SEC Filing | Ingram Micro

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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

PROSPECTUS (Subject to Completion)

Issued September 9, 1996

20,000,000 Shares

[INGRAM MICRO LOGO]

CLASS A COMMON STOCK

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

OF THE 20,000,000 SHARES OF CLASS A COMMON STOCK (THE "COMMON STOCK") OFFERED
HEREBY, 4,000,000 SHARES ARE BEING OFFERED INITIALLY OUTSIDE THE UNITED STATES
AND CANADA BY THE INTERNATIONAL UNDERWRITERS, AND 16,000,000 SHARES ARE BEING
OFFERED INITIALLY IN THE UNITED STATES AND CANADA BY THE U.S. UNDERWRITERS.
SEE "UNDERWRITERS." UP TO 2,300,000 OF THE SHARES OF COMMON STOCK OFFERED
HEREBY ARE BEING RESERVED FOR SALE TO CERTAIN INDIVIDUALS AND INGRAM
INDUSTRIES INC. SEE "EMPLOYEE AND PRIORITY OFFERS." ALL SUCH SHARES ARE
BEING OFFERED ON THE SAME TERMS AND CONDITIONS AS THE SHARES BEING
OFFERED TO THE PUBLIC GENERALLY, AND ANY PURCHASERS OF SUCH SHARES WHO
ARE AFFILIATES OF THE COMPANY WILL REPRESENT THAT ANY PURCHASES ARE
BEING MADE FOR INVESTMENT PURPOSES ONLY. ALL OF THE SHARES OF
COMMON STOCK OFFERED HEREBY ARE BEING ISSUED AND SOLD BY THE
COMPANY. PRIOR TO THIS OFFERING, THERE HAS BEEN NO PUBLIC MARKET
FOR THE COMMON STOCK OF THE COMPANY. IT IS CURRENTLY ESTIMATED
THAT THE INITIAL PUBLIC OFFERING PRICE WILL BE BETWEEN $14 AND
$16 PER SHARE. SEE "UNDERWRITERS" FOR A DISCUSSION OF THE FACTORS
TO BE CONSIDERED IN DETERMINING THE INITIAL PUBLIC OFFERING
PRICE. THE COMPANY HAS TWO CLASSES OF AUTHORIZED COMMON STOCK,
THE COMMON STOCK OFFERED HEREBY AND THE CLASS B COMMON STOCK
(THE "CLASS B COMMON STOCK," AND COLLECTIVELY WITH THE COMMON
STOCK, THE "COMMON EQUITY"). THE RIGHTS OF HOLDERS OF COMMON
STOCK AND CLASS B COMMON STOCK ARE IDENTICAL EXCEPT FOR
VOTING AND CONVERSION RIGHTS AND RESTRICTIONS ON
TRANSFERABILITY. HOLDERS OF THE COMMON STOCK ARE
ENTITLED TO ONE VOTE PER SHARE, AND HOLDERS OF THE
CLASS B COMMON STOCK ARE ENTITLED TO TEN VOTES PER
SHARE ON MOST MATTERS SUBJECT TO STOCKHOLDER VOTE.
UPON THE CLOSING OF THIS OFFERING, THE INGRAM FAMILY
STOCKHOLDERS (AS DEFINED HEREIN) WILL HAVE
APPROXIMATELY 80.7% OF THE COMBINED VOTING POWER
OF THE COMMON EQUITY (80.5% IF THE U.S.
UNDERWRITERS EXERCISE THEIR OVER-ALLOTMENT
OPTION IN FULL). THE COMMON STOCK HAS BEEN
APPROVED FOR LISTING, SUBJECT TO OFFICIAL
NOTICE OF ISSUANCE, ON THE NEW YORK STOCK
EXCHANGE UNDER THE SYMBOL "IM."

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

SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR A DISCUSSION OF CERTAIN
RISKS ASSOCIATED WITH THIS OFFERING.

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

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.

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

PRICE $ A SHARE

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

UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
---------------------------------------------------------------

Per Share.............................. $ $ $
Total(3)............................... $ $ $

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

(2) Before deducting expenses payable by the Company estimated at $1,400,000.

(3) The Company has granted to the U.S. Underwriters an option, exercisable
within 30 days of the date hereof, to purchase up to an aggregate of
3,000,000 additional Shares at the price to public less underwriting
discounts and commissions, for the purpose of covering over-allotments,
if any. If the U.S. Underwriters exercise such option in full, the total
price to public, underwriting discounts and commissions, and proceeds to
Company will be $ , $ and $ , respectively. See
"Underwriters."
---------------------------

The Shares are offered, subject to prior sale, when, as and if accepted by
the Underwriters named herein and subject to approval of certain legal matters
by Wilson Sonsini Goodrich & Rosati, counsel for the Underwriters. It is
expected that delivery of the Shares will be made on or about ,
1996 at the office of Morgan Stanley & Co. Incorporated, New York, New York,
against payment therefor in immediately available funds.
---------------------------

MORGAN STANLEY & CO.
International

THE ROBINSON-HUMPHREY COMPANY, INC.

ALEX. BROWN & SONS
INTERNATIONAL

HAMBRECHT & QUIST

J.C. BRADFORD & CO.
, 1996
2

INGRAM

MICRO LEADING THE WAY IN WORLDWIDE DISTRIBUTION(TM)
LOGO

SUPPLYING OVER 36,000 PRODUCTS
FROM 1,100 VENDORS WORLDWIDE

[LOGOS OF VARIOUS VENDORS]

PCS, PERIPHERALS, WORKSTATIONS

[LOGOS OF VARIOUS VENDORS]

SOFTWARE

[LOGOS OF VARIOUS VENDORS]

NETWORKING

WORLDWIDE PRESENCE

CUSTOMERS IN 120 COUNTRIES

[FACILITIES MAP]

SUPERIOR EXECUTION AND
VALUE-ADDED SERVICES

LOGISTICS BANKING
- Warehousing - Credit
- Order Fulfillment - Financing Programs
- Product Tracking COST-EFFICIENT
- Bullet-Proof Shipping SALES & SERVICES
- Configuration - Telesales
- Labeling - Field Sales
- Returns - Customer Service
- Forecasting - Marketing

PRODUCT KNOWLEDGE

- Cross-Platform - Customer Information
Technical Support Systems
- Technical Training

OVER 100,000 RESELLER
CUSTOMERS IN 3 MARKET SECTORS

Commercial
- Corporate Resellers
- Dealer Affiliates
- Direct Marketers

VAR
- Systems Integrators
- Application VARs
- OEMs
- Government/Education Resellers

Consumer
- Computer Superstores
- Office Product Superstores
- Mass Merchants
- Consumer Electronics Stores
- Warehouse Clubs

IMPULSE

WORLD CLASS
INFORMATION SYSTEMS

COMPETITIVE ADVANTAGE

THROUGH REAL-TIME

WORLDWIDE INFORMATION
ACCESS AND PROCESSING

- - 12 million on-line transactions per day
- - 26,000 orders per day
- - 37,000 shipments per day

[GLOBE]
4

NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN AS CONTAINED IN THIS
PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON TO
MAKE SUCH OFFERING OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE IMPLY THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
------------------------

UNTIL , 1996 (25 DAYS AFTER COMMENCEMENT OF THIS OFFERING), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS DELIVERY
REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS
WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
------------------------

For investors outside the United States: No action has been or will be
taken in any jurisdiction by the Company or by any Underwriter that would permit
a public offering of the Common Stock or possession or distribution of this
Prospectus in any jurisdiction where action for that purpose is required, other
than in the United States. Persons into whose possession this Prospectus comes
are required by the Company and the Underwriters to inform themselves about and
to observe any restrictions as to the offering of the Common Stock and the
distribution of this Prospectus.
------------------------

TABLE OF CONTENTS

PAGE
----

Prospectus Summary..................... 3
Risk Factors........................... 5
The Company............................ 14
Use of Proceeds........................ 16
Dividend Policy........................ 16
Capitalization......................... 17
Dilution............................... 18
Selected Consolidated Financial Data... 19
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 20
Business............................... 29
Management............................. 47

PAGE
----

Employee and Priority Offers........... 56
Certain Transactions................... 57
The Split-Off.......................... 58
Principal Stockholders................. 63
Description of Capital Stock........... 64
Shares Eligible for Future Sale........ 68
Certain U.S. Federal Income Tax
Considerations....................... 70
Underwriters........................... 72
Legal Matters.......................... 75
Experts................................ 75
Additional Information................. 76
Index to Consolidated Financial
Statements........................... F-1

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

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
------------------------

Ingram Micro and the Ingram Micro logo are registered trademarks of the
Company. Ingram Alliance, IMpulse, "Leading the Way in Worldwide Distribution,"
and "Partnership America" are trademarks of the Company. All other trademarks or
tradenames referred to in this Prospectus are the property of their respective
owners.
------------------------

Unless the context otherwise requires, the "Company" or "Ingram Micro"
refers to Ingram Micro Inc., a Delaware corporation, and its consolidated
subsidiaries. In addition, unless otherwise indicated, all information in this
Prospectus assumes (i) the occurrence of the Split-Off (as defined herein)
immediately prior to the closing of this offering and (ii) no exercise of the
U.S. Underwriters' over-allotment option. See "Underwriters." The fiscal year of
the Company is a 52- or 53-week period ending on the Saturday nearest to
December 31. Unless the context otherwise requires, references in this
Prospectus to "1991," "1992," "1993," "1994," and "1995" represent the fiscal
years ended December 28, 1991 (52 weeks), January 2, 1993 (53 weeks), January 1,
1994 (52 weeks), December 31, 1994 (52 weeks), and December 30, 1995 (52 weeks),
respectively. The Company's next 53-week fiscal year will be fiscal year 1997.

2
5

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements and the notes thereto
appearing elsewhere in this Prospectus.

THE COMPANY

Ingram Micro is the leading wholesale distributor of microcomputer products
worldwide. The Company markets microcomputer hardware, networking equipment, and
software products to more than 100,000 reseller customers in approximately 120
countries worldwide. Ingram Micro distributes microcomputer products through
warehouses in eight strategic locations in the continental United States and 21
international warehouses located in Canada, Mexico, most countries of the
European Union, Norway, Malaysia, and Singapore. The Company believes that it is
the market share leader in the United States, Canada, and Mexico, and the second
largest full-line distributor in Europe. In 1995, approximately 31% of the
Company's net sales were derived from operations outside the United States.
Ingram Micro offers one-stop shopping to its reseller customers by providing a
comprehensive inventory of more than 36,000 products from over 1,100 suppliers,
including most of the microcomputer industry's leading hardware manufacturers,
networking equipment suppliers, and software publishers. The Company's suppliers
include Apple Computer, Cisco Systems, Compaq Computer, Creative Labs,
Hewlett-Packard, IBM, Intel, Microsoft, NEC, Novell, Quantum, 3Com, Toshiba, and
U.S. Robotics.

The Company conducts business with most of the leading resellers of
microcomputer products around the world, including, in the United States,
Ameridata, CDW Computer Centers, CompuCom, CompUSA, Computer City, Electronic
Data Systems, En Pointe Technologies, Entex Information Services, Micro
Warehouse, Sam's Club, Staples, and Vanstar. The Company's international
reseller customers include Complet Data A/S, Consultores en Diagnostico
Organizacional y de Sistemas, DSG Retail Ltd., 06 Software Centre Europe, B.V.,
GE Capital Technologies, Jump Ordenadores, Maxima S.A., Norsk Datasenter, Owell
Svenska AB, SNI Siemens Nixdorf Infosys AG, and TC Sistema SPA.

The Company has grown rapidly over the past five years, with net sales and
net income increasing to $8.6 billion and $84.3 million, respectively, in 1995
from $2.0 billion and $30.2 million, respectively, in 1991, representing
compound annual growth rates of 43.8% and 29.3%, respectively. The Company's
growth during this period reflects substantial expansion of its existing
domestic and international operations, resulting from the addition of new
customers, increased sales to the existing customer base, the addition of new
product categories and suppliers, and the establishment of Ingram Alliance
Reseller Company ("Ingram Alliance"), the Company's master reseller business
launched in late 1994, as well as the successful integration of ten acquisitions
worldwide. Because of intense price competition in the microcomputer products
wholesale distribution industry, the Company's margins have historically been
narrow and are expected in the future to continue to be narrow. In addition, the
Company is highly leveraged and has relied heavily on debt financing for its
increasing working capital needs in connection with the expansion of its
business.

The Company is currently a subsidiary of Ingram Industries Inc. ("Ingram
Industries"). Immediately prior to the closing of this offering, Ingram
Industries will consummate the Split-Off (as defined herein), and all
information in this Prospectus assumes the occurrence of the Split-Off at such
time. See "The Company" and "The Split-Off." The consummation of the Split-Off
is a non-waiveable condition to the closing of this offering.

3
6

THE OFFERING

Common Stock offered(1):
U.S. Offering.............................. 16,000,000 Shares
International Offering..................... 4,000,000 Shares
Total................................... 20,000,000 Shares
Common Equity to be outstanding after this
offering(1)(2):
Common Stock............................... 20,000,000 Shares
Class B Common Stock(3).................... 109,868,752 Shares
Total................................... 129,868,752 Shares
Voting rights:
Common Stock............................... One vote per share
Class B Common Stock....................... Ten votes per share
Use of proceeds.............................. To repay certain outstanding indebtedness.
See "Use of Proceeds."
NYSE Symbol.................................. IM

SUMMARY CONSOLIDATED FINANCIAL DATA
(IN MILLIONS, EXCEPT PER SHARE DATA)

TWENTY-SIX WEEKS
ENDED
FISCAL YEAR --------------------
---------------------------------------------------- JULY 1, JUNE 29,
1991 1992 1993 1994 1995 1995 1996
-------- -------- -------- -------- -------- -------- ---------

INCOME STATEMENT DATA:
Net sales.................... $2,016.6 $2,731.3 $4,044.2 $5,830.2 $8,616.9 $3,739.1 $5,543.2
Gross profit................. 185.4 227.6 329.6 439.0 605.7 271.3 377.0
Income from operations....... 67.6 68.9 103.0 140.3 186.9 78.7 114.4 (4)
Net income(5)................ 30.2 31.0 50.4 63.3 84.3 35.5 50.6 (4)
Earnings per share........... 0.25 0.26 0.42 0.53 0.70 0.29 0.42 (4)
Weighted average common
shares outstanding(6)...... 120.6 120.6 120.6 120.6 120.6 120.6 120.6

JUNE 29, 1996
-------------------------------------------
AS AS FURTHER
ACTUAL ADJUSTED(7) ADJUSTED(7)(8)
-------- ----------- --------------

BALANCE SHEET DATA:
Working capital......................................... $ 946.2 $ 786.2 $ 776.4
Total assets............................................ 2,641.4 2,481.4 2,481.4
Total debt(9)........................................... 768.8 591.6 309.5
Stockholders' equity.................................... 338.8 338.4 610.7

- ---------------
(1) Assumes no exercise of the U.S. Underwriters' over-allotment option.

(2) See "Principal Stockholders." Excludes approximately 20,200,000 shares of
Common Equity issuable in connection with outstanding stock options. See
"Management -- 1996 Plan -- Options" and "-- Rollover Plan; Incentive Stock
Units."

(3) Each share of Class B Common Stock is convertible, at any time at the option
of the holder, into one share of Common Stock. In addition, the Class B
Common Stock will be automatically converted into Common Stock upon the
occurrence of certain events. See "Description of Capital Stock."

(4) Reflects a non-cash compensation charge of $7.8 million ($4.8 million, or
$0.04 per share, net of tax) in connection with the granting of the Rollover
Stock Options (as defined herein). See "The Split-Off -- The Exchange" and
Note 11 of Notes to Consolidated Financial Statements.

(5) The 1992 results reflect the adoption of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("FAS 109").

(6) See Note 2 of Notes to Consolidated Financial Statements.

(7) As adjusted to reflect (i) the assumption by the Company of the accounts
receivable securitization program of Ingram Industries in partial
satisfaction of amounts due to Ingram Industries (resulting in a $160.0
million decrease in each of working capital and total debt); (ii) the
issuance of 2,510,400 redeemable shares of Class B Common Stock in the
Employee Offering (as defined herein) (resulting in a $17.2 million increase
in redeemable Class B Common Stock); (iii) the repayment of $17.2 million of
certain indebtedness with the net proceeds from the Employee Offering; and
(iv) $400,000 of expenses in connection with the Employee Offering
(resulting in a decrease in stockholders' equity), as if such transactions
had occurred on June 29, 1996. Does not reflect approximately $40.0 million
of indebtedness, including capital lease obligations, which may be incurred
by the Company in connection with the acquisition of or restructuring of
lease agreements related to certain facilities currently utilized by the
Company. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Liquidity and Capital Resources" and "Certain
Transactions."

(8) As further adjusted to give effect to the issuance of the Common Stock
offered by the Company in this offering, the repayment of certain
indebtedness with the estimated net proceeds therefrom, and the estimated
additional $9.8 million non-cash compensation charge related to certain
Rollover Stock Options (as defined herein). See "Use of Proceeds,"
"Capitalization," and "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Overview."

(9) Includes long-term debt, current maturities of long-term debt, and amounts
due to Ingram Industries.

4
7

RISK FACTORS

In evaluating the Company's business, prospective investors should
carefully consider the following factors in addition to the other information
contained in this Prospectus.

Intense Competition. The Company operates in a highly competitive
environment, both in the United States and internationally. The microcomputer
products distribution industry is characterized by intense competition, based
primarily on price, product availability, speed and accuracy of delivery,
effectiveness of sales and marketing programs, credit availability, ability to
tailor specific solutions to customer needs, quality and breadth of product
lines and services, and availability of technical and product information. The
Company's competitors include regional, national, and international wholesale
distributors, as well as hardware manufacturers, networking equipment
manufacturers, and software publishers that sell directly to resellers and large
resellers who resell to other resellers. There can be no assurance that the
Company will not lose market share in the United States or in international
markets, or that it will not be forced in the future to reduce its prices in
response to the actions of its competitors and thereby experience a further
reduction in its gross margins. See "-- Narrow Margins" and
"Business -- Competition."

The Company entered the "aggregator" or "master reseller" business by
launching Ingram Alliance in late 1994. See "Business -- Ingram Alliance." The
Company competes with other master resellers, which sell to groups of affiliated
franchisees and third-party dealers. Many of the Company's competitors in the
master reseller business are more experienced and have more established contacts
with affiliated resellers, third-party dealers, or suppliers, which may provide
them with a competitive advantage over the Company.

The Company is constantly seeking to expand its business into areas closely
related to its core microcomputer products distribution business. As the Company
enters new business areas, it may encounter increased competition from current
competitors and/or from new competitors, some of which may be current customers
of the Company. For example, the Company intends to distribute media in the new
digital video disc format and may compete with traditional music and printed
media distributors. In addition, certain services the Company provides may
directly compete with those provided by the Company's reseller customers. There
can be no assurance that increased competition and adverse reaction from
customers resulting from the Company's expansion into new business areas will
not have a material adverse effect on the Company's business, financial
condition, or results of operations. See "Business -- The Industry" and "--
Competition."

Narrow Margins. As a result of intense price competition in the
microcomputer products wholesale distribution industry, the Company's margins
have historically been narrow and are expected in the future to continue to be
narrow. See "-- Intense Competition." These narrow margins magnify the impact on
operating results of variations in operating costs. The Company's gross margins
have declined from 8.1% for 1993 to 6.8% for the twenty-six weeks ended June 29,
1996. The Company receives purchase discounts from suppliers based on a number
of factors, including sales or purchase volume and breadth of customers. These
purchase discounts directly affect gross margins. Because many purchase
discounts from suppliers are based on percentage increases in sales of products,
it may become more difficult for the Company to achieve the percentage growth in
sales required for larger discounts due to the current size of the Company's
revenue base. The Company's gross margins have been further reduced by the
Company's entry into the master reseller business through Ingram Alliance, which
has lower gross margins than the Company's traditional wholesale distribution
business. See "-- Risks Associated with Ingram Alliance" and "Business -- Ingram
Alliance." The Company has taken a number of steps intended to address the
challenges of declining gross margins, particularly by continually improving and
enhancing its information systems and implementing procedures and systems
designed to provide greater warehousing efficiencies and greater accuracy in
shipping. However, there can be no assurance that these steps will prevent gross
margins from continuing to decline. If the Company's gross margins continue to
decline, the Company will be required to reduce operating expenses as a
percentage of net sales further in order to maintain or increase its operating
margins. While the Company will continue to explore ways to improve gross
margins and reduce operating expenses as a percentage of net sales, there can be
no assurance that the Company will be successful in such efforts or that the
Company's margins will not decline in the future. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations."

5
8

Fluctuations in Quarterly Results. The Company's quarterly net sales and
operating results have varied significantly in the past and will likely continue
to do so in the future as a result of seasonal variations in the demand for the
products and services offered by the Company, the introduction of new hardware
and software technologies and products offering improved features and
functionality, the introduction of new products and services by the Company and
its competitors, the loss or consolidation of a significant supplier or
customer, changes in the level of operating expenses, inventory adjustments,
product supply constraints, competitive conditions including pricing, interest
rate fluctuations, the impact of acquisitions, currency fluctuations, and
general economic conditions. The Company's narrow margins may magnify the impact
of these factors on the Company's operating results.

Specific historical seasonal variations in the Company's operating results
have included a reduction of demand in Europe during the summer months,
increased Canadian government purchasing in the first quarter, and pre-holiday
stocking in the retail channel during the September to November period. In
addition, as was the case with the introduction of Microsoft Windows 95 in
August 1995, the product cycle of major products may materially impact the
Company's business, financial condition, or results of operations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Quarterly Data; Seasonality." Changes in supplier supported
programs may also have a material impact on the Company's quarterly net sales
and operating results. The Company may be unable to adjust spending sufficiently
in a timely manner to compensate for any unexpected sales shortfall, which could
materially adversely affect quarterly operating results. Accordingly, the
Company believes that period-to-period comparisons of its operating results
should not be relied upon as an indication of future performance. In addition,
the results of any quarterly period are not indicative of results to be expected
for a full fiscal year. In certain future quarters, the Company's operating
results may be below the expectations of public market analysts or investors. In
such event, the market price of the Common Stock would be materially adversely
affected.

Capital Intensive Nature of Business; High Degree of Leverage. The
Company's business requires significant levels of capital to finance accounts
receivable and product inventory that is not financed by trade creditors. The
Company is highly leveraged and has relied heavily on debt financing for its
increasing working capital needs in connection with the expansion of its
business. At December 30, 1995 and June 29, 1996, the Company's total debt was
$850.5 million and $768.8 million, respectively, and represented 73.6% and
70.2%, respectively, of the Company's total capitalization. Pro forma for this
offering and the application of the estimated net proceeds therefrom, as of June
29, 1996, the Company's total debt would have been $309.5 million and would have
represented 33.4% of the Company's total capitalization ($267.0 million and
28.8% assuming the U.S. Underwriters' over-allotment option is exercised in
full). See "Use of Proceeds," "Capitalization," and "Management's Discussion and
Analysis of Financial Condition and Results of Operations." An additional $40.0
million of indebtedness, including capital lease obligations, may be incurred by
the Company in connection with the acquisition of or restructuring of lease
agreements related to certain facilities currently utilized by the Company. See
"Certain Transactions." In order to continue its expansion, the Company will
need additional financing, including debt financing, which may or may not be
available on terms acceptable to the Company, or at all. While a portion of the
Company's historical financing needs has been satisfied through internally
generated funds and trade creditors, a substantial amount has come from
intercompany borrowings under debt facilities and an accounts receivable
securitization facility maintained by Ingram Industries. No assurance can be
given that the Company will continue to be able to borrow in adequate amounts
for these or other purposes on terms acceptable to the Company, and the failure
to do so could have a material adverse effect on the Company's business,
financial condition, and results of operations.

The Company has a commitment from NationsBank of Texas N.A. and The Bank of
Nova Scotia providing for a $1 billion credit facility (the "Credit Facility"),
and the Company expects to enter into a formal agreement prior to the closing of
this offering. The Credit Facility is expected to be effective as of the closing
of this offering, and will contain standard provisions for agreements of its
type. Concurrently with the Split-Off, the Company will repay intercompany
indebtedness with borrowings under the Credit Facility in partial satisfaction
of amounts due to Ingram Industries. Certain of the net proceeds from this
offering will be used to repay outstanding revolving indebtedness related to
amounts drawn by certain of the Company's subsidiaries, as participants in
Ingram Industries' existing unsecured credit facility, which will terminate
concurrently with the closing of this offering. The remainder of the net
proceeds from this offering will be used

6
9

to repay a portion of the borrowings under the Credit Facility. See "Use of
Proceeds." The Company's ability in the future to satisfy its debt obligations
will be dependent upon its future performance, which is subject to prevailing
economic conditions and financial, business, and other factors, including
factors beyond the Company's control. See "-- Fluctuations in Quarterly
Results," "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources," "Certain
Transactions," and "The Split-Off -- The Reorganization."

Management of Growth. The rapid growth of the Company's business has
required the Company to make significant recent additions in personnel and has
significantly increased the Company's working capital requirements. Although the
Company has experienced significant sales growth in recent years, such growth
should not be considered indicative of future sales growth. Such growth has
resulted in new and increased responsibilities for management personnel and has
placed and continues to place a significant strain upon the Company's
management, operating and financial systems, and other resources. There can be
no assurance that the strain placed upon the Company's management, operating and
financial systems, and other resources will not have a material adverse effect
on the Company's business, financial condition, and results of operations, nor
can there be any assurance that the Company will be able to attract or retain
sufficient personnel to continue the expansion of its operations. Also crucial
to the Company's success in managing its growth will be its ability to achieve
additional economies of scale. There can be no assurance that the Company will
be able to achieve such economies of scale, and the failure to do so could have
a material adverse effect on the Company's business, financial condition, and
results of operations.

To manage the expansion of its operations, the Company must continuously
evaluate the adequacy of its management structure and its existing systems and
procedures, including, among others, its data processing, financial, and
internal control systems. When entering new geographic markets, the Company will
be required to implement the Company's centralized IMpulse information
processing system on a timely and cost-effective basis, hire personnel,
establish suitable distribution centers, and adapt the Company's distribution
systems and procedures to these new markets. There can be no assurance that
management will adequately anticipate all of the changing demands that growth
could impose on the Company's systems, procedures, and structure. In addition,
the Company will be required to react to changes in the microcomputer
distribution industry, and there can be no assurance that it will be able to do
so successfully. Any failure to adequately anticipate and respond to such
changing demands may have a material adverse effect on the Company's business,
financial condition, or results of operations. See " -- Dependence on
Information Systems" and "Business -- Information Systems."

Dependence on Information Systems. The Company depends on a variety of
information systems for its operations, particularly its centralized IMpulse
information processing system which supports more than 40 operational functions
including inventory management, order processing, shipping, receiving, and
accounting. At the core of IMpulse is on-line, real-time distribution software
which supports basic order entry and processing and customers' shipments and
returns. The Company's information systems require the services of over 350 of
the Company's associates with extensive knowledge of the Company's information
systems and the business environment in which the Company operates. Although the
Company has not in the past experienced significant failures or downtime of
IMpulse or any of its other information systems, any such failure or significant
downtime could prevent the Company from taking customer orders, printing product
pick-lists, and/or shipping product and could prevent customers 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, such as a currency devaluation. 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, financial condition, or results of
operations. In addition, the inability of the Company to attract and retain the
highly skilled personnel required to implement, maintain, and operate IMpulse
and the Company's other information systems could have a material adverse effect
on the Company's business, financial condition, or results of operations. In
order to react to changing market conditions, the Company must continuously
expand and improve IMpulse and its other information systems. From time to time
the Company may acquire other businesses having information systems and records
which must be converted and integrated into IMpulse or other Company information
systems. This can be a lengthy and expensive process that results in a
significant

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diversion of resources from other operations. The inability of the Company to
convert the information systems of any acquired businesses to the Company's
information systems and to train its information systems personnel in a timely
manner and on a cost-effective basis could materially adversely affect the
Company's business, financial condition, or results of operations. There can be
no assurance that the Company's information systems will not fail, that the
Company will be able to attract and retain qualified personnel necessary for the
operation of such systems, that the Company will be able to expand and improve
its information systems, or that the information systems of acquired companies
will be successfully converted and integrated into the Company's information
systems on a timely and cost-effective basis. See "Business -- Information
Systems."

Exposure to Foreign Markets; Currency Risk. The Company, through its
subsidiaries, operates in a number of countries outside the United States,
including Canada, Mexico, most of the countries of the European Union, Norway,
Malaysia, and Singapore. In 1994, 1995, and the first half of 1996, 29.3%,
30.7%, and 31.1%, respectively, of the Company's net sales were derived from
operations outside of the United States, and the Company expects its
international net sales to increase as a percentage of total net sales in the
future. See "Business -- Geographic Tactics." The Company's international net
sales are primarily denominated in currencies other than the U.S. dollar.
Accordingly, the Company's international operations impose risks upon its
business as a result of exchange rate fluctuations. Although the Company
attempts to mitigate the effect of exchange rate fluctuations on its business,
primarily by attempting to match the currencies of sales and costs, as well as
through the use of foreign currency borrowings and derivative financial
instruments such as forward exchange contracts, the Company does not seek to
remove all risk associated with such fluctuations. Accordingly, there can be no
assurance that exchange rate fluctuations will not have a material adverse
effect on the Company's business, financial condition, or results of operations
in the future. In certain countries outside the United States, operations are
accounted for primarily on a U.S. dollar denominated basis. In the event of an
unexpected devaluation of the local currency in those countries, the Company may
experience significant foreign exchange losses. For example, the devaluation of
the Mexican peso, which began in December 1994, significantly affected the
Company's Mexican operations. The primary impact on the Company's operating
results was a foreign exchange pre-tax charge of approximately $6.9 million and
$7.8 million in 1994 and 1995, respectively. In addition, the Company's net
sales in Mexico were adversely affected in 1995 as a result of the general
economic impact of the devaluation of the Mexican peso. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

The Company's international operations are subject to other risks such as
the imposition of governmental controls, export license requirements,
restrictions on the export of certain technology, political instability, trade
restrictions, tariff changes, difficulties in staffing and managing
international operations, difficulties in collecting accounts receivable and
longer collection periods, and the impact of local economic conditions and
practices. As the Company continues to expand its international business, its
success will be dependent, in part, on its ability to anticipate and effectively
manage these and other risks. There can be no assurance that these and other
factors will not have a material adverse effect on the Company's international
operations or its business, financial condition, and results of operations as a
whole.

Dependence on Key Individuals. The Company is dependent in large part on
its ability to retain the services of its executive officers, especially Messrs.
Jerre L. Stead (Chief Executive Officer and Chairman of the Board of Directors),
Jeffrey R. Rodek (President and Chief Operating Officer), and David R. Dukes
(Vice Chairman of Ingram Micro and Chief Executive Officer of Ingram Alliance).
The loss of any of the Company's executive officers could have a material
adverse effect on the Company. The Company does not have employment agreements
with most of its executive officers, although it does have agreements, primarily
relating to severance arrangements, with certain of the Named Executive Officers
(as defined herein). See "Management -- Employment Agreements." Several of the
Company's executive officers currently perform functions for both the Company
and Ingram Industries, including James E. Anderson, Jr., the Company's Senior
Vice President, Secretary, and General Counsel, and Michael J. Grainger, the
Company's Chief Financial Officer. Concurrently with the Split-Off, Mr. Anderson
will resign from Ingram Industries. Mr. Grainger is devoting substantially all
of his time to the Company's affairs while he remains the Company's Chief
Financial Officer. Mr. Grainger eventually intends to return to a full time
position with Ingram

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Industries. See "Management -- Executive Officers and Directors." The Company's
continued success is also dependent upon its ability to retain and attract other
qualified employees to meet the Company's needs. See "Business -- Employees."

Effective August 27, 1996, the Company appointed Jerre L. Stead as its
Chief Executive Officer and Chairman of the Board. Linwood A. (Chip) Lacy, Jr.,
the Company's Chief Executive Officer since 1985, resigned effective May 31,
1996. Although the Company believes that one of its distinguishing
characteristics is the strength of its senior and middle management personnel,
there can be no assurance that the Company will not experience a material
adverse effect on its business, financial condition, or results of operations as
a result of the resignation of Mr. Lacy. See "Management -- Employment
Agreements."

Product Supply; Dependence on Key Suppliers. The ability of the Company to
obtain particular products or product lines in the required quantities and to
fulfill customer orders on a timely basis is critical to the Company's success.
In most cases, the Company has no guaranteed price or delivery agreements with
its suppliers. As a result, the Company has experienced, and may in the future
continue to experience, short-term inventory shortages. In addition,
manufacturers who currently distribute their products through the Company may
decide to distribute, or to substantially increase their existing distribution,
through other distributors, their own dealer networks, or directly to resellers.
Further, the personal computer industry experiences significant product supply
shortages and customer order backlogs from time to time due to the inability of
certain manufacturers to supply certain products on a timely basis. There can be
no assurance that suppliers will be able to maintain an adequate supply of
products to fulfill the Company's customer orders on a timely basis or that the
Company will be able to obtain particular products or that a product line
currently offered by suppliers will continue to be available. The failure of the
Company to obtain particular products or product lines in the required
quantities or fulfill customer orders on a timely basis could have a material
adverse effect on its business, financial condition, or results of operations.

Although Ingram Micro regularly stocks products and accessories supplied by
over 1,100 suppliers, approximately 36.5%, 41.4%, 53.2%, and 55.4% of the
Company's net sales in 1993, 1994, 1995, and the first half of 1996,
respectively, were derived from products provided by its ten largest suppliers.
In 1995, 23.4% of the Company's net sales were derived from sales of products
from Microsoft (12.7%) and Compaq Computer (10.7%). In the first half of 1996,
24.5% of the Company's net sales were derived from sales of products from Compaq
Computer (13.9%) and Hewlett-Packard (10.6%). Certain of the Company's non-U.S.
operations are even more dependent on a limited number of suppliers. In
addition, many services that the Company provides to its reseller customers,
such as financing and technical training, are dependent on supplier support. The
loss of a major supplier, the deterioration of the Company's relationship with a
major supplier, the loss or deterioration of supplier support for certain
Company-provided services, the decline in demand for a particular supplier's
product, or the failure of the Company to establish good relationships with
major new suppliers could have a material adverse effect on the Company's
business, financial condition, or results of operations. Such a loss,
deterioration, decline, or failure could also have a material adverse effect on
the sales by the Company of products provided by other suppliers.

The Company's ability to achieve increases in net sales or to sustain
current net sales levels depends in part on the ability and willingness of the
Company's suppliers to provide products in the quantities the Company requires.
Although the Company has written distribution agreements with many of its
suppliers, these agreements usually provide for nonexclusive distribution rights
and often include territorial restrictions that limit the countries in which
Ingram Micro is permitted to distribute the products. The agreements are also
generally short term, subject to periodic renewal, and often contain provisions
permitting termination by either party without cause upon relatively short
notice. The termination of an agreement may have a material adverse impact on
the Company's business, financial condition, or results of operations. See
"Business -- Products and Suppliers."

Risks Associated with Ingram Alliance. Ingram Micro entered the master
reseller (also known as "aggregation") business in late 1994 through the launch
of Ingram Alliance. Ingram Alliance is designed to offer resellers access to
products supplied by certain of the industry's leading hardware manufacturers at
competitive prices by utilizing a low-cost business model that depends upon a
higher average order size, lower

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product returns percentage, and supplier-paid financing. The master reseller
business is characterized by gross margins and operating margins that are even
narrower than those of the U.S. microcomputer products wholesale distribution
business and by competition based almost exclusively on price, programs, and
execution. In the master reseller business, the Company has different supply
arrangements and financing terms than in its traditional wholesale distribution
business. There can be no assurance that the Company will be able to compete
successfully in the master reseller business. A failure by Ingram Alliance to
compete successfully could have a material adverse effect on the Company's
business, financial condition, or results of operations.

A substantial portion of Ingram Alliance's net sales (approximately 89.9%
during 1995 and 92.5% during the twenty-six weeks ended June 29, 1996) is
derived from the sale of products supplied by Compaq Computer, IBM, Toshiba,
NEC, and Apple Computer. As a result, Ingram Alliance's business is dependent
upon price and related terms and availability of products provided by these key
suppliers. Although the Company considers Ingram Alliance's relationships with
these suppliers to be good, there can be no assurance that these relationships
will continue as presently in effect or that changes by one or more of such key
suppliers in their volume discount schedules or other marketing programs would
not adversely affect the Company's business, financial condition or results of
operations. Termination or nonrenewal of Ingram Alliance's agreements with key
suppliers would have a material adverse effect on the Company's business,
financial condition, or results of operations.

Although the Company's wholesale distribution division sells
Hewlett-Packard products, Ingram Alliance does not currently have authorization
to sell Hewlett-Packard products in the master reseller market. Because of
Hewlett-Packard's position as a major supplier of microcomputer hardware
products, the Company believes that sales of Hewlett-Packard products likely
account for a substantial portion of sales at Ingram Alliance's major
competitors in the master reseller business. The inability to offer
Hewlett-Packard products places Ingram Alliance at a competitive disadvantage to
its competitors because it is unable to provide a full range of products to its
customers. The continued inability of Ingram Alliance to receive authorization
to sell Hewlett-Packard products could have a material adverse effect on Ingram
Alliance's business, financial condition, or results of operations. See
"Business -- Ingram Alliance."

Acquisitions. As part of its growth strategy, the Company pursues the
acquisition of companies that either complement or expand its existing business.
As a result, the Company is continually evaluating potential acquisition
opportunities, which may be material in size and scope. Acquisitions involve a
number of risks and difficulties, including expansion into new geographic
markets and business areas, the requirement to understand local business
practices, the diversion of management's attention to the assimilation of the
operations and personnel of the acquired companies, the integration of the
acquired companies' management information systems with those of the Company,
potential adverse short-term effects on the Company's operating results, the
amortization of acquired intangible assets, and the need to present a unified
corporate image.

The Company does not currently have any commitments or agreements with
respect to any material acquisitions. The Company is currently in negotiations
regarding potential acquisitions or joint ventures, none of which, if
consummated, would be material to the Company's business. The Company
anticipates that one or more potential acquisition opportunities, including some
that could be material to the Company, may become available in the future. The
Company may issue equity securities to consummate acquisitions, which may cause
dilution to investors purchasing Common Stock in this offering. In addition, the
Company may be required to utilize cash or increase its borrowings to consummate
acquisitions. No assurance can be given that the Company will have adequate
resources to consummate any acquisition, that any acquisition by the Company
will or will not occur, that if any acquisition does occur it will not have a
material adverse effect on the Company, its business, financial condition, or
results of operations or that any such acquisition will be successful in
enhancing the Company's business. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

Risk of Declines in Inventory Value. The Company's business, like that of
other wholesale distributors, is subject to the risk that the value of its
inventory will be adversely affected by price reductions by suppliers or

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by technological changes affecting the usefulness or desirability of the
products comprising the inventory. It is the policy of most suppliers of
microcomputer products to protect distributors such as the Company, who purchase
directly from such suppliers, from the loss in value of inventory due to
technological change or the supplier's price reductions. Under the terms of many
distribution agreements, suppliers will credit the distributor for inventory
losses resulting from the supplier's price reductions if the distributor
complies with certain conditions. In addition, under many such agreements, the
distributor has the right to return for credit or exchange for other products a
portion of the inventory items purchased, within a designated period of time. A
supplier who elects to terminate a distribution agreement generally will
repurchase from the distributor the supplier's products carried in the
distributor's inventory. The industry practices discussed above are sometimes
not embodied in written agreements and do not protect the Company in all cases
from declines in inventory value. No assurance can be given that such practices
will continue, that unforeseen new product developments will not materially
adversely affect the Company, or that the Company will be able to successfully
manage its existing and future inventories. The Company's risk of declines in
inventory value could be greater outside the United States where agreements with
suppliers are more restrictive with regard to price protection and the Company's
ability to return unsold inventory. The Company establishes reserves for
estimated losses due to obsolete inventory in the normal course of business.
Historically, the Company has not experienced losses due to obsolete inventory
materially in excess of established inventory reserves. However, significant
declines in inventory value in excess of established inventory reserves could
materially adversely affect the Company's business, financial condition, or
results of operations.

The Company sometimes purchases from suppliers, usually at significant
discounts, quantities of products that are nearing the end of their product life
cycle. In addition, the Company's purchasing staff also seeks opportunities to
purchase quantities of products from suppliers at discounts larger than those
usually available. When the Company negotiates these purchases, it seeks to
secure favorable terms for the return to suppliers of products unwanted by
resellers and end-users. Because some of these purchase agreements contain terms
providing for a 60-day time limit on returns to suppliers, end-user or reseller
delays in returning the product to the Company may make it difficult for the
Company to meet the deadline for returns to suppliers, and the Company could be
left with unwanted product. Additionally, some suppliers may be unwilling or
unable to pay the Company for products returned to them under purchase
agreements, and this trend may accelerate as consolidation in the industry
increases. For products offered by major suppliers, each of these events, were
they to occur, could materially adversely impact the Company's business,
financial condition, or results of operations. See "Business -- Products and
Suppliers."

Dependence on Independent Shipping Companies. The Company relies almost
entirely on arrangements with independent shipping companies for the delivery of
its products. Products are shipped from suppliers to the Company through Skyway
Freight Systems, Yellow Freight Systems, APL Land Transport Services, and ABF
Freight Systems. Currently, Federal Express Corporation ("FedEx"), United Parcel
Service ("UPS"), Western Package Service, General Parcel Services, Roadway
Parcel Services, and Purolator Courier deliver the substantial majority of the
Company's products to its reseller customers in the United States and Canada. In
other countries, the Company typically relies on one or two shipping companies
prominent in local markets. The termination of the Company's arrangements with
one or more of these independent shipping companies, or the failure or inability
of one or more of these independent shipping companies to deliver products from
suppliers to the Company or products from the Company to its reseller customers
or their end-user customers could have a material adverse effect on the
Company's business, financial condition, or results of operations. For instance,
an employee work stoppage or slow-down at one or more of these independent
shipping companies could materially impair that shipping company's ability to
perform the services required by the Company. There can be no assurance that the
services of any of these independent shipping companies will continue to be
available to the Company on terms as favorable as those currently available or
that these companies will choose or be able to perform their required shipping
services for the Company. See "Business -- Operations -- Shipping."

Rapid Technological Change; Alternate Means of Software Distribution. The
microcomputer products industry is subject to rapid technological change, new
and enhanced product specification requirements, and evolving industry
standards. These changes may cause inventory in stock to decline substantially
in value or to become obsolete. In addition, suppliers may give the Company
limited or no access to new products being

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introduced. Although the Company believes that it has adequate price protection
and other arrangements with its suppliers to avoid bearing the costs associated
with these changes, no assurance can be made that future technological or other
changes will not have a material adverse effect on the business, financial
condition, or results of operations of the Company. Outside North America, the
supplier contracts can be more restrictive and place more risks on the Company.

Net sales of software products have decreased as a percentage of total net
sales in recent years due to a number of factors, including bundling of software
with microcomputers; sales growth in Ingram Alliance, which is a hardware-only
business; declines in software prices; and the emergence of alternative means of
software distribution, such as site licenses and electronic distribution. The
Company expects this trend to continue. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Overview" and
"Business -- Products and Suppliers."

Relationship with Ingram Industries, Ingram Entertainment, and the Ingram
Family Stockholders. The Company has historically depended on Ingram Industries
and other subsidiaries of Ingram Industries for financing, cash management, tax
and payroll administration, property/casualty insurance, employee benefits
administration, and certain other administrative services. In conjunction with
the Split-Off, the Company, Ingram Industries, and Ingram Entertainment Inc.
("Ingram Entertainment"), a wholly-owned subsidiary of Ingram Industries, will
enter into agreements for the continued provision after the Split-Off of certain
services formerly shared among such entities (collectively, the "Transitional
Service Agreements"), as well as a tax sharing agreement. See "The
Split-Off -- The Reorganization." The Company believes that the terms of the
Transitional Service Agreements are on a basis at least as favorable to the
Company as those that would have been obtained from third parties on an arm's
length basis and that they will be adequate to allow the Company to continue its
business as previously conducted on an independent basis. The Company's
historical financial statements reflect an allocation of expenses in connection
with the services covered by the Transitional Service Agreements. Although the
Company expects the costs and fees it will pay in connection with the
Transitional Service Agreements to be higher than its historical allocated
costs, it does not believe the increase in costs will be material to its results
of operations. In addition, the Transitional Service Agreements generally
terminate on December 31, 1996, although payroll services under the Transitional
Service Agreements will be provided through December 31, 1997. After such
termination, the Company will be required to provide such services internally or
find a third-party provider of such services. There can be no assurance that the
Company will be able to secure the provision of such services on acceptable
terms. Either the additional costs and fees associated with the Transitional
Service Agreements or the failure to obtain acceptable provision of services
upon termination of the Transitional Service Agreements could have a material
adverse effect on the Company's business, financial condition, or results of
operations. After the Split-Off, each of the Company, Ingram Industries, and
Ingram Entertainment will be controlled by the Ingram Family Stockholders (as
defined herein). See "-- Control by Ingram Family Stockholders; Certain
Anti-takeover Provisions."

Furthermore, the Company has incurred, and anticipates incurring in the
future, higher payroll costs associated with the hiring of certain additional
personnel and the addition of certain officers, previously paid by Ingram
Industries, to the Company's payroll. There can be no assurance that the
Company's results of operations will not be materially adversely affected by
such additional costs. See "-- Capital Intensive Nature of Business; High Degree
of Leverage," "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources," "Certain
Transactions," and "The Split-Off -- The Reorganization."

In connection with the Split-Off, the Company made a $20.0 million
distribution to Ingram Industries in the second quarter of 1996. Additionally,
the Company may declare a dividend, which would be paid to Ingram Industries and
the other holders of Class B Common Stock prior to the Split-Off, in an amount
yet to be determined. The Company does not expect the dividend, if paid, to be
material in relation to the Company's stockholders' equity or cash available for
operations.

Control by Ingram Family Stockholders; Certain Anti-takeover
Provisions. Immediately after the Exchange and the closing of this offering,
69.6% of the outstanding Common Equity (and 80.7% of the outstanding voting
power) will be held by the Ingram Family Stockholders (68.0% and 80.5%,
respectively, if the U.S. Underwriters' over-allotment option is exercised in
full). Martha R. Ingram, her children, certain

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trusts created for their benefit, and two charitable trusts and a foundation
created by the Ingram family (collectively, the "Ingram Family Stockholders")
are expected to enter into a Board Representation Agreement (as defined herein)
with the Company, which provides that certain types of corporate transactions,
including transactions involving the potential sale or merger of the Company;
the issuance of additional equity, warrants, or options; certain acquisitions;
or the incurrence of significant indebtedness, may not be entered into without
the written approval of at least a majority of the voting power held by certain
of the Ingram Family Stockholders acting in their sole discretion. See "The
Split-Off -- The Exchange," "Principal Stockholders," and "Description of
Capital Stock." Voting control by the Ingram Family Stockholders may discourage
certain types of transactions involving an actual or potential change of control
of the Company, including transactions in which the holders of the Company's
Common Stock might receive a premium for their shares over the prevailing market
price of the Common Stock.

Section 203 of the Delaware General Corporation Law (as amended from time
to time, the "DGCL"), which is applicable to the Company, prohibits certain
business combinations with certain stockholders for a period of three years
after they acquire 15% or more of the outstanding voting stock of a corporation.
See "Description of Capital Stock -- Section 203 of the DGCL." In addition, the
authorized but unissued capital stock of the Company includes 1,000,000 shares
of preferred stock. The Board of Directors is authorized to provide for the
issuance of such preferred stock in one or more series and to fix the
designations, preferences, powers and relative, participating, optional or other
rights and restrictions thereof. Accordingly, the Company may issue a series of
preferred stock in the future that will have preference over the Common Equity
with respect to the payment of dividends and upon liquidation, dissolution or
winding-up or which could otherwise adversely affect holders of the Common
Equity or discourage or make difficult any attempt to obtain control of the
Company. See "Description of Capital Stock -- Preferred Stock."

Shares Eligible for Future Sale. Upon completion of this offering, the
Company will have outstanding 20,000,000 shares of Common Stock (23,000,000
shares if the U.S. Underwriters' over-allotment option is exercised in full) and
109,868,752 shares of Class B Common Stock, and an additional approximately
15,400,000 shares of Common Stock and approximately 4,800,000 shares of Class B
Common Stock will be reserved for issuance upon exercise of outstanding stock
options held by employees and directors of the Company, Ingram Industries, and
Ingram Entertainment. See "Management." The 20,000,000 shares of Common Stock to
be sold by the Company in this offering will be freely tradable without
restriction. The Company and its directors and executive officers, and certain
stockholders of the Company, have agreed, subject to certain exceptions, not to
offer, sell, contract to sell or otherwise dispose of any Common Equity for a
period of 180 days after the date of this Prospectus without the prior written
consent of Morgan Stanley & Co. Incorporated. Morgan Stanley & Co. Incorporated
has informed the Company that it has no present intention to consent to any such
transactions. Despite these limitations, the sale of a significant number of
these shares could have an adverse impact on the price of the Common Stock or on
any trading market that may develop. See "Shares Eligible for Future Sale."

Absence of Public Market; Possible Volatility of Stock Price. Prior to this
offering, there has been no public market for the Common Stock or the Class B
Common Stock. There can be no assurance that an active trading market for the
Common Stock will develop, or, if one does develop, that it will be sustained
following this offering or that the market price of the Common Stock will not
decline below the initial public offering price. The initial public offering
price will be determined by negotiations between the Company and the
Representatives of the Underwriters. See "Underwriters -- Pricing of Offering."
The market price of the Common Stock could be subject to wide fluctuations in
response to quarterly variations in the Company's results of operations, changes
in earnings estimates by research analysts, conditions in the personal computer
industry, or general market or economic conditions, among other factors. In
addition, in recent years the stock market has experienced extreme price and
volume fluctuations. These fluctuations have had a substantial effect on the
market prices of many technology companies, often unrelated to the operating
performance of the specific companies. Such market fluctuations could materially
adversely affect the market price for the Common Stock.

Dilution. The initial public offering price of the shares of Common Stock
offered hereby will be substantially higher than the net tangible book value per
share of the Common Equity. Therefore, purchasers of the Common Stock offered
hereby will experience an immediate and substantial dilution in net tangible
book value per share. See "Dilution."

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THE COMPANY

Ingram Micro is the leading wholesale distributor of microcomputer products
worldwide. The Company markets microcomputer hardware, networking equipment, and
software products to more than 100,000 reseller customers in approximately 120
countries worldwide in three principal market sectors: the VAR sector,
consisting of value-added resellers, systems integrators, network integrators,
application VARs, and original equipment manufacturers; the Commercial sector,
consisting of corporate resellers, direct marketers, independent dealers, and
owner-operated chains; and the Consumer sector, consisting of consumer
electronics stores, computer superstores, mass merchants, office product
superstores, software-only stores, and warehouse clubs. As a wholesale
distributor, the Company markets its products to each of these types of
resellers as opposed to marketing directly to end-user customers.

Ingram Micro offers one-stop shopping to its reseller customers by
providing a comprehensive inventory of more than 36,000 products from over 1,100
suppliers, including most of the microcomputer industry's leading hardware
manufacturers, networking equipment suppliers, and software publishers. The
Company's broad product offerings include: desktop and notebook personal
computers ("PCs"), servers, and workstations; mass storage devices; CD-ROM
drives; monitors; printers; scanners; modems; networking hubs, routers, and
switches; network interface cards; business application software; entertainment
software; and computer supplies. The Company's suppliers include Apple Computer,
Cisco Systems, Compaq Computer, Creative Labs, Hewlett-Packard, IBM, Intel,
Microsoft, NEC, Novell, Quantum, 3Com, Toshiba, and U.S. Robotics.

Ingram Micro distributes microcomputer products worldwide through
warehouses in eight strategic locations in the continental United States and 21
international warehouses located in Canada, Mexico, most countries of the
European Union, Norway, Malaysia, and Singapore. The Company believes that it is
the market share leader in the United States, Canada, and Mexico, and the second
largest full-line distributor in Europe. In 1995, approximately 31% of the
Company's net sales were derived from operations outside the United States. The
Export Division fulfills orders from U.S. exporters and from foreign customers
in countries where the Company does not operate a distribution subsidiary,
including much of Latin America, the Middle East, Africa, Australia, and parts
of Europe and Asia. The Company participates in the master reseller business in
the United States through Ingram Alliance.

The Company's principal objective is to enhance its position as the
preeminent wholesale distributor of microcomputer products worldwide. The
Company is focused on providing a broad range of products and services, quick
and efficient order fulfillment, and consistent on-time and accurate delivery to
its reseller customers around the world. The Company believes that IMpulse, the
Company's on-line information system, provides a competitive advantage through
real-time worldwide information access and processing capabilities. This
information system, coupled with the Company's exacting operating procedures in
telesales, credit support, customer service, purchasing, technical support, and
warehouse operations, enables the Company to provide its reseller customers with
superior service in an efficient and low cost manner. In addition, to enhance
sales and support its suppliers and reseller customers, the Company provides a
wide range of value-added services, such as technical training, order
fulfillment, tailored financing programs, systems configuration, and marketing
programs.

14
17

categories and suppliers, and the establishment of Ingram Alliance, as well as
the successful integration of ten acquisitions worldwide. Because of intense
price competition in the microcomputer products wholesale distribution industry,
the Company's margins have historically been narrow and are expected in the
future to continue to be narrow. In addition, the Company is highly leveraged
and has relied heavily on debt financing for its increasing working capital
needs in connection with the expansion of its business. See "Risk Factors --
Narrow Margins" and "-- Capital Intensive Nature of Business; High Degree of
Leverage."

The Company is currently a subsidiary of Ingram Industries, a company
controlled by the Ingram Family Stockholders. Immediately prior to the closing
of this offering, Ingram Industries will consummate a reorganization (the
"Reorganization"), pursuant to which the Company, Ingram Industries, and Ingram
Entertainment will allocate certain liabilities and obligations among
themselves. In conjunction with the Reorganization, Ingram Industries will
consummate an exchange (the "Exchange"), pursuant to which the existing
stockholders of Ingram Industries will exchange all or a portion of their shares
of Ingram Industries common stock for shares of Class B Common Stock of the
Company or common stock of Ingram Entertainment, in specified ratios.
Immediately after the Exchange and the closing of this offering, none of the
Common Equity will be held by Ingram Industries. At such time, 69.6% of the
outstanding Common Equity (and 80.7% of the outstanding voting power) will be
held by the Ingram Family Stockholders (68.0% and 80.5%, respectively, if the
U.S. Underwriters' over-allotment option is exercised in full). See "Risk
Factors -- Control by Ingram Family Stockholders; Certain Anti-takeover
Provisions." The Exchange and the Reorganization, together with certain related
transactions, are referred to herein as the "Split-Off." The consummation of the
Split-Off is a non-waiveable condition to the closing of this offering. See
"Principal Stockholders" and "The Split-Off."

The Company's earliest predecessor began business in 1979 as a California
corporation named Micro D, Inc. This company, through a series of acquisitions
and mergers, is now a subsidiary of Ingram Micro Holdings Inc. ("Holdings"),
which has expanded through additional acquisitions and internal growth to
encompass the Company's current operations. The Company was reincorporated in
Delaware on April 29, 1996. Holdings is presently a wholly-owned subsidiary of
the Company and will be merged into the Company prior to consummation of the
Split-Off. The Company's principal executive office is located at 1600 East St.
Andrew Place, Santa Ana, California 92705, and its telephone number is (714)
566-1000.

15
18

USE OF PROCEEDS

The net proceeds to the Company from this offering, after deducting
estimated underwriting discounts and commissions and estimated offering
expenses, are assumed to be approximately $282.1 million ($324.6 million if the
U.S. Underwriters' over-allotment option is exercised in full). At June 29,
1996, the Company had total outstanding debt of $768.8 million, of which $560.8
million was due to Ingram Industries. Concurrently with the Split-Off, the
Company will assume Ingram Industries' accounts receivable securitization
program (expected to aggregate $210 million at the closing of this offering) in
partial satisfaction of amounts due to Ingram Industries. The Company intends to
use borrowings under the Credit Facility to repay the remaining intercompany
indebtedness to Ingram Industries, which was incurred for general corporate
purposes, primarily working capital needs in connection with the expansion of
the Company's business.

A portion of the net proceeds from this offering will be used to repay
outstanding revolving indebtedness related to amounts drawn by certain of the
Company's subsidiaries ($167.0 million at June 29, 1996), as participants in
Ingram Industries' existing $380 million unsecured credit facility, which will
terminate concurrently with the closing of this offering. The remainder of the
net proceeds from this offering will be used to repay a portion of the
borrowings under the Credit Facility. After giving effect to the foregoing
transactions, including the application of the net proceeds from this offering,
borrowings under the Credit Facility would have been approximately $218.6
million on a pro forma basis at June 29, 1996. The Company is in discussions
with holders of $192.9 million of Ingram Industries' private placement notes
with respect to the possible assumption of such indebtedness by the Company in
partial satisfaction of amounts due to Ingram Industries. If such private
placement notes are assumed by the Company, borrowings under the Credit Facility
will be reduced correspondingly. See "Capitalization," "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources," and Note 6 of Notes to Consolidated Financial Statements.

DIVIDEND POLICY

The Company has never declared or paid any dividends on the Common Equity
other than the distribution made to Ingram Industries in connection with the
Split-Off. See "Risk Factors--Relationship with Ingram Industries, Ingram
Entertainment, and the Ingram Family Stockholders." The Company currently
intends to retain its future earnings to finance the growth and development of
its business and therefore does not anticipate declaring or paying cash
dividends on the Common Equity for the foreseeable future other than a dividend
that may be paid to Ingram Industries and the other holders of Class B Common
Stock in connection with and prior to the Split-Off. Any future determination to
declare or pay dividends will be at the discretion of the Board of Directors and
will be dependent upon the Company's financial condition, results of operations,
capital requirements, and such other factors as the Board of Directors deems
relevant. In addition, the Credit Facility and the Company's other debt
facilities will contain restrictions on the declaration and payment of
dividends.

16
19

CAPITALIZATION

The following table sets forth, as of June 29, 1996, (i) the actual
short-term debt and capitalization of the Company, (ii) such short-term debt and
capitalization as adjusted to give effect to the Split-Off (as if the Company
had been organized as of such date), and (iii) such as adjusted short-term debt
and capitalization as further adjusted to reflect the sale of the shares of
Common Stock offered by the Company hereby at an assumed initial public offering
price of $15.00 per share (after deducting estimated underwriting discounts and
commissions and estimated offering expenses) and the application of the
estimated net proceeds therefrom. See "Use of Proceeds."

JUNE 29, 1996
-----------------------------------------
AS AS FURTHER
ACTUAL ADJUSTED(1) ADJUSTED(1)(2)
---------- ----------- --------------
(IN THOUSANDS, EXCEPT SHARE DATA)

Short-term debt:
Current maturities of long-term debt........................... $ 12,044 $ 12,044 $ 12,044
========== ======== ========
Long-term debt:
Long-term debt................................................. $ 195,890 $ 579,564 $297,464
Due to Ingram Industries....................................... 560,847 0 0
---------- -------- --------
Total long-term debt........................................ 756,737 579,564 297,464
Redeemable Class B Common Stock.................................. 0 17,573 17,573
---------- -------- --------
Stockholders' equity(3)(4):
Class A Common Stock, $0.01 par value; 265,000,000 shares
authorized;
0, 0, and 20,000,000 shares issued and outstanding,
respectively................................................ 0 0 200
Class B Common Stock, $0.01 par value; 135,000,000 shares
authorized; 107,251,352, 109,868,752, and 109,868,752 shares
issued and outstanding, respectively (including 2,510,400
redeemable shares).......................................... 1,073 1,074 1,074
Additional paid in capital..................................... 22,427 22,775 304,675
Retained earnings.............................................. 312,762 312,762 303,000
Cumulative translation adjustment.............................. 2,539 2,539 2,539
Unearned compensation.......................................... 0 (749) (749)
---------- -------- --------
Total stockholders' equity.................................. 338,801 338,401 610,739
---------- -------- --------
Total capitalization........................................ $1,095,538 $ 935,538 $925,776
========== ======== ========

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

(1) As adjusted to reflect (i) the issuance of 2,510,400 redeemable shares of
Class B Common Stock in the Employee Offering and the grant of 107,000
restricted shares of Class B Common Stock (unearned compensation)
concurrently therewith; (ii) the repayment of $17.2 million in long-term
debt with the net proceeds from the Employee Offering; and (iii) after
consideration of (i) and (ii), the assumption by the Company of certain
debt facilities and the accounts receivable program of Ingram Industries in
satisfaction of amounts due to Ingram Industries (resulting in an increase
of $383.7 million in long-term debt, a decrease of $560.8 million in
amounts due to Ingram Industries, and a decrease of $160.0 million in trade
accounts receivable, not reflected in this table), as if such transactions
had occurred on June 29, 1996. Does not reflect approximately $40.0 million
of indebtedness, including capital lease obligations, which may be incurred
by the Company in connection with the acquisition of or restructuring of
lease agreements related to certain facilities currently utilized by the
Company. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Liquidity and Capital Resources" and "Certain
Transactions."

(2) As further adjusted to give effect to the issuance of the Common Stock
offered by the Company in this offering at an assumed initial public
offering price of $15.00 per share (after deducting estimated underwriting
discounts and commissions and estimated offering expenses in connection with
this offering) and the repayment of certain revolving indebtedness including
certain amounts outstanding under the Credit Facility with the entire net
proceeds therefrom, and the additional estimated $9.8 million non-cash
charge related to certain Rollover Stock Options. See "Use of Proceeds" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Overview."

(4) Excludes approximately 20,200,000 shares of Common Equity issuable in
connection with outstanding stock options. See "Management -- 1996
Plan -- Options" and "-- Rollover Plans; Incentive Stock Units."

17
20

DILUTION

The pro forma net tangible book value of the Common Equity of the Company
as of June 29, 1996 was $327.1 million or $2.98 per share of Common Equity (as
adjusted to give effect to the Employee Offering, the grant of 107,000
restricted shares of Class B Common Stock, and the Split-Off). Net tangible book
value represents the amount of total tangible assets less total liabilities.

Dilution per share to new investors represents the difference between the
amount per share paid by purchasers of Common Stock in the offering made hereby
and the pro forma net tangible book value per share of Common Equity immediately
after the closing of this offering. After giving effect to the sale of
20,000,000 shares of Common Stock offered hereby by the Company at an assumed
initial public offering price of $15.00 per share and after deducting estimated
underwriting discounts and commissions and estimated offering expenses and the
application of the estimated net proceeds therefrom, the pro forma net tangible
book value of the Company as of June 29, 1996 would have been $599.4 million or
$4.62 per share of Common Equity. This represents an immediate increase in net
tangible book value of $1.64 per share of Common Equity to existing stockholders
and an immediate dilution of $10.38 per share of Common Equity to purchasers of
Common Stock in this offering. The following table illustrates the per share
dilution to new investors:

Assumed initial public offering price per share............................. $15.00
Net tangible book value per share of Common
Equity as of June 29, 1996, as adjusted................................ $2.98
Increase attributable to new investors.................................... 1.64
-----
Net tangible book value per share of Common Equity after this offering...... 4.62
------
Dilution per share of Common Equity to new investors........................ $10.38
======

The following table summarizes, on a pro forma basis to give effect to the
Employee Offering, the grant of 107,000 restricted shares of Class B Common
Stock, and the Split-Off, as of June 29, 1996, the difference (before deducting
estimated underwriting discounts and commissions and estimated offering
expenses) between existing stockholders and the purchasers of shares of Common
Stock in this offering (at an assumed initial public offering price of $15.00
per share) with respect to: (i) the number of shares of Common Equity purchased
from the Company; (ii) the effective cash consideration paid; and (iii) the
average price paid per share of Common Equity.

SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
----------------------- ------------------------ PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
----------- ------- ------------ ------- ---------

Existing stockholders(1)........... 109,868,752 84.6% $ 84,133,800 21.9% $ 0.77
New investors...................... 20,000,000 15.4 300,000,000 78.1 15.00
----------- ----- ------------ -----
Total.................... 129,868,752 100.0% $384,133,800 100.0%
=========== ===== ============ =====

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

(1) Excludes options issued under the Company's 1996 Plan and Rollover Plan, to
purchase an aggregate of 20,200,000 shares of Common Equity. To the extent
any of these options are exercised, there will be further dilution to new
investors. See "Management -- 1996 Plan -- Options" and " -- Rollover Plan;
Incentive Stock Units."

18
21

SELECTED CONSOLIDATED FINANCIAL DATA

The following table presents selected consolidated financial data of the
Company. The information set forth below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the historical consolidated financial statements and notes
thereto included elsewhere in this Prospectus. The consolidated statement of
income data set forth below for each of the three years in the period ended
December 30, 1995 and the consolidated balance sheet data at December 31, 1994
and December 30, 1995 are derived from, and are qualified by reference to, the
audited consolidated financial statements included elsewhere in this Prospectus,
and should be read in conjunction with those financial statements and the notes
thereto. The consolidated balance sheet data as of January 1, 1994 are derived
from the audited consolidated balance sheet of the Company as of January 1,
1994, which is not included in this Prospectus. The consolidated statement of
income data for each of the two years in the period ended January 2, 1993 and
the consolidated balance sheet data as of December 28, 1991 and January 2, 1993
are derived from unaudited consolidated financial statements not included in
this Prospectus. The consolidated financial data as of and for the twenty-six
weeks ended July 1, 1995, and as of and for the twenty-six weeks ended June 29,
1996, have been derived from unaudited consolidated financial statements of the
Company which are included in this Prospectus and which, in the opinion of the
Company, reflect all adjustments, consisting only of adjustments of a normal and
recurring nature, necessary for a fair presentation. Results for the twenty-six
weeks ended June 29, 1996 are not necessarily indicative of results for the full
year. The historical consolidated financial data may not be indicative of the
Company's future performance and do not necessarily reflect what the financial
position and results of operations of the Company would have been had the
Company operated as a separate, stand-alone entity during the periods covered.
See "Consolidated Financial Statements."

TWENTY-SIX WEEKS ENDED
FISCAL YEAR -----------------------
-------------------------------------------------------------- JULY 1, JUNE 29,
1991 1992 1993 1994 1995 1995 1996
INCOME STATEMENT DATA: ---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Net sales.............................. $2,016,586 $2,731,272 $4,044,169 $5,830,199 $8,616,867 $3,739,145 $5,543,167
Cost of sales.......................... 1,831,140 2,503,702 3,714,527 5,391,224 8,011,181 3,467,838 5,166,134
---------- ---------- ---------- ---------- ---------- ---------- ----------
Gross profit........................... 185,446 227,570 329,642 438,975 605,686 271,307 377,033
Expenses:
Selling, general and
administrative..................... 116,793 157,306 225,047 296,330 415,344 190,924 252,652
Charges allocated from Ingram
Industries......................... 1,030 1,330 1,567 2,355 3,461 1,678 2,143
Non-cash compensation charge......... 0 0 0 0 0 0 7,802(2)
---------- ---------- ---------- ---------- ---------- ---------- ----------
117,823 158,636 226,614 298,685 418,805 192,602 262,597(2)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income from operations................. 67,623 68,934 103,028 140,290 186,881 78,705 114,436(2)
Other (income) expense:
Interest income...................... (256) (103 ) (407) (937) (3,479) (2,425) (761)
Interest expense..................... 3,233 5,556 5,003 8,744 13,451 6,024 7,526
Interest expense charged by Ingram
Industries......................... 11,859 12,405 16,089 24,189 32,606 14,875 21,172
Net foreign currency exchange loss... 0 0 111 6,873 7,751 4,598 392
Other................................ 324 2,574 (623) 716 1,936 1,412 1,610
---------- ---------- ---------- ---------- ---------- ---------- ----------
15,160 20,432 20,173 39,585 52,265 24,484 29,939
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before income taxes and minority
interest............................. 52,463 48,502 82,855 100,705 134,616 54,221 84,497(2)
Provision for income taxes............. 22,286 17,529 31,660 39,604 53,143 21,402 33,856
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before minority interest........ 30,177 30,973 51,195 61,101 81,473 32,819 50,641(2)
Minority interest...................... 0 0 840 (2,243) (2,834) (2,701) 1
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income(1).......................... $ 30,177 $ 30,973 $ 50,355 $ 63,344 $ 84,307 $ 35,520 $ 50,640(2)
========== ========== ========== ========== ========== ========== ==========
Earnings per share..................... $ 0.25 $ 0.26 $ 0.42 $ 0.53 $ 0.70 $ 0.29 $ 0.42(2)
========== ========== ========== ========== ========== ========== ==========
Weighted average common shares
outstanding.......................... 120,554 120,554 120,554 120,554 120,554 120,554 120,554

DECEMBER 28, JANUARY 2, JANUARY 1, DECEMBER 31, DECEMBER 30, JUNE 29,
1991 1993 1994 1994 1995 1996
BALANCE SHEET DATA: ------------ ---------- ---------- ------------ ------------ ----------
(IN THOUSANDS)

Cash.......................................... $ 15,510 $ 25,276 $ 44,391 $ 58,369 $ 56,916 $ 45,172
Working capital............................... 288,462 334,913 471,616 663,049 1,019,639 946,156
Total assets.................................. 670,649 915,590 1,296,363 1,974,289 2,940,898 2,641,421
Total debt(3)................................. 244,785 295,389 398,929 552,283 850,548 768,781
Stockholder's equity.......................... 78,972 109,418 155,459 221,344 310,795 338,801

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

(1) The 1992 results reflect the adoption of FAS 109.

(2) Reflects a non-cash compensation charge of $7.8 million ($4.8 million, or
$0.04 per share, net of tax) in connection with the granting of Rollover
Stock Options. See Note 11 of Notes to Consolidated Financial Statements.

(3) Includes long-term debt, current maturities of long-term debt, and amounts
due to Ingram Industries.

19
22

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Ingram Micro is the leading wholesale distributor of microcomputer products
worldwide. The Company's net sales have grown to $8.6 billion in 1995 from $2.0
billion in 1991. This sales growth reflects substantial expansion of its
existing domestic and international operations, resulting from the addition of
new customers, increased sales to the existing customer base, the addition of
new product categories and suppliers, and the establishment of Ingram Alliance,
as well as the successful integration of ten acquisitions worldwide. Net income
has grown to $84.3 million in 1995 from $30.2 million in 1991.

The microcomputer wholesale distribution industry in which the Company
operates is characterized by narrow gross and operating margins, which have
declined industry-wide in recent years, primarily due to intense price
competition. The Company's gross margins declined to 7.0% in 1995 from 9.2% in
1991. To partially offset the decline in gross margins, the Company has
continually instituted operational and expense controls which have reduced
selling, general, and administrative ("SG&A") expenses (including charges
allocated from Ingram Industries) as a percentage of net sales to 4.8% in 1995
from 5.8% in 1991. As a result, the Company's operating margins and net margins
have declined less than gross margins. Operating margins declined to 2.2% in
1995 from 3.4% in 1991, and net margins declined to 1.0% in 1995 from 1.5% in
1991. There can be no assurance that the Company will be able to continue to
reduce operating expenses as a percentage of net sales to mitigate further
reductions in gross margins. Although the Company's international operations
have historically had similar gross margins to the Company's U.S. traditional
wholesale operations, the Company's international operations have historically
had lower operating margins due in part to greater economies of scale in the
U.S. operations. See "Risk Factors -- Narrow Margins."

Ingram Micro entered the master reseller (also known as "aggregation")
business in late 1994 through the launch of Ingram Alliance. Ingram Alliance is
designed to offer resellers access to certain of the industry's leading hardware
manufacturers at competitive prices by utilizing a lower cost business model
that depends upon a higher average order size, lower product returns percentage,
and supplier-paid financing. In 1995, Ingram Alliance contributed over $700
million of net sales to the Company. Since its inception in late 1994, Ingram
Alliance has operated with lower gross margins, lower SG&A expenses as a
percentage of net sales, and lower financing costs than the Company's
traditional wholesale distribution business. Accordingly, if Ingram Alliance's
sales continue to grow as a percentage of the Company's total net sales, the
Company expects such increase to cause its overall gross margins to decline.

The Company sells microcomputer hardware, networking equipment, and
software products. Sales of hardware products (including networking equipment)
represent a majority of total net sales and have historically generated a higher
operating margin than sales of software products, although operating margins on
both hardware products and software products have historically declined.
Hardware products and networking equipment have comprised an increasing
percentage, and software products a decreasing percentage, of the Company's net
sales in recent years, and the Company expects this trend to continue. Net sales
of software products have decreased as a percentage of total net sales in recent
years due to a number of factors, including bundling of software with
microcomputers; sales growth in Ingram Alliance, which is a hardware-only
business; declines in software prices; and the emergence of alternative means of
software distribution, such as site licenses and electronic distribution. See
"Risk Factors -- Rapid Technological Change; Alternate Means of Software
Distribution" and "Business -- Products and Suppliers."

Historically, the Company's sources of capital have primarily been
borrowings from Ingram Industries through debt facilities maintained by Ingram
Industries and guaranteed by the Company. The Company has a commitment providing
for the $1 billion Credit Facility, and expects to enter into a formal agreement
prior to the closing of this offering. The Credit Facility is expected to be
effective as of the closing of this offering. Concurrently with the Split-Off,
the Company will repay certain intercompany indebtedness with borrowings under
the Credit Facility, in partial satisfaction of amounts due to Ingram
Industries. Certain of the net proceeds from this offering will be used to repay
outstanding revolving indebtedness related to amounts drawn by certain of the
Company's subsidiaries, as participants in Ingram Industries' existing unsecured
credit

20
23

facility, which will terminate concurrently with the closing of this offering.
The remainder of the net proceeds from this offering will be used to repay a
portion of the borrowings under the Credit Facility. See "Use of Proceeds." The
Company has historically depended on Ingram Industries and other subsidiaries of
Ingram Industries for financing, management, tax and payroll administration,
property/casualty insurance, employee benefits administration, and certain other
administrative services. In conjunction with the Split-Off, the Company, Ingram
Industries, and Ingram Entertainment will enter into the Transitional Service
Agreements, as well as a tax sharing agreement. See "The Split-Off -- The
Reorganization." The Company believes that the terms of the Transitional Service
Agreements will be on a basis at least as favorable to the Company as those that
would have been obtained from third parties on an arm's length basis. The
Company's historical financial statements reflect an allocation of expenses in
connection with the services covered by the Transitional Service Agreements.
Although the Company expects the costs and fees to be paid by it in connection
with the Transitional Service Agreements to be higher than its historical
allocated costs, it does not believe the increase in costs will be material to
its results of operations. On a long-term basis, the Company will be required to
hire personnel to perform such services or contract with one or more independent
third parties to provide such services. See "Risk Factors -- Relationship with
Ingram Industries, Ingram Entertainment, and the Ingram Family Stockholders."

The microcomputer wholesale distribution business is capital intensive. The
Company's business requires significant levels of capital to finance accounts
receivable and product inventory that is not financed by trade creditors. The
Company is highly leveraged and has relied heavily on debt financing for its
increasing working capital needs in connection with the expansion of its
business. The Company will need additional capital to finance its product
inventory and accounts receivable as it expands its business. The Company's
interest expense for any current or future indebtedness will be subject to
fluctuations in interest rates and may cause fluctuations in the Company's net
income. In connection with the Split-Off, the Company will assume Ingram
Industries' accounts receivable securitization program, and financing costs
associated with this program will be classified as other expense. Prior to the
Split-Off, such expenses were reflected as interest expense charged by Ingram
Industries. While this structure will not increase the Company's cost of
financing, this change in the classification of financing costs will result in
an increase in the Company's other expenses of approximately $10.5 million per
year and a corresponding decrease in its interest expense.

In connection with the Split-Off, certain outstanding Ingram Industries
options, incentive stock units ("ISUs"), and stock appreciation rights ("SARs")
held by certain employees of Ingram Industries, Ingram Entertainment, and Ingram
Micro will be converted to options to purchase up to an aggregate of
approximately 11,000,000 shares of Common Stock ("Rollover Stock Options"). See
"Management -- Rollover Plan; Incentive Stock Units." The Company has recorded a
pre-tax non-cash compensation charge of approximately $7.8 million ($4.8 million
net of tax) in the first half of 1996 related to the vested portion of certain
of the Rollover Stock Options as the terms and grants of the Rollover Stock
Options were established in the first quarter of 1996. This charge was based on
the difference between the estimated fair value of such options in the first
quarter of 1996 and the exercise price of such options or SARs. In addition, at
the time of this offering, the Company will be required by applicable accounting
rules to record a non-cash compensation charge with respect to the vested
portion of approximately 1,300,000 formula plan Rollover Stock Options included
in the 11,000,000 shares. This non-cash charge is expected to be approximately
$9.8 million based on the difference between the average exercise price of $2.63
per share and $15.00 per share, the assumed initial public offering price of the
Common Stock. The Company will be required by applicable accounting rules to
record additional non-cash compensation charges over the remaining vesting
periods of the Rollover Stock Options. The Company expects these additional
charges to be $3.0 million ($2.3 million net of tax) in the aggregate for the
third and fourth quarters of 1996, $6.4 million ($5.0 million net of tax) for
1997 and $4.3 million ($3.2 million net of tax) for 1998.

21
24

RESULTS OF OPERATIONS

The following table sets forth the Company's net sales by geographic region
(excluding intercompany sales), and the percentage of total net sales
represented thereby, for each of the periods indicated.

FISCAL YEAR TWENTY-SIX WEEKS ENDED
-------------------------------------------------- --------------------------------
1993 1994 1995 JULY 1, 1995 JUNE 29, 1996
-------------- -------------- -------------- -------------- --------------
(DOLLARS IN MILLIONS)

NET SALES BY GEOGRAPHIC REGION(1):
United States.................. $ 3,118 77.1% $ 4,122 70.7% $ 5,970 69.3% $ 2,577 68.9% $ 3,821 68.9%
Europe......................... 485 12.0 1,078 18.5 1,849 21.4 822 22.0 1,186 21.4
Other international............ 441 10.9 630 10.8 798 9.3 340 9.1 536 9.7
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total.......................... $ 4,044 100.0% $ 5,830 100.0% $ 8,617 100.0% $ 3,739 100.0% $ 5,543 100.0%
====== ====== ====== ====== ====== ====== ====== ====== ====== ======

- ---------------
(1) Net sales are classified by location of the Company entity. For example,
products sold through Ingram Alliance or the U.S. Export Division are
classified as United States sales.

The following table sets forth certain items from the Company's
Consolidated Statement of Income as a percentage of net sales, for each of the
periods indicated.

PERCENTAGE OF NET SALES
----------------------------------------------------
TWENTY-SIX WEEKS ENDED
FISCAL YEAR ----------------------
------------------------- JULY 1, JUNE 29,
1993 1994 1995 1995 1996
----- ----- ----- -------- ---------

Net sales..................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales................................. 91.9 92.5 93.0 92.7 93.2
------ ------ ------ ------ ------
Gross profit.................................. 8.1 7.5 7.0 7.3 6.8
Expenses:
SG&A expenses and charges allocated from
Ingram Industries........................ 5.6 5.1 4.8 5.2 4.6
Non-cash compensation charge................ 0.0 0.0 0.0 0.0 0.1
------ ------ ------ ------ ------
Income from operations........................ 2.5 2.4 2.2 2.1 2.1
Other expense, net............................ 0.5 0.7 0.6 0.7 0.6
------ ------ ------ ------ ------
Income before income taxes and minority
interest.................................... 2.0 1.7 1.6 1.4 1.5
Provision for income taxes.................... 0.8 0.6 0.6 0.6 0.6
Minority interest............................. 0.0 0.0 0.0 (0.1) 0.0
------ ------ ------ ------ ------
Net income.................................... 1.2% 1.1% 1.0% 0.9% 0.9%
====== ====== ====== ====== ======

FIRST HALF 1996 COMPARED TO FIRST HALF 1995

Consolidated net sales increased 48.2% to $5.5 billion in the first half of
1996 from $3.7 billion in the first half of 1995. The increase in worldwide net
sales was attributable to growth in the microcomputer products industry in
general, the addition of new customers, increased sales to the existing customer
base, and expansion of the Company's product offerings.

Net sales from U.S. operations increased 48.3% to $3.8 billion in the first
half of 1996 from $2.6 billion in the first half of 1995. In addition to the
factors above that impacted net sales worldwide, U.S. net sales were positively
impacted by the strong growth in Ingram Alliance sales. Net sales from European
operations increased 44.3% to $1.2 billion in the first half of 1996 from $822.4
million in the first half of 1995. Other international net sales increased 57.8%
to $536.4 million in the first half of 1996 from $339.9 million in the first
half of 1995, principally due to the growth in net sales from the Company's
Canadian operations. In the first half of 1996, net sales from U.S. operations
accounted for 68.9% of consolidated net sales, net sales from European
operations accounted for 21.4% of consolidated net sales, and other
international net sales accounted for 9.7% of consolidated net sales. In the
first half of 1995, net sales from U.S. operations accounted for 68.9% of
consolidated net sales, net sales from European operations accounted for 22.0%
of consolidated net sales, and other international net sales accounted for 9.1%
of consolidated net sales.

22
25

Cost of sales as a percentage of net sales increased to 93.2% in the first
half of 1996 from 92.7% in the first half of 1995. This increase was largely
attributable to competitive pricing pressures, especially in Europe, and the
increase as a percentage of net sales of the lower gross margin Ingram Alliance
business, which more than offset an increase in worldwide purchase discounts and
rebates from the Company's suppliers.

Total SG&A expenses and charges allocated from Ingram Industries increased
32.3% to $254.8 million in the first half of 1996 from $192.6 million in the
first half of 1995, but decreased as a percentage of net sales to 4.6% in the
first half of 1996 from 5.2% in the first half of 1995. The increased level of
spending was attributable to expenses required to support expansion of the
Company's business, consisting primarily of incremental personnel and support
costs, lease payments relating to new operating facilities, and expenses
associated with the development and maintenance of information systems. The
decrease in operating expenses as a percentage of net sales was primarily
attributable to the growth of Ingram Alliance, which utilizes a lower cost
business model, and economies of scale from higher sales volumes.

During the first half of 1996, the Company recorded a non-cash compensation
charge of $7.8 million or 0.1% of net sales in connection with the Rollover
Stock Options. The Company did not record any such charge during the first half
of 1995.

Excluding the $7.8 million non-cash compensation charge in the first half
of 1996, total income from operations increased as a percentage of net sales to
2.2% in the first half of 1996 from 2.1% in the first half of 1995. Income from
operations in the United States remained constant as a percentage of net sales
at 2.7% in both periods. Income from operations in Europe decreased as a
percentage of net sales to 0.7% in the first half of 1996 from 0.9% in the first
half of 1995. The decrease was offset by an increase in income from operations
as a percentage of net sales for geographic regions outside the United States
and Europe to 2.2% in the first half of 1996 from 0.4% in the first half of
1995. The first half of 1995 included the negative impact of an inventory
valuation loss of $3.8 million related to the decline in value of the Mexican
peso and the associated impact on the Mexican economy.

For the reasons set forth above, income from operations, including the $7.8
million non-cash compensation charge, increased 45.4% to $114.4 million in the
first half of 1996 from $78.7 million in the first half of 1995, but remained
constant as a percentage of net sales at 2.1%.

Other expense, net, which consists primarily of net interest expense
(including interest expense charged by Ingram Industries), foreign currency
exchange losses, and miscellaneous non-operating expenses, increased 22.3% to
$29.9 million in the first half of 1996 from $24.5 million in the first half of
1995, but declined as a percentage of net sales to 0.6% in the first half of
1996 from 0.7% in the first half of 1995. The increase in other expense was
largely attributable to a higher level of borrowings to finance the Company's
worldwide business expansion, partially offset by a period-over-period decrease
in the amount of foreign currency losses which were primarily related to the
Mexican peso devaluation.

The provision for income taxes increased 58.2% to $33.9 million in the
first half of 1996 from $21.4 million in the first half of 1995, reflecting the
55.8% increase in the Company's income before income taxes and minority
interest. The Company's effective tax rate was 40.1% in the first half of 1996
compared to 39.5% in the first half of 1995.

Excluding the $4.8 million (net of tax) non-cash compensation charge, net
income increased 56.0% to $55.4 million in the first half of 1996 from $35.5
million in the first half of 1995 and, as a percentage of net sales, increased
to 1.0% in the first half of 1996 from 0.9% in the first half of 1995. Net
income, including the $4.8 million (net of tax) non-cash compensation charge,
increased 42.6% to $50.6 million in the first half of 1996 from $35.5 million in
the first half of 1995, but remained constant as a percentage of net sales at
0.9%.

1995 COMPARED TO 1994

Consolidated net sales increased 47.8% to $8.6 billion in 1995 from $5.8
billion in 1994. The increase in worldwide net sales was attributable to growth
in the microcomputer products industry in general, the addition of new
customers, increased sales to the existing customer base, and expansion of the
Company's product offerings, as well as to the release of significant new
products, including the Microsoft Windows 95 operating system in August 1995.

23
26

Net sales from U.S. operations increased 44.8% to $6.0 billion in 1995 from
$4.1 billion in 1994. The increase in U.S. net sales was largely attributable to
the growth of Ingram Alliance in 1995, its first full year of operations, as
well as an increase in the Company's customer base and product lines. Net sales
from European operations increased 71.5% to $1.8 billion in 1995 from $1.1
billion in 1994. In addition to factors affecting sales worldwide, European net
sales were positively impacted by the full year contribution in 1995 of the
Company's Scandinavian operations, which were acquired in September 1994. Other
international net sales increased 26.7% to $798.0 million in 1995 from $629.6
million in 1994. The increase in net sales from other international operations
was entirely attributable to an increase in Canadian sales, partially offset by
a decrease in Mexican net sales resulting from the distressed Mexican economy
and the related peso devaluation. In 1995, net sales from U.S. operations
accounted for 69.3% of consolidated net sales, net sales from European
operations accounted for 21.4% of consolidated net sales, and other
international net sales accounted for 9.3% of consolidated net sales. In 1994,
net sales from U.S. operations accounted for 70.7% of consolidated net sales,
net sales from European operations accounted for 18.5% of consolidated net
sales, and other international net sales accounted for 10.8% of consolidated net
sales.

Cost of sales as a percentage of net sales increased to 93.0% in 1995 from
92.5% in 1994. This increase was largely attributable to competitive pricing
pressures worldwide and the growth of Ingram Alliance, which is characterized by
lower gross margins than the Company's traditional wholesale distribution
business. Gross margin was favorably impacted by effective operational controls
and an increase in worldwide purchase discounts and rebates from the Company's
suppliers.

Total SG&A expenses and charges allocated from Ingram Industries increased
40.2% to $418.8 million in 1995 from $298.7 million in 1994, but decreased as a
percentage of net sales to 4.8% in 1995 from 5.1% in 1994. The increased level
of spending was attributable to expenses required to support expansion of the
Company's business, consisting primarily of incremental personnel and support
costs, lease payments relating to new facilities, and expenses associated with
the development and maintenance of information systems. The decreased level of
spending as a percentage of net sales was primarily attributable to economies of
scale resulting from higher sales volumes, increased operating efficiencies, and
the growth of Ingram Alliance, which is characterized by lower SG&A expenses as
a percentage of net sales than the Company's traditional wholesale distribution
business.

For the reasons set forth above, income from operations increased 33.2% to
$186.9 million in 1995 from $140.3 million in 1994, but decreased as a
percentage of net sales to 2.2% in 1995 from 2.4% in 1994. Income from U.S.
operations decreased as a percentage of net sales to 2.6% in 1995 from 3.0% in
1994. This decrease was partially offset by an increase in income from European
operations as a percentage of net sales to 1.1% in 1995 from 0.7% in 1994.

Other expense, net increased 32.0% to $52.3 million in 1995 from $39.6
million in 1994, but decreased as a percentage of net sales to 0.6% in 1995 from
0.7% in 1994. The increase in other expense was largely attributable to a higher
level of borrowings to finance the Company's worldwide business expansion. The
Company was also negatively impacted by the continued effect of the distressed
Mexican economy and the related peso devaluation. Primarily due to events in
Mexico, the Company sustained a net foreign currency exchange loss of $7.8
million in 1995 as compared to a $6.9 million loss in 1994.

The provision for income taxes increased 34.2% to $53.1 million in 1995
from $39.6 million in 1994, reflecting the 33.7% increase in the Company's
income before income taxes and minority interest. The Company's effective tax
rate was 39.5% in 1995 as compared to 39.3% in 1994.

Net income increased 33.1% to $84.3 million in 1995 from $63.3 million in
1994, but decreased as a percentage of net sales to 1.0% in 1995 from 1.1% in
1994.

1994 COMPARED TO 1993

Consolidated net sales increased 44.2% to $5.8 billion in 1994 from $4.0
billion in 1993. The increase in worldwide net sales was attributable to growth
in the microcomputer products industry in general, the acquisition of four
international distributors, the addition of new customers, increased sales to
the existing customer base, and expansion of the Company's product offerings.

24
27

Net sales from U.S. operations increased 32.2% to $4.1 billion in 1994 from
$3.1 billion in 1993. The increase in U.S. net sales was primarily attributable
to the same factors favorably impacting worldwide consolidated net sales. Net
sales from European operations increased 122.3% to $1.1 billion in 1994 from
$485.1 million in 1993. The increase in European net sales was due to improved
operating performance by several of the European subsidiaries (including the
addition of some of the Company's suppliers to the German operation), as well as
the Company's entry through acquisitions into the Spanish market in April 1994
and the Scandinavian market in September 1994. Net sales from other
international operations increased 42.9% to $629.6 million in 1994 from $440.7
million in 1993. The increase in net sales from other international operations
was largely attributable to the continued development of the Company's
operations in Canada and Mexico. In 1994, net sales from U.S. operations
accounted for 70.7% of consolidated net sales, net sales from European
operations accounted for 18.5% of consolidated net sales, and net sales from
other international operations accounted for 10.8% of consolidated net sales. In
1993, net sales from U.S. operations accounted for 77.1% of consolidated net
sales, net sales from European operations accounted for 12.0% of consolidated
net sales, and other international net sales accounted for 10.9% of consolidated
net sales.

Cost of sales as a percentage of net sales increased to 92.5% in 1994 from
91.9% in 1993. This increase was primarily attributable to competitive pricing
pressures worldwide.

Total SG&A expenses and charges allocated from Ingram Industries increased
31.8% to $298.7 million in 1994 from $226.6 million in 1993 but decreased as a
percentage of net sales to 5.1% in 1994 from 5.6% in 1993. The increased level
of spending was attributable to expenses required to support expansion of the
Company's business, consisting primarily of incremental personnel and support
costs, lease payments relating to new facilities, and expenses associated with
the development and maintenance of information systems. The decreased level of
spending as a percentage of net sales was primarily attributable to economies of
scale resulting from higher sales volumes, as well as increased operating
efficiencies.

For the reasons set forth above, income from operations increased 36.2% to
$140.3 million in 1994 from $103.0 million in 1993, but decreased as a
percentage of net sales to 2.4% in 1994 from 2.5% in 1993. Contributing to the
increase in income from operations was income from the European operations of
$8.1 million, compared to a $3.2 million loss from such operations in 1993.

Other expense, net increased 96.2% to $39.6 million in 1994 from $20.2
million in 1993, and increased as a percentage of net sales to 0.7% in 1994 from
0.5% in 1993. The increase in other expense was largely attributable to a higher
level of borrowings to finance the Company's worldwide business expansion,
including acquisitions, and foreign currency exchange losses of $6.9 million
primarily related to Mexico in 1994.

The provision for income taxes increased 25.1% to $39.6 million in 1994
from $31.7 million in 1993, reflecting the 21.5% increase in the Company's
income before income taxes and minority interest. The Company's effective tax
rate was 39.3% in 1994 as compared to 38.2% in 1993.

Net income increased 25.8% to $63.3 million in 1994 from $50.4 million in
1993, but decreased as a percentage of net sales to 1.1% in 1994 from 1.2% in
1993.

QUARTERLY DATA; SEASONALITY

The Company's quarterly net sales and operating results have varied
significantly in the past and will likely continue to do so in the future as a
result of seasonal variations in the demand for the products and services
offered by the Company, the introduction of new hardware and software
technologies and products offering improved features and functionality, the
introduction of new products and services by the Company and its competitors,
the loss or consolidation of a significant supplier or customer, changes in the
level of operating expenses, inventory adjustments, product supply constraints,
competitive conditions including pricing, interest rate fluctuations, the impact
of acquisitions, currency fluctuations, and general economic conditions. The
Company's narrow operating margins may magnify any such fluctuations. Specific
historical seasonal variations in the Company's operating results have included
a reduction of demand in Europe during the summer months, increased Canadian
government purchasing in the first quarter, and pre-holiday stocking in the
retail channel during the September to November period. In addition, as was the
case with the introduction of Microsoft Windows 95 in August 1995, the product
cycle of major products may materially impact the Company's business, financial
condition, or results of operations.

25
28

The following table sets forth certain unaudited quarterly historical
consolidated financial data for each of the ten quarters up to the period ended
June 29, 1996. This unaudited quarterly information has been prepared on the
same basis as the annual information presented elsewhere herein and, in the
Company's opinion, includes all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of the selected quarterly
information. This information should be read in conjunction with the
consolidated financial statements and notes thereto included elsewhere in this
Prospectus. The operating results for any quarter shown are not necessarily
indicative of results for any future period.

THIRTEEN WEEKS ENDED
--------------------------------------------------------------------------------------------------------------
APR. 2, JULY 2, OCT. 1, DEC. 31, APR. 1, JULY 1, SEPT. 30, DEC. 30, MAR. 30, JUNE 29,
1994 1994 1994 1994 1995 1995 1995 1995 1996 1996
-------- -------- -------- -------- -------- -------- --------- -------- -------- --------
(IN MILLIONS, EXCEPT PER SHARE DATA)

Net sales........ $1,266.6 $1,298.9 $1,387.0 $1,877.7 $1,879.5 $1,859.6 $ 2,331.6 $2,546.2 $2,752.7 $2,790.4
Gross profit..... 92.4 96.8 105.1 144.7 132.4 138.9 151.2 183.2 186.6 190.5
Income from
operations..... 26.1 28.3 32.9 53.0 38.5 40.2 45.2 63.0 54.9(1) 59.5(2)
Income before
income taxes
and minority
interest....... 19.4 19.5 24.3 37.5 24.3 30.0 33.8 46.5 39.6(1) 44.9(2)
Net income....... 11.6 12.1 14.6 25.0 17.1 18.4 20.8 28.0 23.8(1) 26.8(2)
Earnings per
share.......... $ 0.10 $ 0.10 $ 0.12 $ 0.21 $ 0.14 $ 0.15 $ 0.17 $ 0.23 $ 0.20(1) $ 0.22(2)

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

(1) Reflects a non-cash compensation charge of $6.7 million ($4.1 million, or
$0.03 per share, net of tax) in connection with the granting of the Rollover
Stock Options.

(2) Reflects a non-cash compensation charge of $1.1 million ($0.7 million, or
$0.01 per share, net of tax) in connection with the granting of the Rollover
Stock Options.

As indicated in the table above, the increases in the Company's net sales
in the fourth quarter of each fiscal year have generally been higher than those
in the other three quarters in the same fiscal year. The trend of higher fourth
quarter net sales is attributable to calendar year-end business purchases and
holiday period purchases made by customers. Additionally, gross profit in the
fourth quarter of each year has historically been favorably impacted by
attractive year-end product buying opportunities which have often resulted in
higher purchase discounts. Net sales in the third quarter of 1995 were
positively impacted by the release of Microsoft Windows 95. However, gross and
operating margins were lower in the third quarter of 1995 due to the significant
volume of Microsoft Windows 95 sales, which had lower than average gross
margins.

LIQUIDITY AND CAPITAL RESOURCES

The Company has financed its growth and cash needs largely through income
from operations and borrowings (primarily from Ingram Industries), as well as
from trade and supplier credit.

Cash provided by operating activities increased to $118.6 million in the
first half of 1996 from $14.7 million in the first half of 1995. The significant
increase in cash provided by operating activities was partially due to higher
net income and a greater reduction of trade accounts receivable. Net cash used
for financing activities increased to $95.1 million from $21.5 million in the
first halves of 1996 and 1995, respectively, as a result of higher repayments on
borrowings from Ingram Industries and the $20.0 million distribution to Ingram
Industries, both in the first half of 1996.

Net cash used by operating activities was $251.3 million, $87.1 million,
and $41.7 million in 1995, 1994, and 1993, respectively. The significant
increase in cash used by operating activities in 1995 over 1994 was due to the
increased levels of inventory which accounted for a use of $580.1 million in
1995 as compared to $345.5 million in 1994 and an increase in accounts
receivable which accounted for a use of $320.2 million in 1995 as compared to
$232.3 million in 1994. Cash provided by accounts payable of $543.8 million in
1995 and $411.0 million in 1994 partially offset the use related to inventory
and accounts receivable. The increase in the difference between inventory levels
and accounts payable in 1995 as compared to 1994 was primarily due to the launch
of Microsoft Windows 95.

Net cash used by investing activities of $48.8 million, $42.6 million, and
$40.7 million in 1995, 1994, and 1993, respectively, was due to the Company's
expansion of warehouse and other facilities in each year and the acquisitions of
operations in four European countries in 1994 and the acquisition of operations
in three countries in Europe and in Mexico in 1993.

26
29

Net cash provided by financing activities was $298.3 million, $143.3
million, and $101.4 million in 1995, 1994, and 1993, respectively. The increase
in each period was primarily provided by an increase in borrowings from Ingram
Industries.

The Company's sources of capital have primarily been borrowings from Ingram
Industries. As of June 29, 1996, the Company had total debt outstanding of
$768.8 million, including $560.8 million due to Ingram Industries. The Company
has a commitment from NationsBank of Texas N.A. and The Bank of Nova Scotia with
respect to the $1 billion Credit Facility, and the Company expects to enter into
a formal agreement prior to the closing of this offering. The Credit Facility is
expected to be effective as of the closing of this offering, and will contain
standard provisions for agreements of its type. Concurrently with the Split-Off,
the Company will assume Ingram Industries' accounts receivable securitization
program in partial satisfaction of amounts due to Ingram Industries. The Company
intends to repay the remaining intercompany indebtedness with borrowings under
the Credit Facility.

A portion of the net proceeds from this offering will be used to repay
outstanding revolving indebtedness related to amounts drawn by certain of the
Company's subsidiaries as participants in Ingram Industries' existing unsecured
credit facility, which will terminate concurrently with the closing of this
offering. The remainder of the net proceeds from this offering will be used to
repay a portion of the borrowings under the Credit Facility. After giving effect
to the foregoing transactions, including the application of the net proceeds
from this offering, borrowings under the Credit Facility would have been
approximately $218.6 million on a pro forma basis at June 29, 1996. The Company
is in discussions with holders of $192.9 million of Ingram Industries' private
placement notes with respect to the possible assumption of such indebtedness by
the Company in partial satisfaction of amounts due to Ingram Industries. If such
private placement notes are assumed by the Company, borrowings under the Credit
Facility will be reduced correspondingly. See "Use of Proceeds." After giving
effect to the foregoing transactions and the application of the net proceeds
from this offering, the Company would have had available approximately $781.4
million under the Credit Facility (approximately $974.3 million if the Company
assumes Ingram Industries' private placement notes). The aggregate amount of
long-term debt outstanding after the Split-Off, and before application of the
proceeds from this offering, will be substantially similar to the long-term debt
and debt due to Ingram Industries immediately prior to the Split-Off, except as
adjusted for the accounts receivable securitization program to be assumed by the
Company. However, in connection with the Split-Off, the Company may incur up to
an additional $40.0 million of indebtedness including capital lease obligations
in connection with the acquisition of or restructuring of lease agreements
related to certain facilities currently utilized by the Company. See "Certain
Transactions."

Effective February 1993, the Company entered into an agreement with Ingram
Industries whereby the Company sold all of its domestic trade accounts
receivable to Ingram Industries on an ongoing basis. Ingram Industries
transferred certain trade accounts receivable from the Company and other Ingram
Industries affiliates to a trust which sold certificates representing undivided
interests in the total pool of trade receivables without recourse. As of June
29, 1996, Ingram Industries had sold $160 million of fixed rate certificates and
a variable rate certificate, under which $93 million was outstanding. Ingram
Industries' arrangement with the trust extended to December 31, 1997, renewable
biannually under an evergreen provision up to a maximum term of 20 years. As a
result of the Split-Off, in partial satisfaction of amounts due to Ingram
Industries, the Ingram Industries accounts receivable securitization program
will be assumed by the Company, which will be the sole seller of receivables.
Under the amended program, certain of the Company's domestic receivables will no
longer be transferred to the trust. The Company believes the amended program
will contain sufficient trade accounts receivable to support the outstanding
fixed rate certificates and an unspecified amount of the variable rate
certificates. Assumption of the securitization program results in a $160 million
reduction of trade accounts receivable and due to Ingram Industries. See Note 4
of Notes to Consolidated Financial Statements.

The Company and its foreign subsidiaries have uncommitted lines of credit
and short-term overdraft facilities in various currencies which aggregated
$103.5 million as of June 29, 1996. These facilities are used principally for
working capital and bear interest at market rates. See Note 6 of Notes to
Consolidated Financial Statements.

27
30

The Company believes that the net proceeds from the sale of the Common
Stock offered hereby, together with net cash provided by operating activities,
supplemented as necessary with funds available under credit arrangements
(including the Credit Facility), will provide sufficient resources to meet its
present and future working capital requirements and other cash needs for at
least the next 12 months, or earlier if the Company were to engage in any
corporate transactions not currently anticipated, in which event the Company
anticipates that additional debt or equity financing would be required.

The Company presently expects to spend approximately $90 million in each of
1996 and 1997 for capital expenditures due to the continued expansion of its
business.

ASSET MANAGEMENT

The Company maintains sufficient quantities of product inventories to
achieve high order fill rates. The Company believes that the risks associated
with slow moving and obsolete inventory are substantially mitigated by
protection and stock return privileges provided by suppliers. In the event of a
supplier price reduction, the Company generally receives a credit for products
in its inventory. In addition, the Company has the right to return a certain
percentage of purchases, subject to certain limitations. Historically, price
protection, stock return privileges, and inventory management procedures have
helped to reduce the risk of decline in the value of inventory. The Company's
risk of decline in the value of inventory could be greater outside the United
States, where agreements with suppliers are more restrictive with regard to
price protection and the Company's ability to return unsold inventory. The
Company establishes reserves for estimated losses due to obsolete inventory in
the normal course of business. Historically, the Company has not experienced
losses due to obsolete inventory materially in excess of established inventory
reserves. Inventory levels may vary from period to period, due in part to the
addition of new suppliers or new lines with current suppliers and large cash
purchases of inventory due to advantageous terms offered by suppliers. See "Risk
Factors -- Risk of Inventory Losses."

The Company offers various credit terms to qualifying customers as well as
prepay, credit card, and COD terms. The Company closely monitors customers'
creditworthiness through its on-line computer system which contains detailed
information on each customer's payment history and other relevant information.
In addition, the Company participates in a national credit association which
exchanges credit rating information on customers of association members. In most
markets, the Company utilizes various levels of credit insurance to allow sales
expansion and control credit risks. The Company establishes reserves for
estimated credit losses in the normal course of business. Historically, the
Company has not experienced credit losses materially in excess of established
credit loss reserves.

CHANGES IN ACCOUNTING STANDARDS

The Company will adopt Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of " ("FAS 121") in 1996. The Company does not expect the adoption
of FAS 121 to have a material effect on its financial condition or results of
operations.

The Company will adopt Statement of Financial Accounting Standards No. 123,
"Accounting for Stock Based Compensation" ("FAS 123") in 1996. As permitted by
FAS 123, the Company will continue to measure compensation cost in accordance
with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees." Therefore, the adoption of FAS 123 will have no impact on the
Company's financial condition or results of operations.

28
31

BUSINESS

OVERVIEW

Ingram Micro offers one-stop shopping to its reseller customers by
providing a comprehensive inventory of more than 36,000 products from over 1,100
suppliers, including most of the microcomputer industry's leading hardware
manufacturers, networking equipment suppliers, and software publishers. The
Company's broad product offerings include: desktop and notebook PCs, servers,
and workstations; mass storage devices; CD-ROM drives; monitors; printers;
scanners; modems; networking hubs, routers, and switches; network interface
cards; business application software; entertainment software; and computer
supplies. The Company's suppliers include Apple Computer, Cisco Systems, Compaq
Computer, Creative Labs, Hewlett-Packard, IBM, Intel, Microsoft, NEC, Novell,
Quantum, 3Com, Toshiba, and U.S. Robotics.

Ingram Micro distributes microcomputer products through warehouses in eight
strategic locations in the continental United States and 21 international
warehouses located in Canada, Mexico, most countries of the European Union,
Norway, Malaysia and Singapore. The Company believes that it is the market share
leader in the United States, Canada, and Mexico, and the second largest
full-line distributor in Europe, based on publicly available data and
management's knowledge of the industry. In 1995, approximately 31% of the
Company's net sales were derived from operations outside the United States. The
Export Division fulfills orders from U.S. exporters and from foreign customers
in countries where the Company does not operate a distribution subsidiary,
including much of Latin America, the Middle East, Africa, Australia, and parts
of Europe and Asia. The Company participates in the master reseller business in
the United States through Ingram Alliance.

The Company's principal objective is to enhance its position as the
preeminent wholesale distributor of microcomputer products worldwide. The
Company's belief that it is the preeminent wholesale distributor of
microcomputer products is based on publicly available data and management's
knowledge of the industry. The Company is focused on providing a broad range of
products and services, quick and efficient order fulfillment, and consistent
on-time and accurate delivery to its reseller customers around the world. The
Company believes that IMpulse provides a competitive advantage through real-time
worldwide information access and processing capabilities. This on-line
information system, coupled with the Company's exacting operating procedures in
telesales, credit support, customer service, purchasing, technical support, and
warehouse operations, enables the Company to provide its reseller customers with
superior service in an efficient and low cost manner. In addition, to enhance
sales and to support its suppliers and reseller customers, the Company provides
a wide range of value-added services, such as technical training, order
fulfillment, tailored financing programs, systems configuration, and marketing
programs.

29
32

June 29, 1996, the Company's net sales and net income increased 48.2% and 42.6%,
respectively, as compared to the net sales and net income levels achieved in the
twenty-six weeks ended July 1, 1995. The Company's growth during these periods
reflects substantial expansion in its existing domestic and international
operations, resulting from the addition of new customers, increased sales to the
existing customer base, the addition of new product categories and suppliers,
the establishment of Ingram Alliance, and the successful integration of ten
acquisitions worldwide. Because of intense price competition in the
microcomputer products wholesale distribution industry, the Company's margins
have historically been narrow and are expected in the future to continue to be
narrow. In addition, the Company is highly leveraged and has relied heavily on
debt financing for its increasing working capital needs in connection with the
expansion of its business. See "Risk Factors -- Narrow Margins" and "-- Capital
Intensive Nature of Business; High Degree of Leverage."

THE INDUSTRY

The worldwide microcomputer products distribution industry generally
consists of suppliers, which sell directly to wholesalers, resellers, and
end-users; wholesale distributors, which sell to resellers; and resellers, which
sell to other resellers and directly to end-users. A variety of reseller
categories exists, including corporate resellers, VARs, systems integrators,
original equipment manufacturers, direct marketers, independent dealers,
owner-operated chains, franchise chains, and computer retailers. Different types
of resellers are defined and distinguished by the end-user market they serve,
such as large corporate accounts, small and medium-sized businesses, or home
users, and by the level of value they add to the basic products they sell.
Wholesale distributors generally sell only to resellers and purchase a wide
range of products in bulk directly from manufacturers. Different wholesale
distribution models have evolved in particular countries and geographies
depending on the characteristics of the local reseller environment, as well as
other factors specific to a particular country or region. The United States, for
example, is distinguished by the presence of master resellers, or aggregators,
which are functionally similar to wholesale distributors, but which focus on
selling relatively few product lines -- typically high volume, brand name
hardware systems -- to a network of franchised dealers and affiliates.

The growth of the microcomputer products wholesale distribution industry
continues to exceed that of the microcomputer industry as a whole. Faced with
the pressures of declining product prices and the increasing costs of selling
direct to a large and diverse group of resellers, suppliers are increasingly
relying upon wholesale distribution channels for a greater proportion of their
sales. To minimize costs and focus on their core capabilities in manufacturing,
product development, and marketing, many suppliers are also outsourcing an
increasing portion of certain functions such as distribution, service, technical
support, and final assembly to the wholesale distribution channel. Growing
product complexity, shorter product life cycles, and an increasing number of
microcomputer products due to the emergence of open systems architectures and
the recognition of certain industry standards have led resellers to depend on
wholesale distributors for more of their product, marketing, and technical
support needs. In addition, resellers are relying to an increasing extent on
wholesale distributors for inventory management and credit to avoid stocking
large inventories and maintaining credit lines to finance their working capital
needs. The Company believes that new opportunities for growth in the
microcomputer products wholesale distribution industry will emerge as new
product categories, such as computer telephone integration ("CTI") and the
digital video disc format, arise from the ongoing convergence of computing,
communications, and consumer electronics.

International markets, which represent over half of the microcomputer
industry's sales, are characterized by a more fragmented wholesale distribution
channel than in the United States. Increasingly, suppliers and resellers
pursuing global growth are seeking wholesale distributors with international
sales and support capabilities. In addition, the microcomputer products industry
in international markets is less mature and growing more rapidly than in the
United States, and as such, international growth opportunities for microcomputer
wholesaler distributors are significant.

The evolution of open sourcing during the past several years is a
phenomenon specific to the U.S. microcomputer products wholesale distribution
market. Historically, branded computer systems from large suppliers such as
Apple Computer, Compaq Computer, Hewlett-Packard, and IBM were sold in the
United States only through authorized master resellers. Under this single
sourcing model, resellers were required to

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purchase these products exclusively from one master reseller. Over the past few
years, competitive pressures have led some of the major computer suppliers to
authorize second sourcing, in which resellers may purchase a supplier's product
from a source other than their primary master reseller, subject to certain
restrictive terms and conditions (such as higher prices or the elimination of
floor planning subsidies). More recently, certain computer manufacturers have
authorized open sourcing, a model under which resellers can purchase the
supplier's product from any source on equal terms and conditions. The trend
toward open sourcing has blurred the distinction between wholesale distributors
and master resellers, which are increasingly able to serve the same reseller
customers, whereas previously master resellers had a captive reseller customer
base. The Company believes that continued movement towards second sourcing and
open sourcing puts the largest and most efficient distributors of microcomputer
products, which provide the highest value through superior service and pricing,
in the best position to compete for reseller customers.

The dynamics of the microcomputer products wholesale distribution business
favor the largest distributors which have access to financing and are able to
achieve economies of scale, breadth of geographic coverage, and the strongest
vendor relationships. Consequently, the distributors with these characteristics
are tending to take share from smaller distributors as the industry undergoes a
process of consolidation. The need for wholesale distributors to implement high
volume/low cost operations on a worldwide basis is continuing to grow due to
ongoing price competition, the increasing demand for value-added services, the
trend toward open sourcing, and the increasing globalization of the
microcomputer products industry. In summary, the microcomputer wholesale
distribution industry is growing rapidly while simultaneously consolidating,
creating an industry environment in which market share leadership and cost
efficiency are of paramount importance.

BUSINESS STRATEGY

The Company is the preeminent worldwide wholesale distributor of
microcomputer products and services and believes that it has developed the
capabilities and scale of operations critical for long-term success in the
microcomputer products distribution industry.

The Company's strategy of offering a full line of products and services
provides reseller customers with one-stop shopping. The Company generally is
able to purchase products in large quantities and to avail itself of special
purchase opportunities from a broad range of suppliers. This allows the Company
to take advantage of various discounts from its suppliers, which in turn enables
the Company to provide competitive pricing to its reseller customers. The
Company's international market presence provides suppliers with access to a
broad base of geographically dispersed resellers, serviced by the Company's
extensive network of distribution centers and support offices. The Company's
size has permitted it to attract highly qualified associates and increase
investment in personnel development and training. Also, the Company benefits
from being able to make large investments in information systems, warehousing
systems, and infrastructure. Further, the Company is able to spread the costs of
these investments across its worldwide operations.

The Company is pursuing a number of strategies to further enhance its
leadership position within the microcomputer marketplace. These include:

EXPAND WORLDWIDE MARKET COVERAGE. Ingram Micro is committed to extending
its already extensive worldwide market coverage through internal growth in all
domestic and international markets in which it currently participates. In
addition, the Company intends to pursue acquisitions, joint ventures, and
strategic relationships outside the United States in order to take advantage of
growth opportunities and to leverage its strong systems, infrastructure, and
international management skills.

The Company believes that its skills in warehouse operations, purchasing,
sales, credit management, marketing, and technical support enable it to expand
effectively and quickly into new markets. The Company integrates acquired
operations by incorporating its management philosophies and exacting operating
procedures, implementing its IMpulse information system, applying its functional
expertise, and training personnel on the Ingram Micro business model. Based upon
these capabilities, the Company believes it is in the best position to serve
global resellers, which are increasingly seeking a single source for
microcomputer products and services.

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By providing greater worldwide market coverage, Ingram Micro also increases
the scale of its business, which results in more cost economies. In addition, as
it increases its global reach, the Company diversifies its business across
different markets, reducing its exposure to individual market downturns. The
Company has grown its international operations principally through acquisitions
and currently has fully integrated operations in 15 countries outside the United
States: Canada, Mexico, most countries of the European Union, Norway, Malaysia,
and Singapore. The Company believes that it is the market share leader in the
United States, Canada, and Mexico, and the second largest full-line distributor
in Europe, based on publicly available data and management's knowledge of the
industry. The Company's objective is to achieve the number one market share in
each of the markets in which it operates.

Ingram Micro will continue to focus on expansion of its operations through
acquisitions, joint ventures, and strategic relationships in order to take
advantage of significant growth opportunities around the world, both in
established and developing markets.

EXPLOIT INFORMATION SYSTEMS LEADERSHIP. Ingram Micro continually invests in
its information systems which are crucial in supporting the Company's growth and
its ability to maintain high service and performance levels. The Company has
developed a scalable, full-featured information system, IMpulse, which the
Company believes is critical to its ability to deliver worldwide, real-time
information to both suppliers and reseller customers. IMpulse is a single,
standardized information system, used across all markets worldwide, that has
been customized to suit local market requirements. The Company believes that it
is the only full-line wholesale distributor of microcomputer products in the
world with such a centralized global system.

IMpulse allows the Company's telesales representatives to deliver real-time
information on product pricing, inventory, availability, and order status to
reseller customers. Telesales representatives utilize the Company's Sales
Adjusted Gross Profit ("SAGP") pricing system to make informed pricing decisions
for each order through access to specific product and order related costs.
Considering the industry's narrow margins, the Company's ability to make
thousands of informed pricing decisions daily represents a competitive
advantage. In addition, the Company has a number of supporting systems,
including its Decision Support System ("DSS"), a multidimensional sales and
profitability analysis application. The Company continuously seeks to make
system modifications to provide greater capability and flexibility to the
Company's individual business units and markets.

The Company intends to continue to develop and expand the use of its
Customer Information Systems ("CIS"), which packages the full range of Ingram
Micro's electronic services into a single solution. CIS is designed to improve
the information flow from supplier to distributor to reseller to end-user in
order to conduct business in a cost-effective manner. It addresses the dynamic
requirements of various customer markets by offering a core group of services
through a number of different electronic media. By using CIS, resellers can
place orders directly, without the assistance of a telesales representative. The
Company plans further expansion in electronic links with reseller customers and
suppliers to provide better access to the Company's extensive database for
pricing, product availability, and technical information.

The Company will continue to invest in the enhancement and expansion of its
systems to create additional applications and functionality.

PROVIDE SUPERIOR EXECUTION FOR RESELLER CUSTOMERS. Ingram Micro continually
refines its systems and processes to provide superior execution and service to
reseller customers. The Company believes that the level of service achieved with
its systems and processes is a competitive advantage and has been a principal
contributor to its success to date.

Providing superior execution involves, among other factors, rapid response
to customer calls, quick access to relevant product information, high order fill
rates, and on-time, accurate shipments. The Company's information systems enable
telesales representatives to provide reseller customers with real-time inventory
and pricing information. Ingram Micro strives to maintain high order fill rates
by keeping extensive supplies of product in its 29 distribution centers
worldwide. In the United States and Canada, the Company has implemented control
systems and processes referred to as Bulletproof Shipping, which include
stock-keeping unit ("SKU") bar coding

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for all products and on-line quality assurance methods. As a result of this
program, substantially all orders in the United States received by 5:00 p.m. are
shipped on the same day, with highly accurate shipping performance.

Ingram Micro will continue to invest in the development of systems and
processes to improve execution. In the United States, the Company is currently
implementing CTI technology, which will provide automatic caller identification,
onscreen call waiting, and abandoned call management capabilities to telesales
and customer service associates. Also in the United States, the recently
installed POWER system will improve response time to reseller customers' product
returns and other customer service requests. To support future customer
requirements, the Company continues to expand and upgrade its distribution
network. For example, a new warehouse is under construction in Millington,
Tennessee. In Canada, a new returns center will be added near Toronto, Ontario.
The Company is implementing formal systems for evaluating and tracking key
performance metrics such as responsiveness to customers, process accuracy, order
processing cycle time, and order fulfillment efficiency. Ingram Micro will use
this customer satisfaction monitoring system to identify potential areas of
improvement as part of the Company's focus on providing superior service.

DELIVER WORLD-CLASS VALUE-ADDED SERVICES TO SUPPLIERS AND RESELLERS. Ingram
Micro is committed to providing a diverse range of value-added wholesaling and
"for fee" services to its supplier and reseller customers. Together, these
services are intended to link reseller customers and suppliers to Ingram Micro
as a one-stop provider of microcomputer products and related services, while
meeting demand by suppliers and resellers to outsource non-core business
activities and thereby lower their operating costs.

The Company's value-added wholesaling services include final assembly and
configuration of products, technical education programs, pre- and post-sale
technical support, order fulfillment, and product demo evaluation.

In addition to these value-added wholesaling services, the Company offers a
variety of "for fee" services for its reseller customers and suppliers. These
services include: contract configuration, contract fulfillment, contract
warehousing, contract telesales, contract credit/accounts receivable management,
contract inventory management, and contract technical support for customers. The
Company is focused on identifying and developing services that directly meet
reseller customer and supplier needs.

MAINTAIN LOW COST LEADERSHIP THROUGH CONTINUOUS IMPROVEMENTS IN SYSTEMS AND
PROCESSES. The microcomputer products industry is characterized by intense
competition and narrow margins, and as a result, achieving economies of scale
and controlling operating expenses are critical to achieving and maintaining
profitable growth.

Over the last five years, the Company has been successful in reducing SG&A
expenses (including expenses allocated from Ingram Industries) as a percentage
of net sales, from 5.8% in 1991 to 4.8% in 1995. The Company has embarked on a
number of programs that are designed to continue to reduce operating expenses as
a percentage of net sales.

Many U.S. developed programs continue to be adapted for implementation in
the Company's international operations. These programs include: (i) the use of
advanced inventory processes and techniques to reduce the number of shipments
from multiple warehouses to fulfill a single order; (ii) the use of proprietary
warehouse productivity programs, such as Bulletproof Shipping and Pick
Assignment; (iii) the enhancement of associates' productivity through the use of
technology such as CTI, and the expanded use of multimedia workstations for
functions such as Telesales and Customer Service; and (iv) the electronic
automation of the ordering and information delivery process through CIS to
decrease the number of non-order telesales calls. See "-- Information Systems."

The Company believes that the continued development of the IMpulse system
and related distribution processes represents an opportunity for the Company to
leverage operating costs across additional areas of the Company's operations.

DEVELOP HUMAN RESOURCES FOR EXCELLENCE AND TO SUPPORT FUTURE GROWTH. Ingram
Micro's growth to date is a result of the talent, dedication, and teamwork of
its associates. Future growth and success will be

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substantially dependent upon the retention and development of existing
associates, as well as the recruitment of superior talent.

The Company has invested in a number of programs and systems designed to
assist in the development and retention of its associates. The Company recently
formed its Leadership Institute to provide training on a global basis in areas
such as personal leadership and basic business fundamentals. In addition, the
Company provides specific functional training for associates through Company
programs such as the Sales, Purchasing, and Marketing Academies. Transferring
functional skills and implementing cross-training programs across all Ingram
Micro locations have proven to be important factors in the Company's growth and
international expansion. In conjunction with these programs, the Company intends
to expand its human resource systems to provide enhanced career planning,
training support, applicant tracking, and benefits administration. Also, the
Company continues to seek top quality associates worldwide through local,
professional, and college recruiting programs.

CUSTOMERS

Ingram Micro sells to more than 100,000 reseller customers in approximately
120 countries worldwide. No single customer accounted for more than 3% of Ingram
Micro's net sales in 1993, 1994, 1995, or the first half of 1996.

Ingram Micro is firmly committed to maintaining a strong customer focus in
all of the markets it serves. To best meet this key business objective, the
Company is organized along the lines of the three market sectors it serves: VAR,
Commercial, and Consumer. This organization permits the Company to identify and
address the varying and often unique requirements of each customer group, as
opposed to applying a uniform approach to distinctly different reseller
channels. This organization model is most fully developed in the United States
and Canada, and is described as follows:

- VAR sector. VARs develop computer solutions for their customers by adding
tangible value to a microcomputer product. These computer solutions range
from tailored software development to systems integration that meet
specific customer needs. Systems integrators, network integrators,
application VARs, and original equipment manufacturers ("OEMs") are
classified in this sector. In 1995, this sector contributed over 27% of
Ingram Micro's U.S. net sales (inclusive of Ingram Alliance and the
Export Division).

- Commercial sector. The Commercial sector includes chain/independent
dealers, corporate resellers, and direct marketers that sell a variety of
computer products. This sector continues to be Ingram Micro's largest
channel and contributed over 53% of the Company's 1995 U.S. net sales.

- Consumer sector. The Consumer sector includes computer superstores,
office product superstores, mass merchants, consumer electronics stores,
and warehouse clubs. In 1995, over 17% of the Company's U.S. net sales
came from this sector.

In addition to focusing on the VAR, Commercial, and Consumer market
sectors, the Company also has specialized strategic business units ("SBUs")
designed to provide additional focused marketing and support for specific
product categories or within specific markets. These product-focused SBUs
address the needs of resellers and suppliers for in-depth support of particular
product categories. These SBUs include the Technical

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Products Division, the Macintosh and Apple Computer Division, the Enterprise
Computing Division, and the Mass Storage Division. The Company's market-focused
SBUs, which include the Consumer Markets Division, the Education Division, and
the Government Division, are designed to meet the needs of resellers and VARs
who have chosen to concentrate on a particular customer market.

Customer organization along the VAR, Commercial, and Consumer market
sectors has been implemented to varying degrees throughout the Company's
worldwide operations and may not be as well defined as in the United States and
Canada. Specific market circumstances vary from country to country. In some
markets, a few large resellers dominate; in others, the customer base is more
diversified.

SALES AND MARKETING

Ingram Micro's telesales department is comprised of approximately 1,400
telesales representatives worldwide, of whom more than 800 representatives are
located in the United States. These telesales representatives assist resellers
with product specifications, system configuration, new product/service
introductions, pricing, and availability. The two main United States telesales
centers are located in Santa Ana, California and Buffalo, New York and are
supported by an extensive national field sales organization. Currently, Ingram
Micro has more than 130 field sales representatives worldwide, including more
than 50 in the United States.

In addition to customer organization along the VAR, Commercial, and
Consumer market sectors, the Company utilizes a variety of product-focused
groups specializing in specific product types. Specialists in processors, mass
storage, networks, and other product categories promote sales growth and
facilitate customer contacts for their particular product group. Ingram Micro
also offers a variety of marketing programs tailored to meet specific supplier
and reseller customer needs. Services provided by the Company's in-house
marketing services group include advertising, direct mail campaigns, market
research, retail programs, sales promotions, training, and assistance with trade
shows and other events.

In Canada, Ingram Micro has been organized along customer sector lines to
render more specialized service to each customer sector. Additionally, a
Montreal telesales center was opened in 1995 specifically to cover the
French-speaking market. The Corporate Reseller Division has 13 dedicated field
sales representatives to focus efforts on increasing penetration and protecting
market share. The VAR accounts have received increasing coverage from field
sales representatives, now one for each geographic region, along with dedicated
telesales operations in Vancouver and Montreal. Retail customers served by the
Consumer Markets Division benefit from usage of the electronic ordering systems
and manufacturer/customer symposiums tailored specifically to the Consumer
sector. The Company offers a myriad of marketing programs targeted at the
respective customer markets and are similar to the United States programs that
offer a graduated level of services based on monthly purchase volume.

In Europe, Ingram Micro relies more heavily on telesales to cover its
customer base than in the United States and Canada. In addition, the Company
maintains a relatively small field sales organization to serve larger customers
in each country. Many of the country operations have Technical Products
Divisions that employ dedicated technical sales representatives. The European
operation is expanding the presence of other product-specific divisions such as
the Mass Storage Division and the Macintosh Division. Ingram Micro employs many
of the same marketing tools in Europe as in the United States and Canada,
including product guides, catalogues, and showcases used to promote selected
manufacturers' product lines.

In Mexico, the sales team is comprised of both field sales representatives
and telesales representatives serving Mexico City, Merida, Guadalajara, Puebla,
Monterrey, Leon, and Hermosillo. Complementing this sales group are marketing
associates assigned to key supplier product lines. To best meet the
individualized needs of its increasingly diverse customer group, the Company is
in the process of realigning its sales and marketing workforce along VAR,
Commercial, and Consumer sectors throughout the branch network. This is
anticipated to be a strategic advantage as the trend toward greater customer
focus on particular markets continues to evolve in Mexico.

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Ingram Micro's Asia Pacific sales force is responsible for growing the
Company's sales in Singapore, Malaysia, Indonesia, The Philippines, Thailand,
India, and Hong Kong. Marketing support for this sales effort is based on
product line, but will eventually be aligned along VAR, Commercial, and Consumer
sectors.

The Company's Export Division is supported by a team of sales
representatives located in Miami, Florida and Santa Ana, California. The Miami
office covers the Caribbean, Puerto Rico, Ecuador, Colombia, Venezuela, Peru,
Chile, Argentina, Uruguay, and Brazil, while the Santa Ana Export
representatives sell and market Ingram Micro products and services to Japan, the
Middle East, and Australia. A satellite export sales office was opened in Tokyo
during the third quarter of 1995 to provide greater focus on the Japanese
market. The Belgian Export office, which is part of the Company's European
operations, serves Africa and areas of Europe where Ingram Micro does not have
an in-country sales and distribution operation.

PRODUCTS AND SUPPLIERS

Ingram Micro believes that it has the largest inventory of products in the
industry, based on a review of publicly available data with respect to its major
competitors. The Company distributes and markets more than 36,000 products from
the industry's premier microcomputer hardware manufacturers, networking
equipment suppliers, and software publishers worldwide. Product assortments vary
by market, and the relative importance of manufacturers to Ingram Micro varies
from country to country. On a worldwide basis, the Company's sales mix is more
heavily weighted toward hardware products and networking equipment than software
products. Net sales of software products have decreased as a percentage of total
net sales in recent years due to a number of factors, including bundling of
software with microcomputers; sales growth in Ingram Alliance, which is a
hardware-only business; declines in software prices; and the emergence of
alternative means of software distribution, such as site licenses and electronic
distribution. The Company believes that this is a trend that applies to the
microcomputer products distribution industry as a whole, and the Company expects
it to continue. See "Risk Factors -- Rapid Technological Change; Alternate Means
of Software Distribution" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Overview."

In the United States, Ingram Micro's suppliers include almost all of the
leading microcomputer hardware manufacturers, networking equipment
manufacturers, and software publishers such as Apple Computer, Cisco Systems,
Compaq Computer, Creative Labs, Hewlett-Packard, IBM, Intel, Microsoft, NEC,
Novell, Quantum, 3Com, Toshiba, and U.S. Robotics. Internationally, Ingram Micro
has secured distribution agreements with most of the leading suppliers, and
products are added to the Company's mix in response to local market demands.

New products are continually evaluated and added to the Company's product
mix upon meeting Ingram Micro's business and technical standards. The Company
evaluates on average 160 products monthly. Each Ingram Micro entity has its own
procedure for assessing new products based on local market characteristics, but
all follow general guidelines utilizing certain business and technical criteria
including market size, demand, perceived value, industry positioning, support
required, ease of set-up, packaging quality, and error handling procedures. The
Company proactively pursues products representing the leading edge of
technology.

The Company's suppliers generally warrant the products distributed by the
Company and allow the Company to return defective products, including those that
have been returned to the Company by its customers. The Company does not
independently warrant the products it distributes.

The Company's business, like that of other wholesale distributors, is
subject to the risk that the value of its inventory will be affected adversely
by suppliers' price reductions or by technological changes affecting the
usefulness or desirability of the products comprising the inventory. It is the
policy of most suppliers of microcomputer products to protect distributors, such
as the Company, who purchase directly from such suppliers, from the loss in
value of inventory due to technological change or the supplier's price
reductions. Although the Company has written distribution agreements with many
of its suppliers, these agreements usually provide for nonexclusive distribution
rights and often include territorial restrictions that limit the countries in
which Ingram Micro is permitted to distribute the products. The agreements are
also generally short term, subject to periodic renewal, and often contain
provisions permitting termination by either party without cause upon relatively
short notice. The Company does not believe that its business is substantially

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dependent on the terms of any such agreements. Under the terms of many
distribution agreements, suppliers will credit the distributor for declines in
inventory value resulting from the supplier's price reductions if the
distributor complies with certain conditions. In addition, under many such
agreements, the distributor has the right to return for credit or exchange for
other products a portion of those inventory items purchased, within a designated
period of time. A supplier who elects to terminate a distribution agreement
generally will repurchase from the distributor the supplier's products carried
in the distributor's inventory. While the industry practices discussed above are
sometimes not embodied in written agreements and do not protect the Company in
all cases from declines in inventory value, management believes that these
practices provide a significant level of protection from such declines. No
assurance can be given, however, that such practices will continue or that they
will adequately protect the Company against declines in inventory value. The
Company's risk of inventory loss could be greater outside the United States,
where agreements with suppliers are more restrictive with regard to price
protection and the Company's ability to return unsold inventory. The Company
establishes reserves for estimated losses due to obsolete inventory in the
normal course of business. Historically, the Company has not experienced losses
due to obsolete inventory materially in excess of established inventory
reserves. See "Risk Factors -- Product Supply; Dependence on Key Suppliers."

VALUE-ADDED SERVICES

The Company believes that there is a trend among wholesale distributors of
microcomputer products to increase available services for suppliers and
customers, and the Company is committed to being in the forefront of this trend.
Ingram Micro offers a myriad of programs and services to its supplier and
reseller customers as an integral part of its wholesaling efforts. The Company
categorizes these services into value-added wholesale distribution and "for fee"
services. Together, these services are intended to link reseller customers and
suppliers to Ingram Micro as a one-stop provider of microcomputer products and
related services, while meeting demand by suppliers and resellers to outsource
non-core business activities and thereby lower their operating costs.

The Company's value-added wholesaling services are an important complement
to its distribution activities and include final assembly and configuration of
products, technical education programs, pre- and post-sale technical support,
order fulfillment, and product demo evaluation.

Ingram Micro offers a selection of "for fee" services which reseller
customers and suppliers may avail themselves of, independent of product purchase
transactions. Many of the value-added wholesaling services are also included in
this set of "for fee" services, which include: contract configuration, contract
fulfillment, contract warehousing, contract telesales, contract credit/accounts
receivable management, contract inventory management, and contract technical
support for reseller customers and end-users. Management remains focused on
adding more value-added "for fee" services to meet reseller customer and
supplier needs.

Ingram Micro's value-added services for its reseller customers and
suppliers include:

- System Configuration. Final assembly and configuration of microcomputer
products for suppliers and reseller customers.

- Order Fulfillment. Fulfillment of end-user orders on behalf of suppliers
and reseller customers. This may include order-taking, configuration,
shipping, and collection.

- Electronic Services. Various electronic ordering and information delivery
media integrated under the Company's CIS program which enable suppliers
and reseller customers to interface directly with the Company's database.

- Technical Support. Pre- and post-sale technical support for reseller
customers.

- Tailored Marketing Services. A range of offerings including trade show
and symposium development, promotional advertising, end-user briefings,
and joint sales calls performed by Ingram Micro Sales and Marketing staff
for the benefit of reseller customers and suppliers.

- Financial Services. Includes accounts receivable financing, a purchase
order program, and credit insurance provided or arranged by Ingram
Financial Services Company for reseller customers.

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- Inventory Management. A variety of services conducted for reseller
customers that includes contract warehousing, inventory tracking by
serial number, and other services.

- Telesales. Telesales performed by the Company for suppliers and reseller
customers.

- Warehousing. Leasing of warehouse space to suppliers and reseller
customers.

- Credit/Accounts Receivable Management. Providing reseller customers with
assistance in account collection, credit inquiries, and similar matters.

- Technical Education. Various computer-based and self-study training
programs, some leading to certification from suppliers.

- Warranty and Repair. Comprehensive warranty coverage on end-user systems.
This service is sub-contracted by Ingram Micro to third-party repair
businesses for reseller customers.

All of these services are currently available in the Company's U.S.
operations. The degree of implementation of these value-added services in Ingram
Micro's international operations varies depending on particular market
circumstances. Although the Company believes that value-added services are
important as a complement to its core business, such services do not, and are
not in the future expected to, generate a material percentage of the Company's
net sales. In addition, such value-added services do not, and are not in the
future expected to, require a material portion of the Company's resources.

INGRAM ALLIANCE

Ingram Micro entered the master reseller (also known as "aggregation")
business in late 1994 with the launch of Ingram Alliance. Ingram Alliance is
designed to offer resellers access to the industry's leading hardware
manufacturers at competitive prices by utilizing a lower cost business model
that depends upon a higher average order size, lower product returns percentage,
and supplier-paid financing. See "Risk Factors -- Narrow Margins" and "-- Risks
Associated with Ingram Alliance."

The Company believes that it has been able to leverage its leading
traditional wholesale distribution business in the United States to establish
its master reseller business. Over 95% of Ingram Alliance's sales are funded by
floor plan financing companies. The Company typically receives payment from
these financing institutions within three business days from the date of the
sale, allowing Ingram Alliance to operate at much lower relative working capital
levels than the Company's wholesale distribution business. Such floor plan
financing is typically subsidized for Ingram Alliance's reseller customers by
its suppliers.

Since its inception, Ingram Alliance has experienced rapid growth. In 1995,
Ingram Alliance achieved net sales in excess of $700 million, and it currently
has 12 suppliers and more than 800 reseller customers. Ingram Alliance's success
has, to a large degree, been attributable to its ability to leverage Ingram
Micro's distribution infrastructure and capitalize on strong supplier
relationships.

To support additional growth, Ingram Alliance remains committed to further
developing relations with key suppliers. These efforts are largely driven by
joint supplier/distributor sales calls, proposal and bid development programs,
and tailored marketing campaigns carried out by Ingram Alliance supplier program
teams.

Ingram Alliance pursues an integrated sales and marketing strategy to gain
new customers and grow its business. A fully-dedicated telesales team is in
place, which in conjunction with the Company's field sales representatives aims
to cultivate important relationships with reseller customers. Further, Ingram
Alliance provides a wide range of high quality "for fee" value-added services
for its customers including technical training and certification, warranty and
repair, fulfillment, technical support, contract warehousing, and configuration
services. Special promotional activities and creative financing packages are
additional incentives for resellers to do business with Ingram Alliance.

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INFORMATION SYSTEMS

The Company's information system, IMpulse, is central to its ability to
provide superior execution to its customers, and as such, the Company believes
that it represents an important competitive advantage. See "Risk
Factors -- Dependence on Information Systems."

Ingram Micro's systems are primarily mainframe-based in order to provide
the high level of scalability and performance required to manage such a large
and complex business operation. IMpulse is a single, standardized, real-time
information system and operating environment, used across all of the Company's
worldwide operations. It has been customized as necessary for use in every
country in which the Company operates and has the capability to handle multiple
languages and currencies. On a daily basis, the Company's systems typically
handle 12 million on-line transactions, 26,000 orders, and 37,000 shipments. The
Company has designed IMpulse as a scalable system that has the capability to
support increased transaction volume. The overall on-line response time for the
Company's network of over 8,000 user stations (terminals, printers, personal
computers, and radio frequency hand held terminals) is less than one-half
second.

Worldwide, Ingram Micro's centralized processing system supports more than
40 operational functions including receiving, order processing, shipping,
inventory management, and accounting. At the core of the IMpulse system is
on-line, real-time distribution software to which considerable enhancements and
modifications have been made to support the Company's growth and its low cost
business model. The Company makes extensive use of advanced telecommunications
technologies with customer service-enhancing features, such as Automatic Call
Distribution to route customer calls to the telesales representatives. The
Telesales Department relies on its Sales Wizard system for on-line, real-time
tracking of all customer calls and for status reports on sales statistics such
as number of customer calls, customer call intentions, and total sales
generated. IMpulse allows the Company's telesales representatives to deliver
real-time information on product pricing, inventory, availability, and order
status to reseller customers. The SAGP pricing system enables telesales
representatives to make informed pricing decisions through access to specific
product and order related costs for each order. Considering the industry's
narrow margins, these pricing decisions are particularly important, and the
Company believes that its ability to make thousands of informed pricing
decisions daily represents a competitive advantage.

In the United States, the Company is in the process of implementing CTI
technology, which will provide the telesales and customer service
representatives with Automatic Number Identification capability and advanced
telecommunications features such as on-screen call waiting and automatic call
return, thereby reducing the time required to process customer orders and
customer service requests.

To complement Ingram Micro's telesales, customer service, and technical
support capabilities, IMpulse supports CIS, which integrates all of the
Company's electronic services into a single solution. CIS offers a number of
different electronic media through which customers can conduct business with the
Company, such as the Customer Automated Purchasing System ("CAPS"), Electronic
Data Interchange ("EDI"), the Bulletin Board Service, and the Ingram Micro Web
site. The Company's latest additions to CIS are its Internet-based Electronic
Catalog and Manufacturer Information Library. The Electronic Catalog provides
reseller customers with real-time access to product pricing and availability,
with the capability to search by product category, name, or manufacturer. The
Manufacturer Information Library is a comprehensive multi-manufacturer database
of timely and accurate product, sales, marketing, and technical information,
which is updated nightly for new information. Ingram Micro believes it is the
first microcomputer wholesale distributor to offer electronic access to
real-time product pricing, availability, and information on the World Wide Web.
All of Ingram Micro's CIS offerings are constantly being reviewed for
enhancement. For instance, a faster local network intranet solution to access
the Manufacturer Information Library is currently being tested, and ordering and
configuration capabilities through the Internet are under consideration.

The Company's warehouse operations use extensive bar-coding technology and
radio frequency technology for receiving and shipping, and real-time links to
UPS and FedEx for freight processing and shipment tracking. The Customer Service
Department uses the POWER System for on-line documentation and faster processing
of customer product returns. To ensure that adequate inventory levels are
maintained, the Company's buyers depend on the Purchasing system to track
inventory on a continual basis. Many other

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features of IMpulse help to expedite the order processing cycle and reduce
operating costs for the Company as well as its reseller customers and suppliers.

To support and augment the Company's mainframe-based systems, the Company
utilizes a number of client-server applications. Examples are the Marketing
On-line Management System, a software application that provides management,
accountability, and financial controls for over 6,000 marketing projects;
APImage, an application that facilitates imaging of invoices and related
documents in the Accounts Payable department, substantially reducing paper
processing and improving document work flow; and DSS, a data warehousing
application that enables multidimensional sales and profitability analysis. In
the United States, over 330 associates across all functions have access to 75
million lines of data through DSS. DSS is used for, among other tasks, pricing
decisions and analysis of profitability by customer market and product category.
DSS is currently being implemented in Canada and the U.K., with plans to add
other international locations thereafter. The Company has also begun to deploy
other PC-based tools for both the United States and international locations,
including workstations in Telesales and Purchasing to assist with product
acquisition and pricing decisions.

The Company employs various security measures and backup systems designed
to protect against unauthorized use or failure of its information systems.
Access to the Company's information systems is controlled through the use of
passwords and additional security measures are taken with respect to especially
sensitive information. The Company has a five year contract with Sungard
Recovery Services for disaster recovery and twice per year performs a complete
systems test, including applications and database integrity. In addition, the
Company has back-up power sources for emergency power and also has the
capability to automatically reroute incoming calls, such as from its Santa Ana
(West Coast sales) facility to its Buffalo (East Coast sales) facility. The
Company has not in the past experienced significant failures or downtime of
IMpulse or any of its other information systems, but any such failure or
significant downtime could prevent the Company from taking customer orders,
printing product pick-lists, and/or shipping product and could prevent customers
from accessing price and product availability information from the Company. See
"Risk Factors -- Dependence on Information Systems."

Over 350 experienced information technology professionals support the daily
maintenance and continuous development of the Company's systems.

OPERATIONS

ORDER ENTRY

The order entry process begins with the entry of a customer account number
by a telesales representative. With this input, IMpulse automatically displays
the customer's name, address, credit terms, financing arrangements, and
preferred shipping method. The telesales representative assists the customer
on-line with product lookups, real-time inventory availability, price inquiries,
and status of previous orders. As an order is entered, key information is filled
in by the system, such as product description, price, availability, and adjusted
gross margin. The closest warehouse to the customer with available product is
automatically determined, and the corresponding product quantity is reserved.
The system totals the order and automatically checks the customer's credit
status. The order is released for processing, unless credit limits are exceeded
or the order falls outside acceptable profit levels. In the latter case, the
order is put on hold and immediately elevated for review by credit or sales
management.

Reseller customers can also conduct business electronically through the
Company's CIS offerings such as CAPS, EDI, and IM On Line. By using CIS,
resellers can access the Company's database and place orders directly without
the assistance of a telesales representative. See "-- Information Systems."

SHIPPING

In most of Ingram Micro's operations, the Company's objective is to ship
substantially all orders received by 5:00 p.m. on the same day. In Canada,
France, Belgium, the U.K. and the Netherlands, the cut-off time for same day
shipment is 6:00 p.m. When an order is released, it is immediately available for
processing in the designated warehouse. IMpulse ensures cost efficient order
processing through a system called Pick Assignment which determines pick lists
based on the warehouse location of items ordered. In the distribution

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43

centers, Ingram Micro relies on a sophisticated bar code reading system and a
flexible automated package handling system for picking, packing, and shipping
products accurately and cost effectively. In addition, IMpulse provides on-line
shipping, manifesting, freight costing, invoicing and package tracking
information.

The Company's warehouse inventories are maintained automatically by IMpulse
which updates stock levels and feeds this information to the purchasing system
for restocking as soon as an order is received. On-line quality assurance done
during receipt of inbound product and prior to the shipment of orders ensures
the integrity of warehouse stock inventory and the accuracy of shipments to
customers. See "Risk Factors -- Dependence on Independent Shipping Companies."

PURCHASING

To monitor product inventory, the purchasing staff, numbering over 260
worldwide, uses the IMpulse system inventory reports, which provide product
inventory levels, six months' sales history, month-to-date, and year-to-date
sales statistics by SKU and by warehouse location. Buyers carefully analyze
current and future inventory positions and profitability potential. Several
factors, such as inventory carrying cost, payment terms, purchase rebates,
volume discounts, and marketing funds are considered in negotiating deals with
suppliers. Buyers enter purchase orders into the IMpulse system, indicating the
SKU number, the quantity to be ordered, and the warehouse locations to which the
order should be shipped. Cost information and supplier terms and conditions are
automatically entered on the purchase order; and can be modified if different
terms have been negotiated. The IMpulse system automatically generates purchase
orders for each inventory warehouse location and transmits these orders directly
to the suppliers via EDI or facsimile. See "Risk Factors -- Risk of Declines in
Inventory Value."

A number of purchasing programs have been developed to exploit
opportunities unique to certain of the Company's operations. In Europe, the
country managers work together as a group to obtain the best available supplier
terms. The European "Inventory Sharing" program, when fully implemented, will
allow sales personnel in one market to order products that are out of stock or
otherwise unavailable in the local country from another European Ingram Micro
business unit. Benefits of this program include lower inventory costs, better
inventory turnover, and improved margins. In Canada, the U.S. Direct Fulfillment
Program allows the fulfillment of individual Canadian orders from the United
States as necessary. See "-- Geographic Tactics -- Canada" and "-- Europe."

GEOGRAPHIC TACTICS

Ingram Micro operates worldwide with a set of common, global strategies.
Recognizing the varying requirements of the Company's different geographic
markets, the Company has developed specific tactics to address local market
conditions. However, the Company's non-U.S. operations are subject to certain
additional risks. See "Risk Factors -- Exposure to Foreign Markets; Currency
Risk."

UNITED STATES

In the United States, the Company has undertaken a number of key
initiatives to enhance its position in the wholesale microcomputer marketplace:

- In an effort to capture an increased share of the VAR sector, the Company
will seek to convey to the market its superior ability to supply basic
wholesaling services to VARs, as well as its breadth of product offerings
to support vertical VAR customer sets. The Premier VAR Plus program has
been developed as the prime marketing vehicle for all VAR programs and
services. This program provides VARs with graduated levels of business
services based on monthly purchase volume. Such services include a
dedicated technical sales force, end-user leads, technology seminars, and
marketing symposiums.

- As a cornerstone of the Company's VAR efforts, the Enterprise Computing
Division continues to expand its penetration in markets for high-end
technical products such as UNIX, document imaging, and networking
equipment. This will be accomplished by developing programs which
institute a

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44

Company-wide commitment to the UNIX VAR market, providing a sophisticated
sales force experienced in complex networking technology solutions,
partnering with key suppliers of high-end technical products, and
leveraging the Company's core competencies in electronic ordering and
configuration.

- In order to increase its share of the Consumer sector, the Company
maintains a team of sales account managers and business development
specialists dedicated to the Consumer account base. The aim of the
Consumer Markets Division is to provide a variety of value-added services
including inventory mix management, store personnel training, marketing
programs, and administration of supplier programs.

CANADA

While the Company's Canadian operation closely mirrors the U.S. operation,
initiatives unique to the Canadian operating environment have been developed and
are described below:

- The U.S. Direct Fulfillment Program has been instituted in Canada to take
advantage of its proximity to the United States. Through this program,
Canadian customers are currently able to receive products directly from
the Chicago distribution center. The expanded use of the U.S. Direct
Fulfillment Program will allow for greater breadth of SKUs and
manufacturers represented in the Canadian marketplace.

- As part of its overall strategy to grow share in the retail market, the
Canadian operation employs Dealer Development Representatives as a
special service to retail customers. These representatives visit
resellers to provide product education, display set-up assistance, and
provide other similar on-site services. In addition, the Company fields
on-site credit representatives to facilitate processing of financial
service applications of its retail customers.

EUROPE

One of the Company's key objectives is to become the market share leader in
Europe. The Company entered Europe in 1989 with an acquisition in Belgium. See
"Risk Factors -- Acquisitions." Through a series of small acquisitions, it has
rapidly grown to a pan-European presence with aggregate net sales of $1.8
billion in 1995, covering 11 countries: Austria, Belgium, Denmark, France,
Germany, Italy, the Netherlands, Norway, Sweden, Spain, and the United Kingdom.
The Company believes that it has the second largest market share position in
Europe and that it has a strong base for future growth and increased
profitability. Particular areas of focus in Europe include:

- The Company will seek to enhance gross margin in the European operation
through increased emphasis on high-end and higher margin technical
product sales and the implementation of the SAGP system.

- A program unique to Ingram Micro is Inventory Sharing. This program
allows sales personnel in one European market to order products that are
out of stock or otherwise unavailable in the local country from another
Ingram Micro business unit. The billing is done in the local currency
with all value-added taxes, tax reporting, and similar functions managed
automatically by the IMpulse system. Inventory sharing allows the Company
to expand its sales base without an expansion of inventory investment or
individual country expansion of stock product assortment. Benefits of the
program include lower inventory costs, better inventory turnover, and
improved gross margin. An important initiative is to add more country
operations to the inventory sharing program and to enhance the program
through coordinated purchasing among several countries.

- Continued cost reduction, as a percentage of net sales, and cost control
are important for boosting profitability in the European operation. The
Company aims to further reduce expense ratios of the individual business
units through increased sales volume, the continued development and
refinement of operations and management processes, and the increasing use
of selected U.S. and Canadian business programs.

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MEXICO/ASIA PACIFIC

Mexico. Ingram Dicom, a 70%-owned subsidiary of Ingram Micro, is the
leading wholesale distributor of microcomputer products in Mexico. Ingram Dicom
offers over 6,000 products to more than 5,900 reseller customers in Mexico. In
1995, over 85% of Ingram Dicom's net sales came from 1,100 resellers who
primarily service the country's major banks and businesses. Additionally, Ingram
Dicom also sells to a small but growing VAR client base and to mass merchant
retailers (e.g., Sam's Club, Sanborn's, Price Club).

As the local high technology market becomes more sophisticated, Ingram
Dicom intends to add higher volume, more specialized technical (e.g., UNIX,
networking) products to its inventory. Other important initiatives include
adding a wider selection of technical education courses, extending CAPS
electronic ordering throughout the entire Ingram Dicom operation, and offering a
broader range of financing options for reseller customers. The Company will also
continue to negotiate supplier terms and conditions aimed at limiting the
Company's exposure to foreign currency fluctuations.

Asia Pacific. Ingram Micro's Asia Pacific operations, supported by its
Singapore office and warehouse, focus on serving the Singapore, Malaysia,
Indonesia, Philippines, Thailand, India, and Hong Kong markets. Over 800
customers are currently served from the Singapore base, with approximately 64%
of these customers concentrated in the local Singapore market. The Company
operates a sales office in Tokyo serving the Japanese market. In addition, the
Company has recently acquired a distributor in Malaysia.

In building a solid regional Asia Pacific business, the Company intends to
leverage its systems capability, financial strength, management experience, and
excellent relationships with key suppliers. The initial aim of the Asia Pacific
strategy is to recruit new suppliers and reseller customers while further adding
experienced managers in key functional areas of the business. The Company is
currently exploring the possibility of establishing additional operations
through joint ventures or acquisitions. See "Risk Factors -- Acquisitions."

EXPORT MARKETS

Ingram Micro's Export Division continues to expand in international markets
where the Company does not have a stand-alone, in-country presence. The Miami,
Santa Ana, and Belgium offices serve more than 2,500 resellers in over 100
countries.

Key strategic objectives for the Export Division include increasing sales
and market share in each of the regions it serves primarily by providing a broad
product assortment, further cultivating key supplier relationships, and
expanding reseller service offerings. The Company will continue to position
itself as a global distributor of microcomputer products providing resellers in
all markets access to the Company's vast selection of products via its extensive
network of international and U.S. warehouses.

COMPETITION

The Company operates in a highly competitive environment, both in the
United States and internationally. The microcomputer products distribution
industry is characterized by intense competition, based primarily on price,
product availability, speed and accuracy of delivery, effectiveness of sales and
marketing programs, credit availability, ability to tailor specific solutions to
customer needs, quality and breadth of product lines and service, and
availability of technical and product information. The Company believes it
competes favorably with respect to each of these factors. As price points have
declined, the Company believes that value-added services capabilities (such as
configuration, innovative financing programs, order fulfillment, contract
telesales, and contract warehousing) will become more important competitive
factors.

The Company entered the master reseller business through Ingram Alliance in
late 1994. See "-- Ingram Alliance." The Company competes with other master
resellers, which sell to groups of affiliated franchisees and third-party
dealers. Many of the Company's competitors in the master reseller business are
more experienced and have more established contacts with affiliated resellers,
third-party dealers, or suppliers, which may provide them with a competitive
advantage over the Company.

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customers of the Company. For example, the Company intends to distribute media
in the new digital video disc format and may compete with traditional music and
printed media distributors. In addition, certain services the Company provides
may directly compete with those provided by the Company's reseller customers.
There can be no assurance that increased competition and adverse reaction from
customers resulting from the Company's expansion into new business areas will
not have a material adverse effect on the Company's business, financial
condition, or results of operations. See "Risk Factors -- Intense Competition."

Ingram Micro's primary competitors include large United States-based
international distributors such as Merisel, Tech Data, and Arrow Electronics (a
worldwide industrial electronics distributor), as well as national distributors
such as AmeriQuest Technologies (majority owned by Computer 2000), Handleman,
Navarre, and Avnet. Ingram Alliance's principal competitors include such master
resellers as Intelligent Electronics, MicroAge, Datago, InaCom, and recent
entrant Tech Data Elect, a division of Tech Data. Ingram Micro competes
internationally with a variety of national and regional distributors. European
competitors include international distributors such as Computer 2000 (owned by
German conglomerate Viag AG), Merisel, and Softmart/Tech Data, and several local
and regional distributors, including Actebis, Scribona, and Microtech. In
Canada, Ingram Micro competes with Merisel, Globelle, Beamscope, and Tech Data.
Ingram Dicom is the leading distributor in Mexico, competing with such companies
as MPS, Merisel, Intertec, and Dataflux. In the Asia Pacific market, Ingram
Micro faces both regional and local competitors, of whom the largest is Tech
Pacific, a division of First Pacific Holdings, which operates in more than five
Asia Pacific markets.

Ingram Micro also competes with hardware manufacturers and software
publishers that sell directly to reseller customers and end-users.

FACILITIES

Ingram Micro's worldwide executive headquarters, as well as its West Coast
sales and support offices, are located in Santa Ana, California. The Company
also maintains an East Coast operations center in Buffalo, New York. A new
United States distribution center in Millington, Tennessee is expected to be
completed in April 1997, adding 600,000 square feet to the Company's warehouse
capacity. This distribution center will be strategically located near several
major transportation hubs and is expected to benefit from lower regional labor
costs. The U.S. network of distribution centers permits Ingram Micro to keep an
extensive supply of product close to its reseller customers, which enables the
Company to provide substantially all of its U.S. reseller customers with one- or
two-day ground delivery.

The principal properties of the Company consist of the following:

APPROXIMATE
LOCATION PRINCIPAL USE FLOOR AREA IN SQ. FT.
- ------------------------------ ----------------------------------------- ---------------------

UNITED STATES
Santa Ana, CA................. Executive offices 389,245
Buffalo, NY................... Offices 175,000
Nashville, TN................. Data Processing Center 11,782
Millington, TN................ Distribution Center (under construction) 600,000
Chicago/Carol Stream, IL...... Distribution Centers 436,359
Fullerton, CA................. Distribution Center 273,760
Harrisburg, PA................ Distribution Center 230,000
Memphis, TN................... Distribution Center 160,000
Fremont, CA................... Distribution Center 141,540
Carrollton, TX................ Distribution Center 121,654
Atlanta, GA................... Distribution Center 83,049
Miami, FL..................... Distribution Center, Offices 52,080
Santa Ana, CA................. Returns Center, Offices 114,500
Fremont, CA................... Freight Consolidation Center 58,435

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APPROXIMATE
LOCATION PRINCIPAL USE FLOOR AREA IN SQ. FT.
- ------------------------------ ----------------------------------------- ---------------------

EUROPE
Brussels, Belgium............. Offices 33,600
Birkerod, Denmark............. Offices 22,281
Taastrup, Denmark............. Distribution Center 21,699
Lesquin, France............... Offices 37,088
Paris, France................. Offices 4,250
Roncq, France................. Distribution Center 96,000
Ottobrunn, Germany............ Offices 32,221
Kirchheim, Germany............ Distribution Center 75,904
Milan, Italy.................. Offices 17,114
Milan, Italy.................. Distribution Center 44,669
Rome, Italy................... Offices, Distribution Center 10,225
Utrecht, Netherlands.......... Offices 30,999
Vianen, Netherlands........... Distribution Center 61,149
Oslo, Norway.................. Offices, Distribution Center 53,595
Madrid, Spain................. Offices 17,689
Barcelona, Spain.............. Offices, Distribution Center 74,508
Kista, Sweden................. Offices 26,371
Sollentuna, Sweden............ Distribution Center 43,126
Milton Keynes, U.K............ Offices, Distribution Center 211,992
CANADA
Toronto, Ontario.............. Offices, Distribution Center 250,000
Vancouver, B.C................ Offices, Distribution Center 87,148
Montreal, Quebec.............. Offices 12,000
MEXICO
Mexico City, D.F.............. Offices, Distribution Center 65,695
Puebla, Puebla................ Offices, Distribution Center 11,679
Leon, Guanajuato.............. Offices, Distribution Center 11,206
Guadalajara, Jalisco.......... Offices, Distribution Center 9,967
Merida, Yucatan............... Offices, Distribution Center 6,437
Monterrey, Nuevo Leon......... Offices, Distribution Center 6,039
Hermosillo, Sonora............ Offices, Distribution Center 5,156
ASIA
Singapore..................... Offices, Distribution Center 20,989
Kuala Lumpur, Malaysia........ Offices, Distribution Center 6,000
Tokyo, Japan.................. Offices 720

All of the Company's facilities, with the exception of the Brussels office
and the distribution centers in Chicago and Roncq, France are leased. These
leases have varying terms. The Company does not anticipate any material
difficulty in renewing any of its leases as they expire or securing replacement
facilities, in each case on commercially reasonable terms.

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TRADEMARKS AND SERVICE MARKS

The Company holds various trademarks and service marks, including, among
others, "Ingram Micro," "IMpulse," the Ingram Micro logo, "Partnership America,"
and "Leading the Way in Worldwide Distribution." Certain of these marks are
registered, or are in the process of being registered, in the United States and
various foreign countries. Even though the Company's marks may not be registered
in every country where the Company conducts business, in many cases the Company
has acquired rights in those marks because of its continued use of them.
Management believes that the value of the Company's marks is increasing with the
development of its business but that the business of the Company as a whole is
not materially dependent on such marks.

EMPLOYEES

As of June 29, 1996, the Company had approximately 8,119 associates located
as follows: United States -- 5,151, Europe -- 1,762, Canada -- 754,
Mexico -- 387, and Asia-Pacific -- 65. Ingram Micro believes that its success
depends on the skill and dedication of its associates. The Company strives to
attract, develop, and retain outstanding personnel. None of the Company's
associates in the United States, Europe, Canada, Malaysia, and Singapore are
represented by unions. In Mexico, Ingram Dicom has collective bargaining
agreements with one of the national unions. The Company considers its employee
relations to be good.

LEGAL PROCEEDINGS

There are no material pending legal proceedings to which the Company is a
party or to which any of its property is subject.

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MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth certain information with respect to each
person who is an executive officer or director of the Company:

NAME AGE PRESENT AND PRIOR POSITIONS HELD(1)
- ------------------------ --- ------------------------------------- YEARS POSITIONS HELD
----------------------------

Jerre L. Stead(2) 53 Chief Executive Officer and Chairman Aug. 1996 - Present
of the Board
Chief Executive Officer and Chairman Jan. 1995 - Aug. 1995
of the Board, Legent Corporation, a
software development company
Executive Vice President, Chairman May 1993 - Dec. 1994
and Chief Executive Officer, AT&T
Corp. Global Information Solutions
(NCR Corp.), a computer
manufacturer
President and Chief Executive Sept. 1991 - Apr. 1993
Officer, AT&T Corp. Global Business
Communication Systems, a
communications company
Chairman, President and Chief Sept. 1988 - Aug. 1991
Executive Officer, Square D Co., an
electronics manufacturer
Jeffrey R. Rodek 43 President; Chief Operating Officer; Dec. 1994 - Present
Director
Senior Vice President, Americas and July 1991 - Sept. 1994
Caribbean, Federal Express, an
overnight courier firm
Senior Vice President, Central Dec. 1989 - July 1991
Support Services, Federal Express
David R. Dukes(3) 52 Vice Chairman Apr. 1996 - Present
Co-Chairman Jan. 1992 - Apr. 1996
Chief Executive Officer, Ingram Jan. 1994 - Present
Alliance
Chief Operating Officer Sept. 1989 - Dec. 1993
Director Sept. 1989 - Present
President Sept. 1989 - Dec. 1991
Sanat K. Dutta 47 Executive Vice President Aug. 1994 - Present
Senior Vice President, Operations May 1988 - Aug. 1994
John Wm. Winkelhaus, II 46 Executive Vice President; President, Jan. 1996 - Present
Ingram Micro Europe
Senior Vice President, Ingram Micro Feb. 1992 - Dec. 1995
Europe
Senior Vice President, Sales Apr. 1989 - Jan. 1992
Michael J. Grainger 44 Chief Financial Officer May 1996 - Present
Vice President and Controller, Ingram July 1990 - Present
Industries
James E. Anderson, Jr. 48 Senior Vice President, Secretary, and Jan. 1996 - Present
General Counsel
Vice President, Secretary, and Sept. 1991 - Present
General Counsel, Ingram Industries
Partner, Dearborn & Ewing, a law firm Jan. 1986 - Sept. 1991
Douglas R. Antone 43 Senior Vice President; President, June 1994 - Present
Ingram Alliance
Senior Vice President, Worldwide Nov. 1993 - May 1994
Sales and Marketing, Borland
International, a software
development company
Senior Vice President, Worldwide July 1990 - Nov. 1993
Sales, Borland International

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50

NAME AGE PRESENT AND PRIOR POSITIONS HELD(1)
- ------------------------ --- ------------------------------------- YEARS POSITIONS HELD
----------------------------

Larry L. Elchesen 46 Senior Vice President June 1994 - Present
President, Ingram Micro Canada May 1989 - Present
Philip D. Ellett 42 Senior Vice President; General Jan. 1996 - Present
Manager, U.S. Consumer Markets
Division
President, Gates/Arrow, an Aug. 1994 - Dec. 1995
electronics distributor
President and Chief Executive Oct. 1991 - Aug. 1994
Officer, Gates/F.A. Distributing,
Inc.
President and Chief Operating Oct. 1990 - Oct. 1991
Officer, Gates/F.A. Distributing,
Inc.
David M. Finley 55 Senior Vice President, Human July 1996 - Present
Resources
Senior Vice President, Human May 1995 - July 1996
Resources, Budget Rent a Car, a car
rental company
Vice President, Human Resources, The Jan. 1977 - May 1995
Southland Corporation, a
convenience retail company
Robert Furtado 40 Senior Vice President, Operations Aug. 1994 - Present
Vice President, Operations July 1989 - Aug. 1994
Robert Grambo 32 Senior Vice President, Telesales Oct. 1995 - Present
Vice President, Sales Apr. 1994 - Sept. 1995
Vice President, Product Marketing Apr. 1993 - Mar. 1994
President, Bloc Publishing Corp., a Apr. 1992 - Apr. 1993
software publishing firm
Senior Director, Purchasing, Ingram Jan. 1990 - Apr. 1992
Micro
Ronald K. Hardaway 52 Senior Vice President; Chief Jan. 1992 - Present
Financial Officer, Ingram Micro
U.S.
Senior Vice President and Controller June 1990 - Jan. 1992
Gregory J. Hawkins 41 Senior Vice President, Sales Oct. 1995 - Present
Vice President, Sales Jan. 1993 - Oct. 1995
Vice President, Major Accounts Aug. 1992 - Jan. 1993
Director, Major Accounts, Consumer June 1992 - Aug. 1992
Markets
Director, Marketing Jan. 1991 - June 1992
James M. Kelly 60 Senior Vice President, Management Feb. 1991 - Present
Information Systems
David W. Rutledge 43 Senior Vice President, Asia Pacific, Jan. 1996 - Present
Latin America and Export Markets
Senior Vice President, Administration Sept. 1991 - Dec. 1995
Vice President, Secretary, and Jan. 1986 - Sept. 1991
General Counsel, Ingram Industries
Martha R. Ingram(4)(5) 61 Director May 1996 - Present
Chairman of the Board of Directors May 1996 - Aug. 1996
Chairman of the Board of Directors, June 1995 - Present
Ingram Industries
Director, Ingram Industries 1981 - Present
Chief Executive Officer, Ingram Apr. 1996 - Present
Industries
Director of Public Affairs, Ingram 1979 - June 1995
Industries

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NAME AGE PRESENT AND PRIOR POSITIONS HELD(1)
- ------------------------ --- ------------------------------------- YEARS POSITIONS HELD
----------------------------

John R. Ingram(4) 35 Director Dec. 1994 - Present
Acting Chief Executive Officer May 1996 - Aug. 1996
Co-President, Ingram Industries Jan. 1996 - Present
President, Ingram Book Company Jan. 1995 - Present
Vice President, Purchasing, Ingram Jan. 1994 - Dec. 1994
Micro Europe
Vice President, Management Services, July 1993 - Dec. 1993
Ingram Micro Europe
Director of Management Services, Jan. 1993 - June 1993
Ingram Micro Europe
Director of Purchasing Apr. 1991 - Dec. 1992
David B. Ingram(4) 33 Director May 1996 - Present
Chairman and President, Ingram Mar. 1996 - Present
Entertainment
President and Chief Operating Aug. 1994 - Mar. 1996
Officer, Ingram Entertainment
Vice President, Major Accounts, Nov. 1993 - Aug. 1994
Ingram Entertainment
Assistant Vice President, Sales, June 1992 - Nov. 1993
Ingram Entertainment
Director, Sales, Ingram Entertainment July 1991 - June 1992
Philip M. Pfeffer 51 Director 1986 - Present
President and Chief Operating May 1996 - Present
Officer, Random House Inc., a
publishing company
Executive Vice President, Ingram Dec. 1981 - Mar. 1996
Industries
Chairman and Chief Executive Officer, Dec. 1981 - Dec. 1995
Ingram Distribution Group Inc.
Chairman, Ingram Micro Holdings Inc. Apr. 1989 - Oct. 1995

- ---------------
(1) The first position and any other positions not given a separate corporate
identification are with the Company.

(2) Jerre L. Stead is a director of Armstrong World Industries, Inc. and TJ
International, Inc.

(3) David R. Dukes is a director of National Education Corporation.

(4) Martha R. Ingram is the mother of David B. Ingram and John R. Ingram. There
are no other family relationships among the above individuals.

(5) Martha R. Ingram is a director of Baxter International Inc., First American
Corporation, and Weyerhaeuser Co.

BOARD OF DIRECTORS

The Board of Directors currently consists of Mr. Stead, Mrs. Ingram and
Messrs. John R. Ingram, Rodek, Dukes, David B. Ingram, and Pfeffer. So long as
the Ingram Family Stockholders and their permitted transferees (as defined in
the Board Representation Agreement) own in excess of 25,000,000 shares of the
outstanding Common Equity, the Board Representation Agreement will provide for
the designation of (i) not more than three directors designated by the Ingram
Family Stockholders, (ii) one director designated by the Chief Executive Officer
of the Company, and (iii) four or five additional directors ("Independent
Directors") who are not members of the Ingram family or executive officers or
employees of the Company. Directors designated by the Ingram Family Stockholders
may include Martha R. Ingram, any of her legal descendants, or any of their
respective spouses. See "The Split-Off -- The Exchange." Although the identity
of the directors has not been determined, it is expected that three additional
independent directors will be designated as soon as practicable after the
closing of this offering.

COMMITTEES. The Board Representation Agreement provides for the formation
of certain committees of the Board of Directors. The bylaws of the Company will
be amended to specifically provide for four committees: an Audit Committee, a
Compensation Committee, an Executive Committee, and a Nominating Committee. The
Audit Committee will consist of at least three directors, and a majority of the
members of the Audit Committee will be Independent Directors. The functions of
the Audit Committee will be to recommend annually to the Board of Directors the
appointment of the independent auditors of the Company, discuss and

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review in advance the scope and the fees of the annual audit and review the
results thereof with the independent auditors, review and approve non-audit
services of the independent auditors, review compliance with existing major
accounting and financial reporting policies of the Company, review the adequacy
of the financial organization of the Company, and review management's procedures
and policies relating to the adequacy of the Company's internal accounting
controls and compliance with applicable laws relating to accounting practices.

The Compensation Committee will consist of three directors, one of whom
will be a director designated by the Ingram Family Stockholders and two of whom
will be Independent Directors. The functions of the Compensation Committee will
be to review and approve annual salaries, bonuses, and grants of stock options
pursuant to the 1996 Plan for all executive officers and key members of the
Company's management staff and to review and approve the terms and conditions of
all employee benefit plans or changes thereto.

The Executive Committee will consist of three directors, one of whom will
be a director designated by the Ingram Family Stockholders, one of whom will be
the director designated by the Chief Executive Officer of the Company, and one
of whom will be an Independent Director. The Executive Committee may approve
management decisions requiring the immediate attention of the Board of Directors
during the period of time between each regularly scheduled meeting of the Board.
The Executive Committee will not have authority to approve any of the following
items, all of which require the approval of the Board: (i) any action that would
require the approval of the holders of a majority of the stock held by certain
of the Ingram Family Stockholders or that would require approval of the holders
of a majority of the Common Equity under applicable law or under the Certificate
of Incorporation or Bylaws of the Company; (ii) any acquisition with a total
aggregate consideration in excess of 2% of the Company's stockholders' equity;
(iii) any action outside the ordinary course of business of the Company; or (iv)
any other action involving a material shift in policy or business strategy for
the Board.

The Nominating Committee will consist of three directors, two of whom will
be directors designated by the Ingram Family Stockholders, and one of whom will
be the director designated by the Chief Executive Officer of the Company. The
function of the Nominating Committee will be to recommend to the full Board of
Directors nominees for election as directors of the Company and to elect members
of committees of the Board of Directors.

COMPENSATION OF DIRECTORS. Directors of the Company do not currently
receive a salary or an annual retainer for their services. The Company expects
that following this offering, directors who are not employees of the Company
will be paid an annual retainer, plus reimbursement for expenses incurred in
attending meetings of the Board of Directors and committees thereof. In
addition, it is contemplated that such directors will receive options to
purchase Common Equity. The specific terms and conditions of such compensation
have not yet been decided. Directors who are also employees of the Company will
not receive any additional compensation for serving on the Board of Directors.

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EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE. The following table provides information
relating to compensation for the year ended December 30, 1995 for the Company's
former Chief Executive Officer and the other four most highly compensated
executive officers of the Company (collectively, the "Named Executive Officers")
for services rendered by each Named Executive Officer during the year ended
December 30, 1995. A portion of this compensation was paid by Ingram Industries
and was included as a factor in the determination of intercompany charges paid
by the Company to Ingram Industries.

LONG-TERM
COMPENSATION
---------------
AWARDS
--------------- ALL
ANNUAL COMPENSATION SECURITIES OTHER
-------------------------- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION(S) YEAR(1) SALARY($)(2) BONUS($)(3) OPTIONS/SARS(#) ($)(4)
- ----------------------------------- ------- ------------ ----------- --------------- ------------

Linwood A. (Chip) Lacy, Jr.(5)..... 1995 $558,000 $ 414,057 -- $ 28,617
Former Chief Executive Officer
and Former Chairman of the Board
of Directors
Jeffrey R. Rodek................... 1995 392,820 267,089 240,258(6) 163,649
President, Chief Operating
Officer, and Director
David R. Dukes..................... 1995 260,130 205,611 -- 10,607
Vice Chairman of the Company,
Chief Executive Officer of Ingram
Alliance, and Director
Sanat K. Dutta..................... 1995 263,500 213,593 -- 12,365
Executive Vice President
John Wm. Winkelhaus, II............ 1995 250,000 130,441 -- 124,287
Executive Vice President and
President, Ingram Micro Europe

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

(1) Under rules promulgated by the Securities and Exchange Commission, since the
Company was not a reporting company during the three immediately preceding
fiscal years, only the information with respect to the most recent completed
fiscal year is reported in the Summary Compensation Table.

(2) Includes amounts deferred under qualified and nonqualified defined
contribution compensation plans and pretax insurance premium amounts.

(3) Reflects amounts paid in 1996 in respect of the fiscal year ended December
30, 1995.

(4) Includes the following amounts: Mr. Lacy (group term life insurance, $3,600;
employer thrift plan contributions, $20,625; relocation, $4,392); Mr. Rodek
(group term life insurance, $1,632; employer thrift plan contributions,
$11,631; relocation, $150,386); Mr. Dukes (group term life insurance,
$1,152; employer thrift plan contributions, $9,455); Mr. Dutta (group term
life insurance, $2,784; employer thrift plan contributions, $9,581); and Mr.
Winkelhaus (group term life insurance, $1,006; employer thrift plan
contributions, $6,211; and expatriate compensatory payments, $117,070).

(5) Mr. Lacy was an employee of Ingram Industries at all times during 1995. All
amounts shown for Mr. Lacy were paid by Ingram Industries, and a portion of
such amounts is reflected in the Company's consolidated statement of income
under charges allocated from Ingram Industries.

(6) Represents options exercisable for 175,000 shares of Ingram Industries
common stock, which will be converted into options exercisable for 240,258
shares of Common Stock in connection with the Split-Off.

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STOCK OPTION/SAR GRANTS IN LAST FISCAL YEAR. The following table provides
information relating to stock options granted to the Named Executive Officers
for the year ended December 30, 1995.

INDIVIDUAL GRANTS(1) POTENTIAL
------------------------------------------------- REALIZABLE
% OF TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS/SARS ANNUAL RATES OF
SECURITIES GRANTED TO STOCK PRICE
UNDERLYING EMPLOYEES OF EXERCISE APPRECIATION FOR
OPTIONS/ THE COMPANY OR BASE OPTION TERM
SARS IN FISCAL PRICE EXPIRATION -------------------
NAME GRANTED YEAR ($/SH) DATE 5%($) 10%($)
- ---------------------------------- ---------- ------------ -------- ---------- -------- --------

Linwood A. (Chip) Lacy, Jr. ...... -- -- -- -- -- --
Jeffrey R. Rodek(2)............... 240,258 22.95% $ 2.85 1/1/03 $326,532 $782,100
David R. Dukes.................... -- -- -- -- -- --
Sanat K. Dutta.................... -- -- -- -- -- --
John Wm. Winkelhaus, II........... -- -- -- -- -- --

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

(1) The Company has, since December 30, 1995, granted certain options to
purchase Class B Common Stock, including options to purchase 150,000,
35,000, 40,000, and 40,000 shares, respectively, to Messrs. Rodek, Dukes,
Dutta, and Winkelhaus. Additionally, options to purchase Common Stock are
expected to be granted to certain of the Named Executive Officers
concurrently with the closing of this offering at the initial public
offering price set forth on the cover page of this Prospectus. See "-- 1996
Plan -- Options."

(2) Represents options exercisable for 175,000 shares of Ingram Industries
common stock, which will be converted into options exercisable for 240,258
shares of Common Stock in connection with the Split-Off. Mr. Rodek's options
vest according to the following schedule: 34,324 shares on January 1, 1997,
60,064 shares on January 1, 1998, 60,064 shares on January 1, 1999, 60,064
shares on January 1, 2000, and 25,742 shares on January 1, 2001.

STOCK OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTIONS/SAR VALUES. The following table provides information relating to stock
options and ISUs exercised by the Named Executive Officers during the year ended
December 30, 1995, as well as the number and value of securities underlying
unexercised stock options held by the Named Executive Officers as of December
30, 1995.

NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
SHARES UNEXERCISED IN-THE-MONEY
ACQUIRED OPTIONS/SARS OPTIONS/SARS
ON AT YEAR END AT YEAR END
EXERCISE VALUE ------------------- ----------------
DURING REALIZED EXERCISABLE/ EXERCISABLE/
NAME 1995(1)(2) ($)(3) UNEXERCISABLE(2) UNEXERCISABLE
- ------------------------------ --------- ---------- ------------------- ----------------

Linwood A. (Chip) Lacy,
Jr. ........................ 1,613,158(4) $2,917,808 46,875/372,315(5) $87,656/$554,749(5)
Jeffrey R. Rodek.............. -- -- 0/274,580 0/214,400
David R. Dukes................ -- 518,063 30,032/278,184 41,097/570,335
Sanat K. Dutta................ -- -- 0/258,105 0/455,656
John Wm. Winkelhaus, II....... -- 278,600 0/244,376 0/450,216

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

(1) Excludes Ingram Industries ISUs held by Messrs. Lacy, Dukes, and Winkelhaus
that matured in 1995 and were settled in cash.

(2) Reflects the conversion of shares of Ingram Industries common stock, or
options exercisable for shares of Ingram Industries common stock, into
shares of Class B Common Stock, or options exercisable for shares of Common
Stock, in connection with the Split-Off.

(3) Includes $830,408, $518,063, and $278,600 paid to Messrs. Lacy, Dukes, and
Winkelhaus, respectively, in connection with the settlement of ISUs.

(4) 1,544,513 of such shares were acquired from the E. Bronson Ingram Charitable
8% Remainder Unitrust and were deemed to be acquired from the Company.

(5) Excludes options exercisable for 12,731/101,121 shares of Ingram Industries
common stock with a value of $74,858/$540,997.

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PENSION PLAN

None of the Named Executive Officers other than Mr. Lacy participates in
the tax-qualified Ingram Retirement Plan and the non-qualified Ingram
Supplemental Executive Retirement Plan (the "Retirement Plans") sponsored by
Ingram Industries. At the time he left the Company, Mr. Lacy had earned one year
of credited service under the Retirement Plans.

Mr. Lacy's benefit from the Retirement Plans will be in the form of a
deferred annuity. At age 65, his life only annuities would be $178.70 per month
from the Ingram Retirement Plan and $539.70 per month from the Ingram
Supplemental Executive Retirement Plan. It is anticipated that the Company will
establish a qualified plan similar to the Ingram Industries qualified plan. None
of the Named Executive Officers will participate in the Company's qualified
retirement plan.

EMPLOYMENT AGREEMENTS

In August 1996, the Company entered into an agreement with Mr. Stead
pursuant to which he agreed to serve as Chief Executive Officer and Chairman of
the Board of the Company. The agreement provides for the grant to Mr. Stead of
options at the initial public offering price set forth on the cover page of this
Prospectus exercisable for 3,600,000 shares of Common Stock. Such options will
vest over an extended period, as described below. See "-- 1996 Plan -- Options."
Mr. Stead will not receive any salary, bonus, or other cash compensation during
the vesting period of such options; however, the Company has agreed to
compensate Mr. Stead in a mutually agreeable manner in the event that the
initial public offering price set forth on the cover page of this Prospectus
exceeds $14.00. The Company has also agreed to provide Mr. Stead and his spouse
with lifetime healthcare coverage, with a lifetime cap of $2.0 million, as well
as certain other perquisites.

In December 1994, the Company entered into an agreement with Mr. Rodek
pursuant to which he agreed to serve as President and Chief Operating Officer of
the Company and as a member of the Company's Board of Directors. The agreement
provides for a base salary, participation in the Company's Executive Incentive
Bonus Plan, and participation in the Company's health and benefit programs. Mr.
Rodek will receive a severance benefit equal to his annual base salary if the
Company terminates his employment without cause prior to January 1, 1998.

In April 1988, the Company entered into an agreement with Mr. Dutta
pursuant to which he agreed to serve as Senior Vice President, Operations. The
agreement provides for a base salary, participation in the Company's Executive
Incentive Bonus Plan, and participation in the Company's health and benefit
programs. Mr. Dutta will receive a severance benefit of nine months' base salary
if he is terminated without cause or 12 months' base salary if he is
involuntarily terminated or has a substantial change in title or reduction of
salary within 12 months of a change in control (as defined in the agreement).

In June 1991, the Company entered into an agreement with Mr. Winkelhaus
pursuant to which he agreed to serve as Senior Vice President, Ingram Micro
Europe. The agreement provides for a base salary, a housing cost and goods and
services differential, participation in the Company's Executive Incentive Bonus
Plan, and participation in the Company's health and benefit programs.

Mr. Lacy resigned as Chairman and Chief Executive Officer of the Company
effective May 31, 1996. Pursuant to an agreement (the "Severance Agreement"),
Mr. Lacy resigned from all positions with the Company, and resigned from all
positions with Ingram Industries and its other subsidiaries, except that Mr.
Lacy will remain a director of Ingram Industries until December 31, 1997, unless
earlier removed in accordance with the bylaws of Ingram Industries. In addition,
Mr. Lacy has agreed to serve as a director of the Company, if so requested by
Ingram Industries, until December 31, 1997.

Pursuant to the Severance Agreement, Mr. Lacy has agreed to cooperate with
the Company and Ingram Industries in connection with the consummation of the
Split-Off and this offering. Mr. Lacy has also agreed not to use or disclose
confidential information relating to the Company. Furthermore, Mr. Lacy has
agreed that until November 30, 1998, he will not compete with the Company or
solicit for hire any person who was or

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becomes an employee of the Company between December 1, 1995 and June 1, 1998.
Mr. Lacy has also agreed to similar restrictions with respect to the businesses
of Ingram Industries and its other subsidiaries.

The Company will pay Mr. Lacy one year's salary at the level in effect as
of the date of his resignation, and has paid Mr. Lacy $272,000, his earned bonus
for the first five months of 1996. In addition, the Severance Agreement provides
for the continuation of certain health and life insurance benefits for a period
of 12 months from the date thereof. Mr. Lacy will also receive certain payments
from Ingram Industries.

The shares of Ingram Industries common stock owned by Mr. Lacy will be
converted into shares of Class B Common Stock in connection with the Exchange.
These shares have been placed in an escrow account, although Mr. Lacy will be
permitted to sell such shares, subject to applicable tax and securities laws,
provided that the after-tax proceeds of such sales remain in the escrow account.
If at any time prior to December 1, 1998, Mr. Lacy breaches the terms and
conditions of the Severance Agreement, the Company shall have the right to be
reimbursed for its damages from this escrow account. Furthermore, Ingram
Industries and the Company may suspend any payments or obligations otherwise
owed to Mr. Lacy. If not earlier released due to the death of Mr. Lacy or a
Change of Control (as defined therein), fifty percent of the escrow account will
be released on June 1, 1998 and the remainder on December 1, 1998.

KEY EMPLOYEE STOCK PURCHASE PLAN

As of April 30, 1996, the Board of Directors of the Company adopted, and
Ingram Industries, as the sole stockholder of the Company, approved, the Key
Employee Stock Purchase Plan (the "Stock Purchase Plan"). The Company has
reserved 4,000,000 shares of Class B Common Stock to cover awards under the
Stock Purchase Plan.

Employee Offering. In the second quarter of 1996, the Company offered (the
"Employee Offering") 2,775,000 shares of its Class B Common Stock, of which
2,510,400 shares were purchased, in reliance upon Regulation D and Regulation S
under the Securities Act of 1933, as amended (the "Securities Act"), for
$17,572,800, to certain of its officers. Such shares are subject to vesting,
certain restrictions on transfer, and repurchase by the Company upon termination
of employment.

Restricted Stock Grants. The Company also made grants pursuant to the
Stock Purchase Plan of an aggregate of 107,000 restricted shares of Class B
Common Stock to certain officers and employees of the Company, which shares will
vest 25% on April 1, 1998 and each year thereafter through 2001. Prior to
vesting, such shares are subject to forfeiture to the Company, with no
consideration paid to the holder thereof, upon termination of the holder's
employment.

1996 PLAN

As of April 30, 1996, the Board of Directors of the Company adopted, and
Ingram Industries, as the sole stockholder of the Company, approved, the 1996
Equity Incentive Plan (the "1996 Plan"). The Company currently intends to amend
the 1996 Plan, primarily to change the allowable vesting schedule for options
granted under the 1996 Plan and to permit options to be granted to purchase
shares of Common Stock in addition to Class B Common Stock. Options granted
prior to the closing of this offering will continue to be governed by the 1996
Plan as in effect prior to the amendment of the 1996 Plan concurrently with the
closing of this offering.

The purpose of the 1996 Plan is to attract and retain key personnel and to
enhance their interest in the Company's continued success.

The 1996 Plan is administered by the Board of Directors of the Company or a
committee appointed thereby (the "Committee"). The Committee has broad
discretion, subject to contractual restrictions affecting the Company, as to the
specific terms and conditions of each award and any rules applicable thereto,
including but not limited to the effect thereon of the death, retirement, or
other termination of employment of the participant.

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57

The 1996 Plan permits the granting of (i) stock options that qualify as
"Incentive Stock Options" under the U.S. Internal Revenue Code of 1986, as
amended (the "Code"), (ii) options other than Incentive Stock Options
("Nonqualified Stock Options"), (iii) SARs granted either alone or in tandem
with other awards under the 1996 Plan, (iv) restricted stock and restricted
stock units, (v) performance awards, and (vi) other stock-based awards. The
Company has reserved approximately 10,000,000 shares of Common Equity (which may
be either Common Stock or Class B Common Stock) to cover awards under the 1996
Plan.

The Board of Directors may amend, alter, or terminate the 1996 Plan at any
time, provided that stockholder approval generally must be obtained for any
change that would require stockholder approval under Rule 16b-3 under the
Exchange Act or any other regulatory or tax requirement that the Board deems
desirable to comply with or obtain relief under and subject to the requirement
that no rights under an outstanding award may be impaired by such action without
the consent of the holder thereof. The Committee may amend or modify the terms
of any outstanding award but only with the consent of the participant if such
amendment would impair his rights. In the event of certain corporate
transactions or events affecting the shares or the structure of the Company, the
Committee may make certain adjustments as set forth in the 1996 Plan.

The 1996 Plan is not subject to any provision of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") and is not qualified under
Section 401(a) of the Code.

Options. On June 25, 1996, the Company granted options to purchase an
aggregate of approximately 4,800,000 shares of Class B Common Stock under the
1996 Plan to all full-time employees of the Company who had at such time been
continuously employed by the Company since January 1, 1996, as well as to
certain employees of the Company, at the director level and above, who began
employment with the Company at a later date. The exercise price of these options
is $7.00 per share. These options, which are Incentive Stock Options to the
extent permitted under the terms of the 1996 Plan and the Code, will vest as
follows: (i) for officers of the Company, in four equal annual installments
commencing on April 1, 1998, and (ii) for non-officers, in five equal annual
installments commencing on April 1, 1997, in each case subject to continued
employment with the Company.

Concurrently with the closing of this offering, it is expected that the
Board of Directors will grant options under the 1996 Plan to purchase
approximately 4,400,000 shares of Common Stock to certain executive officers and
employees of the Company. The exercise price of these options will be equal to
the initial public offering price set forth on the cover page of this
Prospectus. Of such options, options to purchase 3,600,000 shares will be
granted to Mr. Stead pursuant to the employment agreement described above. See
"-- Employment Agreements." Of the total options being granted to Mr. Stead,
options to purchase 400,000 shares will vest immediately, and options to
purchase an additional 1,600,000 shares will vest in four equal installments
beginning April 1, 1998. The remaining options to purchase an additional
1,600,000 shares granted to Mr. Stead, as well as the options to purchase
800,000 shares to be granted to other executive officers and employees of the
Company, will vest over a fixed term, subject to continued employment with the
Company; however, such options will vest earlier if the Company achieves certain
performance criteria. The specific numbers of options to be granted to
individual executive officers will be determined prior to the closing of this
offering.

EXECUTIVE INCENTIVE BONUS PLAN

All officers of the Company are eligible to participate in the Company's
Executive Incentive Bonus Plan (the "Bonus Plan"). Pursuant to the Bonus Plan,
officers receive bonus payments based on the Company's meeting or exceeding
budgeted results, as well as individual achievement of previously agreed upon
goals.

ROLLOVER PLAN; INCENTIVE STOCK UNITS

In connection with the Split-Off, Ingram Industries options held by the
Company's employees and certain other Ingram Industries options and SARs will be
converted to Ingram Micro options ("Rollover Stock Options") to purchase shares
of Common Stock. In addition, holders of approximately 300,000 Ingram Industries
ISUs will have the option to exchange a portion of their ISUs for Rollover Stock
Options. See "The Split-Off -- The Exchange." Upon conversion, assuming all
eligible ISUs are exchanged, approximately

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11,000,000 Rollover Stock Options will be outstanding, with exercise prices
ranging from $0.66 to $3.32 per share. See "The Split-Off -- The Exchange." The
majority of these options will be fully vested by the year 2000 and expire no
later than ten years from the date of grant. These vested options generally
become exercisable, if otherwise vested, upon the earlier of (i) nine months
after the Split-Off or (ii) a public offering of the shares, in each case
subject to the optionee's continued employment with any of the Company, Ingram
Industries, or Ingram Entertainment.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Board of Directors of the Company does not currently maintain a
separate compensation committee. Historically, base compensation of officers of
the Company, and Mr. Lacy's compensation under the Bonus Plan, has been
determined by the Executive Compensation Committee of the Ingram Industries
board of directors, which in 1995 consisted of E. Bronson Ingram, until his
resignation from the Board in May, and Messrs. Lacy and Pfeffer. Mr. Lacy did
not participate in the determination of his compensation. Compensation under the
Bonus Plan for all officers of the Company other than Mr. Lacy was determined by
the entire Board of Directors of the Company.

EMPLOYEE AND PRIORITY OFFERS

EMPLOYEE DIRECTED OFFER

Up to 500,000 shares of Common Stock offered in this offering (the
"Employee Shares") have been reserved for certain employees of the Company (the
"Employee Directed Offer"). Each such employee may apply to purchase a number of
shares of Common Stock within a specified range at the initial public offering
price set forth on the cover page of this Prospectus and on the same terms and
conditions as the shares being offered to the general public. Any purchasers who
are affiliates of the Company will represent that any purchases are being made
for investment purposes only.

In the event that the demand for Employee Shares exceeds the number of
shares of Common Stock available under the Employee Directed Offer, the maximum
number of Employee Shares available to each individual will be reduced to the
extent necessary so that the total subscriptions equal the number of available
Employee Shares. Any application for a number of shares that is less than the
employee's new maximum individual application size will be unaffected thereby.

PRIORITY OFFER

Up to 1,800,000 of the shares of Common Stock offered in this offering (the
"Priority Shares") have been reserved pursuant to a priority allocation offer
(the "Priority Offer"). The Priority Offer is being made to certain customers
and vendors of the Company, to certain other individuals, including certain
employees of Ingram Industries and Ingram Entertainment, and to Ingram
Industries. Ingram Industries may purchase approximately 300,000 shares of
Common Stock in connection with its obligations under certain deferred
compensation plans which relate to the performance of the Common Stock. Each
other such person may apply to purchase a number of shares of Common Stock
within a range based on certain individual factors relating to such person at
the initial public offering price set forth on the cover page of this Prospectus
and on the same terms and conditions as the shares being offered to the general
public. Any purchasers who are affiliates of the Company will represent that any
purchases are being made for investment purposes only.

In the event that the demand for Priority Shares exceeds the number of
shares of Common Stock available under the Priority Offer, the maximum number of
Priority Shares available to each purchaser other than Ingram Industries will be
reduced to the extent necessary so that the total subscriptions equal the number
of available Priority Shares. Any application for a number of shares that is
less than the applicant's new maximum individual application size will be
unaffected thereby.

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CERTAIN TRANSACTIONS

Historically, Ingram Industries has provided certain administrative
services to the Company. The Company is allocated a portion of the costs of
these administrative services. This allocation totaled $1.6 million, $2.4
million, $3.5 million, and $2.1 million in 1993, 1994, 1995, and the first half
of 1996, respectively. In connection with the Split-Off, the Company will enter
into the Transitional Service Agreements with Ingram Industries relating to the
continued provision of certain administrative services. The Company believes
that the terms of the Transitional Service Agreements will be on a basis at
least as favorable as those that would be obtained from third parties on an
arm's length basis. The Transitional Service Agreements generally terminate on
December 31, 1996, although payroll services under the Transitional Service
Agreements will be provided through December 31, 1997. After such termination,
the Company will be required to provide such services internally or find a
third-party provider of such services.

Additionally, Ingram Industries has provided a large portion of the debt
financing required by the Company in connection with its expansion. As of
December 31, 1994, December 30, 1995, and June 29, 1996, $449.4 million, $673.8
million, and $560.8 million, respectively, was outstanding to Ingram Industries.
Interest on such debt has been charged based on Ingram Industries' domestic
weighted average cost of funds. See Note 6 of Notes to Consolidated Financial
Statements. In connection with the Split-Off, substantially all of the debt
facilities of Ingram Industries guaranteed by the Company will be assumed by the
Company in satisfaction of amounts due to Ingram Industries. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

The Company leases certain office space near Buffalo, New York from a
partnership owned by certain members of the Ingram family. The lease agreement
expires January 31, 2013 and requires annual rental payments of approximately
$1.6 million. The partnership is in discussions with lenders with regard to a
possible restructuring of the lease agreement relating to this facility, which
could require the Company to capitalize this lease for financial reporting
purposes in the amount of approximately $15.0 million at June 29, 1996. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources." The Company subleases its
facilities in Santa Ana, California and Harrisburg, Pennsylvania from Ingram
Industries pursuant to a sublease which expires March 1, 2007. The sublease
agreement requires annual rental payments of approximately $2.1 million. In
connection with the Split-Off, the Company is in discussions with the present
lessor (which now leases directly to Ingram Industries) with respect to entering
into a direct lease agreement under terms and conditions similar to the
sublease. Alternatively, the Company may acquire ownership of these facilities
for an aggregate amount of approximately $25.0 million, utilizing borrowings
under the Credit Facility. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources." The Company's lease for its distribution center in Millington,
Tennessee is guaranteed by Ingram Industries. This guarantee provides for the
release of Ingram Industries' guarantee upon satisfaction by the Company of
certain financial requirements specified in the guarantee including consummation
of an initial public offering of at least $300 million. Certain of the Company's
other leases are guaranteed by Ingram Industries. The Company anticipates that
such guarantees will be released in connection with the Split-Off.

The Company extended a loan during 1995 to one of its senior executive
officers. This loan has been repaid in full. The largest aggregate amount
outstanding at any time during 1995 was $450,000. This loan bore interest at the
intercompany rate of interest paid by the Company to Ingram Industries.

In connection with the Split-Off, it is expected that agreements relating
to board representation and registration rights with respect to Common Stock
held by the Ingram Family Stockholders (including shares of Common Stock issued
upon conversion of Class B Common Stock) will be entered into by the Company and
the Ingram Family Stockholders. See "The Split-Off."

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THE SPLIT-OFF

Immediately prior to the closing of this offering, Ingram Industries will
consummate the Split-Off. The consummation of the Split-Off is a non-waiveable
condition to the closing of this offering. The following is a summary of certain
of the material terms of the Split-Off.

THE EXCHANGE

Immediately prior to the closing of this offering, it is contemplated that
Ingram Industries will consummate the Exchange, under an Exchange Agreement (the
"Exchange Agreement"), pursuant to which the existing stockholders of Ingram
Industries may exchange a specified number of their shares of Ingram Industries
common stock for shares of Class B Common Stock of the Company and/or common
stock of Ingram Entertainment of equivalent value to the shares of Ingram
Industries so exchanged. See "Principal Stockholders." If all eligible
stockholders were to exchange all of their shares of Ingram Industries common
stock eligible to be exchanged, they would receive 107,251,352 shares of Class B
Common Stock. The exchange values were determined by the board of directors of
Ingram Industries, which relied in part on an opinion of a financial advisor to
the effect that the Exchange was fair to all involved parties. In the Exchange
Agreement, the Company covenants that, during the two-year period following the
Exchange, it will not (i) liquidate, merge, or consolidate with any other
person, or sell, exchange, distribute, or dispose of any material asset other
than in the ordinary course of business, (ii) with certain limited exceptions,
redeem or reacquire any of its capital stock transferred in the Exchange, (iii)
cease to conduct the principal active trade or business conducted by it during
the five years immediately preceding the Exchange, or (iv) otherwise take any
actions inconsistent with the facts and representations set forth in the private
letter ruling from the U.S. Internal Revenue Service (the "IRS") regarding
certain federal income tax consequences of the Reorganization and Exchange, in
each case unless it first obtains an opinion from recognized tax counsel or a
ruling from the IRS that such action will not affect the qualification of the
transactions contemplated by the Exchange Agreement for tax-free treatment. All
such covenants were necessary to obtain the private letter ruling from the IRS.

Certain outstanding Ingram Industries options and SARs will be converted
to, and certain Ingram Industries ISUs may be exchanged for, Rollover Stock
Options. The exchange values for these options, SARs, and ISUs are primarily
based on the exchange value for the underlying common stock. The option, SAR,
and ISU exchange values were determined by the board of directors of Ingram
Industries in accordance with the respective plans under which they were issued.
If all eligible ISUs are exchanged, the total number of Rollover Stock Options
outstanding would be exercisable for approximately 11,000,000 shares of Common
Stock. See "Management -- Rollover Plan; Incentive Stock Units."

The Company and the Ingram Family Stockholders are expected to enter into
the Board Representation Agreement. So long as the Ingram Family Stockholders
and their permitted transferees (as defined in the Board Representation
Agreement) own in excess of 25,000,000 shares of the outstanding Common Equity,
the Board Representation Agreement will provide for the designation of (i) not
more than three directors designated by the Ingram Family Stockholders, (ii) one
director designated by the Chief Executive Officer of the Company, and (iii)
four or five additional Independent Directors (collectively, the "Designated
Nominees").

The Ingram Family Stockholders will be required to vote their shares of
Common Equity for the election of the Designated Nominees. In addition, certain
types of corporate transactions, including transactions involving the potential
sale or merger of the Company; the issuance of additional equity, warrants, or
options; acquisitions involving aggregate consideration in excess of 10% of the
Company's stockholders' equity; any guarantee of indebtedness of an entity other
than a subsidiary of the Company exceeding 5% of the Company's stockholders'
equity; and the incurrence of indebtedness in a transaction which could
reasonably be expected to reduce the Company's investment rating (i) lower than
one grade below the rating in effect immediately following this offering or (ii)
below investment grade, may not be entered into without the written approval of
at least a majority of the voting power deemed to be held (for purposes of the
Board Representation Agreement) by certain of the Ingram Family Stockholders,
acting in their sole discretion.

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The Board Representation Agreement will terminate on the date on which the
Ingram Family Stockholders and their permitted transferees collectively cease to
beneficially own at least 25,000,000 shares of the Common Equity of the Company
(as such number may be equitably adjusted to reflect stock splits, stock
dividends, recapitalization, and other transactions in the capital stock of the
Company). All decisions for the Ingram Family Stockholders that are trusts or
foundations will be made by the trustees thereof, who in some cases are members
of the Ingram family.

The Ingram Family Stockholders and the other stockholders of Ingram
Industries who will receive shares of Class B Common Stock in the Exchange will
enter into a registration rights agreement (the "Registration Rights Agreement")
which grants the E. Bronson Ingram QTIP Marital Trust (the "QTIP Trust") demand
registration rights following the closing of this offering. Such demand
registration rights may be exercised with respect to all or any portion (subject
to certain minimum thresholds) of the shares of Class B Common Stock owned by
the QTIP Trust, one or more of the other Ingram Family Stockholders and certain
of their permitted transferees on up to three occasions during the 84-month
period following the closing of this offering; provided that the Company shall
not be obligated to effect (i) any registration requested by the QTIP Trust
unless the QTIP Trust has furnished the Company with an opinion of counsel to
the effect that such registration and any subsequent sale will not affect the
tax-free nature of the Split-Off or (ii) more than one demand registration
during any 12-month period.

The Registration Rights Agreement also grants one demand registration right
(subject to certain minimum thresholds) to members of the Ingram family (which
may only be exercised during the 84-month period following the closing of this
offering) and one demand registration right to certain minority stockholders of
the Company if a change of control of the Company occurs following the closing
of this offering but prior to the second anniversary of the Split-Off Date. The
minority stockholders will not be entitled to this registration right if they
were offered the opportunity to participate in the change of control
transaction.

The Registration Rights Agreement restricts the exercise by any party
thereto of a demand registration right, and provides that the Company will not
grant any registration rights to any other person that are more favorable than
those granted pursuant to the Registration Rights Agreement or that provide for
the exercise of demand registration rights sooner than three months following a
public offering in which such person was entitled to include its shares, unless
the number of shares requested to be included in such public offering exceeded
125% of the number of shares actually included.

In addition, the Registration Rights Agreement provides that the parties
thereto shall be entitled to unlimited "piggyback" registration rights in
connection with any proposed registration of equity securities by the Company
(with certain specified exceptions) during the 84-month period following the
completion of this offering. Employees who received shares in the Employee
Offering, and persons who have exercised Rollover Stock Options, are bound by
the provisions of the Registration Rights Agreement as if such employees were
parties thereto, and are entitled to the "piggyback" registration rights
provided therein, with respect to the portion of their shares of Class B Common
Stock that is no longer subject to restrictions.

The Registration Rights Agreement contains provisions regarding reduction
of the size of an offering that has been determined by the underwriters to have
exceeded its maximum potential size and contains certain customary provisions,
including those relating to holdback arrangements, registration procedures,
indemnification, contribution and payment of fees and expenses.

Pursuant to an agreement (the "Thrift Plan Liquidity Agreement") with the
Ingram Thrift Plan (the "Thrift Plan"), which will receive 10,007,000 shares of
Class B Common Stock in the Split-Off, during the 90-day period following each
of (i) the closing of this offering and (ii) the first anniversary of the
closing of this offering, the Company may elect to file a registration statement
under the Securities Act covering such number of shares as are required to be
sold by the Thrift Plan in order to comply with the requirements of ERISA or are
necessary to fund distributions to Thrift Plan participants ("Registrable
Securities"). If a registration statement covering the Registrable Securities
has not become effective during either such 90-day period, the Thrift Plan may
elect to sell any of such Registrable Securities to the Company during the
90-day period thereafter at the then-current fair market value of the Common
Stock; provided that the Company's

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obligation in any fiscal year to purchase shares not required to fund
distributions by the Thrift Plan will be limited to the lesser of $10,000,000 or
3% of the Company's stockholders' equity as of the beginning of such fiscal
year. In addition, the Thrift Plan may elect to sell to the Company one time
each calendar month, such number of shares as are necessary to fund
distributions to Thrift Plan participants, except during such periods when the
Company has notified the Thrift Plan of the filing of a registration statement
covering Registrable Securities or when such a registration statement is
effective. The Company will not be obligated to make any repurchase pursuant to
the Thrift Plan Liquidity Agreement if it determines that to do so would
adversely affect the tax-free nature of the Split-Off or if such repurchase
would be prohibited by a credit facility of the Company. Of the 10,007,000
shares of Class B Common Stock to be received by the Thrift Plan, 9,207,000
shares will be subject to a lock-up agreement in connection with this offering.
See "Shares Eligible for Future Sale" and "Underwriters."

THE REORGANIZATION

The Company is currently a subsidiary of Ingram Industries, a company
controlled by the Ingram Family Stockholders. Ingram Industries is engaged in
various businesses in addition to that of the Company, including inland marine
transportation; the production and transport of specification commercial sand;
insurance; and the distribution of books, prerecorded video cassettes, laser
discs, video games, and spoken-word audio cassettes. It is contemplated that the
businesses of the Company, Ingram Industries, and Ingram Entertainment (each, an
"Ingram Company") and their respective subsidiaries will be reorganized as
described below. In conjunction with the Split-Off, the Company will assume
Ingram Industries' accounts receivable securitization program in partial
satisfaction of amounts due to Ingram Industries. The Company will repay the
remaining intercompany indebtedness with borrowings under the Credit Facility.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

Pursuant to a reorganization agreement (the "Reorganization Agreement"), it
is contemplated that each Ingram Company will agree to retain or assume, at the
time of the Reorganization, certain liabilities and obligations, including the
following: (i) liabilities and obligations incurred by such Ingram Company
(other than certain general corporate level liabilities of Ingram Industries)
with respect to periods ending on or prior to the closing of the Reorganization,
other than liabilities or obligations arising as a result of any intentional act
which is tortious or as a result of any illegal act (each, a "Designated
Action") committed by (x) a corporate officer of Ingram Industries (except for
actions that are believed by such person to be in furtherance of his duties as
an officer or employee of the Company, Ingram Entertainment, or their respective
subsidiaries, or the other subsidiaries or business operating units of Ingram
Industries), (y) any other employee of Ingram Industries whose responsibilities
are not primarily associated with the Company, Ingram Entertainment, or their
respective subsidiaries, or the other subsidiaries or business operating units
of Ingram Industries or (z) an employee (other than general corporate level
employees of Ingram Industries) of any other Ingram Company; (ii) liabilities
and obligations (other than general corporate level liabilities of Ingram
Industries) incurred by any other Ingram Company with respect to periods ending
on or prior to the closing of the Reorganization as a result of any Designated
Action committed by an employee of any such Ingram Company or certain
subsidiaries or business operating units of such Ingram Company; (iii) in the
case of Ingram Industries, certain general corporate level liabilities and
obligations up to an aggregate of $100,000 incurred by Ingram Industries with
respect to certain periods ending on or prior to the closing of the
Reorganization and recorded under Ingram Industries' internal accounting system
as "home office" liabilities, to the extent that such liabilities and
obligations are extraordinary in nature and arise out of the ordinary course of
business and were not accrued on Ingram Industries' year end 1995 balance sheet;
(iv) specified liabilities and obligations related to certain asset dispositions
and the settlement of certain claims; and (v) liabilities and obligations
incurred by such Ingram Company with respect to periods beginning after the
closing of the Reorganization. In addition, certain contingent assets or
liabilities, as well as fees and costs incurred in connection with the
Split-Off, will be shared 23.01% by Ingram Industries, 72.84% by the Company,
and 4.15% by Ingram Entertainment. These contingent liabilities include (i)
liabilities and obligations arising as a result of any Designated Action
committed by a corporate officer of Ingram Industries (except for actions that
are believed by such person to be in furtherance of his duties as an officer or
employee of the Company, Ingram

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Entertainment, or their respective subsidiaries or other designated affiliates,
or the other subsidiaries or designated affiliates of Ingram Industries), or any
other employee of Ingram Industries whose responsibilities are not primarily
associated with the Company, Ingram Entertainment, or their respective
subsidiaries, or the other subsidiaries or business operating units of Ingram
Industries; (ii) certain general corporate level liabilities and obligations, if
the aggregate of such liabilities and obligations incurred by Ingram Industries
exceeds $100,000, incurred by Ingram Industries with respect to periods ending
on or prior to the closing of the Reorganization and recorded under Ingram
Industries' internal accounting system as "home office" liabilities, to the
extent that such liabilities and obligations are extraordinary and non-recurring
in nature and arise out of the ordinary course of business and were not accrued
on Ingram Industries' 1995 balance sheet; (iii) certain liabilities and
obligations incurred by Ingram Industries in respect of specified individuals
pursuant to certain deferred compensation plans of Ingram Industries; and (iv)
assets, liabilities, and obligations arising in connection with certain
specified asset dispositions. The Company will not be responsible for any
liabilities except to the extent that the Company's share of such liabilities,
fees or costs and certain other amounts (net of any contingent assets) exceeds,
in the aggregate, $20,778,000. The Company is not currently aware of any such
liabilities, fees or costs that will require any further payment by the Company
(other than those which will be satisfied by a dividend, if any, to be paid to
stockholders of the Company in connection with and prior to the Split-Off, which
dividend, if paid, is not expected to be material in relation to the Company's
stockholders' equity or cash available for operations). There can be no
assurance that any further payment, which could be material, will not be
required in the future.

Pursuant to the Reorganization Agreement, each Ingram Company will agree to
conduct its business, from the date of the Reorganization Agreement until the
closing of the Reorganization, in the ordinary course of business consistent
with past practice. The Reorganization Agreement provides that at or prior to
the closing of the Reorganization, the Company and Ingram Entertainment will
enter into bank repurchase agreements with respect to securities of the Company
or Ingram Entertainment, respectively, received in connection with the Exchange
Agreement in exchange for shares of Ingram Industries common stock currently
held as collateral for certain loans made to stockholders of Ingram Industries.

Pursuant to the Reorganization Agreement, it is expected that each Ingram
Company will agree to indemnify each other Ingram Company from any and all
damage, loss, liability, and expense incurred as a result of any breach by such
party of any covenant or agreement pursuant to the Reorganization Agreement or
the failure by such party to perform its obligations with respect to any
liability retained or assumed by such party pursuant to the Reorganization
Agreement.

The Ingram Companies are also expected to enter into an employee benefits
transfer and assumption agreement (the "Employee Benefits Agreement"). The
Employee Benefits Agreement will provide for the allocation of employee benefit
assets and liabilities generally on a pro rata basis in respect of each Ingram
Company's current and former employees. Each Ingram Company will indemnify the
other parties with respect to such party's benefit-related assumed or retained
assets and liabilities.

In connection with the Reorganization, it is also contemplated that the
Ingram Companies will enter into a tax sharing and tax services agreement (the
"Tax Sharing Agreement"). Under the Tax Sharing Agreement, the Company will
agree that it will be liable for (i) its allocable share of the consolidated
federal income tax liability and any consolidated state income tax liability for
the year that includes the Split-Off and (ii) generally, 72.84% of any
adjustment in excess of reserves already established by Ingram Industries for
past federal or state income tax liabilities of Ingram Industries, Ingram
Entertainment, or the Company. Subject to certain consultation rights and
certain limited rights on the part of the Company to consent to a settlement,
Ingram Industries will have the right to control any audit or proceeding
relating to the Company for periods ending prior to the Split-Off. The Company
will share in any refunds received in respect of the carryback of any future tax
losses or credits it may suffer or receive. In addition, Ingram Industries and
Ingram Entertainment will each agree that, upon the exercise by one of its
employees of an option granted in connection with the Exchange, it will pay the
Company an amount equal to the tax benefit, if any, received from any
compensation deduction in respect of such exercise. Furthermore, if the
Split-Off fails to qualify for tax-free treatment as a result of a breach by one
of the Ingram Companies of specified representations or

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covenants contained in the Exchange Agreement, any resulting deficiency shall be
borne by such breaching Ingram Company.

In addition, until 1999, the Company will provide data processing services
to Ingram Industries and Ingram Entertainment for a fee to be determined. The
Ingram Companies will also enter into the Transitional Service Agreements
relating to the continued provision of certain administrative services
(including cash management, insurance, employee benefits, and payroll
administration). The Transitional Service Agreements are expected to be on terms
comparable to those that would be obtained from third parties on an arms' length
basis.

CONDITIONS TO THE SPLIT-OFF

The Split-Off is subject to the satisfaction or waiver of certain
conditions including, without limitation, (i) receipt of a private letter ruling
from the IRS satisfactory to Ingram Industries and certain of the Ingram Family
Stockholders as to the tax-free nature of the Split-Off and a determination by
the board of directors of Ingram Industries and each of the Ingram Family
Stockholders that nothing has come to their attention that causes them to
conclude that significant questions exist as to the validity of the ruling as
applied to the Reorganization or the Exchange; (ii) the absence of any law,
judgment, injunction, order or decree which prohibits consummation of the
Split-Off; (iii) the effectiveness of certain ancillary agreements; (iv) receipt
of required regulatory approvals and third-party consents; (v) consummation of
the scheduled refinancing and assumption of debt; and (vi) settlement of
intercompany receivables and payables. The Exchange Agreement may be terminated
by the board of directors of Ingram Industries or the holders of a majority of
the outstanding shares of Ingram Industries common stock at any time prior to
the closing of the Split-Off.

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PRINCIPAL STOCKHOLDERS

The following table sets forth certain information, as of July 31, 1996, as
adjusted for (i) the Split-Off and (ii) the issuance of the Common Stock offered
hereby as if such transactions had occurred on July 31, 1996, with respect to
the beneficial ownership of each class of the Common Equity by (a) each person
known by the Company to own beneficially more than five percent of the
outstanding shares of either class of the Common Equity; (b) each director; (c)
each of the Named Executive Officers; and (d) all executive officers and
directors of the Company as a group. See "Management" and "Certain
Transactions."

COMMON
CLASS B COMMON STOCK COMMON STOCK EQUITY
------------------------------ -------------------------- ------------
SHARES SHARES PERCENTAGE
BENEFICIALLY PERCENTAGE BENEFICIALLY PERCENTAGE OF TOTAL
NAME OWNED OF CLASS OWNED OF CLASS VOTING POWER
- --------------------------------------- ------------ ---------- ------------ ---------- ------------

E. Bronson Ingram QTIP Marital
Trust(1)(2).......................... 69,099,259 62.9% -- -- 61.8%
Ingram Thrift Plan(1).................. 10,007,000 9.1 -- -- 8.9
David B. Ingram(1)(2).................. 72,377,210(3)(4) 65.9 13,750(5) * 64.7
Robin Ingram Patton(1)(2).............. 71,646,916(3)(4) 65.2 -- -- 64.0
Orrin H. Ingram(1)(2).................. 73,157,670(3)(4) 66.6 56,250(5) * 65.4
Roy E. Claverie(1)..................... 10,859,083(3) 9.9 150,000(5) * 9.7
SunTrust Banks, Inc.(6)................ 12,115,391 11.0 -- -- 10.8
25 Park Place, NE
Atlanta, GA 30303
Jerre L. Stead......................... -- -- 400,000(7) 2.0 *
Jeffrey R. Rodek....................... 285,000 * -- -- *
David R. Dukes......................... 65,000 * 73,279(5) * *
Sanat K. Dutta......................... 85,000 * 37,412(5) * *
John Wm. Winkelhaus, II................ 85,000 * 42,560(5) * *
Martha R. Ingram(2).................... 83,740,788(3)(4) 76.2 -- -- 74.9
John R. Ingram(2)...................... 71,875,978(3)(4) 65.4 29,500(5) * 64.3
Philip M. Pfeffer...................... 1,972,476(4) 1.8 21,250(5) * 1.8
All executive officers and directors as
a group (21 persons)(2)(8)........... 91,067,943(3)(4) 82.9 953,405(5) 4.6 81.4
Linwood A. (Chip) Lacy, Jr............. 1,390,062 1.3 110,500(5) * 1.3

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

* Less than one percent.

(1) The address for the indicated parties is: c/o Ingram Industries Inc., One
Belle Meade Place, 4400 Harding Road, Nashville, Tennessee 37205.

(2) David B. Ingram, Robin Ingram Patton, Orrin H. Ingram, John R. Ingram, and
Martha R. Ingram are trustees of the QTIP Trust, and accordingly could each
be deemed to be the beneficial owner of the shares held by the QTIP Trust.

(3) Includes 71,286,290; 71,266,588; 71,286,290; 10,387,004; 71,286,290;
81,702,786; and 83,870,115 shares, for David B. Ingram, Robin Ingram Patton,
Orrin H. Ingram, Roy E. Claverie, John R. Ingram, Martha R. Ingram, and all
executive officers and directors as a group, respectively, which shares are
held by various trusts or foundations of which these individuals are
trustees. Such individuals could each be deemed to be the beneficial owner
of the shares held by such trusts of which he or she is a trustee.

(4) Excludes for David B. Ingram 5,132,080 shares held by one or more trusts of
which he and/or his children are beneficiaries; for Robin Ingram Patton
2,932,917 shares held by one or more trusts of which she is a beneficiary;
for Orrin H. Ingram 1,441,856 shares held by one or more trusts of which he
and/or his children are beneficiaries; for John R. Ingram 2,732,815 shares
held by one or more trusts of which he and/or his children are
beneficiaries; for Mr. Lacy 223,097 shares held by a trust of which his
children are beneficiaries; for Mr. Pfeffer 234,348 shares held by his
children or one or more trusts of which his children are beneficiaries; and
for Mr. Claverie 244,912 shares held by his children or one or more trusts
of which he and/or his children are beneficiaries. Each such individual
disclaims beneficial ownership as to such shares.

(5) Represents Rollover Stock Options exercisable within 60 days of the date of
the table for shares of Common Stock.

(6) The address for SunTrust Banks, Inc. ("SunTrust") is 25 Park Place, NE,
Atlanta, Georgia 30303. All shares are held by SunTrust Bank Atlanta, a
subsidiary of SunTrust, as trustee for certain individuals. SunTrust and
certain of its subsidiaries may be deemed beneficial owners of such shares;
however, SunTrust and such subsidiaries disclaim any beneficial interest in
such shares.

(7) Represents the immediately exercisable portion of the options to be granted
to Mr. Stead effective upon the closing of this offering. See
"Management -- 1996 Plan -- Options."

(8) Excludes shares beneficially owned by Mr. Lacy, the Company's former Chief
Executive Officer and former Chairman of the Board of Directors.

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DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 265,000,000 shares
of Class A Common Stock, par value $0.01 per share, of which 20,000,000 shares
will be issued and outstanding upon the closing of this offering (assuming no
exercise of the U.S. Underwriters' over-allotment option), and 135,000,000
shares of Class B Common Stock, par value $0.01 per share, of which 109,868,752
shares will be issued and outstanding upon the closing of this offering. In
addition, the Company's Certificate of Incorporation (the "Certificate of
Incorporation") authorizes the issuance by the Company of up to 1,000,000 shares
of preferred stock, par value $0.01 per share (the "Preferred Stock"), on terms
determined by the Company's Board of Directors. The following description is a
summary of the capital stock of the Company and is subject to and qualified in
its entirety by reference to the provisions of the Certificate of Incorporation
and the Bylaws (the "Bylaws") of the Company, which are included as exhibits to
the Registration Statement of which this Prospectus forms a part.

COMMON EQUITY

The shares of Common Stock and Class B Common Stock are identical in all
respects, except for voting rights and certain conversion rights, as described
below.

VOTING RIGHTS. Each share of Common Stock entitles the holder to one vote
on each matter submitted to a vote of the Company's stockholders, including the
election of directors, and each share of Class B Common Stock entitles the
holder to ten votes on each such matter. Except as required by applicable law,
holders of the Common Stock and Class B Common Stock vote together as a single
class on all matters submitted to a vote of the stockholders of the Company.
There is no cumulative voting. See "Risk Factors -- Control by Ingram Family
Stockholders."

For so long as there are any shares of Class B Common Stock outstanding,
any action that may be taken at a meeting of the stockholders may be taken by
written consent in lieu of a meeting if the Company receives consents signed by
stockholders having the minimum number of votes that would be necessary to
approve the action at a meeting at which all shares entitled to vote on the
matter were present and voted. This could permit certain holders of Class B
Common Stock to take action regarding certain matters without providing other
stockholders the opportunity to voice dissenting views or raise other matters.
The right to take such action by written consent of stockholders will expire at
such time as all outstanding shares of Class B Common Stock cease to be
outstanding.

DIVIDENDS, DISTRIBUTIONS AND STOCK SPLITS. Holders of Common Stock and
Class B Common Stock are entitled to receive dividends at the same rate if, as,
and when such dividends are declared by the Board of Directors out of assets
legally available therefor after payment of dividends required to be paid on
shares of Preferred Stock, if any.

In the case of dividends or distributions payable in Common Stock or Class
B Common Stock, only shares of Common Stock will be distributed with respect to
the Common Stock and only shares of Class B Common Stock will be distributed
with respect to the Class B Common Stock. In the case of dividends or other
distributions consisting of other voting shares of the Company, the Company will
declare and pay such dividends in two separate classes of such voting
securities, identical in all respects, except that the voting rights of each
such security paid to the holders of the Common Stock shall be one-tenth of the
voting rights of each such security paid to the holders of Class B Common Stock,
and such security paid to the holders of Class B Common Stock shall convert into
the security paid to the holders of the Common Stock upon the same terms and
conditions applicable to the Class B Common Stock. In the case of dividends or
other distributions consisting of securities convertible into, or exchangeable
for, voting securities of the Company, the Company will provide that such
convertible or exchangeable securities and the underlying securities be
identical in all respects, except that the voting rights of each security
underlying the convertible or exchangeable security paid to the holders of the
Common Stock shall be one-tenth of the voting rights of each security underlying
the convertible or exchangeable security paid to the holders of Class B Common
Stock, and such underlying securities paid to the holders of Class B Common
Stock shall convert into the security paid to the holders of the Common Stock
upon the same terms and conditions applicable to the Class B Common Stock.

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Neither the Common Stock nor the Class B Common Stock may be subdivided or
combined in any manner unless the other class is subdivided or combined in the
same proportion.

CONVERSION. The Common Stock has no conversion rights.

The Class B Common Stock is convertible into Common Stock, in whole or in
part, at any time and from time to time at the option of the holder, on the
basis of one share of Common Stock for each share of Class B Common Stock
converted. Each share of Class B Common Stock will also automatically convert
into one share of Common Stock upon the earliest to occur of (i) the fifth
anniversary of the closing of the Split-Off; (ii) the sale or transfer of such
share of Class B Common Stock (a) by a holder that is a party to the Board
Representation Agreement to any person that is not an affiliate, spouse or
descendant of such holder, their estates or trusts for their benefit or any
other party to the Exchange Agreement or (b) by any other holder, to a holder
that is not the spouse or descendant of such holder or their estates or trusts
for the benefit thereof; and (iii) the date on which the number of shares of
Class B Common Stock then outstanding is less than 25% of the aggregate number
of shares of Common Equity then outstanding.

LIQUIDATION. In the event of any dissolution, liquidation, or winding up of
the affairs of the Company, whether voluntary or involuntary, after payment of
the debts and other liabilities of the Company and making provision for the
holders of Preferred Stock, if any, the remaining assets of the Company will be
distributed ratably among the holders of the Common Stock and the Class B Common
Stock, treated as a single class.

MERGERS AND OTHER BUSINESS COMBINATIONS. Upon a merger, combination, or
other similar transaction of the Company in which shares of Common Equity are
exchanged for or changed into other stock or securities, cash and/or any other
property, holders of each class of Common Equity will be entitled to receive an
equal per share amount of stock, securities, cash, and/or any other property, as
the case may be, into which or for which each share of any other class of Common
Equity is exchanged or changed; provided that in any transaction in which shares
of capital stock are distributed, such shares so exchanged for or changed into
may differ as to voting rights and certain conversion rights to the extent and
only to the extent that the voting rights and certain conversion rights of
Common Stock and Class B Common Stock differ at that time.

OTHER PROVISIONS. The holders of the Common Stock and Class B Common Stock
are not entitled to preemptive rights. There are no redemption provisions or
sinking fund provisions applicable to the Common Stock or the Class B Common
Stock.

PREFERRED STOCK

The Board of Directors is authorized, subject to any limitations prescribed
by the DGCL, or the rules of any quotation system or national securities
exchange on which stock of the Company may be quoted or listed, to provide for
the issuance of shares of Preferred Stock in one or more series; to establish
from time to time the number of shares to be included in each such series; to
fix the rights, powers, preferences, and privileges of the shares of each series
and any qualifications and restrictions thereon; and, to the extent permitted by
the DGCL, to increase or decrease the number of shares of such series, without
any further vote or action by the stockholders. Depending upon the terms of the
Preferred Stock established by the Board of Directors, any or all series of
Preferred Stock could have preference over the Common Stock with respect to
dividends and other distributions and upon liquidation of the Company or could
have voting or conversion rights that could adversely affect the holders of the
outstanding Common Stock. The Company has no present plans to issue any shares
of Preferred Stock.

LIMITATION OF LIABILITY; INDEMNIFICATION

As permitted by the DGCL, the Certificate of Incorporation provides that
directors of the Company shall not be personally liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director to
the fullest extent permitted by the DGCL (which currently provides that such
liability may be so limited, except for liability (i) for any breach of the
director's duty of loyalty to the Company or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of the law, (iii) under Section 174 of the DGCL, relating to
prohibited dividends or distributions or

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the repurchase or redemption of stock, or (iv) for any transaction from which
the director derives an improper personal benefit).

Each person who is or was a party to any action by reason of the fact that
such person is or was a director or officer of the Company shall be indemnified
and held harmless by the Company to the fullest extent permitted by the DGCL.
This right to indemnification also includes the right to have paid by the
Company the expenses incurred in connection with any such proceeding in advance
of its final disposition, to the fullest extent permitted by the DGCL. In
addition, the Company may, by action of the Board of Directors, provide
indemnification to such other employees and agents of the Company to such extent
as the Board of Directors determines to be appropriate under the DGCL.

As a result of this provision, the Company and its stockholders may be
unable to obtain monetary damages from a director for breach of his duty of
care. Although stockholders may continue to seek injunctive or other equitable
relief for an alleged breach of fiduciary duty by a director, stockholders may
not have any effective remedy against the challenged conduct if equitable
remedies are unavailable. The Company also reserves the right to purchase and
maintain directors' and officers' liability insurance.

OTHER CERTIFICATE OF INCORPORATION AND BYLAW PROVISIONS

It is anticipated that the Bylaws will be amended, prior to the closing of
this offering, to implement certain provisions of the Board Representation
Agreement. The Board Representation Agreement contains additional provisions
relating to corporate governance. See "The Split-Off -- The Exchange." The
following discussion describes the Bylaws, as contemplated to be in effect as of
the closing of this offering. The Bylaws provide that a majority of the total
number of directors shall constitute a quorum for the transaction of business.
The Board of Directors may act by unanimous written consent.

Annual meetings of stockholders shall be held to elect the Board of
Directors and transact such other business as may be properly brought before the
meeting. Special meetings of stockholders may be called by the chairman and
shall be called by the secretary on the written request of stockholders having
10% of the voting power of the Company. The stockholders may act by written
consent in lieu of a meeting of stockholders until such time as all shares of
Class B Common Stock cease to be outstanding.

The Certificate of Incorporation may be amended with the approval of the
Board of Directors (by the vote required as described above), and for so long as
any shares of Class B Common Stock remain outstanding, in addition to any vote
required by law, any such amendment also requires the approval of the holders of
a majority of the Company's outstanding voting power and a majority of the
members of the Board of Directors. However, any amendment to the provisions of
the Certificate of Incorporation relating to the Common Equity also requires the
consent of a majority of the outstanding voting power held by the Ingram Family
Stockholders. The Bylaws may be amended with the approval of three-quarters of
the entire Board of Directors or by the holders of 75% of the Company's voting
power present and entitled to vote at any annual or special meeting of
stockholders at which a quorum is present.

The number of directors which shall constitute the whole Board of Directors
shall be fixed by resolution of the Board of Directors. The number of directors
shall in no event be less than five nor more than nine. The size of the initial
Board is fixed at seven members, but will be increased to eight or nine in
accordance with the Board Representation Agreement. The vote of a majority of
the entire Board is required for all actions of the Board. The directors shall
be elected at the annual meeting of the stockholders, except for filling
vacancies. Directors may be removed with the approval of the holders of a
majority of the Company's voting power present and entitled to vote at a meeting
of stockholders. Vacancies and newly created directorships on the Board of
Directors resulting from any increase in the number of directors may be filled
by a majority of the directors then in office, although less than a quorum, a
sole remaining director, or the holders of a majority of the voting power
present and entitled to vote at a meeting of stockholders. So long as the Ingram
Family Stockholders and their permitted transferees own at least 25,000,000
shares of the Common Equity, the Bylaws will provide for the appointment of the
Designated Nominees.

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The presence, in person or by proxy, of the holders of a majority of the
votes entitled to be cast by the stockholders entitled to vote generally, shall
constitute a quorum for stockholder action at any meeting.

SECTION 203 OF THE DGCL

After this offering, the Company will be subject to Section 203 of the DGCL
which, subject to certain exceptions, prohibits a Delaware corporation from
engaging in a business combination (as defined therein) with an "interested
stockholder" (defined generally as any person who beneficially owns 15% or more
of the outstanding voting stock of the Company or any person affiliated with
such person) for a period of three years following the date that such
stockholder became an interested stockholder, unless (i) prior to such date the
board of directors of the corporation approved either the business combination
or the transaction that resulted in the stockholder becoming an interested
stockholder; (ii) upon consummation of the transaction that resulted in the
stockholder becoming an interested stockholder, the interested stockholder owned
at least 85% of the voting stock of the corporation at the time the transaction
commenced (excluding for purposes of determining the number of shares
outstanding those shares owned (a) by directors who are also officers of the
corporation and (b) by employee stock plans in which employee participants do
not have the right to determine confidentially whether shares held subject to
the plan will be tendered in a tender or exchange offer); or (iii) on or
subsequent to such date the business combination is approved by the board of
directors of the corporation and authorized at a meeting of stockholders by the
affirmative vote of at least 66 2/3% of the outstanding voting stock of the
corporation not owned by the interested stockholder.

TRANSFER AGENT

The Company will appoint a transfer agent and registrar for the Common
Stock prior to the closing of this offering.

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SHARES ELIGIBLE FOR FUTURE SALE

Upon the closing of this offering, the Company will have outstanding an
aggregate of 20,000,000 shares of Common Stock (23,000,000 if the U.S.
Underwriters' over-allotment option is exercised in full), and 109,868,752
shares of Class B Common Stock. Of the total outstanding shares of Common
Equity, only the shares of Common Stock sold in this offering will be freely
tradable without restriction or further registration under the Securities Act,
unless purchased by "affiliates" of the Company, as that term is defined in Rule
144 under the Securities Act (which sales would be subject to certain volume
limitations and other restrictions described below).

The remaining shares of Common Equity held by existing stockholders upon
completion of this offering will be "restricted securities" as that term is
defined in Rule 144 under the Securities Act. In general, under Rule 144 as
currently in effect, a person (or persons whose shares are aggregated),
including an affiliate, who has beneficially owned shares for at least two years
(including, if the shares are transferred, the holding period of any prior owner
except an affiliate) is entitled to sell in "broker's transactions" or to market
makers, within any three-month period commencing 90 days after the date of this
Prospectus, a number of shares that does not exceed the greater of (i) 1% of the
then outstanding shares of such class of the Common Equity (approximately
1,098,688 shares immediately after this offering) or (ii) generally, the average
weekly trading volume in such class of the Common Stock during the four calendar
weeks preceding the filing of a Form 144 with respect to such sale, and subject
to certain other limitations and restrictions. In addition, a person who is not
deemed to have been an affiliate of the Company at any time during the three
months preceding a sale, and who has beneficially owned the shares proposed to
be sold for at least three years, would be entitled to sell such shares under
Rule 144(k) without regard to the volume and other requirements described above.
Shares of Common Equity that would otherwise be deemed "restricted securities"
could be sold at any time through an effective registration statement relating
to such shares of Common Equity.

Of the 109,868,752 shares of Class B Common Stock outstanding as of the
closing of this offering, 2,617,400 shares were acquired in July 1996 pursuant
to the Employee Offering and the concurrent grant of restricted stock awards,
and 107,251,352 shares will have been acquired pursuant to the Split-Off. Under
current law, absent registration or an exemption from registration other than
Rule 144, (a) no shares of Class B Common Stock will be eligible for sale as of
the date of this Prospectus; (b) 107,251,352 shares of Class B Common Stock will
be eligible for sale two years from the effective date of the Split-Off, and (c)
the 2,617,400 shares of Class B Common Stock sold in the Employee Offering in
July 1996 (or granted concurrently therewith) will be eligible for sale upon the
later of (i) July 1998 and (ii) for those shares pledged to secure purchase
money loans for such shares, two years after the release of such pledge. In
addition, the 2,617,400 shares of Class B Common Stock issued in July 1996 are
subject to contractual vesting restrictions, which restrictions begin to lapse
in April 1998.

Pursuant to the Registration Rights Agreement, the QTIP Trust, which after
the Split-Off will hold 69,099,259 shares of Class B Common Stock, has certain
demand registration rights with respect to all or any portion (subject to
certain minimum thresholds) of the shares of Class B Common Stock owned by the
QTIP Trust, one or more of the other Ingram Family Stockholders and certain of
their permitted transferees on up to three occasions during the 84-month period
following the closing of this offering; provided that the Company shall not be
obligated to effect (i) any registration requested by the QTIP Trust unless the
QTIP Trust has furnished the Company with an opinion of counsel to the effect
that such registration and any subsequent sale will not affect the tax-free
nature of the Split-Off or (ii) more than one demand registration during any
12-month period. The Registration Rights Agreement also grants one demand
registration right (subject to certain minimum thresholds) to members of the
Ingram family holding 18,209,986 shares of Class B Common Stock (which may only
be exercised within the 84-month period following the closing of this offering).
All holders of such demand registration rights are subject to the lock-up
agreements described below, and therefore are restricted from selling any shares
during the 180-day period following the date of this Prospectus. In addition,
the Registration Rights Agreement grants one demand registration right to
certain minority stockholders of the Company, if a change of control of the
Company occurs following the closing of this offering but prior to the second
anniversary of the Split-Off Date. The minority stockholders will not be
entitled to this registration right if they were offered the opportunity to
participate in the change of control transaction.

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In addition, the Registration Rights Agreement provides that the recipients
of Class B Common Stock received in the Split-Off will be entitled to unlimited
"piggyback" registration rights in connection with any proposed registration of
equity securities by the Company (with certain specified exceptions) during the
84-month period following the closing of this offering. Employees who received
shares in the Employee Offering, holders of restricted stock granted at the time
of the Employee Offering, and persons who have exercised Rollover Stock Options,
are bound by the provisions of the Registration Rights Agreement as if such
employees were parties thereto, and are entitled to the "piggyback" registration
rights provided therein, with respect to the portion of their shares of Common
Equity that is no longer subject to restrictions.

Pursuant to the Thrift Plan Liquidity Agreement, the Thrift Plan has
certain rights to require the Company to purchase such shares of Class B Common
Stock as are required to be sold by the Thrift Plan in order to comply with the
requirements of ERISA or are necessary to fund distributions to Thrift Plan
participants, if the Company does not arrange for the registration of such
shares. Of the 10,007,000 shares of Class B Common Stock held by the Thrift
Plan, 9,207,000 shares will be subject to the lock-up agreements described
below.

The Company intends to file registration statements under the Securities
Act covering shares of Common Stock issuable upon exercise of options granted
under the Company's 1996 Plan and Rollover Plan. Such registration statements
are expected to be filed and become effective as soon as practicable after the
effective date of this offering. Accordingly, shares registered under such
registration statements will, subject to Rule 144 volume limitations applicable
to affiliates, be available for sale in the open market, unless such shares are
subject to vesting restrictions with the Company or the lock-up agreements
described below. Immediately following the closing of this offering, there will
be outstanding options exercisable for approximately 16,600,000 shares of Common
Equity. Of such options, approximately 2,600,000 Rollover Stock Options and
400,000 options granted to Mr. Stead will be exercisable immediately after the
closing of this offering for shares of Common Stock, although shares issuable
upon exercise of approximately 1,100,000 of such options will be subject to the
lock-up agreements described below. In addition, approximately 1,200,000
Rollover Stock Options will become exercisable on or prior to April 1, 1997,
although the shares issuable upon exercise of approximately 640,000 of such
Rollover Stock Options will be subject to the lock-up agreements described
below. In addition, on April 1, 1997, options granted to non-officers of the
Company pursuant to the 1996 Plan will become exercisable for approximately
700,000 shares of Class B Common Stock, none of which will be subject to the
lock-up agreements described below. See "Management -- 1996 Plan." See
"Management -- 1996 Plan" and "-- Rollover Plan; Incentive Stock Units."

The Company and its directors and executive officers, and certain
stockholders of the Company, have agreed, subject to certain exceptions, not to
offer, sell, contract to sell or otherwise dispose of any Common Stock for a
period of 180 days after the date of this Prospectus without the prior written
consent of Morgan Stanley & Co. Incorporated. Morgan Stanley & Co. Incorporated
has informed the Company that it has no present intention to consent to any such
transactions. Of the 107,251,352 shares of Class B Common Stock to be received
in the Split-Off, all but 3,855,882 shares are subject to such lock-up
agreements. Each holder of shares received in the Split-Off, in order to obtain
the private letter ruling from the IRS, has represented in the Exchange
Agreement that there is no plan or intention by such holder to sell, exchange,
transfer by gift or otherwise dispose of any of such holder's Class B Common
Stock subsequent to the Exchange. As described above, all such shares are
subject to restrictions on resale under Rule 144, including a two-year holding
period. However, 800,000 of such 3,855,882 shares are held by the Thrift Plan,
which has the registration rights described above, and therefore such shares may
be registered and be eligible for immediate resale under certain limited
circumstances. In addition, certain minority stockholders may have demand
registration rights under the Registration Rights Agreement upon a change of
control, as described above.

Prior to this offering, there has not been any public market for either
class of the Common Equity. No prediction can be made as to the effect, if any,
that market sales of shares or the availability of shares for sale will have on
the market price prevailing from time to time. Sales of substantial additional
amounts of Common Equity in the public market, or the perception that such sales
could occur, could adversely affect the prevailing market price of the Common
Stock.

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CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS

The following is a discussion of the material U.S. federal income and
estate tax consequences of the ownership and disposition of Common Stock by a
"Non-U.S. Holder." A "Non-U.S. Holder" is a person or entity that, for U.S.
federal income tax purposes, is a non-resident alien individual, a foreign
corporation, a foreign partnership, or a non-resident fiduciary of a foreign
estate or trust.

This discussion is based on the Code, and administrative interpretations as
of the date hereof, all of which are subject to change, including changes with
retroactive effect. This discussion does not address all aspects of U.S. federal
income and estate taxation that may be relevant to Non-U.S. Holders in light of
their particular circumstances and does not address any tax consequences arising
under the laws of any state, local or foreign jurisdiction.

Proposed United States Treasury Regulations were issued on April 15, 1996
(the "Proposed Regulations") which, if adopted, would affect the United States
taxation of dividends paid to a Non-U.S. Holder on Common Stock. The Proposed
Regulations are generally proposed to be effective with respect to dividends
paid after December 31, 1997, subject to certain transition rules. The
discussion below is not intended to be a complete discussion of the provisions
of the Proposed Regulations, and prospective investors are urged to consult
their tax advisors with respect to the effect the Proposed Regulations would
have if adopted.

Prospective holders should consult their tax advisors with respect to the
particular tax consequences to them of owning and disposing of Common Stock,
including the consequences under U.S. federal law as well as under the laws of
any state, local or foreign jurisdiction.

DIVIDENDS

Subject to the discussion below, dividends paid to a Non-U.S. Holder of
Common Stock generally will be subject to withholding tax at a 30% rate or such
lower rate as may be specified by an applicable income tax treaty. For purposes
of determining whether tax is to be withheld at a 30% rate or at a reduced rate
as specified by an income tax treaty, the Company ordinarily will presume that
dividends paid to an address in a foreign country are paid to a resident of such
country absent knowledge that such presumption is not warranted.

Under the Proposed Regulations, to obtain a reduced rate of withholding
under a treaty, a Non-U.S. Holder would generally be required to provide a Form
W-8 certifying such Non-U.S. Holder's entitlement to benefits under a treaty.
The Proposed Regulations would also provide special rules to determine whether,
for purposes of determining the applicability of a tax treaty, dividends paid to
a Non-U.S. Holder that is an entity should be treated as paid to the entity or
those holding an interest in that entity.

There will be no withholding tax on dividends paid to a Non-U.S. Holder
that are effectively connected with the Non-U.S. Holder's conduct of a trade or
business within the United States if the Non-U.S. Holder files a valid Form 4224
(or, if and when the Proposed Regulations become effective, a Form W-8) stating
that the dividends are so connected. Instead, the effectively connected
dividends will be subject to regular U.S. income tax in the same manner as if
the Non-U.S. Holder were a U.S. resident. A non-U.S. corporation receiving
effectively connected dividends may also be subject to an additional "branch
profits tax" which is imposed, under certain circumstances, at a rate of 30% (or
such lower rate as may be specified by an applicable treaty) of the non-U.S.
corporation's effectively connected earnings and profits, subject to certain
adjustments.

Generally, the Company must report to the IRS the amount of dividends paid,
the name and address of the recipient, and the amount, if any, of tax withheld.
A similar report is sent to the holder. Pursuant to tax treaties or certain
other agreements, the IRS may make its reports available to tax authorities in
the recipient's country of residence.

Dividends paid to a Non-U.S. Holder at an address within the United States
may be subject to backup withholding imposed at a rate of 31% if the Non-U.S.
Holder fails to establish that it is entitled to an exemption or to provide a
correct taxpayer identification number and certain other information. The
Proposed Regulations would, if adopted, alter the foregoing rules in certain
respects, including by providing certain

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presumptions under which a Non-U.S. Holder would be subject to backup
withholding in the absence of the certification from the holder as to non-U.S.
status, regardless of whether dividends are paid to a U.S. or non-U.S. address.

GAIN ON DISPOSITION OF COMMON STOCK

A Non-U.S. Holder generally will not be subject to U.S. federal income tax
with respect to gain realized on a sale or other disposition of Common Stock
unless (i) the gain is effectively connected with a trade or business of such
holder in the United States, (ii) in the case of certain Non-U.S. Holders who
are non-resident alien individuals and hold the Common Stock as a capital asset,
such individual is present in the United States for 183 or more days in the
taxable year of the disposition, (iii) the Non-U.S. Holder is subject to tax
pursuant to the provisions of the Code regarding the taxation of U.S.
expatriates, or (iv) the Company is or has been a "U.S. real property holding
corporation" within the meaning of Section 897(c)(2) of the Code at any time
within the shorter of the five-year period preceding such disposition or such
holder's holding period. The Company is not, and does not anticipate becoming, a
U.S. real property holding corporation.

INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING ON DISPOSITION OF
COMMON STOCK

Under current United States federal income tax law, information reporting
and backup withholding imposed at a rate of 31% will apply to the proceeds of a
disposition of Common Stock paid to or through a U.S. office of a broker unless
the disposing holder certifies as to its non-U.S. status or otherwise
establishes an exemption. Generally, U.S. information reporting and backup
withholding will not apply to a payment of disposition proceeds if the payment
is made outside the United States through a non-U.S. office of a non-U.S.
broker. However, U.S. information reporting requirements (but not backup
withholding) will apply to a payment of disposition proceeds outside the United
States if (A) the payment is made through an office outside the United States of
a broker that is either (i) a U.S. person, (ii) a foreign person which derives
50% or more of its gross income for certain periods from the conduct of a trade
or business in the United States or (iii) a "controlled foreign corporation" for
U.S. federal income tax purposes and (B) the broker fails to maintain
documentary evidence that the holder is a Non-U.S. Holder and that certain
conditions are met, or that the holder otherwise is entitled to an exemption.

The Proposed Regulations would, if adopted, alter the foregoing rules in
certain respects. Among other things, the Proposed Regulations would provide
certain presumptions under which a Non-U.S. Holder would be subject to backup
withholding in the absence of certification from the holder as to non-U.S.
status.

Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained, provided that the required information is furnished to the IRS.

FEDERAL ESTATE TAX

An individual Non-U.S. Holder who is treated as the owner of, or has made
certain lifetime transfers of, an interest in the Common Stock will be required
to include the value thereof in his gross estate for U.S. federal estate tax
purposes, and may be subject to U.S. federal estate tax unless an applicable
estate tax treaty provides otherwise.

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UNDERWRITERS

Under the terms and subject to the conditions in an Underwriting Agreement
dated the date hereof (the "Underwriting Agreement"), the U.S. Underwriters
named below, for whom Morgan Stanley & Co. Incorporated, The Robinson-Humphrey
Company, Inc., Alex. Brown & Sons Incorporated, Hambrecht & Quist LLC, and J.C.
Bradford & Co. are serving as U.S. Representatives, and the International
Underwriters named below, for whom Morgan Stanley & Co. International Limited,
The Robinson-Humphrey Company, Inc., Alex. Brown & Sons Incorporated, Hambrecht
& Quist LLC, and J.C. Bradford & Co. are serving as International
Representatives, have severally agreed to purchase, and the Company has agreed
to sell to them severally, the respective number of shares of Common Stock set
forth opposite the name of each Underwriters below:

NUMBER OF
NAME SHARES
----------------------------------------------------------------- ----------

U.S. Underwriters:
Morgan Stanley & Co. Incorporated..............................
The Robinson-Humphrey Company, Inc.............................
Alex. Brown & Sons Incorporated................................
Hambrecht & Quist LLC..........................................
J.C. Bradford & Co. ...........................................

----------
Subtotal.................................................... 16,000,000
----------
International Underwriters:
Morgan Stanley & Co. International Limited.....................
The Robinson-Humphrey Company, Inc.............................
Alex. Brown & Sons Incorporated................................
Hambrecht & Quist LLC..........................................
J.C. Bradford & Co. ...........................................

----------
Subtotal.................................................... 4,000,000
----------
Total.................................................. 20,000,000
=========

The U.S. Underwriters and the International Underwriters are collectively
referred to as the "Underwriters." The U.S. Representatives and the
International Representatives are collectively referred to as the
"Representatives." The Underwriting Agreement provides that the obligations of
the several Underwriters to pay for and accept delivery of the shares of Common
Stock offered hereby are subject to the approval of certain legal matters by
their counsel and to certain other conditions. The Underwriters are obligated to
take and pay for all the shares of Common Stock offered hereby (other than those
covered by the over-allotment option described below) if any such shares are
taken.

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Pursuant to the Agreement Between U.S. and International Underwriters, each
U.S. Underwriter has represented and agreed that, with certain exceptions set
forth below, (a) it is not purchasing any U.S. Shares (as defined below) for the
account of anyone other than a United States or Canadian Person (as defined
below) and (b) it has not offered or sold, and will not offer or sell, directly
or indirectly, any U.S. Shares or distribute any prospectus outside the United
States and Canada or to anyone other than a United States or Canadian Person.
Pursuant to the Agreement Between U.S. and International Underwriters, each
International Underwriter has represented and agreed that, with certain
exceptions set forth below, (a) it is not purchasing any International Shares
(as defined below) for the account of any United States or Canadian Person and
(b) it has not offered or sold, and will not offer or sell, directly or
indirectly, any International Shares or distribute any prospectus relating to
the International Shares within the United States or Canada or to any United
States or Canadian Person. With respect to any of The Robinson-Humphrey Company,
Inc., Alex. Brown & Sons Incorporated, Hambrecht & Quist LLC, and J.C. Bradford
& Co., the foregoing representations or agreements (i) made by it in its
capacity as a U.S. Underwriter shall apply only to shares of Common Stock
purchased by it in its capacity as a U.S. Underwriter, (ii) made by it in its
capacity as an International Underwriter shall apply only to shares of Common
Stock purchased by it in its capacity as an International Underwriter, and (iii)
shall not restrict its ability to distribute any prospectus relating to the
shares of Common Stock to any person. The foregoing limitations do not apply to
stabilization transactions or to certain transactions specified in the Agreement
Between U.S. and International Underwriters. As used herein, "United States or
Canadian Person" means any national or resident of the United States or Canada,
or any corporation, pension, profit-sharing or other trust or other entity
organized under the laws of the United States or Canada or of any political
subdivision thereof (other than a branch located outside the United States and
Canada of any United States or Canadian Person) and includes any United States
or Canadian branch of a person who is otherwise not a United States or Canadian
Person. All shares of Common Stock to be purchased by the U.S. Underwriters and
the International Underwriters are referred to herein as the "U.S. Shares" and
the "International Shares," respectively.

Pursuant to the Agreement Between U.S. and International Underwriters,
sales may be made between the U.S. Underwriters and International Underwriters
of any number of shares of Common Stock to be purchased pursuant to the
Underwriting Agreement as may be mutually agreed. The per share price of any
shares so sold shall be the Price to Public set forth on the cover page hereof,
in United States dollars, less an amount not greater than the per share amount
of the concession to dealers set forth below.

Pursuant to the Agreement Between U.S. and International Underwriters, each
U.S. Underwriter has represented that it has not offered or sold, and has agreed
not to offer or sell, any shares of Common Stock, directly or indirectly, in
Canada in contravention of the securities laws of Canada or any province or
territory thereof and has represented that any offer of shares of Common Stock
in Canada will be made only pursuant to an exemption from the requirement to
file a prospectus in the province or territory of Canada in which such offer is
made. Each U.S. Underwriter has further agreed to send to any dealer who
purchases from it any shares of Common Stock a notice stating in substance that,
by purchasing such shares of Common Stock, such dealer represents and agrees
that it has not offered or sold, and will not offer or sell, directly or
indirectly, any of such shares of Common Stock in Canada or to, or for the
benefit of, any resident of Canada in contravention of the securities laws of
Canada or any province or territory thereof and that any offer of shares of
Common Stock in Canada will be made only pursuant to an exemption from the
requirement to file a prospectus in the province or territory of Canada in which
such offer is made, and that such dealer will deliver to any other dealer to
whom it sells any of such shares of Common Stock a notice to the foregoing
effect.

Pursuant to the Agreement Between U.S. and International Underwriters, each
International Underwriter has represented and agreed that (i) it has not offered
or sold and during the period of six months after the date hereof will not offer
or sell any shares of Common Stock to persons in the United Kingdom except to
persons whose ordinary activities involve them in acquiring, holding, managing,
or disposing of investments (as principal or agent) for the purposes of their
businesses or otherwise in circumstances which have not resulted and will not
result in an offer to the public in the United Kingdom within the meaning of
Public Offers of Securities Regulations 1995 (the "Regulations"); (ii) it has
complied and will comply with all applicable provisions of the Financial
Services Act 1986 and the Regulations with respect to anything done by it in

73
76

relation to the shares of Common Stock offered hereby in, from or otherwise
involving the United Kingdom; and (iii) it has only issued or passed on and will
only issue or pass on to any person in the United Kingdom any document received
by it in connection with the offer of the shares of Common Stock, other than any
document which consists of, or is part of, listing particulars, supplementary
listing particulars, or any other document required or permitted to be published
by listing rules under Article IV of the Financial Services Act 1986, if that
person is of a kind described in Article 11(3) of the Financial Services Act
1986 (Investment Advertisements) (Exemptions) Order 1995, or is a person to whom
such document may otherwise lawfully be issued or passed on.

Pursuant to the Agreement Between U.S. and International Underwriters, each
International Underwriter has represented and agreed that it has not offered or
sold, and will not offer or sell, directly or indirectly, in Japan or to or for
the account of any resident thereof, any of the shares of Common Stock acquired
in connection with this offering, except for offers or sales to Japanese
International Underwriters or dealers and except pursuant to any exemption from
the registration requirements of the Securities and Exchange Law of Japan. Each
International Underwriter has further agreed to send to any dealer who purchases
from it any of the shares of Common Stock a notice stating in substance that
such dealer may not offer or sell any of such shares, directly or indirectly, in
Japan or to or for the account of any resident thereof except pursuant to any
exemption from the registration requirements of the Securities and Exchange Law
of Japan, and that such dealer must send to any other dealer to whom it sells
any of such shares of Common Stock a notice to the foregoing effect.

The Underwriters initially propose to offer part of the shares of Common
Stock directly to the public at the price to public set forth on the cover page
hereof and part to certain dealers at a price that represents a concession not
in excess of $ per share under the price to public. The Underwriters
may allow, and such dealers may reallow, a concession not in excess of
$ per share to other Underwriters or to certain dealers. After the
initial offering of the shares of Common Stock, the offering price and other
selling terms may from time to time be varied by the Representatives.

Pursuant to the Underwriting Agreement, the Company has granted to the U.S.
Underwriters an option, exercisable for 30 days from the date hereof, to
purchase up to 3,000,000 additional shares of Common Stock at the price to
public set forth on the cover page of this Prospectus, less underwriting
discounts and commissions. The U.S. Underwriters may exercise such option solely
for the purpose of covering over-allotments, if any, incurred in the sale of the
shares of Common Stock offered hereby. To the extent that such option is
exercised, each U.S. Underwriter will become obligated, subject to certain
conditions, to purchase approximately the same percentage of such additional
shares as the number of shares to be purchased and offered by such U.S.
Underwriter in the above table bears to the total number of initial shares to be
purchased by the U.S. Underwriters.

The Common Stock has been approved for listing, subject to official notice
of issuance, on the New York Stock Exchange under the symbol "IM." The
Underwriters intend to sell shares of the Common Stock to a minimum of 2,000
beneficial owners in lots of 100 or more so as to meet the distribution
requirements of such listing.

At the Company's request, the Underwriters have reserved for sale, at the
price to public set forth on the cover page hereof, up to 2,300,000 shares
offered hereby for directors, officers, employees, business associates, and
related persons of the Company and its subsidiaries. The number of shares of
Common Stock available for sale to the general public will be reduced to the
extent such persons purchase such reserved shares. Any reserved shares which are
not so purchased will be offered by the Underwriters to the general public on
the same basis as the other shares offered hereby. See "Employee and Priority
Offers."

The Company and its directors and executive officers, and certain
stockholders of the Company, have agreed that they will not (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right, or warrant to purchase, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock, or (ii) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
the Common Stock, whether any such

74
77

transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise, for a period of
180 days after the date of this Prospectus, without the prior written consent of
Morgan Stanley & Co. Incorporated, other than (i) the sale to the Underwriters
of any shares of Common Stock pursuant to the Underwriting Agreement, (ii) the
grant of options or issuance of stock upon the exercise of outstanding stock
options pursuant to the Company's stock option plans or (iii) an exception for
the Thrift Plan allowing for the sale of up to 800,000 shares. See "Shares
Eligible for Future Sale." Morgan Stanley & Co. Incorporated has informed the
Company that it has no present intention to provide a waiver from the 180-day
lock-up period for the Company and its directors, executive officers and
stockholders who have agreed to such lock-ups.

The Representatives have informed the Company that the Underwriters do not
intend sales to discretionary accounts to exceed five percent of the total
number of shares of Common Stock offered by them.

The Company and the Underwriters have agreed in the Underwriting Agreement
to indemnify each other against certain liabilities, including liabilities under
the Securities Act.

From time to time each of Morgan Stanley & Co. Incorporated, The
Robinson-Humphrey Company, Inc., and J.C. Bradford & Co. has provided, and
continues to provide, investment banking services to Ingram Industries and the
Company.

PRICING OF OFFERING

Prior to this offering, there has been no public market for the shares of
Common Stock of the Company. Consequently, the initial public offering price
will be determined by negotiations between the Company and the Representatives.
Among the factors considered in determining the initial public offering price
will be the Company's record of operations, the Company's current financial
condition and future prospects, the experience of its management, the economics
of the industry in general, the general condition of the equity securities
market, and the market prices of similar securities of companies considered
comparable to the Company. There can be no assurance that a regular trading
market for the shares of Common Stock will develop after this offering or, if
developed, that a public trading market can be sustained. There can be no
assurance that the prices at which the Common Stock will sell in the public
market after this offering will not be lower than the price at which it is
issued by the Underwriters in this offering.

LEGAL MATTERS

Certain legal matters with respect to the Common Stock offered hereby will
be passed upon for the Company by Davis Polk & Wardwell, New York, New York and
for the Underwriters by Wilson Sonsini Goodrich & Rosati, Palo Alto, California.

EXPERTS

The consolidated financial statements as of December 31, 1994 and December
30, 1995 and for each of the three fiscal years in the period ended December 30,
1995 included in this Prospectus have been so included in reliance on the report
of Price Waterhouse LLP, independent accountants, given on the authority of said
firm as experts in auditing and accounting.

75
78

ADDITIONAL INFORMATION

Prior to this offering, the Company has not been subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (together with any amendments
thereto, the "Registration Statement") under the Securities Act of 1933, as
amended, with respect to the shares of Common Stock being offered hereby. This
Prospectus, which is part of the Registration Statement, does not contain all of
the information set forth in the Registration Statement and the exhibits and
schedules thereto, certain items of which are omitted as permitted by the Rules
and Regulations of the Commission. Statements contained in this Prospectus as to
the contents of any contract or other document referred to herein are not
necessarily complete, and in each instance in which a copy of such contract or
other document has been filed as an exhibit to the Registration Statement,
reference is made to such copy and each such statement is qualified in all
respects by such reference.

As a result of this offering, the Company will be subject to the
informational requirements of the Exchange Act, and, in accordance therewith,
will file reports and other information with the Commission. A copy of the
Registration Statement, the exhibits and schedules forming a part thereof and
the reports and other information filed by the Company in accordance with the
Exchange Act may be inspected without charge at the offices of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549 and at certain regional offices
of the Commission located at Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center, 13th
Floor, New York, New York 10048. Copies of such material may also be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, upon payment of the fees prescribed by the Commission.
Such material may also be accessed electronically by means of the Commission's
home page on the Internet at http://www.sec.gov.

76
79

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

INGRAM MICRO INC.
(A WHOLLY-OWNED SUBSIDIARY OF INGRAM INDUSTRIES INC.)

PAGE
----

Report of Independent Accountants..................................................... F-2
Consolidated Balance Sheet as of December 31, 1994, December 30, 1995 and June 29,
1996 (unaudited).................................................................... F-3
Consolidated Statement of Income for the years ended January 1, 1994, December 31,
1994 and December 30, 1995 and the twenty-six weeks ended July 1, 1995 and June 29,
1996 (unaudited).................................................................... F-4
Consolidated Statement of Stockholder's Equity for the years ended January 1, 1994,
December 31, 1994 and December 30, 1995 and the twenty-six weeks ended June 29, 1996
(unaudited)......................................................................... F-5
Consolidated Statement of Cash Flows for the years ended January 1, 1994, December 31,
1994 and December 30, 1995 and the twenty-six weeks ended July 1, 1995 and June 29,
1996 (unaudited).................................................................... F-6
Notes to Consolidated Financial Statements............................................ F-7

F-1
80

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and
Stockholder of Ingram Micro Inc.

In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income, of stockholder's equity and of cash flows
present fairly, in all material respects, the financial position of Ingram Micro
Inc. (a wholly-owned subsidiary of Ingram Industries Inc.) and its subsidiaries
at December 31, 1994 and December 30, 1995, and the results of their operations
and their cash flows for each of the three years in the period ended December
30, 1995, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.

PRICE WATERHOUSE LLP

Nashville, Tennessee
February 29, 1996, except

Note 12 as to which the date is September 9, 1996

F-2
81

INGRAM MICRO INC.
(A WHOLLY-OWNED SUBSIDIARY OF INGRAM INDUSTRIES INC.)

CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

FISCAL PERIOD END
------------------------- JUNE 29,
1994 1995 1996
---------- ---------- ----------
(UNAUDITED)

ASSETS
Current assets:
Cash.............................................. $ 58,369 $ 56,916 $ 45,172
Trade accounts receivable (less allowances of
$25,668 in 1994, $30,791 in 1995 and $35,193 in
1996)........................................... 745,910 1,071,275 1,013,386
Inventories....................................... 995,880 1,582,922 1,333,651
Other current assets.............................. 68,717 88,503 91,987
---------- ---------- ----------
Total current assets......................... 1,868,876 2,799,616 2,484,196
Property and equipment, net.......................... 58,285 89,126 107,175
Goodwill, net........................................ 33,481 29,871 28,573
Other................................................ 13,647 22,285 21,477
---------- ---------- ----------
Total assets................................. $1,974,289 $2,940,898 $2,641,421
========== ========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable.................................. $1,100,598 $1,652,073 $1,395,296
Accrued expenses.................................. 94,505 121,572 130,700
Current maturities of long-term debt.............. 10,724 6,332 12,044
---------- ---------- ----------
Total current liabilities.................... 1,205,827 1,779,977 1,538,040
Long-term debt.................................... 92,204 170,424 195,890
Due to Ingram Industries.......................... 449,355 673,792 560,847
Other............................................. 3,434 5,697 5,130
---------- ---------- ----------
Total liabilities............................ 1,750,820 2,629,890 2,299,907
Minority interest.................................... 2,125 213 2,713
Commitments and contingencies (Note 8)
Stockholder's equity:
Class A Common Stock, $.01 par value, 265,000,000
shares authorized; no shares issued and
outstanding..................................... -- -- --
Class B Common Stock, $.01 par value, 135,000,000
shares authorized; 107,251,352 shares issued and
outstanding..................................... 1,073 1,073 1,073
Additional paid in capital........................ 22,427 22,427 22,427
Retained earnings................................. 197,815 282,122 312,762
Cumulative translation adjustment................. 29 5,173 2,539
---------- ---------- ----------
Total stockholder's equity................... 221,344 310,795 338,801
---------- ---------- ----------
Total liabilities and stockholder's equity... $1,974,289 $2,940,898 $2,641,421
========== ========== ==========

See accompanying notes to these consolidated financial statements.

F-3
82

INGRAM MICRO INC.
(A WHOLLY-OWNED SUBSIDIARY OF INGRAM INDUSTRIES INC.)

CONSOLIDATED STATEMENT OF INCOME
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

TWENTY-SIX WEEKS ENDED
FISCAL YEAR ---------------------------
------------------------------------------- JULY 1, JUNE 29,
1993 1994 1995 1995 1996
----------- ----------- ----------- ----------- -----------

(UNAUDITED)
Net sales............... $ 4,044,169 $ 5,830,199 $ 8,616,867 $ 3,739,145 $ 5,543,167
Cost of sales........... 3,714,527 5,391,224 8,011,181 3,467,838 5,166,134
----------- ----------- ----------- ----------- -----------
Gross profit............ 329,642 438,975 605,686 271,307 377,033
Expenses:
Selling, general and
administrative..... 225,047 296,330 415,344 190,924 252,652
Charges allocated from
Ingram
Industries......... 1,567 2,355 3,461 1,678 2,143
Non-cash compensation
charge............. 7,802
----------- ----------- ----------- ----------- -----------
226,614 298,685 418,805 192,602 262,597
----------- ----------- ----------- ----------- -----------
Income from
operations............ 103,028 140,290 186,881 78,705 114,436
Other (income) expense:
Interest income....... (407) (937) (3,479) (2,425) (761)
Interest expense...... 5,003 8,744 13,451 6,024 7,526
Interest expense
charged by Ingram
Industries......... 16,089 24,189 32,606 14,875 21,172
Net foreign currency
exchange loss...... 111 6,873 7,751 4,598 392
Other................. (623) 716 1,936 1,412 1,610
----------- ----------- ----------- ----------- -----------
20,173 39,585 52,265 24,484 29,939
----------- ----------- ----------- ----------- -----------
Income before income
taxes and minority
interest.............. 82,855 100,705 134,616 54,221 84,497
Provision for income
taxes................. 31,660 39,604 53,143 21,402 33,856
----------- ----------- ----------- ----------- -----------
Income before minority
interest.............. 51,195 61,101 81,473 32,819 50,641
Minority interest....... 840 (2,243) (2,834) (2,701) 1
----------- ----------- ----------- ----------- -----------
Net income.............. $ 50,355 $ 63,344 $ 84,307 $ 35,520 $ 50,640
========== ========== ========== ========== ==========
Earnings per share...... $ 0.42 $ 0.53 $ 0.70 $ 0.29 $ 0.42
========== ========== ========== ========== ==========

See accompanying notes to these consolidated financial statements.

F-4
83

INGRAM MICRO INC.
(A WHOLLY-OWNED SUBSIDIARY OF INGRAM INDUSTRIES INC.)

CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

CLASS A CLASS B
COMMON STOCK COMMON STOCK ADDITIONAL CUMULATIVE
------------------- -------------------- PAID IN RETAINED TRANSLATION
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS ADJUSTMENT TOTAL
---------- ------ ----------- ------ ---------- -------- ----------- --------

JANUARY 2, 1993................. 107,251,352 $1,073 $ 22,427 $84,116 $ 1,802 $109,418
Translation adjustment.......... (4,314) (4,314)
Net income...................... 50,355 50,355
---------- ------ ----------- ------ ------- -------- ------ --------
JANUARY 1, 1994................. 107,251,352 1,073 22,427 134,471 (2,512) 155,459
Translation adjustment.......... 2,541 2,541
Net income...................... 63,344 63,344
---------- ------ ----------- ------ ------- -------- ------ --------
DECEMBER 31, 1994............... 107,251,352 1,073 22,427 197,815 29 221,344
Translation adjustment.......... 5,144 5,144
Net income...................... 84,307 84,307
---------- ------ ----------- ------ ------- -------- ------ --------
DECEMBER 30, 1995............... 107,251,352 1,073 22,427 282,122 5,173 310,795
Distribution to Ingram
Industries (unaudited)........ (20,000 ) (20,000)
Translation adjustment
(unaudited)................... (2,634) (2,634)
Net income (unaudited).......... 50,640 50,640
---------- ------ ----------- ------ ------- -------- ------ --------
JUNE 29, 1996 (UNAUDITED)....... 107,251,352 $1,073 $ 22,427 $312,762 $ 2,539 $338,801
========== ====== =========== ====== ======= ======== ====== ========

See accompanying notes to these consolidated financial statements.

F-5
84

INGRAM MICRO INC.
(A WHOLLY-OWNED SUBSIDIARY OF INGRAM INDUSTRIES INC.)

CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

TWENTY-SIX WEEKS
ENDED
FISCAL YEAR -------------------
------------------------------ JULY 1, JUNE 29,
1993 1994 1995 1995 1996
-------- -------- -------- -------- --------
(UNAUDITED)

CASH PROVIDED (USED) BY OPERATING
ACTIVITIES:
Net income................................ $ 50,355 $ 63,344 $ 84,307 $ 35,520 $ 50,640
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization.......... 12,918 18,675 25,394 11,632 15,700
Deferred income taxes.................. (5,719) (4,668) (8,632) (5,721) (2,190)
Minority interest...................... 840 (2,243) (2,834) (2,701) 1
Non-cash compensation charge........... 7,802
Changes in operating assets and
liabilities, net of effects of
acquisitions:
Trade accounts receivable.............. (161,097) (232,268) (320,177) (10,796) 49,804
Inventories............................ (143,738) (345,511) (580,116) 22,160 242,256
Other current assets................... (2,881) (12,846) (15,877) (4,250) 16
Accounts payable....................... 184,787 411,012 543,822 (35,479) (247,848)
Accrued expenses....................... 22,830 17,452 22,828 4,327 2,443
-------- -------- -------- -------- --------
Cash provided (used) by operating
activities........................... (41,705) (87,053) (251,285) 14,692 118,624
CASH PROVIDED (USED) BY INVESTING
ACTIVITIES:
Purchase of property and equipment........ (21,311) (31,286) (52,985) (25,745) (33,026)
Acquisitions, net of cash acquired........ (21,447) (15,088)
Other..................................... 2,062 3,765 4,188 555 (1,394)
-------- -------- -------- -------- --------
Cash used by investing activities...... (40,696) (42,609) (48,797) (25,190) (34,420)
CASH PROVIDED (USED) BY FINANCING
ACTIVITIES:
Increase (decrease) in borrowings from
Ingram Industries...................... 83,635 103,580 224,437 (66,804) (112,945)
Proceeds (repayment) of debt.............. 1,410 (4,930) (838) 223 943
Net borrowings under revolving credit
facility............................... 16,388 44,636 74,666 45,103 34,505
Distribution to Ingram Industries......... (20,000)
Minority interest investment.............. 2,400
-------- -------- -------- -------- --------
Cash provided (used) by financing
activities........................... 101,433 143,286 298,265 (21,478) (95,097)
Effect of exchange rate changes on cash..... 84 354 364 603 (851)
-------- -------- -------- -------- --------
Increase (decrease) in cash................. 19,116 13,978 (1,453) (31,373) (11,744)
Cash, beginning of year..................... 25,275 44,391 58,369 58,369 56,916
-------- -------- -------- -------- --------
Cash, end of period or year................. $ 44,391 $ 58,369 $ 56,916 $ 26,996 $ 45,172
======== ======== ======== ======== ========
Supplementary disclosure of cash flow
information:
CASH PAYMENTS DURING THE PERIOD:
Interest.................................. $ 20,738 $ 32,528 $ 45,164 $ 20,243 $ 28,945
Income taxes.............................. 34,906 47,152 54,506 22,509 37,817
Cash payments include payments made to Ingram Industries for interest and U.S. income taxes

See accompanying notes to these consolidated financial statements.

F-6
85

INGRAM MICRO INC.
(A WHOLLY-OWNED SUBSIDIARY OF INGRAM INDUSTRIES INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 1 -- ORGANIZATION AND BASIS OF PRESENTATION

Ingram Micro Inc. (the "Company" or "Ingram Micro"), formerly Ingram Micro
Holdings Inc. (refer to Note 12), is primarily engaged in wholesale distribution
and marketing of microcomputer hardware and software products. The Company
conducts the majority of its operations in North America and Europe. The Company
is a wholly-owned subsidiary of Ingram Industries Inc. ("Ingram Industries"). In
September 1995, Ingram Industries announced its intention to reorganize into
three separate companies in a tax-free reorganization. As part of the
reorganization, Ingram Industries will split-off the Company. The plan of
reorganization is subject to, among other things, receipt of a satisfactory tax
ruling from the Internal Revenue Service. The plan contemplates that certain of
the Ingram Industries shareholders will exchange all or some of their shares of
Ingram Industries for the outstanding shares of the Company held by Ingram
Industries. The reorganization and exchange are referred to herein as the
"Split-Off."

The accompanying consolidated financial statements have been prepared as if
the Company had operated as an independent stand alone entity for all periods
presented except the Company generally has not had significant borrowings in
North America other than amounts due Ingram Industries. Refer to Notes 6 and 10
regarding related party transactions.

NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES

The Company's significant accounting policies which conform to generally
accepted accounting principles applied on a consistent basis between years, are
described below:

Basis of Consolidation

The consolidated financial statements include the accounts of the Company,
its wholly-owned and majority-owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation.

Fiscal Year

The fiscal year of the Company is a 52 or 53 week period ending on the
Saturday nearest to December 31. All references herein to "1993," "1994" and
"1995" represent the 52 week fiscal years ended January 1, 1994, December 31,
1994 and December 30, 1995, respectively.

Accounting Estimates

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

Cash

Outstanding checks of $119,627 in 1994 and $72,868 in 1995 are included in
accounts payable.

Revenue Recognition

Revenue is recognized at the time of product shipment. The Company, under
specified conditions, permits its customers to return or exchange products. The
provision for estimated sales returns is recorded concurrently with the
recognition of revenue.

F-7
86

INGRAM MICRO INC.
(A WHOLLY-OWNED SUBSIDIARY OF INGRAM INDUSTRIES INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

Vendor Programs

Funds received from vendors for price protection, product rebates,
marketing or training programs are recorded net of direct costs as adjustments
to product costs, reduction of selling, general and administrative expenses or
revenue according to the nature of the program.

The Company does not provide warranty coverage of its product sales.
However, to maintain customer relations, the Company facilitates domestic vendor
warranty policies by accepting for exchange, with the Company's prior approval,
most defective products within 90 days of invoicing. Defective products received
by the Company are subsequently returned to the vendor for credit or
replacement.

The Company generated approximately 17% of its sales in fiscal 1993, 18% in
1994 and 23% in 1995 from products purchased from two vendors.

Inventories

Inventories are stated at the lower of average cost or market.

Property and Equipment

Property and equipment are recorded at cost and depreciated using the
straight-line method over the following estimated useful lives. Leasehold
improvements are amortized over the shorter of the lease term or the estimated
useful life:

Leasehold improvements....................................... 3-12 years
Distribution equipment....................................... 5-7 years
Computer equipment........................................... 2-5 years

Maintenance, repairs and minor renewals are charged to expense as incurred.
Additions, major renewals and betterments to property and equipment are
capitalized. Realization of carrying value is assessed periodically.

Goodwill

Goodwill is amortized on a straight-line basis over periods ranging from
five to twenty years. Accumulated amortization was $9,846 at December 31, 1994
and $13,576 at December 30, 1995. The Company evaluates the recoverability of
goodwill and reviews the amortization periods on an annual basis. Recoverability
is measured on the basis of anticipated undiscounted cash flows from operations.
At December 31, 1994 and December 30, 1995, no impairment was indicated.

Income Taxes

The temporary differences between the financial reporting basis and the
income tax basis of the Company's assets and liabilities are provided in
accordance with Statement of Financial Accounting Standards No. 109.

Foreign Currency Translation

Financial statements of foreign subsidiaries are translated into U.S.
dollars using the exchange rate at each balance sheet date for assets and
liabilities and a weighted average exchange rate for each period for results of
foreign operations. Translation adjustments are recorded as a separate component
of stockholder's equity when the local currency is the functional currency.
Translation adjustments are recorded in income

F-8
87

INGRAM MICRO INC.
(A WHOLLY-OWNED SUBSIDIARY OF INGRAM INDUSTRIES INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

when the U.S. dollar is the functional currency. The U.S. dollar is the
functional currency for the Company's subsidiaries in Mexico and Singapore.

Financial Instruments

The carrying amounts of cash, accounts receivable, accounts payable and
other accrued expenses approximate fair value because of the short maturity of
these items.

The carrying amounts of intercompany payables and debt issued pursuant to
bank credit agreements approximate fair value because interest rates on these
instruments approximate current market interest rates.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of trade accounts receivable
and derivative financial instruments. Credit risk with respect to trade accounts
receivable is limited due to the large number of customers and their dispersion
across geographic areas. The Company sells its products primarily in the United
States, Europe, Canada and Mexico. The Company performs ongoing credit
evaluations of its customers' financial condition, utilizes flooring
arrangements with third party financing companies, obtains credit insurance in
certain locations and requires collateral in certain circumstances. The Company
maintains an allowance for potential credit losses.

Derivative Financial Instruments

The Company operates internationally with distribution facilities in
various locations around the world. The Company uses derivative financial
instruments to reduce its exposure to fluctuations in interest rates and foreign
exchange rates by creating offsetting positions through the use of derivative
financial instruments. The market risk related to the foreign exchange
agreements is offset by changes in the valuation of the underlying items being
hedged. The majority of the Company's derivative financial instruments have
terms of 90 days or less. The Company currently does not use derivative
financial instruments for trading or speculative purposes, nor is the Company a
party to leveraged derivatives.

Derivative financial instruments are accounted for on an accrual basis.
Income and expense are recorded in the same category as that arising from the
related asset or liability being hedged. Gains and losses resulting from
effective hedges of existing assets, liabilities or firm commitments are
deferred and recognized when the offsetting gain and losses are recognized on
the related hedged items. Written foreign currency options are used to mitigate
currency risk in conjunction with purchased options. Gains or losses on written
foreign currency options are adjusted to market value at the end of each
accounting period and have not been material to date.

The notional amount of forward exchange contracts and options is the amount
of foreign currency bought or sold at maturity. The notional amount of currency
interest rate swaps is the underlying principal and currency amounts used in
determining the interest payments exchanged over the life of the swap. Notional
amounts are indicative of the extent of the Company's involvement in the various
types and uses of derivative financial instruments and are not a measure of the
Company's exposure to credit or market risks through its use of derivatives. The
estimated fair value of derivative financial instruments represents the amount
required to enter into like off-setting contracts with similar remaining
maturities based on quoted market prices.

Credit exposure is limited to the amounts, if any, by which the
counterparties' obligations under the contracts exceed the obligations of the
Company to the counterparties. Potential credit losses are minimized through
careful evaluation of counterparty credit standing, selection of counterparties
from a limited group of high quality institutions and other contract provisions.

F-9
88

INGRAM MICRO INC.
(A WHOLLY-OWNED SUBSIDIARY OF INGRAM INDUSTRIES INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

Derivative financial instruments comprise the following:

1994 1995
----------------------- -----------------------
NOTIONAL ESTIMATED NOTIONAL ESTIMATED
AMOUNTS FAIR VALUE AMOUNTS FAIR VALUE
-------- ---------- -------- ----------

Foreign exchange forward contracts....... $ 44,586 $ (384) $109,218 $ (1,971)
Purchased foreign currency options....... 55,979 699 75,928 485
Written foreign currency options ........ 77,298 (25) 121,183 (615)
Currency interest rate swaps............. 9,823 (543) 25,655 (1,056)

Employee Benefits

The Company participates in Ingram Industries' defined contribution plan
covering substantially all U.S. employees. The plan permits eligible employees
to make contributions up to certain limits and receive employer matching at
stipulated percentages. The Company's contributions charged to expense were $716
in fiscal 1993, $764 in 1994 and $1,399 in 1995.

As a result of the Split-Off described in Note 1, the Company will
establish its own employee benefit plans.

Earnings Per Share

Historical earnings per share data reflects the Company's capital structure
as a result of the formation of the Delaware corporation in preparation for the
Split-Off described in Notes 1 and 12. Earnings per share is determined based on
the number of shares the Company is expected to have after the Split-Off
(107,251,352) in addition to all dilutive common stock and common stock
equivalent shares issued within 12 months of the public offering. Pursuant to
the Securities and Exchange Commission Staff Accounting Bulletins and Staff
policy, such shares are treated as if they were outstanding for all periods
presented using the treasury stock method (13,302,151). The number of common
shares used to compute the earnings per share amounts for each of the three
fiscal years in the period ended December 30, 1995 and the twenty-six weeks
ended July 1, 1995 and June 29, 1996 was 120,553,503.

Supplementary Earnings Per Share

Supplementary per share data (unaudited) is presented to give effect to the
repayment of certain indebtedness assumed by the Company in satisfaction of
amounts due to Ingram Industries. Net income is adjusted by $13,378 and $6,225
for 1995 and the twenty-six weeks ended June 29, 1996, respectively, to reflect
the reduction in interest expense (net of tax) related to the indebtedness
assumed by the Company.

The weighted average shares outstanding used to calculate supplementary pro
forma earnings per share are based on weighted average shares outstanding at
December 30, 1995 and June 29, 1996, respectively, as adjusted for 20,000,000
shares of Class A Common Stock being sold in the offering and 2,510,400 shares
of Class B Common Stock sold in the Employee Offering (see Note 12) to repay
certain indebtedness of the Company.

Unaudited supplementary pro forma earnings per share for the fiscal periods
ended December 30, 1995 and June 29, 1996 is $0.69 and $0.40, respectively.

F-10
89

INGRAM MICRO INC.
(A WHOLLY-OWNED SUBSIDIARY OF INGRAM INDUSTRIES INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

Interim Financial Information

The accompanying interim financial statements have been prepared without
audit, and certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted, although the Company believes that
the disclosures herein are adequate to make information presented not
misleading. These statements should be read in conjunction with the Company's
financial statements for the year ended December 30, 1995. The results of
operations for the three month period is not necessarily indicative of results
for the full year.

In the opinion of management, the accompanying interim financial statements
contain all adjustments of a normal and recurring nature necessary for a fair
presentation of the Company's financial position as of June 29, 1996, its
results of operations for the twenty-six weeks ended July 1, 1995 and June 29,
1996, and its cash flows for the twenty-six weeks ended July 1, 1995 and June
29, 1996.

NOTE 3 -- ACQUISITIONS

The Company acquired 70% of the stock of Distribuidora de Computo, S.A. de
C.V. ("Dicom"), in January 1993, for $9,327 cash and amounts payable to the
sellers of $2,475. Dicom is located in Mexico and is engaged in wholesale
distribution. The assets acquired were $32,383 and liabilities assumed were
$21,468.

The Company also acquired four separate wholesale distributors in Germany,
the United Kingdom, Belgium and the Netherlands in 1993. The combined
consideration for the assets or common stock purchased was $12,120 cash and
$2,364 of notes payable to sellers. The acquired companies had assets of $10,810
and liabilities of $80.

In April and August 1994, the Company acquired two separate wholesale
distributors (Keylan S.A. and Datateam Sverige AB) with operations in Spain,
Sweden, Denmark and Norway. The combined consideration paid was $15,088 cash and
$5,279 of notes payable to the sellers. The acquired companies had assets of
$48,748 and liabilities of $35,034.

The acquisitions described above have been accounted for using the purchase
method of accounting. The purchase price has been allocated to the assets
purchased and liabilities assumed based on fair values at the date of
acquisition. The excess of the purchase price over fair value of net assets
acquired in 1993 was $7,916 and in 1994 was $6,653 and was recorded as goodwill.

The operating results of these acquired businesses have been included in
the consolidated statement of income from the date of acquisition. Pro forma
results of operations have not been presented because the effects of these
acquisitions were not significant.

NOTE 4 -- ACCOUNTS RECEIVABLE

Effective February 1993, the Company entered into an arrangement with
Ingram Industries whereby the Company sells all of its domestic trade accounts
receivable to Ingram Industries on an ongoing basis ($665,325 at December 30,
1995). Ingram Industries transfers certain trade accounts receivable from the
Company and other Ingram Industries affiliates to a trust which sells
certificates representing undivided interests in the total pool of trade
receivables without recourse. Ingram Industries' arrangement with the trust
extends to December 31, 1997 and renews biannually under an evergreen provision
up to a maximum term of twenty years. At December 31, 1994 and December 30,
1995, the accounts receivable and due to Ingram Industries amounts in the
Company's consolidated balance sheet have not been reduced to reflect the sale
of such receivables. As a result of the Split-Off described in Note 1, it is
anticipated that Ingram Industries' accounts receivable securitization agreement
will be assumed by the Company.

F-11
90

INGRAM MICRO INC.
(A WHOLLY-OWNED SUBSIDIARY OF INGRAM INDUSTRIES INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 5 -- PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

FISCAL PERIOD END
--------------------- JUNE 29,
1994 1995 1996
-------- -------- ---------
(UNAUDITED)

Land............................................... $ 2,274 $ 2,359 $ 7,290
Leasehold improvements............................. 17,448 26,381 34,285
Distribution equipment............................. 39,814 62,462 71,031
Computer equipment................................. 40,579 59,161 69,384
------- ------- -------
100,115 150,363 181,990
Accumulated depreciation........................... (41,830) (61,237) (74,815)
------- ------- -------
$ 58,285 $ 89,126 $ 107,175
======= ======= =======

Depreciation expense was $10,927 in fiscal 1993, $15,756 in 1994 and
$21,785 in 1995.

NOTE 6 -- LONG-TERM DEBT AND DUE TO INGRAM INDUSTRIES

Ingram Industries manages most treasury activities, including the
arrangement of short-term and long-term financing on a centralized, consolidated
basis. Using a centralized cash management system, the Company's domestic cash
receipts are remitted to Ingram Industries and domestic cash disbursements are
funded by Ingram Industries on a daily basis. The Company's historical financial
statements reflect funding provided by Ingram Industries to the Company, and net
cash used by the Company, as amounts due to Ingram Industries. At December 31,
1994 and December 30, 1995, amounts due to Ingram Industries are classified as
long-term due to the terms of the underlying debt at Ingram Industries.

Ingram Industries charges the Company interest expense on the outstanding
intercompany balance based on Ingram Industries' domestic weighted average cost
of funds. The average rate was 6.93% in fiscal 1993, 6.99% in 1994 and 7.38% in
1995.

The Company and other Ingram Industries affiliates participate in Ingram
Industries' unsecured revolving credit agreement with a syndicate of banks.
Under this agreement, Ingram Industries and its affiliates may borrow in various
currencies up to $380,000 at various money market and bid rates. The weighted
average borrowing rate was 6.84% at December 31, 1994 and 7.00% at December 30,
1995. The agreement extends to December 31, 1999, and is renewable for an
additional two year period during the year prior to expiration. The agreement is
guaranteed by certain subsidiaries of the Company and other Ingram Industries
affiliates. At December 30, 1995, outstanding aggregate borrowings were
$229,716, of which $167,176 is specifically related to amounts drawn by the
Company's subsidiaries.

The Company's subsidiaries outside the United States have lines of credit
and short-term overdraft facilities aggregating $93,527 various banks worldwide.
Most of these arrangements are reviewed periodically for renewal. At December
30, 1995, the Company had $5,782 outstanding under these facilities.

In addition to the guarantee described above, the Company has guaranteed
certain other borrowings of Ingram Industries totaling $328,572. Included within
this amount are (i) amounts outstanding on an unsecured temporary revolving
credit facility that provides for borrowings up to $200,000 at specified
variable rates and expires on the earlier of December 31, 1996 or five days
after the successful completion of an initial public offering and (ii) $192,900
of fixed maturity, privately placed debt with maturities from November 1, 1996
to November 1, 2002. As a result of the Split-Off described in Notes 1 and 12,
it is anticipated that

F-12
91

INGRAM MICRO INC.
(A WHOLLY-OWNED SUBSIDIARY OF INGRAM INDUSTRIES INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

certain of the debt facilities guaranteed will be assumed by the Company in
satisfaction of the amounts payable to Ingram Industries.

Under the most restrictive provisions of the loan agreements, Ingram
Industries is required to maintain certain levels of stockholders' equity, a
certain current ratio and a certain debt to capital ratio and is subject to
certain dividend restrictions. During 1994 and 1995, Ingram Industries was in
compliance with the provisions of these agreements.

Long-term debt consists of the following:

FISCAL PERIOD END
--------------------- JUNE 29,
1994 1995 1996
-------- -------- --------
(UNAUDITED)

Revolving credit facility.......................... $ 87,568 $167,176 $192,717
Overdraft facilities............................... 10,724 5,782 10,476
Other.............................................. 4,636 3,798 4,741
-------- -------- --------
102,928 176,756 207,934
Less current maturities of long-term debt.......... (10,724) (6,332) (12,044)
-------- -------- --------
$ 92,204 $170,424 $195,890
======== ======== ========

Annual maturities of long-term debt as of December 30, 1995 are as follows:

1996.............................................................. $ 6,332
1997.............................................................. 364
1998.............................................................. 388
1999.............................................................. 167,566
2000 and thereafter............................................... 2,106
--------
$176,756
========

NOTE 7 -- INCOME TAXES

The components of income before taxes and minority interest consist of the
following:

FISCAL YEAR
---------------------------------
1993 1994 1995
------- -------- --------

United States....................................... $85,044 $ 99,701 $124,277
Foreign............................................. (2,189) 1,004 10,339
------- -------- --------
Total..................................... $82,855 $100,705 $134,616
======= ======== ========

F-13
92

INGRAM MICRO INC.
(A WHOLLY-OWNED SUBSIDIARY OF INGRAM INDUSTRIES INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

The provision for income taxes consists of the following:

FISCAL YEAR
-------------------------------
1993 1994 1995
------- ------- -------

Current:
Federal............................................. $30,268 $35,989 $44,615
State............................................... 4,721 4,060 9,544
Foreign............................................. 2,390 4,223 7,616
------- ------- -------
37,379 44,272 61,775
Deferred:
Federal............................................. (1,929) (2,472) (4,082)
State............................................... (198) 136 (949)
Foreign............................................. (3,592) (2,332) (3,601)
------- ------- -------
(5,719) (4,668) (8,632)
------- ------- -------
Total income tax provision............................ $31,660 $39,604 $53,143
======= ======= =======

Deferred income taxes reflect the tax effect of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets and liabilities are as follows:

FISCAL PERIOD END
-------------------------------
1993 1994 1995
------- ------- -------

Deferred tax assets:
Tax in excess of book basis of foreign operations... $ 9,837 $13,816 $19,511
Accruals not currently deductible................... 7,840 9,275 12,734
Inventories......................................... 2,724 3,538 5,876
Other............................................... 293 263 492
------- ------- -------
Total....................................... $20,694 $26,892 $38,613
======= ======= =======
Deferred tax liabilities:
Depreciation........................................ $ 1,324 $ 958 $ 1,564
======= ======= =======

Current deferred tax assets of $15,130 and $19,307 are included in other
current assets at December 31, 1994 and December 30, 1995, respectively.
Non-current deferred tax assets of $11,762 and $19,306 are included in other
assets at December 31, 1994 and December 30, 1995, respectively.

Reconciliation of the statutory U.S. federal income tax rate to the
Company's effective rate is as follows:

FISCAL YEAR
----------------------
1993 1994 1995
---- ---- ----

U.S. statutory rate............................................ 35.0% 35.0% 35.0%
State income taxes, net of federal income tax benefit.......... 3.3 2.8 3.9
Other.......................................................... (.1) 1.5 .6
---- ---- ----
- - -
Effective tax rate............................................. 38.2% 39.3% 39.5%
===== ===== =====

F-14
93

INGRAM MICRO INC.
(A WHOLLY-OWNED SUBSIDIARY OF INGRAM INDUSTRIES INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

The Company is included in the consolidated federal income tax return filed
by Ingram Industries. Taxes related to the Company are determined on a separate
entity basis and taxes payable are remitted to Ingram Industries every two
months. Taxes payable to Ingram Industries of $4,089 at December 31, 1994 and
$14,303 at December 30, 1995 are included in accrued expenses in the
consolidated balance sheet.

At December 30, 1995, the Company had foreign net operating tax loss
carryforwards of $49,264 of which approximately one third have no expiration
date.

The Company does not provide for U.S. federal income taxes on undistributed
earnings of foreign subsidiaries as such earnings are intended to be permanently
reinvested in those operations.

NOTE 8 -- COMMITMENTS AND CONTINGENCIES

There are various claims, lawsuits and pending actions against the Company
incident to the Company's operations. It is the opinion of management that the
ultimate resolution of these matters will not have a material effect on the
Company's financial position or results of operations.

The Company has arrangements with certain finance companies which provide
accounts receivable and inventory financing facilities for its customers. The
Company assesses the financial stability of the finance companies and payment
terms are within 3 to 30 days of product shipment. In conjunction with certain
of these arrangements, the Company has inventory repurchase agreements with the
finance companies that would require it to repurchase certain inventory which
might be repossessed from the customers by the finance companies. Such
repurchases have been insignificant to date.

The Company leases the majority of its facilities and certain equipment
under noncancelable operating leases. Renewal and purchase options at fair
values exist for a substantial portion of the leases. Rental expense for the
years ended January 1, 1994, December 31, 1994 and December 30, 1995 was
$11,939, $16,574 and $28,367, respectively. Future minimum rental commitments on
operating leases that have remaining noncancelable lease terms in excess of one
year as of December 30, 1995 are as follows:

1996............................................................... $21,507
1997............................................................... 18,614
1998............................................................... 16,693
1999............................................................... 14,912
2000............................................................... 9,912
Later years........................................................ 54,104

F-15
94

INGRAM MICRO INC.
(A WHOLLY-OWNED SUBSIDIARY OF INGRAM INDUSTRIES INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 9 -- SEGMENT INFORMATION

The Company operates predominantly in a single industry segment as a
wholesale distributor of microcomputer hardware and software. Geographic areas
in which the Company operates include the United States (United States and the
majority of the Company's exports), Europe (Belgium, Denmark, France, Germany,
Italy, the Netherlands, Norway, Spain, Sweden and the United Kingdom) and Other
(Canada, Mexico and Singapore). Transfers between geographic areas primarily
represent intercompany sales and are accounted for based on established sales
prices between the related companies. Net sales, income (loss) from operations
and identifiable assets by geographic area are as follows:

FISCAL YEAR
------------------------------------
1993 1994 1995
---------- ---------- ----------

NET SALES:
United States:
Sales to unaffiliated customers............... $3,118,316 $4,122,338 $5,969,749
Transfers between geographic areas............ 60,358 76,696 86,961
Europe........................................... 485,126 1,078,250 1,849,129
Other............................................ 440,727 629,611 797,989
Eliminations..................................... (60,358) (76,696) (86,961)
---------- ---------- ----------
Total.................................... $4,044,169 $5,830,199 $8,616,867
========== ========== ==========
INCOME (LOSS) FROM OPERATIONS:
United States.................................... $ 98,669 $ 123,796 $ 156,749
Europe........................................... (3,246) 8,079 19,576
Other............................................ 7,605 8,415 10,556
---------- ---------- ----------
Total.................................... $ 103,028 $ 140,290 $ 186,881
========== ========== ==========
IDENTIFIABLE ASSETS:
United States.................................... $ 945,699 $1,381,798 $1,996,642
Europe........................................... 190,892 393,346 669,309
Other............................................ 159,772 199,145 274,947
---------- ---------- ----------
Total.................................... $1,296,363 $1,974,289 $2,940,898
========== ========== ==========

No single customer accounts for 10% or more of the Company's net sales.

NOTE 10 -- TRANSACTIONS WITH RELATED PARTIES

Ingram Industries provides certain corporate, general and administrative
services to the Company in addition to treasury activities described in Note 6
(including, but not limited to, legal, tax, employee benefits and electronic
data processing services). Charges for these services are based upon utilization
and at amounts which management believes are less than the amounts which the
Company would incur as a stand-alone entity. Such amounts are reflected as
charges allocated from Ingram Industries on the consolidated statement of
income.

Ingram Industries also provides guarantees to certain of the Company's
vendors and for certain of the Company's leases; no charges from Ingram
Industries have been reflected in the Company's financial statements for such
guarantees.

The Company leases warehouse and office space from certain shareholders of
Ingram Industries. Total rental payments were $729 in fiscal 1993, $784 in 1994
and $1,645 in 1995.

F-16
95

INGRAM MICRO INC.
(A WHOLLY-OWNED SUBSIDIARY OF INGRAM INDUSTRIES INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

Other transactions with Ingram Industries affiliates includes sales of
$1,664 in fiscal 1993, $3,056 in 1994 and $5,281 in 1995.

NOTE 11 -- STOCK OPTIONS AND INCENTIVE PLANS

Certain of the Company's employees participate in Ingram Industries'
qualified and non-qualified stock option and SAR plans. Ingram Industries' plans
provide for the grant of options and SARs at fair value. In conjunction with the
Split-Off, Ingram Industries options held by the Company's employees and certain
other Ingram Industries options and SARs will be converted to Ingram Micro
options ("Rollover Stock Options") to purchase Class A Common Stock. Upon
conversion, approximately 11,000,000 Rollover Stock Options will be outstanding.
The Rollover Stock Options have exercise prices ranging from $0.66 to $3.32 per
share, the majority will be fully vested by the year 2000 and no such options
expire later than 10 years from the date of grant. The Company recorded a
non-cash compensation charge of approximately $7,802 or $4,760 net of tax, in
the first half of 1996 related to the vested portion of certain Rollover Stock
Options. This charge was based on the difference between the estimated fair
value of such options in the first quarter of 1996 and the exercise price of
such options.

The Company has two Incentive Stock Unit ("ISU") plans available to grant
up to 1,575,000 ISUs to certain key employees. Subject to continued employment,
these stock appreciation awards vest over five years and actual cash payout is
based on the increase in book value from date of award grant. Outstanding ISUs
at January 1, 1994, December 31, 1994 and December 30, 1995 were 748,200,
221,000 and 25,100, respectively. The amounts charged to expense related to
these incentive stock unit plans totaled $3,354 in fiscal 1993, $2,163 in 1994
and $695 in 1995. There were no grants made under the ISU plans in 1995.

The Company will establish its separate stock option and incentive plans in
conjunction with the Split-Off. Refer to Note 12.

NOTE 12 -- SUBSEQUENT EVENTS

Formation of Ingram Micro Inc.

On April 29, 1996, a Delaware corporation, Ingram Micro Inc., was formed to
hold all of the outstanding stock of Ingram Micro Holdings Inc. ("Holdings"). It
is the Company's plan to merge with and into such Delaware corporation prior to
the effective date of a registration statement on Form S-1 filed with the
Securities and Exchange Commission. The proposed merger will not impact the
Company's financial statements, as the Company's historical financial statements
reflect the capital structure described herein.

Ingram Micro Inc., a Delaware corporation, has two classes of common stock
consisting of 265,000,000 shares of $0.01 par value Class A Common Stock,
135,000,000 shares of $0.01 par value Class B Common Stock and 1,000,000 shares
of $0.01 par value Preferred Stock. Class A stockholders are entitled to one
vote on each matter to be voted on by the shareholders whereas the Class B
stockholders are entitled to ten votes on each matter to be voted on by the
shareholders. The two classes of stock have similar rights in all other
respects. Each share of Class B Common Stock may at any time be converted to a
share of Class A Common Stock; however, conversion will occur automatically on
the earliest to occur of (i) the fifth anniversary of the consummation of the
Split-Off pursuant to the Exchange Agreement; (ii) the sale of such share of
Class B Common Stock to any person not provided for under the provisions of the
Board Representation Agreement;

F-17
96

INGRAM MICRO INC.
(A WHOLLY-OWNED SUBSIDIARY OF INGRAM INDUSTRIES INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

or (iii) the date on which the number of shares of Class B Common Stock then
outstanding represents less than 25% of the aggregate number of shares of Class
A Common Stock and Class B Common Stock then outstanding. The capital structure
resulting from the formation of the Delaware corporation was finalized on
September 9, 1996 and the Company has 107,251,352 shares of Class B Common Stock
outstanding.

Key Employee Stock Purchase Plan

As of April 30, 1996, the Company adopted the Key Employee Stock Purchase
Plan (the "Plan") which provides for the issuance of up to 4,000,000 shares of
Class B Common Stock to certain employees. In June 1996, the Company offered
2,775,000 shares of its Class B Common Stock to certain employees pursuant to
the Plan, and subsequently sold 2,510,400 shares with net proceeds of
approximately $17,173. The shares sold thereby are subject to vesting and
certain restrictions on transfer, may be redeemable prior to vesting and are
subject to repurchase by the Company upon termination of employment. In
addition, the Company granted, pursuant to this Plan, 107,000 restricted shares
of Class B Common Stock to certain officers and employees of the Company. These
shares are subject to vesting. Prior to vesting, these restricted grant shares
are subject to forfeiture to the Company without consideration.

1996 Equity Incentive Plan

As of April 30, 1996, the Company adopted the 1996 Equity Incentive Plan
and Ingram Industries approved the grant of options under this plan. In June
1996, the Company issued options at $7.00 per share to purchase an aggregate of
approximately 4,800,000 shares of Class B Common Stock under its Equity
Incentive Plan to all eligible employees of the Company. These options vest and
generally become exercisable over five years from the issue date and expire
eight years after the issue date.

Split-Off, Reorganization and Exchange

The Company plans to engage in a Split-Off, consisting of a Reorganization
and an Exchange, from Ingram Industries and Ingram Entertainment. Pursuant to
the Reorganization Agreement it is contemplated that the Company will retain all
of the assets and liabilities associated with the Company's business and will
indemnify Ingram Industries and Ingram Entertainment for all liabilities related
to the Company's business and operations or otherwise assigned to the Company.
In addition the Reorganization Agreement provides for the sharing by the Company
of approximately 73% of certain contingent assets and liabilities not allocated
to one of the parties. The Company will assume a portion of Ingram Industries'
debt in return for the extinguishment of intercompany indebtedness. The debt to
be assumed by the Company includes an accounts receivable securitization program
which will be transferred to the Company subsequent to the Split-Off and may
include $192,900 of privately placed term debt. The Company will also enter into
a $1 billion Credit Facility.

In connection with the Reorganization Agreement, the Company is expected to
enter into an employee benefits transfer and assumption agreement with Ingram
Industries and Ingram Entertainment which will provide for the allocation of
employee benefit assets and liabilities on a pro rata basis to each of the
parties of the Split-Off. It is also contemplated that the Company will enter
into a Tax Sharing Agreement. This Agreement will hold the Company liable for
its allocable share of the consolidated federal and state income tax liability
for the year that includes the Split-Off and approximately 73% of any adjustment
in excess of reserves already established by Ingram Industries for past federal
or state tax liabilities of the Company, Ingram Industries or Ingram
Entertainment. In addition, the Company will share in any refunds received. The
Company will also enter into Transitional Service Agreements related to certain
administration services including data processing.

F-18
97

INGRAM MICRO INC.
(A WHOLLY-OWNED SUBSIDIARY OF INGRAM INDUSTRIES INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

In conjunction with the Reorganization, the Company will consummate an
Exchange pursuant to which the existing shareholders of Ingram Industries may
exchange all or a portion of their shares of Ingram Industries common stock for
shares of Class B Common Stock of the Company and/or common stock of
Entertainment of equivalent value. If all stockholders were to exchange all
eligible shares, they would receive 107,251,352 shares of Class B Common Stock.
Pursuant to a Transfer Restrictions Agreement, the shares of Class B Common
Stock received by employees of the Company, Ingram Industries or Ingram
Entertainment in the Exchange are expected to be subject to repurchase by the
Company upon termination of employment. The repurchase feature lapses upon
consummation of an initial public offering.

F-19
98

[INGRAM MICRO LOGO]

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