INACOM CORP, 424B2, 1997-10-30

INACOM CORP
424B2, 1997-10-30
PATENT OWNERS & LESSORS

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<PAGE>
Filed Pursuant to Rule 424(b)(2)
File Number 333-36815
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED OCTOBER 29, 1997

3,000,000 SHARES

INACOM CORP.

COMMON STOCK
(PAR VALUE $.10 PER SHARE)
------------------

All of the shares of Common Stock offered hereby are being offered by InaCom
Corp.

Concurrently with this offering, the Company is offering its 4.50%
Convertible Subordinated Debentures due November 1, 2004 in the aggregate amount
of $75,000,000 under a separate Debenture Prospectus. Neither offering is
conditioned upon consummation of the other offering. See "Debentures Offering".

SEE "RISK FACTORS" ON PAGES S-8 TO S-11 OF THIS PROSPECTUS SUPPLEMENT FOR
CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE
COMMON STOCK.

The Common Stock is listed on the New York Stock Exchange under the symbol
"ICO." On October 29, 1997, the last reported sales price of the Common Stock on
the New York Stock Exchange was $32.75 per share. See "Price Range of Common
Stock."
--------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------

<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE DISCOUNT(1) COMPANY(2)
------------------------ ------------------------ ------------------------
<S> <C> <C> <C>
Per Share............................. $32.75 $1.60 $31.15
Total(3).............................. $98,250,000 $4,800,000 $93,450,000
</TABLE>

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

(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."

(2) Before deduction of expenses estimated at $300,000 payable by the Company.

(3) The Company has granted the Underwriters an option exercisable for 30 days
after the date hereof to purchase up to 450,000 additional shares of Common
Stock at the initial public offering price per share, less the underwriting
discount. If such option is exercised in full, the total initial public
offering price, underwriting discount and proceeds to Inacom will be
$112,987,500, $5,520,000 and $107,467,500, respectively. See "Underwriting."
--------------------

The shares offered hereby are offered severally by the Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to their
right to reject any order in whole or in part. It is expected that certificates
for the shares will be ready for delivery in book-entry form only through the
facilities of the Depository Trust Company in New York, New York, on or about
November 4, 1997, against payment therefor in immediately available funds.

GOLDMAN, SACHS & CO.

J.P. MORGAN & CO.

PAINEWEBBER INCORPORATED
------------

The date of this Prospectus Supplement is October 29, 1997.
<PAGE>
------------------

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH
SECURITIES, AND THE IMPOSITION OF A PENALTY BID, IN CONNECTION WITH THE
OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

S-2
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY INFORMATION IS QUALIFIED IN ITS ENTIRETY BY THE MORE
DETAILED INFORMATION AND CONSOLIDATED FINANCIAL STATEMENTS, INCLUDING THE NOTES
THERETO, APPEARING ELSEWHERE IN THIS PROSPECTUS SUPPLEMENT AND PROSPECTUS OR
INCORPORATED BY REFERENCE. EXCEPT AS OTHERWISE INDICATED HEREIN, ALL INFORMATION
IN THIS PROSPECTUS SUPPLEMENT AND PROSPECTUS ASSUMES NO EXERCISE OF THE
UNDERWRITERS' OVER-ALLOTMENT OPTION.

THE COMPANY

InaCom Corp. (the "Company" or "Inacom") is a leading single source provider
of information technology products and technology management services designed
to enhance the productivity of information systems primarily for Fortune 1000
clients. The Company offers a comprehensive range of value added services to
manage the entire information system life cycle including: (1) needs assessment
and technology planning, (2) technology procurement and configuration, (3)
systems integration and systems management, (4) ongoing systems support and
distributed support, and (5) asset management. Inacom's expertise includes the
integration of voice and data communications. Inacom sells its products and
services through a marketing network of 51 Company-owned business centers
throughout the United States that focus on serving large corporations. The
Company also has a network of approximately 1,000 value added resellers that
typically have a regional, industry, or specific product focus. The Company has
international affiliations in Europe, Asia, Central and South America, the
Caribbean, Middle East, Africa, Canada and Mexico to satisfy the technology
management needs of its multinational clients. Inacom is the largest purchaser
of IBM computer products and believes it is the second largest purchaser of
Compaq computer products worldwide.

Inacom's expertise in procurement, configuration and delivery of PC's,
peripherals and software from a wide range of major vendors enables the Company
to customize information systems to meet specific client needs. In addition,
Inacom provides its clients with numerous benefits including in-depth product
knowledge and experience, competitive pricing from its purchasing arrangements
and a wide array of services supporting client needs on an on-going basis.

Management believes that the Company's expertise in procuring, configuring
and delivering information technology products and providing technology
management services provides a strategic advantage in addressing certain
industry trends. In particular, businesses increasingly are seeking to outsource
the management and support of their information technology systems with fewer
providers. At the same time, the demand for cost-effective, customized
technology systems has led a number of manufacturers, including IBM, Compaq and
Hewlett-Packard, to move from "build-to-forecast" delivery systems to
"build-to-order" programs in which they ship computer components to a limited
number of qualified technology providers, including Inacom, for final assembly
and configuration. Management also believes that these trends will lead to
further consolidation in the highly fragmented technology management services
industry. As a result of the Company's experience in integrating acquired
businesses, management believes that the Company is well-positioned to take
advantage of strategic acquisition opportunities as they arise.

Inacom's earnings growth has been enhanced by its rapidly expanding services
business. In the first six months of fiscal 1997, computer services provided
47.7% of net earnings, more than double the net earnings from the same period in
1996. Computer products contributed 40.8% and communications products and
services provided 11.5% of net earnings in the same period. Inacom expects that
earnings from services will continue to grow more rapidly than earnings from its
other business segments given Inacom's broad offering of services to its clients
and the industry trends discussed above.

S-3
<PAGE>
Inacom's goals are to grow net earnings and increase economic value added to
enhance shareholder value. To achieve these goals, Inacom provides comprehensive
solutions to improve the productivity of its clients' information systems. Key
elements of the Company's strategy are: (i) to leverage client relationships to
continue expanding higher-margin services revenues, (ii) to capitalize on the
trend toward build-to-order/configure-to-order systems, (iii) to expand
offerings and geographic coverage through strategic acquisitions, and (iv) to
capitalize on the convergence of data and voice communications.

THE OFFERING

<TABLE>
<CAPTION>
<S> <C>
Common Stock, $.10 par value (the "Common Stock").............. 3,000,000 shares

Common Stock Outstanding after the Offering.................... 14,563,482 shares(1)

Use of Proceeds................................................ To repay, in part, indebtedness and for general
corporate purposes. See "Use of Proceeds."

Trading Symbol................................................. The Common Stock is traded on the New York Stock
Exchange ("NYSE") under the symbol "ICO".
</TABLE>

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

(1) Does not include (i) 1,132,948 additional shares reserved for issuance
pursuant to currently outstanding options under the Company's 1997, 1994 and
1990 stock plans and 1987 nonqualified stock option plan, (ii) 2,302,084
additional shares reserved for issuance pursuant to the conversion of the
Company's 6% Convertible Subordinated Debentures due June 15, 2006 or (iii)
such additional shares which will be reserved for issuance pursuant to the
conversion of the Company's 4.50% Convertible Subordinated Debentures due
November 1, 2004 which the Company is offering concurrently with this
offering of Common Stock.

S-4
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER TWENTY-SIX WEEKS
ENDED
----------------------------------------------------------------------------------
----------------------
JUNE 29, JUNE 28,
1992 1993 1994 1995 1996 1996 1997
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.............................. $1,014,466 $1,545,227 $1,800,539 $2,200,344 $3,102,055 $1,411,941 $1,813,904
Earnings (loss) before income taxes... 17,959 19,693 (3,749) 19,833 31,719 12,566 20,262
Net earnings (loss)................... 10,734 11,975 (2,256) 11,707 18,733 7,414 11,954
Earnings (loss) per share, fully
diluted............................. $ 1.25 $ 1.26 $ (0.22) $ 1.14 $ 1.64 $ 0.71 $ 0.94
Weighted average shares outstanding,
fully diluted....................... 8,566 9,500 10,300 10,300 12,000 10,500 13,800
</TABLE>

<TABLE>
<CAPTION>
JUNE 28, 1997
--------------------------------------
AS AS ADJUSTED
ACTUAL ADJUSTED(1) PRO FORMA(2)
--------- ------------ -------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital........................................................... $ 81,869 $ 175,019 $ 247,544
Total assets.............................................................. 944,912 944,912 993,062
Long-term debt............................................................ 55,250 55,250 130,250
Stockholders' equity...................................................... $ 207,012 $ 300,162 $ 300,162
</TABLE>

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

(1) As adjusted to give effect to the sale of Common Stock offered hereby.

(2) As adjusted to give effect to the sale of Common Stock offered hereby and
the sale of the debentures, as described in the following paragraph, and the
application of the estimated net proceeds of both offerings. See "Use of
Proceeds".

DEBENTURE OFFERING

Concurrently with the offering, the Company is offering, by separate
prospectus, $75,000,000 of its 4.50% Convertible Subordinated Debentures due
November 1, 2004 (the "Debentures") (up to $86,250,000 of Debentures if the
underwriters' over-allotment option is exercised in full). The consummation of
the offering of the Common Stock made hereby is not conditioned upon the
consummation of the Debentures offering.

S-5
<PAGE>
RECENT DEVELOPMENTS

1997 THIRD QUARTER EARNINGS PRESS RELEASE. On October 16, 1997, Inacom
issued a press release with respect to earnings for its third quarter ended
September 27, 1997. Information, including revenues and earnings for Inacom's
third quarter ended September 27, 1997, is set forth below.

CONDENSED AND CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
THIRTEEN WEEKS THIRTY-NINE WEEKS
ENDED ENDED
----------------------- ----------------------
SEPT. 27, SEPT. 28, SEPT. 27, SEPT. 28,
1997 1996 1997 1996
---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues:
Computer products............................................. $ 921,361 $ 713,432 $2,579,066 $2,029,739
Computer services............................................. 65,634 34,952 173,872 93,292
Communications products and services.......................... 26,339 21,068 74,300 58,362
---------- ----------- ---------- ----------
1,013,334 769,452 2,827,238 2,181,393
---------- ----------- ---------- ----------

Direct costs:

Computer products............................................. 871,014 671,588 2,436,639 1,913,579

Computer services............................................. 16,921 7,971 45,301 23,521

Communications products and services.......................... 20,037 16,766 57,819 45,852
---------- ----------- ---------- ----------

907,972 696,325 2,539,759 1,982,952
---------- ----------- ---------- ----------

Gross margin.................................................... 105,362 73,127 287,479 198,441

Selling, general and administrative expenses.................... 85,633 60,185 233,304 163,014
---------- ----------- ---------- ----------

Operating income................................................ 19,729 12,942 54,175 35,427

Interest expense................................................ 7,489 4,398 21,673 14,317
---------- ----------- ---------- ----------

Earnings before income tax...................................... 12,240 8,544 32,502 21,110

Income tax expense.............................................. 5,011 3,503 13,319 8,655
---------- ----------- ---------- ----------

Net earnings.................................................... $ 7,229 $ 5,041 $ 19,183 $ 12,455
---------- ----------- ---------- ----------
---------- ----------- ---------- ----------

Earnings per share

Primary....................................................... $ .61 $ .48 $ 1.65 $ 1.20

Fully diluted................................................. $ .55 $ .43 $ 1.49 $ 1.14
---------- ----------- ---------- ----------
---------- ----------- ---------- ----------

Common shares and equivalents outstanding

Primary....................................................... 11,800 10,500 11,600 10,400

Fully diluted................................................. 14,100 12,800 13,900 11,400
---------- ----------- ---------- ----------
---------- ----------- ---------- ----------
</TABLE>

S-6
<PAGE>
CONDENSED AND CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
SEPTEMBER 27, DECEMBER 28,
1997 1996
-------------- --------------

<S> <C> <C>
ASSETS

Current assets:

Cash and cash equivalents...................................................... $ 27,481 $ 31,410

Accounts receivable, net....................................................... 287,592 288,407

Inventories.................................................................... 486,199 386,592

Other current assets........................................................... 11,485 5,889
-------------- --------------

Total current assets....................................................... 812,757 712,298
-------------- --------------

Other assets, net................................................................ 26,989 27,531

Cost in excess of net assets of business acquired, net of accumulated
amortization.................................................................... 77,977 48,646

Property and equipment, net...................................................... 86,366 59,125
-------------- --------------

$1,004,089 847,600
-------------- --------------
-------------- --------------
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable............................................................... $ 547,185 $ 406,753

Notes payable.................................................................. 88,500 140,770

Other current liabilities...................................................... 95,906 64,472
-------------- --------------

Total current liabilities.................................................. 731,591 611,995
-------------- --------------

Long-term debt................................................................... 55,250 55,250

Other long-term liabilities...................................................... 3,000 3,525

Stockholders' equity:

Capital stock:

Class A preferred stock of $1 par value

Authorized 1,000,000 shares; none issued................................... -- --

Common stock of $.10 par value. Authorized 30,000,000 shares; issued
11,563,482 in 1997 and 10,850,008 shares in 1996........................... 1,157 1,085

Additional paid-in capital..................................................... 116,301 98,153

Retained earnings.............................................................. 96,790 77,607
-------------- --------------

214,248 176,845

Less:

Unearned restricted stock...................................................... -- (15)
-------------- --------------

Total stockholders' equity................................................. 214,248 176,830
-------------- --------------

$1,004,089 $ 847,600
-------------- --------------
-------------- --------------
</TABLE>

S-7
<PAGE>
RISK FACTORS

The Prospectus and this Prospectus Supplement, including documents
incorporated by reference herein, contain certain forward-looking statements and
information relating to the Company that are based on the beliefs of the
Company's management as well as assumptions made by and information currently
available to the Company's management. Such statements reflect the current view
of the Company with respect to future events and are subject to certain risks,
uncertainties and assumptions, including factors described in "Risk Factors"
herein and in documents incorporated herein by reference. Should one or more of
these risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those described herein as
believed, estimated or expected.

DEPENDENCE UPON KEY VENDORS

Inacom's business is dependent in large measure upon its relationship with
key vendors. A substantial portion of Inacom's computer products revenue is
derived from the sales of the products of key vendors, including Compaq, IBM and
Hewlett-Packard. During the fiscal year ended December 28, 1996, sales of
Compaq, IBM and Hewlett-Packard products accounted for approximately 26%, 24%
and 15%, respectively, of the Company's revenues. Inacom derives a substantial
portion of its communications products and services revenue from the sale of
Lucent Technologies products and AT&T services. Although Inacom considers its
relationships with its key vendors to be good, there can be no assurance that
these relationships will continue as presently in effect or that changes in
marketing approach by one or more such key vendors and other suppliers would not
adversely affect Inacom. Inacom's agreements with these vendors are on a
non-exclusive basis and may be terminated by the vendors on notice typically
ranging from 30 to 90 days. Termination of, or a material change to, or a
nonrenewal of Inacom's agreements with Compaq, IBM and Hewlett-Packard, a
material decrease in the level of marketing development programs offered by
computer vendors, or an insufficient or interrupted supply of vendors' product
would have a material adverse effect on Inacom's business. See
"Business--Products and Vendors."

IMPACT OF VENDOR INCENTIVE FUNDS

The key vendors of Inacom provide various incentives for promoting and
marketing their product offerings. Funds or credits received by Inacom are based
either on the sales of the vendor's products through the independent reseller
and Inacom-owned channels, or on Inacom's purchases from the respective vendor.
The three major forms of vendor incentives received by Inacom are co-operative
funds, market development funds and vendor rebates. The funds or credits are
earned through performance of specific marketing programs or upon completion of
objectives outlined by the vendors. These funds or credits from Inacom's primary
vendors typically range from 1% to 5% of purchases by Inacom. A material
decrease in the level of vendor incentive funding or credits would have a
material adverse effect on Inacom's business. See "Business--Products and
Vendors."

INVENTORY MANAGEMENT RISKS

The personal computer industry is characterized by rapid product improvement
and technological change resulting in relatively short product life cycles and
rapid product obsolescence, which can place inventory at considerable valuation
risk. Inacom's information technology suppliers generally provide price
protection intended to reduce the risk of inventory devaluation. However, many
of these suppliers have announced plans to reduce the number of days for which
they will provide price protection. There can be no assurance that vendors will
continue such policies or that unforeseen new product developments and related
inventory obsolescence will not materially adversely affect Inacom's business.

S-8
<PAGE>
BUILD-TO-ORDER DELIVERY MODEL

The system used by major manufacturers, such as IBM, Compaq and
Hewlett-Packard to deliver computer systems to business clients through
technology providers such as Inacom is changing from a build-to-forecast model
to a build-to-order model. See "Business--Industry". The potential advantages to
technology providers such as Inacom from such a system--reduced inventory
requirements, improved margins and market share gains--involve potential
disadvantages including a decrease in the number of days of price protection
available from the manufacturers and the requirement that Inacom meet strict
manufacturer final assembly qualification standards. The failure of Inacom to
meet the manufacturer qualification standards, or the inability of Inacom to
manage its inventory to levels to meet client demands and within the
manufacturer's price protection limits, could have a material adverse effect on
Inacom's business.

DEPENDENCE UPON KEY MANAGEMENT AND TECHNICAL PERSONNEL

Inacom's success depends to a significant extent on its ability to attract
and retain key personnel. Inacom is particularly dependent on its senior
management team and technical personnel. Inacom's strategy for growth in the
sale of computer services and communication services depends on its ability to
attract and retain qualified technical personnel, including systems engineers
and communications specialists. Competition for technical personnel is intense
and no assurance can be given that Inacom will be able to recruit and retain
such personnel. The failure to recruit and retain senior management and
technical personnel could have a material adverse effect on Inacom's business.

MANAGEMENT OF EXPANDING OPERATIONS AND INCREASED SERVICE FOCUS

The Company's growth resulting from expanding operations and its increased
focus on the complete life cycle technological needs of its business clients
places significant demands on the Company's management, operational and
technical resources. Such growth and increased life cycle service focus are
expected to continue to challenge the Company's sales, marketing, technical and
support personnel and senior management. The Company's future performance will
depend in part on its ability to manage expanding operations and to adapt its
operational systems to respond to changes in its business. In particular, the
Company's success will depend upon its key management and technical personnel.
See "Dependence Upon Key Management and Technical Personnel" above. The failure
of the Company to effectively manage its growth and increased life cycle service
focus effectively or to train its technical field personnel could have a
material adverse effect on Inacom's business.

FUNDING REQUIREMENTS; INTEREST RATE SENSITIVITY

Inacom's business requires significant working capital to finance product
inventory and accounts receivable. Inacom has funded its inventory and working
capital requirements through an inventory and working capital financing
agreement, a revolving credit facility and the public sale of debentures. The
borrowings under these agreements typically bear a floating rate of interest.
Due to the Company's significant working capital needs, an increase in interest
rates could have a material adverse effect on Inacom's results of operation.
There can be no assurance that sufficient equity or debt financing will be
available on terms acceptable to Inacom or that Inacom will be able to refinance
its existing indebtedness. The inability of Inacom to refinance its existing
indebtedness or to obtain a sufficient amount of alternative financing would
have a material adverse effect on Inacom's business.

RISKS OF FINANCIAL LEVERAGE

The Company's business requires significant working capital and the primary
sources of such working capital are provided through an inventory and working
capital financing agreement, the $55.25 million in aggregate principal amount of
6% convertible subordinated debentures issued in

S-9
<PAGE>
June 1996, and a revolving credit facility of $40.0 million. On June 28, 1997,
$80.0 million was outstanding under the working capital portion of the inventory
and working capital financing agreement and the interest rate was 7.5% based on
three-month LIBOR. The inventory and working capital agreement expires in June
1998. The debentures are unsecured subordinated debt of the Company. On June 28,
1997, $40.0 million was outstanding under the revolving credit facility and the
interest rate was 6.99% based on three-month LIBOR. The revolving credit
facility expires in February 1998. The degree to which the Company is leveraged
could have important consequences to holders of the Common Stock, including the
following: (i) the Company's ability to obtain other financing in the future may
be impaired; (ii) a substantial portion of the Company's cash flow from
operations must be dedicated to the payment of principal and interest on its
indebtedness; and (iii) a high degree of leverage may make the Company more
vulnerable to economic downturns and may limit the ability to withstand
competitive pressures. The Company's ability to make scheduled payments on or,
to the extent not restricted pursuant to the terms thereof, to refinance its
indebtedness depends on its financial and operating performance, which is
subject to prevailing economic conditions and to financial, business and other
factors beyond its control.

COMPETITION

All aspects of the technology management services industry are highly
competitive. The technology management services industry continues to experience
a significant amount of consolidation. In the future Inacom may face fewer but
larger and better financed competitors as a consequence of such consolidation.
Inacom competes for potential clients, including national accounts, with
numerous resellers, distributors and service providers. Several computer
manufacturers have expanded their channels of delivery, pricing and product
positioning and compete with Inacom's marketing network for potential clients.
Other competitors operate mail-order or discount stores offering clones of major
vendor products. Inacom also competes with computer technology providers in the
recruitment and retention of franchisees and independently-owned resellers.
Inacom competes in the computer services division with a large number of service
providers, including IBM through its Global Services division, Andersen
Consulting, EDS, CompuCom Systems, ENTEX, GE Capital Technology Management
Services, IKON Office Solutions and Vanstar Corp. Competition in the
communications products and services industry is also intense, and includes
entities which are also significant vendors of Inacom, such as Lucent
Technologies and AT&T. Certain competitors and manufacturers are substantially
larger than Inacom and have greater financial, technical, service and marketing
resources. The level of future sales and earnings achieved by Inacom in any
period may be adversely affected by a number of competitive factors, including
an increase in direct sales by vendors to independent resellers and/or clients
and increased computer client preference for mail-order or discount store
purchases of clones of major vendor products.

ACQUISITIONS

Inacom's strategy includes effecting acquisitions and strategic
relationships in selected geographic market and service areas. Acquisitions
involve a number of special risks, including the incorporation of acquired
products and services into Inacom's offerings, the potential loss of key
employees of the acquired business, the valuation of the acquired business, the
incurrence of additional debt and the financial impact of goodwill amortization.
Inacom expects to issue equity securities to consummate certain acquisitions,
which may cause dilution to current stockholders. No assurance can be given that
Inacom will have adequate resources to consummate acquisitions, integrate the
acquired businesses or that any such acquisitions will be successful in
enhancing Inacom's business.

DEPENDENCE ON INFORMATION SYSTEMS

The Company depends on a variety of information systems to provide it with a
competitive advantage. Although the Company has not in the past experienced
significant failures or down time of its

S-10
<PAGE>
proprietary procurement and delivery system or any of its other information
systems, any such failure or significant down time could prevent the Company
from taking orders and/or shipping product and could prevent clients from
accessing price and product availability information from the Company. In such
event, the Company could be at a severe disadvantage in determining appropriate
product pricing or the adequacy of inventory levels or in reacting to rapidly
changing market conditions. A failure of the Company's information systems which
impacts any of these functions could have a material adverse effect on the
Company's business. In addition, the inability of the Company to attract and
retain the highly-skilled personnel required to implement, maintain, and operate
its centralized information processing system and the Company's other
information systems could have a material adverse effect on the Company's
business.

GROSS MARGIN RISKS

Gross margins from the sale of computer products have declined over the past
several years as a result of computer product price reductions and intense
competition. Inacom has responded by reducing operating expenses as a percentage
of revenue and by focusing on sales of higher-margin computer services and
communication services. There can be no assurance that gross margins for
computer products will not continue to decline or that Inacom will be successful
in reducing operating expenses as a percentage of revenue. Furthermore, there
can be no assurance that gross margins for computer services and communications
services will not also decline or that Inacom will be able to continue to
successfully grow and compete in such service markets.

CERTAIN ANTI-TAKEOVER EFFECTS

Certain provisions of the Company's Certificate of Incorporation and
Delaware law may be deemed to have anti-takeover effects. The Company's
Certificate of Incorporation provides that the Board of Directors may issue
additional shares of Common Stock or establish one or more classes or a series
of Preferred Stock with such designations, relative voting rights, dividend
rights, liquidation and other rights that the Board of Directors determines
without stockholder approval. In addition, the Company is subject to the
anti-takeover provisions of Section 203 of the Delaware General Corporation Law
which prohibits a publicly-held Delaware corporation from engaging in a
"business combination" with an "interested stockholder" for a period of three
years after the date of the transaction in which the person became an interested
stockholder, unless the business combination is approved in a prescribed manner.
See "Description of Capital--Preferred Stock" and "Description of Capital
Stock--Section 203 of the Delaware General Corporation Law" in the Prospectus.

USE OF PROCEEDS

The net proceeds to the Company from the sale of the Common Stock and the
Debentures being offered concurrently are expected to be $93,150,000 and
$72,525,000, respectively ($107,167,500 and $83,437,500, respectively if the
Underwriters' over-allotment options for the offerings are exercised in full),
after deducting the discounts and commissions and the estimated offering
expenses payable by the Company. The Company currently anticipates that
approximately $120,000,000 of such net proceeds will be used to repay, in part,
borrowings under the Company's short-term revolving lines of credit which
borrowings are made for working capital purposes and can be reborrowed at any
time. The reduction in short-term borrowings will strengthen the Company's
balance sheet and provide the Company with additional debt capacity to grow its
business internally and through acquisitions. Borrowings outstanding under such
lines of credit were $80 million and $40 million at June 28, 1997 and the annual
interest rate was 7.50% and 6.99%, respectively. The balance of the net proceeds
will be used for general corporate purposes. See "Capitalization."

S-11
<PAGE>
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY

Prior to September 12, 1997, the Common Stock traded in the over-the-counter
market and was quoted on the NASDAQ National Market under the symbol "INAC". The
Common Stock commenced trading on the NYSE on September 12, 1997, under the
symbol "ICO". The following table sets forth the quarterly high and low sales
prices for the Common Stock as reported by the NASDAQ prior to September 12,
1997 and by the NYSE thereafter.

<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C>
FISCAL YEAR ENDED DECEMBER 30, 1995
First Quarter....................................................... $ 9.38 $ 7.00
Second Quarter...................................................... 14.25 8.25
Third Quarter....................................................... 15.25 12.25
Fourth Quarter...................................................... 15.12 9.50
FISCAL YEAR ENDED DECEMBER 28, 1996
First Quarter....................................................... $ 18.50 $ 13.25
Second Quarter...................................................... 24.25 15.38
Third Quarter....................................................... 35.88 15.38
Fourth Quarter...................................................... 39.25 29.50
FISCAL YEAR ENDING DECEMBER 27, 1997
First Quarter....................................................... $ 40.63 $ 20.63
Second Quarter...................................................... 32.88 20.00
Third Quarter....................................................... 37.63 29.75
Fourth Quarter (through October 29, 1997)........................... 39.38 32.13
</TABLE>

On October 29, 1997 the last reported sales price of the Common Stock on the
NYSE was $32.75. As of October 1, 1997 the Company estimates that there were
approximately 5,300 beneficial holders of the Company's Common Stock.

The Company has never declared or paid a cash dividend to stockholders. The
Company's Board of Directors presently intends to retain all earnings to finance
the expansion of the Company's operations and does not expect to authorize cash
dividends in the foreseeable future. Any payment of cash dividends in the future
will depend upon the Company's earnings, capital requirements and other factors
considered relevant by the Company's Board of Directors. Certain of the
Company's debt agreements restrict the amount of dividends which may be paid by
the Company. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Liquidity and Capital Resources."

S-12
<PAGE>
CAPITALIZATION

The following table sets forth the capitalization of the Company at June 28,
1997, and as adjusted to give effect to the application of estimated net
proceeds of $93,150,000 from the sale by the Company of the Common Stock and
$72,525,000 from the sale by the Company of the Debentures. The information set
forth below should be read in conjunction with the Consolidated Financial
Statements and Notes thereto and with "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

<TABLE>
<CAPTION>
JUNE 28, 1997
-------------------------------------------
AS ADJUSTED
ACTUAL AS ADJUSTED(1) PRO FORMA(2)
----------- --------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash and cash equivalent............................................ $ 30,720 $ 30,720 $ 76,395
----------- --------------- -------------
----------- --------------- -------------
Short-term debt..................................................... $ 120,000 $ 26,850 --
----------- --------------- -------------
----------- --------------- -------------
Long-term debt...................................................... $ 55,250 $ 55,250 $ 130,250

Stockholders' equity:
Capital stock:
Class A preferred stock, $1 par value; authorized 1,000,000
shares; none issued........................................... -- -- --
Common stock, $.10 par value; authorized 30,000,000 shares;
11,537,315 shares issued and outstanding; 14,537,315 shares
issued and outstanding as adjusted(3)........................... 1,153 1,453 1,453
Additional paid-in capital........................................ 116,298 209,148 209,148
Retained earnings................................................. 89,561 89,561 89,561
----------- --------------- -------------
Total stockholders' equity...................................... 207,012 300,162 300,162
----------- --------------- -------------
Total capitalization.......................................... $ 262,262 $ 355,412 $ 430,412
----------- --------------- -------------
----------- --------------- -------------
</TABLE>

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

(1) As adjusted to give effect to the sale of the Common Stock offered hereby.

(2) Assumes consummation of the offering of the Debentures concurrently with the
consummation of the offering of Common Stock.

(3) Does not include (i) 1,132,948 additional shares reserved for issuance
pursuant to currently outstanding options under the Company's 1997, 1994 and
1990 stock plans and 1987 nonqualified stock option plan, (ii) 2,302,084
additional shares reserved for issuance pursuant to the conversion of the
Company's 6% Convertible Subordinated Debentures due June 15, 2006 or (iii)
such additional shares which will be reserved for issuance pursuant to the
conversion of the Company's 4.50% Convertible Subordinated Debentures due
November 1, 2004 which the Company is offering concurrently with this
offering of Common Stock.

S-13
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data under the captions "Statement of
Operations Data" and "Balance Sheet Data" are derived from the Company's Annual
Reports on Form 10-K for each of the years ended December 26, 1992, December 25,
1993, December 31, 1994, December 30, 1995 and December 28, 1996 which have been
audited by KPMG Peat Marwick LLP, independent public accountants, and such data
as of and for the twenty-six weeks ended June 29, 1996 and June 28, 1997 have
been derived from the Company's unaudited Quarterly Reports on Form 10-Q. This
information should be read in conjunction with the Consolidated Financial
Statements and Notes thereto, and the independent auditors' report and with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
TWENTY-SIX WEEKS ENDED
FISCAL YEAR ENDED DECEMBER ----------------------
---------------------------------------------------------- JUNE 29, JUNE 28,
1992 1993 1994 1995 1996 1996 1997
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues......................... $1,014,466 $1,545,227 $1,800,539 $2,200,344 $3,102,055 $1,411,941 $1,813,904
Direct costs..................... 895,276 1,375,796 1,631,820 1,996,538 2,818,696 1,286,627 1,631,787
---------- ---------- ---------- ---------- ---------- ---------- ----------
Gross margin..................... 119,190 169,431 168,719 203,806 283,359 125,314 182,117
Selling, general and
administrative expenses........ 93,267 141,142 160,437 169,338 231,235 102,829 147,671
---------- ---------- ---------- ---------- ---------- ---------- ----------
Operating income................. 25,923 28,289 8,282 34,468 52,124 22,485 34,446
Interest expense................. 7,964 8,596 12,031 14,635 20,405 9,919 14,184
---------- ---------- ---------- ---------- ---------- ---------- ----------
Earnings (loss) before income
taxes.......................... 17,959 19,693 (3,749) 19,833 31,719 12,566 20,262
Income tax expense (benefit)..... 7,225 7,947 (1,493) 8,126 12,986 5,152 8,308
Cumulative effect of change in
accounting for taxes........... -- 229 -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net earnings (loss).............. $ 10,734 $ 11,975 $ (2,256) $ 11,707 $ 18,733 $ 7,414 $ 11,954
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
Earnings (loss) per share, fully
diluted........................ $ 1.25 $ 1.26 $ (0.22) $ 1.14 $ 1.64 $ .71 $ .94
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
Weighted average shares
outstanding, fully diluted..... 8,566 9,500 10,300 10,300 12,000 10,500 13,800
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
BALANCE SHEET DATA:
Working capital.................. $ 65,901 $ 67,936 $ 78,759 $ 90,940 $ 100,303 $ 135,408 $ 81,869
Total assets..................... 288,365 456,894 519,875 624,238 847,600 631,854 944,912
Long-term debt................... 36,800 20,000 30,333 23,667 55,250 68,850 55,250
Stockholders' equity............. $ 101,275 $ 136,491 $ 135,590 $ 148,775 $ 176,830 $ 158,313 $ 207,012
</TABLE>

CERTAIN DATA AS A PERCENTAGE OF REVENUES

<TABLE>
<CAPTION>
TWENTY-SIX WEEKS ENDED
FISCAL YEAR ENDED DECEMBER ------------------------
----------------------------------------------------- JUNE 29, JUNE 28,
1992 1993 1994 1995 1996 1996 1997
--------- --------- --------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues.................................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Direct costs................................ 88.3 89.0 90.6 90.7 90.8 91.1 90.0
--------- --------- --------- --------- --------- ----------- -----------
Gross margin................................ 11.7 11.0 9.4 9.3 9.2 8.9 10.0
Selling, general and administrative
expenses.................................. 9.2 9.1 8.9 7.7 7.5 7.3 8.1
--------- --------- --------- --------- --------- ----------- -----------
Operating income............................ 2.5 1.9 0.5 1.6 1.7 1.6 1.9
Interest expense............................ 0.8 0.6 0.7 0.7 0.7 0.7 0.8
--------- --------- --------- --------- --------- ----------- -----------
Earnings (loss) before income tax........... 1.7 1.3 (0.2) 0.9 1.0 0.9 1.1
Income tax expense (benefit)................ 0.7 0.5 (0.1) 0.4 0.4 0.4 0.4
--------- --------- --------- --------- --------- ----------- -----------
Net earnings (loss)......................... 1.0% 0.8% (0.1)% 0.5% 0.6% 0.5% 0.7%
--------- --------- --------- --------- --------- ----------- -----------
--------- --------- --------- --------- --------- ----------- -----------
</TABLE>

S-14
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

OVERVIEW

The Company generates revenue, gross margin and earnings by providing
products and services to its clients throughout the life cycle of a computer
system. These revenues, gross margin and earnings are comprised of three main
classifications; (i) computer product sales, (ii) computer services and (iii)
communication products and services and are provided through the Company's
marketing network which consists of Company-owned business centers and
independent value added resellers. Computer product sales are derived from the
sale of microcomputer systems, workstations and related products. Computer
services are derived from the sale of technology procurement services, system
integration services and system support services. Communication products and
services are derived from the sale of voice and data equipment, long distance
services and convergence technology through the Company's communications
division.

The Company recognizes revenue from computer product sales upon shipment to
its clients. Revenues from consulting and other computer services are recognized
as the Company performs the services. Revenues from maintenance and extended
warranty agreements are recognized ratably over the term of the agreement.
Extended warranty costs are accounted for on an accrual basis and are recognized
under the sales method.

RESULTS OF OPERATIONS

The following table sets forth, for the indicated periods, revenues, gross
margins and net earnings of the Company segmented by the three main
classifications.

SUMMARY OF OPERATING RESULTS
(IN THOUSANDS)

<TABLE>
<CAPTION>
TWENTY-SIX WEEKS ENDED
THIRTEEN WEEKS ENDED
FISCAL YEAR ENDED DECEMBER ---------------------- ----------------------
---------------------------------- JUNE 29, JUNE 28, JUNE 29, JUNE 28,
1994(1) 1995 1996(2) 1996 1997 1996 1997
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Computer products................... $1,680,397 $2,047,215 $2,885,019 $1,316,307 $1,657,705 $ 718,585 $ 884,952
Computer services................... 85,406 95,476 136,888 58,340 108,238 30,201 60,607
Communication products
and services...................... 34,736 57,653 80,148 37,294 47,961 21,074 26,655
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total........................... $1,800,539 $2,200,344 $3,102,055 $1,411,941 $1,813,904 $ 769,860 $ 972,214
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
Gross margin:
Computer products................... $ 113,797 $ 122,386 $ 162,651 $ 74,316 $ 92,080 $ 40,825 $ 48,076
Computer services................... 52,506 67,599 103,228 42,790 79,858 22,854 45,726
Communication products
and services...................... 7,516 13,821 17,480 8,208 10,179 4,454 5,072
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total............................... $ 173,819 $ 203,806 $ 283,359 $ 125,314 $ 182,117 $ 68,133 $ 98,874
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net earnings (loss):
Computer products................... $ (659) $ 5,418 $ 9,703 $ 4,102 $ 4,883 $ 2,545 $ 2,550
Computer services................... 2,527 5,272 7,381 2,796 5,691 1,669 3,464
Communication products
and services...................... 77 1,017 1,649 516 1,380 210 695
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total............................... $ 1,945 $ 11,707 $ 18,733 $ 7,414 $ 11,954 $ 4,424 $ 6,709
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
</TABLE>

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

(1) Gross margin and net earnings exclude the impact of non-recurring charges
recognized in the second quarter of 1994.
(2) Net earnings include the impact of non-recurring charges of $991,000 in the
fourth quarter of 1996.

S-15
<PAGE>
The following table sets forth, for the indicated periods, the percentage
mix of revenue and net earnings of the Company by the three main
classifications.

PERCENTAGE MIX OF REVENUES AND NET EARNINGS

The following table sets forth, for the indicated periods, the gross margin
percentage of the three main classifications and the consolidated gross margin
percentage.

GROSS MARGIN PERCENTAGES
<TABLE>
<CAPTION>
TWENTY-SIX WEEKS ENDED THIRTEEN
FISCAL YEAR ENDED DECEMBER WEEKS ENDED
---------------------------- -------------
------------------------------------- JUNE 29, JUNE 28, JUNE 29,
1994(1) 1995 1996(2) 1996 1997 1996
----------- ----- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gross margin:
Computer products...................... 6.8% 6.0% 5.6% 5.7% 5.6% 5.7%
Computer services...................... 61.5 70.8 75.4 73.4 73.8 75.7
Communication products
and services......................... 21.6 24.0 21.8 22.0 21.2 21.1

Consolidated gross margin................ 9.7 9.3 9.1 8.9 10.0 8.9

JUNE 28,
1997
-------------
<S> <C>
Gross margin:
Computer products...................... 5.4%
Computer services...................... 75.5
Communication products
and services......................... 19.0
Consolidated gross margin................ 10.2
</TABLE>

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

(1) Gross margin and net earnings exclude the impact of non-recurring charges
recognized in the second quarter of 1994.

(2) Net earnings include the impact of non-recurring charges of $991,000 in the
fourth quarter of 1996.

SECOND QUARTER AND FIRST SIX MONTHS OF 1997 COMPARED TO SECOND QUARTER AND FIRST
SIX MONTHS OF 1996

REVENUES. Revenues for the second quarter and first six months of 1997
increased $202.4 million or 26.3% and $402.0 million or 28.5% over the second
quarter and first six months of 1996, respectively. Revenue growth resulted
primarily from computer product sales which increased $166.4 million or 23.2%
and $341.4 million or 25.9% over the second quarter and first six months of
1996, respectively. Revenues from computer services increased $30.4 million or
100.7% and $49.9 million or 85.5% over the second quarter and first six months
of 1996, respectively. Revenues from communication products and services
increased $5.6 million or 26.5% and $10.7 million or 28.6% over the second
quarter and first six months of 1996, respectively.

Revenues increased primarily as a result of an increase in products shipped
directly to the end-user client, overall industry growth and the acquisitions
completed by the Company during 1996 and 1997. The increase in revenues related
to the acquisitions was approximately $27.5 million and $52.3 million

S-16
<PAGE>
over the second quarter and first six months of 1996, respectively. The increase
in computer product sales resulted primarily from an increase in sales through
the Company-owned business centers ($129.1 million or 39.2% and $222.2 million
or 35.9% over the second quarter and first six months of 1996, respectively) and
through an increase in sales through the independent reseller channel ($49.0
million or 12.0% and $136.1 million or 18.7% over the second quarter and first
six months of 1996, respectively).

Revenues from computer services increased as a result of increased sales
efforts for such service offerings, the inclusion of these services with
increasing computer product sales and the recent acquisitions completed by the
Company. The increase in computer services sales resulted primarily from an
increase in sales through the Company-owned business centers ($15.0 million or
65.4% and $24.8 million or 55.9% over the second quarter and first six months of
1996, respectively). The increase in computer services revenues related to
acquisitions was approximately $9.4 million and $13.4 million over the second
quarter and first six months of 1996, respectively. Revenues from communication
products and services increased as a result of broad based growth from the
communications product offerings.

GROSS MARGINS. The increase in the Company's gross margin percentages for
the first six months of 1997 versus the same period in 1996 was primarily a
result of the increase in mix of higher-margin computer services and
communications products and services versus lower-margin computer products. The
decrease in gross margin percentage for computer products resulted primarily
from a decrease in the margin percentage on computer product sales through the
Company-owned business centers and the independent reseller channel in the first
six months of 1997 versus the same period in 1996. The increase in gross margin
percentage for computer services resulted from an increase in the mix of
services to include more higher-margin systems integration services versus
support and technology procurement services. The decrease in gross margin
percentage for the communication products and services resulted from an increase
in mix of revenues to include more lower-margin communications product sales as
compared to higher-margin long distance and non-product services.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative (SG&A) expenses for the second quarter and first six months of
1997 increased $24.8 million or 44.6% and $44.8 million or 43.6% over the second
quarter and first six months of 1996, respectively. SG&A as a percentage of
revenue was 8.3% in the second quarter of 1997 versus 7.2% in the second quarter
of 1996, and 8.1% for the first six months of 1997 versus 7.3% for the first six
months of 1996. The increase in spending and the related increase in SG&A as a
percentage of revenues resulted primarily from the costs of handling the
increased services revenues. During the third quarter of 1996 the Company
continued to invest in the infrastructure by opening a center in Ontario,
California to facilitate "build-to-order" and cost-effective configuration and
delivery to the Company's clients. The Company incurred additional costs during
the second quarter and first six months of 1997 related to integrating the
acquisitions completed in the fourth quarter of 1996 and acquisitions completed
in the first and second quarters of 1997. The increase in SG&A related to
acquisitions was approximately $6.1 million and $7.5 million over the second
quarter and first six months of 1996, respectively.

INTEREST EXPENSE. Interest expense for the second quarter and first six
months of 1997 was $7.1 million and $14.2 million, respectively, versus interest
expense for the second quarter and first six months of 1996 of $5.0 million and
$9.9 million, respectively. Interest expense increased primarily due to higher
average daily borrowings. Average daily borrowings for the second quarter and
first six months of 1997 were $124.1 million and $118.3 million more than the
average borrowings for the second quarter and first six months of 1996,
respectively. The weighted average borrowing rate for the second quarter of 1997
increased approximately 6 basis points over the second quarter of 1996 and
decreased 15 basis points for the first six months of 1997 versus the first six
months of 1996. The increase in the average daily borrowings resulted primarily
from financing an increase in accounts receivable resulting from the

S-17
<PAGE>
increase in revenues, and an increase in inventory levels. The weighted average
daily borrowing interest rate increased for the second quarter of 1997 primarily
due to an increase in LIBOR rates in 1997 versus 1996. The average daily
borrowing interest rate decreased for the first six months of 1997 versus the
same period in 1996 primarily because the Company sold an additional $100
million of accounts receivable in January 1997, which as of June 28, 1997 had an
interest rate of 6.09%, and issued $55.25 million of 6% convertible subordinated
debentures in June 1996 (see "Liquidity and Capital Resources"). The funding
from the sale of $100 million in accounts receivable and the issuance of $55.25
million of convertible bonds was used to decrease the borrowings outstanding on
the inventory and working capital credit line which on June 28, 1997 had an
interest rate of 7.5%.

NET EARNINGS. Net earnings for the quarter ending June 28, 1997 increased
51.7% to $6.7 million compared with net earnings of $4.4 million for the second
quarter of 1996. Net earnings per share for the second quarter of 1997 increased
to $.52 per fully diluted share from the $.42 per fully diluted share reported
for the same period in 1996. Net earnings for the first six months of 1997
increased 61.2% to $12.0 million compared with net earnings of $7.4 million for
the first six months of 1996. Net earnings per share for the first six months of
1997 increased to $.94 per fully diluted share from the $.71 per fully diluted
share reported for the same period in 1996. Net earnings from computer services
for the quarter ending June 28, 1997 increased 107.5% to $3.5 million compared
with net earnings from computer services of $1.7 million for the same period in
1996 and constituted 51.6% in the aggregate of net earnings of the Company for
such period.

1996 COMPARED TO 1995

REVENUES. Revenues for 1996 increased $901.7 million or 41.0% to $3.1
billion when comparing the fiscal year ended December 28, 1996 with the fiscal
year ended December 30, 1995. Revenue growth resulted primarily from computer
product sales which increased $837.8 million or 40.9% during 1996. Revenues from
computer services increased $41.4 million or 43.4% over 1995. Revenues from
communication products and services increased $22.5 million or 39.0% in 1996.

Revenues increased primarily as a result of an increase in products shipped
directly to the end-user client, overall industry growth, the sale of products
to new independent resellers and the acquisitions completed by the Company-owned
business centers. The increase in revenues related to the acquisitions was
approximately $49.4 million for 1996. The increase in computer product sales
resulted from an increase in sales through the independent reseller channel
($563.5 million or 50.9% over 1995) and through an increase in sales through the
Company-owned business centers ($291.7 million or 29.4% over 1995). Revenues
from computer services increased as a result of increased sales efforts for such
service offerings and the inclusion of these services with increasing computer
product sales. Revenues from communication products and services increased as a
result of broad based growth from the communications product and service
offerings.

GROSS MARGINS. The decrease in the Company's gross margin percentage for
1996 is primarily a result of the decrease in the gross margin percentage on
computer products, which resulted primarily from a greater proportion of
lower-margin independent reseller channel sales in 1996 versus higher-margin
computer product sales in the Company-owned business centers.

The increase in gross margin percentage for computer services resulted from
an increase in the mix of services to include more higher-margin systems
integration services versus the support and technology procurement services. The
decrease in gross margin percentage for the communication products and services
resulted from an increase in mix of revenues which included more lower-margin
communications product sales as compared to the higher-margin long distance and
non-product services.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative (SG&A) expenses increased $61.9 million or 36.6% in 1996. SG&A as
a percentage of revenue was 7.5% in 1996

S-18
<PAGE>
versus 7.7% in 1995. Excluding the impact of non-recurring charges recognized in
the fourth quarter of 1996, SG&A expenses increased $60.2 million or 35.6% in
1996. SG&A as a percentage of revenue, excluding the impact of the non-recurring
charges recognized in the fourth quarter of 1996, was 7.4% in 1996 versus 7.7%
in 1995.

The increase in spending resulted primarily from the costs of handling the
increased product, services and communications revenues. The Company also
continued to invest in the infrastructure by opening a center in Ontario,
California to enable "build-to-order" configuration and delivery, during the
third quarter of 1996. The Company incurred additional costs during the year
related to integrating the current year's acquisitions. The decrease in SG&A as
a percentage of revenue resulted from leverage achieved through operational
efficiencies resulting from current and prior period investments in distribution
center automation, information systems and computer service offerings.

INTEREST EXPENSE. Interest expense for 1996 increased by $5.8 million to
$20.4 million. Interest expense increased due to higher average daily
borrowings. Average daily borrowings for 1996 were $114.4 million more than the
average borrowings during 1995. The average daily borrowing interest rate
decreased approximately 0.8 percentage points from 1995. The increase in the
average daily borrowings resulted from the Company's decision in the first
quarter of 1996 to take advantage of early pay discounts offered by some of the
Company's major vendors as well as an increase in accounts receivable and
inventory. The increase in accounts receivable is a result of an increase in
sales. The decrease in the average daily borrowing interest rate resulted from
the Company selling $100 million of accounts receivable in June 1995 and the
issuance of $55.25 million of 6% convertible subordinated debentures in June
1996 (see "Liquidity and Capital Resources").

NET EARNINGS. Net earnings for 1996 increased 60% to $18.7 million, which
includes non-recurring charges of $991,000, compared with net earnings of $11.7
million for 1995. Net earnings per share increased to $1.64 per fully diluted
share, which includes non-recurring charges of $0.09 per share, from the $1.14
per fully diluted share reported for 1995.

BUSINESS COMBINATION AND NON-RECURRING CHARGES. In December 1996, the
Company effected two business combinations accounted for as poolings of interest
transactions. The overall impact of the combinations with relation to the
financial statements taken as a whole are not material and thus prior periods
for the Company have not been restated to reflect the business combinations. The
Company recognized non-recurring charges of $991,000 related to the business
combinations during the fourth quarter of 1996. The effect of the immaterial
poolings was to increase stockholders' equity by approximately $643,000.

1995 COMPARED TO 1994

REVENUES. Computer product sales increased $366.8 million or 21.8% to $2.0
billion during 1995. Computer services increased $10.1 million or 11.8% to $95.5
million during 1995. Communications products and services revenue increased
$22.9 million or 66% to $57.7 million during 1995.

Revenues from computer product sales increased as a result of broad based
growth within both the independent reseller channel and the Company-owned
business centers. Revenues from the independent reseller channel increased as a
result of growth within the Company's existing reseller channel, an increase in
products shipped directly to the end-user and an increase in second source
revenue. Second source revenue is generated from sales to independent resellers
who are not Inacom resellers by contract. These revenues are primarily a result
of "open sourcing" pursuant to which certain manufacturers, beginning in 1994,
lessened or eliminated requirements from independent resellers to purchase
product from one source. Revenues from the Company-owned business centers
increased as a result of broad-based growth across all regional locations.
Computer services revenue increased as a

S-19
<PAGE>
result of the increase in computer product sales. Revenues from communication
products and services increased as a result of broad-based growth within the
Company's communications division.

GROSS MARGINS. Computer product margins increased $8.6 million or 7.6% to
$122.4 million during 1995 and the gross margin percentage, exclusive of
non-recurring charges recognized in the second quarter of 1994, decreased 0.8
percentage points to 6.0% in 1995. Computer services margins increased $15.1
million or 28.7% to $67.6 million during 1995 and the gross margin percentage,
exclusive of non-recurring charges recognized in the second quarter of 1994,
increased 9.3 percentage points to 70.8% in 1995. Communications product and
services margins increased $6.3 million or 83.9% to $13.8 million during 1995
and the gross margin percentage increased 2.4 percentage points to 24.0% in
1995. Computer products margin was 60.1% of total 1995 gross margin versus 65.5%
of total 1994 gross margin. Computer services gross margin was 33.2% of total
1995 gross margin versus 30.2% of total 1994 gross margin. Communications
products and services gross margin was 6.7% of total 1995 gross margin versus
4.3% of total 1994 gross margin.

The increase in gross margin dollars for computer products was a result of
the increase in revenues. The decline in gross margin percentage for computer
products was a result of market pricing pressures related to open sourcing,
which began in the independent reseller channel during the second quarter of
1994, and an overall decline in hardware margins realized on end user sales. The
increase in gross margin dollars and gross margin percentage for computer
services resulted from the increased revenues and an increase in mix of services
revenues to include more higher margin systems integration services versus the
support and technology procurement services. The increase in gross margin
dollars and gross margin percentage for the communication products and services
was a result of the increased revenues and the increase in the mix of revenues
to include more higher margin long distance and services.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative (SG&A) expenses increased $8.9 million or 5.6% to $169.3 million
in 1995. As a percentage of revenue, these expenses decreased 1.2 percentage
points from 8.9% in 1994 to 7.7% in 1995. Excluding the impact of 1994
non-recurring charges, SG&A expenses increased $10.9 million or 6.9% during
1995. SG&A as a percentage of revenue, excluding the impact of non-recurring
charges recognized in the second quarter of 1994, decreased 1.1 percentage
points during 1995.

The increase in SG&A during 1995 resulted primarily from increased spending
partially offset by an increase in market development funds earned from various
vendors and credited against SG&A. The increase in spending was primarily a
result of employee increases and contract labor expenses to support the
increasing service revenue component of the Company-owned business centers. The
increase in vendor funds earned resulted from attainment of program objectives
outlined by vendors primarily driven by higher revenues in 1995. The decrease in
SG&A as a percentage of revenue during 1995 resulted from operational
efficiencies achieved through investments in distribution center automation and
information systems.

INTEREST EXPENSE. Net interest expense for 1995 increased by $2.6 million
to $14.6 million. The increase was due primarily to the increase in the average
daily borrowing interest rate. The Company's average daily borrowing interest
rate for 1995 increased approximately 1.3 percentage points during the year
while the average daily borrowings decreased to $178.8 million in 1995 from
$201.9 million in 1994.

NET EARNINGS. For the reasons described above, the net earnings for 1995
were $11.7 million compared to a net loss of $2.3 million in 1994 which includes
non-recurring charges of $4.2 million; an increase of $14.0 million. Earnings
per share for 1995 were $1.14 compared to a loss per share of $0.22 in 1994
which includes non-recurring charges of $.41 per share.

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RECENT ACCOUNTING PRONOUNCEMENT

In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per share" which revises the calculation and presentation
provisions of Accounting Principals Board opinion 15 and related
interpretations. Statement No. 128 is effective for the Company's fiscal year
ending December 28, 1997. Retroactive application will be required. The Company
believes the adoption of Statement 128 will not have a significant effect on its
reported earnings per share.

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary sources of liquidity are provided through an inventory
and working capital financing agreement of $550.0 million (increased from $350.0
million as of June 27, 1997), convertible subordinated debentures of $55.25
million, and a revolving credit facility of $40.0 million.

The $550 million facility provided by IBM Credit Corp. can be used by the
Company at its discretion, subject to a borrowing base, for its working capital
needs and inventory purchases. The inventory and working capital financing
agreement was amended in 1997 and expires June 29, 1998. On June 28, 1997,
$338.8 million was outstanding under the inventory and working capital financing
agreement. Of this amount, $258.8 million was related to non-interest bearing
trade accounts payable. The balance of $80.0 million was related to working
capital with an interest rate of 7.5% based on three-month LIBOR. This inventory
and working capital financing agreement is secured by inventory and other
assets.

The $55.25 million 6% convertible subordinated debentures were issued in
June 1996 and are due June 15, 2006. The debentures are convertible into common
stock of the Company at a conversion price of $24.00 per share, subject to
adjustments under certain circumstances, beginning on September 19, 1996. The
debentures are not redeemable by the Company prior to June 16, 2000 and,
thereafter, the Company may redeem the debentures at various premiums to
principal amount. The debentures may also be redeemed at the option of the
holder at any time prior to June 16, 2000 if there is a Change in Control (as
defined in the indenture) at a price equal to 100% of the principal amount plus
accrued interest at the date of redemption.

The $40.0 million revolving credit facility agreement expires in February
1998. On June 28, 1997, $40.0 million was outstanding under the revolving credit
facility and the interest rate was 6.99% based on three-month LIBOR. The
revolving credit facility is secured by inventory and other assets.

The debt agreements contain certain restrictive covenants, including the
maintenance of minimum levels of working capital, tangible net worth,
limitations on incurring additional indebtedness and restrictions on the amount
of net loss the Company can incur. Certain covenants effectively limit the
amount of dividends which the Company may pay to the stockholders. The amount of
retained earnings on June 28, 1997 not restricted as to payments of cash
dividends under the most restrictive covenants in such agreements was
approximately $78.8 million. The Company was in compliance with the covenants
contained in the agreements on June 28, 1997.

Long-term debt was 21.1% of the total long-term debt and equity at June 28,
1997 versus 30.3% at June 29, 1996. The decrease was primarily a result of the
payment of $13.6 million of private placement notes previously held by
unaffiliated insurance companies and an increase in equity due to earnings and
the issuance of additional shares of common stock.

The Company has entered into an agreement to sell $200 million of accounts
receivable, with limited recourse, to an unrelated financial institution. The
agreement was initially entered into in June 1995 with respect to $100 million
of accounts receivable and was amended in January 1997 to sell an additional
$100 million of accounts receivable. New qualifying receivables are sold to the
financial institution as collections reduce previously sold receivables in order
to maintain a balance of $200 million sold receivables. On June 28, 1997, $46.6
million of additional accounts receivable were designated to offset potential
obligations under limited recourse provisions; however, historical losses on
Company

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receivables have been substantially less than such additional amount. On June
28, 1997, the interest rate was 6.09%.

The Company occasionally uses financial instruments to reduce interest rate
risk. The Company does not hold or issue financial instruments for trading
purposes. On January 17, 1997 the Company entered into a one-year interest rate
swap agreement with an unrelated financial institution which resulted in certain
floating rate interest payment obligations becoming fixed rate interest payment
obligations at 5.82%. The notional amount of the swap agreement was $100
million.

During the first six months of 1997, the Company used $44.0 million of cash
in operations. Inventory increased by $74.1 million during the first six months
with a portion of the increase offset by an increase in accounts payable of
$68.8 million. Accounts receivable also increased $55.2 million during the first
six months of 1997. Inventory increased during the first six months of 1997 as a
result of the Company taking
advantage of certain major manufacturers inventory incentive programs. Accounts
payable increased as a result of the increase in inventory levels. Accounts
receivable increased during the first six months primarily as a result of the
increase in revenues for the first six months of 1997.

The Company used $35.9 million in cash for investing activities in the first
six months of 1997. Cash of $19.8 million was used to purchase fixtures and
equipment and cash of $4.1 million was used for business combinations.

Net cash provided from financing activities for the first six months of 1997
totaled $79.2 million, of which $100.0 million was provided from the sale of
accounts receivable. The financing proceeds were used to reduce short term
borrowings of $20.8 million.

Operating activities used cash of $18.3 million in 1996 compared to $57.7
million in 1995. The primary factor contributing to the change in cash used by
operating activities was the net cash provided by inventory and accounts
payable. In 1996, inventory increased $31.8 million over 1995 with an offsetting
increase in accounts payable of $71.1 million resulting in net cash provided
from inventory and accounts payable of $39.3 million. In 1995, inventory
increased $124.3 million over 1994 with a portion of the increase financed
through an increase in accounts payable of $105.1 million resulting in net cash
used in inventory and accounts payable of $19.2 million. The increase in cash
provided by inventory and accounts payable was primarily a result of an increase
in inventory turns in addition to the Company's efforts to match accounts
payable terms more closely with inventory turns.

The net cash provided by inventory and accounts payable was primarily offset
by an increase in accounts receivable in 1996. Accounts receivable levels
increased $123.6 million due to the increased revenues.

The Company used $61.1 million in cash for investing activities in 1996.
Cash of $26.2 million was used to purchase fixtures and equipment and cash of
$23.4 million was used for business combinations (See Notes to Consolidated
Financial Statements--Business Combinations).

Net cash provided by financing for 1996 totaled $90.1 million, of which
$63.0 million was provided from notes payable and $55.25 million was provided
from the proceeds received from the sale of 6% convertible subordinated
debentures. The financing proceeds were partially offset by $30.3 million in
payments on long-term borrowings.

The Company believes the funding expected to be generated from operations
and provided by the existing credit facilities and this offering will be
sufficient to meet working capital and capital investment needs for the next
twelve months.

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BUSINESS

Inacom is a leading single source provider of information technology
products and technology management services designed to enhance the productivity
of information systems primarily for Fortune 1000 clients. The Company offers a
comprehensive range of value added services to manage the entire information
system life cycle including: (1) needs assessment and technology planning, (2)
technology procurement and configuration, (3) systems integration and systems
management, (4) ongoing systems support and distributed support, and (5) asset
management. Inacom's expertise includes the integration of voice and data
communications. Inacom sells its products and services through a marketing
network of 51 Company-owned business centers throughout the United States that
focus on serving large corporations. The Company also has a network of
approximately 1,000 value added resellers that typically have a regional,
industry, or specific product focus. The Company has international affiliations
in Europe, Asia, Central and South America, the Caribbean, Middle East, Africa,
Canada and Mexico to satisfy the technology management needs of its
multinational clients. Inacom is the largest purchaser of IBM computer products
and believes it is the second largest purchaser of Compaq computer products
worldwide.

Inacom's goals are to grow net earnings and increase economic value added to
enhance shareholder value. To achieve these goals, Inacom provides comprehensive
solutions to improve the productivity of its clients' information systems. Key
elements of the Company's strategy are: (i) to leverage client relationships to
continue expanding higher-margin services revenues, (ii) to capitalize on the
trend toward build-to-order/configure-to-order systems, (iii) to expand
offerings and geographic coverage through strategic acquisitions, and (iv) to
capitalize on the convergence of data and voice communications.

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INDUSTRY BACKGROUND

The markets for corporate information technology products and technology
management services are expected to grow at an annual rate of 18% and 15%,
respectively, and are projected to reach $44.9 billion and $26.1 billion,
respectively, in 2000 according to DataQuest, a Gartner Group company, a leading
information technology research firm. In recent years, the computer industry has
undergone a significant transformation as personal computers have replaced
traditional minicomputer and mainframe systems. The increasing use of personal
computers has led to the networking of personal computers into local area
networks (LANs), which in turn has resulted in the expansion of shared
information through wide area networks (WANs). Networks are typically comprised
of servers, personal computers, peripherals, communication devices and software.
Networks increase the speed and flexibility of distributing information and the
usefulness of such information to end-users. Achieving the optimal technology
system, however, is difficult for many businesses due to the complexity of the
distributed network environment, the fragmented sources of products and services
and the lack of trained personnel to design, deploy and support networks.

The decision-making process that businesses face when designing, selecting
and deploying information technology solutions is becoming more costly and
complex. Many businesses increasingly seek to outsource part or all of the
management and support of their information technology systems. Businesses must
select from an expanding number of product options with shortening life cycles.
Businesses seeking to implement enterprise-wide information management solutions
often must integrate diverse and incompatible hardware and software environments
which have independently evolved within their organizations. Such integration
typically requires the design of a new network, the upgrade of existing hardware
and software, and the migration to new systems. In addition, a shortage of
qualified information technology personnel has limited the ability of many
businesses to capitalize on the latest technologies. Many businesses find it
increasingly difficult and costly to maintain the internal infrastructure needed
to support their networks. As a result of these trends, the outsourcing of
computer network management has grown substantially.

These developments have created a rapidly-growing market for managing
distributed technology. Although competition has led to reduced margins in the
computer products segment of the industry, the complexity of designing,
selecting and deploying information systems has led to an increase in demand for
related higher margins technology management services. The demand for
cost-effective customized technology systems has driven a significant change in
industry delivery methods. The historical method was a "build-to-forecast"
system, in which both manufacturers and providers of computer products
maintained inventories based on forecasted client demand. Recently, a number of
manufacturers, including IBM, Compaq and Hewlett-Packard, have announced
"build-to-order" programs in which they will ship basic computer components to a
limited number of technology providers, including Inacom, based on specific
client orders, with final assembly and configuration to be performed by the
technology providers for delivery to the business client.

BUSINESS STRATEGY

Inacom's goals are to grow net earnings and increase economic value added to
enhance shareholder value. To achieve these goals Inacom provides comprehensive
solutions to improve the productivity of its clients' information systems. Key
elements of the Company's strategy are as follows.

LEVERAGE CLIENT RELATIONSHIPS TO CONTINUE EXPANDING HIGHER-MARGIN SERVICES
REVENUES. Inacom's large client base of hardware procurement clients is a
substantial source of services revenue. As businesses increasingly seek to
outsource systems management functions to fewer providers, the Company believes
it can continue to rapidly grow its services revenue. During the first six
months of 1997, computer services accounted for approximately 48% of net
earnings, compared to 38% in the comparable period one year ago. Services
revenue is generally higher margin, and tends to be more

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predictable and recurring than hardware procurement revenue making it a
particularly attractive portion of the business mix. Inacom believes that its
demonstrated ability to extend its relationships into the full life cycle of
management services provides it with a competitive advantage in the technology
management services industry. The Company also believes that the growing
outsourcing of computer technology management services along with the Company's
focus on faster growing higher-margin services will allow it to grow its
services revenues in excess of the projected industry growth rate.

CAPITALIZE ON TREND TOWARD BUILD-TO-ORDER/CONFIGURED-TO-ORDER
SYSTEMS. Businesses are demanding more efficient, cost-effective procurement
and delivery of custom-configured systems. In response to this demand for
build-to-order services, Inacom has invested $42 million to automate its three
assembly and configuration facilities. The Company believes that these
facilities are among the most sophisticated in the industry due to their
state-of-the-art infrastructure and information systems. Two of the Company's
assembly and configuration facilities have complete build-to-order capabilities
and the third assembly and configuration facility will have such capabilities by
the end of 1997. Inacom's strategy is to configure network-ready systems for its
business clients on behalf of vendors such as IBM, Compaq and Hewlett-Packard.
Inacom has been designated as a build-to-order channel participant for each of
these three major vendors.

EXPAND SERVICE OFFERINGS AND GEOGRAPHIC COVERAGE THROUGH STRATEGIC
ACQUISITIONS. Inacom continually seeks to acquire businesses which enhance its
service capabilities and allow the Company to build geographic coverage in
attractive markets. Inacom has demonstrated its ability to successfully
integrate acquired businesses, having acquired eight businesses during the past
eighteen months. These acquisitions expanded Inacom's offerings in the areas of
procurement, delivery, network integration, network consulting, asset management
and asset registry. These acquisitions also enhanced Inacom's geographic
coverage in key metropolitan markets across the United States. Management
believes that industry trends, including build-to-order, will result in further
consolidation in the highly fragmented technology management services industry.
Inacom's strategy is to use its experience in integrating acquired businesses to
take advantage of strategic acquisition opportunities as they arise.

CAPITALIZE ON CONVERGENCE OF DATA AND VOICE COMMUNICATIONS. The Company is
focusing on opportunities resulting from the convergence of voice and data
communications with computer information management systems. Inacom is
leveraging its expertise in providing computer services to assist its business
clients in integrating communications systems to allow voice/data recognition,
remote access, video conferencing, mobile communications and internet access.
Currently, Inacom provides its clients with the communications services and
products of Lucent Technologies, AT&T, Cisco Systems, 3Com and Intel. The
Company believes it is one of the nation's largest independent providers of
communications products for Lucent Technologies.

LIFE CYCLE MANAGEMENT BY THE COMPANY

As a single source provider of technology products and services, the Company
strives to help its clients optimize their information technology investments
and control ongoing costs throughout the life cycle of the clients' technology
systems. The Company combines a process improvement approach along with tools
and practices gained by experience and trained personnel to assist its clients
in managing the life cycle and costs of distributed technology.

NEEDS ASSESSMENT AND TECHNOLOGY PLANNING. Technology planning services
involve assisting clients in designing and developing standardized technology
platforms. The services include determining standard hardware technology,
application software, operating system software and networking platforms. The
Company assists its clients with the selection and standardization of
manufacturer brands (such as IBM, Compaq, Hewlett-Packard, Microsoft, Lotus and
others) and assists its clients in studying the total cost, performance and
capabilities of these brands and products.

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Technology planning services performed by the Company also include the
development of strategies for deployment of distributed technology systems
within its clients' businesses. The Company assists its clients in decisions to
lease or purchase, determining replacement cycles and centralizing acquisition
processes. To assist clients with technology planning, the Company has developed
specific products and programs such as Policy Based Management-TM-, Tactical
Enterprise Network Assessment-TM- and Enterprise Technology Blueprint-TM-.

TECHNOLOGY PROCUREMENT AND CONFIGURATION. Technology procurement and
configuration services generally involve coordinating the technology purchase
process, requisitioning technology products, processing, tracking and reporting
on the status of orders, customizing hardware and software configurations,
direct shipment and shipment tracking. The demand for cost-effective customized
technology systems has driven a significant change in industry procurement
methods including the trend toward build-to-order programs. Inacom believes that
only a limited number of technology providers will have the scale and
configuration capabilities necessary to meet these manufacturer requirements.
Compaq, IBM and Hewlett-Packard have chosen Inacom for participation in their
build-to-order programs. Inacom has invested $42 million in its state-of-the-art
assembly and delivery systems to provide build-to-order capabilities. The
facilities are strategically located in Swedesboro, New Jersey, Omaha, Nebraska,
and Ontario, California to provide prompt and cost-effective delivery
nationwide.

The Company also focuses its technology procurement services on shortening
the delivery time of technology products, improving compliance to standards in
its clients' organizations, assisting in negotiating hardware and software
agreements on behalf of its clients, and providing other services that minimize
its clients' costs. The Company provides certain clients with on-site technical
procurement specialists who assist and manage the technology procurement process
at client locations nationwide. These procurement specialists are technically
oriented and focus on process improvement and operational efficiencies in the
procurement process.

The Company believes it has a competitive advantage in providing procurement
services through the use of its automated state-of-the-art ordering systems. The
Company's Inacommerce and Inacommerce Plus-TM- software provide an easy to use
internet-based procurement management system that allows a business client to
determine real-time product availability and order status along with a custom
configurator to assist the client in designing a technology solution from its
desktop computer. The Company's VISION-TM- 2000 software also allows a business
client to determine daily product availability, custom configure and order its
technology solution. The Company's Direct Express delivery program reduces the
number of steps in the procurement process by shipping products directly to the
location selected by the business client.

SYSTEMS INTEGRATION AND SYSTEMS MANAGEMENT. The Company provides systems
integration services to its clients in an effort to assist clients in
controlling costs and gaining control of the life cycle of its distributed
technology systems. The Company has products and services available to assist,
design and support clients' WANs and LANs and to manage software procurement and
license control. In addition, the Company can provide solutions to its clients
for data storage management, technology security management, capacity planning,
data and database management, and internet and intranet connectivity, support
and management.

The Company provides systems management services that assess the current
state and future needs of a client's distributed technology network to maximize
the value of the client's investment in its networked systems. The systems
management services provided through remote management centers assist clients in
the control and reliability of LAN/WAN environments, provide a study of adequate
network speed and responsive user services and monitor the infrastructure and
system capabilities to satisfy clients' current and future needs.

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The Company employs high-end technical systems engineers and systems
consultants who perform systems integration services at client locations. These
systems engineers and systems consultants, and the project managers who
coordinate their activities, are contracted to the client for hourly rates or
for fixed-price extended contracts.

The Company has developed specific products and programs to assist its
clients in the systems management function, including Inacom Network Patrol-TM-
and Inacom Network Baseline.-TM-

ONGOING SYSTEMS SUPPORT AND DISTRIBUTED SUPPORT. The Company provides its
clients ongoing support in their distributed technology systems primarily in two
major areas: "break/fix" hardware maintenance and installation, moves, addition
and changes ("IMACs"). These functions are similar, but differ in the timing and
level of service.

The Company's break/fix hardware maintenance capabilities are supported
directly by the Company's help desk operation, HelpCentral-TM-. Centralized
break/fix hardware maintenance provides coordination, problem solving, tracking
and control of the clients' hardware maintenance needs. The Company's national
services network, comprised of over 1,500 Company technicians plus over 2,000
technicians in affiliated partner locations provides extensive coverage of
clients' distributed technology.

Similarly, the Company delivers IMAC services to its clients with the same
technician delivery infrastructure. These distributed support services are
managed through various scheduling and reporting tools that are interrelated
with the Company's VISTA-TM-, VISION-TM-, Inacommerce,-TM- and Inacommerce
Plus-TM- information systems. Additionally, the Company provides distributed
support services to its clients by providing on-site technical personnel that
may be involved in various support activities, including LAN administration,
network monitoring, general deskside support and some end-user training.

The Company also offers convergence solutions centered around wide area data
networks, computer and telephone integration, desktop video conferencing, and
wireless data communications. These services include specialized support
programs, maintenance programs and specialized software. The Company provides
communication network services with advanced digital capabilities enabling
voice, data and video communications, utilizing AT&T, Frontier and Westinghouse
networks. The Company's communications services also include long distance,
inbound 800 service, calling cards and teleconferencing featuring account codes
and enhanced billing and customized call reports which allow business clients to
restrict and track telecommunications activity.

ASSET MANAGEMENT. Asset management services are becoming increasingly
important as businesses determine what capabilities their existing technology
products have and whether, when and how to upgrade to the latest technology.
Asset management services consist of asset registration, tracking and disposal
of technology assets as they move throughout the client's organization.

The Company has developed a comprehensive program called Inacom Asset
Advantage-TM- that contains tools and process improvement techniques to assist
its clients' inventory, track and control distributed technology assets. This
program helps clients meet financial, risk management, custodial, warranty,
maintenance, service and refreshment objectives. The products, including Inacom
Asset Roll-Call,-TM- can be integrated with HelpCentral-TM- and also integrated
with the other life cycle products and programs to help lower the total
ownership cost of clients' technology. Additionally, the Company's Computer
Resources International group and Boston Computer Exchange subsidiary provide
customized asset registry, asset tracking services and disposal services to its
clients.

MARKETING NETWORK

Computer products and services are sold through a marketing network of
approximately 1,000 business centers located throughout the United States, of
which 51 are Company-owned. Communications products and services are provided
through a network of 18 direct sales offices and contractual

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relationships with approximately 160 dealers. The Company has international
affiliations in Europe, Asia, Central and South America, the Caribbean, Middle
East, Africa, Canada and Mexico to satisfy the technology management needs of
its multinational clients.

The Company's direct sales force in the Company-owned business centers
enables the Company to establish relationships with major corporate clients for
purposes of marketing the Company's technology management services.

PRODUCTS AND VENDORS

Computer products include microcomputers, workstations, servers, monitors,
printers and operating systems software. The Company currently distributes
computer products from leading vendors such as Compaq, IBM, Hewlett-Packard,
Toshiba, Lexmark, Novell, Microsoft, Oracle, 3Com, SynOptics, Cisco, Intel and
Network General. Compaq, IBM and Hewlett-Packard represented greater than 65%
and 63% of the Company's net revenues in fiscal 1996 and for the first six
months of 1997, respectively. The Company is the largest purchaser of IBM
computer products and believes it is the second largest purchaser of Compaq
computer products on a world wide basis.

Communications products and services include phone systems, voice mail,
voice processing, data network equipment, multiple small office-home office
offerings and maintenance. The Company also offers network services including
long distance, 800 service, calling cards, wide area value-added data
networking, video conferencing and cellular communications. The products of
Lucent Technologies and the services of AT&T constitute approximately 90% of the
voice and data systems sold by the Company. The Company believes it is one of
the nation's largest independent resellers of Lucent Technology business
products.

The Company has negotiated purchase arrangements, including price, delivery,
training and support, directly with most major vendors. The Company's extensive
vendor relationships allow it to offer over 35,000 products in providing
multiple-vendor solutions to meet its business client's needs. The Company's
agreements with its vendors are generally on a non-exclusive basis and may be
terminated by the vendors on notice typically ranging from 30 to 90 days.

The agreements with vendors generally contain provisions with respect to
product cost, price protection, returns and product allocations; the Company is
entitled to price protection with all major vendors on eligible products in the
Company's inventory in the event of vendor price reductions. Certain vendors
also sponsor payment programs with several financial service organizations to
facilitate product sales through the business centers. In addition, the
Company's primary vendors provide various incentives for promoting and marketing
their products which typically range from 1% to 5% of purchases. The three major
forms of vendor incentives received by the Company are co-operative funds,
market development funds and vendor rebates. Co-operative funds are earned based
upon the sale of the vendor's products and generally must be utilized to offset
the costs associated with advertising and promotion pursuant to programs
established by the respective vendor. Market development funds are earned based
upon the Company's purchases from the vendor and generally must be used for
market development activities approved by the respective vendor. Vendor rebates
are based upon the Company's attaining purchase volume targets established with
the vendor. Rebates generally can be used at the Company's discretion.

INTERNATIONAL CAPABILITIES

InaCom International, a subsidiary of the Company, has international
affiliations in Europe, Asia, Central and South America, the Caribbean, Middle
East, Africa, Canada and Mexico to satisfy the technology management needs of
its multinational clients. ICG, an affiliation of leading independent
organizations in various countries, provides pc-related products and services to
international corporate clients. Inacom's capabilities in international project
management and local resources of the affiliated

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members allow Inacom to serve the global needs of its multinational clients'
information technology projects. Inacom Latin America, a 60% owned subsidiary of
the Company, provides international logistics and configuration services in
Mexico, the Caribbean, Central and South America.

CLIENTS

The Company is not dependent for a material part of its business upon a
single or a few clients and the loss of any one client would not have a material
adverse effect on the Company's business.

EMPLOYEES

At June 28, 1997 the number of employees was 4,309, including 1,813 systems
engineers, technicians and service support employees. In addition, at June 28,
1997 the Company had contracted for the services of approximately 600 systems
engineers and consultants, and through an alliance with selected independent
resellers has access to the services of approximately 2,000 additional services
personnel. None of the employees is covered by a collective bargaining
agreement. The Company considers its relations with employees to be good.

COMPETITION

All aspects of the technology management services industry are highly
competitive. The technology management industry continues to experience a
significant amount of consolidation. In the future Inacom may face fewer but
larger and better financed competitors as a consequence of such consolida-
tion. The Company's marketing network competes for potential clients, including
national accounts, with numerous resellers and distributors. Several computer
manufacturers have expanded their channels of distribution, pricing and product
positioning and compete with the Company's marketing network for potential
clients. Other competitors operate mail-order or discount stores offering clones
of major vendor products. The Company also competes with other computer
technology providers in the recruitment and retention of franchisees and
independently-owned resellers. The Company competes in the computer services
industry with a large number of service providers, including IBM through its
Global Services division, Andersen Consulting, CompuCom, EDS, ENTEX, GE Capital
Technology Management Service, IKON Offices Solutions and Vanstar. Competition
in communication products and services is also intense, and includes entities
which are also significant vendors of the Company, such as Lucent Technologies
and AT&T. Certain competitors and manufacturers are substantially larger than
the Company and have greater financial, technical, service and marketing
resources. The Company's marketing network competes primarily on the basis of
professionalism and client contact, quality of product line, availability of
products, service, after-sale support, price, and quality of end-user training.

SERVICE MARK AND TRADEMARK

The Company holds United States service mark and trademark registrations for
the marks "Inacom", "ValCom" and "Inacomp." The Company also has certain state
registrations. The Company claims common law rights to the marks based on
adoption and use. To the Company's knowledge, there are no pending interference,
opposition or cancellation proceedings, or litigation threatened or claimed,
with respect to the marks in any jurisdiction.

GOVERNMENT REGULATION

The Company is subject to various federal, state and local laws and
regulations affecting businesses generally such as laws and regulations
concerning employment, workplace safety and protection of the environment. The
Company is also subject to federal and state laws regulating franchise
relationships which generally impose registration and/or disclosure requirements
on the Company in the offer and sale of franchises and also regulate related
advertisements. The Company believes it is in substantial compliance with all
such laws and regulations.

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MANAGEMENT

The Company's executive officers and directors are listed below, together
with their ages and offices held by them. The Company's Board of Directors
consists of nine members elected annually.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------------------- --------- ------------------------------------------------------------------------
<S> <C> <C>
Bill L. Fairfield........... 50 Director, President and Chief Executive Officer
David C. Guenthner.......... 47 Executive Vice President and Chief Financial Officer
Michael A. Steffan.......... 45 President, Distribution and Operations, and Secretary
Cris Freiwald............... 42 President and General Manager, International Division
Robert A. Schultz........... 54 Group Executive, Information Systems Group
Larry Fazzini............... 50 Vice President of Corporate Resources
George DeSola............... 50 Group Executive, Technology Service Group and President, Inacom
Communications
Jeffrey A. Hartigan......... 54 Vice President and Chief Information Officer
Steven Ross................. 39 President, Reseller Division and Corporate Marketing
Leon Kerkman................ 38 Vice President, Corporate Controller
Paul Kellenberger........... 37 Vice President of Planning and Business Development
Joseph Auerbach............. 80 Director
Mogens C. Bay............... 48 Director
James Q. Crowe.............. 48 Director
W. Grant Gregory............ 56 Director
Rick Inatome................ 43 Director
Joseph Inatome.............. 71 Director
Gary Schwendiman............ 56 Director
Linda S. Wilson............. 60 Director
</TABLE>

Bill L. Fairfield has been President, Chief Operating Officer and a director
of the Company since March 1985. He was named Chief Executive Officer in
September 1987. Mr. Fairfield serves as a director of Buckle, Inc., Norwest Bank
Nebraska, Sitel Corp. and International Computer Group (IGC) Paris.

David C. Guenthner was named Executive Vice President and Chief Financial
Officer in November 1991. Prior to November 1991, Mr. Guenthner was Senior Vice
President of Finance and Chief Financial Officer for the Company.

Michael A. Steffan was named President of Distribution and Operations in
December 1995. Mr. Steffan was responsible for the Reseller Division from
December 1994 to December 1995 in addition to his position as President of
Distribution and Operations, a position he had held since May 1993. Prior to May
1993, Mr. Steffan was Vice President of Corporate Development and Secretary for
the Company.

Cris Freiwald was named President of the International Division in November
1994. Mr. Freiwald was Vice President of Corporate Development from May 1993 to
November 1994. Prior to May 1993, Mr. Freiwald was Director of Business
Development.

Robert A. Schultz was named Group Executive of the Information Systems Group
in December 1996. Prior to December 1996, Mr. Schultz was the President and
General Manager of Direct Operations, a position he has held since April 1994,
and the President and General Manager of Client Services Division, a position he
had held from January 1993 to December 1996. Mr. Schultz was responsible for
Direct Operations and the Advanced Systems and Services Group for the Company
from August 1991 to January 1993.

Larry Fazzini was named Vice President of Corporate Resources in February
1993 when he joined the Company. Prior to February 1993, Mr. Fazzini was the
Director of Human Resources for Sears Business Centers, Inc., a distributor of
information technology products and services.

S-30
<PAGE>
George DeSola was named Group Executive of the Technology Services Group in
December 1996 in addition to his position as President of Inacom Communications,
a position he has held since he joined the Company in March 1994. Mr. DeSola was
responsible for Corporate Marketing from December 1994 to December 1996 in
addition to his position as President of Inacom Communications. Prior to March
1994, Mr. DeSola was the Vice President of Marketing and Customer Service for
MCI Communications Corp., a telecommunications company.

Jeffrey A. Hartigan was named Vice President and Chief Information Officer
in May 1995 when he joined the Company. Prior to May 1995, Mr. Hartigan was Vice
President of Information Services at Northern Telecommunications Inc. (NORTEL),
a telecommunications company.

Steven Ross was named President of the Reseller Division and Corporate
Marketing in December 1996. Prior to December 1996, Mr. Ross was the President
of the Reseller Division, a position he has held since he joined the Company in
December 1995. Mr. Ross was Vice President of Sales and Business Development at
Intelligent Electronics Inc., a distributor of information technology products,
from September 1993 to November 1995. Prior to September 1993, Mr. Ross was the
Executive Vice President of Ultimate/Allerion Corp., an international systems
integrator company.

Leon Kerkman was named Vice President and Corporate Controller in June 1993.
Prior to June 1993, Mr. Kerkman was Corporate Controller, a position he has held
since he joined the Company in 1989.

Paul Kellenberger was named Vice President of Business Development in March
1997 when he joined the Company. Mr. Kellenberger was the Vice President of
Worldwide Channels, Computer Group from January 1995 to February 1997 and the
General Manager, Canada from February 1994 to December 1994 at Motorola Inc.
Prior to February 1994, Mr. Kellenberger was the Director of Marketing, Canada
for Digital Equipment Company, an information technology products company.

Joseph Auerbach is Professor of Business Administration, Emeritus, at the
Harvard Business School. He is Counsel to the firm of Sullivan & Worcester,
Boston, Massachusetts.

Mogens C. Bay is the President and Chief Executive Officer of Valmont
Industries, Inc. He is a director of ConAgra, Inc.

James Q. Crowe is the President and Chief Executive Office of Kiewit
Diversified Group, Inc. He is a director of Peter Kiewit Sons' Inc., CalEnergy,
Inc. and C-TEC Corporation.

W. Grant Gregory is Chairman of Gregory & Hoenemeyer, Inc., New York and
serves as a director of Bozell Inc., Ambac, Inc., Ambac Indemnity Group and HCIA
Health Care Inc.

Rick Inatome is Chairman of the Board of Directors and in 1976 was the
co-founder of Inacomp Computer Centers, Inc. and its Chief Executive Officer
from 1979 to August 1991. He is a director of Atlantic Premium Brands, American
Speedy Printing Centers, Inc., Liberty BIDCO Investment Corporation, Action
Technologies, Inc., Saturn Electronic and Engineering, Inc. and Sylvan Learning
Systems, Inc.

Joseph Inatome is a co-founder of Inacomp Computer Centers, Inc., and was an
executive officer until July 1989, and director until August 1991. He is
currently a director of American Speedy Printing Centers, Inc.

Gary Schwendiman is a Professor of Management in the College of Business
Administration at the University of Nebraska-Lincoln and was Dean of the College
of Business Administration for the University of Nebraska-Lincoln from 1977 to
1994. Mr. Schwendiman serves as a director of The Gallup Organization, Inc. and
Security Mutual Life Insurance Co.

Linda S. Wilson is the President of Radcliffe College. She is a director of
Citizens Financial Group and Trustee of Massachusetts General Hospital
Corporation.

S-31
<PAGE>
LEGAL MATTERS

The validity of the Securities offered hereby have been passed upon for the
Company by McGrath, North, Mullin & Kratz, P.C., Omaha, Nebraska and for the
Underwriters by Katten Muchin & Zavis, Chicago, Illinois.

EXPERTS

The consolidated financial statements and schedule of InaCom Corp. as of
December 28, 1996 and December 30, 1995, and for each of the years in the
three-year period ended December 28, 1996, included herein and incorporated by
reference in the registration statement in reliance upon the report of KPMG Peat
Marwick LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing.

S-32
<PAGE>
INACOM CORP. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULE

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (AUDITED)

Independent Auditors' Report............................................................................. F-2

Consolidated Statements of Operations--Three-Year Period Ended December 28, 1996......................... F-3

Consolidated Balance Sheets--December 28, 1996 and December 30, 1995..................................... F-4

Consolidated Statements of Stockholders' Equity--Three-Year Period Ended December 28, 1996............... F-5

Consolidated Statements of Cash Flows--Three-Year Period Ended December 28, 1996......................... F-6

Notes to Consolidated Financial Statements--Three-Year Period Ended December 28, 1996.................... F-7

SCHEDULE--Valuation and Qualifying Accounts.............................................................. F-16

CONSOLIDATED FINANCIAL STATEMENTS FOR THE QUARTER AND SIX MONTHS ENDED JUNE 28, 1997 (UNAUDITED)

Condensed and Consolidated Balance Sheets--June 28, 1997 and December 28, 1996........................... F-17

Condensed and Consolidated Statement of Operations--Thirteen Weeks Ended June 28, 1997 and June 29, 1996
and Twenty-Six Weeks Ended June 28, 1997 and June 29, 1996............................................. F-18

Condensed and Consolidated Statement of Cash Flows--Twenty-Six Weeks Ended June 28, 1997 and June 29,
1996................................................................................................... F-19

Notes to Condensed and Consolidated Financial Statements--Twenty-Six Weeks Ended June 28, 1997........... F-20
</TABLE>

All other schedules have been omitted as the required information is
inapplicable or the information is included in the consolidated financial
statements or related notes.

F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT

The Board of Directors
InaCom Corp.:

We have audited the accompanying consolidated financial statements of InaCom
Corp. and subsidiaries as listed in the accompanying index. In connection with
our audits of the consolidated financial statements, we have also audited the
financial statement schedule as listed in the accompanying index. These
consolidated financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and financial statement
schedule based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of InaCom Corp.
and subsidiaries at December 28, 1996 and December 30, 1995, and the results of
their operations and their cash flows for each of the years in the three-year
period ended December 28, 1996, in conformity with generally accepted accounting
principles. Also in our opinion, the related financial statement schedule, when
considered in relation to the consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set forth
therein.

KPMG PEAT MARWICK LLP

Omaha, Nebraska
February 21, 1997

F-2
<PAGE>
INACOM CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE-YEAR PERIOD ENDED DECEMBER 28, 1996
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
1996 1995 1994
------------- ------------- -------------
<S> <C> <C> <C>
Revenues:
Computer products................................................. $ 2,885,019 2,047,215 1,680,397
Computer services................................................. 136,888 95,476 85,406
Communications products and services.............................. 80,148 57,653 34,736
------------- ------------- -------------
3,102,055 2,200,344 1,800,539
------------- ------------- -------------

Direct costs:
Computer products................................................. 2,722,368 1,924,829 1,571,700
Computer services................................................. 33,660 27,877 32,900
Communications products and services.............................. 62,668 43,832 27,220
------------- ------------- -------------
2,818,696 1,996,538 1,631,820
------------- ------------- -------------
Gross margin...................................................... 283,359 203,806 168,719
Selling, general and administrative expenses........................ 231,235 169,338 160,437
------------- ------------- -------------
Operating income.................................................. 52,124 34,468 8,282
Interest expense.................................................... 20,405 14,635 12,031
------------- ------------- -------------
Earnings (loss) before income taxes............................... 31,719 19,833 (3,749)
Income tax expense (benefit)........................................ 12,986 8,126 (1,493)
------------- ------------- -------------
Net earnings (loss)............................................... $ 18,733 11,707 (2,256)
------------- ------------- -------------
------------- ------------- -------------

Earnings (loss) per share:
Primary........................................................... $ 1.76 1.14 (.22)
Fully diluted..................................................... 1.64 1.14 (.22)
------------- ------------- -------------
------------- ------------- -------------

Common shares and equivalents outstanding:
Primary........................................................... 10,600 10,300 10,300
Fully diluted..................................................... 12,000 10,300 10,300
------------- ------------- -------------
------------- ------------- -------------
</TABLE>

See accompanying notes to consolidated financial statements.

F-3
<PAGE>
INACOM CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 28, 1996 AND DECEMBER 30, 1995
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
1996 1995
----------- ---------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.............................................................. $ 31,410 20,690
Accounts receivable, less allowance for doubtful accounts of $4,385 in 1996 and $3,537
in 1995.............................................................................. 288,407 160,306
Deferred income taxes.................................................................. 3,554 4,202
Inventories............................................................................ 386,592 352,948
Other current assets................................................................... 2,335 1,794
----------- ---------
Total current assets................................................................. 712,298 539,940
----------- ---------
Property and equipment, at cost.......................................................... 116,970 85,922
Less accumulated depreciation.......................................................... 57,845 44,421
----------- ---------
Net property and equipment........................................................... 59,125 41,501
----------- ---------
Other assets, net of accumulated amortization............................................ 27,531 17,831
Cost in excess of net assets of business acquired, net of accumulated amortization....... 48,646 24,966
----------- ---------
$ 847,600 624,238
----------- ---------
----------- ---------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable....................................................................... $ 406,753 331,221
Notes payable and current installments of long-term debt............................... 140,770 83,526
Income taxes payable................................................................... 3,531 384
Other current liabilities................................................................ 60,941 33,869
----------- ---------
Total current liabilities............................................................ 611,995 449,000
----------- ---------
Long-term debt, excluding current installments........................................... 55,250 23,667
Other long-term liabilities.............................................................. 73 --
Deferred income taxes.................................................................... 3,452 2,796

Stockholders' equity:
Capital stock:
Class A preferred stock of $1 par value. Authorized 1,000,000 shares; none issued.... -- --
Common stock of $.10 par value. Authorized 30,000,000 shares; issued 10,850,008
shares in 1996 and 10,040,000 in 1995.............................................. 1,085 1,004
Additional paid-in capital............................................................. 98,153 89,528
Retained earnings.................................................................... 77,607 58,874
----------- ---------
176,845 149,406
Less:
Cost of common shares in treasury of 19,989 in 1995.................................... -- (161)
Unearned restricted stock.............................................................. (15) (470)
----------- ---------
Total stockholders' equity........................................................... 176,830 148,775
----------- ---------
Commitments and contingent liabilities................................................... $ 847,600 624,238
----------- ---------
----------- ---------
</TABLE>

See accompanying notes to consolidated financial statements.

F-4
<PAGE>
INACOM CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
THREE-YEAR PERIOD ENDED DECEMBER 28, 1996
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
ADDITIONAL UNEARNED TOTAL
COMMON PAID-IN RETAINED TREASURY RESTRICTED STOCKHOLDERS'
STOCK CAPITAL EARNINGS STOCK STOCK EQUITY
----------- ----------- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 25, 1993............ $ 1,004 88,928 49,423 (2,034) (830) 136,491
Net loss................................ -- -- (2,256) -- -- (2,256)
Issuance of 3,400 treasury shares as
director compensation................. -- 11 -- 30 -- 41
Issuance of 35,253 treasury shares under
stock option plans.................... -- 209 -- 310 -- 519
Issuance of 16,800 treasury shares as
stock awards, net of forfeitures...... -- 166 -- 161 468 795
----------- ----------- ----------- ----------- --- -------------
Balance at December 31, 1994............ 1,004 89,314 47,167 (1,533) (362) 135,590
Net earnings............................ -- -- 11,707 -- -- 11,707
Issuance of 4,400 treasury shares as
director compensation................. -- (1) -- 39 -- 38
Issuance of 89,993 treasury shares under
stock option plans.................... -- 240 -- 790 -- 1,030
Issuance of 61,800 treasury shares as
stock awards, net of forfeitures...... -- (25) -- 543 (108) 410
----------- ----------- ----------- ----------- --- -------------
Balance at December 30, 1995............ 1,004 89,528 58,874 (161) (470) 148,775
Net earnings............................ -- -- 18,733 -- -- 18,733
Issuance of 691,131 shares in connection
with business combinations............ 69 6,581 -- -- -- 6,650
Issuance of 132,966 treasury and common
shares under stock option plans....... 12 1,956 -- 161 -- 2,129
Issuance of 3,400 shares as director
compensation.......................... -- 60 -- -- -- 60
Issuance of 2,500 shares as stock
awards, net of forfeitures............ -- 28 -- -- 455 483
----------- ----------- ----------- ----------- --- -------------
Balance at December 28, 1996............ $ 1,085 98,153 77,607 -- (15) 176,830
----------- ----------- ----------- ----------- --- -------------
----------- ----------- ----------- ----------- --- -------------
</TABLE>

See accompanying notes to consolidated financial statements.

F-5
<PAGE>
INACOM CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE-YEAR PERIOD ENDED DECEMBER 28, 1996
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
1996 1995 1994
------------ ---------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss)....................................................... $ 18,733 11,707 (2,256)
Adjustments to reconcile net earnings (loss) to net cash provided (used)
by operating activities:
Depreciation and amortization........................................... 21,814 19,059 19,766
Changes in assets and liabilities, net of effects from business
combinations:
Accounts receivable................................................... (123,648) (75,333) (22,496)
Inventories........................................................... (31,794) (124,296) (41,783)
Other current assets.................................................. 97 (610) 463
Accounts payable...................................................... 71,162 105,100 122,961
Other liabilities..................................................... 20,896 5,444 5,983
Income taxes.......................................................... 4,451 1,195 (2,192)
------------ ---------- ---------
Net cash provided (used) by operating activities.................... (18,289) (57,734) 80,446
------------ ---------- ---------
Cash flows from investing activities:
Additions to property and equipment....................................... (26,240) (10,346) (14,910)
Business combinations..................................................... (23,386) -- --
Payments from (advances of) notes receivable.............................. 446 (1,872) 917
Other, including advances to affiliates................................... (11,950) (1,051) (1,816)
------------ ---------- ---------
Net cash used in investing activities............................... (61,130) (13,269) (15,809)
------------ ---------- ---------
Cash flows from financing activities:
Principal payments on long-term debt...................................... (30,334) (6,667) --
Proceeds from receivables sold............................................ -- 100,000 --
Proceeds from (payments of) notes payable................................. 63,094 (13,184) (81,314)
Proceeds from long-term debt.............................................. 55,250 -- 17,000
Proceeds from the exercise of employee stock options...................... 2,129 1,030 519
------------ ---------- ---------
Net cash provided by (used in) financing activities................. 90,139 81,179 (63,795)
------------ ---------- ---------
Net increase in cash and cash equivalents................................... 10,720 10,176 842
Cash and cash equivalents, beginning of year................................ 20,690 10,514 9,672
------------ ---------- ---------
Cash and cash equivalents, end of year...................................... $ 31,410 20,690 10,514
------------ ---------- ---------
------------ ---------- ---------
</TABLE>

See accompanying notes to consolidated financial statements.

F-6
<PAGE>
INACOM CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

THREE-YEAR PERIOD ENDED DECEMBER 28, 1996
(COLUMNAR DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) ORGANIZATION

The consolidated financial statements include the accounts of InaCom Corp.
(Company) and its wholly-owned subsidiaries. The Company is a leading provider
of management technology services which include technology procurement and
distribution of microcomputer systems, workstations, networking and
telecommunications equipment, systems integration and support services. All
significant intercompany balances and transactions have been eliminated in
consolidation.

(b) ACCOUNTS RECEIVABLE

The Company entered into an agreement in June 1995 (which agreement was
amended and restated in August 1995) to sell $100 million of accounts
receivable, with limited recourse, to an unrelated financial institution. New
qualifying receivables are sold to the financial institution as collections
reduce previously sold receivables in order to maintain a balance of $100
million sold receivables. On December 28, 1996, $37.3 million of additional
accounts receivable were designated to offset potential obligations under
limited recourse provisions; however, historical losses on Company receivables
have been substantially less than such additional amount. At December 28, 1996,
the implicit interest rate on the receivable sale transaction was 5.9%. On
January 13, 1997, the agreement was amended to sell an additional $100 million
of accounts receivable.

Inventories are stated at the lower of cost (first-in, first-out) or market
and consist of computer hardware, software, voice and data equipment and related
materials.

(d) OTHER ASSETS

Other assets include vendor authorization rights and long-term notes
receivable. Vendor authorization rights are being amortized over 10 years.

(e) COST IN EXCESS OF NET ASSETS OF BUSINESS ACQUIRED

The excess of the cost over the carrying value of assets of business
acquired is being amortized over 20 years. The Company assesses the
recoverability of intangible assets by determining whether the amortization of
the asset balance over its remaining life can be recovered through undiscounted
future operating cash flows of the acquired operation. The amount of goodwill
impairment, if any, is measured based on projected discounted future operating
cash flows using a discount rate reflecting the Company's average cost of funds.

(f) DEPRECIATION

Depreciation is provided over the estimated useful lives of the respective
assets ranging from 3 to 31 years using the straight-line method.

(g) INCOME TAXES

Deferred tax assets and liabilities are recognized for the estimated future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
in

F-7
<PAGE>
INACOM CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

THREE-YEAR PERIOD ENDED DECEMBER 28, 1996
(COLUMNAR DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
effect for the year in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.

(h) EARNINGS/(LOSS) PER COMMON SHARE

Primary earnings/(loss) per share of common stock have been computed on the
basis of the weighted average number of shares of common stock outstanding after
giving effect to equivalent common shares from dilutive stock options. Fully
diluted earnings/(loss) per share further assumes the conversion of the
Company's convertible subordinated debentures for the period they were
outstanding.

(i) REVENUE AND EXPENSE RECOGNITION

The Company recognizes revenue from product sales upon shipment to the
customer. Revenues from consulting and other services are recognized as the
Company performs the services. Revenues from maintenance and extended warranty
agreements are recognized ratably over the term of the agreement. Extended
warranty costs are accounted for on an accrual basis and are recognized under
the sales method.

(j) MARKETING DEVELOPMENT FUNDS

Primary vendors of the Company provide various incentives, in cash or credit
against obligations, for promoting and marketing their product offerings. The
funds or credits received are based on the purchases or sales of the vendor's
products and are earned through performance of specific marketing programs or
upon completion of objectives outlined by the vendors. Funds or credits earned
are applied to direct costs or selling, general and administrative expenses
depending on the objectives of the program. Funds or credits from the Company's
primary vendors typically range from 1% to 3% of purchases.

(k) RISKS AND UNCERTAINTIES

Financial instruments which potentially expose the Company to a
concentration of credit risk principally consist of accounts receivable. The
Company sells product to a large number of customers in many different
industries and geographies. To minimize credit concentration risk, the Company
utilizes several financial services organizations which purchase accounts
receivable and perform ongoing credit evaluations of its customers' financial
conditions.

The Company's business is dependent in large measure upon its relationship
with key vendors since a substantial portion of the Company's revenue is derived
from the sales of the products of such key vendors. Termination of, or a
material change to the Company's agreements with these vendors, or a material
decrease in the level of marketing development programs offered by
manufacturers, or an insufficient or interrupted supply of vendors' product
would have a material adverse effect on the Company's business.

Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these

F-8
<PAGE>
INACOM CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

THREE-YEAR PERIOD ENDED DECEMBER 28, 1996
(COLUMNAR DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
consolidated financial statements in conformity with generally accepted
accounting principles. Actual results could differ from those estimates.

(l) DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts for cash and cash equivalents, accounts receivable,
accounts payable and notes payable approximate fair value because of the short
maturity of these instruments. The fair values of each of the Company's
long-term debt instruments are based on the amount of future cash flows
associated with each instrument discounted using the Company's current borrowing
rate for similar debt instruments of comparable maturity. The estimated fair
value of the Company's long-term debt at December 28, 1996 approximates book
value.

(m) CASH EQUIVALENTS

For purposes of the consolidated statements of cash flows, the Company
considers cash and temporary cash investments with a maturity of three months or
less to be cash equivalents.

2. BUSINESS COMBINATIONS

During 1996, the Company completed several acquisitions. In April 1996, the
Company acquired Technology Express, a network integrator in the Nashville,
Tennessee market for consideration of approximately $4.8 million in cash and
89,286 shares of common stock in a transaction accounted for as a purchase. The
excess purchase price over the estimated fair value of the net assets acquired
was $6.2 million and is being amortized using the straight-line method over 20
years.

In August 1996, the Company acquired Computer Access International for
consideration including approximately $7.6 million in cash and 238,209 shares of
common stock in a transaction accounted for as a purchase. The excess purchase
price over the estimated fair value of the net assets acquired was $8.0 million
and is being amortized using the straight line method over 20 years.

In December 1996, the Company acquired Gorham Clark, Inc., a network
consulting business in New York, New York for consideration of approximately
$12.0 million in cash in a transaction accounted for as a purchase. The Company
may also issue up to a maximum of 122,278 shares of common stock over the next
two years, contingent upon future results of the acquired business. The excess
purchase price over the estimated fair value of the net assets acquired was
$10.0 million and is being amortized using the straight-line method over 20
years.

In December 1996, the Company acquired all the issued and outstanding shares
of Perigee Communications Inc. of Minneapolis, Minnesota and Networks, Inc. of
Miami, Florida for 272,726 and 90,910 shares of common stock, respectively, in
transactions accounted for as "poolings of interest." The Company's consolidated
financial statements for the year ended December 28, 1996 include the fourth
fiscal quarters' activity for the acquired businesses. Prior period consolidated
financial statements were not restated as the results of operations would not
have been materially different than those previously reported by the Company.
The effect of the immaterial poolings was to increase stockholders' equity by
approximately $643,000.

F-9
<PAGE>
INACOM CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

THREE-YEAR PERIOD ENDED DECEMBER 28, 1996
(COLUMNAR DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

2. BUSINESS COMBINATIONS (CONTINUED)
If the above business combinations had occurred on December 26, 1993, the
pro forma operations of the Company would not have been materially different
than that reported in the accompanying consolidated statements of operations.

3. PROPERTY AND EQUIPMENT

A summary of property and equipment follows:

<TABLE>
<CAPTION>
1996 1995
----------- ---------
<S> <C> <C>
Land, buildings and improvements....................................... $ 13,911 10,541
Furniture, fixtures and equipment...................................... 27,875 18,392
Computer equipment..................................................... 53,239 35,340
Computer parts held for repair and exchange............................ 21,945 21,649
----------- ---------
$ 116,970 85,922
----------- ---------
----------- ---------
</TABLE>

4. INCOME TAXES

Income tax expense (benefit) consists of the following:

<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Current:
Federal...................................................... $ 10,195 6,151 487
State........................................................ 1,488 943 92
Deferred:
Federal...................................................... 1,209 897 (1,789)
State........................................................ 94 135 (283)
--------- --------- ---------
$ 12,986 8,126 (1,493)
--------- --------- ---------
--------- --------- ---------
</TABLE>

The reconciliation of the statutory Federal income tax rate and the effective
tax rate are as follows:

<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Statutory Federal income tax rate.............................. 35.0% 35.0% 34.0%
State income taxes, net of
Federal benefit.............................................. 3.2 3.6 4.7
Other........................................................ 2.8 2.4 1.1
--------- --------- ---------
41.0% 41.0% 39.8%
--------- --------- ---------
--------- --------- ---------
</TABLE>

F-10
<PAGE>
INACOM CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

THREE-YEAR PERIOD ENDED DECEMBER 28, 1996
(COLUMNAR DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

4. INCOME TAXES (CONTINUED)
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities are presented below:

<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Deferred tax assets:
Valuation reserves....................................................... $ 5,726 3,324
Accrued expenses not deducted until paid................................. 2,188 1,275
Other.................................................................... -- 2
--------- ---------
Total deferred tax assets................................................ 7,914 4,601
--------- ---------
Deferred tax liabilities:
Vendor discounts......................................................... 2,766 --
Depreciation............................................................. 4,241 2,725
Other.................................................................... 805 470
--------- ---------
Total deferred tax liabilities........................................... 7,812 3,195
--------- ---------
Net deferred tax assets.................................................. $ 102 1,406
--------- ---------
--------- ---------
</TABLE>

There was no valuation allowance for deferred tax assets at December 28, 1996 or
December 30, 1995.

5. NOTES PAYABLE AND LONG-TERM DEBT

The Company's primary sources of liquidity are provided through a working
capital financing agreement for $350.0 million, a revolving credit facility of
$40.0 million and convertible subordinated debentures of $55.25 million. The
$350.0 million working capital financing agreement, which is provided by an
unrelated financial services organization, expires June 29, 1998. At December
28, 1996, $100.8 million was outstanding under the working capital line and the
interest rate was 7.4% based on LIBOR. The working capital financing agreement
is secured by accounts receivable and inventories.

The Company entered into a revolving credit facility agreement in February
1996 with an unrelated financial institution. The $40.0 million revolving credit
facility agreement expires in February 1998. At December 28, 1996, $40.0 million
was outstanding under the revolving credit facility and the interest rate was
6.8% based on LIBOR. The revolving credit facility is secured by accounts
receivable and inventories.

The working capital financing agreement and the revolving credit facility
agreement contain certain restrictive covenants, including the maintenance of
minimum levels of working capital, tangible net worth, limitations on incurring
additional indebtedness and restrictions on the amount of net loss that the
Company can incur. The Company was in compliance with the covenants contained in
the agreements at December 28, 1996.

F-11
<PAGE>
INACOM CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

THREE-YEAR PERIOD ENDED DECEMBER 28, 1996
(COLUMNAR DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

5. NOTES PAYABLE AND LONG-TERM DEBT (CONTINUED)
A summary of long-term debt follows:

<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Private placement notes(a).............................................. $ -- 30,334
Convertible subordinated debentures(b).................................. 55,250 --
--------- ---------
Total long-term debt................................................ 55,250 30,334
Less current installments............................................... -- 6,667
--------- ---------
Long-term debt, excluding current installments...................... $ 55,250 23,667
--------- ---------
--------- ---------
</TABLE>

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

(a) The private placement notes were held by unaffiliated insurance companies.
The balances of the notes were paid in full in December 1996.

(b) In June 1996, the Company issued $55.25 million of 6.0% convertible
subordinated debentures due June 15, 2006. The debentures are convertible
into common stock of the Company at a conversion price of $24.00 per share,
subject to adjustments under certain circumstances, beginning on September
19, 1996. The debentures are not redeemable by the Company prior to June 16,
2000 and thereafter the Company may redeem the debentures at various
premiums to principal amount. The debentures may also be redeemed at the
option of the holder at any time prior to June 16, 2000 if there is a Change
in Control (as defined in the indenture) at a price equal to 100% of the
principal amount plus accrued interest at the date of redemption. The net
proceeds from the sale of the 6% debentures were used to reduce a portion of
the outstanding balance of the working capital financing agreement which
carried an interest rate at the time of the debenture sale of 7.3%.

6. CREDIT ARRANGEMENTS

The Company has floor plan agreements to take advantage of vendor financing
programs. The agreements were secured by $122.7 million of the Company's
inventory at December 28, 1996 and $111.9 million at December 30, 1995. The
Company has entered into dealer working capital financing agreements with
several financial services organizations which purchase, primarily, accounts
receivable from the Company. The Company had contingent liabilities of $1.8
million at December 28, 1996 and $7.9 million at December 30, 1995 relating to
these agreements.

7. LEASES

The Company operates in leased premises which include the general offices,
warehouse facilities and Company-owned branches. Operating lease terms range
from monthly to ten years and generally provide for renewal options. Rent
expense for operating leases was approximately $12.0 million, $9.8 million, and
$8.6 million for the three years ended December 28, 1996, respectively.

Future minimum operating lease obligations for the years 1997 through 2001
are $12.6 million, $10.6 million, $8.9 million, $6.6 million and $5.7 million,
respectively. It is anticipated that leases will be renewed or replaced as they
expire such that future lease obligations will approximate rent expense for
1996.

F-12
<PAGE>
INACOM CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

THREE-YEAR PERIOD ENDED DECEMBER 28, 1996
(COLUMNAR DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

8. EMPLOYEE RETIREMENT BENEFIT PLAN

The Company maintains a qualified savings plan under Section 401(k) of the
Internal Revenue Code (IRC) which covers substantially all full-time employees.
Annual contributions to the qualified plan, based on participant's annual pay,
are made by the Company. Participants may also elect to make contributions to
the plan. Employee contributions are matched by the Company up to limits
prescribed by the IRC. Company contributions to the plan approximated $3.3
million in 1996, $2.4 million in 1995 and $1.8 million in 1994.

The Company maintains a nonqualified savings plan for employees whose
benefits under the qualified savings plans are reduced because of limitations
under Federal tax laws. Contributions made to this plan were not material.

9. LITIGATION

The Company is involved in a limited number of legal actions. Management
believes that the ultimate resolution of all pending litigation will not have a
material adverse effect on the Company's consolidated financial statements.

10. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Interest and income taxes paid are summarized as follows:

<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Interest paid................................................ $ 19,611 14,054 12,599
Income taxes paid............................................ 8,176 6,931 890
--------- --------- ---------
--------- --------- ---------
</TABLE>

Components of cash used for acquisitions as reflected in the consolidated
statements of cash flows are summarized as follows:

<TABLE>
<CAPTION>
1996
----------
<S> <C>
Fair value of assets acquired..................................................... $ 41,965
Liabilities assumed............................................................... (11,436)
Fair value of common stock issued................................................. (7,143)
----------
Cash paid at closing, net of cash acquired........................................ $ 23,386
----------
----------
</TABLE>

11. STOCK OPTION AND AWARD PROGRAMS

The Company has two stock plans approved by the shareholders in 1994 and
1990, and a nonqualified stock option plan approved by shareholders in 1987.
Options granted under the stock plans may be either nonqualified or incentive
stock options. The option price, vesting period and term under the stock plans
and the nonqualified stock option plan are set by the Compensation Committee of
the Board of Directors of the Company. The option price may not be less than the
fair market value per share at the time the option is granted. The vesting
period of options granted typically ranges from 2 to 3 years, and the term of
any option granted may not exceed ten years. The stock plans also permit the
issuance of

F-13
<PAGE>
INACOM CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

THREE-YEAR PERIOD ENDED DECEMBER 28, 1996
(COLUMNAR DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

11. STOCK OPTION AND AWARD PROGRAMS (CONTINUED)
restricted or bonus stock awards by the Compensation Committee. At December 28,
1996, the Company had approximately 80,000 shares available for issuance
pursuant to subsequent grants under the plans.

Additional information as to shares subject to options is as follows:

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
NUMBER OF EXERCISE PRICE EXERCISE
OPTIONS PER OPTION PRICE
----------- ----------------- -----------
<S> <C> <C> <C>
Options outstanding at December 25, 1993.......... 684,000 $ 5.85 to 19.75 13.73
Granted......................................... 193,500 8.00 to 12.00 10.20
Exercised....................................... (35,000) 7.25 to 14.62 11.74
Canceled........................................ (42,000) 7.02 to 14.50 12.21
-----------

Options outstanding at December 31, 1994.......... 800,500 5.85 to 19.75 13.01
Granted......................................... 157,000 9.56 to 14.69 9.82
Exercised....................................... (90,000) 7.25 to 12.00 10.26
Canceled........................................ (68,500) 5.85 to 14.63 12.45
-----------

Options outstanding at December 30, 1995.......... 799,000 5.85 to 19.75 12.76
Granted......................................... 36,500 35.56 35.56
Exercised....................................... (133,000) 5.85 to 14.63 10.77
Canceled........................................ (21,000) 5.85 to 14.63 9.56
-----------

Options outstanding at December 28, 1996.......... 681,500 8.00 to 35.56 14.47
----------- ----------------- -----
----------- ----------------- -----

Exercisable at December 28, 1996.................. 428,000 $ 8.00 to 19.75 12.74
----------- ----------------- -----
----------- ----------------- -----
</TABLE>

The Company accounts for stock options in accordance with the provisions of
Accounting Principles Board (APB) Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO
EMPLOYEES, and related interpretations. As such, compensation expense would be
recorded on the date of grant only if the current market price of the underlying
stock exceeded the exercise price. Accordingly, the Company has not recognized
compensation expense for its options granted in 1995 and 1996. In 1996, the
Company adopted FASB Statement No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION,
which permits entities to recognize as expense over the vesting period the fair
value of all stock-based awards on the date of grant. FASB Statement No. 123
also allows entities to continue to apply the provisions of APB Opinion No. 25
and provide pro forma net earnings and earnings per share disclosures for
employee stock option grants made in 1995 and future years as if the
fair-value-based method defined in FASB Statement No. 123 had been applied. The
Company has elected to continue to apply the provisions of APB Opinion No. 25
and provide the pro forma disclosure provisions of FASB Statement No. 123.

The per share weighted-average fair value of stock options granted during
1996 and 1995 was $30.96 and $7.83, respectively, on the date of grant using the
Black Scholes option-pricing model with the following weighted-average
assumptions: 1996--expected dividend yield 0.0%, risk-free interest rate

F-14
<PAGE>
INACOM CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

THREE-YEAR PERIOD ENDED DECEMBER 28, 1996
(COLUMNAR DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

11. STOCK OPTION AND AWARD PROGRAMS (CONTINUED)
of 6.1%, expected volatility factor of 192.9%, and an expected life of 2.5
years; 1995--expected dividend yield 0.0%, risk-free interest rate of 5.7%,
expected volatility factor of 133.8%, and an expected life of 3.7 years.

Since the Company applies APB Opinion No. 25 in accounting for its plans, no
compensation cost has been recognized for its stock options in the consolidated
financial statements. Had the Company recorded compensation cost based on the
fair value at the grant date for its stock options under FASB Statement No. 123,
the Company's net earnings for 1996 and 1995 would have been reduced by
approximately 1.9% and 0.6%, respectively, and the Company's earnings per share,
fully diluted, for 1996 and 1995 would have been reduced by approximately 1.2%
and 0.9%, respectively.

Pro forma net income reflects only options granted in 1996 and 1995.
Therefore, the full impact of calculating compensation cost for stock options
under FASB Statement No. 123 is not reflected in the pro forma net earnings
amounts presented above, because compensation cost is reflected over the
options' vesting period of two and three years for the 1996 and 1995 options,
respectively. Compensation costs for options granted prior to January 1, 1995
are not considered.

F-15
<PAGE>
SCHEDULE

INACOM CORP. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
BALANCE AT CHARGED TO AMOUNTS BALANCE
BEGINNING COSTS AND WRITTEN AT END
OF PERIOD EXPENSES OFF(1) OF PERIOD
----------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
Fiscal year ended December 28, 1996--
Allowance for doubtful accounts................................ $ 3,537 1,626 778 4,385
----------- ----- ----- -----

Fiscal year ended December 30, 1995--
Allowance for doubtful accounts................................ $ 2,626 2,308 1,397 3,537
----------- ----- ----- -----

Fiscal year ended December 31, 1994--
Allowance for doubtful accounts................................ $ 2,784 1,691 1,849 2,626
----------- ----- ----- -----
</TABLE>

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

(1) The deductions from reserves are net of recoveries.

F-16
<PAGE>
INACOM CORP. AND SUBSIDIARIES

CONDENSED AND CONSOLIDATED BALANCE SHEETS

(UNAUDITED)
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
JUNE 28, DECEMBER 28,
1997 1996
----------- --------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......................................................... $ 30,720 31,410
Accounts receivable, net........................................................... 257,358 288,407
Inventories........................................................................ 464,145 386,592
Other current assets............................................................... 8,843 5,889
----------- --------------
Total current assets............................................................. 761,066 712,298
----------- --------------
Other assets, net.................................................................... 45,513 27,531
Cost in excess of net assets of business acquired, net of
accumulated amortizations.......................................................... 68,659 48,646
Property and equipment, net.......................................................... 69,674 59,125
----------- --------------
$ 944,912 847,600
----------- --------------
----------- --------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................................................... $ 479,746 406,753
Notes payable...................................................................... 120,000 140,770
Other current liabilities.......................................................... 79,451 64,472
----------- --------------
Total current liabilities........................................................ 679,197 611,995
----------- --------------
Long-term debt....................................................................... 55,250 55,250
Other long-term liabilities.......................................................... 3,453 3,525
Stockholders' equity:
Capital stock:
Class A preferred stock of $1 par value
Authorized 1,000,000 shares; none issued....................................... -- --
Common stock of $.10 par value. Authorized 30,000,000 shares;
issued 11,537,315 in 1997 and 10,850,008 shares in 1996........................ 1,153 1,085
Additional paid-in capital....................................................... 116,298 98,153
Retained earnings................................................................ 89,561 77,607
----------- --------------
207,012 176,845
Less:
Unearned restricted stock........................................................ -- (15)
----------- --------------
Total stockholders' equity....................................................... 207,012 176,830
----------- --------------
$ 944,912 847,600
----------- --------------
----------- --------------
</TABLE>

See accompanying notes to consolidated financial statements.

F-17
<PAGE>
INACOM CORP. AND SUBSIDIARIES

CONDENSED AND CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED)

(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
------------------------ TWENTY-SIX WEEKS ENDED
JUNE 28, JUNE 29, ----------------------------
1997 1996 JUNE 28, 1997 JUNE 29, 1996
----------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Computer products...................................... $ 884,952 718,585 1,657,705 1,316,307
Computer services...................................... 60,607 30,201 108,238 58,340
Communication products and services.................... 26,655 21,074 47,961 37,294
----------- ----------- ------------- -------------
Total................................................ 972,214 769,860 1,813,904 1,411,941
----------- ----------- ------------- -------------
Direct costs:
Computer products...................................... 836,876 677,760 1,565,625 1,241,991
Computer services...................................... 14,881 7,347 28,380 15,550
Communications products and services................... 21,583 16,620 37,782 29,086
----------- ----------- ------------- -------------
873,340 701,727 1,631,787 1,286,627
----------- ----------- ------------- -------------
Gross margin............................................. 98,874 68,133 182,117 125,314
Selling, general and administrative expenses............. 80,354 55,588 147,671 102,829
----------- ----------- ------------- -------------
Operating income......................................... 18,520 12,545 34,446 22,485
Interest expense......................................... 7,148 5,046 14,184 9,919
----------- ----------- ------------- -------------
Earnings before income tax............................... 11,372 7,499 20,262 12,566
Income tax expense....................................... 4,663 3,075 8,308 5,152
----------- ----------- ------------- -------------
Net earnings............................................. $ 6,709 4,424 11,954 7,414
----------- ----------- ------------- -------------
----------- ----------- ------------- -------------
Earnings per share
Primary................................................ $ .58 .43 1.04 .72
Fully diluted.......................................... $ .52 .42 .94 .71
----------- ----------- ------------- -------------
----------- ----------- ------------- -------------
Common shares and equivalents outstanding
Primary................................................ 11,600 10,300 11,500 10,300
Fully diluted.......................................... 13,900 10,700 13,800 10,500
----------- ----------- ------------- -------------
----------- ----------- ------------- -------------
</TABLE>

See accompanying notes to consolidated financial statements.

F-18
<PAGE>
INACOM CORP. AND SUBSIDIARIES

CONDENSED AND CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
TWENTY-SIX WEEKS ENDED
-----------------------
JUNE 28, JUNE 29,
1997 1996
----------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings.......................................................................... $ 11,954 7,414
Adjustments to reconcile net earnings to net cash used in operating activities:
Depreciation and amortization....................................................... 14,256 9,720
Increase in accounts receivable..................................................... (55,200) (41,182)
(Increase) decrease in inventories.................................................. (74,070) 48,585
Increase in other current assets.................................................... (2,599) (395)
Increase (decrease) in accounts payable............................................. 68,840 (69,691)
(Decrease) increase in other long-term liabilities.................................. (83) 226
(Decrease) increase in other current liabilities.................................... (7,107) 13,219
----------- ----------
Net cash used in operating activities............................................. (44,009) (32,104)
----------- ----------
Cash flows from investing activities:
Additions to property and equipment................................................... (19,836) (10,016)
Proceeds from notes receivable........................................................ 100 1,605
Business combinations................................................................. (4,100) --
Increase in other assets.............................................................. (12,085) (10,472)
----------- ----------
Net cash used in investing activities............................................. (35,921) (18,883)
----------- ----------
Cash flows from financing activities:
Proceeds from receivables sold........................................................ 100,000 --
(Payments of) proceeds from short-term debt........................................... (20,770) 5,741
Payments of long-term debt............................................................ -- (6,667)
Proceeds from sale of convertible subordinated debentures............................. -- 55,250
Proceeds from exercise of stock options............................................... 10 808
----------- ----------
Net cash provided by financing activities......................................... 79,240 55,132
----------- ----------
Net (decrease) increase in cash and cash equivalents.................................. (690) 4,145
Cash and cash equivalents, beginning of the period...................................... 31,410 20,690
----------- ----------
Cash and cash equivalents, end of the period............................................ $ 30,720 24,835
----------- ----------
----------- ----------
</TABLE>

See accompanying notes to consolidated financial statements.

F-19
<PAGE>
INACOM CORP. AND SUBSIDIARIES

NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS

The condensed and consolidated financial statements are unaudited and
reflect all adjustments (consisting only of normal recurring adjustments) which
are, in the opinion of management, necessary for a fair presentation of the
financial position and operating results for the interim periods. The condensed
and consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto contained in the Company's
Annual Report to Stockholders incorporated by reference in the Company's Annual
Report on Form 10-K for the fiscal year ended December 28, 1996. The results of
operations for the thirteen and twenty-six weeks ended June 28, 1997 are not
necessarily indicative of the results for the entire fiscal year ending December
27, 1997.

2. ACCOUNTS RECEIVABLE

The Company has entered into an agreement to sell $200 million of accounts
receivable, with limited recourse, to an unrelated financial institution. The
agreement was initially entered into in June 1995 with respect to $100 million
of accounts receivable and was amended in January 1997 to sell an additional
$100 million of accounts receivable. New qualifying receivables are sold to the
financial institution as collections reduce previously sold receivables in order
to maintain a balance of $200 million sold receivables. On June 27, 1997, $46.6
million of additional accounts receivable were designated to offset potential
obligations under limited recourse provisions; however, historical losses on
Company receivables have been substantially less than such additional amount. On
June 28, 1997, the interest rate was 6.09%.

3. INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out method) or
market and consist of computer hardware, software, voice and data equipment and
related materials.

4. EARNINGS PER COMMON SHARE

Primary earnings per share of common stock have been computed on the basis
of the weighted average number of shares of common stock outstanding after
giving effect to equivalent common shares from dilutive stock options. Fully
diluted earnings per share further assumes the conversion of the Company's
convertible subordinated debentures for the period they were outstanding.

5. MARKETING DEVELOPMENT FUNDS

F-20
<PAGE>
INACOM CORP. AND SUBSIDIARIES

NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

6. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

For purposes of the condensed and consolidated statement of cash flows, the
Company considers cash and cash investments with a maturity of three months or
less to be cash equivalents.

Interest and income taxes paid are summarized as follows (dollars in
thousands):

<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Interest paid........................................................... $ 14,310 $ 9,924
Income taxes paid....................................................... 7,574 1,126
--------- ---------
--------- ---------
</TABLE>

F-21
<PAGE>
UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, Inacom
has agreed to sell to each of the Underwriters named below, and each of such
Underwriters, for whom Goldman, Sachs & Co., J.P. Morgan Securities Inc. and
PaineWebber Incorporated are acting as representatives, has severally agreed to
purchase from Inacom, the respective number of shares of Common Stock set forth
opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
UNDERWRITER COMMON STOCK
- ----------------------------------------------------------------------------- ---------------
<S> <C>
Goldman, Sachs & Co.......................................................... 734,000
J.P. Morgan Securities Inc................................................... 734,000
PaineWebber Incorporated..................................................... 734,000
Robert W. Baird & Co. Incorporated........................................... 34,500
Bear, Stearns & Co. Inc...................................................... 82,500
Dain Bosworth Incorporated................................................... 34,500
Deutsche Morgan Grenfell Inc................................................. 82,500
SBC Warburg Dillon Read Inc.................................................. 82,500
Donaldson, Lufkin & Jenrette Securities Corporation.......................... 82,500
A.G. Edwards & Sons, Inc..................................................... 82,500
Kirkpatrick, Pettis, Smith, Polian Inc....................................... 34,500
Lazard Freres & Co. LLC...................................................... 82,500
Lehman Brothers Inc.......................................................... 82,500
Piper Jaffray Inc............................................................ 34,500
The Robinson-Humphrey Company, LLC........................................... 82,500
---------------
Total.................................................................... 3,000,000
---------------
---------------
</TABLE>

Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the shares of Common Stock
offered hereby, if any are taken.

The Underwriters propose to offer the shares of Common Stock in part
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus Supplement and in part to certain securities
dealers at such price less a concession of $.92 per share. The Underwriters may
allow, and such dealers may reallow, a concession not in excess of $.10 per
share to certain brokers and dealers. After the shares of Common Stock are
released for sale to the public, the offering price and other selling terms may
from time to time be varied by the representatives.

Inacom has granted the Underwriters an option exercisable for 30 days after
the date of this Prospectus Supplement to purchase up to an aggregate of 450,000
additional shares of Common Stock solely to cover over-allotments, if any. If
the Underwriters exercise their over-allotment option, the Underwriters have
severally agreed, subject to certain conditions, to purchase approximately the
same percentage thereof which the number of shares to be purchased by each of
them, as shown in the foregoing table, bears to the 3,000,000 shares of Common
Stock offered hereby.

Inacom and its directors and executive officers have agreed during the
period beginning from the date of this Prospectus Supplement and continuing to
and including the date 90 days after the date of this Prospectus Supplement, not
to offer, sell, contract to sell or otherwise dispose of any shares of Common
Stock or any securities of Inacom that are substantially similar to the shares
of the Common Stock, or any other security convertible into or exchangeable for,
or that represent the right to receive, shares of Common Stock or any such
similar securities, except for (i) shares of Common Stock issuable pursuant to
convertible debt securities, warrants and stock options outstanding on the date
of this Prospectus Supplement, (ii) shares of Common Stock (or securities
convertible or exchangeable in to

U-1
<PAGE>
Common Stock) to be issued solely in connection with acquisitions, (iii) the
Debentures offered in the concurrent Debenture offering and (iv) the shares of
Common Stock offered in this offering without the prior written consent of the
Underwriters. The Company has agreed to give Goldman, Sachs & Co. prompt notice
of any issuance of Common Stock in private placements in connection with
acquisitions and not to register such Common Stock for sale or resale during the
period beginning from the date of this Prospectus Supplement and continuing to
and including the date 90 days after the date of this Prospectus Supplement.

In connection with this offering, the Underwriters may purchase and sell
Common Stock in the open market. These transactions may include over-allotment
and stabilizing transactions and purchases to cover syndicate short positions in
connection with this offering. Stabilizing transactions consist of certain bids
or purchases for the purpose of preventing or retarding a decline in the market
price of the Common Stock; and syndicate short positions involve the sale by the
Underwriters of a greater number of shares of Common Stock than they are
required to purchase from the Company in this offering. The Underwriters also
may impose a penalty bid, whereby selling concessions allowed to syndicate
members or other broker-dealers in respect of the shares of Common Stock sold in
this offering for their account, may be reclaimed by the syndicate if such
shares of Common Stock are repurchased by the syndicate in stabilizing or
covering transactions. These activities may stabilize, maintain or otherwise
affect the market price of the Common Stock, which may be higher than the price
that might otherwise prevail in the open market; and these activities, if
commenced, may be discontinued at any time. These transactions may be effected
on the NYSE or otherwise.

Inacom has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.

U-2
<PAGE>
$300,000,000
INACOM CORP.

DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK

InaCom Corp. ("InaCom" or the "Company") may from time to time offer (i)
debt securities ("Debt Securities") consisting of debentures, notes and/or other
evidences of indebtedness, in one or more series, (ii) shares of preferred
stock, par value $1.00 per share ("Preferred Stock"), in one or more series, or
(iii) shares of common stock, par value $.10 per share ("Common Stock"), or any
combination of the foregoing, at an aggregate initial offering price not to
exceed $300,000,000, at prices and on terms to be determined at or prior to the
time of the sale. The Debt Securities, Preferred Stock and Common Stock are
collectively referred to herein as "Securities."

Specific terms of the Securities in respect of which this Prospectus is
being delivered will be set forth in an accompanying Prospectus Supplement (the
"Prospectus Supplement"), together with the terms of the offering of such
Securities and the initial price and the net proceeds to the Company from their
sale. Without limiting the foregoing, the Prospectus Supplement will set forth
the following: (i) in the case of Debt Securities, the specific designation,
aggregate principal amount, ranking as senior debt or subordinated debt,
authorized denomination, maturity, rate or method of calculation of interest and
dates for payment thereof, nature and terms of any security, any
exchangeability, conversion, redemption, prepayment or sinking fund provisions,
additional covenants or events of default, tax consequences, and the currency or
currencies or currency unit or currency units in which principal, premium, if
any, or interest, if any, is payable; (ii) in the case of Preferred Stock, the
designation, number of shares, liquidation preference per share, dividend rate
(or method of calculation thereof), dates on which dividends, if any, shall be
payable and from which dividends shall accrue, voting rights, if any, any
redemption or sinking fund provisions, and any conversion or exchange rights;
and (iii) in the case of Common Stock, the number of shares.

The Common Stock is listed on the New York Stock Exchange under the symbol
"ICO". Any Common Stock sold pursuant to a Prospectus Supplement will be listed
on the New York Stock Exchange, subject to official notice of issuance. The
Company has not yet determined whether any of the Debt Securities or Preferred
Stock offered hereby will be listed on any exchange or over-the-counter market.
If the Company decides to seek listing of any such Securities, the Prospectus
Supplement relating thereto will disclose such exchange or market.

The Company may sell the Securities directly, through agents, underwriters
or dealers, as designated from time to time, or through a combination of any
such methods. See "Plan of Distribution." If any agents of the Company or any
underwriters or dealers are involved in the sale of the Securities, the names of
such agents, underwriters or dealers and any applicable commissions and
discounts will be set forth in the Prospectus Supplement.

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

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

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

The date of this Prospectus is October 29, 1997.
<PAGE>
AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the Commission's regional offices at 7 World Trade
Center, New York, New York 10048 and 500 West Madison Street, Chicago, Illinois
60661-2511. Copies of such material also can be obtained at prescribed rates by
writing to the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. Reports and other information concerning the
Company can also be inspected at the office of the New York Stock Exchange, 20
Broad Street, New York, New York 10005. The Commission maintains a World Wide
Web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission.
The address of the site is http://www.sec.gov.

The Company has filed a registration statement on Form S-3 (together with
all amendments and exhibits filed or to be filed in connection therewith, the
"Registration Statement") under the Securities Act of 1933 (the "Securities
Act") with respect to the Securities offered hereby. This Prospectus does not
contain all the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. The Registration Statement may be inspected and copied at the public
reference facilities maintained at the addresses set forth in the preceding
paragraph. Statements contained or incorporated by reference herein concerning
the provisions of documents are necessarily summaries of such documents, and
each statement is qualified in its entirety by reference to the copy of the
applicable document filed with the Commission.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed by the Company with the Commission pursuant to
the Exchange Act are hereby incorporated by reference: (i) Annual Report on Form
10-K for the fiscal year ended December 28, 1996, (ii) Quarterly Reports on Form
10-Q for the quarters ended March 29, 1997 and June 28, 1997, (iii) Proxy
Statement for the Annual Meeting of Stockholders held on April 22, 1997 and (iv)
the description of the Common Stock contained in the Company's Registration
Statement on Form 8-A filed on August 26, 1997 pursuant to Section 12 of the
Exchange Act and all amendments thereto and reports filed for the purposes of
updating such description.

All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Securities shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which is
or is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.

The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of such person, a copy of any and all of the documents
incorporated herein by reference (not including the exhibits to such documents,
unless such exhibits are specifically incorporated by reference in such
documents). Requests for such copies should be directed to David C. Guenthner,
Chief Financial Officer, InaCom Corp., 10810 Farnam Drive, Omaha, Nebraska
68154, Telephone: (402) 392-3900.

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

2
<PAGE>
THE COMPANY

InaCom is a leading single source provider of information technology
products and technology management services designed to enhance the productivity
of information systems, primarily for Fortune 1000 clients. The Company offers a
comprehensive range of value added services to manage the entire information
system life cycle including: (1) needs assessment and technology planning, (2)
technology procurement and configuration, (3) systems integration and systems
management, (4) ongoing systems support and distributed support, and (5) asset
management. InaCom's expertise includes the integration of voice and data
communications. InaCom sells its products and services through a marketing
network of 51 Company-owned business centers throughout the United States that
focus on serving large corporations. The Company also has a network of
approximately 1,000 value added resellers that typically have a regional,
industry, or specific product focus. The Company has international affiliations
in Europe, Asia, Central and South America, the Caribbean, Middle East, Africa,
Canada and Mexico to satisfy the technology management needs of its
multinational clients.

The Company's headquarters are located at 10810 Farnam Drive, Omaha,
Nebraska 68154, and its telephone number is (402) 392-3900.

USE OF PROCEEDS

The Company currently anticipates that net proceeds from the sale of
Securities would be used for general corporate purposes, including, but not
limited to payments of outstanding indebtedness, working capital, capital
expenditures, investments and acquisitions. When Securities are offered, the
Prospectus Supplement related thereto will set forth the Company's intended use
for the net proceeds received from the sale of such Securities.

RATIO OF EARNINGS TO FIXED CHARGES

The following table sets forth the ratios of earnings to fixed charges for
the Company for the periods indicated. There were no shares of Preferred Stock
issued or outstanding during the periods indicated below and therefore the
combined ratio of earnings to fixed charges and preferred dividends would have
been the same as set forth below.
<TABLE>
<CAPTION>
TWENTY-SIX WEEKS
FISCAL YEAR ENDED DECEMBER ENDED
----------------------------------------------------- -----------------
1992 1993 1994 1995 1996 JUNE 29, 1996
--------- --------- --------- --------- --------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges............. 2.85 2.80 0.75x 2.11 2.30 2.07

JUNE 28, 1997
-----------------
<S> <C>
Ratio of earnings to fixed charges............. 2.20
</TABLE>

The ratio of earnings to fixed charges has been computed by dividing
earnings available for fixed charges (income before interest expense, interest
income and income taxes plus fixed charges) by fixed charges. Fixed charges
consist of interest expense (including amortization of deferred financing costs)
and the portion of rental expense that is representative of the interest factor.
For the fiscal year ended December 31, 1994, earnings were insufficient to cover
fixed charges by $3.8 million; for such fiscal year the Company incurred
non-recurring charges of $7.1 million; exclusive of such charges, the ratio of
earnings to fixed charges was 1.23.

3
<PAGE>
DESCRIPTION OF DEBT SECURITIES

The following description of the Debt Securities sets forth certain general
terms and provisions of the Debt Securities to which any Prospectus Supplement
may relate ("Offered Debt Securities"). The particular terms of the Offered Debt
Securities and the extent to which such general provisions may apply will be
described in the Prospectus Supplement relating to such Offered Debt Securities.

The Debt Securities will be general obligations of the Company, and each
series of Offered Debt Securities will constitute either senior debt securities
or subordinated debt securities. In the case of senior debt securities ("Senior
Debt Securities"), the Debt Securities will be issued under an indenture dated
September 30, 1997 (the "Senior Indenture") between the Company and Norwest Bank
Minnesota, National Association as trustee. In the case of subordinated debt
securities ("Subordinated Debt Securities"), the Debt Securities will be issued
under an indenture dated September 30, 1997 (the "Subordinated Indenture")
between the Company and Norwest Bank Minnesota, National Association as trustee.
The Senior Indenture and the Subordinated Indenture are sometimes hereinafter
referred to herein individually as an "Indenture" and collectively as the
"Indentures." The trustee under each Indenture (and any successor thereto under
each Indenture) is referred to herein as the "Trustee." The statements under
this caption relating to the Debt Securities and the Indentures are summaries
only and do not purport to be complete. Such summaries make use of terms defined
in the Indentures. Wherever such terms are used herein or particular provisions
of the Indentures are referred to, such terms or provisions, as the case may be,
are incorporated by reference as part of the statements made herein, and such
statements are qualified in their entirety by such reference. Copies of the
Senior Indenture and the Subordinated Indenture have been filed as exhibits to
the Registration Statement, of which this Prospectus is a part.

PROVISIONS APPLICABLE TO BOTH SENIOR AND SUBORDINATED DEBT SECURITIES

GENERAL

The Indentures do not limit the aggregate principal amount of Debt
Securities which can be issued thereunder and provide that Debt Securities may
be issued thereunder from time to time in one or more series, each in an
aggregate principal amount authorized by the Company prior to issuance. The
applicable Prospectus Supplement will set forth any limitations on the amount of
other indebtedness or securities which may be issued by the Company.

Reference is made to the Prospectus Supplement relating to the particular
series of Debt Securities offered thereby for the following terms of the Offered
Debt Securities: (i) the title and aggregate principal amount; (ii) the maturity
date or dates; (iii) the interest rate or rates (which may be fixed or variable)
per annum, if any, or the method of determining such rate or rates; (iv) the
date or dates from which such interest, if any, will accrue and the date or
dates on which such interest, if any, will be payable, the date on which payment
of such interest, if any, will commence and the record dates for determining
interest payments, if any; (v) the terms for redemption or early payment, if
any, including any mandatory or optional sinking fund or analogous provision;
(vi) whether such Offered Debt Securities will be secured or unsecured and, if
secured, the nature and terms of the security; (vii) the terms for conversion or
exchange, if any; (viii) the classification as Senior Debt Securities or
Subordinated Debt Securities; (ix) in the case of Offered Debt Securities
offered to foreign investors, whether such Offered Debt Securities will be
issued in fully registered form or in bearer form or any combination thereof;
(x) whether such Offered Debt Securities will be issued in the form of one or
more global securities and whether such global securities are to be issuable in
temporary global form or permanent global form; (xi) if other than U.S. dollars,
the currency or currencies or currency unit or units in which such Offered Debt
Securities will be denominated and in which the principal of, and premium, if
any, and interest, if any, thereon will be payable; (xii) whether, and the terms
and conditions on which, the Company or a holder may elect that, or the other
circumstances under which, payment of principal of, or premium, if any, or
interest, if any, is

4
<PAGE>
to be made in a currency or currencies or currency unit or units other than that
in which such Offered Debt Securities are denominated; (xiii) any Events of
Default (as defined below) with respect to the Offered Debt Securities if not
otherwise set forth under "Events of Default" below; (xiv) any additions to, or
changes in, the covenants which apply to the Offered Debt Securities; (xv) a
summary of the tax consequences to holders under United States laws of owning
the Offered Debt Securities, including the possible imposition of withholding
taxes; (xvi) the securities exchange or market, if any, on which the Offered
Debt Securities will be listed; and (xvii) any other specific terms of the
Offered Debt Securities.

Offered Debt Securities may be sold at a discount (which may be substantial)
below their stated principal amount or bear no interest or interest at a rate
which at the time of issuance is below market rates, or both.

No service charge will be made to any holder for any registration of
transfer or exchange of the Offered Debt Securities, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.

If any of the Offered Debt Securities are sold for any foreign currency or
currency unit or if the principal of, or premium, if any, or interest, if any,
on any of the Offered Debt Securities is payable in any foreign currency or
currency unit, the restrictions, elections, tax consequences, specific terms and
other information with respect to such Offered Debt Securities and such foreign
currency or currency unit will be set forth in the Prospectus Supplement
relating thereto.

EVENTS OF DEFAULT

Unless otherwise provided in the Prospectus Supplement with respect to any
series of Offered Debt Securities, the following are "Events of Default" under
each Indenture with respect to each series of Debt Securities issued under such
Indenture: (a) failure for 30 days to pay any interest on any Debt Security of
such series when due; (b) failure to pay principal of (or premium, if any, on)
any Debt Security of such series when due; (c) failure for 60 days to deposit
any mandatory sinking fund payment, when due, in respect of the Debt Securities
of such series; (d) failure for 90 days after written notice as provided in the
Indenture to perform any other covenant of the Company in the Indenture (other
than covenants described in clauses (a), (b) or (c) above); (e) failure to pay
when due any payment on, or the acceleration of, Indebtedness (as defined below)
under any mortgages, indentures (including the Indenture) or instruments under
which the Company may have issued, or under which there may have been secured or
evidenced, any indebtedness for money borrowed by the Company aggregating in
excess of $5 million, if such Indebtedness is not discharged or such
acceleration is not annulled within 30 days after written notice as provided in
the Indenture; (f) certain events of bankruptcy, insolvency or reorganization;
and (g) any other Event of Default as may be specified in the Prospectus
Supplement with respect to the Offered Debt Securities. If an Event of Default
with respect to any outstanding series of Debt Securities occurs and is
continuing, either the Trustee or the holders of at least 25% in principal
amount of the outstanding Debt Securities of such series (in the case of an
Event of Default described in clause (a), (b), (c) or (d) above) or at least 25%
in principal amount of all outstanding Debt Securities under the applicable
Indenture (in the case of other Events of Default) may declare the principal
amount and all accrued but unpaid interest of all the Debt Securities of the
applicable series (or of all outstanding Debt Securities under the applicable
Indenture, as the case may be) to be due and payable immediately. At any time
after a declaration of acceleration with respect to Debt Securities of any
series (or of all outstanding Debt Securities under the applicable Indenture, as
the case may be) has been made, but before a judgment or decree for payment of
money has been obtained, the holders of a majority in principal amount of the
outstanding Debt Securities of such series (or of all outstanding Debt
Securities under the applicable Indenture, as the case may be) may, under
certain circumstances, rescind and annul such acceleration. Depending on the
terms of other Indebtedness of the Company outstanding from time to time, an
Event of Default under an Indenture may give rise to cross defaults on such
other indebtedness of the Company.

5
<PAGE>
Each Indenture provides that the Trustee will, within 90 days after the
occurrence of a default in respect of any series of Debt Securities, give to the
holders of the Debt Securities of such series notice of all unsecured and
unwaived defaults known to it; provided, however, that except in the case of a
default in the payment of the principal of, or premium, if any, or interest, if
any, on or any sinking fund installment with respect to, any Debt Securities of
such series, the Trustee will be protected in withholding such notice if it in
good faith determines that the withholding of such notice is in the best
interest of the holders of the Debt Securities of such series. For the purpose
of this provision, "default" with respect to Debt Securities of any series means
any event which is, or after notice or lapse of time or both would become, an
Event of Default with respect to the Debt Securities of such series.

The holders of a majority in principal amount of the outstanding Debt
Securities of any series (or, in certain cases, all outstanding Debt Securities
under the applicable Indenture) have the right, subject to certain limitations,
to direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee with respect to the Debt Securities of such series (or of all
outstanding Debt Securities under the applicable Indenture). Each Indenture
provides that in case an Event of Default shall occur and be continuing, the
Trustee shall exercise such of its rights and powers under the applicable
Indenture and use the same degree of care and skill in its exercise as a prudent
person would exercise or use under the circumstances in the conduct of his own
affairs. Subject to such provisions, the Trustee will be under no obligation to
exercise any of its rights or powers under the applicable Indenture at the
request of any of the holders of the Debt Securities unless they shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request.

The holders of a majority in principal amount of the outstanding Debt
Securities of any series (or, in certain cases, all outstanding Debt Securities
under the applicable Indenture) may, on behalf of the holders of all Debt
Securities of such series (or of all outstanding Debt Securities under the
applicable Indenture), waive any past default under the applicable Indenture,
except a default in the payment of the principal of, or premium, if any, or
interest, if any, on, any Debt Security of such series (or of all outstanding
Debt Securities under the applicable Indenture) or in respect of a provision
which under the applicable Indenture cannot be modified or amended without the
consent of the holder of each outstanding Debt Security affected. The holders of
a majority in principal amount of the outstanding Debt Securities affected
thereby may, on behalf of the holders of all such Debt Securities, waive
compliance by the Company with certain restrictive provisions of the Indentures.

The Company is required to furnish to the Trustee annually a statement as to
the performance by the Company of certain of its obligations under each
Indenture and as to any default in such performance.

MODIFICATION OF INDENTURES

The Company and the Trustee may, with the consent of the holders of a
majority in principal amount of all series of outstanding Debt Securities under
the Indenture affected thereby, enter into supplemental indentures for the
purpose of amending or modifying, in any manner, provisions of such Indenture or
any supplemental indenture modifying the rights of holders of such series of
Debt Securities; provided, however, that no such supplemental indenture, without
the consent of the holder of each outstanding Debt Security affected thereby,
shall, among other things, (a) change the stated maturity date of the principal
of, or any installment of interest on, any Debt Security, (b) reduce the
principal amount of, or the premium, if any, or interest, if any, on any Debt
Security, (c) change the place or currency or currencies or currency unit or
units of payments of principal of, or premium, if any, or interest, if any, on,
any Debt Security, (d) impair the right to institute suit for the enforcement of
any payment on or with respect to any Debt Securities, or (e) reduce the
percentage in principal amount of outstanding Debt Securities the consent of
whose holders is required for execution of any such supplemental indenture or
for waiver of compliance with certain provisions of such Indenture or for waiver
of certain defaults.

6
<PAGE>
Each Indenture provides that the Company and the Trustee may, without the
consent of any holders of Debt Securities, enter into supplemental indentures
for the purposes, among other things, of (a) adding to the Company's covenants,
(b) adding additional Events of Default, (c) establishing the form or terms of
Debt Securities or (d) curing ambiguities or inconsistencies in the applicable
Indenture, any supplemental indenture or in the Debt Securities of any series,
provided such action to cure ambiguities or inconsistencies shall not adversely
affect the interests of the holders of the Debt Securities in any material
respect.

CONSOLIDATION, MERGER AND SALE OF ASSETS

The Company may not consolidate with or merge into, or convey transfer or
lease its assets substantially as an entirety to, any person, unless (a) the
person formed by such consolidation or into which the Company is merged or which
acquires or leases the assets of the Company substantially as an entirety is a
corporation, partnership, limited liability company or trust organized under the
laws of any United States jurisdiction, (b) the person formed by such
consolidation or into which the Company is merged or which acquires or leases
the assets of the Company substantially as an entirety assumes by supplemental
indenture the Company's obligations in respect of the Debt Securities and under
the Indentures, (c) after giving effect to the transaction, no Event of Default,
and no event which, after notice or lapse of time or both, would become an Event
of Default, shall have occurred and be continuing, and (d) certain other
conditions are met. Upon compliance with these provisions by a successor person,
the Company will (except in the case of a lease) be relieved of its obligations
under the Indentures and the Debt Securities.

OTHER COVENANTS

The Prospectus Supplement relating to the Offered Debt Securities will
describe other specific affirmative and negative covenants, if any, from which
the Offered Debt Securities will benefit. The Company may covenant, among other
things, to deliver to holders of the Offered Debt Securities reports filed by
the Company pursuant to the Exchange Act and to execute additional instruments
necessary to fulfill its obligations under the Indenture and the Offered Debt
Securities. Each Indenture or indenture supplement thereto may also impose
restrictions on indebtedness, guarantees, issuance of preferred stock, liens,
investments, acquisitions, dividend payments and/or transactions with
affiliates. Unless otherwise indicated in a Prospectus Supplement, the Debt
Securities will not benefit from any covenant or other provision that would
afford holders of such Debt Securities special protection in the event of a
highly leveraged transaction or change of control involving the Company.

DISCHARGE AND DEFEASANCE

The Company may satisfy and discharge its obligations under each Indenture,
other than its obligation to pay the principal of, and premium, if any, and
interest, if any, on, the Debt Securities of any series and certain other
obligations, if it (i) irrevocably deposits or causes to be irrevocably
deposited with the Trustee as trust funds, an amount, in money or U.S.
government obligations maturing as to principal and interest, sufficient to pay
the principal of, and premium, if any, and interest, if any, on, and any
mandatory sinking funds in respect of, all outstanding Debt Securities of such
series on the stated maturity date of such payments or on any redemption date
and (ii) complies with any additional conditions specified to be applicable with
respect to the covenant defeasance of Debt Securities of such series.

7
<PAGE>
The terms of any series of Debt Securities may also provide for legal
defeasance pursuant to each Indenture. In such case, if the Company (i)
irrevocably deposits or causes to be irrevocably deposited money or U.S.
government obligations as described above, (ii) makes a request to the Trustee
to be discharged from its obligations on the Debt Securities of such series, and
(iii) complies with any additional conditions specified to be applicable with
respect to legal defeasance of Debt Securities of such series, the Company shall
be deemed to have paid and discharged the entire indebtedness on all the
outstanding Debt Securities of such series, and the obligations of the Company
under the applicable Indenture and the Debt Securities of such series to pay the
principal of, and premium, if any, and interest, if any, on, the Debt Securities
of such series shall cease, terminate and be completely discharged, and the
holders thereof shall thereafter be entitled only to payment out of the money or
U.S. government obligations so deposited with the Trustee, unless the Company's
obligations are revived and reinstated because the Trustee is unable to apply
such trust fund by reason of any legal proceeding, order or judgment.

FORM, EXCHANGE, REGISTRATION AND TRANSFER

Each Debt Security will be represented by either a global security (a
"Global Debt Security") registered in the name of The Depository Trust Company
(the "Depositary") or a nominee of the Depositary (each such Debt Security
represented by a Global Debt Security being herein referred to as a "Book-Entry
Debt Security") or a certificate issued in definitive registered form (a
"Certificated Debt Security"), as set forth in the applicable Prospectus
Supplement. Except as set forth below, Book-Entry Debt Securities will not be
issuable in certificated form.

Certificated Debt Securities may be transferred or exchanged at the
Trustee's office or paying agencies in accordance with the terms of the
Indenture. No service charge will be made to any holder for any transfer or
exchange of Certificated Debt Securities, but the Company may require payment of
a sum sufficient to cover any tax or other governmental charge payable in
connection therewith. Certificated Debt Securities will not be exchangeable for
Book-Entry Debt Securities.

The transfer of Certificated Debt Securities and the right to the principal
of, and premium, if any, and interest, if any, on, such Certificated Debt
Securities may be effected only by surrender of the old certificate representing
such Certificated Debt Securities and either reissuance by the Company or the
Trustee of the old certificate to the new holder or the issuance by the Company
or the Trustee of a new certificate to the new holder.

Each Global Debt Security representing Book-Entry Debt Securities will be
deposited with, or on behalf of, the Depositary and registered in the name of
the Depositary or a nominee of the Depositary. Except as set forth below,
Book-Entry Debt Securities will not be exchangeable for Certificated Debt
Securities and will not otherwise be issuable as Certificated Debt Securities.

Ownership of beneficial interests in Book-Entry Debt Securities will be
limited to persons that have accounts with the Depositary for the related Global
Debt Security ("Participants") or persons that may hold interests through
Participants. Upon deposit of a Global Debt Security, the Depositary will
credit, on its book-entry registration and transfer system, the Participants'
accounts with the respective principal amounts of the Book-Entry Debt Securities
represented by such Global Debt Security beneficially owned by such
Participants. The accounts to be credited shall be designated by any dealers,
underwriters or agents participating in the distribution of such Book-Entry Debt
Securities. Ownership of Book-Entry Debt Securities will be shown on, and the
transfer of such ownership interests will be effected only through, records
maintained by the Depositary for the related Global Debt Security (with respect
to interests of Participants) and on the records of Participants (with respect
to interests of persons holding through Participants). The laws of some states
may require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such limits and such laws may impair the ability
to own, transfer or pledge beneficial interests in Book-Entry Debt Securities.

8
<PAGE>
So long as the Depositary for a Global Debt Security, or its nominee, is the
registered owner of such Global Debt Security, the Depositary or such nominee,
as the case may be, will be considered the sole owner or holder of the
Book-Entry Debt Securities represented by such Global Debt Security for all
purposes under the Indenture. Except as set forth below, owners of beneficial
interests in Book-Entry Debt Securities will not be entitled to have such
securities registered in their names, will not receive or be entitled to receive
physical delivery of a certificate in definitive form representing such
securities and will not be considered the owners or holders thereof under the
Indenture for any purpose, including with respect to the giving of any
directions, approvals or instructions to the Trustee thereunder. As a result,
the ability of a person having a beneficial interest in Book-Entry Debt
Securities represented by a Global Debt Security to pledge such interest to
persons or entities that do not participate in the Depositary's system, or to
otherwise take actions with respect to such interest, may be affected by the
lack of a physical certificate evidencing such interest. Accordingly, each
person owning Book-Entry Debt Securities must rely on the procedures of the
Depositary for the related Global Debt Security and, if such person is not a
Participant, on the procedures of the Participant through which such person owns
its interest, to exercise any rights of a holder under the Indenture.

The Company understands that, under existing industry practice, if the
Company requests any action of holders, or an owner of a beneficial interest in
a Global Debt Security desires to give any notice or take any action a holder is
entitled to give or take under the Indenture, the Depositary will authorize the
Participants on whose behalf it holds a Global Debt Security to give such notice
or take such action, and Participants will authorize beneficial owners owning
through such Participant to give such notice or take such action or will
otherwise act upon the instructions of beneficial owners owning through them.
The Indentures provide that the Company, the Trustee and their respective agents
will treat as the holder of a Debt Security the persons specified in a written
statement of the Depositary with respect to such Global Debt Security for
purposes of obtaining any consents or directions required to be given by holders
of the Debt Securities pursuant to the Indentures.

Payments of principal of, and premium, if any, and interest, if any, on,
Book-Entry Debt Securities will be made by the Trustee to the Depositary or its
nominee, as the case may be, as the registered holder of the related Global Debt
Security. Under the terms of the Indentures, the Company and the Trustee may
treat the persons in whose names the Offered Debt Securities, including the
Global Debt Security, are registered as the owners thereof for the purpose of
receiving such payments and for any and all other purposes whatsoever.
Consequently, none of the Company, the Trustee or any other agent of the Company
or any agent of the Trust will have any responsibility or liability for any
aspect of the records relating to, or payments made on account of any beneficial
ownership interest in, such Global Debt Security or for maintaining, supervising
or reviewing any records relating to such beneficial ownership interests.

The Company expects that the Depositary, upon receipt of any payment of
principal of, or premium, if any, or interest, if any, on a Global Debt
Security, will immediately credit Participants' accounts with payments in
amounts proportionate to the respective amounts of Book-Entry Debt Securities
held by each such Participant as shown on the records of such Depositary. The
Company also expects that payments by Participants to owners of beneficial
interests in Book-Entry Debt Securities held through such Participants will be
governed by standing customer instructions and customary practices, as is now
the case with the securities held for the accounts of customers in bearer form
or registered in "street name," and will be the responsibility of the
Participants.

If (i) the Depositary is at any time unwilling or unable to continue as
Depositary or ceases to be a clearing agency registered under the Exchange Act,
and a successor depositary registered as a clearing agency under the Exchange
Act is not appointed by the Company within 90 days, (ii) the Company, at its
option, notifies the Trustee that it elects to cause the issuance of
Certificated Debt Securities under an Indenture, or (iii) there shall be an
Event of Default with respect to the Debt Securities represented by the Global
Debt Security, then, upon surrender by the Depositary of the Global Debt
Security, Certificated

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Debt Securities will be issued to each person that the Depositary identifies as
the beneficial owner of the Book-Entry Debt Securities represented by the Global
Debt Security.

Neither the Company nor the Trustee shall be liable for any delay by the
Depositary or any Participant or any person that may hold interests through a
Participant in identifying the beneficial owners of the Book-Entry Debt
Securities, and the Company and the Trustee may conclusively rely on, and shall
be protected in relying on, instructions from the Depositary for all purposes
(including with respect to the registration and delivery, and the respective
principal amounts, of the Book-Entry Debt Securities to be issued).

The foregoing information in this section concerning the Depositary and the
Depositary's book-entry system has been obtained from sources that the Company
believes to be reliable. The Company takes no responsibility for the accuracy of
such information or the performance by the Depositary or its Participants of
their respective obligations as described hereunder or under the rules and
procedures governing their respective operations.

Each Indenture requires that payments in respect to the Book-Entry Debt
Securities represented by a Global Debt Security (including principal, premium,
if any, and interest, if any) be made by wire transfer of immediately available
funds to the accounts specified by the Depositary. With respect to Offered Debt
Securities represented by Certificated Debt Securities, the Company will make
all payments of principal, premium, if any, and interest, if any, by mailing a
check to each such holder's registered address.

THE TRUSTEE

Each Indenture contains certain limitations on the right of the Trustee, as
a creditor of the Company, to obtain payment of claims in certain cases and to
realize on certain property received with respect to any such claims, as
security or otherwise. The Trustee is permitted to engage in other transactions,
except that if it acquires any conflicting interest (as defined), it must
eliminate such conflict or resign. The Trustee may also be a trustee under other
indentures of the Company under which outstanding senior or subordinated debt
securities of the Company have been issued.

Norwest Bank Minnesota, National Association is the Trustee under each
Indenture and is one of a number of banks with which Inacom maintains banking
relationships.

PROVISIONS APPLICABLE SOLELY TO SENIOR DEBT SECURITIES

Senior Debt Securities will be issued under the Senior Indenture and will
rank PARI PASSU with all other Senior Indebtedness (as defined below) of the
Company.

PROVISIONS APPLICABLE SOLELY TO SUBORDINATED DEBT SECURITIES

GENERAL

Subordinated Debt Securities will be issued under the Subordinated Indenture
and will rank PARI PASSU with certain other subordinated debt of the Company
that may be outstanding from time to time and junior to all Senior Indebtedness
(as defined below) of the Company (including any Senior Debt Securities) that
may be outstanding from time to time.

SUBORDINATION

The payment of the principal of, and premium, if any, and interest, if any,
on the Subordinated Debt Securities is expressly subordinated, to the extent and
in the manner set forth in the Subordinated Indenture, in right of payment to
the prior payment in full of all Senior Indebtedness of the Company.

In the event of any dissolution or winding up or total or partial
liquidation or reorganization of the Company, whether in bankruptcy,
reorganization, insolvency, receivership or similar proceeding, the

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holders of Senior Indebtedness will be entitled to receive payment in full of
all amounts due or to become due on or in respect of all Senior Indebtedness
before the holders of the Subordinated Debt Securities are entitled to receive
any payment on account of principal of, or premium, if any, or interest, if any,
on, the Subordinated Debt Securities.

Except as provided pursuant to a supplemental indenture or a board
resolution of the Company, no payment in respect of the Debentures will be made
if, at the time of such payment, there exists a default in payment of all or any
portion of any Senior Indebtedness, and such default has not been cured or
waived in writing or the benefits of this sentence waived in writing by or on
behalf of the holders of such Senior Indebtedness. In addition, during the
continuation of any event of default (other than a default referred to in the
immediately preceding sentence) with respect to any Senior Indebtedness
permitting the holders to accelerate the maturity thereof and upon written
notice thereof given to the Trustee, with a copy to the Company, by any holder
of such Senior Indebtedness or its representative, then, unless and until such
an event of default has been cured or waived or has ceased to exist, no payment
will be made by the Company with respect to the principal of or interest on the
Debentures or to acquire any of the Debentures or on account of the redemption
provisions for the Debentures; PROVIDED, HOWEVER, that if the holders of the
Senior Indebtedness to which the default relates have not declared such Senior
indebtedness to be immediately due and payable within 90 days after the
occurrence of such default (or have declared such Senior Indebtedness to be
immediately due and payable and within such period rescind such declaration of
acceleration), then the Company will resume making any and all required payments
in respect of the Debentures (including any missed payments). Only one payment
blockage period under the immediately preceding sentence may be commenced within
any consecutive 270-day period with respect to the Debentures. No event of
default which existed or was continuing on the date of the commencement of any
90-day payment blockage period with respect to the Senior Indebtedness
initiating such payment blockage period will be made the basis for the
commencement of a second payment blockage period by a holder or representative
of such Senior Indebtedness whether or not within a period of 270 consecutive
days unless such event of default has been cured or waived for a period of not
less than 90 consecutive days (and, in the case of any such waiver, no payment
will be made by the Company to the holders of Senior Indebtedness in connection
with such waiver other than amounts due pursuant to the terms of the Senior
Indebtedness as in effect at the time of such default).

The term "Senior Indebtedness" is defined in the Indenture as Indebtedness
(as defined below) of the Company outstanding at any time except Indebtedness
that by its terms is subordinate in right of payment to the Subordinated Debt
Securities or Indebtedness that is not otherwise senior in right of payment to
the Subordinated Debt Securities. Senior Indebtedness does not include
Indebtedness of the Company to any of its subsidiaries. Indebtedness is defined
with respect to any person as the principal of, and premium, if any, and
interest on (a) all indebtedness of such person for borrowed money (including
all indebtedness evidenced by notes, bonds, debentures or other securities sold
by such person for money), (b) all indebtedness incurred by such person in the
acquisition (whether by way of purchase, merger, consolidation or otherwise and
whether by such person or another person) of any business, real property or
other assets (except assets acquired in the ordinary course of the conduct of
the acquiror's usual business), (c) guarantees by such person of indebtedness
described in clause (a) or (b) of any other person, (d) all renewals,
extensions, refundings, deferrals, restructurings, amendments and modifications
of any such indebtedness, obligation or guarantee, (e) all reimbursement
obligations of such person with respect to letters of credit, bankers'
acceptances or similar facilities issued for the account of such person, (f) all
capital lease obligations of such person, and (g) all net obligations of such
person under interest rate swap or similar agreements of such person. There are
no restrictions in the Subordinated Indenture upon the creation of additional
Senior Indebtedness by the Company, or on the creation of any indebtedness by
the Company or any of its subsidiaries.

If Subordinated Debt Securities are issued under the Subordinated Indenture,
the aggregate principal amount of Senior Indebtedness outstanding as of a recent
date will be set forth in the applicable

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Prospectus Supplement. The applicable Prospectus Supplement will also set forth
any limitation on the issuance by the Company of any additional Senior
Indebtedness.

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 30,000,000 shares of
Common Stock, par value $.10 per share, and 1,000,000 shares of Preferred Stock,
par value $1.00 per share. As of September 26, 1997, there were 11,566,707
shares of Common Stock outstanding and no shares of Preferred Stock outstanding.

On June 15, 1996, InaCom issued $55,250,000 in aggregate principal amount of
its 6% Convertible Subordinated Debentures due June 15, 2006 (the "Debentures").
The Debentures are convertible at the option of the holder into Common Stock at
a conversion price of $24.00 per share; an aggregate of 2,302,084 shares of
Common Stock would be issued if all Debentures were converted into Common Stock.

COMMON STOCK

Holders of outstanding Common Stock are entitled to such dividends as may be
declared by the Company Board of Directors out of the assets legally available
for that purpose, and are entitled to one vote per share on all matters
submitted to a vote of the stockholders of the Company. The holders of shares of
Common Stock do not have cumulative voting rights. Therefore, the holders of
more than 50% of the Common Stock voting for the election of directors can elect
all the directors, and the remaining holders will not be able to elect any
directors. The holders of Common Stock have no pre-emptive or other subscription
rights, and there are no conversion or redemption or sinking fund provisions
with respect to such shares.

All of the outstanding shares of Common Stock will be, when issued upon
conversion of the Debt Securities, duly authorized, validly issued, fully paid
and nonassessable.

PREFERRED STOCK

The Company Board of Directors is authorized to issue up to 1,000,000 shares
of Preferred Stock in one or more series, from time to time, with such
designations, preferences and relative, participating, optional or other special
rights, and qualifications, limitations and restrictions thereof, as may be
provided in a resolution or resolutions adopted by the Company Board of
Directors. The authority of the Company Board of Directors includes, but is not
limited to, the determination or fixing of the following with respect to shares
of such class or any series thereof: (i) the number of shares; (ii) the dividend
rate and the date from which dividends are to be cumulative; (iii) whether
shares are to be redeemable and, if so, the terms and amount of any sinking fund
providing for the purchase or redemption of such shares; (iv) whether shares
shall be convertible, and, if so, the terms and provisions thereof; (v) what
restrictions are to apply, if any, on the issue or reissue of any additional
Preferred Stock; and (vi) whether such shares have voting rights. Shares of
Preferred Stock may be issued with a preference over the Common Stock as to the
payment of dividends. No shares of Preferred Stock have been issued.

The description of Preferred Stock herein and the description of the terms
of a particular series of Preferred Stock that will be set forth in a Prospectus
Supplement do not purport to be complete and are qualified in their entirety by
reference to the certificate of designation, preferences and rights relating to
such series.

Classes of stock such as the Preferred Stock may be used, in certain
circumstances, to create voting impediments on extraordinary corporate
transactions or to frustrate persons seeking to effect a merger or otherwise to
gain control of the Company. For the foregoing reasons, any shares of Preferred

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<PAGE>
Stock issued by the Company could have an adverse effect on the rights of the
holders of the Common Stock. The Company has no present plans to issue any
shares of Preferred Stock.

LIQUIDATION AND OTHER RIGHTS

Upon liquidation, the holders of Common Stock are entitled to share ratably
in assets available for distribution to stockholders after satisfaction of any
liquidation preferences of any outstanding preferred stock. The issuance of any
shares of series of Preferred Stock in future financings, acquisitions or
otherwise may result in dilution of voting power and relative equity interest of
the holders of shares of Common Stock and will subject the Common Stock to any
prior dividend and liquidation rights of the outstanding shares of the series of
Preferred Stock.

ADVANCE NOTICE REQUIREMENTS IN CONNECTION WITH STOCKHOLDER MEETINGS

The Company bylaws establish an advance notice procedure for bringing
business before an annual meeting of stockholders and for nominating (other than
by or at the direction of the Board of Directors) candidates for election as
directors at a meeting of stockholders. To be timely, notice of business to be
brought before an annual meeting or nominations of candidates for election of
directors at a meeting must be received by the Secretary of the Company not less
than 60 nor more than 90 days prior to the meeting. In the event that less than
40 days' notice or prior public disclosure of the date is given or made to the
stockholders, notice by the stockholder must be received no later than the tenth
day following the date on which notice of the date of the meeting was mailed or
public disclosure thereof was made.

SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW

Section 203 of the General Corporation Law of the Delaware prohibits a
publicly-held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years after the date of
the transaction in which the person became an interested stockholder, unless
upon consummation of such transaction the interested stockholder owned 85% of
the voting stock of the corporation outstanding at the time the transaction
commenced or unless the business combination is, or the transaction in which
such person became an interested stockholder was, approved in a prescribed
manner. A "business combination" includes a merger, an asset sale and any other
transaction resulting in a financial benefit to the interested stockholder. An
"interested stockholder" is a person who, together with affiliates and
associates, owns 15% or more of the corporation's voting stock.

TRANSFER AGENT

The transfer agent for the Common Stock is The First Chicago Trust Company
of New York.

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PLAN OF DISTRIBUTION

The Company may offer the Securities directly to purchasers, to or through
underwriters, through dealers or agents or through a combination of any such
methods. Any such underwriter(s), dealer(s) or agent(s) involved in the offer
and sale of the Securities in respect of which this Prospectus is delivered will
be named in a Prospectus Supplement. The Prospectus Supplement with respect to
such Securities also will set forth the terms of the offering of such
Securities, including the purchase price of such Securities and the proceeds to
the Company from such sale, any underwriting discounts and other items
constituting underwriters' compensation, any initial public offering price and
any discounts or concessions allowed or reallowed or paid to dealers and any
securities exchanges or markets on which such Securities may be listed.

If underwriters are used in an offering of Securities, the Company will
execute an underwriting agreement with such underwriters, and the name of each
underwriter and the terms of the transaction, including any underwriting
discounts and other items constituting compensation of the underwriters and
dealers, if any, will be set forth in the Prospectus Supplement relating to such
offering, and, if an underwriting syndicate is used, the managing underwriter or
underwriters will be set forth on the cover of such Prospectus Supplement. Such
Securities will be acquired by the underwriters for their own accounts and may
be resold from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. Any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers may be changed from time to
time.

If a dealer is used in an offering of Securities, the Company will sell such
Securities to the dealer, as principal. The dealer then may resell such
Securities to the public at varying prices to be determined by such dealer at
the time of resale. The name of the dealer and the terms of the transaction will
be set forth in the Prospectus Supplement relating thereto.

If an agent is used in an offering of Securities, the agent will be named,
and the terms of the agency will be set forth, in the Prospectus Supplement
relating thereto. Unless otherwise indicated in such Prospectus Supplement, an
agent will act on a best efforts basis for the period of its appointment.

Dealers and agents named in a Prospectus Supplement may be deemed to be
underwriters (within the meaning of the Securities Act) of the Securities
described therein. Underwriters, dealers and agents, under underwriting
agreements and other agreements which may be entered into with the Company, may
be entitled to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act.

Offers to purchase Securities may be solicited, and sales thereof may be
made, by the Company directly to institutional investors or others, who may be
deemed to be underwriters within the meaning of the Securities Act with respect
to any resales thereof. The terms of any such offer will be set forth in the
Prospectus Supplement relating thereto.

If so indicated in the Prospectus Supplement, the Company will authorize
underwriters, dealers or other agents of the Company to solicit offers by
certain institutional investors to purchase Securities from the Company pursuant
to contracts providing for payment and delivery at a future date. Institutional
investors with which such contracts may be made include commercial and savings
banks, insurance companies, pension funds, investment companies, educational and
charitable institutions and others, but in all cases such purchasers must be
approved by the Company. The obligations of any purchaser under any such
contract will not be subject to any conditions except that (i) the purchase of
the Securities shall not at the time of delivery be prohibited under the laws of
any jurisdiction to which such purchaser is subject and (ii) if the Securities
also are being sold to underwriters, the Company shall have sold to such
underwriters the Securities not subject to delayed delivery. Underwriters and
other agents will not have any responsibility in respect of the validity or
performance of such contracts.

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<PAGE>
The anticipated date of delivery of the Securities will be set forth in the
Prospectus Supplement relating to each applicable offering.

There can be no assurance that a secondary market will be created for the
Debt Securities or the Preferred Stock or, if it is created, that it will
continue.

Certain underwriters, dealers or agents and their associates may engage in
transactions with, and perform services for, the Company in the ordinary course
of business, including refinancing of the Company's indebtedness.

To facilitate an offering of a series of Securities, certain persons
participating in the offering may engage in transactions that stabilize,
maintain or otherwise affect the price of the Securities. This may include
over-allotments or short sales of the Securities, which involves the sale by
persons participating in the offering of more Securities than have been sold to
them by the Company. In such circumstances, such persons would cover such
over-allotments or short positions by purchasing in the open market or by
exercising the over-allotment option granted to such persons. In addition, such
persons may stabilize or maintain the price of the Securities by bidding for or
purchasing Securities in the open market or by imposing penalty bids, whereby
selling concessions allowed to dealers participating in any such offering may be
reclaimed if Securities sold by them are repurchased in connection with
stabilization transactions. The effect of these transactions may be to stabilize
or maintain the market price of the Securities at a level above that which might
otherwise prevail in the open market. Such transactions, if commenced, may be
discontinued at any time.

LEGAL MATTERS

The validity of the Securities offered hereby will be passed upon for the
Company by McGrath, North, Mullin & Kratz, P.C., Omaha, Nebraska 68102.

EXPERTS

The consolidated financial statements and schedule of InaCom Corp. as of
December 28, 1996 and December 30, 1995, and for each of the years in the
three-year period ended December 28, 1996, have been incorporated by reference
herein and in the registration statement in reliance upon the report of KPMG
Peat Marwick LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.

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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES, OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES, IN ANY CIRCUMSTANCE IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.

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TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT
Prospectus Summary........................................................ S-3
Risk Factors.............................................................. S-8
Use of Proceeds........................................................... S-11
Price Range of Company Stock and Dividend Policy.......................... S-12
Capitalization............................................................ S-13
Selected Consolidated Financial Data...................................... S-14
Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. S-15
Business.................................................................. S-23
Management................................................................ S-30
Legal Matters............................................................. S-32
Experts................................................................... S-32
Index to Consolidated Financial
Statements and Financial Statement Schedule............................... F-1
Underwriting.............................................................. U-1
PROSPECTUS
Available Information..................................................... 2
Incorporation of Certain Documents By Reference........................... 2
The Company............................................................... 3
Use of Proceeds........................................................... 3
Ratios of Earnings to Fixed Charges....................................... 3
Description of Debt Securities............................................ 4
Description of Capital Stock.............................................. 12
Plan of Distribution...................................................... 14
Legal Matters............................................................. 15
Experts................................................................... 15
</TABLE>

3,000,000 SHARES

[LOGO]

COMMON STOCK

(PAR VALUE $.10 PER SHARE)

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PROSPECTUS SUPPLEMENT

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GOLDMAN, SACHS & CO.

J.P. MORGAN & CO.

PAINEWEBBER INCORPORATED

REPRESENTATIVES OF THE UNDERWRITERS

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