the additional redemption price paid to the
former shareholder. Thus, the settlement had no impact on the Company's results
of operations or cash flows.

Interest income, net of other expenses, increased to $4.4 million in 1998
compared to $4.0 million in 1997, primarily due to higher levels of available
cash.

The effective income tax rate, expressed as a percentage of income before
income taxes, was 39.6% in 1998 versus 39.7% in 1997.

Net income in 1998 was $65.8 million, a 29% increase over $51.0 million in
1997. Diluted earnings per share were $1.51 and $1.17 in 1998 and 1997,
respectively, an increase of 29%.

Seasonality

Although the Company has historically experienced variability in the rates
of sales growth, it has not historically experienced seasonality in its
business. However, the buying patterns of government customers typically result
in seasonally high revenues during the third quarter of the year. If sales to
these customers increase, the Company may experience some seasonality.

Liquidity and Capital Resources

Working capital

The Company has historically financed its operations and capital
expenditures primarily through cash flow from operations and public offerings of
common stock. At December 31, 1999, the Company had working capital of $340.1
million, including cash, cash equivalents and marketable securities of $83.0
million. At December 31, 1998, the Company had working capital of $228.7
million. The increase of $111.4 million in working capital in 1999 was due
primarily to certain components of the Company's cash flows from operations for
1999 offset by capital expenditures for facility expansion and investment in the
Company's joint venture discussed below. The Company's current and anticipated
uses of its cash, cash equivalents and marketable securities are to fund the
growth in working capital and capital expenditures necessary to support future
growth in sales.

Market risk

The Company's investments in marketable securities as of December 31,
1999 and 1998 are all due in one year or less and are concentrated in U.S.
Government and Government Agency securities. As such, the risk of significant
changes in the value of these securities as a result of a change in market
interest rates is minimal.

Cash flows

Cash provided by operating activities in 1999 was $22.5 million compared to
$4.5 million in 1998. The primary working capital factors that have historically
affected the Company's cash flows from operations are the levels of accounts
receivable, merchandise inventory and accounts payable. Accounts receivable at
December 31, 1999 increased $79.0 million from December 31, 1998. The increase
in accounts receivable resulted from increased sales volume and an increase in
the percentage of net sales generated from open credit terms with commercial
customers to 70% from 62% in 1998. Cash provided by operating activities in 1999
was positively impacted by a $17.4 million tax benefit recorded to
paid-in-capital, relating to the exercise of options pursuant to the MPK Stock
Option Plan and the CDW Incentive Stock Option Plan.

Cash used in investing activities in 1999 was $9.4 million compared to
$17.6 million in 1998. In 1999, the Company incurred approximately $9.2 million
of capital expenditures for the purchase of warehouse equipment and information
technology investments. The Company also invested approximately $6.5 million in
CDW Leasing, L.L.C., a joint venture discussed below. These investments were
offset by decreases in the Company's marketable securities portfolio.

The Company reopened the office portion of the Buffalo Grove facility
during the fourth quarter of 1998 as a sales office. Accordingly, the Company
records a proportionate share of the rent and other operating costs to selling
and administrative expenses. The Company sublet the warehouse and showroom
portions of the Buffalo Grove facility to a third party for the period beginning
June 15, 1999, and continuing through the end of the lease term on December 31,
2003. However, the third party sublessee filed a Chapter 11 petition for
reorganization under the bankruptcy laws in August 1999, and subsequently
decided to liquidate the business operating from the sublet space. As a result
of the liquidation, the sublessee is not likely to affirm or complete the lease.
If the lease is terminated, the Company will reevaluate the future use of the
warehouse space and adjust the remaining exit liability as necessary depending
on whether the Company pursues a new sublease, uses the space for its operations
or leaves the space vacant.

In October 1999, the Company executed a lease agreement to establish a
sales office in Chicago, Illinois. The lease commences for one floor on April 1,
2000 and for the second floor on September 1, 2000. The Company plans to expend
between $8 million and $10 million for computer and telecommunication equipment,
furniture and improvements related to the facility. The computer equipment will
support the operations of the new office and also replicate and serve as a back
up of the main computer system located at the Company's headquarters.

The Company plans to construct a new warehouse at its Vernon Hills,
Illinois campus by the end of 2000. The new warehouse will provide approximately
250,000 square feet of additional capacity and is estimated to cost between $6
million and $7 million for construction and equipment. Upon completion, the
Company's total warehouse capacity will be approximately 450,000 square feet.

The Company also received approximately $2.4 million as proceeds from the
exercise of stock options under the CDW Incentive Stock Option Plan in 1999.

Leasing Joint Venture

In April 1999, CDW Capital Corporation, a wholly-owned subsidiary of CDW,
and First Portland Corporation ("FIRSTCORP") formed CDW Leasing, L.L.C.
("CDW-L"), a 50/50 joint venture. CDW-L provides captive leasing services to CDW
customers. Under the terms of an operating agreement, FIRSTCORP provides leasing
management services to CDW-L, with net earnings of the venture allocated 50% to
CDW and 50% to FIRSTCORP. CDW Capital Corporation and FIRSTCORP each contributed
$100,000 to the capital of CDW-L, maintain equal operating authority over CDW-L
and have an equal number of seats on the Board of Managers of the joint venture.
CDW Capital Corporation has committed to loan up to $10 million to CDW-L on

a secured basis to fund new leases initiated by CDW-L. The terms of the loan
provide for monthly interest payments to the Company based on the 90 day LIBOR
rate plus 2.2%. The investment in and loan to CDW-L at December 31, 1999 was
$6.5 million.

Year 2000 Readiness Disclosure

All of the Company's hardware and software systems successfully
transitioned to the year 2000. The Company has not experienced any significant
problems as a result of the Year 2000 Issue ('Y2K') with its own systems or
those of its vendors. However, the potential still exists for a non-compliant
system, either within the Company or at a vendor, to malfunction due to Y2K and
cause a disruption to the Company's business. Due to the uncertain nature of the
Y2K issue, the Company can not determine at this time whether the consequences
of Y2K failures will have a material impact on the Company's results of
operations and financial condition. The Company believes that, with the
successful transition to the year 2000, the possibility of significant
interruptions of normal operations should be minimal.

The Company originally estimated that total costs for its Y2K project,
through December 31, 1999, would range between $750,000 and $1 million. Actual
costs incurred were lower than originally estimated. Over the life of the
project the Company incurred and recorded as operating expenses approximately
$443,000, of which approximately $203,000 was incurred during 1999. The
Company's expenditures consisted primarily of internal payroll costs related to
the assessment and correction of internal systems and assessment and
communication with vendors. The Company does not anticipate incurring further
costs related to the project.

Certain statements included in Management's Discussion and Analysis of
Financial Condition and Results of Operations concerning the Company's sales
growth, gross profit as a percentage of sales, advertising expense, cooperative
advertising reimbursements and Y2K readiness are forward-looking statements that
involve certain risks and uncertainties, as specified herein.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

See discussion of market risk in Item 7 under the heading Liquidity and
Capital Resources.

Item 8. Financial Statements and Supplementary Data.

The information required by this item is contained in a separate section of
this Report beginning on page F(i). See Index to Consolidated Financial
Statements beginning on page F(i).

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.

There were no disagreements with accountants on accounting and financial
disclosure matters during the periods reported herein.

PART III

Item 10. Directors and Executive Officers of the Registrant.

The information required hereunder is incorporated by reference herein from
the Registrant's Definitive Proxy Statement for the Annual Meetings of
Shareholders to be held on May 24, 2000, to be filed pursuant to Regulation 14A
not later than April 30, 2000 (the 'Definitive Proxy Statement').

Item 11. Executive Compensation.

The information required hereunder is incorporated by reference herein from
the Definitive Proxy Statement. Information in the Definitive Proxy Statement
under the headings 'Report of the Compensation and Stock Option Committee' and
'Shareholder Return Performance Presentation' is specifically note incorporated
by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management.

The information required hereunder is incorporated by reference herein from
the Definitive Proxy Statement.

Item 13. Certain Relationships and Related Transactions.

The information required hereunder is incorporated by reference herein from
the Definitive Proxy Statement.

PART IV

Item 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K.

(a) The following documents are filed as part of this report :

1. Financial Statements (See Index to Consolidated Financial
Statements on page F(i) of this Report);

2. Index to Financial Statement Schedule : Page
----

Report of Independent Accountants on Financial
Statement Schedule S-1

Schedule II - Valuation and Qualifying Accounts S-2

All other schedules are omitted since the required information is
not present or is not present in amounts sufficient to require
submission of the schedule, or because the information required is
included in the consolidated financial statements or notes
thereto.

3. Exhibits required by Securities and Exchange Commission
Regulation S-K, Item 601:

Exhibit No. Description of Document

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

3 (c) Articles of Incorporation of CDW Computer Centers, Inc. (an Illinois Corporation) (iii)
3 (d) Bylaws of CDW Computer Centers, Inc. (an Illinois Corporation) (iii)
10 (a) CDW Computer Centers, Inc. Employees' Defined ContributionRetirement Plan and Trust (i) (xi)
10 (b) CDW Incentive Stock Option Plan (i) (xi)
10 (c) MPK Stock Option Plan and Agreement (i) (xi)
10 (d) MPK Restricted Stock Plan and Agreement (i) (xi)
10 (e) Employment and Non-Competition Agreement dated as of March 15, 1993 between the Company and Michael
P. Krasny (i) (xi)
10 (f) Employment and Non-Competition Agreement dated as of March 15, 1993 between the Company and Greg C.
Zeman (i) (xi)

10 (g) Employment and Non-Competition Agreement dated as of March 15, 1993 between the Company and Daniel B.
Kass (i) (xi)
10 (n) Tax Indemnification Agreement dated as of May 25, 1993 between the Company and Michael P. Krasny (i)
10 (p) Lease Agreement dated February 22, 1993 between the Company, as lessee, and Chevy Chase Business Park
Limited Partnership, as lessor, relating to the premises located in Buffalo Grove, Illinois (i)
10 (t) CDW Director Stock Option Plan (i)
10 (y) First Lease Amendment dated as of May 13, 1993 to Lease Agreement dated February 22, 1993 between the
Company, as lessee, and Chevy Chase Business Park Limited Partnership, as lessor, relating to the
Illinois (i)
10 (ee) Lease Agreement dated January 25, 1995 between the Company, as lessee, and IJM Management Limited
Partnership, as agent for the owner, as lessor, relating to the premises located in Chicago, Illinois
(ii)
10 (ii) Non-statutory Stock Option Agreement dated September 5, 1996 between the Company and Harry J.
Harczak, Jr. (iii) (xi)
10 (jj) Non-statutory Stock Option Agreement dated September 5, 1996 between the Company and James R. Shanks
(iii) (xi)
10 (kk) Form of Indemnification and Hold Harmless Agreement between the Company and the Selling Shareholder
(iv)
10 (ll) CDW 1996 Incentive Stock Option Plan (iv) (xi)
10 (pp) CDW 1997 Officer and Manager Bonus Plan (v) (xi)
10 (rr) Revolving Note between the Company and The Northern Trust Company dated June 30, 1998 (vi)
10 (ss) First Amendment to CDW Incentive Stock Option Plan (vii) (xi)
10 (tt) First Amendment to CDW 1996 Incentive Stock Option Plan (vii) (xi)
10 (uu) CDW 1998 Officer and Manager Bonus Plan (viii) (xi)
10 (vv) Operating Agreement of CDW Leasing, L.L.C. (viii)
10 (ww) Loan and Security Agreement Between CDW Capital Corp. and CDW Leasing, L.L.C. (viii)
10 (xx) First Amendment to 1996, 1997 and 1998 Officer and Manager Bonus Plans (viii) (xi)
10 (yy) Revolving Note between the Company and LaSalle National Bank dated June 28, 1999 (ix)
10 (zz) Lease Agreement dated October 11, 1999 between the Company as Lessee and Solano Associates
as Lessor relating to the office space located at 120 S. Riverside Plaza, Chicago, Illinois (x)
10 (aaa) CDW Officer and Manager Plan dated April 21, 1998 (xii)

21 Subsidiaries of the Registrant (i)
23 Consent of Independent Accountants
27 Financial Data Schedule

Footnotes

(i) Incorporated by reference from the exhibits filed
with the Company's registration statement
(33-59802) on Form S-1 filed under the Securities
Act of 1933 filed on May 11, 1993, and the
Company's registration statement (333-60025) on
Form S-3 filed under the Securities Act of 1933
on July 28, 1998

(ii) Incorporated by reference from the exhibits filed
with the Company's quarterly report (0-21796) on
Form 10-Q for the quarter ended June 30, 1995.

(iii) Incorporated by reference from the exhibits filed
with the Company's quarterly report (0-21796) on
Form 10-Q for the quarter ended September 30,
1997.(iii)

(iv) Incorporated by reference from the exhibits filed
with the Company's registration statement
(333-20935) on Form S-3 filed under the
Securities Act of 1993 on January 31, 1997.

(v) Incorporated by reference from the exhibits filed
with the Company's annual report (0-21796) on
Form 10-K for the year ended December 31, 1997.

(vi) Incorporated by reference from the exhibits filed
with the Company's Quarterly report (0-21796) on
Form 10-Q for the quarter ended June 30, 1998.

(vii) Incorporated by reference from the exhibits filed
with the Company's annual report (0-21796) on
Form 10-K for the year ended December 31, 1998.

(viii) Incorporated by reference from the exhibits filed
with the Company's Quarterly report (0-21796) on
Form 10-Q for the quarter ended March 31, 1999.

(ix) Incorporated by reference from the exhibits filed
with the Company's Quarterly report (0-21796) on
Form 10-Q for the quarter ended June 30, 1999.

(x) Incorporated by reference from the exhibits filed
with the Company's Quarterly report (0-21796) on
Form 10-Q for the quarter ended September 30,
1999.

(xi) Management contract or compensatory plan or
arrangement.

(xii) Incorporated by reference from the exhibits filed
with the Company's Notice of Annual Meeting of
Shareholders and Proxy Statement dated May 18,
1999.

(b) The Company did not file any reports on Form 8-K during the last
quarter of the year ended December 31, 1999.

(d) The financial statement schedule is included as reflected in Section
(a) 2. of this Item.

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.

CDW COMPUTER CENTERS, INC.

Date : March 7, 2000

By : /s/ Michael P. Krasny
-----------------------------
Michael P. Krasny, Chairman
of the Board, Chief Executive
Officer and Secretary

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

Signature Title Date

/s/ Michael P. Krasny Chairman of the Board, Chief March 7, 2000
--------------------------
Michael P. Krasny Executive Officer and Secretary

/s/ Gregory C. Zeman President and Director March 7, 2000
--------------------------
Gregory C. Zeman

/s/ Daniel B. Kass Executive Vice President-Sales March 7, 2000
-------------------------- and Director
Daniel B. Kass

/s/ Harry J. Harczak, Jr. Chief Financial Officer March 7, 2000
-------------------------- and Treasurer
Harry J. Harczak, Jr.

/s/ Sandra M. Rouhselang Controller and March 7, 2000
-------------------------- Chief Accounting Officer
Sandra M. Rouhselang

/s/ Michelle L. Collins Director March 7, 2000
--------------------------
Michelle L. Collins

/s/ Casey Cowell Director March 7, 2000
--------------------------
Casey Cowell

/s/ Dr. Donald Jacobs Director March 7, 2000
--------------------------
Dr. Donald Jacobs

/s/ Joseph Levy, Jr. Director March 7, 2000
--------------------------
Joseph Levy, Jr.

/s/ Brian Williams Director March 7, 2000
--------------------------
Brian Williams

ITEMS 8 AND 14(A)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page(s)
-------

Report of Independent Accountants F-1

Consolidated Balance Sheets as of December 31, 1999 and 1998 F-2

Consolidated Statements of Income for the years ended December 31, 1999, 1998 and 1997 F-3

Consolidated Statement of Shareholders' Equity for the years ended December 31, 1999, 1998 and 1997 F-4

Consolidated Statements of Cash Flows for the years ended December 31, 1999, 1998 and 1997 F-5

Notes to Consolidated Financial Statements F-6

F(i)

REPORT OF INDEPENDENT ACCOUNTANTS

The Board of Directors
CDW Computer Centers, Inc.
Vernon Hills, Illinois

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, shareholders' equity and cash flows present
fairly, in all material respects, the financial position of CDW Computer
Centers, Inc. and Subsidiaries (the 'Company') as of December 31, 1999 and 1998,
and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States. 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 of these statements in accordance with auditing standards
generally accepted within the United States which require that we plan and
perform the audit to obtain reasonable assurance about whether the statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.

PricewaterhouseCoopers LLP

Chicago, Illinois
January 20, 2000

F-1

CDW COMPUTER CENTERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET

(in thousands)

December 31,
------------
1999 1998
------------- -------------
ASSETS

Current assets :
Cash and cash equivalents $ 19,747 $ 4,230
Marketable securities 63,228 66,458
Accounts receivable, net of allowance for doubtful
accounts of $4,300 and $3,185, respectively 230,190 152,308
Miscellaneous receivables 7,589 5,896
Merchandise inventory 126,217 64,392
Prepaid expenses and other assets 1,375 1,423
Deferred income taxes 6,702 5,081
--------- ---------

Total current assets 455,048 299,788

Property and equipment, net 39,429 37,056
Investments in and advances to subsidiary 6,499 -
Deferred income taxes and other assets 4,939 4,977
--------- ---------

TOTAL ASSETS $ 505,915 $ 341,821
========== ==========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities :
Accounts payable $ 65,657 $ 41,358
Accrued expenses :
Payroll, commissions and management
incentive compensation 27,339 16,279
Income taxes 11,960 5,146
Exit costs 2,219 2,715
Other 7,756 5,560
--------- ---------

Total current liabilities 114,931 71,058
--------- ---------

Commitments and contingencies

Shareholders' equity :

Preferred shares, $1.00 par value; 5,000 shares
authorized; none issued - -
Common shares, $ .01 par value; 75,000 shares
authorized; 43,339 and 43,142 shares
issued, respectively 433 431
Paid-in capital 102,771 81,137
Retained earnings 290,344 192,259
Unearned compensation (475) (975)
--------- ---------
393,073 272,852

Less cost of common shares in treasury, 100 shares (2,089) (2,089)

Total shareholders' equity 390,984 270,763
--------- ---------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 505,915 $ 341,821
========== ==========

The accompanying notes are an integral part of the consolidated financial
statements.

F-2

CDW COMPUTER CENTERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(in thousands, except per share data)

Years Ended December 31,
---------------------------------------------
1999 1998 1997
---------------------------------------------

Net sales $ 2,561,239 $1,733,489 $ 1,276,929
Cost of sales 2,237,700 1,513,314 1,106,124
----------- ----------- -----------

Gross profit 323,539 220,175 170,805

Selling and administrative expenses 165,627 115,537 90,315
----------- ----------- -----------

Income from operations 157,912 104,638 80,490

Interest income 4,931 4,708 4,259
Other expense, net (450) (335) (241)
----------- ----------- -----------

Income before income taxes 162,393 109,011 84,508

Income tax provision 64,308 43,170 33,507
----------- ----------- -----------

Net income $ 98,085 $ 65,841 $ 51,001
=========== =========== ===========

Earnings per share

Basic $ 2.27 $ 1.53 $ 1.18
=========== =========== ===========
Diluted $ 2.22 $ 1.51 $ 1.17
=========== =========== ===========

Weighted average number of
common shares outstanding
Basic 43,135 43,062 43,050
=========== =========== ===========
Diluted 44,152 43,504 43,408
=========== =========== ===========

The accompanying notes are an integral part of the consolidated financial
statements.

F-3

CDW COMPUTER CENTERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(in thousands)

Total

Common Stock Paid in Retained Unearned Treasury Shares Shareholders'
Shares Amount Capital Earnings Compensation Shares Amount Equity
--------------------------------------------------------------------------------------

BALANCE AT DECEMBER 31, 1996 43,050 $ 430 $ 67,738 $ 75,417 $ (1,963) - $ - $ 141,622

MPK Restricted Stock Plan forfeitures (35) 35 -

Amortization of unearned compensation 481 481

Compensatory stock option grants, net of
forfeitures 699 699

Tax Benefit from restricted stock and
stock option transactions 5,835 5,835

Capital contribution for legal costs assumed
by majority shareholder, net of tax 228 228

Net income 51,001 51,001
--------------------------------------------------------------------------------------

BALANCE AT DECEMBER 31, 1997 43,050 430 74,465 126,418 (1,447) - - 199,866

MPK Restricted Stock Plan forfeitures (1) (1)

Amortization of unearned compensation 472 472

Compensatory stock option grants 986 986

Exercise of Stock Options 92 1 1,140 1,141

Tax benefit from stock option transactions 3,741 3,741

Capital contribution for litigation
settlement by majority shareholder 4,365 4,365

Additional redemption price pursuant to
litigation settlement (4,365) (4,365)

Capital contibution for legal costs assumed
by majority shareholder, net of tax 806 806

Purchase of treasury shares 100 (2,089) (2,089)

Net income 65,841 65,841
--------------------------------------------------------------------------------------

BALANCE AT DECEMBER 31, 1998 43,142 431 81,137 192,259 (975) 100 (2,089) 270,763

MPK Restricted Stock Plan forfeitures (101) 101 -

Amortization of unearned compensation 399 399

Compensatory stock option grants 1,880 1,880

Exercise of stock options 197 2 2,417 2,419

Tax benefit from stock option transactions 17,438 17,438

Net income 98,085 98,085
--------------------------------------------------------------------------------------

BALANCE AT DECEMBER 31, 1999 43,339 $ 433 $ 102,771 $ 290,344 $ (475) 100 $(2,089) $ 390,984
======================================================================================

The accompanying notes are an integral part of the consolidated financial
statements.

F-4

CDW COMPUTER CENTERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)

Years Ended December 31,
--------------------------------------
1999 1998 1997
-------- -------- --------

Cash flows from operating activities:

Net income $ 98,085 $ 65,841 $ 51,001

Adjustments to reconcile net income to net cash provided by operating
activities:

Depreciation 6,788 4,758 2,672
Accretion of marketable securities (3,017) (2,797) (2,014)
Stock-based compensation expense 2,279 1,458 1,180
Allowance for doubtful accounts 1,115 1,235 850
Legal fees assumed by majority shareholder, net of tax - 806 228
Deferred income taxes (1,573) (720) (1,351)
Tax benefit from stock option exercises 17,438 3,741 5,835

Changes in assets and liabilities:
Accounts receivable (78,997) (66,019) (30,978)
Miscellaneous receivables (1,693) (1,936) (29)
Merchandise inventory (61,825) (2,451) (20,479)
Prepaid expenses and other assets 38 (675) 58
Accounts payable 24,299 (3,093) 7,809
Accrued compensation 11,060 3,283 2,246
Accrued income taxes and other expenses 9,010 1,769 3,108
Accrued exit costs (496) (676) (596)
-------- -------- --------

Net cash provided by operating activities 22,511 4,524 19,540
-------- -------- --------

Cash flows from investing activities:

Purchases of available-for-sale securities (81,567) (26,810) (13,825)
Redemptions of available-for-sale securities 53,792 32,250 9,575
Purchases of held-to-maturity securities (50,020) (88,122) (87,330)
Redemptions of held-to-maturity securities 84,042 80,213 90,892
Investment in and advances to subsidiary (6,499) - -
Purchase of property and equipment (9,161) (15,110) (17,081)
-------- -------- --------

Net cash used in investing activities (9,413) (17,579) (17,769)
-------- -------- --------

Cash flows from financing activities:

Proceeds of treasury shares - (2,089) -
Proceeds from exercise of stock options 2,419 1,141 -
-------- -------- --------

Net cash provided by (used in) investing activities 2,419 (948) -
-------- -------- --------

Net increse (decrease) increase in cash 15,517 (14,003) 1,771

Cash and cash equivalents - beginning of year 4,230 18,233 16,462
-------- -------- --------

Cash and cash equivalents - end of year $ 19,747 4,230 $ 18,233
======== ======== ========

Supplementary disclosure of cash flow information:

Taxes paid $ 41,491 $ 40,400 $ 26,197

The accompanying notes are an integral part of the consolidated financial
statements.

F-5

CDW COMPUTER CENTERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Description of Business

CDW Computer Centers, Inc. and its subsidiaries (collectively the
'Company') are engaged in the sale of brand name personal computers and
related products primarily through direct marketing to end users within
the United States. The Company's primary business is conducted from a
combined sales office, corporate office, warehouse and showroom
facility located in Vernon Hills, Illinois and through www.cdw.com(TM),
its Internet site. The Company also operates a sales office in Buffalo
Grove, Illinois, a retail showroom in Chicago, Illinois and a
government sales office in Chantilly, Virginia.

The Company extends credit to business, government and institutional
customers under certain circumstances based upon the financial strength
of the customer. Such customers are typically granted net 30 day credit
terms. The balance of the Company's sales are made primarily through
third party credit cards and for cash-on-delivery.

2. Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements include the accounts
of CDW Computer Centers, Inc, and its wholly owned subsidiaries, CDW
Government, Inc. (CDW-G), Northbrook Ad Agency, Inc. (NAA) and CDW
Capital Corporation. CDW-G sells personal computers and related
products and focuses exclusively on serving government and educational
accounts. NAA provides advertising services, primarily consisting of
media placements, solely to the Company. CDW Capital Corporation owns a
50% interest in CDW Leasing, L.L.C. (Note 12 ). The investment in CDW
Leasing, L.L.C. is accounted for by the equity method. All intercompany
transactions and accounts are eliminated in consolidation.

Pervasiveness 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. Additionally, such estimates and
assumptions affect the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.

Earnings Per Share

The Company calculates earnings per share in accordance with Statement
of Financial Accounting Standards No. 128, 'Earnings Per Share' (SFAS
128). Accordingly, the Company has disclosed earnings per share
calculated using both the basic and diluted methods for all periods
presented. A reconciliation of basic and diluted per-share computations
is included in Note 10.

On April 20, 1999, the Board of Directors of the Company approved a
two-for-one stock split to be effected in the form of a stock dividend
payable on May 19, 1999 to all common shareholders of record at the
close of business on May 5, 1999. All per share and related amounts
contained in these financial statements and notes have been adjusted
to reflect the stock split.

Cash and Cash Equivalents

Cash and cash equivalents include all deposits in banks and highly
liquid temporary cash investments purchased with original maturities of
three months or less at the time of purchase.

Marketable Securities

The Company classifies securities with a stated maturity, which it has
the intent to hold to maturity, as 'held-to-maturity', and records such
securities at amortized cost. Securities which do not have stated
maturities or for which the Company does not have the intent to hold to
maturity are classified as 'available-for-sale' and recorded at fair
value, with unrealized holding gains or losses, if material, recorded
as a separate component of Shareholders' Equity. The Company does not
invest in trading securities. All securities are accounted for on a
specific identification basis.

The Company's marketable securities are concentrated in securities of
the U.S. Government and U.S. Government Agencies. Such investments are
supported by the financial stability and credit standing of the U. S.
Government or applicable U. S. Government Agency.

Merchandise Inventory

Inventory is valued at the lower of cost or market. Cost is determined
on the first-in, first-out method.

Property and Equipment

Property and equipment are stated at cost. The Company calculates
depreciation using the straight-line method with useful lives ranging
from 2 to 25 years. Expenditures for major renewals and improvements
that extend the useful life of property and equipment are capitalized.
Expenditures for maintenance and repairs are charged to expense as
incurred.

Revenue Recognition

The Company records revenues from sales transactions when title to
products sold passes to the customer. The Company's shipping terms
dictate that the passage of title occurs upon receipt of products by
the customer.

Advertising

Advertising costs are charged to expense in the period incurred.
Cooperative reimbursements from vendors, which are earned and
available, are recorded in the period the related advertising
expenditure is incurred. Advertising expense, included in selling and
administrative expenses net of cooperative reimbursements earned, was
approximately $16,400,000, $12,400,000 and $16,200,000 for the years
ended December 31, 1999, 1998 and 1997, respectively.

Stock-Based Compensation

In accordance with Statement of Financial Accounting Standards No. 123,
'Accounting for Stock Based Compensation' (SFAS 123), the Company
accounts for its stock-based compensation programs according to the
provisions of Accounting Principles Board Opinion No. 25, 'Accounting
for Stock

Issued to Employees.' Accordingly, compensation expense is recognized
to the extent of employee or director services rendered based on the
intrinsic value of compensatory options or shares granted under the
plans. See Note 9 for disclosure of the Company's stock-based
compensation plans in accordance with SFAS 123.

Fair Value of Financial Instruments

The Company estimates that the fair market value of all of its
financial instruments at December 31, 1999 and 1998 are not materially
different from the aggregate carrying value due to the short term
nature of these instruments.

Treasury Shares

During 1998, the Company's Board of Directors authorized the repurchase
of up to 1 million shares of its common stock in open market
transactions. The Company repurchased a total of 100,000 shares during
the third quarter of 1998 for approximately $2.1 million. The Company
intends to hold the shares in treasury for general corporate purposes,
including issuances under various employee stock option plans. The
Company accounts for the treasury shares using the cost method.

3. Marketable Securities

The amortized cost and estimated fair values of the Company's
investments in marketable securities at December 31, 1999 and 1998 (in
thousands) were:

Gross
Unrealized
Estimated Holding Amortized
Security Type Fair Value Gains Losses Cost
------------- ----------- ------ ------ ----

December 31, 1999
Available-for-sale:
U.S. Government and Government Agency
securities $ 30,757 $ - $ (20) $ 30,777
-------------------------------------------------------

Held-to-maturity:
U.S. Government and Government Agency
securities 32,458 7 - 32,451
-------------------------------------------------------
Total marketable securities: $ 63,215 $ 7 $ (20) $ 63,228
=======================================================

December 31, 1998 Available-for-sale:

U.S. Government and Government Agency $ 2,004 $ 4 $ - $ 2,000
securities
-------------------------------------------------------

Held-to-maturity:
Bonds of states, municipalities, and
political subdivisions 512 2 - 510
U.S. Government and Government Agency
securities 63,963 45 (30) 63,948
-------------------------------------------------------
Total held-to-maturity 64,475 47 (30) 64,458
-------------------------------------------------------
Total marketable securities: $ 66,479 $ 51 $ (30) $ 66,458
=======================================================

The Company's investments in securities held-to-maturity at December
31, 1999 and 1998 were all due in one year or less by contractual
maturity. Estimated fair values of marketable securities are based on
quoted market prices.

4. Property and Equipment

Property and equipment consists of the following (in thousands):

December 31,
1999 1998
---- ----

Land $ 10,367 $ 10,367
Machinery and equipment 15,117 11,001
Building and leasehold improvements 13,455 12,885
Computer and data processing equipment 10,168 7,502
Furniture and fixtures 2,193 1,882
Computer software 2,482 1,341
Construction in progress 1,057 728
---------------- ----------------
54,839 45,706
Less accumulated depreciation 15,410 8,650
----------------- -----------------
Net property and equipment $ 39,429 $ 37,056
================= =================

The Company owns approximately 45 acres of land, of which approximately
17 acres are vacant and available for future expansion.

The Company plans to construct a second warehouse on approximately 6 to
8 acres of its Vernon Hills, Illinois campus by the end of 2000. The
new warehouse will provide approximately 250,000 square feet of
additional capacity and is estimated to cost between $12 million and
$13 million for construction and equipment. Upon completion, the
Company's total warehouse capacity will be approximately 450,000 square
feet.

5. Financing Arrangements

The Company has an aggregate $50 million available pursuant to two $25
million unsecured lines of credit with two financial institutions. One
line of credit expires in June 2000, at which time the Company intends
to renew the line, and the other does not have a fixed expiration date.
Borrowings under the first credit facility bear interest at the prime
rate less 2 1/2%, LIBOR plus 1/2% or the federal funds rate plus 1/2%,
as determined by the Company. Borrowings under the second credit
facility bear interest at the prime rate less 2 1/2%, LIBOR plus .45%
or the federal funds rate plus .45%, as determined by the Company. At
December 31, 1999, there were no borrowings under either of the credit
facilities.

6. Trade Financing Agreements

The Company has entered into security agreements with certain financial
institutions ('Flooring Companies') in order to facilitate the purchase
of inventory from various suppliers under certain terms and conditions.
The agreements allow for a maximum credit line of $64.0 million
collateralized by inventory purchases financed by the Flooring
Companies. At December 31, 1999 and 1998, the Company owed the Flooring
Companies approximately $13.8 million and $6.7 million, respectively,
which is included in trade accounts payable.

7. Operating Leases and Exit Costs

In October 1999, the Company executed an operating lease agreement for
two floors of office space totaling approximately 72,000 square feet in
Chicago, Illinois. The Company plans to establish a sales office in the
facility with the lease commencing for one floor on April 1, 2000, and
for the second floor on September 1, 2000. The lease provides a ten
year term, with certain expansion and renewal options.

The Company is obligated under a lease agreement through December 31,
2003 for its Buffalo Grove office and warehouse facility. Future
minimum rentals under the lease are $802,000 in 2000 and 2001 and
$842,000 in 2002 and 2003. The Company is also obligated under a lease
agreement for its Chicago showroom which expires on June 30, 2001. In
addition to the Chicago showroom rental costs, the Company is subject
to a proportionate share of any increase in real estate taxes and
operating costs over a certain amount per square foot.

For the years ended December 31, 1999, 1998 and 1997, rent expense was
$432,000, $230,000 and $540,000, respectively. Additionally, $573,000
and $689,000 of rental payments were charged to the exit liability in
1999 and 1998, respectively. Minimum future rentals are as follows (in
thousands):

Years Ended December 31, Amount
------------------------ ------
2000 $ 1,510
2001 1,928
2002 1,928
2003 1,961
2004 1,152
-----------------
Thereafter 7,208
-----------------
$ 15,687
=================

The Company recorded a $4.0 million pre-tax non-recurring charge to
operating results for exit costs relating to the Buffalo Grove facility
in the first quarter of 1996. The exit costs consist primarily of the
estimated cost to the Company of subleasing the vacated facility,
including holding costs, the estimated costs of restoring the building
to its original condition and certain asset write-offs resulting from
the relocation. During 1999, 1998 and 1997, the Company charged
approximately $496,000, $676,000 and $596,000 against the exit accrual,
respectively. These amounts include cash payments for rent, real estate
taxes and restoration, net of sublease payments.

The Company reopened the office portion of the Buffalo Grove facility
during the fourth quarter of 1998 as a sales office. Accordingly, the
Company records a proportionate share of the rent and other operating
costs to selling and administrative expenses. The Company sublet the
warehouse and showroom portions of the Buffalo Grove facility to a
third party for the period beginning June 15, 1999, and continuing
through the end of the lease term on December 31, 2003. However, the
third party sublessee filed a Chapter 11 petition for reorganization
under the bankruptcy laws in August 1999, and subsequently decided to
liquidate the business operating from the sublet space. As a result of
the liquidation, the sublessee is not likely to affirm or complete the
lease. If the lease is terminated, the Company will reevaluate the
future use of the warehouse space and adjust the remaining exit
liability as necessary depending on whether the Company pursues a new
sublease, uses the space for its operations or leaves the space vacant.

8. Income Taxes

Components of the provision (benefit) for income taxes for the years
ended December 31, 1999, 1998 and 1997 consist of (in thousands):

1999 1998 1997
-------------- -------------- ---------------

Current:
Federal $ 54,135 $ 35,968 $ 28,630
State 11,746 7,922 6,228
-------------- -------------- ---------------
65,881 43,890 34,858
Deferred (1,573) (720) (1,351)
-------------- -------------- ---------------
Provision for income taxes $ 64,308 $ 43,170 $ 33,507
============== ============== ===============

The current income tax liabilities for 1999, 1998 and 1997 were reduced
by $17.4 million, $3.7 million and $5.8 million, respectively, for tax
benefits recorded directly to paid-in capital relating to the exercise
and vesting of shares pursuant to the CDW Stock Option Plan, the MPK
Stock Option Plan and the MPK Restricted Stock Plan.

The reconciliation between the statutory tax rate expressed as a
percentage of income before income taxes and the actual effective tax
rate for 1999, 1998 and 1997 is as follows:

1999 1998 1997
-------- -------- --------
Statutory federal income tax rate 35.0 % 35.0 % 35.0 %
State taxes, net of federal benefit 4.6 4.6 4.6
Other 0.0 0.0 0.1
-------- -------- --------
39.6 % 39.6 % 39.7 %
======== ======== ========

The tax effect of temporary differences that give rise to the net
deferred income tax asset at December 31, 1999 and 1998 are presented
below (in thousands):

1999 1998
---- ----
Current:
Accounts receivable $ 2,233 $ 1,827
Payroll and benefits 3,805 2,719
Merchandise inventory 462 333
Accrued expenses 202 202
-------- --------
6,702 5,081
-------- --------
Non-current:

Employee stock plans 4,742 4,238
Exit charge 865 1,059
Property and equipment (752) (562)
Other (47) 121
-------- --------
4,808 4,856
-------- --------
Net deferred tax asset $11,510 $ 9,937
======== ========

The portion of the net deferred tax asset relating to employee stock
plans results primarily from the MPK Stock Option Plan and compensatory
stock option grants under the CDW Stock Option Plans. Compensation
expense related to these plans is deductible for income tax purposes in
the year the options are exercised.

Although realization is not assured, management believes, based upon
historical taxable income, that it is more likely than not that all of
the deferred tax asset will be realized.

9. Stock-Based Compensation

CDW Stock Option Plans

The Company has established certain stock-based compensation plans for
the benefit of its directors and coworkers. Pursuant to these plans the
Company has reserved a total of 2,281,240 common shares for stock
option grants. The plans generally include vesting requirements from 3
to 10 years and option lives of 20 years. Options may be granted at
exercise prices ranging from $0.01 to the market price of the common
stock at the date of grant.

Option activity for the years ended December 31, 1997, 1998 and 1999
was as follows:

Weighted-Average Options
Shares Exercise Price Exercisable
---------------- ---------------- ----------------

Balance at January 1, 1997 2,108,688 $ 21.17 -

Options granted 1,719,518 26.17
Options exercised - -
Options forfeited (164,368) 23.76
---------------- ---------------- ----------------
Balance at December 31, 1997 3,663,838 23.40 89,474
---------------- ---------------- ----------------
Options granted 1,428,230 46.38
Options exercised (91,744) 12.43
Options forfeited (230,070) 25.25
---------------- ---------------- ----------------
Balance at December 31, 1998 4,770,254 30.40 226,090
---------------- ---------------- ----------------

Options granted 1,849,365 62.21
Options exercised (197,202) 12.26
Options forfeited (324,530) 34.42
---------------- ---------------- -----------------

Balance at December 31, 1999 6,098,401 $ 40.42 409,955
================ ================ =================

For the years ended December 31, 1999, 1998 and 1997, the
weighted-average fair value of options granted was as follows:

1999 1998 1997
---- ---- ----

Exercise price equals market price $45.76 $32.78 $18.09
Exercise price is less than market price $78.62 $47.97 $26.06

The following table summarizes the status of outstanding stock options
as of December 31, 1999:

Options Outstanding Options Exercisable
------------------------------------------------- ---------------------------
Weighted-Average

Number of Remaining Weighted- Number of Weighted-
Range of Options Contractual Life Average Options Average
Exercise Prices Outstanding (in years) Exercise Price Exercisable Exercise Price
---------------- ------------- ------------------- --------------- ------------ ---------------

$0.005 68,064 18.0 $ .01 - $ -

$0.01 23,911 20.0 .01 - -

$4.67 - $6.50 16,200 15.0 5.92 - -

$11.38 - $13.50 536,522 15.7 12.84 307,824 12.34

$20.00 - $24.47 2,387,662 17.4 27.34 102,131 29.66

$32.41 - $47.97 1,240,574 19.0 47.72 - -

$48.63 - $49.78 986,480 19.8 49.77 - -

$78.625 838,988 20.2 78.63 - -
---------------- ------------- ------------------- --------------- ------------ ---------------
$0.005 - $78.625 6,098,401 18.3 $ 40.42 409,955 $ 16.66
================ ============= =================== =============== ============ ===============

Had the Company elected to apply the provisions of Statement of
Financial Accounting Standards No. 123, 'Accounting for Stock Based
Compensation' (SFAS 123) regarding recognition of compensation expense
to the extent of the calculated fair value of stock options, reported
net income and earnings per share would have been reduced as follows:

(in 000's, except per share amounts)
1999 1998 1997
---------- ---------- ----------

Net income, as reported $ 98,085 $ 65,841 $ 51,001
Pro forma net income $ 90,525 $ 61,574 $ 48,573

Basic earnings per share, as reported $ 2.27 $ 1.53 $ 1.18
Diluted earnings per share, as reported $ 2.22 $ 1.51 $ 1.17

Pro forma basic earnings per share $ 2.10 $ 1.43 $ 1.13
Pro forma diluted earnings per share $ 2.05 $ 1.42 $ 1.12

The effects of applying SFAS 123 in the above pro forma disclosure are
not likely to be representative of the effects disclosed in future
years because the proforma calculations exclude stock options granted
before 1995.

For purposes of the SFAS 123 pro forma net income and earnings per
share calculation, the fair value of each option grant is estimated as
of the date of grant using the Black-Scholes option-pricing model. The
weighted-average assumptions used in determining fair value as
disclosed for SFAS 123 are shown in the following table:

1999 1998 1997
---- ---- ----
Risk-free interest rate 6.1 % 5.4 % 5.5 %
Dividend yield 0.0 % 0.0 % 0.0 %
Option life (years) 9.8 9.9 9.9
Stock price volatility 54.6 % 52.6 % 51.7 %

MPK Stock Option Plan

Effective December 31, 1992, the Company's current majority shareholder
established the MPK Stock Option Plan pursuant to which he granted
non-forfeitable options to certain officers to purchase 8,286,750
shares of common stock owned by him at an exercise price of $.0085 per
share. Options were exercised and the resulting shares were sold
pursuant to secondary offerings in 1995 and 1997, and open market
transactions in 1998 and 1999, as follows:

Transaction Year Number of Options

---------------- -----------------
1995 676,000
1997 272,000
1998 330,000
1999 872,000

In 1999, one of the plan participants, who held 489,510 options at the
time, terminated employment with the Company. Pursuant to the terms of
the MPK Stock Option Plan, the participant exercised all of the
remaining options during 1999. Options for 2,065,074 shares for the two
remaining participants are exercisable as of December 31, 1999 and the
remaining 2,667,000 options are exercisable at the rate of 1,143,000 on
each December 31, 2000 and 2001, and 381,000 on December 31, 2002. The
options have a 20 year life. The number of options exercisable increase
proportionately to shares, if any, sold by the majority shareholder.

MPK Restricted Stock Plan

Effective upon the closing of the initial public offering, the current
majority shareholder established the MPK Restricted Stock Plan.
Pursuant to this plan, the majority shareholder allocated 1,337,208
shares of his common stock to be held in escrow for the benefit of
those persons employed by the Company as of December 31, 1992. The
number of shares allocated to each employee was dependent upon the
employee's years of service and salary history. As a result of these
grants, which provided for vesting based upon continuous employment
with the Company or its subsidiaries through January 1, 2000, the
Company recorded a capital contribution and offsetting deferred charge
of approximately $2.8 million for unearned compensation equal to the
number of shares granted, times $2.085 per share. The deferred charge
is classified in the equity section of the consolidated balance sheet
of the Company as unearned compensation and is being amortized on a
straight-line basis over the vesting period. As of December 31, 1999,
338,930 shares have been forfeited for which the Company has recorded a
reduction of both unearned compensation and paid-in capital, in
addition to reducing the amortization of unearned compensation
accordingly.

The Company filed a Registration Statement on Form S-3, which was
effective on February 7, 1997, to modify the terms of the MPK
Restricted Stock Plan and provide participants the option to accelerate
the vesting on 25% of their shares in exchange for the extension of the
vesting period on their remaining shares through 2003. Under the terms
of this modification, participants who elected the acceleration were
granted options by the Company equal to the number of shares which
became vested with an exercise price of $29.50 per share, the market
price of the stock on the acceleration date. Participants elected
accelerated vesting under this modification for 264,128 shares.

As of December 31, 1999, 53,034 shares remain outstanding under the
original terms and vest on January 1, 2000 and 681,116 shares remain
outstanding under the modified terms and vest 25% each year beginning
on January 1, 2000. The Company filed a registration statement on Form
S-3, which was effective on December 7, 1999, to allow participants of
the plan to sell the shares as they vest under the plan.

MPK Stock Plans, Tax Benefits

The exercise and vesting of shares pursuant to the MPK Stock Option
Plan and MPK Restricted Stock Plan resulted in the realization by the
Company of tax benefits as of $14.7 million in 1999, $3.1 million in
1998 and $6.2 million in 1997, of which $381,000, $144,000 and
$334,000, respectively, were previously recorded in deferred taxes. The
incremental tax benefits of $14.3 million in 1999, $2.9 million in 1998
and $5.8 million in 1997 were recorded to paid-in capital.

10. Earnings Per Share

At December 31, 1999, the Company had outstanding common shares
totaling 43,239,000. The Company has also granted options to purchase
common shares to the coworkers of the Company as discussed in Note 9.
These options have a dilutive effect on the calculation of earnings per
share. The following is a reconciliation of the numerators and
denominators of the basic and diluted earnings per share computations
as required by SFAS 128.

Years ended December 31,
(in 000's except per share data)
--------------------------------
1999 1998 1997
---- ---- ----

Basic earnings per share:
Income available to

common shareholders (numerator) $ 98,085 $ 65,841 $ 51,001
=========== =========== ============
Weighted average common

shares outstanding (denominator) 43,135 43,062 43,050
=========== =========== ============
Basic earnings per share $ 2.27 $ 1.53 $ 1.18
=========== =========== ============

Diluted earnings per share:
Income available to

common shareholders (numerator) $ 98,085 $ 65,841 $ 51,001
=========== =========== ============
Weighted average common

shares outstanding 43,135 43,062 43,050
Effect of dilutive securities:
Options on common stock 1,017 442 358
----------- ----------- ------------
Total common shares and dilutive 44,152 43,504 43,408
securities (denominator)
=========== =========== ============
Diluted earnings per share $ 2.22 $ 1.51 $ 1.17
=========== =========== ============

11. Profit Sharing and 401(k) Plan

The Company has a profit sharing plan which includes a salary reduction
feature established under the Internal Revenue Code Section 401(k)
covering substantially all employees. Contributions by the Company to
the profit sharing plan are determined at the discretion of the Board
of Directors. For the years ended December 31, 1999, 1998 and 1997, the
Company's profit sharing expense was approximately $2,639,000,
$1,860,000 and $1,066,000, respectively.

12. Leasing Joint Venture

In April 1999, CDW Capital Corporation, a wholly-owned subsidiary of
CDW, and First Portland Corporation ("FIRSTCORP") formed CDW Leasing,
L.L.C. ("CDW-L"), a 50/50 joint venture. CDW-L provides captive leasing
services to CDW customers. Under the terms of an operating agreement,
FIRSTCORP provides leasing management services to CDW-L, with net
earnings of the venture allocated 50% to CDW and 50% to FIRSTCORP. CDW
Capital Corporation and FIRSTCORP each contributed $100,000 to the
capital of CDW-L, maintain equal operating authority over CDW-L and
have an equal number of seats on the Board of Managers of the joint
venture. CDW Capital Corporation has committed to loan up to $10
million to CDW-L on a secured basis to fund new leases initiated by
CDW-L. The terms of the loan provide for monthly interest payments to
the Company based on the 90 day LIBOR rate plus 2.2%. The investment in
and loan to CDW-L at December 31, 1999 was $6.5 million.

13. Contingencies

As of December 31, 1999, the Company was not a party to any material
legal proceedings.

In December 1998, the Company and Michael P. Krasny, its majority
shareholder, Chairman and CEO, agreed to settle the litigation brought
against them in 1993 by a former shareholder, director and executive
officer of the Company. The lawsuit was related to the Company's
redemption of the common stock held by the former shareholder in July
1990, and requested actual and punitive damages . Although the Company
and Mr. Krasny believe their actions were honest and proper and that
the allegations were without merit, they agreed to the settlement of
the suit, whereby all pending litigation was dismissed with a one time
payment by Mr. Krasny to the former shareholder of approximately $4.4

million. The amount was determined based upon the difference between
the agreed upon estimated fair market value of the Company at the time
of the redemption of the former shareholder's interest in 1990 and the
amount previously paid to the former shareholder. Pursuant to Mr.
Krasny's indemnification of the Company for all costs, damages or
settlements related to the litigation, the Company recorded the payment
by Mr. Krasny to the former shareholder as a capital contribution, with
an offsetting reduction of paid-in capital for the additional
redemption price paid to the former shareholder. Thus, the settlement
had no impact on the Company's results of operations or cash flows.

Mr. Krasny also reimbursed the Company for all expenses, net of tax
benefits received by the Company, related to this action. For the years
ended December 31, 1998 and 1997 , the Company and Mr. Krasny incurred
legal expenses of approximately $1.3 million and $379,000 ,
respectively, which have been assumed by Mr. Krasny. These legal
expenses are recorded as a selling and administrative expense and the
reimbursement, net of tax, is recorded as an increase to paid-in
capital. As a result of the settlement the Company does not anticipate
incurring any additional expenses related to this lawsuit.

14. Selected Quarterly Financial Data (Unaudited)

The following information is for the years ended December 31, 1999 and
1998 (in thousands, except per share data):

First Second Third Fourth
Quarter Quarter Quarter Quarter
------- ------- ------- -------

December 31, 1999

Net sales $ 539,406 $ 597,554 $ 683,012 $ 741,267
Gross profit 67,906 74,747 85,614 95,272
Income before income taxes 32,614 36,921 43,358 49,500
Net income 19,698 22,301 26,188 29,898
Earnings per share:
Basic $ 0.46 $ 0.52 $ 0.61 $ 0.69
Diluted $ 0.45 $ 0.51 $ 0.59 $ 0.67

December 31, 1998

Net sales $ 384,591 $ 408,945 $ 462,720 $ 477,233
Gross profit 49,147 51,707 58,863 60,458
Income before income taxes 24,453 25,807 28,384 30,367
Net income 14,770 15,588 17,141 18,342
Earnings per share:
Basic $ 0.34 $ 0.36 $ 0.40 $ 0.43
Diluted $ 0.34 $ 0.36 $ 0.39 $ 0.42

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
CDW Computer Centers, Inc.

Our report on the consolidated financial statements of CDW Computer Centers,
Inc. and Subsidiaries is included on page F-1 of this Form 10-K. In connection
with our audits of such financial statements, we have also audited the related
financial statement schedule listed in the index on page 19 of this Form 10-K.

In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information required to be
included therein.

PricewaterhouseCoopers LLP

Chicago, Illinois
January 20, 2000

S-1
44

CDW COMPUTER CENTERS, INC.

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

years ended December 31, 1999, 1998 and 1997
(in thousands)

Column A Column B Column C Column D Column E
-------- ---------- ------------------------- ---------- ----------

Balance at Charged to Charged to Balance at
Beginning Costs and Other End
Description of Period Expenses Accounts Deductions of Period
----------- ---------- ---------- ---------- ---------- ----------

Year ended December 31, 1999
Deducted in the balance sheet
from the asset to which it applies:
Allowance for doubtful accounts $ 3,185 $ 2,291 $ - $ 1,176 (a) $ 4,300
---------- ---------- ---------- ---------- ----------
Year ended December 31, 1998
Deducted in the balance sheet
from the asset to which it applies:
Allowance for doubtful accounts $ 1,950 $ 2,129 $ - $ 894 (a) $ 3,185
---------- ---------- ---------- ---------- ----------
Year ended December 31, 1997
Deducted in the balance sheet
from the asset to
which it applies:
Allowance for doubtful accounts $ 1,100 $ 1,166 $ - $ 316 (a) $ 1,950
---------- ---------- ---------- ---------- ----------

Note:

(a) Uncollectible items written off, less recoveries of items previously written
off.

S-2