INGRAM MICRO INC, 424B1, 1997-07-01

INGRAM MICRO INC
424B1, 1997-07-01
COMPUTERS & PERIPHERAL EQUIPMENT & SOFTWARE

Previous: BANCO INC, SC 13G, 1997-07-01

Next: NUVEEN FLAGSHIP MULTISTATE TRUST II, 485BPOS, 1997-07-01

<PAGE> 1
This filing is made pursuant
to Rule 424(b)(1) under
the Securities Act of
1933 in connection with
Registration No. 333-27471

PROSPECTUS

INGRAM MICRO INC.

CLASS A COMMON STOCK

3,383,369 SHARES

(1,378,369 SHARES BY INGRAM MICRO INC.
1,900,000 SHARES BY INGRAM THRIFT PLAN, AS SELLING STOCKHOLDER
65,000 SHARES BY INGRAM MICRO THRIFT PLAN, AS SELLING
STOCKHOLDER 40,000 SHARES BY INGRAM ENTERTAINMENT THRIFT
PLAN, AS SELLING STOCKHOLDER)

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

THIS PROSPECTUS RELATES TO THE OFFER AND SALE OF UP TO 1,378,369 SHARES OF
THE CLASS A COMMON STOCK, PAR VALUE $0.01 PER SHARE (THE "CLASS A COMMON
STOCK"), OF INGRAM MICRO INC. ("INGRAM MICRO" OR THE "COMPANY") AT VARIOUS
PRICES PURSUANT TO THE INGRAM MICRO INC. 1996 ROLLOVER STOCK OPTION PLAN (THE
"PLAN"). PLEASE SEE THE SUMMARY OF THE PLAN BEGINNING ON PAGE 19 AND THE FULL
TEXT OF THE PLAN BEGINNING ON PAGE A-1.

Holders of Options (as defined herein) may not exercise such Options unless
the Company has available a current final prospectus with respect to the shares
issuable upon exercise of such Options. The Company has agreed, as part of the
Split-Off (as defined herein), to keep this Prospectus available for a period of
30 days from the date of this Prospectus (or until July 30, 1997). The Committee
(as defined herein) has considerable discretion in determining whether to allow
the exercise of any particular Option. On March 24, 1997, the Company filed with
the Securities and Exchange Commission a registration statement on Form S-8
relating to shares issuable upon exercise of Options held by employees of the
Company. In addition, the Company has agreed that, as soon as practicable after
it becomes eligible to use Form S-3 (generally one year after the effectiveness
of the registration statement relating to the Company's initial public offering
in November 1996 (the "IPO")), it will file with the Securities and Exchange
Commission and keep effective until no Options remain outstanding, a
registration statement on Form S-3 relating to all shares issuable upon exercise
of Options, other than those covered by the registration statement on Form S-8
referred to above. Holders of Options who are not employees of the Company will
not have the ability to exercise Options after the date on which this Prospectus
is no longer available, until such time as a registration statement on Form S-3
relating to shares issuable upon exercise of such Options has been filed and
declared effective by the Securities and Exchange Commission. See "The
Plan--Exercise of Options" for a more complete discussion of the Company's
obligations with respect to additional registration statements and other related
matters.

IN ADDITION, THIS PROSPECTUS RELATES TO THE OFFER AND SALE FROM TIME TO
TIME BY THE INGRAM THRIFT PLAN ("II THRIFT PLAN"), THE INGRAM MICRO THRIFT PLAN
("IM THRIFT PLAN"), AND THE INGRAM ENTERTAINMENT THRIFT PLAN ("IE THRIFT PLAN"),
AS SUCCESSORS TO THE INGRAM THRIFT PLAN, OF A TOTAL OF 1,900,000 SHARES, 65,000
SHARES, AND 40,000 SHARES, RESPECTIVELY, OF CLASS A COMMON STOCK OF THE COMPANY.
II THRIFT PLAN, IM THRIFT PLAN AND IE THRIFT PLAN ARE SOMETIMES EACH REFERRED TO
HEREIN INDIVIDUALLY AS A "THRIFT PLAN" AND COLLECTIVELY AS THE "THRIFT PLANS."
THE THRIFT PLANS, DEFINED CONTRIBUTION PLANS INTENDED TO QUALIFY UNDER SECTION
401(A) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), CURRENTLY
OWN AN AGGREGATE OF 9,237,000 SHARES OF CLASS B COMMON STOCK, PAR VALUE $0.01
PER SHARE (THE "CLASS B

<PAGE> 2
COMMON STOCK"), (WHICH ARE AUTOMATICALLY CONVERTIBLE INTO SHARES OF CLASS A
COMMON STOCK UPON SALE) ISSUED TO THE INGRAM THRIFT PLAN IN NOVEMBER 1996
PURSUANT TO A REORGANIZATION OF THE COMPANY THAT INCLUDED THE INITIAL PUBLIC
OFFERING OF THE COMPANY'S CLASS A COMMON STOCK, AMONG OTHER ELEMENTS. SUCH
SHARES WERE DISTRIBUTED TO THE THRIFT PLANS IN JANUARY 1997 IN CONNECTION WITH
THE ESTABLISHMENT OF INDIVIDUAL THRIFT PLANS FOR EACH OF THE COMPANY, INGRAM
INDUSTRIES INC., AND INGRAM ENTERTAINMENT INC. THE COMPANY WILL NOT RECEIVE ANY
OF THE PROCEEDS FROM THE SALE OF SUCH SHARES OFFERED HEREBY.

The Thrift Plans directly or through agents, brokers, dealers or
underwriters designated from time to time, may sell shares of the Class A Common
Stock from time to time, on terms to be determined at the time of sale. To the
extent required, the specific number of shares to be sold, the purchase price
and public offering price, the names of any resale agent, dealer or underwriter,
and the terms and amount of any applicable commission or discount with respect
to a particular offer will be set forth in a Prospectus Supplement and/or
post-effective amendment to the registration statement of which this Prospectus
forms a part. See "Plan Of Distribution."

The Thrift Plans and any such agents, brokers, dealers or underwriters may
be deemed to be "underwriters" within the meaning of the Securities Act of 1933,
as amended (the "Securities Act"), and any commissions received by them and any
profit on the resale of the Class A Common Stock purchased by them may be deemed
to be underwriting commissions or discounts under the Securities Act.

The Company has agreed to bear all expenses of registration of the Class A
Common Stock under federal and state securities laws and to indemnify the Thrift
Plans and such agents, brokers, dealers, and underwriters against certain civil
liabilities, including certain liabilities under the Securities Act.

The Class A Common Stock is listed on the New York Stock Exchange under the
symbol "IM." On June 25, 1997, the last reported sale price of the Class A
Common Stock on the New York Stock Exchange Composite Tape was $24.13 per share.

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

SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR A DISCUSSION OF CERTAIN RISKS
ASSOCIATED WITH THIS OFFERING (THE OFFERING BY THE COMPANY
AND THE OFFERINGS BY THE THRIFT PLANS
ARE COLLECTIVELY REFERRED TO
HEREIN AS "THE 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.

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

June 27, 1997

<PAGE> 3
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. 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.

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

TABLE OF CONTENTS

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

<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary.................................................... 5
Risk Factors.......................................................... 8
The Company........................................................... 17
Restrictions on Resale................................................ 18
The Plan.............................................................. 19
Federal Income Tax Considerations Relating to the Plan................ 22
ERISA................................................................. 22
Use of Proceeds....................................................... 23
Dividend Policy ...................................................... 23
Price Range of Common Stock and Related Stockholder Matters .......... 23
Capitalization........................................................ 24
Selected Consolidated Financial Data.................................. 25
Management's Discussion and Analysis
of Financial Condition and Results of Operations.................... 26
Business.............................................................. 36
Management............................................................ 48
Certain Transactions.................................................. 59
The Split-Off and the Reorganization.................................. 60
Selling Stockholders.................................................. 65
Principal Stockholders................................................ 66
Description of Capital Stock.......................................... 68
Shares Eligible for Future Sale....................................... 72
Certain U.S. Federal Income Tax Considerations........................ 73
Plan of Distribution.................................................. 75
Legal Matters......................................................... 76
Experts............................................................... 76
Additional Information................................................ 77
Index to Consolidated Financial Statements............................ F-1
Ingram Micro Inc. Rollover Stock Option Plan.......................... A-1
</TABLE>

<PAGE> 4
This Prospectus forms a part of a registration statement on Form S-1 filed
with the Securities and Exchange Commission (the "Commission"). The Company has
registered on such registration statement a number of shares equal to the number
of shares issuable upon exercise of Options ("Options") to purchase shares of
Class A Common Stock, par value $0.01 per share ("Class A Common Stock"), under
the Ingram Micro Inc. Rollover Stock Option Plan during the period in which it
expects this Prospectus to be available. This document contains additional
information about the Plan for use by holders of Options in determining whether
to purchase shares of Class A Common Stock pursuant to the Plan. The discussion
of the Plan beginning on page 19 is a general summary only. Please refer to the
complete text of the Plan beginning on page A-1, and, if applicable, the Option
Agreement. Capitalized terms not separately defined in this Prospectus have the
meanings set forth in the Plan. Additional information regarding the Plan and
its administrators may be obtained from Matthew Sauer, Ingram Micro Inc., 1600
East St. Andrew Place, Santa Ana, California 92705 (telephone number: (714)
566-1000).

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

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. 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 "1992," "1993," "1994," "1995," and "1996"
represent the fiscal years ended January 2, 1993 (53 weeks), January 1, 1994 (52
weeks), December 31, 1994 (52 weeks), December 30, 1995 (52 weeks), and December
28, 1996 (52 weeks), respectively. The Company's next 53-week fiscal year will
be fiscal year 1997.

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

SAFE HARBOR FOR FORWARD-LOOKING INFORMATION

In connection with the "safe-harbor" provisions of the Private Securities
Litigation Reform Act of 1995, the Company, in its Annual Report on Form 10-K
for the year ended December 28, 1996 (the "Company's 1996 Form 10-K"), outlined
cautionary statements identifying important factors that could cause the
Company's actual results to differ materially from those projected in
forward-looking statements made by, or on behalf of, the Company. The factors
identified in the Company's 1996 Form 10-K include, but are not limited to, the
following: intense competition, narrow margins, fluctuations in quarterly
results, the capital intensive nature of the Company's business, management of
growth, the Company's dependence on information systems, exposure to foreign
markets, dependence on key suppliers, acquisitions, risk of declines in
inventory value, dependence on independent shipping companies and rapid
technological change. Any forward-looking statements made within this
Prospectus and Registration Statement should be considered in conjunction with
the information included in the Company's 1996 Form 10-K (including
Exhibit 99.01 thereto, which is also incorporated by reference as
Exhibit 99.01 to this Registration Statement). In addition, certain related
information is contained herein under "Risk Factors."

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

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE CLASS A COMMON STOCK
OR OTHER SECURITIES OF THE COMPANY. SPECIFICALLY, UNDERWRITERS, IF ANY, ENGAGED
BY THE THRIFT PLANS, MAY OVERALLOT IN CONNECTION WITH THE OFFERING AND MAY BID
FOR, AND PURCHASE, CLASS A COMMON STOCK IN THE OPEN MARKET. FOR A DESCRIPTION OF
THESE ACTIVITIES, SEE "PLAN OF DISTRIBUTION."

4
<PAGE> 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
and services 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 22 international distribution centers 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 third largest full-line distributor in Europe. In
1996, 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 100,000 distinct
items 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, Seagate, 3Com, Sun Microsystems, 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, CDW
Computer Centers, CompuCom, CompUSA, Computer City, Electronic Data Systems, En
Pointe Technologies, Entex Information Services, GE Capital Information
Technologies Solutions, Micro Warehouse, Sam's Club, Staples, and Vanstar. The
Company's reseller customers outside the United States 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 four years, with net sales and
net income increasing to $12.0 billion and $110.7 million, respectively, in 1996
from $2.7 billion and $31.0 million, respectively, in 1992, representing
compound annual growth rates of 44.8% and 37.5%, 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, 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 has relied heavily on debt
financing for its increasing working capital needs in connection with the
expansion of its business.

Prior to the Split-Off (as defined herein), the Company was a subsidiary of
Ingram Industries Inc. ("Ingram Industries"). Immediately prior to the closing
of the IPO, Ingram Industries consummated the Split-Off. See "The Company" and
"The Split-Off and the Reorganization."

5
<PAGE> 6
THE OFFERING

<TABLE>
<S> <C>
Class A Common Stock offered:

Class A Common Stock offered by the Company................... 1,378,369 Shares

Class A Common Stock offered by Thrift Plans (1):

Class A Common Stock offered by the II Thrift Plan....... 1,900,000 Shares

Class A Common Stock offered by the IM Thrift Plan....... 65,000 Shares

Class A Common Stock offered by the IE Thrift Plan....... 40,000 Shares

Total offered by the Company and the Thrift Plans... 3,383,369 Shares

Common Stock to be outstanding after this offering (2):

Class A Common Stock........................................... 29,170,148 Shares

Class B Common Stock(3)........................................ 107,038,762 Shares

Total.................................................. 136,208,910 Shares

Voting rights:

Class A Common Stock........................................... One vote per share

Class B Common Stock........................................... Ten votes per share

NYSE Symbol......................................................... IM
</TABLE>

SUMMARY CONSOLIDATED FINANCIAL DATA
(in millions, except earnings per share)

<TABLE>
<CAPTION>
FISCAL YEAR THIRTEEN WEEKS ENDED
---------------------------------------------------------- ---------------------------
MARCH 30, MARCH 29,
1992 1993 1994 1995 1996 1996 1997
---------- ---------- --------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales.................. $2,731.3 $4,044.2 $5,830.2 $8,616.9 $12,023.5 $2,752.7 $3,650.0
Gross profit............... 227.6 329.6 439.0 605.7 812.4 186.6 234.7
Income from operations... 68.9 103.0 140.3 186.9 247.5 (4) 54.9 (4) 78.8 (4)
Net income(5).............. 31.0 50.4 63.3 84.3 110.7 (4) 23.8 (4) 40.4 (4)
Earnings per share......... 0.26 0.41 0.52 0.69 0.88 (4) 0.20 (4) 0.28 (4)
Weighted average common
shares outstanding(6)... 121.4 121.4 121.4 121.4 125.4 121.4 145.4
</TABLE>

<TABLE>
<CAPTION>
MARCH 29, 1997(7)
------------------
<S> <C>
BALANCE SHEET DATA:
Working capital...................................................... $1,176.6
Total assets......................................................... 3,744.0
Total debt(8)........................................................ 508.5
Stockholders' equity................................................. 865.1
</TABLE>

- -------------------------
(footnotes on following page)

6
<PAGE> 7
- -------------------------
(1) The II Thrift Plan, the IM Thrift Plan and the IE Thrift Plan hold
6,688,708 shares, 1,691,509 shares, and 856,783 shares, respectively, of
Class B Common Stock prior to this offering and will hold 4,788,708 shares,
1,626,509 shares and 816,783 shares, respectively, of Class B Common Stock
assuming all shares offered hereby are purchased. The Company has certain
obligations with respect to the registration of the remaining shares of
Class B Common Stock held by the Thrift Plans. See "The Split-Off and the
Reorganization--The Split-Off."

(2) Assumes all shares offered in this offering are actually sold, based on
shares outstanding at March 29, 1997. The 2,005,000 shares offered in this
offering by the Thrift Plans are currently outstanding shares of Class B
Common Stock, which will convert to Class A Common Stock automatically upon
purchase in this offering. See "Selling Stockholders" and "Principal
Stockholders." Excludes approximately 19,000,000 shares of Common Stock
issuable in connection with outstanding stock options. See
"Management--1996 Plan" and "--Rollover Plan; Incentive Stock Units."
See "Shares Eligible for Future Sale."

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

(4) Income Statement Data reflects a noncash compensation charge in connection
with the granting of the Options of $23.4 million ($19.5 million, or $0.16
per share, net of tax) for fiscal year 1996, of $6.7 million ($4.1 million,
or $0.03 per share, net of tax) for the thirteen weeks ended March 30,
1996, and of $1.8 million ($1.4 million, or $0.01 per share, net of tax)
for the thirteen weeks ended March 29, 1997. See "The Split-Off and the
Reorganization--The Split-Off".

(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) Does not reflect the issuance of any Class A Common Stock upon exercise of
the Options. If all 1,378,369 shares being offered by the Company hereby
were purchased, the Company would receive net proceeds of approximately
$2.0 million and estimated realizable tax benefits not quantifiable at this
time. See "Capitalization," "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Overview," "--Liquidity and
Capital Resources," and "Certain Transactions."

(8) Includes long-term debt and current maturities of long-term debt.

<PAGE> 8
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. Some manufacturers have been successful
in selling directly to the retail market, without the use of resellers or
distributors such as the Company. Many computer manufacturers which distribute
products through traditional two-tier distribution are attempting to counter
the success of the direct selling model through the use of channel assembly, in
which distributors or resellers assemble computers on behalf of manufacturers.
The Company intends to significantly increase its capacity and ability to
assemble computer systems. However, the Company's business, financial condition,
and results of operations could be adversely affected if manufacturers choose
to pursue the direct selling model, or if the Company is unable to successfully
compete in channel assembly. 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 versatile 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 8.3% for 1992 to 6.4% for the thirteen weeks ended March 29,
1997. 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. 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

<PAGE> 9
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. 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."

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 Class A Common Stock would be materially
adversely affected.

Capital Intensive Nature of Business. 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 has relied
heavily on debt financing for its increasing working capital needs in connection
with the expansion of its business. At December 30, 1996 and March 29, 1997, the
Company's total debt was $304.0 million and $508.5 million, respectively, and
represented 26.9% and 37.0%, respectively, of the Company's total
capitalization. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations." In November 1996, the Company sold 23,200,000 shares
of Class A Common Stock in the IPO at $18.00 per share. The Company received net
proceeds of $393.8 million, of which approximately $366.3 million was used to
repay certain existing indebtedness to Ingram Industries. Primarily as a result
of the IPO, stockholders' equity increased to $825.2 million at December 28,
1996, up 165.5%, from $310.8 million at December 30, 1995. 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. The Company expects that the ratio of total debt to total
capitalization will likely increase over time. While a portion of the Company's
historical financing needs has been satisfied through

<PAGE> 10
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 $1 billion credit facility (the "Credit Facility") with
NationsBank of Texas N.A. and The Bank of Nova Scotia, acting as Agents for a
syndicate of lenders. The Credit Facility became effective immediately prior to
the closing of the IPO. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources."
Concurrently with the Split-Off, the Company used borrowings under the Credit
Facility to repay (i) intercompany indebtedness in partial satisfaction of
amounts due to Ingram Industries (the Company assumed Ingram Industries'
accounts receivable securitization program in satisfaction of the remaining
amounts due to Ingram Industries) and (ii) outstanding revolving indebtedness
related to amounts drawn by certain of the Company's subsidiaries, as
participants in Ingram Industries' then existing unsecured credit facility,
which terminated concurrently with the closing of the IPO. The net proceeds from
the IPO were used 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 and the Reorganization--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. On April 29, 1997, the Company
signed a definitive agreement to acquire the Reseller Network Division (the
"RND") of Intelligent Electronics, Inc. ("IE"). There can be no assurance that
management will adequately anticipate all of the changing demands that growth,
including the acquisition of the RND, could impose on the Company's
business 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

10
<PAGE> 11
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 diversion
of resources from other operations. The inability of the Company to convert the
information systems of any acquired businesses, such as that of the RND,
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."

Management believes that customer information systems are becoming
increasingly important in the wholesale distribution of technology products. As
a result, the Company has recently enriched its customer information systems by
adding features, including on-line ordering through the Internet. However, there
can be no assurance that competitors will not develop customer information
systems that are superior to those offered by the Company. The inability of the
Company to develop competitive customer information systems could adversely
affect the Company's business, financial condition, and income from operations.

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 1995, 1996, and the first quarter of 1997, 30.7%,
31.0%, and 30.6%, 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. 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

<PAGE> 12
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 (Worldwide President and Chief Operating Officer), and David R.
Dukes (Vice Chairman of Ingram Micro, Chief Executive Officer of Ingram
Alliance, and Acting President, Ingram Micro Asia-Pacific). 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." 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."

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 41.4%, 53.2%, 55.5% and 57.7% of the
Company's net sales in 1994, 1995, 1996, and the first quarter of 1997,
respectively, were derived from products provided by its ten largest suppliers.
In the first quarter of 1997, 37.4% of the Company's net sales were derived from
sales of products provided by its three largest suppliers. 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.

<PAGE> 13
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 product returns percentage, and supplier-paid
financing. The Company signed a definitive agreement on April 29, 1997 to
acquire IE's indirect business, its RND, which will greatly increase the size of
Ingram Alliance's business. 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 92.8%
during 1996 and 93.4% during the thirteen weeks ended March 29, 1997) is derived
from the sale of products supplied by Compaq Computer, IBM, Hewlett-Packard
(since January 1997), 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.

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 announced on April 30, 1997 that it has signed a definitive
agreement to acquire the IE indirect business, its RND. Under the terms of the
agreement, Ingram Micro will pay a total of $78 million, subject to adjustment,
in a combination of cash and assumption of liabilities in excess of current
assets. Pending IE stockholder approval, the transaction is expected to close in
the latter half of July 1997. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital Resources."

The Company does not currently have any commitments or agreements with
respect to any other 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

<PAGE> 14
the future. The Company may issue equity securities to consummate acquisitions,
which may cause dilution to investors purchasing Class A 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 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

<PAGE> 15
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.

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 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,
entered 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 and tax services
agreement. See "The Split-Off and the Reorganization--The Reorganization." The
Company believes that the terms of the Transitional Service Agreements are on a
basis as favorable to the Company as those that would have been obtained from
third parties on an arm's length basis and that they are 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 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. In addition, the Transitional Service
Agreements generally terminated 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. Each of the Company and Ingram Industries
continues to be controlled by the Ingram Family Stockholders (as defined
herein). See "--Control by Ingram Family Stockholders; Certain Anti-takeover
Provisions." After the Split-Off, Ingram Entertainment continues to be a
wholly-owned subsidiary of Ingram Industries. Although there can be no
assurance, it is contemplated that, on or after June 20, 1997, certain remaining
stockholders of Ingram Industries will exchange their remaining shares of Ingram
Industries common stock for shares of Ingram Entertainment common stock. See
"The Split-Off and the Reorganization--The Reorganization."

<PAGE> 16
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,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources," "Certain Transactions," and "The
Split-Off and the Reorganization--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. The Company may
be obligated to Ingram Industries for certain liabilities, fees or costs
incurred in connection with the Split-Off. However, the Company believes such
obligations will be largely offset by amounts due from Ingram Industries. See
"The Split-Off and the Reorganization."

Control by Ingram Family Stockholders; Certain Anti-takeover Provisions. As
of March 29, 1997, 66.4% of the outstanding Common Stock (and 80.1% of the
outstanding voting power) was held by the Ingram Family Stockholders. Martha R.
Ingram, her children, certain trusts created for their benefit, and two
charitable trusts and a foundation created by the Ingram family (collectively,
the "Ingram Family Stockholders") have entered 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 and the Reorganization--The
Split-Off," "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 Class A Common
Stock might receive a premium for their shares over the prevailing market price
of the Class A 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 Stock
with respect to the payment of dividends and upon liquidation, dissolution or
winding-up or which could otherwise adversely affect holders of the Common Stock
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. At March 29, 1997, the Company had
outstanding 25,786,779 shares of Class A Common Stock and 109,043,762 shares of
Class B Common Stock, and an additional approximately 19,000,000 shares of Class
A Common Stock, which includes approximately 4,600,000 shares of Class B Common
Stock convertible into Class A Common Stock, have been reserved for issuance
upon exercise of outstanding stock options (including the Options) held by
employees and directors of the Company, Ingram Industries, and Ingram
Entertainment. See "Management." Any shares of Class A Common Stock sold by the
Company or the Thrift Plans in this offering will be freely tradable without
restriction. The Company and its directors and executive officers, and certain
shareowners of the Company (including the Thrift Plans), had agreed, subject to
certain exceptions, not to offer, sell, contract to sell or otherwise dispose of
any Common Stock until May 1, 1997 without the prior written consent of Morgan
Stanley & Co. Incorporated. Sale of a significant number of these shares (which
are no longer subject to such contractual restrictions) could have an adverse
impact on the price of the Class A Common Stock. See "Shares Eligible for Future
Sale."

Possible Volatility of Stock Price. The market price of the Class A Common
Stock could be subject to wide

16
<PAGE> 17
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 Class A Common Stock.

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 100,000 distinct items 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, Seagate, Sun Microsystems, 3Com, Toshiba, and
U.S. Robotics.

Ingram Micro distributes microcomputer products worldwide through
warehouses in eight strategic locations in the continental United States and 22
international distribution centers 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
third largest full-line distributor in Europe. In 1996, 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 and services
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,

<PAGE> 18
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.

The Company has grown rapidly over the past four years, with net sales and
net income increasing to $12.0 billion and $110.7 million, respectively, in 1996
from $2.7 billion and $31.0 million, respectively, in 1992, representing
compound annual growth rates of 44.8% and 37.5%, 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, 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 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."

Prior to the Split-Off, the Company was a subsidiary of Ingram Industries,
a company controlled by the Ingram Family Stockholders. The Company, Ingram
Industries, and Ingram Entertainment have entered into certain agreements,
pursuant to which the operations of the three companies were reorganized (the
"Reorganization"). In the Reorganization, the Company, Ingram Industries, and
Ingram Entertainment allocated certain liabilities and obligations among
themselves. Immediately prior to the closing of the IPO, Ingram Industries
consummated an exchange, pursuant to which certain existing stockholders of
Ingram Industries exchanged all or a portion of their shares of Ingram
Industries common stock for shares of Class B Common Stock of the Company in
specified ratios. Immediately after the Split-Off and the closing of the IPO,
none of the Common Stock was held by Ingram Industries, other than 246,000
shares of Class A Common Stock purchased by Ingram Industries in the IPO. At
such time, 67.9% of the outstanding Common Stock (and 80.5% of the outstanding
voting power) was held by the Ingram Family Stockholders. See "Risk
Factors--Control by Ingram Family Stockholders; Certain Anti-takeover
Provisions." Such exchange of shares of Ingram Industries common stock for
shares of Class B Common Stock of the Company, together with those elements of
the Reorganization that occurred prior to the closing of the IPO, are referred
to herein as the "Split-Off." See "Principal Stockholders" and "The Split-Off
and the Reorganization." After the Split-Off, Ingram Entertainment continues to
be a wholly-owned subsidiary of Ingram Industries. Although there can be no
assurance, it is contemplated that, on or after June 20, 1997, certain remaining
stockholders of Ingram Industries will exchange their remaining shares of Ingram
Industries common stock for shares of Ingram Entertainment common stock. See
"The Split-Off and the Reorganization."

The Company's earliest predecessor began business in 1979 as a California
corporation named Micro D, Inc. This company and its parent, Ingram Micro
Holdings Inc. ("Holdings"), grew through a series of acquisitions, mergers, and
internal growth to encompass the Company's current operations. Ingram Micro Inc.
was incorporated in Delaware on April 29, 1996, in order to effect the
reincorporation of the Company in Delaware. The successor to Micro D, Inc. and
Holdings were merged into Ingram Micro Inc. in October 1996. 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.

RESTRICTIONS ON RESALE

Any person who is an "affiliate" of the Company (as the term "affiliate" is
used in Rule 144 promulgated by the Commission under the Securities Act), and
who acquires shares of Class A Common Stock pursuant to this offering may resell
such shares only (i) pursuant to a registration statement filed under the
Securities Act or (ii) within the restrictions, including the sales volume
limitations, imposed by Rule 144 other than the one-year holding period
requirement in Rule 144. In addition, certain participants in the Plan may be
subject to the "short-swing profits" sanction of Section 16(b) of the Exchange
Act.

<PAGE> 19
THE PLAN

THIS SECTION IS NOT APPLICABLE TO SALES MADE BY THE THRIFT PLANS. THIS
SECTION ONLY APPLIES TO SALES MADE BY THE COMPANY PURSUANT TO EXERCISES OF
OPTIONS UNDER THE PLAN.

PURPOSE

The purposes of the Plan are to promote the interests of the Company and
its stockholders by providing for the granting of options to purchase shares of
the Company's Class A Common Stock. These options are being granted upon the
conversion and cancellation of certain options to purchase shares of, and
Incentive Stock Units ("ISUs") and Stock Appreciation Rights ("SARs") relating
to, common stock of Ingram Industries as provided in the Conversion Agreement in
connection with the Split-Off pursuant to the Exchange Agreement.

The following summary of the Plan does not purport to be complete, and
reference is made to the Ingram Micro Inc. Rollover Stock Option Plan which is
reproduced beginning at page A-1.

ADMINISTRATION

The Plan is administered by a Committee (the "Committee") of the Board of
Directors of the Company (the "Board"). Under the Plan, the Committee may grant
Incentive Stock Options and Non-Qualified Stock Options.

Subject to the terms of the Plan and applicable law, the Committee has full
power to construe and interpret the Plan and to establish and amend such rules
and regulations as it deems necessary or advisable for the proper administration
of the Plan. Decisions of the Committee are conclusive and binding upon all
Persons, including Optionees and any persons claiming under or through an
Optionee.

The Committee, to the extent necessary to comply with Section 16 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), shall consist
of at least two directors of the Company chosen by the Board, each of whom is a
"non-employee director" within the meaning of Rule 16b-3 under the Exchange Act.
Additional information regarding the Plan and the Committee may be obtained by
contacting the Committee: Attention: Matthew Sauer, Ingram Micro Inc., 1600 East
St. Andrew Place, Santa Ana, California 92705 (telephone number: (714)
566-1000).

ELIGIBILITY

Any employee or director of the Company, Ingram Industries, Ingram
Entertainment, or any of their respective subsidiaries who qualified as a
Participant as of the Closing is eligible to participate in the Plan.

This Prospectus applies only to the exercise of Options by Participants who
are current or former employees or directors of Ingram Industries, Ingram
Entertainment, or any of their respective subsidiaries, and are not currently
employees of the Company or any of its subsidiaries ("Optionees").

SHARES SUBJECT TO THE PLAN

The maximum number of shares of Class A Common Stock in respect of which
Options may be granted under the Plan is 12,000,000 shares.

OPTIONS

Type of Options. Subject to the provisions of the Plan, the Committee shall
have the authority to grant Incentive Stock Options (within the meaning of
Section 422 of the U.S. Internal Revenue Code of 1986, as amended

<PAGE> 20
(the "Code")) and Non-Qualified Stock Options, not intended to qualify under
such Section 422.

Term of Options. The term of an Option was determined by the Committee
pursuant to the Conversion Agreement. In granting an Option, the Committee may
impose such conditions and limitations as it deems advisable.

Exercise Price. The per share exercise price of each Option granted by the
Committee was determined by the Committee pursuant to the Conversion Agreement.

Option Agreement. The Option Agreement, if applicable, may impose
restrictions or limitations on the exercise of an Option in addition to those
set forth in this Prospectus. Each Optionee should read his or her Option
Agreement with special care.

EFFECT ON OPTIONS OF TERMINATION OF EMPLOYMENT

Termination of Employment. Except as the Committee may otherwise provide,
if an Optionee's employment with his or her Employer is terminated for any
reason other than death, permanent and total disability, retirement or Cause,
the Optionee's Options shall expire 60 days following such
termination of employment or, if earlier, the date such Option would otherwise
expire by its terms. Such Option will be exercisable prior to such expiration
only to the extent exercisable at the date of such termination of employment.

Death, Disability or Retirement. Except as the Committee may otherwise
provide, if an Optionee's employment with his or her Employer is terminated by
reason of death or by permanent and total disability or retirement (as
determined by the Committee), the Optionee or his successor (if employment is
terminated by death) shall have the right to exercise any Option during the
one-year period following such termination of employment, to the extent
exercisable at the date of such termination of employment, but in no event later
than the date the Option would otherwise expire by its terms.

Cause. An Optionee's right to exercise any Option shall terminate and such
Option shall expire upon termination of employment for Cause.

EXERCISE OF OPTIONS

EXERCISE OF OPTIONS. Each Option is exercisable only during its term.

Options under the Plan shall be exercised by delivering or mailing to the
stock plan administrator, Smith Barney, Inc. (the "Stock Plan Administrator"),
Attention: Stewart Smith, 3100 West End Avenue, Suite 150, Nashville, Tennessee
37203-1323,

(1) a notice, in the form prescribed by the Committee, specifying the
number of shares to be purchased, and either

(2) a check or money order payable to the Stock Plan Administrator for
the exercise price multiplied by the number of shares to be
purchased, or

(3) shares of Class A Common Stock owned for at least six months
valued at Fair Market Value on the date the Option is exercised
equal to the per share exercise price multiplied by the number of
shares to be purchased, or

(4) a combination of the consideration set forth in (2) and (3) above.

<PAGE> 21
Upon receipt of such notice and payment, subject to compliance with
applicable withholding obligations, the Company shall cause prompt delivery to
the Optionee of a certificate or certificates for the shares purchased, if stock
certificates have been requested by the Optionee. Otherwise, the Stock Plan
Administrator will send to the Optionee a statement reflecting ownership in an
account with the Stock Plan Administrator by the Optionee of the total number of
shares of Class A Common Stock purchased and held by electronic notation.

RESTRICTIONS ON EXERCISE

In order to avoid violation of any applicable law or regulation, the
Committee may at any time refuse to issue or transfer shares of Common Stock
under the Plan. It is expected that the Committee will refuse to issue shares
upon exercise of Options unless there is at such time an effective registration
statement (including a current prospectus) with respect to such shares. The
Company has agreed, as part of the Split-Off, to keep this Prospectus available
for a period of 30 days from the date of this Prospectus (or until July 30,
1997).

Additional Registration Statement Relating to Options Held by Employees of
the Company. The Company has filed with the Commission a registration statement
on Form S-8 effective March 24, 1997, relating to shares issuable upon exercise
of Options which are held by employees of the Company. Although such
registration statement is effective, the Committee still retains discretion to
refuse to issue shares upon exercise of Options.

Additional Registration Statement Relating to Options Held by Non-Employees
of the Company. The Company has agreed that, as soon as practicable after it
becomes eligible to use Form S-3 (generally one year after the effectiveness of
the registration statement relating to the IPO), it will file with the
Commission and keep effective until no Options remain outstanding, a
registration statement on Form S-3 relating to all shares issuable upon exercise
of Options, other than those covered by the registration statement on Form S-8
referred to above.

AMENDMENT AND TERMINATION

The Board may amend, suspend, or terminate the Plan at any time. However,
with the exception of adjustment for changes in capitalization, the
authorization of the Company's stockholders is required if the Committee
determines that such authorization is necessary to comply with any tax or
regulatory requirement, including any approval requirement which is a
prerequisite for exemptive relief from Section 16 of the Exchange Act, for which
or with which the Committee determines that it is desirable to qualify or
comply. The Committee may amend the term

of any Option but no amendment may
adversely affect any Option without the Optionee's consent.

The Plan expired 90 days after the closing of the Split-Off (i.e., February
4, 1997). Unless otherwise provided in the Plan or Option Agreement, the
authority of the Board and Committee with respect to outstanding Options shall
continue after the authority to grant new Options under the Plan has expired.

ADJUSTMENTS

In the event that the Committee shall determine that any corporate event
affects the Class A Common Stock such that an adjustment is required to preserve
the benefits or potential benefits made available under the Plan, then the
Committee may, in such manner as the Committee may deem equitable, adjust any or
all of (i) the number and kind of shares which thereafter may be optioned and
sold, (ii) the number and kinds of shares subject to outstanding Options, and
(iii) the exercise price with respect to any Option.

TRANSFERABILITY

All Options granted under the Plan are nontransferable other than by will
or by the laws of descent and distribution.

<PAGE> 22
FEDERAL INCOME TAX CONSIDERATIONS RELATING TO THE PLAN

The following summary contains general information on the United States
federal income tax consequences to Optionees and the Company with respect to
Options. All Options covered by this Prospectus are Non-Qualified Stock
Options. For additional tax information, including information regarding state
taxes, Optionees should consult their own tax advisors.

GRANT OF OPTION

There is no tax consequence to the Optionee or to the Company upon the
grant of a Non-Qualified Stock Option or an Incentive Stock Option.

EXERCISE OF OPTION

An Optionee realizes ordinary taxable income upon the exercise of a
Non-Qualified Stock Option to the extent of the difference between the fair
market value on the exercise date of the shares of Class A Common Stock acquired
on exercise of the Option, and the Option price. The Company has a corporate
income tax deduction in an amount equal to the ordinary taxable income of an
Optionee who is an employee or former employee of the Company. Ingram
Industries, Ingram Micro, and Ingram Entertainment have agreed that Ingram Micro
will be paid an amount equal to the tax benefit to Ingram Industries or Ingram
Entertainment, as the case may be, in respect of Options exercised by their
current or former employees.

The exercise price of the shares plus the amount of the Optionee's ordinary
taxable income is the Optionee's cost basis for shares of Class A Common Stock
acquired pursuant to the exercise of a Non-Qualified Stock Option. An Optionee
who sells shares of Class A Common Stock acquired upon exercise of a
Non-Qualified Stock Option will have gain or loss equal to the difference
between the amount realized on sale and the Optionee's cost basis for the
shares. If an Optionee sells shares at a gain and such shares were held for more
than one year, the gain realized on sale will be treated as a long-term capital
gain.

If the Optionee uses previously acquired shares of Class A Common Stock to
exercise a Non-Qualified Stock Option, the Optionee will not recognize gain or
loss on the exchange of the previously acquired shares for the Option shares.
Those shares received upon exercise that are equal in number to the previously
acquired shares exchanged therefor will have the same tax basis and holding
period as the previously acquired shares. The additional shares received upon
exercise will have a tax basis equal to the amount of ordinary income realized
on the Option exercise and a holding period beginning on the date of exercise.

TAX WITHHOLDING

Upon the exercise of a Non-Qualified Stock Option, the Optionee's Employer
is required to withhold federal and state (if applicable) income taxes, social
security tax (if the Optionee's wages have not exceeded the social security wage
base) and Medicare tax.

ERISA

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

<PAGE> 23

USE OF PROCEEDS

If all 1,378,369 shares of Class A Common Stock being offered hereby by the
Company pursuant to the Plan were sold, the net proceeds to the Company from
this offering would be approximately $2.0 million. The Company intends to use
the proceeds from this offering for general corporate purposes.

The Company will not receive any proceeds from the sale of the 2,005,000
shares of Class A Common Stock being offered hereby for the account of the
Thrift Plans.

DIVIDEND POLICY

The Company has never declared or paid any dividends on the Common Stock
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 Stock for the foreseeable future. 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 contain restrictions on the declaration and payment of
dividends.

PRICE RANGE OF COMMON STOCK
AND RELATED STOCKHOLDER MATTERS

The Company's Class A Common Stock is listed and traded on the New York
Stock Exchange under the symbol "IM." The Company made its initial public
offering on November 1, 1996, at a price of $18 per share. From November 1, 1996
through December 28, 1996, the trading price of the Class A Common Stock ranged
from a high of $28.125 per share to a low of $20 per share. From January 1, 1997
through March 29, 1997, the trading price of the Class A Common Stock ranged
from a high of $25.875 per share to a low of $19 per share. From March 30, 1997
through June 25, 1997, the trading price of the Class A Common Stock ranged from
a high of $25.25 per share to a low of $20.75 per share.

As of March 5, 1997, there were 498 holders of record of the Class A Common
Stock and 150 holders of record of the Class B Common Stock.

23
<PAGE> 24
CAPITALIZATION

The following table sets forth, as of March 29, 1997, the short-term debt,
long-term debt, and capitalization of the Company.

<TABLE>
<CAPTION>
MARCH 29, 1997 (1)
------------------
(IN THOUSANDS
EXCEPT PER SHARE
DATA)
<S> <C>
Short-term debt:
Current maturities of long-term debt .................. $ 13,170
===========
Long-term debt:
Total long-term debt ................................... $ 495,361
Redeemable Class B Common Stock ........................... 17,223
-----------
Stockholders' equity(2)(3):
Preferred Stock, $0.01 par value; 1,000,000
shares authorized; 0, 0, and 0 shares issued
and outstanding, respectively........................ 0
Class A Common Stock, $0.01 par value; 265,000,000
shares authorized; and 25,786,779 shares issued
and outstanding...................................... 258
Class B Common Stock, $0.01 par value; 135,000,000
shares authorized; 109,043,762 shares issued
and outstanding (including 2,460,400
redeemable shares) .................................. 1,066
Additional paid in capital ............................. 457,679
Retained earnings ...................................... 413,178
Cumulative translation adjustment ...................... (6,571)
Unearned compensation .................................. (474)
-----------
Total stockholders' equity .......................... 865,136
-----------
Total capitalization ................................ $ 1,390,890
===========
</TABLE>

- -------------------
(1) Does not reflect the issuance of any shares of Class A Common
Stock pursuant to the exercise of Options, as offered by the
Company hereby. If all 1,378,369 shares of Class A Common Stock
being offered hereby were purchased, the Company would receive net
proceeds of approximately $2.0 million. See "Use of Proceeds" and
"Management's Discussion and Analysis of Financial Condition and
Results of Operations--Overview." In addition, does not reflect
the conversion into Class A Common Stock (from Class B Common
Stock) of any shares sold by the Thrift Plans hereby.

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

(3) Excludes approximately 19,000,000 shares of Common Stock issuable
in connection with outstanding stock options (including the
Options). See "Management--1996 Plan" and "--Rollover
Plan; Incentive Stock Units."

24
<PAGE> 25
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 28, 1996 and the consolidated balance sheet data at December 30, 1995
and December 28, 1996 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 statement of income data for the period ended January
1, 1994 and the consolidated balance sheet data as of January 1, 1994 and
December 31, 1994 are derived from the audited consolidated financial statements
of the Company as of January 1, 1994 and December 31, 1994, which are not
included in this Prospectus. The consolidated statement of income data for the
fiscal year ended January 2, 1993 and the consolidated balance sheet data as of
January 2, 1993 are derived from unaudited consolidated financial statements not
included in this Prospectus. The consolidated financial data as of and for the
thirteen weeks ended March 30, 1996, and as of and for the thirteen weeks ended
March 29, 1997, 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 thirteen weeks ended March 29, 1997 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."

<TABLE>
<CAPTION>
THIRTEEN WEEKS
ENDED
FISCAL YEAR -----------------------
--------------------------------------------------------------- MARCH 30, MARCH 29,
1992(1) 1993 1994 1995 1996 1996 1997
---------- ---------- ---------- ---------- ----------- ---------- ----------
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales........................... $2,731,272 $4,044,169 $5,830,199 $8,616,867 $12,023,451 $2,752,735 $3,649,978
Cost of sales....................... 2,503,702 3,714,527 5,391,224 8,011,181 11,211,067 2,566,170 3,415,270
---------- ---------- ---------- ----------- ----------- ---------- ----------
Gross profit........................ 227,570 329,642 438,975 605,686 812,384 186,565 234,708
Expenses:
Selling, general and
administrative.................. 157,306 225,047 296,330 415,344 537,893 123,304 154,145
Charges allocated from Ingram
Industries...................... 1,330 1,567 2,355 3,461 3,633 1,583 0
Noncash compensation charge....... 0 0 0 0 23,350(3) 6,745(4) 1,813(5)
---------- ---------- ---------- ----------- ---------- ---------- ----------
158,636 226,614 298,685 418,805 564,876(3) 131,632(4) 155,958(5)
---------- ---------- ---------- ----------- ---------- ---------- ----------
Income from operations.............. 68,934 103,028 140,290 186,881 247,508(3) 54,933(4) 78,750(5)
Other (income) expense:
Interest income................... (103) (407) (937) (3,479) (2,060) (340) (814)
Interest expense.................. 5,556 5,003 8,744 13,451 14,812 3,926 7,308
Interest expense charged by Ingram
Industries...................... 12,405 16,089 24,189 32,606 35,123 10,635 0
Net foreign currency exchange
loss............................ 0 111 6,873 7,751 701 226 63
Other............................. 2,574 (623) 716 1,936 2,175 876 3,148
---------- ---------- ---------- ----------- ---------- ---------- ----------
20,432 20,173 39,585 52,265 50,751 15,323 9,705
---------- ---------- ---------- ----------- ---------- ---------- ----------
Income before income taxes and
minority interest................. 48,502 82,855 100,705 134,616 196,757(3) 39,610(4) 69,045(5)
Provision for income taxes.......... 17,529 31,660 39,604 53,143 84,889 15,854 28,453
---------- ---------- ---------- ----------- ---------- ---------- ----------
Income before minority interest..... 30,973 51,195 61,101 81,473 111,868(3) 23,756(4) 40,592(5)
Minority interest................... 0 840 (2,243) (2,834) 1,189 (72) 215
---------- ---------- ---------- ----------- ---------- ---------- ----------
Net income.......................... $ 30,973 $ 50,355 $ 63,344 $ 84,307 $ 110,679(3) $ 23,828(4)$ 40,377(5)
========== ========== ========== =========== ========== ========== ==========
Earnings per share(2)............... $ 0.26 $ 0.41 $ 0.52 $ 0.69 $ 0.88(3) $ 0.20(4)$ 0.28(5)
========== ========== ========== =========== ========== ========== ==========
Weighted average common shares
outstanding....................... 121,407 121,407 121,407 121,407 125,436 121,407 145,369
</TABLE>

25
<PAGE> 26
<TABLE>
<CAPTION>
JANUARY 2, JANUARY 1, DECEMBER 31, DECEMBER 30, DECEMBER 28, MARCH 29,
1993 1994 1994 1995 1996 1997
------------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Cash.......................... $ 25,276 $ 44,391 $ 58,369 $ 56,916 $ 48,279 $ 62,138
Working capital............... 334,913 471,616 663,049 1,019,639 920,544 1,176,625
Total assets.................. 915,590 1,296,363 1,974,289 2,940,898 3,366,947 3,744,005
Total debt(6)................. 295,389 398,929 552,283 850,548 304,033 508,531
Stockholder's equity.......... 109,418 155,459 221,344 310,795 825,150 865,136
</TABLE>

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

(2) In March 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings per Share" ("FAS
128"), which will become effective in the fourth quarter of 1997. FAS 128
prohibits early application; however, compliance with SEC guidelines
requires in the year of adoption the restatement of previously reported
earnings per share in selected financial data for all periods presented.
See Note 2 of Notes to Consolidated Financial Statements. As calculated
under FAS 128, the unaudited pro forma basic earnings per share for fiscal
years 1992, 1993, 1994, 1995 and 1996 and the thirteen weeks ended March
30, 1996 and March 29, 1997 would have been $0.29, $0.47, $0.59, $0.79,
$0.99, $0.22 and $0.30 per share, respectively. Diluted earnings per share
as required by FAS 128 would be equivalent to the amount presented as
historical earnings per share in the Selected Consolidated Financial Data
above.

(3) Reflects a noncash compensation charge of $23.4 million ($19.5 million, or
$0.16 per share, net of tax) in connection with the granting of the
Options. See Note 12 of Notes to Consolidated Financial Statements.

(4) Reflects a noncash compensation charge of $6.7 million ($4.1 million, or
$0.03 per share, net of tax) in connection with the granting of the
Options.

(5) Reflects a noncash compensation charge of $1.8 million ($1.4 million, or
$0.01 per share, net of tax) in connection with the granting of the
Options.

(6) Includes long-term debt, current maturities of long-term debt, and for
fiscal years 1992 through 1996, amounts due to Ingram Industries.

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

OVERVIEW

Ingram Micro is the leading wholesale distributor of microcomputer products
and services worldwide. The Company's net sales have grown to $12.0 billion in
1996 from $2.7 billion in 1992. This sales growth reflects substantial expansion
of its existing 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 $110.7 million in 1996 from $31.0 million in 1992.

In November 1996, the Company was split-off from Ingram Industries through
the Split-Off and completed an IPO of its Class A Common Stock that raised
$393.8 million, net of underwriters' discounts and expenses, of which
approximately $366.3 million was used to repay certain indebtedness to Ingram
Industries. Concurrently with the completion of the IPO, the Company entered
into a $1 billion Credit Facility with a syndicate of banks for which
NationsBank of Texas N.A. and The Bank of Nova Scotia acted as agents. In
addition, the Company assumed an Ingram Industries accounts receivable
securitization program under which $160 million of fixed rate medium term

26
<PAGE> 27
certificates and $13 million in trust certificate-backed commercial paper was
outstanding at the time in satisfaction of remaining amounts due to Ingram
Industries. See "--Liquidity and Capital Resources."

The microcomputer wholesale distribution industry in which the Company
operates is characterized by narrow gross and operating margins that have
declined industrywide in recent years, primarily due to intense price
competition. The Company's gross margins declined to 6.4% for the thirteen weeks
ended March 29, 1997 from 8.3% for fiscal 1992. To partially offset the decline
in gross margins, the Company has continually instituted operational and expense
controls that have reduced selling, general and administrative ("SG&A") expenses
(including charges allocated from Ingram Industries prior to the Split-Off) as a
percentage of net sales to 4.5% in 1996 from 5.8% in 1992. As a result, the
Company's operating margins and net margins have declined less than gross
margins. Operating margins declined to 2.1% in 1996 (1996 operating margins were
2.3% excluding the impact of noncash compensation charges totaling $23.4
million) from 2.5% in 1992, and net margins declined to 0.9% in 1996 (1996 net
margins were 1.0% excluding the impact of noncash compensation charges totaling
$19.5 million, net of tax) from 1.1% in 1992. 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 operations outside the United States have historically had gross
margins similar to the Company's U.S. traditional wholesale operations, these
non-U.S. 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. Ingram Alliance contributed over $1.8 billion and
$700 million of net sales to the Company in 1996 and 1995, respectively. 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 of 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 of 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."

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 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, certain outstanding Ingram Industries
stock options, ISUs and SARs held by certain employees of Ingram Industries,
Ingram Entertainment, and Ingram Micro were converted to Options exercisable for
an aggregate of approximately 10,989,000 shares of Class A Common Stock. See
"The Plan," "Management--Rollover Plan; Incentive Stock Units." The Company
recorded a pre-tax noncash compensation charge of approximately $23.4 million
($19.5 million net of tax) in 1996 related to the vested portion of certain

27
<PAGE> 28
Options based on the difference between the estimated fair value of such options
at the applicable measurement dates and the exercise price of such options. The
Company will record additional noncash compensation charges over the remaining
vesting periods of the Options. These additional charges, including charges for
a 1996 restricted stock grant, are expected to be approximately $7.3 million
($5.8 million net of tax) for 1997, $4.8 million ($3.7 million net of tax) for
1998 and $2.7 million ($1.9 million net of tax) for 1999.

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.

<TABLE>
<CAPTION>
FISCAL YEAR THIRTEEN WEEKS ENDED
------------------------------------------------ ---------------------------------

1994 1995 1996 MARCH 30, 1996 MARCH 29, 1997
--------------- ------------- ---------------- -------------- ----------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET SALES BY GEOGRAPHIC
REGION(1):
United States................. $4,122 70.7% $5,970 69.3% $ 8,290 69.0% $1,834 66.6% $2,535 69.4%
Europe........................ 1,078 18.5% 1,849 21.4% 2,590 21.5% 633 23.0% 758 20.8%
Other international........... 630 10.8% 798 9.3% 1,143 9.5% 286 10.4% 357 9.8%
============== ============== =============== ============== ===============
Total...................... $5,830 100.0% $8,617 100.0% $12,023 100.0% $2,753 100.0% $3,650 100.0%
============== ============== =============== ============== ===============
</TABLE>

- ------------------------
(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.

<TABLE>
<CAPTION>
PERCENTAGE OF NET SALES
--------------------------------------------------------------------
FISCAL YEAR THIRTEEN WEEKS ENDED
---------------------------------------- -------------------------
MARCH 30, MARCH 29,
1994 1995 1996 1996 1997
---------------------------------------- -------------------------

<S> <C> <C> <C> <C> <C>
Net sales..................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales................................. 92.5% 93.0% 93.2% 93.2% 93.6%
---------------------------------------- ------------------------
Gross profit.................................. 7.5% 7.0% 6.8% 6.8% 6.4%
Expenses:
SG&A expenses and charges
allocated from Ingram Industries........ 5.1% 4.8% 4.5% 4.6% 4.2%
Noncash compensation charge................ 0.0% 0.0% 0.2% 0.2% 0.0%
-------------------------------------------------------------------
Income from operations........................ 2.4% 2.2% 2.1% 2.0% 2.2%
Other expense, net............................ 0.7% 0.6% 0.5% 0.6% 0.3%
-------------------------------------------------------------------
Income before income taxes and minority 1.7% 1.6% 1.6% 1.4% 1.9%
interest...................................
Provision for income taxes.................... 0.6% 0.6% 0.7% 0.6% 0.8%
Minority interest............................. 0.0% 0.0% 0.0% 0.0% 0.0%
===================================================================
Net income.................................... 1.1% 1.0% 0.9% 0.8% 1.1%
===================================================================
</TABLE>

<PAGE> 29
THIRTEEN WEEKS ENDED MARCH 29, 1997 COMPARED TO THIRTEEN WEEKS ENDED MARCH 30,
1996

Consolidated net sales increased 32.6% to $3.6 billion in the first quarter
of 1997 from $2.8 billion in the first quarter of 1996. 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, improved product availability, and expansion of the
Company's product offerings.

Net sales from U.S. operations increased 38.2% to $2.54 billion in the
first quarter of 1997 from $1.83 billion in the first quarter of 1996. 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 which
grew 82.6% to $681.0 million in the first quarter of 1997 from $373.0 million in
the first quarter of 1996. Net sales from European operations increased 19.7% to
$757.6 million in the first quarter of 1997 from $632.8 million in the first
quarter of 1996. The U.S. dollar was stronger against most European currencies
during the first quarter of 1997 relative to the first quarter of 1996. At
constant exchange rates, net sales from European operations would have increased
27% in the first quarter of 1997 as compared to the first quarter of 1996. Other
international net sales increased 25.2% to $357.6 million in the first quarter
of 1997 from $285.7 million in the first quarter of 1996, principally due to
growth in net sales of the Company's Canadian and Mexican operations.

Cost of sales as a percentage of net sales increased to 93.6% in the first
quarter of 1997 from 93.2% in the first quarter of 1996. This increase was
largely attributable to the increase as a percentage of net sales of the Ingram
Alliance business which has lower gross margins.

Total SG&A expenses (including charges allocated from Ingram Industries in
1996) increased 23.4% to $154.1 million in the first quarter of 1997 from $124.9
million in the first quarter of 1996, but decreased as a percentage of net sales
to 4.2% in the first quarter of 1997 from 4.6% in the first quarter of 1996. 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.

In the first quarter of 1996 and 1997, the Company recorded noncash
compensation charges related to the vested portion of previously granted stock
options converted to Ingram Micro stock options. Noncash compensation charges
decreased 73.1% to $1.8 million in the first quarter of 1997 from $6.7 million
in the first quarter of 1996. The higher amount in 1996 was due to the initial
noncash compensation charge recorded in the first quarter of 1996 when the terms
and grants of these stock options were established. The Company expects to
record additional noncash compensation charges of $1.8 million in each of the
second, third and fourth quarters of 1997.

Excluding noncash compensation charges, total income from operations
expressed as a percentage of net sales remained unchanged at 2.2% in the first
quarter of 1997 and the first quarter of 1996. Income from operations in the
United States excluding the noncash compensation charge increased as a
percentage of U.S. net sales to 2.7% in the first quarter of 1997 from 2.6% in
the first quarter of 1996. Income from operations in Europe excluding the
noncash compensation charge decreased as a percentage of European net sales to
1.0% in the first quarter of 1997 from 1.1% in the first quarter of 1996. Income
from operations for other international regions excluding the noncash
compensation charge decreased as a percentage of other international net sales
to 1.7% in the first quarter of 1997 from 2.5% in the first quarter of 1996 due
to the impact of higher cost of sales as a percentage of other international net
sales.

For the reasons set forth above, income from operations, including noncash
compensation charges, increased 43.4% to $78.8 million in the first quarter of
1997 from $54.9 million in the first quarter of 1996, and, as a percentage of
net sales, increased to 2.2% in the first quarter of 1997 from 2.0% in the first
quarter of 1996.

<PAGE> 30
Other expense, net, which consists primarily of net interest expense
(including interest expense charged by Ingram Industries in 1996), foreign
currency exchange losses, and miscellaneous non-operating expenses, decreased
36.7% to $9.7 million in the first quarter of 1997 from $15.3 million in the
first quarter of 1996, and decreased as a percentage of net sales to 0.3% in the
first quarter of 1997 from 0.6% in the first quarter of 1996. The decrease in
other expense was largely attributable to a year-over-year decrease in interest
expense to $7.3 million in the first quarter of 1997 from $14.6 million
(including interest expense charged by Ingram Industries) in the first quarter
of 1996, primarily related to repayment of indebtedness to Ingram Industries
with proceeds from the Company's initial public offering in the fourth quarter
of 1996. The decrease in interest expense was partially offset by the increase
in other expense to $3.1 million in the first quarter of 1997 from $0.9 million
in the first quarter of 1996 resulting from the classification of $2.9 million
of financing costs in the first quarter of 1997 relating to the Company's
accounts receivable securitization program. See --"Liquidity and Capital
Resources". Such expenses were reflected as interest expense charged by Ingram
Industries in the first quarter of 1996.

The provision for income taxes increased 79.5% to $28.5 million in the
first quarter of 1997 from $15.9 million in the first quarter of 1996,
reflecting the 74.3% increase in the Company's income before income taxes and
minority interest. The Company's effective tax rate was 41.2% in the first
quarter of 1997 compared to 40.0% in the first quarter of 1996. The increase in
the effective tax rate was primarily due to the effect of higher state taxes and
tax benefits of noncash compensation charges. In 1996, the Company filed
consolidated state tax returns with Ingram Industries which allowed the Company
to take advantage of certain apportionment benefits among the states. In 1997,
the Company will file its own separate state tax returns. In addition,
approximately one-half of the noncash compensation charge for the first quarter
of 1997 is not deductible for income tax purposes. The noncash compensation
charge for the first quarter of 1996 was fully deductible for income tax
purposes.

Excluding noncash compensation charges of $1.4 million (net of tax) for the
first quarter of 1997 and $4.1 million (net of tax) for the first quarter of
1996, net income increased 49.7% to $41.8 million in the first quarter of 1997
from $27.9 million in the first quarter of 1996 and, as a percentage of net
sales, increased to 1.1% in the first quarter of 1997 from 1.0% in the first
quarter of 1996. Pro forma earnings per share, excluding noncash compensation
charges, increased 26.0% to $0.29 in the first quarter of 1997 from $0.23 in the
first quarter of 1996. Net income, including noncash compensation charges,
increased 69.5% to $40.4 million in the first quarter of 1997 from $23.8 million
in the first quarter of 1996. Earnings per share, including the noncash
compensation charge, increased 40.0% to $0.28 in the first quarter of 1997 from
$0.20 in the first quarter of 1996.

1996 COMPARED TO 1995

Consolidated net sales increased 39.5% to $12.0 billion in 1996 from $8.6
billion in 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. Microsoft Windows 95 was launched in the third
quarter of 1995 with net sales of $267.5 million in 1995.

Net sales from U.S. operations increased 38.9% to $8.3 billion in 1996 from
$6.0 billion in 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 which grew 157.3% to $1.88 billion in 1996 from $729
million in 1995. Net sales from European operations increased 40.0% to $2.6
billion in 1996 from $1.8 billion in 1995. Other international net sales
increased 43.3% to $1.1 billion in 1996 from $798 million in 1995, principally
due to the growth in net sales from the Company's Canadian operations.

Cost of sales as a percentage of net sales increased to 93.2% in 1996 from
93.0% in 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.

Total SG&A expenses and charges allocated from Ingram Industries increased
29.3% to $541.5 million in 1996 from $418.8 million in 1995, but decreased as a
percentage of net sales to 4.5% in 1996 from 4.8% in 1995. The

<PAGE> 31
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 1996, the Company recorded a noncash compensation charge of $23.4
million ($19.5 million, net of tax) or 0.2% of net sales in connection with the
Options. The Company did not record any such charge during 1995.

Excluding the $23.4 million noncash compensation charge in 1996, total
income from operations increased as a percentage of net sales to 2.3% in 1996
from 2.2% in 1995. Income from operations in the United States excluding the
noncash compensation charge increased as a percentage of U.S. net sales to 2.7%
in 1996 from 2.6% in 1995. Income from operations in Europe excluding the
noncash compensation charge decreased as a percentage of European net sales to
0.8% in 1996 from 1.0% in 1995. This decrease was offset by an increase in
income from other international operations excluding the noncash compensation
charge as a percentage of other international net sales to 2.0% in 1996 from
1.3% in 1995.

For the reasons set forth above, income from operations, including the
$23.4 million noncash compensation charge, increased 32.4% to $247.5 million in
1996 from $186.9 million in 1995, but, as a percentage of net sales, decreased
to 2.1% in 1996 from 2.2% in 1995.

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, decreased 2.9% to
$50.8 million in 1996 from $52.3 million in 1995, and decreased as a percentage
of net sales to 0.5% in 1996 from 0.6% in 1995. The decrease in other expense
was largely attributable to a year-over-year decrease in the amount of foreign
currency losses to $0.7 million in 1996 from $7.8 million in 1995, primarily
related to the Mexican peso devaluation. Such decrease was partially offset by a
higher level of borrowings to finance the Company's worldwide business
expansion.

The provision for income taxes increased 59.7% to $84.9 million in 1996
from $53.1 million in 1995, reflecting the 46.2% increase in the Company's
income before income taxes and minority interest. The Company's effective tax
rate was 43.1% in 1996 compared to 39.5% in 1995. The increase in the effective
tax rate was primarily due to the effect of the noncash compensation charge,
much of which is not deductible for income tax purposes, as well as the effect
of certain international taxes in 1996.

Excluding the $19.5 million (net of tax) noncash compensation charge, net
income increased 54.4% to $130.2 million in 1996 from $84.3 million in 1995 and,
as a percentage of net sales, remained constant at 1.0% in 1996 and in 1995. Pro
forma earnings per share, excluding the noncash compensation charge, increased
50.7% to $1.04 in 1996 from $0.69 in 1995. Net income, including the $19.5
million (net of tax) noncash compensation charge, increased 31.3% to $110.7
million in 1996 from $84.3 million in 1995. Earnings per share, including the
noncash compensation charge, increased 27.5% to $0.88 in 1996 from $0.69 in
1995.

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.

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

<PAGE> 32
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.

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 U.S. 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 European 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.

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

<PAGE> 33
results have included a reduction of demand in Europe during the summer months,
increased Canadian government purchasing in the first quarter, and worldwide
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.

The following table sets forth certain unaudited quarterly historical
consolidated financial data for each of the thirteen quarters up to the period
ended March 29, 1997. 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.

<TABLE>
<CAPTION>
INCOME BEFORE
INCOME TAXES
INCOME AND
NET GROSS FROM MINORITY NET EARNINGS
SALES PROFIT OPERATIONS INTEREST INCOME PER SHARE
---------------------------------------------------------------------------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
FISCAL YEAR ENDED DECEMBER 31, 1994
THIRTEEN WEEKS ENDED:
April 2, 1994................. $1,266.6 $ 92.4 $26.1 $19.4 $11.6 $0.10
July 2, 1994.................. 1,298.9 96.8 28.3 19.5 12.1 0.10
October 1, 1994............... 1,387.0 105.1 32.9 24.3 14.6 0.12
December 31, 1994............. 1,877.7 144.7 53.0 37.5 25.0 0.20

FISCAL YEAR ENDED DECEMBER 30, 1995
THIRTEEN WEEKS ENDED:
April 1, 1995................. $1,879.5 $132.4 $38.5 $24.3 $17.1 $0.14
July 1, 1995.................. 1,859.6 138.9 40.2 30.0 18.4 0.15
September 30, 1995............ 2,331.6 151.2 45.2 33.8 20.8 0.17
December 30, 1995............. 2,546.2 183.2 63.0 46.5 28.0 0.23

FISCAL YEAR ENDED DECEMBER 28, 1996
THIRTEEN WEEKS ENDED:
March 30, 1996................ $2,752.7 $186.6 $54.9 (1) $39.6 (1) $23.8 (1) $0.20 (1)
June 29, 1996................. 2,790.4 190.5 59.5 (2) 44.9 (2) 26.8 (2) 0.22 (2)
September 28, 1996............ 2,931.6 197.4 61.5 (3) 48.9 (3) 27.0 (3) 0.22 (3)
December 28,1996.............. 3,548.8 237.9 71.6 (4) 63.4 (4) 33.1 (4) 0.24 (4)

FISCAL YEAR ENDED JANUARY 3, 1998
THIRTEEN WEEKS ENDED:
March 29, 1997................ $3,650.0 $234.7 $78.7 (5) $69.0 (5) $40.4 (5) $0.28 (5)
</TABLE>

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

(2) Reflects a noncash compensation charge of $1.1 million ($0.7 million, or
less than $0.01 per share, net of tax) in connection with the granting of
the Options.

(3) Reflects a noncash compensation charge of $1.1 million ($0.6 million, or
less than $0.01 per share, net of tax) in connection with the granting of
the Options.

(4) Reflects a noncash compensation charge of $14.5 million ($14.1 million, or
less than $0.11 per share, net of tax) in connection with the granting of
the Options.

(5) Reflects a noncash compensation charge of $1.8 million ($1.4 million, or
$0.01 per share, net of tax) in connection with the granting of the
Options.

<PAGE> 34
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.

LIQUIDITY AND CAPITAL RESOURCES

The Company has financed its growth and cash needs largely through income
from operations and borrowings, trade and supplier credit and, more recently,
the public sale of 23,200,000 shares of its Class A Common Stock at $18.00 per
share in the IPO completed in November 1996.

Cash used by operating activities was $191.4 million in the first quarter
of 1997 as compared to cash provided by operating activities of $35.2 million in
the first quarter of 1996. The significant increase in cash used by operating
activities in the first quarter of 1997 over the first quarter of 1996 was due
to the increase in accounts receivable and inventory levels at March 29, 1997 as
compared to March 30, 1996. Cash provided by the increase in accounts payable in
the first quarter of 1997 partially offset the use related to accounts
receivable and inventory. The increase in inventory levels at March 29, 1997 was
due to the growth in sales volume, new product launches and the pursuit of
attractive product buying opportunities in order to maintain high customer order
fill rates.

Cash provided by operating activities was $78.0 million in 1996 as compared
to cash used in operating activities of $251.3 million in 1995 and $87.1 million
in 1994. The significant increase in cash provided by operating activities in
1996 over cash used in operating activities in 1995 was partially due to higher
net income and the difference between accounts receivable, inventory levels, and
accounts payable in 1996 as compared to 1995 due to the launch of Microsoft
Windows 95 in the third quarter of 1995. The significant increase in cash used
by operating activities in 1995 over 1994 was due to the increased levels of
inventory and an increase in accounts receivable. Cash provided by the increase
in accounts payable in 1995 partially offset the use related to inventory and
accounts receivable. The increase in the difference in inventory levels and
accounts payable in 1995 as compared to 1994 was partially due to the launch of
Microsoft Windows 95.

Net cash used by investing activities was $21.3 million in the first
quarter of 1997 as compared to $16.1 million in the first quarter of 1996. The
increase was due to the Company's expansion of warehouse and other facilities.
Net cash used by investing activities was $107.2 million, $48.8 million, and
$42.6 million in 1996, 1995, and 1994, respectively. These increases were due to
the Company's expansion of warehouse and other facilities in each year. In 1996,
purchases of property and equipment included $22.6 million related to the
acquisition, in connection with the Split-Off, of certain previously leased
facilities utilized by the Company. Net cash used by investing activities in
1994 included acquisitions of operations in four European countries in 1994.

Net cash provided by financing activities was $228.2 million in the first
quarter of 1997 as compared to cash used by financing activities of $37.8
million in the first quarter of 1996. The increase in net cash provided by
financing activities was caused primarily by proceeds drawn under the revolving
credit facility and new long-term debt of $221.9 million in the first quarter of
1997 as compared to the net repayment of borrowings from Ingram Industries
totaling $55.9 million in the first quarter of 1996. Borrowings under the
revolving credit facility and long-term debt were used, in part, to finance the
increase in accounts receivable and inventories.

Net cash provided by financing activities was $21.3 million, $298.3
million, and $143.3 million in 1996, 1995 and 1994, respectively. Net cash
provided by financing activities in 1996 includes the receipt of $393.8 million
in net proceeds from the IPO. The decrease in net cash provided by financing
activities in 1996 as compared to 1995 was caused primarily by the repayment of
borrowings from Ingram Industries totaling $513.8 million as a result of the
Split-Off and a $20.0 million distribution to Ingram Industries in 1996. The
decrease in borrowings from Ingram Industries is partially offset by proceeds
from debt totaling $49.7 million and net borrowings under the

<PAGE> 35
revolving credit facility of $80.6 million. The increase in net cash
provided by financing activities in 1995 as compared to 1994 was primarily
provided by an increase in borrowings from Ingram Industries.

Prior to the Split-Off, the Company's sources of capital were primarily
borrowings from Ingram Industries. Ingram Industries no longer provides
financing to the Company following the Split-Off. In November 1996, the Company
entered into a $1 billion Credit Facility with a syndicate of banks for which
NationsBank of Texas N.A. and The Bank of Nova Scotia acted as agents. The
Company is required to comply with certain financial covenants, including
minimum net worth, restrictions on funded debt, current ratio and interest
coverage, which will be tested as of the end of each fiscal quarter. The Credit
Facility also restricts the Company's ability to pay dividends. Borrowings will
be subject to the satisfaction of customary conditions, including the absence of
any material adverse change in the Company's business or financial condition. At
December 28, 1996 and at March 29, 1997, the Company was in compliance with
these financial covenants. Borrowings under the Credit Facility were 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 was terminated concurrent with the Split-Off,
as well as partial financing for the increase in accounts receivable and
inventories at December 28, 1996 as compared to December 30, 1995.

In November 1996, the Company sold 23,200,000 shares of Class A Common
Stock in the IPO at $18.00 per share. The Company received net proceeds of
$393.8 million of which approximately $366.3 million was used to repay certain
existing indebtedness to Ingram Industries. Primarily as a result of the IPO,
stockholders' equity increased to $825.2 million at December 28, 1996, up
165.5%, from $310.8 million at December 30, 1995. In addition, the Company's
debt to capitalization ratio was 27% at December 28, 1996, down from 73% at
December 30, 1995, but increased to 37% at March 29, 1997. At March 29, 1997,
the Company had $363.5 million in outstanding borrowings under the Credit
Facility.

From February 1993 through the Split-Off, the Company had 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
November 1, 1996, Ingram Industries had sold $160 million of fixed rate medium
term certificates and established a commercial paper program, supported by a
variable rate certificate, under which $13.0 million was outstanding. The
arrangement with the trust extends to December 31, 1999, renewable biannually
under an evergreen provision up to a maximum term of 20 years. In connection
with the Split-Off, in partial satisfaction of amounts due to Ingram Industries,
the Ingram Industries accounts receivable securitization program was assumed by
the Company, which is now the sole seller of receivables. Under the amended
program, certain of the Company's domestic receivables are transferred to the
trust. The Company believes the amended program contains sufficient trade
accounts receivable to support the outstanding fixed rate medium term
certificates as well as an unspecified amount of variable rate certificates
which support the commercial paper program. At March 29, 1997, the amount of
commercial paper outstanding totaled $105.0 million. Assumption of the
securitization program resulted in a $160 million reduction of trade accounts
receivable and long-term debt in the Company's consolidated balance sheet at
December 28, 1996 and March 29, 1997. See Note 5 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 $62.4
million as of December 28, 1996. These facilities are used principally for
working capital and bear interest at market rates. See Note 7 of Notes to
Consolidated Financial Statements.

The exercise of stock options provides an additional source of cash to the
Company. In 1996, cash proceeds from the exercise of stock options, including
applicable tax benefits, totaled $11.3 million.

<PAGE> 36
stockholder approval, the transaction is expected to close in the latter half of
July 1997. The RND business model -- also known as "wholesale aggregation" or
"master reseller" - is complementary to Ingram Alliance. The Company believes
that the agreement will provide a new revenue source as well as strengthen the
Company's relationships with resellers through new programs, better access to
key manufacturers and improved operations. The Company will also become the
primary wholesaler to IE's XLSource division, an authorized direct sales
organization and reseller for products of more than 80 technology manufacturers,
for an initial term of up to three years. The Company believes that its existing
cash and credit facilities are adequate to pay the purchase price for RND and
discharge its other obligations under the agreement, as well as finance the
anticipated increase in accounts receivable and inventories upon completion of
the acquisition of RND.

The Company believes that its available cash, together with net cash
provided by operating activities, supplemented as necessary with funds available
under credit arrangements (including the $1 billion Credit Facility), will
provide sufficient resources to meet its present and future working capital and
cash requirements for at least the next 12 months, or earlier if the Company
were to engage in significant, material 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 1997
for capital expenditures due to continued expansion of its business.

NEW ACCOUNTING STANDARDS

In February 1997, the Financial Accounting Standards Board issued FAS 128
which will become effective in the fourth quarter of 1997. FAS 128 replaces the
presentation of earnings per share reflected on the Statement of Income with a
dual presentation of basic earnings per share and diluted earnings per share.
FAS 128 does not permit early application; however, it requires, when
implemented in the fourth quarter of 1997, restatement of previously reported
earnings per share for each income statement presented. The Company does not
expect the adoption of FAS 128 to have a material impact on its financial
condition or results of operations.

BUSINESS

OVERVIEW

Ingram Micro offers one-stop shopping to its reseller customers by
providing a comprehensive inventory of more than 100,000 distinct items 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. 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.

Ingram Micro entered the master reseller (also known as "aggregation")
business in late 1994 with the launch of Ingram Alliance. On April 29, 1997,
the Company signed a definitive agreement to acquire IE's RND which will
greatly increase the size of Ingram Alliance's business. 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. Over 95%

<PAGE> 37
of Ingram Alliance's sales in 1996 were 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 1996,
Ingram Alliance achieved net sales in excess of $1.88 billion, and it currently
has 13 suppliers and more than 1,100 reseller customers.

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. IMpulse is a single, standardized, real-time information system
and operating environment, used across all of the Company's worldwide
operations. 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.

The Company's earliest predecessor began business in 1979 as a California
corporation named Micro D, Inc. This company and its parent, Holdings, grew
through a series of acquisitions, mergers, and internal growth to encompass the
Company's current operations. Ingram Micro Inc. was incorporated in Delaware on
April 29, 1996, in order to effect the reincorporation of the Company in
Delaware. The successor to Micro D, Inc. and Holdings were merged into Ingram
Micro Inc. in October 1996.

THE SPLIT-OFF AND INITIAL PUBLIC OFFERING

In November 1996, the Company completed the sale of 23,200,000 shares of
its Class A Common Stock pursuant to an initial public offering at an offering
price of $18.00 per share. Cash proceeds of the offering totaled $393.8 million,
net of underwriters' discounts and expenses of the offering, of which
approximately $366.3 million was used to repay indebtedness to its then parent,
Ingram Industries. The remaining proceeds of the offering, amounting to $27.5
million, were used for working capital purposes.

Immediately prior to the closing of the IPO, the Company was split-off from
its former parent, Ingram Industries, in a tax-free reorganization. In the
Split-Off, Ingram Industries, a company controlled by the Ingram Family
Stockholders, consummated an exchange, pursuant to which certain existing
stockholders of Ingram Industries exchanged eligible shares of Ingram Industries
common stock for 107,251,362 shares of Class B Common Stock of the Company in
specified ratios. Immediately after the Split-Off and the closing of the IPO,
none of the Common Stock was held by Ingram Industries, other than 246,000
shares of Class A Common Stock purchased by Ingram Industries in the IPO
(including 15,000 shares purchased by Ingram Entertainment, a subsidiary of
Ingram Industries). At March 29, 1997, 66.4% of the outstanding Common Stock
(and 80.1% of the outstanding voting power) was held by the Ingram Family
Stockholders. In connection with the Split-Off, agreements relating to board
representation and registration rights with respect to Class A Common Stock held
by the Ingram Family Stockholders (including shares of Class A Common Stock
issued upon conversion of Class B Common Stock) were entered into by the Company
and the Ingram Family Stockholders. See "The Split-Off and The Reorganization."

In connection with the Split-Off, the Company, Ingram Industries and Ingram
Entertainment allocated certain liabilities and obligations among themselves.
See "The Split-Off and The Reorganization."

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,

<PAGE> 38
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 versatile disc format, arise from the ongoing convergence of computing,
communications, and consumer electronics.

Markets outside the United States, 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 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

<PAGE> 39
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
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.

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 operations outside the United States principally through
acquisitions and currently has operations in 19 countries including 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 third 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.

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 scaleable, 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.

The Company will continue to invest in the enhancement and expansion of its
systems to create additional applications and functionality including further
expansion in electronic links with reseller customers and suppliers

39
<PAGE> 40
to provide better access to the Company's extensive database for pricing,
product availability, and technical information.

PROVIDE SUPERIOR EXECUTION FOR RESELLER CUSTOMERS. Ingram Micro continually
refines its systems and processes to provide superior execution and service to
reseller customers. 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. 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.

Ingram Micro strives to maintain high order fill rates by keeping extensive
supplies of product in its 30 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 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.

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, to 4.5% in 1996 from 5.8% in 1992. 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

<PAGE> 41
information delivery process through CIS to decrease the number of non-order
telesales calls. See "--Information Systems."

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

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 1996, 1995, or 1994.

SALES AND MARKETING

Ingram Micro's telesales department is comprised of approximately 1,700
telesales representatives worldwide, of whom more than 950 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 200 field sales representatives worldwide, including more
than 60 in the United States.

The sales organization is organized to focus on resellers who address the
VAR (consisting of value-added resellers, system integrators, network
integrators, application VARs and original equipment manufacturers), Commercial
(consisting of corporate resellers, direct marketers, independent dealers and
owner-operated chains) and Consumer (consisting of consumer electronics stores,
computer superstores, mass merchants, office product superstores, software only
stores and warehouse clubs) market sectors. In addition, 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 certain markets outside the United States, the Company relies more
heavily on telesales and maintains a relatively smaller field sales organization
to cover its customer base.

<PAGE> 42
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 100,000 distinct
items 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, Seagate, Sun Microsystems, 3Com, Toshiba, and U.S. Robotics.
Outside the United States, 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.

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 generally does
not independently warrant the products it distributes; however, the Company has
recently begun to warrant the following: (i) its services with regard to
products which it configures for its customers, and (ii) products which it
builds to order from components purchased from other sources.

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
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.

<PAGE> 43
Historically, the Company has not experienced losses due to obsolete inventory
materially in excess of established inventory reserves.

VALUE-ADDED SERVICES

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.

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 operations outside the United States 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. Ingram
Alliance achieved net sales of $1.88 billion in 1996, which grew 157.3% from
$729 million in 1995. 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. In addition, the Company signed a definitive agreement on April 29, 1997
to acquire IE's indirect business, its RND, which will greatly increase the
size of Ingram Alliance's business.

<PAGE> 44
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.

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 scaleable 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.

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, Electronic Data
Interchange, 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.

<PAGE> 45
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 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.

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 backup 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.

NON-U.S. OPERATIONS AND EXPORT SALES

OPERATIONS OUTSIDE THE UNITED STATES

The Company, through its subsidiaries, operates in a number of countries
outside of the United States, including Canada, Mexico, most countries of the
European Union, Norway, Malaysia and Singapore. In 1996, 1995, and 1994, 31.0%,
30.7% and 29.3%, 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. The Company's net sales from operations outside the United States are
primarily denominated in currencies other than the U.S. dollar. Accordingly, the
Company's operations outside the United States 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 $7.8 million and $6.9 million in 1995
and 1994, 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 operations outside the United States 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

<PAGE> 46
assurance that these and other factors will not have a material adverse effect
on the Company's operations or its business, financial condition, and results of
operations as a whole.

EXPORT MARKETS

Ingram Micro's Export Division continues to expand in 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. In
addition, the Export Division has field sales representatives based in Buenos
Aires, Argentina and Quito, Ecuador.

For segment information regarding the Company's United States and
international operations, see Note 10 of Notes to Consolidated Financial
Statements.

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. In addition, 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. 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.

Ingram Micro's primary competitors include large U.S.-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 (although the Company has agreed to purchase the
master reseller business of IE), MicroAge, Datago, InaCom, and 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), CHS
Electronics, and Softmart/Tech Data, and several local and regional
distributors, including Actebis, Scribona, Microtech and Macrotron. 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, CHS Electronics, Intertec, and Dataflux. In the Asia Pacific market, Ingram
Micro faces both regional and local competitors, of

<PAGE> 47
whom the largest is Tech Pacific, a subsidiary 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.

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.

The Company offers various credit terms to qualifying customers as well as
prepay, credit card, and COD terms. The Company closely monitors customers'
credit worthiness 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.

FACILITIES

Ingram Micro's worldwide executive headquarters, as well as its West Coast
sales and support offices, are located in a three-building office complex in
Santa Ana, California. In November 1996, the Company acquired ownership of two
of the buildings within the Santa Ana office complex as well as a distribution
center in Harrisburg, PA by assuming underlying mortgages in the aggregate
amount of approximately $22.6 million. The Company also maintains an East Coast
operations center in Buffalo, New York.

The Company operates eight distribution centers in the continental United
States located in or near Atlanta, GA, Dallas, TX, Chicago, IL, Fremont, CA,
Fullerton, CA, Harrisburg, PA, Memphis, TN, and Miami, FL. In addition, the
Company operates 22 international distribution centers located in Canada,
Mexico, most countries of the European Union, Norway, Malaysia and Singapore.

A new United States distribution center in Millington, Tennessee is
expected to be completed in July 1997, adding 600,000 square feet to the
Company's warehouse capacity. This distribution center is 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 reseller customers, which
enables the Company to provide substantially all of its U.S. reseller customers
with one- or two-day ground delivery.

<PAGE> 48
All of the Company's facilities, with the exception of two buildings within
the Santa Ana campus, the Brussels office and the distribution centers in
Chicago, Harrisburg 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. In addition, the Company has recently purchased
three undeveloped properties in Santa Ana, California totaling approximately
23.27 acres.

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 March 29, 1997, the Company had approximately 9,662 associates
located as follows: United States--6,200, Europe--2,040, Canada--891,
Mexico--432, and Asia-Pacific--99. 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.

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
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Jerre L. Stead(2) 54 Chief Executive Officer and Chairman of the Aug. 1996 - Present
Board
Chief Executive Officer and Chairman of the Jan. 1995 - Aug. 1995
Board, Legent Corporation, a software
development company
Executive Vice President, Chairman and Chief May 1993 - Dec. 1994
Executive Officer, AT&T Corp. Global
Information Solutions (NCR Corp.), a
computer manufacturer
President and Chief Executive Officer, AT&T Sept. 1991 - Apr. 1993
Corp. Global Business Communication
Systems, a communications company
</TABLE>

NAME AGE PRESENT AND PRIOR POSITIONS HELD(1) YEARS POSITIONS HELD
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Jeffrey R. Rodek 43 Worldwide President; Chief Operating Officer Dec. 1994 - Present
Senior Vice President, Americas and Caribbean,
Federal Express, an overnight courier firm July 1991 - Sept. 1994

David R. Dukes (3) 53 Acting President, Ingram Micro Asia-Pacific May 1997 - Present
Vice Chairman Apr. 1996 - Present
Chief Executive Officer, Ingram Alliance Jan. 1994 - Present
Co-Chairman Jan. 1992 - Apr. 1996
Chief Operating Officer Sept. 1989 - Dec. 1993
President Sept. 1989 - Dec. 1991

Sanat K. Dutta 48 Executive Vice President; President, Ingram Oct. 1996 - Present
Micro U.S.
Executive Vice President Aug. 1994 - Oct. 1996
Senior Vice President, Operations May 1988 - Aug. 1994

Michael J. Grainger 44 Executive Vice President; Worldwide Chief Oct. 1996 - Present
Financial Officer
Chief Financial Officer May 1996 - Oct. 1996
Vice President and Controller, Ingram July 1990 - Oct. 1996
Industries

John Wm. Winkelhaus, II 46 Executive Vice President, Global Channel May 1997 - Present
Assembly
Executive Vice President; President, Ingram Jan. 1996 - May 1997
Micro Europe
Senior Vice President, Ingram Micro Europe Feb. 1992 - Dec. 1995
Senior Vice President, Sales Apr. 1989 - Jan. 1992

James E. Anderson, Jr. 49 Senior Vice President, Secretary, and General Jan. 1996 - Present
Counsel
Vice President, Secretary, and General Sept. 1991 - Nov. 1996
Counsel, Ingram Industries

David M. Carlson 56 Senior Vice President, Chief Feb. 1997 - Present
Technology Officer
President, Consumer Focused Technology, Jan. 1996 - Feb. 1997
a consulting firm
Vice President, Technology and Network Mar. 1995 - Dec. 1995
Services, Florist Transworld Delivery Corp.
Senior Vice President, Corporate Information July 1985 - Nov. 1994
Systems, K Mart Corporation, a retail company

Larry L. Elchesen 46 Senior Vice President June 1994 - Present
President, Ingram Micro Asia Pacific Dec. 1996 - May 1997
President, Ingram Micro Canada May 1989 - Dec. 1996
</TABLE>

49
<PAGE> 50
<TABLE>
<CAPTION>

NAME AGE PRESENT AND PRIOR POSITIONS HELD(1) YEARS POSITIONS HELD
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Philip D. Ellett 42 Senior Vice President; President, Ingram Micro May 1997 - Present
Europe Jan. 1997 - May 1997
Senior Vice President; Chief Operating
Officer, Ingram Micro Europe Feb. 1996 - Dec. 1996
Senior Vice President; General Manager, U.S.
Consumer Markets Division Aug. 1994 - Dec. 1995
President, Gates/Arrow, an electronics
distributor Oct. 1991 - Aug. 1994
President and Chief Executive Officer,
Gates/F.A. Distributing, Inc.

David M. Finley 56 Senior Vice President, Human Resources July 1996 - Present
Senior Vice President, Human Resources, Budget May 1995 - July 1996
Rent a Car, a car rental company
Vice President, Human Resources, The Southland Jan. 1977 - May 1995
Corporation, a convenience retail company

James M. Kelly 60 Senior Vice President, Management Information Feb. 1991 - Present
Systems

David W. Rutledge 43 Senior Vice President; President, Latin Jan. 1997 - Present
America and Export Markets
President, Ingram Micro Canada Jan. 1997 - May 1997
Senior Vice President, Asia Pacific, Latin Jan. 1996 - Dec. 1996
America and Export Markets
Senior Vice President, Administration Sept. 1991 - Dec. 1995

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, Ingram June 1995 - Present
Industries
Director, Ingram Industries 1981 - Present
Chief Executive Officer, Ingram Industries Apr. 1996 - Present
Director of Public Affairs, Ingram Industries 1979 - June 1995

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 - Oct. 1996
Vice President, Purchasing, Ingram Micro Europe Jan. 1994 - Dec. 1994
Vice President, Management Services, Ingram
Micro Europe July 1993 - Dec. 1993
Director of Management Services, Ingram Micro
Europe Jan. 1993 - June 1993
Director of Purchasing
Apr. 1991 - Dec. 1992
</TABLE>

50
<PAGE> 51
<TABLE>
<CAPTION>

NAME AGE PRESENT AND PRIOR POSITIONS HELD(1) YEARS POSITIONS HELD
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
David B. Ingram (4) 33 Director May 1996 - Present
Chairman and President, Ingram Entertainment Mar. 1996 - Present
President and Chief Operating Officer, Ingram Aug. 1994 - Mar. 1996
Entertainment
Vice President, Major Accounts, Ingram Nov. 1993 - Aug. 1994
Entertainment
Assistant Vice President, Sales, Ingram June 1992 - Nov. 1993
Entertainment
Director, Sales, Ingram Entertainment July 1991 - June 1992

Don H. Davis, Jr. (6) 56 Director Oct. 1996 - Present
President and Chief Operating Officer, July 1995 - Oct. 1996
Rockwell International Corporation, a
diversified high-technology company
Executive Vice President and Chief Operating Jan. 1994 - July 1995
Officer, Rockwell International Corporation
Senior Vice President; President, Automation June 1993 - Jan. 1994
Group, Rockwell International Corporation
President, Allen-Bradley Company, a July 1989 - Jan. 1994
wholly-owned subsidiary of Rockwell
International Corporation

Philip M. Pfeffer 51 Director 1986 - Present
President and Chief Operating Officer, Random May 1996 - Present
House Inc., a publishing company
Executive Vice President, Ingram Industries Dec. 1981 - Mar. 1996
Chairman and Chief Executive Officer, Ingram Dec. 1981 - Dec. 1995
Distribution Group Inc.
Chairman, Ingram Micro Holdings Inc. Apr. 1989 - Oct. 1995

J. Phillip Samper (7) 62 Director Oct. 1996 - Present
Chairman, Chief Executive Officer and Oct. 1996 - Present
President, Quadlux, Inc., a commercial and
residential cooking appliance company
Chairman and Chief Executive Officer, Cray May 1995 - Mar. 1996
Research, Inc., a computer products company
President and Chief Executive Officer, Sun Jan. 1994 - Mar. 1995
Microsystems Computer Corporation, a
division of Sun Microsystems, Inc., a
computer products company
Managing Partner, FRN Group, a private Feb. 1991 - Jan. 1994
investment and consulting firm
President and Chief Executive Officer, May 1990 - Feb. 1991
Kindercare Learning Centers, Inc., a child
care and educational company

Joe B. Wyatt (8) 61 Director Oct. 1996 - Present
Chancellor, Vanderbilt University July 1982 - Present
</TABLE>

- ------------------------
(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., TBG Group,
and TJ International, Inc.

<PAGE> 52
(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 serves on the Board of Trust of Vanderbilt University and
Vassar College and is a director of Baxter International Inc., First
American Corporation, and Weyerhaeuser Co.

(6) Don H. Davis, Jr. is a director of Sybron International Corporation and
Rockwell International Corporation, and Chairman of the Board for the L.A.
Manufacturing Learning Center.

(7) J. Phillip Samper is a director of Armstrong World Industries, Inc., the
Interpublic Group of Companies, Inc., Sylvan Learning Systems, Inc., and
Network Storage Corp.

(8) Joe B. Wyatt is a director of Sonat, Inc. and Reynolds Metals Company.

BOARD OF DIRECTORS

The Board of Directors currently consists of Mr. Stead, Mrs. Ingram, and
Messrs. John R. Ingram, David B. Ingram, Davis, Pfeffer, Samper, and Wyatt. 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 Stock, 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 and the Reorganization--The
Reorganization." Messrs. Pfeffer, Davis, Samper, and Wyatt are Independent
Directors.

COMMITTEES. The Board Representation Agreement provides for the formation
of certain committees of the Board of Directors. As provided in the Bylaws and
the Board Representation Agreement, the Company has four committees: an
Executive Committee, a Nominating Committee, an Audit Committee, and a Human
Resources Committee. The Predecessor's Board of Directors did not have any
committees during 1996.

The Executive Committee consists of three Directors, one of whom is a
Director designated by the Ingram Family Stockholders, one of whom is the
Director designated by the Chief Executive Officer of the Company, and one of
whom is an Independent Director. The Executive Committee currently consists of
Messrs. Stead, John R. Ingram, and Samper. The Executive Committee did not meet
in 1996, but acted by written consent on several occasions. 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 does 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 Stock 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 was formed in November 1996 and consists of three
Directors, two of whom are Directors designated by the Ingram Family
Stockholders, and one of whom is the Director designated by the Chief Executive
Officer of the Company. The Nominating Committee currently consists of Messrs.
David B. Ingram and Stead and Mrs. Ingram. The Nominating Committee did not meet
in 1996, but acted by written consent on one occasion. The function of the
Nominating Committee is to designate nominees for election as Directors of the
Company and to elect members of other committees of the Board of Directors. The
Nominating Committee will consider individuals recommended by shareowners. Any
such recommendation must be submitted in writing prior

52
<PAGE> 53
to January 1 of each year, accompanied by a description of the proposed
nominee's qualifications and other relevant biographical information, and should
be addressed to the Nominating Committee, in care of the Secretary of the
Company.

The Audit Committee was formed in November 1996 and consists of at least
three Directors, a majority of whom must be Independent Directors. The Audit
Committee currently consists of Messrs. David B. Ingram, Pfeffer, and Wyatt. The
Audit Committee did not meet in 1996. The functions of the Audit Committee are
to recommend annually to the Board of Directors the appointment of the
independent auditors of the Company, discuss and 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 Human Resources Committee was formed in November 1996 and consists of
three Directors, one of whom is a Director designated by the Ingram Family
Stockholders and two of whom are Independent Directors. The Human Resources
Committee currently consists of Messrs. Davis and Samper and Mrs. Ingram. The
Human Resources Committee held one meeting in 1996. The functions of the Human
Resources Committee are to review and approve annual salaries, bonuses, and
grants of stock options for all executive officers and key members of the
Company's management staff and to review and approve the terms and conditions of
all compensation plans in which such individuals participate, and any changes
thereto.

COMPENSATION OF DIRECTORS

Directors who are not Independent Directors do not receive any additional
compensation for serving on the Board of Directors, but are reimbursed for
expenses incurred in attending meetings of the Board of Directors and Committees
thereof. In addition to such reimbursement, each current Independent Director
has been granted on the date his service began (but not prior to October 31,
1996), and each new Independent Director will be granted on the date his or her
service begins, options to purchase 45,000 shares of Class A Common Stock. These
options have an exercise price per share equal to the market price of the Class
A Common Stock on the date of grant and will vest in equal installments on the
first, second, and third anniversaries of the date of grant. Independent
Directors do not receive any other compensation for their service.

EXECUTIVE COMPENSATION

Summary Compensation Table. The following table provides information
relating to compensation for the two most recently completed fiscal years for
the Company's Chief Executive Officer and the other four most highly compensated
executive officers of the Company (collectively, the "Named Executive
Officers"). Excluding Mr. Stead, prior to the Split-Off, 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.

53
<PAGE> 54
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------------
ANNUAL COMPENSATION SECURITIES ALL OTHER
---------------------------------------- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION(S) YEAR(1) SALARY($)(2) BONUS($)(3) OPTIONS/SARS(#) ($)(4)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Jerre L. Stead(5) 1996 -- -- 3,400,000 --
Chief Executive Officer and Chairman of
the Board of Directors

Jeffrey R. Rodek 1996 $434,458 $375,239 350,000 (6) $ 12,493
Worldwide President and Chief Operating 1995 392,820 267,089 240,258 (7) 163,649
Officer

David R. Dukes 1996 317,081 266,272 185,000 (6) 16,499
Vice Chairman of the Company and Chief 1995 260,130 205,611 -- 10,607
Executive Officer of Ingram Alliance

Sanat K. Dutta 1996 268,435 241,475 165,000 (6) 12,850
Executive Vice President and President, 1995 263,500 213,593 -- 12,365
Ingram Micro U.S.

John Wm. Winkelhaus, II 1996 336,411 87,136 115,000 (6) 128,865
Executive Vice President, Global 1995 250,000 130,441 -- 124,287
Channel Assembly

Linwood A. (Chip) Lacy, Jr.(8) 1996 577,498 686,057 -- (6) 487,452
Former Chief Executive Officer and 1995 558,000 414,057 -- 28,617
Former Chairman of the Board of
Directors
</TABLE>

- ------------------------
(1) Under rules promulgated by the Commission, only information with respect to
the two most recently completed fiscal years 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) In respect of each of 1995 and 1996, the bonuses were paid in February or
March of the following years.

(4) Includes the following amounts for 1996: Mr. Rodek (group term life
insurance, $1,632; employer thrift plan contributions, $10,861); Mr. Dukes
(group term life insurance, $4,608; employer thrift plan contributions,
$11,891); Mr. Dutta (group term life insurance, $2,784; employer thrift
plan contributions, $10,066); Mr. Winkelhaus (group term life insurance,
$1,267; employer thrift plan contributions, $6,136; expatriate compensatory
payments, $121,462); Mr. Lacy (group term life insurance, $4,608; employer
thrift plan contributions, $9,063; relocation, $145,448; termination
payments, $328,333).

(5) Mr. Stead became the Company's Chief Executive Officer and Chairman of the
Board of Directors on August 27, 1996.

(6) Does not include the exchange or conversion of outstanding Ingram
Industries securities held by Messrs. Rodek, Dukes, Dutta, Winkelhaus and
Lacy, into Options in connection with the Split-Off, as follows: 274,582,
273,896, 258,107, 244,378, and 419,190 shares, respectively.

(7) Represents options granted in 1995 exercisable for 175,000 shares of Ingram
Industries common stock, which were converted into options exercisable for
240,258 shares of Class A Common Stock in connection with the Split-Off.

<PAGE> 55
(8) Mr. Lacy was an employee of Ingram Industries at all times during 1995 and
through May 31, 1996, at which time he resigned from both the Company and
Ingram Industries. 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.

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 28, 1996.

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
-------------------------------------------------------
% OF TOTAL
NUMBER OF OPTIONS/SARS
SECURITIES GRANTED TO EXERCISE ALTERNATIVE
UNDERLYING EMPLOYEES OF OR BASE TO GRANT
OPTIONS/SARS THE COMPANY PRICE EXPIRATION DATE PRESENT
NAME GRANTED IN FISCAL YEAR ($/SH) DATE VALUE($)(5)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Jerre L. Stead.............. 200,000(2) 2.1% $18.00 10/31/04 $ 1,275,609
1,600,000(3) 16.4 18.00 10/31/04 10,037,594
1,600,000(4) 16.4 18.00 10/31/06 8,706,314
- -------------------------------------------------------------------------------------------------------
Jeffrey R. Rodek............ 150,000(3) 1.5 7.00 3/31/04 177,637
200,000(4) 2.1 18.00 10/31/06 1,088,289
- -------------------------------------------------------------------------------------------------------
David R. Dukes.............. 35,000(3) 0.4 7.00 3/31/04 45,847
70,000(3) 0.7 18.00 10/31/04 444,585
80,000(4) 0.8 18.00 10/31/06 435,316
- -------------------------------------------------------------------------------------------------------
Sanat K. Dutta.............. 40,000(3) 0.4 7.00 3/31/04 49,956
25,000(3) 0.3 18.00 10/31/04 159,973
100,000(4) 1.0 18.00 10/31/06 544,145
- -------------------------------------------------------------------------------------------------------
John Wm. Winkelhaus, II..... 40,000(3) 0.4 7.00 3/31/04 52,397
75,000(4) 0.8 18.00 10/31/06 408,108
- -------------------------------------------------------------------------------------------------------
Linwood A. (Chip) Lacy, Jr.. -- 0.0 -- -- --
- -------------------------------------------------------------------------------------------------------
</TABLE>

- -----------------
(1) Does not include the exchange or conversion of outstanding Ingram
Industries securities into Options in connection with the Split-Off.

(2) Such options were immediately exercisable on the date of grant.

(3) Such options become exercisable in four equal annual installments,
beginning April 1, 1998.

(4) Such options become exercisable over a fixed term, subject to continued
employment with the Company; however, such options will vest earlier if the
Company achieves certain performance criteria.

(5) The grant date present values shown in the table were determined pursuant
to the Black-Scholes option valuation model, using the following
assumptions: stock price volatility of 0% and 39.4% for the $7.00 options
and $18.00 options, respectively; expected lives of 3 years for the $7.00
options, 3.2 years for the $18.00 options which vest over 4 years, and 2.5
years for the $18.00 options which vest over a fixed term but are subject
to earlier vesting if the Company achieves certain performance criteria;
dividend yield of 0%; and risk free interest rate of 5.9%.

Stock Options/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Option/SAR Values. The following table provides information relating to any
stock options and ISUs exercised by the Named Executive Officers during the year
ended December 28, 1996, as well as the number and value of securities
underlying unexercised stock options held by the Named Executive Officers as of
December 28, 1996.

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 1996(1) ($)(2) UNEXERCISABLE UNEXERCISABLE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jerre L. Stead.............. -- -- 200,000/3,200,000 $1,100,000/$17,600,000
Jeffrey R. Rodek............ -- -- 0/624,582 0/9,245,118
David R. Dukes.............. -- -- 73,277/385,619 1,611,679/5,842,797
Sanat K. Dutta.............. -- -- 37,410/385,694 810,016/6,120,591
John Wm. Winkelhaus, II..... -- -- 42,559/316,819 918,300/5,459,084
Linwood A. (Chip) Lacy, Jr. 100,500 $2,921,148 10,000/308,690 220,900/6,795,268
</TABLE>

- -------------------
(1) Excludes Ingram Industries ISUs held by Mr. Lacy that matured in 1996 and
were settled in cash.

(2) Includes $612,353 paid to Mr. Lacy in connection with the settlement of
ISUs.

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. In connection with the Split-Off, the
Company established a qualified plan similar to the Ingram Industries qualified
plan. None of the Named Executive Officers participates in or 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 exercisable for 3,600,000 shares of
Class A Common Stock. Such options will vest over an extended period, as
described above. In lieu of receipt of 200,000 of such options, Mr. Stead
purchased 200,000 shares of Class A Common Stock directly from the Company at
the initial public offering price. See "--1996 Plan." Mr. Stead will not receive
any salary, bonus, or other cash compensation during the vesting period of such
options; however, the Company's agreement with Mr. Stead provides for the
Company to compensate Mr. Stead in a mutually agreeable manner in the event
(which occurred) that the initial public offering price exceeded $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.

<PAGE> 57
Mr. Rodek currently serves as Worldwide President and Chief Operating Officer.

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).
Mr. Dutta currently serves as Executive Vice President and President, Ingram
Micro U.S.

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.
Winkelhaus currently serves as Executive Vice President, Global Channel
Assembly.

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.

Pursuant to the Severance Agreement, Mr. Lacy agreed to cooperate with the
Company and Ingram Industries in connection with the consummation of the
Split-Off and the IPO. 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 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 agreed to 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 were
converted into shares of Class B Common Stock in connection with the Split-Off.
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

<PAGE> 58
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 the holder's employment. As of March 29, 1997, 50,000 of such
shares had been repurchased by the Company. In order to allow loan financing
from a bank of the shares purchased in the Employee Offering, the Company
entered into repurchase agreements with such bank, pursuant to which it agreed
to repurchase (i) unvested shares at the lower of fair market value and $7.00
and (ii) vested shares at fair market value, in the event of an employee's
default on his or her loan.

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. 10,000 of
such shares have been forfeited to the Company to date.

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 has amended the 1996 Plan,
effective as of October 31, 1996, primarily to increase the number of shares
available for grant from 10,000,000 shares to 12,000,000 shares, as well as to
change the allowable vesting schedule for options granted under the 1996 Plan
and to permit options to be granted to purchase shares of Class A Common Stock
in addition to Class B Common Stock. Options granted prior to October 31, 1996
will continue to be governed by the 1996 Plan as in effect prior to the
amendment of the 1996 Plan.

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 Human Resources Committee of the Board
of Directors of the Company (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.

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
("Non-Qualified 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 12,000,000 shares of Common Stock (which may be either
Class A 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 ERISA and is not qualified
under Section 401(a) of the Code.

At March 29, 1997, approximately 2,027,000 shares of Common Stock are
available for grant under the 1996 Plan.

<PAGE> 59
1996 EMPLOYEE STOCK PURCHASE PLAN

The Company has made available to its employees the opportunity to purchase
shares of Class A Common Stock under its 1996 Employee Stock Purchase Plan (the
"ESPP"). The ESPP was adopted by the Board of Directors and stockholders in
October 1996. The ESPP is intended to qualify under Section 423 of the Code and
permits eligible employees of the Company to purchase Class A Common Stock
through payroll deductions, provided that no employee may accrue the right to
purchase more than $25,000 worth of stock under all employee stock purchase
plans of the Company in any calendar year. Up to 1,000,000 shares of Class A
Common Stock is available for sale under the ESPP. The initial offering period
commenced on November 1, 1996 and will end on the last market trading day on or
before December 31, 1998, and the right to purchase shares of Class A Common
Stock will accrue in an amount not to exceed $13,000 per employee for such
initial offering during the offering period. The price of Class A Common Stock
offered under the initial offer under the ESPP was 100% of the lower of the fair
market value of the Class A Common Stock on the first or last day of the
offering period. The price of Class A Common Stock offered under subsequent ESPP
offerings, the duration of which will be determined by the Committee, will be
from 85% to 100% of the lower of the fair market value of the Class A Common
Stock on the first or last day of each offering period, as determined by the
Committee. Employees may end their participation in the ESPP at any time during
an offering period, and they will be paid their payroll deductions accumulated
to date. Participation ends automatically on termination of employment with the
Company.

Rights granted under the ESPP are not transferable by a participant other
than by will, the laws of descent and distribution, or as otherwise provided
under the ESPP.

The Board may amend or terminate the ESPP at any time. The ESPP will
terminate in all events on the last business day in October 2006.

EXECUTIVE INCENTIVE BONUS PLAN

All officers of the Company are eligible to participate in the Company's
Executive Incentive Bonus Plan (the "Incentive Plan"). Pursuant to the Incentive
Plan, officers receive incentive 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 were
converted to the Options. In addition, holders of approximately 300,000 Ingram
Industries ISUs had the option to exchange a portion of their ISUs for the
Options. See "The Plan" and "The Split-Off and the Reorganization -- The
Split-Off." At March 29, 1997, approximately 9,104,000 Options were outstanding,
with exercise prices ranging from $0.66 to $3.32 per share. See "The Split-Off
and the Reorganization -- The Split-Off." 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.

HUMAN RESOURCES (COMPENSATION) COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.

Messrs. Davis and Samper and Mrs. Ingram served on the Human Resources
Committee during 1996. No Human Resources Committee interlocks or insider
participation existed in 1996.

CERTAIN TRANSACTIONS

Historically, Ingram Industries provided certain administrative services to
the Company. The Company was allocated a portion of the costs of these
administrative services. This allocation totaled $3.6 million in 1996. In
connection with the Split-Off, the Company entered into certain agreements (the
"Transitional Service

<PAGE> 60
Agreements") with Ingram Industries relating to the continued provision of
certain administrative services. The Company believes that the terms of the
Transitional Service Agreements are on a basis as favorable as those that would
have been obtained from third parties on an arm's length basis. The Transitional
Service Agreements generally terminated 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 historically provided a large portion of
the debt financing required by the Company in connection with its expansion.
Interest on such debt was charged based on Ingram Industries' domestic weighted
average cost of funds. In connection with the Split-Off, the Company assumed
$160 million of fixed rate medium term certificates and $13.0 million of
outstanding commercial paper under Ingram Industries' accounts receivable
securitization program, in partial satisfaction of the amounts due to Ingram
Industries. Assumption of the securitization program resulted in a $160 million
reduction of trade accounts receivable and long-term debt on the Company's
consolidated balance sheet at December 28, 1996. The Company used proceeds from
the IPO to repay the remaining intercompany indebtedness to Ingram Industries of
$366.3 million, which was incurred for general corporate purposes, primarily
working capital needs in connection with the expansion of the Company's
business. The Company also used borrowings under its new $1 billion credit
facility (the "Credit Facility") to repay outstanding revolving indebtedness
related to amounts drawn by certain of the Company's subsidiaries, as
participants in Ingram Industries' then existing $380 million credit facility,
which terminated concurrently with the closing of the IPO.

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. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Liquidity Capital Resources." Until November 1996,
the Company subleased its facilities in Santa Ana, California and Harrisburg,
Pennsylvania from Ingram Industries. The sublease agreement required annual
rental payments of approximately $2.1 million. In connection with the Split-Off,
the Company acquired ownership of two of three office buildings within the Santa
Ana campus, as well as the Harrisburg distribution center, for an aggregate
amount of approximately $22.6 million. The Company's lease for its distribution
center in Millington, Tennessee was previously guaranteed by Ingram Industries.
Certain of the Company's other leases were also guaranteed by Ingram Industries.
Such guarantees were 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 1996 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, agreements relating to board
representation and registration rights with respect to Class A Common Stock held
by the Ingram Family Stockholders (including shares of Class A Common Stock
issued upon conversion of Class B Common Stock) were entered into by the Company
and the Ingram Family Stockholders. See "The Split-Off and the Reorganization."

THE SPLIT-OFF AND THE REORGANIZATION

Immediately prior to the closing of the IPO, Ingram Industries consummated
the Split-Off. The Company, Ingram Industries, and Ingram Entertainment have
also entered into certain agreements to effect the Reorganization. The following
is a summary of certain of the material terms of the Split-Off.

THE SPLIT-OFF

Immediately prior to the closing of the IPO, Ingram Industries consummated
an exchange, under an Exchange Agreement (the "Exchange Agreement"), pursuant to
which certain existing stockholders of Ingram Industries exchanged a specified
number of their shares of Ingram Industries common stock for shares of Class B
Common Stock of the Company of equivalent value to the shares of Ingram
Industries so exchanged. The exchange of shares of Ingram Industries common
stock for shares of Class B Common

<PAGE> 61
Stock of the Company, together with those elements of the Reorganization which
occurred prior to the closing of the IPO, are referred to herein as the
"Split-Off." See "Principal Stockholders." Eligible stockholders who exchanged
shares of Ingram Industries common stock eligible to be exchanged received
107,251,362 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 Split-Off was fair to all
involved parties. In the Exchange Agreement, the Company covenanted that, during
the two-year period following the Split-Off, 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 Split-Off, (iii) cease to conduct the principal active trade
or business conducted by it during the five years immediately preceding the
Split-Off, 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 the Split-Off, 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. After the Split-Off, Ingram
Entertainment has continued to be a wholly-owned subsidiary of Ingram
Industries. Although there can be no assurance, it is contemplated that,
pursuant to the Exchange Agreement, on or after June 20, 1997, certain remaining
stockholders of Ingram Industries will exchange their remaining shares of Ingram
Industries common stock for shares of Ingram Entertainment common stock.

Certain outstanding Ingram Industries options and SARs were converted to,
and certain Ingram Industries ISUs were exchanged for, the Options. The exchange
values for these options, SARs, and ISUs were based primarily 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. The total number of
Options outstanding immediately after the Split-Off were exercisable for
approximately 11,000,000 shares of Class A Common Stock. See "The Plan" and
"Management--Rollover Plan; Incentive Stock Units."

The Company and the Ingram Family Stockholders entered 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 Stock, 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 Stock 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 the IPO 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.

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 Stock 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.

<PAGE> 62
The Ingram Family Stockholders and the other stockholders of Ingram
Industries who received shares of Class B Common Stock in the Split-Off entered
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 the IPO. 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 the IPO; 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 the
IPO) 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
the IPO 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 the IPO. Employees who received shares in the Employee Offering,
and persons who have exercised 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, which received 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 the
IPO and (ii) the first anniversary of the closing of the IPO 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 Ingram Thrift Plan in order
to comply with the requirements of ERISA or are necessary to fund distributions
to Ingram Thrift Plan participants ("Registrable Securities"). Such rights were
transferred to the Thrift Plans in connection with the establishment of
individual thrift plans for each of the Company, Ingram Industries and Ingram
Entertainment. If a registration statement covering the Registrable Securities
has not become effective during either such 90-day period, the Thrift Plans 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 Class A
Common Stock; provided that the Company's obligation in any fiscal year to
purchase shares not required to fund distributions by the Thrift Plans 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 Plans 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

<PAGE> 63
notified the Thrift Plans of the filing of a registration statement covering
Registrable Securities or when such a registration statement is effective. The
Ingram Thrift Plan sold 770,000 shares of Common Stock in December 1996 pursuant
to an effective registration statement. 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. The Thrift Plan Liquidity Agreement also allows the Thrift Plans to
include shares of Class A Common Stock in any registration statement to be filed
by the Company with respect to shares of Common Stock to be issued upon exercise
of Options. The Thrift Plans are including shares of Common Stock herein
pursuant to such provision.

THE REORGANIZATION

Prior to the Split-Off, the Company was a subsidiary of Ingram Industries,
a company controlled by the Ingram Family Stockholders. Ingram Industries is
engaged in various businesses, 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. The businesses of the Company, Ingram
Industries, and Ingram Entertainment (each, an "Ingram Company") and their
respective subsidiaries have been reorganized as described below. In conjunction
with the Split-Off, the Company assumed Ingram Industries' accounts receivable
securitization program in partial satisfaction of amounts due to Ingram
Industries. The Company repaid 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"),
each Ingram Company has agreed 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 Split-Off, 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 Split-Off 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 Split-Off 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 Split-Off. 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 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

<PAGE> 64
respect to periods ending on or prior to the closing of the Split-Off 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 currently believes
that any such liabilities, fees, or costs will be largely offset by other
amounts due from Ingram Industries. However, there can be no assurance that
further payments, which could be material, will not be required in the future.

Pursuant to the Reorganization Agreement, each Ingram Company agreed to
conduct its business, from the date of the Reorganization Agreement until the
closing of the Split-Off, in the ordinary course of business consistent with
past practice. The Reorganization Agreement required the Company, at or prior to
the closing of the Split-Off, to enter into bank repurchase agreements with
respect to securities of the Company received in connection with the Exchange
Agreement in exchange for shares of Ingram Industries common stock previously
held as collateral for certain loans made to stockholders of Ingram Industries.
If securities of Ingram Industries are exchanged for securities of Ingram
Entertainment, as contemplated in "--The Split-Off" above, Ingram Entertainment
has agreed to enter into similar agreements with respect to such securities.

Pursuant to the Reorganization Agreement, each Ingram Company has agreed 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 have also entered into an employee benefits transfer
and assumption agreement (the "Employee Benefits Agreement"). The Employee
Benefits Agreement provides 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, the Ingram Companies entered into a
tax sharing and tax services agreement (the "Tax Sharing Agreement"). Under the
Tax Sharing Agreement, the Company agreed 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 federal or state income tax liabilities of
Ingram Industries, Ingram Entertainment, or the Company (x) relating to tax
periods ending on or prior to the Split-Off or (y) resulting from a failure
(other than due to a breach of certain representations or covenants) of either
the Split-Off or the subsequent exchange of securities of Ingram Industries for
securities of Ingram Entertainment to qualify for tax-free treatment. However,
no liability with respect to the subsequent exchange involving Ingram
Entertainment will be allocated to the Company if such exchange is not completed
in accordance with the provisions of the Exchange Agreement or if the facts and
circumstances of such exchange are materially different from those on which the
private letter ruling received by Ingram Industries (see "The Split-Off and the
Reorganization -- Conditions to the Split-Off") is based, unless a supplemental
private letter ruling reasonably satisfactory to the Company addressing such
differences is obtained prior to such exchange. 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 have each agreed that, upon the exercise by
one of its employees of an option granted in connection with the Split-Off, it
will pay the Company an amount equal to the tax benefit, if any, received from
any

<PAGE> 65
compensation deduction in respect of such exercise. Furthermore, if the
Split-Off or the contemplated exchange of Ingram Entertainment common stock
fails to qualify for tax-free treatment as a result of a breach by one of the
Ingram Companies of specified representations or covenants contained in the
Exchange Agreement, any resulting deficiency will 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 based on the allocated
costs of such services. The Company received fees of $253,500 in 1996 (beginning
in November 1996), and is expected to receive approximately $1,782,400 in 1997.

SELLING STOCKHOLDERS

Pursuant to the Thrift Plan Liquidity Agreement, the Company has agreed to
register the sale of certain of the shares held by the Thrift Plans, or
alternatively to purchase such shares from such Thrift Plans. The registration
statement of which this Prospectus forms a part relates to a total of 1,900,000
shares, 65,000 shares and 40,000 shares of the shares held, respectively, by the
II Thrift Plan, the IM Thrift Plan and the IE Thrift Plan. See "The Split-Off
and the Reorganization--The Split-Off" and "Shares Eligible for Future Sale."

The following table sets forth certain information, as of March 31, 1997,
with respect to the beneficial ownership of Class B Common Stock by each of the
Thrift Plans. The Thrift Plans do not own any Class A Common Stock. The
percentages included under "After Offering" below assume no sales of Class A
Common Stock by the Company pursuant to the exercise of Options. The percentages
would not be materially different if such shares of Class A Common Stock were
outstanding.

<TABLE>
<CAPTION>
BEFORE OFFERING AFTER OFFERING
------------------------------------------------- -------------------------------------------------
SHARES OF PERCENTAGE OF SHARES OF PERCENTAGE OF
CLASS B COMMON TOTAL CLASS B COMMON TOTAL
STOCK OUTSTANDING PERCENTAGE OF STOCK OUTSTANDING PERCENTAGE OF
BENEFICIALLY SHARES OF TOTAL VOTING BENEFICIALLY SHARES OF TOTAL VOTING
NAME OWNED COMMON STOCK POWER OWNED COMMON STOCK POWER
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
II THRIFT PLAN 6,688,708 5.0% 6.0% 4,788,708 3.6% 4.4%
- ---------------------------------------------------------------------------------------------------------------------
IM THRIFT PLAN 1,691,509 1.3% 1.5% 1,626,509 1.2% 1.5%
- ---------------------------------------------------------------------------------------------------------------------
IE THRIFT PLAN 856,783 0.6% 0.8% 816,783 0.6% 0.7%
- ---------------------------------------------------------------------------------------------------------------------
TOTAL FOR ALL
THRIFT PLANS 9,237,000 6.9% 8.3% 7,232,000 5.4% 6.6%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE> 66
PRINCIPAL STOCKHOLDERS

The following table sets forth certain information, as of March 31, 1997
(unless otherwise noted), with respect to the beneficial ownership of each class
of the Common Stock by (a) each Director of the Company; (b) the Company's Chief
Executive Officer, the Company's former Chief Executive Officer and the other
four most highly compensated executive officers of the Company in the most
recently completed fiscal year (collectively, the "Named Executive Officers");
(c) all executive officers and Directors of the Company as a group; and (d) each
person known by the Company to own beneficially more than five percent of the
outstanding shares of either class of Common Stock.

<TABLE>
<CAPTION>
COMMON STOCK (CLASS A
COMMON STOCK AND
CLASS A COMMON STOCK (1) CLASS B COMMON STOCK CLASS B COMMON STOCK)
---------------------------- ----------------------------- -------------------------
PERCENTAGE PERCENTAGE
SHARES SHARES OF TOTAL OF TOTAL
BENEFICIALLY PERCENTAGE BENEFICIALLY PERCENTAGE OUTSTANDING VOTING
NAME OWNED OF CLASS OWNED OF CLASS SHARES POWER
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Don H. Davis, Jr................ -- -- -- -- -- --
David B. Ingram(2)(3)........... 14,435 (4)(5) * 72,377,210 (6)(7) 66.4% 53.7% 64.8%
John R. Ingram(3)(8)............ 55,346 (4)(5) * 71,875,977 (6)(7) 65.9% 53.3% 64.4%
Martha R. Ingram(3)(8).......... -- (5) -- 83,740,791 (6)(7) 76.8% 62.1% 75.0%
Philip M. Pfeffer(9)............ 144,679 * 1,972,478 (7) 1.8% 1.6% 1.8%
J. Phillip Samper............... -- -- -- -- -- --
Jerre L. Stead.................. 400,000 (10) 1.5% -- -- * *
Joe B. Wyatt.................... 193,065 (11) * -- -- * *
Jeffrey R. Rodek................ 42,902 (4) * 285,000 * * *
David R. Dukes.................. 119,099 (12) * 65,000 * * *
Sanat K. Dutta.................. 86,833 (13) * 85,000 * * *
John Wm. Winkelhaus, II......... 85,118 (4) * 85,000 * * *
Linwood A. (Chip) Lacy, Jr.(14). 105,180 (4) * 1,390,062 (7) 1.3% 1.1% 1.3%
All executive officers and
Directors as a group (26
persons)(3)(15).............. 1,811,726 (5)(16) 6.7% 98,301,855 (6)(7) 90.1% 73.6% 88.1%
Orrin H. Ingram(3)(8)........... 97,245 (5)(17) * 73,157,670 (6)(7) 67.1% 54.3% 65.5%
Robin Ingram Patton(3)(8)....... -- (5) -- 71,646,916 (6)(7) 65.7% 53.1% 64.2%
E. Bronson Ingram QTIP
Marital Trust(3)(8).......... -- -- 69,099,259 63.4% 51.2% 61.9%
SunTrust Bank, Atlanta(18)...... 43,329 * 11,802,632 10.8% 8.8% 10.6%
Roy E. Claverie(8).............. -- (5) -- 7,540,794 (6)(7)(19) 6.9% 5.6% 6.8%
Ingram Thrift Plan(8)........... -- -- 6,688,708 6.1% 5.0% 6.0%
Tiger Management L.L.C.,
Tiger Performance
L.L.C., Panther
Partners, L.P., Panther
Management Company,
L.P., and Julian H.
Robertson Jr.(20)............ 4,831,100 18.7% -- -- 3.6% *
FMR Corp.(21)................... 1,413,400 5.5% -- -- 1.0% *
AIM Management Group
Inc.(22)..................... 1,840,300 7.1% -- -- 1.4% *
Public Employees Retirement
System of Ohio(23)........... 1,400,000 5.4% -- -- 1.0% *
</TABLE>

- ----------------------
(footnotes on following page)

66
<PAGE> 67
- ----------------------
* Less than one percent.

(1) Excludes each shareowner's beneficial ownership of Class B Common Stock,
which may be converted into Class A Common Stock at any time, at the
option of the holder.

(2) The address for David B. Ingram is c/o Ingram Entertainment Inc., Two
Ingram Boulevard, La Vergne, Tennessee 37089.

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

(4) Represents stock options exercisable for shares of Class A Common Stock
within 60 days of the date of the table.

(5) Excludes 246,000 shares of Class A Common Stock purchased by Ingram
Industries in the IPO (including 15,000 shares purchased by Ingram
Industries' subsidiary Ingram Entertainment). As principal shareowners of
Ingram Industries, the indicated shareowners may be deemed to be
beneficial owners of the shares held by Ingram Industries.

(6) Includes 71,286,290; 71,266,588; 71,286,290; 7,068,715; 71,286,290;
81,702,789; and 84,078,771 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.

(7) 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 2,932,919 shares held by one or more trusts of which she is a
beneficiary; for Orrin H. Ingram 1,441,858 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.

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

(9) The address for Mr. Pfeffer is c/o Random House, Inc., 201 East 50th
Street, New York, New York 10022.

(10) Includes options to purchase 200,000 shares of Class A Common Stock.

(11) Includes options to purchase 188,065 shares of Class A Common Stock.

(12) Includes options to purchase 56,118 shares of Class A Common Stock.

(13) Includes options to purchase 42,559 shares of Class A Common Stock.

(14) The address for Mr. Lacy is c/o Micro Warehouse, 535 Connecticut Avenue,
Norwalk, Connecticut 06854.

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

(16) Includes options to purchase 1,275,167 shares of Class A Common Stock.

(17) Includes options to purchase 62,923 shares of Class A Common Stock.

(18) The address for SunTrust Bank, Atlanta ("SunTrust") is 25 Park Place, NE,
Atlanta, Georgia 30303. All shares of Class B Common Stock are held by
SunTrust as trustee for certain individuals. All shares of Class A Common
Stock are held in accounts for customers of SunTrust Banks and its
affiliates. SunTrust and its affiliates have sole voting and dispositive
power with respect to 20,320 of these shares of Class A Common

<PAGE> 68
Stock, and shared voting and dispositive power with respect to 4,100 of
such shares. SunTrust and its affiliates hold the other 18,909 shares of
Class A Common Stock in non-discretionary accounts. SunTrust Banks and
each of its affiliates disclaim any beneficial interest in all shares of
Class A Common Stock it holds.

(19) Includes 6,688,708 shares held by the Ingram Thrift Plan. Mr. Claverie
may be deemed to be the beneficial owner of such shares, because he is a
trustee of the Ingram Thrift Plan.

(20) As of April 30, 1997, based on information provided in a Schedule 13G
filed on May 9, 1997 by Tiger Management L.L.C., Tiger Performance
L.L.C., Panther Partners, L.P., Panther Management Company, L.P.,. and
Julian H. Robertson, Jr. The address for each of Tiger Management L.L.C.,
Tiger Performance L.L.C., Panther Partners, L.P., Panther Management
Company, L.P., and Julian H. Robertson, Jr. is 101 Park Avenue, New York,
NY 10178.

(21) As of April 30, 1997, based on information provided in a Schedule 13G
filed on May 8, 1997 by FMR Corp. The address for FMR Corp. is 82
Devonshire Street, Boston, Massachusetts 02109.

(22) As of December 31, 1996, based on information provided in a Schedule 13G
filed on February 12, 1997 by AIM Management Group Inc. The address for
AIM Management Group Inc. is 11 Greenway Plaza, Suite 1919, Houston,
Texas 77046.

(23) As of December 31, 1996. The address for the Public Employees Retirement
System of Ohio is 277 East Town Street, Columbus, Ohio 43215.

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 25,786,779 shares
were issued and outstanding at March 29, 1997, and 135,000,000 shares of Class B
Common Stock, par value $0.01 per share, of which 109,043,762 shares were issued
and outstanding at March 29, 1997. 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. Additionally, any shares of Class A Common Stock (a maximum of
1,378,369 shares) sold by the Company in this offering upon exercise of Options
will be outstanding and any shares (a maximum of 2,005,000 shares) sold by the
Thrift Plans in this offering will be converted from Class B Common Stock into
Class A Common Stock. 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
Amended and Restated Bylaws (the "Bylaws") of the Company, which are included
as exhibits to the Registration Statement of which this Prospectus forms a part.

COMMON STOCK

The shares of Class A 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 Class A Common Stock entitles the holder to
one vote on each matter submitted to a vote of the Company's shareowners,
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 Class A Common Stock and Class B Common Stock
vote together as a single class on all matters submitted to a vote of the
shareowners of the Company. There is no cumulative voting. See "Risk
Factors -- Control by Ingram Family Stockholders; Certain Anti-Takeover
Provisions."

Subject to New York Stock Exchange requirements, 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 shareowners may be taken by written consent in lieu of a
meeting if the Company receives consents signed by shareowners having the
minimum number of votes

<PAGE> 69
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 shareowners the opportunity to voice dissenting views or raise
other matters. The right to take such action by written consent of shareowners
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 Class A 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 Class A Common Stock
or Class B Common Stock, only shares of Class A Common Stock will be distributed
with respect to the Class A 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 Class A 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 Class
A 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 Class A 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 Class A Common Stock upon the same
terms and conditions applicable to the Class B Common Stock.

Neither the Class A 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 Class A Common Stock has no conversion rights.

The Class B Common Stock is convertible into Class A 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 Class A 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 Class A Common Stock upon the earliest to occur of (i)
November 6, 2001; (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 Stock 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 Class A 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 Stock are
exchanged for or changed into other stock or securities, cash and/or any other
property, holders of each class of Common Stock will be entitled to receive an
equal per share

69
<PAGE> 70
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 Stock 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 Class A
Common Stock and Class B Common Stock differ at that time.

OTHER PROVISIONS. The holders of the Class A 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 Class A 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 shareowners. 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 Class A 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 Class A 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
shareowners 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 shareowners, (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 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 shareowners may be
unable to obtain monetary damages from a director for breach of his duty of
care. Although shareowners may continue to seek injunctive or other equitable
relief for an alleged breach of fiduciary duty by a director, shareowners 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

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. The Board Representation Agreement contains
additional provisions relating to corporate governance. See "The Split-Off and
the

<PAGE> 71
Reorganization -- The Split-Off."

Annual meetings of shareowners 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 shareowners may be called by the chairman and shall
be called by the secretary on the written request of shareowners having 10% of
the voting power of the Company. The shareowners may act by written consent in
lieu of a meeting of shareowners 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 Stock 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
shareowners 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 be eight or nine. The size of the initial Board is fixed at eight members,
but may be increased to 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 shareowners, 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 shareowners. 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
shareowners. So long as the Ingram Family Stockholders and their permitted
transferees own at least 25,000,000 shares of the Common Stock, the Bylaws will
provide for the appointment of the Designated Nominees.

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

SECTION 203 OF THE DGCL

The Company is 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 shareowners by the affirmative vote of at least 66
2/3% of the outstanding voting stock of the corporation not owned by the
interested stockholder.

71
<PAGE> 72
TRANSFER AGENT

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

SHARES ELIGIBLE FOR FUTURE SALE

At March 29, 1997, the Company had outstanding an aggregate of 25,786,779
shares of Class A Common Stock and 109,043,762 shares of Class B Common Stock.
Additionally, any shares of Class A Common Stock sold by the Company in this
offering (a maximum of 1,378,369 shares) and any shares sold by the Thrift Plans
in this offering which will be converted from Class B Common Stock into Class A
Common Stock (a maximum of 2,005,000 shares) will be outstanding. Of the total
outstanding shares of Common Stock (assuming all shares are purchased in the
offering) only the following shares of Class A Common Stock 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): (i) shares of Class A
Common Stock sold in the IPO, and (ii) shares of Class A Common Stock issued
pursuant to Registration Statements on Form S-8 and Form S-1 relating to the
Plan, the 1996 Plan, the ESPP and the Thrift Plans, including the shares of
Class A Common Stock being offered by the Company in this offering, and (iii)
shares of Class A Common Stock sold by the Thrift Plans in this offering.

The remaining shares of Common Stock acquired by shareowners prior to
completion of the IPO or in the Split-Off are "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 one year
(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, a number of shares that does not exceed
the greater of (i) 1% of the then outstanding shares of such class of the Common
Stock or (ii) generally, the average weekly trading volume in such class of the
Class A 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 two 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 Stock that would
otherwise be deemed "restricted securities" could be sold at any time through an
effective registration statement relating to such shares of Common Stock.

Of the 109,043,762 shares of Class B Common Stock outstanding as of March
29, 1997, 2,562,400 shares (the "Employee Offering Shares") were acquired
pursuant to the Employee Offering and the concurrent grant of restricted stock
awards, and 106,481,362 shares were 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) 106,481,362 shares of Class B Common Stock will
be eligible for sale on November 6, 1997, and (c) the Employee Offering Shares
not repurchased or forfeited will be eligible for sale upon the later of (i)
July 1997 and (ii) for those shares pledged to secure purchase money loans for
such shares, one year after the release of such pledge. In addition, the
Employee Offering Shares are subject to contractual vesting restrictions, which
restrictions begin to lapse in April 1998.

Pursuant to the Registration Rights Agreement, the QTIP Trust, which holds
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 the IPO; 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

<PAGE> 73
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, at the time of the
Split-Off, approximately 18,210,000 shares of Class B Common Stock (which may
only be exercised within the 84-month period following the closing of the IPO on
November 6, 1996). In addition, the Registration Rights Agreement grants one
demand registration right to certain minority shareowners of the Company, if a
change of control of the Company occurs following the closing of the IPO but
prior to the second anniversary of the Split-Off Date. The minority shareowners
will not be entitled to this registration right if they were offered the
opportunity to participate in the change of control transaction.

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 the IPO. 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 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 Stock
that is no longer subject to restrictions.

Pursuant to the Thrift Plan Liquidity Agreement, the Thrift Plans have
certain rights to require the Company to purchase such shares of Class B Common
Stock as are required to be sold by the Thrift Plans 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.

In addition to the registration statement of which this Prospectus forms a
part, the Company filed a registration statement on Form S-8 relating to Options
held by employees of the Company. See "The Plan--Exercise of Options." The
Company also filed registration statements on Form S-8 relating to options
granted under the 1996 Plan (and the amended 1996 Plan), and for shares to be
issued pursuant to the ESPP. 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. As of March 29, 1997,
options to purchase an aggregate of approximately 19,000,000 shares of Class A
Common Stock and Common B Common Stock were outstanding. See "The Plan,"
"Management -- 1996 Plan," and "-- Rollover Plan; Incentive Stock Units."

Each holder of shares of the remaining 106,481,362 shares of Class B Common
Stock received in the Split-Off, in order to obtain the private letter ruling
from the IRS, has represented in the Exchange Agreement that there was 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
Split-Off. As described above, all such shares are subject to restrictions on
resale under Rule 144, including a one-year holding period. In addition, certain
minority shareowners may have demand registration rights under the Registration
Rights Agreement upon a change of control, as described above.

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 Class A 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

73
<PAGE> 74
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 Class A 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 Class A 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
Class A 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 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 CLASS A 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 Class A Common
Stock unless (i) the gain is effectively connected with a trade or

74
<PAGE> 75
business of such holder in the United States, (ii) in the case of certain
Non-U.S. Holders who are nonresident alien individuals and hold the Class A
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
CLASS A 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 Class A 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 Class A 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.

PLAN OF DISTRIBUTION

THIS SECTION IS NOT APPLICABLE TO SALES MADE BY THE COMPANY PURSUANT TO THE
EXERCISES OF OPTIONS UNDER THE PLAN. THIS SECTION ONLY APPLIES TO SALES MADE BY
THE THRIFT PLANS.

The Company will not receive any proceeds from any sales of Class A Common
Stock offered by the Thrift Plans pursuant to this Prospectus. Shares of Class A
Common Stock may be sold from time to time to purchasers directly by the Thrift
Plans. Alternatively, from time to time the Thrift Plans may offer shares of
Class A Common Stock through underwriters, brokers, dealers or agents, who may
receive compensation in the form of underwriting discounts, concessions or
commissions from the seller and/or the purchasers for whom they may act as
agent. The Thrift Plans and any such underwriters, dealers or agents that
participate in the distribution of the Class A Common Stock may be deemed to be
underwriters, and any profits on the sale of Class A Common Stock by them and
any associated discounts, commissions or concessions that are received may be
deemed to be underwriting compensation under the Securities Act. To the extent
any of the Thrift Plans may be deemed to be an underwriter, it

75
<PAGE> 76
may be subject to certain statutory liabilities under the Securities Act
including but not limited to Sections 11 and 12 of the Securities Act. If
required at the time a particular offering is made, a Prospectus Supplement will
be distributed that will set forth the aggregate number of shares of Class A
Common Stock being offered and the terms of the offering, including the name or
names of any underwriters, any discounts, commissions and other items
constituting compensation from the selling Thrift Plans and any discounts,
commissions or concessions allowed or reallowed or paid to dealers. Such
Prospectus Supplement, and, if necessary, a post-effective amendment to the
registration statement of which this Prospectus forms a part, will be filed with
the Commission to reflect the disclosure of additional information with respect
to the distribution of the Class A Common Stock.

Shares of the Class A Common Stock may be sold from time to time in one or
more transactions at a fixed offering price, which may be changed, or at varying
prices determined at the time of sale or at negotiated prices. Such prices will
be determined by the Thrift Plan selling such shares or by agreement between
such Thrift Plan and underwriters or dealers. Each of the Thrift Plans also may,
from time to time, authorize dealers, acting as the respective Thrift Plan's
agents, to solicit offers to purchase the Class A Common Stock upon the terms
and conditions set forth in any Prospectus Supplement.

Each of the Thrift Plans and any other person participating in a sale or
distribution of the Class A Common Stock will be subject to applicable
provisions of the Exchange Act and the rules and regulations thereunder,
including without limitation Rules 10b-5, 10b-6 and 10b-7, which provisions may
limit the timing of purchases and sales of any of the Class A Common Stock by
each of the Thrift Plans and any other such person.

In connection with this offering, underwriters, if any, may engage in
transactions that stabilize, maintain or otherwise affect the price of the Class
A Common Stock or other securities of the Company. Specifically, underwriters,
if any, may overallot the offering, creating a syndicate short position. In
addition, underwriters, if any, may bid for, and purchase, the Class A Common
Stock in the open market to cover syndicate shorts or to stabilize the price of
the Class A Common Stock. Finally, the underwriting syndicate, if any, may
reclaim selling concessions allowed for distributing the Class A Common Stock in
the offering, if the syndicate repurchases previously distributed Class A Common
Stock in syndicate covering transactions, in stabilization transactions or
otherwise. Any of these activities may stabilize or maintain the market price of
the Class A Common Stock above independent market levels. Underwriters, if any,
are not required to engage in these activities, and may end any of these
activities at any time.

The Class A Common Stock is listed on the New York Stock Exchange under the
symbol: "IM."

The Company has agreed to pay all expenses incident to the registration
statement of which this Prospectus forms a part and the sale of Class A Common
Stock by the Thrift Plans hereunder to the public, other than commissions, fees
and discounts of underwriters, dealers or agents. In addition, each of the
Thrift Plans and any underwriters, agents dealers and brokers participating in
the distribution of the Class A Common Stock, will be indemnified by the Company
against certain civil liabilities, including liabilities under the Securities
Act.

LEGAL MATTERS

Certain legal matters with respect to the Class A Common Stock offered in
this offering will be passed upon for the Company by James E. Anderson, Jr.,
Senior Vice President, Secretary and General Counsel of the Company. Mr.
Anderson owns shares of Common Stock, and options to purchase shares of Common
Stock, with a value in excess of $50,000.

EXPERTS

The consolidated financial statements as of December 30, 1995 and December
28, 1996 and for each of the

<PAGE> 77
three fiscal years in the period ended December 28, 1996 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.

ADDITIONAL INFORMATION

THIS PROSPECTUS RELATING TO THE OPTIONS AND THE IM THRIFT PLAN IS AVAILABLE
FROM MATTHEW SAUER, INGRAM MICRO INC., 1600 EAST ST. ANDREW PLACE, SANTA ANA,
CALIFORNIA 92705 (TELEPHONE NUMBER: (714) 566-1000). THIS PROSPECTUS RELATING TO
THE II THRIFT PLAN IS AVAILABLE FROM MICHAEL HEAD, INGRAM INDUSTRIES INC., 4400
HARDING ROAD, NASHVILLE, TENNESSEE 37205 (TELEPHONE NUMBER: (615) 298-8200).
THIS PROSPECTUS RELATING TO THE IE THRIFT PLAN IS AVAILABLE FROM MARGARET
MORFORD, INGRAM ENTERTAINMENT INC., TWO INGRAM BOULEVARD, LA VERGNE, TN 37089
(TELEPHONE NUMBER: (615) 287-4050).

The Company has filed with the Commission a registration statement on Form
S-1 (together with any amendments thereto, the "Registration Statement") under
the Securities Act, with respect to the shares of Class A Common Stock being
offered hereby. This Prospectus 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.

The Company is subject to the informational requirements of the Exchange
Act, and, in accordance therewith, files 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. In addition, reports, proxy statements and other information
concerning the Company can be inspected at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005. Such material may also be
accessed electronically by means of the Commission's home page on the Internet
at http://www.sec.gov.

77
<PAGE> 78
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
INGRAM MICRO INC.

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
CONSOLIDATED BALANCE SHEET AS OF DECEMBER 30, 1995, DECEMBER 28, 1996
AND MARCH 29, 1997 (UNAUDITED)......................................................... F-2

CONSOLIDATED STATEMENT OF INCOME FOR THE YEARS ENDED DECEMBER 31, 1994, DECEMBER
30, 1995 AND DECEMBER 28, 1996 AND THE THIRTEEN WEEKS ENDED MARCH 30,
1996 AND MARCH 29, 1997 (UNAUDITED).................................................... F-3

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
1994, DECEMBER 30, 1995 AND DECEMBER 28, 1996 AND THE THIRTEEN WEEKS
ENDED MARCH 29, 1997 (UNAUDITED)....................................................... F-4

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1994,
DECEMBER 30, 1995 AND DECEMBER 28, 1996 AND THE THIRTEEN WEEKS ENDED
MARCH 30, 1996 AND MARCH 29, 1997 (UNAUDITED).......................................... F-5

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS..................................................... F-6

REPORT OF INDEPENDENT ACCOUNTANTS.............................................................. F-21
</TABLE>

F-1
<PAGE> 79
INGRAM MICRO INC.

CONSOLIDATED BALANCE SHEET
(dollars in 000s, except per share data)

<TABLE>
<CAPTION>
Fiscal Year End
-------------------------- March 29,
1995 1996 1997
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash $ 56,916 $ 48,279 $ 62,138
Trade accounts receivable (less allowances of $30,791
in 1995, $38,622 in 1996 and $42,896 in 1997) 1,071,275 1,143,028 1,194,492
Inventories 1,582,922 1,818,047 2,117,410
Other current assets 88,503 145,964 148,747
----------- ----------- -----------
Total current assets 2,799,616 3,155,318 3,522,787

Property and equipment, net 89,126 161,172 169,481
Goodwill, net 29,871 25,918 25,057
Other 22,285 24,539 26,680
----------- ----------- -----------
Total assets $ 2,940,898 $ 3,366,947 $ 3,744,005
=========== =========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,652,073 $ 2,047,988 $ 2,132,911
Accrued expenses 121,572 162,887 200,081
Current maturities of long-term debt 6,332 23,899 13,170
----------- ----------- -----------
Total current liabilities 1,779,977 2,234,774 2,346,162

Long-term debt 170,424 280,134 495,361
Due to Ingram Industries 673,792 -- --
Other 5,697 6,190 16,432
----------- ----------- -----------
Total liabilities 2,629,890 2,521,098 2,857,955

Minority interest 213 3,476 3,691
Commitments and contingencies (Note 9)
Redeemable Class B Common Stock -- 17,223 17,223

Stockholders' equity:
Preferred Stock, $0.01 par value, 1,000,000 shares
authorized; no shares issued and outstanding -- -- --
Class A Common Stock, $0.01 par value, 265,000,000
shares authorized; 25,047,696 and 25,786,779
shares issued and outstanding in 1996 and 1997,
respectively -- 250 258
Class B Common Stock, $0.01 par value, 135,000,000
shares authorized; 107,251,362, 109,043,762 and 109,043,762
shares issued and outstanding in 1995, 1996 and 1997
(including 2,460,400 redeemable shares in 1996 and 1997) 1,073 1,066 1,066
Additional paid in capital 22,427 449,657 457,679
Retained earnings 282,122 372,801 413,178
Cumulative translation adjustment 5,173 1,910 (6,571)
Unearned compensation -- (534) (474)
----------- ----------- -----------
Total stockholders' equity 310,795 825,150 865,136
----------- ----------- -----------
Total liabilities and stockholders' equity $ 2,940,898 $ 3,366,947 $ 3,744,005
=========== =========== ===========
</TABLE>

See accompanying notes to these consolidated financial statements

F-2
<PAGE> 80
INGRAM MICRO INC.

CONSOLIDATED STATEMENT OF INCOME
(dollars in 000s, except per share data)

<TABLE>
<CAPTION>
Fiscal Year Thirteen Weeks Ended
-------------------------------------------- ----------------------------
March 30, March 29,
1994 1995 1996 1996 1997
------------ ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales $ 5,830,199 $ 8,616,867 $ 12,023,451 $ 2,752,735 $ 3,649,978

Cost of sales 5,391,224 8,011,181 11,211,067 2,566,170 3,415,270
------------ ------------ ------------ ------------ ------------
Gross profit 438,975 605,686 812,384 186,565 234,708

Expenses:
Selling, general and administrative 296,330 415,344 537,893 123,304 154,145
Charges allocated from Ingram Industries 2,355 3,461 3,633 1,583 --
Noncash compensation charge (Note 12) -- -- 23,350 6,745 1,813
------------ ------------ ------------ ------------ ------------
298,685 418,805 564,876 131,632 155,958
------------ ------------ ------------ ------------ ------------

Income from operations 140,290 186,881 247,508 54,933 78,750

Other (income) expense:
Interest income (937) (3,479) (2,060) (340) (814)
Interest expense 8,744 13,451 14,812 3,926 7,308
Interest expense charged by Ingram Industries 24,189 32,606 35,123 10,635 --
Net foreign currency exchange loss 6,873 7,751 701 226 63
Other 716 1,936 2,175 876 3,148
------------ ------------ ------------ ------------ ------------
39,585 52,265 50,751 15,323 9,705
------------ ------------ ------------ ------------ ------------

Income before income taxes and
minority interest 100,705 134,616 196,757 39,610 69,045

Provision for income taxes 39,604 53,143 84,889 15,854 28,453
------------ ------------ ------------ ------------ ------------
Income before minority interest 61,101 81,473 111,868 23,756 40,592

Minority interest (2,243) (2,834) 1,189 (72) 215
------------ ------------ ------------ ------------ ------------
Net income $ 63,344 $ 84,307 $ 110,679 $ 23,828 $ 40,377
============ ============ ============ ============ ============

Earnings per share $ 0.52 $ 0.69 $ 0.88 $ 0.20 $ 0.28
============ ============ ============ ============ ============
</TABLE>

See accompanying notes to these consolidated financial statements

F-3
<PAGE> 81
INGRAM MICRO INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(DOLLARS IN 000S)

<TABLE>
<CAPTION>
Additional Cumulative
Common Stock Paid in Retained Translation Unearned
Class A Class B Capital Earnings Adjustment Compensation Total
--------- --------- --------- --------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
January 1, 1994 $ -- $ 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 -- 1,073 22,427 197,815 29 -- 221,344
Translation adjustment 5,144 5,144
Net income 84,307 84,307
--------- --------- --------- --------- --------- --------- ---------
December 30, 1995 -- 1,073 22,427 282,122 5,173 -- 310,795
Noncash compensation charge
related to stock options 23,170 23,170
Distribution to Ingram Industries (20,000) (20,000)
Grant of restricted Class B
Common Stock 1 713 (714) --
Net proceeds from sale of
Class A Common Stock 232 393,612 393,844
Stock options exercised 10 1,612 1,622
Income tax benefit from
exercise of stock options 8,123 8,123
Conversion of Class B Common
Stock to Class A Common Stock 8 (8)
Amortization of unearned
compensation 180 180
Translation adjustment (3,263) (3,263)
Net income 110,679 110,679
--------- --------- --------- --------- --------- --------- ---------
December 28, 1996 250 1,066 449,657 372,801 1,910 (534) 825,150
Noncash compensation charge
related to stock options 1,753 1,753
Stock options exercised 8 1,249 1,257
Income tax benefit from
exercise of stock options 5,020 5,020
Amortization of unearned
compensation 60 60
Translation adjustment (8,481) (8,481)
Net income 40,377 40,377
--------- --------- --------- --------- --------- --------- ---------
March 29, 1997 (unaudited) $ 258 $ 1,066 $ 457,679 $ 413,178 $ (6,571) $ (474) $ 865,136
========= ========= ========= ========= ========= ========= =========
</TABLE>

See accompanying notes to these consolidated financial statements

F-4
<PAGE> 82
INGRAM MICRO INC.

CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN 000S)

<TABLE>
<CAPTION>
Fiscal Year Thirteen Weeks ended
------------------------------------- -----------------------
March 30, March 29,
1994 1995 1996 1996 1997
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash provided (used) by operating activities:
Net income $ 63,344 $ 84,307 $ 110,679 $ 23,828 $ 40,377
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization 18,675 25,394 36,170 7,700 10,326
Deferred income taxes (4,668) (8,632) (1,635) (2,285) (1,892)
Minority interest (2,243) (2,834) 1,189 (72) 215
Noncash compensation charge -- -- 23,350 6,745 1,813
Changes in operating assets and liabilities,
net of effects of acquisitions:
Trade accounts receivable (232,268) (320,177) (237,747) (10,214) (81,599)
Inventories (345,511) (580,116) (239,054) 135,278 (322,031)
Other current assets (12,846) (15,877) (46,291) (4,635) (3,916)
Accounts payable 411,012 543,822 399,995 (117,676) 114,732
Accrued expenses 17,452 22,828 31,372 (3,444) 50,620
--------- --------- --------- --------- ---------
Cash provided (used) by operating activities (87,053) (251,285) 78,028 35,225 (191,355)

Cash provided (used) by investing activities:
Purchase of property & equipment (31,286) (52,985) (105,584) (14,186) (19,358)
Acquisitions, net of cash acquired (15,088) -- -- -- --
Other 3,765 4,188 (1,596) (1,925) (1,955)
--------- --------- --------- --------- ---------
Cash used by investing activities (42,609) (48,797) (107,180) (16,111) (21,313)

Cash provided (used) by financing activities:
Proceeds from sale of Class A Common Stock -- -- 393,844 -- --
Proceeds from sale of Redeemable Class B Common Stock -- -- 17,223 -- --
Exercise of stock options including tax benefits -- -- 11,331 -- 6,276
(Decrease) increase in borrowings from Ingram Industries 103,580 224,437 (513,792) (55,930) --
Proceeds from (repayment of) debt (4,930) (838) 49,717 238 53,135
Net borrowings under revolving credit facility 44,636 74,666 80,618 15,456 168,750
Distribution to Ingram Industries -- -- (20,000) -- --
Minority interest investment -- -- 2,400 2,400 --
--------- --------- --------- --------- ---------
Cash provided (used) by financing activities 143,286 298,265 21,341 (37,836) 228,161

Effect of exchange rate changes on cash 354 364 (826) (619) (1,634)
--------- --------- --------- --------- ---------
Increase (decrease) in cash 13,978 (1,453) (8,637) (19,341) 13,859

Cash, beginning of year 44,391 58,369 56,916 56,916 48,279
--------- --------- --------- --------- ---------
Cash, end of period or year $ 58,369 $ 56,916 $ 48,279 $ 37,575 $ 62,138
========= ========= ========= ========= =========

Supplemental disclosure of cash flow information:

Cash payments during the period:
Interest $ 32,528 $ 45,164 $ 50,071 $ 15,216 $ 7,089
Income taxes 47,152 54,506 101,091 22,913 15,324

Cash payments include payments made to
Ingram Industries for interest and U.S. income taxes
</TABLE>

See accompanying notes to these consolidated financial statements

F-5
<PAGE> 83
INGRAM MICRO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN 000S, EXCEPT PER SHARE DATA)

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION

Ingram Micro Inc. (the "Company" or "Ingram Micro"), formerly Ingram Micro
Holdings Inc., 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. In November 1996, the Company's
former parent, Ingram Industries Inc. ("Ingram Industries"), consummated a
split-off of the Company in a tax-free reorganization (the "Split-Off"). In
connection with the Split-Off, certain stockholders of Ingram Industries
exchanged all or some of their shares of Ingram Industries Common Stock for
107,251,362 shares of Class B Common Stock of the Company in specified ratios.
See Note 3 for further information.

On April 29, 1996, Ingram Micro Inc., a Delaware corporation, was formed to
hold all of the outstanding stock of Ingram Micro Holdings Inc. ("Holdings"). In
October 1996, just prior to the Company's initial public offering, Holdings
merged with and into such Delaware corporation. The merger did not impact the
Company's financial statements, since the Company's historical financial
statements for earlier periods reflect the capital structure described herein.

The accompanying historical consolidated financial statements have been
prepared as if the Company had operated as an independent stand alone entity for
all periods presented except that prior to the Split-Off, the Company generally
had no significant borrowings in North America other than amounts due Ingram
Industries. See Notes 7 and 11 regarding long-term debt and related party
transactions.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

The Company's significant accounting policies are described below:

Basis of Consolidation

The consolidated financial statements include the accounts of the Company
and 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 "1994," "1995" and
"1996" represent the 52 week fiscal years ended December 31, 1994, December 30,
1995 and December 28, 1996, 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 the financial
statement date and reported amounts of revenue and expenses during the reporting
period. Actual results could differ from these estimates.

Cash

Outstanding checks of $72,868 in 1995 and $128,233 in 1996 are included
in accounts payable.

F-6
<PAGE> 84
INGRAM MICRO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN 000S, EXCEPT PER SHARE DATA)

Revenue Recognition

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

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 for 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 22% of its net sales in fiscal 1994,
32% in 1995 and 35% in 1996 from products purchased from three 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 annually.

Goodwill

Goodwill is amortized on a straight-line basis over periods ranging from
five to twenty years. Accumulated amortization was $13,576 at December 30, 1995
and $16,566 at December 28, 1996. 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 30, 1995 and December 28, 1996, 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 using the
liability method.

F-7
<PAGE> 85
INGRAM MICRO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN 000S, EXCEPT PER SHARE DATA)

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 the results
of operations. Translation adjustments are recorded as a separate component of
stockholders' equity when the local currency is the functional currency.
Translation adjustments are recorded in income when the U.S. dollar is the
functional currency. The U.S. dollar is the functional currency for the
Company's subsidiaries in Mexico, Singapore and Malaysia.

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 debt due to Ingram Industries 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 floor plan financing
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 reduces 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 gains 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.

F-8
<PAGE> 86
INGRAM MICRO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN 000S, EXCEPT PER SHARE DATA)

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.

Derivative financial instruments comprise the following:

<TABLE>
<CAPTION>
1995 1996
--------------------- ------------------------
NOTIONAL ESTIMATED NOTIONAL ESTIMATED
AMOUNTS FAIR VALUE AMOUNTS FAIR VALUE
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Foreign exchange forward contracts $109,218 $(1,971) $178,873 $1,498
Purchased foreign currency options 75,928 485 30,857 146
Written foreign currency options 121,183 (615) 44,017 (112)
Currency interest rate swaps 25,655 (1,056) 25,655 410
</TABLE>

Employee Benefits

The Company participated in Ingram Industries' defined contribution plan
covering substantially all U.S. employees. As a result of the Split-Off, the
Company established its own employee benefit plans. The plans permit eligible
employees to make contributions up to certain limits which are matched by the
Company at stipulated percentages. The Company's contributions charged to
expense were $764 in 1994, $1,399 in 1995 and $1,642 in fiscal 1996.

Accounting for Stock-Based Compensation

The Company adopted Statement of Financial Accounting Standards No. 123,
"Accounting for Stock Based Compensation" ("FAS 123") in 1996. As permitted by
FAS 123, the Company continues to measure compensation cost in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" ("APB 25") but provides pro forma disclosures of net income and
earnings per share as if the fair value method (as defined in FAS 123) had been
applied beginning in 1996.

Earnings Per Share

Historical earnings per share for fiscal 1995 and 1994 reflect the
Company's capital structure as a result of the formation of the Delaware
corporation in connection with the Split-Off. Earnings per share is determined
based on the number of shares outstanding after giving effect to the Split-Off (
107,251,362, 107,251,362 and 109,043,762 at December 31, 1994, December 30, 1995
and December 28, 1996, respectively) in addition to all dilutive common stock
and common stock equivalent shares. Pursuant to the Securities and Exchange
Commission Staff Accounting Bulletins and Staff policy, such shares issued
within 12 months of the initial public offering (the "IPO") of the Company's
Class A Common Stock are treated as if they were outstanding for all periods
presented prior to the IPO using the treasury stock method (14,155,229 at
December 31, 1994 and December 30, 1995). The number of common and common
equivalent shares outstanding used in the computation of earnings per share for
the fiscal years ended December 31, 1994, December 30, 1995 and December 28,
1996 was 121,406,591, 121,406,591, and 125,436,376, respectively. ). The number
of common and common equivalent shares outstanding used in the computation of
earnings per share for the thirteen weeks ended March 30, 1996 and March 29,
1997 was 121,406,591 and 145,369,321, respectively.

In March 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share" ("FAS 128") which
will become effective in the fourth quarter of 1997. FAS 128 replaces the
presentation of earnings per share reflected on the Statement of Income with a
dual presentation of Basic Earnings per Share ("Basic EPS") and Diluted Earnings
per Share ("Diluted EPS"). Basic EPS excludes dilution and is computed by
dividing net income by the weighted average number of common shares outstanding
during the period. Diluted EPS reflects the potential

F-9
<PAGE> 87
INGRAM MICRO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN 000S, EXCEPT PER SHARE DATA)

dilution that could occur if stock options and other commitments to issue common
stock were exercised resulting in the issuance of common stock that then shared
in the earnings of the Company. FAS 128 does not permit early application;
however, it requires, when implemented in the fourth quarter, the restatement of
previously reported earnings per share for each income statement presented. Pro
forma disclosure of earnings per share information as if the Company had
implemented FAS 128 for the fiscal years ended 1994, 1995, 1996 and the thirteen
weeks ended March 30, 1996 and March 29, 1997 is as follows:

PRO FORMA EARNINGS PER SHARE (unaudited): FISCAL YEAR END THIRTEEN WEEKS ENDED
------------------------------------------- --------------------------
MARCH 30, MARCH 29,
1994 1995 1996 1996 1997
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net income $ 63,344 $ 84,307 $ 110,679 $ 23,828 $ 40,377
=========== =========== =========== =========== ===========

Weighted average shares 107,251,362 107,251,362 112,285,058 107,251,362 134,773,566
=========== =========== =========== =========== ===========

Basic earnings per share $ 0.59 $ 0.79 $ 0.99 $ 0.22 $ 0.30
=========== =========== =========== =========== ===========

Weighted average shares including
the dilutive effect of stock options 121,406,591 121,406,591 125,436,376 121,406,591 145,369,321
=========== =========== =========== =========== ===========

Diluted earnings per share $ 0.52 $ 0.69 $ 0.88 $ 0.20 $ 0.28
=========== =========== =========== =========== ===========
</TABLE>

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 28, 1996. The results of
operations for the thirteen week 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 March 29, 1997, its
results of operations for the thirteen weeks ended March 30, 1996 and March 29,
1997, and its cash flows for the thirteen weeks ended March 30, 1996 and March
29, 1997.

NOTE 3 - SPLIT-OFF, REORGANIZATION AND EXCHANGE

In November 1996, the Split-off was effected pursuant to a Reorganization
Agreement among the Company, Ingram Industries, and its subsidiary, Ingram
Entertainment Inc. ("Ingram Entertainment"), and an Exchange Agreement among
such companies and the stockholders of Ingram Industries. Pursuant to the
Reorganization Agreement, the Company retained all of the assets and liabilities
associated with the Company's business and indemnified Ingram Industries for all
liabilities related to the Company's business and operations or otherwise
assigned to the Company. In addition, the Reorganization Agreement provided for
the sharing by the Company of approximately 73% of certain contingent assets and
liabilities not allocated to one of the parties. The Company assumed a portion
of Ingram Industries' debt in return for the extinguishment of intercompany
indebtedness (see Note 5).

F-10
<PAGE> 88
INGRAM MICRO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN 000S, EXCEPT PER SHARE DATA)

In connection with the Reorganization Agreement, the Company entered into
an Employee Benefits Transfer and Assumption Agreement with Ingram Industries
which provided for the allocation of employee benefit assets and liabilities to
each of the parties relating to their continuing employees. The Company also
entered into a Tax Sharing and Tax Services Agreement pursuant to which the
Company will be responsible for its allocable share of Ingram Industries'
consolidated federal and state income tax liabilities for fiscal 1996 through
the date of the Split-Off and approximately 73% of any adjustment in excess of
reserves already established by Ingram Industries for past federal and state
liabilities of the Company and Ingram Industries. Similarly, the Company will
share in any refunds received with respect to such periods. The Company also
entered into Transitional Service Agreements related to certain administrative
services and data processing (see Note 11).

Pursuant to the Exchange Agreement, certain stockholders of Ingram
Industries exchanged all or some of their shares of Ingram Industries Common
Stock for 107,251,362 shares of Class B Common Stock of the Company in specified
ratios.

NOTE 4 - ACQUISITIONS

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 sellers. The acquired companies had assets of $48,748
and liabilities of $35,034. The acquisitions were accounted for using the
purchase method of accounting. The purchase price was allocated to the assets
purchased and the liabilities assumed based on fair values at the date of
acquisition. The excess of the purchase price over fair value of net assets
acquired totaling $6,653 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 effect of these
acquisitions was not significant.

NOTE 5 - ACCOUNTS RECEIVABLE

From February 1993 through the Split-Off, the Company had an arrangement
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. At 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.

In connection with the Split-Off, in partial satisfaction of amounts due to
Ingram Industries, the Ingram Industries accounts receivable securitization
agreement as it related to the Company was assumed by the Company. The
arrangement with the trust extends to December 31, 1999 and renews biannually
under an evergreen provision up to a maximum term of twenty years. As of the
Split-Off, the trust had sold $160,000 of medium term certificates. In addition,
approximately $13,000 of trust certificate-backed commercial paper was
outstanding on that date. Assumption of the securitization program resulted in a
$160,000 reduction of trade accounts receivable and long-term debt on the
Company's consolidated balance sheets at December 28, 1996 and March 29, 1997 to
reflect the sale of such receivables. Amounts outstanding under the commercial
paper program totaling $50,000 at December 28, 1996 are included in long-term
debt in the consolidated balance sheet at December 28, 1996.

Fees in the amount of $1,537 in 1996 related to the sale of trade accounts
receivable under the medium term certificates are included in other expenses in
the consolidated statement of income. Prior to the Company assuming the accounts
receivable securitization program, such fees were included in interest expense
charged by Ingram Industries.

F-11
<PAGE> 89
INGRAM MICRO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN 000S, EXCEPT PER SHARE DATA)

NOTE 6 - PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

<TABLE>
<CAPTION>
FISCAL YEAR END
----------------------- MARCH 29,
1995 1996 1997
--------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C>
Land $ 2,359 $ 18,746 $ 18,673
Buildings and leasehold improvements 26,381 67,765 71,568
Distribution equipment 62,462 83,242 91,878
Computer equipment 59,161 83,594 84,691
--------- --------- ---------
150,363 253,347 266,810
Accumulated depreciation (61,237) (92,175) (97,329)
--------- --------- ---------
$ 89,126 $ 161,172 $ 169,481
========= ========= =========
</TABLE>

Depreciation expense was $21,785 in 1995 and $33,180 in 1996.

NOTE 7 - LONG-TERM DEBT AND DUE TO INGRAM INDUSTRIES

Prior to the Split-Off, Ingram Industries managed most treasury activities
for the Company, 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 were remitted to Ingram Industries
and domestic cash disbursements were 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. This arrangement was terminated effective with the
Split-Off. At December 28, 1996, all amounts due to Ingram Industries had been
repaid with the exception of certain federal and state estimated tax payments
made on the Company's behalf relating to the period prior to the Split-Off.

Ingram Industries charged the Company interest expense on the outstanding
intercompany balance based on Ingram Industries' domestic weighted average cost
of funds. The average rate was 6.99% in fiscal 1994, 7.38% in 1995 and 7.25% in
1996.

Prior to the Split-Off, the Company and other Ingram Industries affiliates
participated in Ingram Industries' unsecured revolving credit agreement with a
syndicate of banks. Under this agreement, Ingram Industries and its affiliates
borrowed in various currencies up to $380,000 at various money market and bid
rates. The weighted average borrowing rate was 7.00% at December 30, 1995. The
agreement was guaranteed by certain subsidiaries of the Company and other Ingram
Industries affiliates. The Company's participation in Ingram Industries'
revolving credit agreement was terminated concurrently with the Split-Off.

Effective upon completion of the Company's initial public offering, the
Company entered into a $1,000,000 revolving credit agreement (the "Credit
Facility") with a syndicate of banks. The Credit Facility is unsecured and
matures on October 30, 2001. Revolving loan rate and competitive bid interest
rate options are available under the Credit Facility. The spread over LIBOR for
revolving rate loans as well as a facility fee will be determined by reference
to certain financial ratios or credit ratings by recognized rating agencies on
the Company's senior unsecured debt. At December 28, 1996, the Company had
$201,475 of outstanding borrowings under this Credit Facility. The weighted
average interest rate on outstanding borrowings at December 28, 1996 was 5.44%.

F-12
<PAGE> 90
INGRAM MICRO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN 000S, EXCEPT PER SHARE DATA)

The Company is required to comply with certain financial covenants,
including minimum net worth, current ratio and interest coverage. The Company is
also subject to certain restrictions on the amount of funded debt and the
payment of dividends. At December 28, 1996, the Company was in compliance with
these covenants.

At December 28, 1996, commercial paper in the amount of $50,000 was
outstanding under the Company's accounts receivable securitization program (see
Note 5) and is included in long-term debt. The weighted average interest rate on
this commercial paper was 5.7% at December 28, 1996.

The Company's subsidiaries outside the United States have lines of credit
and short-term overdraft facilities with various banks worldwide which provide
for borrowings aggregating $62,424. Most of these arrangements are reviewed
periodically for renewal. At December 28, 1996, the Company had $22,752
outstanding under these facilities.

Long-term debt consists of the following:

FISCAL YEAR END
----------------------- MARCH 29,
1995 1996 1997
--------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C>
Revolving credit facility $ 141,521 $ 201,475 $ 363,532
Overdraft facilities 5,782 22,752 12,057
Commercial paper -- 50,000 105,000
Other 29,453 29,806 27,942
--------- --------- ---------
176,756 304,033 508,531
Less current maturities of
long-term debt (6,332) (23,899) (13,170)
--------- --------- ---------
$ 170,424 $ 280,134 $ 495,361
========= ========= =========
</TABLE>

Annual maturities of long-term debt as of December 28, 1996 are as follows:

<TABLE>
<CAPTION>
<S> <C>
1997 $ 23,899
1998 512
1999 460
2000 393
2001 and thereafter 278,769
--------
$304,033
========
</TABLE>

NOTE 8 - INCOME TAXES

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

FISCAL YEAR END
--------------------------------
1994 1995 1996
-------- -------- --------
<S> <C> <C> <C>
United States $ 99,701 $124,277 $165,576
Foreign 1,004 10,339 31,181
-------- -------- --------
Total $100,705 $134,616 $196,757
======== ======== ========
</TABLE>

The provision for income taxes consists of the following:

F-13
<PAGE> 91
INGRAM MICRO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN 000S, EXCEPT PER SHARE DATA)

FISCAL YEAR END
----------------------------------
1994 1995 1996
-------- -------- --------
<S> <C> <C> <C>
Current:
Federal $ 35,989 $ 44,615 $ 64,252
State 4,060 9,544 9,952
Foreign 4,223 7,616 13,076
-------- -------- --------
44,272 61,775 87,280
Deferred:
Federal (2,472) (4,082) (5,241)
State 136 (949) 462
Foreign (2,332) (3,601) 2,388
-------- -------- --------
(4,668) (8,632) (2,391)
-------- -------- --------
Total income tax provision $ 39,604 $ 53,143 $ 84,889
======== ======== ========
</TABLE>

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 net deferred tax assets and liabilities are as follows:

FISCAL YEAR END
----------------------------------
1994 1995 1996
-------- -------- --------
<S> <C> <C> <C>
Net deferred tax assets and liabilities:
Tax in excess of book basis of
foreign operations $ 13,816 $ 19,511 $ 18,511
Items not currently deductible 12,813 18,610 20,296
Depreciation (958) (1,564) (881)
Other 263 492 758
-------- -------- --------
Total $ 25,934 $ 37,049 $ 38,684
======== ======== ========
</TABLE>

Net current deferred tax assets of $19,307 and $22,038 are included in
other current assets and other current liabilities at December 30, 1995 and
December 28, 1996, respectively. Net non-current deferred tax assets of $17,742
and $16,646 are included in other assets and other liabilities at December 30,
1995 and December 28, 1996, respectively.

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

FISCAL YEAR END
------------------
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
U.S. statutory rate 35% 35% 35%
State income taxes, net of federal
income tax benefit 3% 4% 4%
Noncash compensation 2%
Foreign rates in excess of statutory rate 1% 1% 2%
-- -- --
Effective tax rate 39% 40% 43%
== == ==
</TABLE>

The Company was included in the consolidated federal income tax return
filed by Ingram Industries through the date of the Split-Off. Taxes related to
the Company, prior to the Split-Off, were determined on a separate entity basis
and taxes

F-14
<PAGE> 92
INGRAM MICRO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN 000S, EXCEPT PER SHARE DATA)

payable were remitted to Ingram Industries every two months. Taxes payable to
Ingram Industries of $14,303 at December 30, 1995 and $10,521 at December 28,
1996 are included in accrued expenses.

At December 28, 1996, the Company had foreign net operating loss
carryforwards of $50,530 of which approximately one-half have no expiration
date.

The Company does not provide for income taxes on undistributed earnings of
foreign subsidiaries as such earnings are intended to be permanently reinvested
in those operations. Any related taxes on the undistributed earnings are
immaterial.

NOTE 9 - 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 the
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 December 31, 1994, December 30, 1995 and December 28, 1996 was
$16,574, $28,367 and $34,784, respectively.

Future minimum rental commitments on operating leases that have remaining
noncancelable lease terms in excess of one year as of December 28, 1996 are as
follows:

<S> <C>
1997 $24,628
1998 21,268
1999 19,184
2000 12,922
2001 9,739
Later years 31,905
</TABLE>

NOTE 10 - 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 (Austria, Belgium, Denmark, France,
Germany, Italy, the Netherlands, Norway, Spain, Sweden and the United Kingdom)
and Other (Canada, Malaysia, Mexico, and Singapore). Transfers between
geographic areas primarily represent intercompany sales which are accounted for
based on established sales prices between the related companies and are
eliminated in consolidation. Net sales, income from operations and identifiable
assets by geographic area are as follows:

F-15
<PAGE> 93
INGRAM MICRO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN 000S, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
FISCAL YEAR
--------------------------------------------
1994 1995 1996
---------- ---------- -----------
<S> <C> <C> <C>
NET SALES
United States
Sales to unaffiliated customers $4,122,338 $5,969,749 $ 8,289,776
Transfers between geographic areas 76,696 86,961 140,721
Europe 1,078,250 1,849,129 2,590,120
Other 629,611 797,989 1,143,555
Eliminations (76,696) (86,961) (140,721)
---------- ---------- -----------

Total $5,830,199 $8,616,867 $12,023,451
========== =========== ===========

INCOME FROM OPERATIONS:
United States $ 123,796 $ 156,749 $ 201,961
Europe 8,079 19,576 21,593
Other 8,415 10,556 23,954
---------- ---------- -----------

Total $ 140,290 $ 186,881 $ 247,508
========== ========== ===========

IDENTIFIABLE ASSETS:
United States $1,381,798 $1,996,642 $ 2,227,997
Europe 393,346 669,309 800,755
Other 199,145 274,947 338,195
---------- ---------- -----------

Total $1,974,289 $2,940,898 $ 3,366,947
========== ========== ===========
</TABLE>

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

NOTE 11 - TRANSACTIONS WITH RELATED PARTIES

Historically, Ingram Industries provided certain administrative services to
the Company. Prior to the Split-Off, the Company was allocated a portion of the
costs of these administrative services. Charges for these services were based
upon utilization and at amounts which management believes are less than the
amounts which the Company would have incurred as a stand-alone entity. Such
amounts are reflected as charges allocated from Ingram Industries on the
consolidated statement of income. Subsequent to the Split-Off, such allocations
ceased and the Company entered into Transitional Service Agreements with Ingram
Industries relating to the continued provision of certain administrative
services including payroll processing through December 31, 1997. The Company
believes that the terms of these agreements are on a basis as favorable as those
that would be obtained from third parties on an arm's length basis. In addition,
the Company entered into the Data Center Services Agreement with Ingram
Entertainment and a division of Ingram Industries pursuant to which the Company
has agreed to provide computer services and maintenance. Charges for these
services are based on a pro-rata allocation of costs incurred by the Company in
operating the data services center.

Prior to the Split-Off, Ingram Industries also provided guarantees to
certain of the Company's vendors and for certain of the Company's leases; no
charges from Ingram Industries were reflected in the Company's financial
statements for such guarantees. Such guarantees ceased concurrently with the
Split-Off.

F-16
<PAGE> 94
INGRAM MICRO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN 000S, EXCEPT PER SHARE DATA)

The Company leases warehouse and office space from certain of its
stockholders. Total rental payments were $784 in 1994 and $ 1,645 in fiscal 1996
and 1995, respectively.

Other transactions with Ingram Industries affiliates include sales of
$3,056 in fiscal 1994, $5,281 in 1995 and $3,464 in 1996.

NOTE 12 - STOCK OPTIONS AND INCENTIVE PLANS

The Company adopted Statement of Financial Accounting Standards No. 123
("FAS 123") in 1996. As permitted by FAS 123, the Company continues to measure
compensation cost in accordance with APB 25. Therefore, the adoption of FAS 123
had no impact on the Company's financial condition or results of operations. Had
compensation cost for the Company's stock option plans been determined based on
the fair value of the options consistent with the method of FAS 123, the
Company's net income and earnings per share would have been reduced to the pro
forma amounts indicated below:

<TABLE>
<CAPTION>
1996
--------

<S> <C> <C>
Net Income As reported $110,679
Pro forma 106,825

Earnings per share As reported $ 0.88
Pro forma 0.85
</TABLE>

For pro forma disclosure, the fair value of compensatory stock options,
restricted stock grants and stock purchase rights was estimated using the
Black-Scholes option pricing model using the following weighted average
assumptions: dividend yield of 0%; expected volatility of 0% for options granted
prior to the IPO and 39.4% for options granted concurrently with the IPO, risk
free interest rates ranging from 5.6% to 5.8%, and expected lives for each plan
ranging from 1.71 years to 3.5 years.

Rollover Stock Option Plan

Certain of the Company's employees participated in Ingram Industries'
qualified and non-qualified stock option and SAR plans. Ingram Industries' plans
provided for the grant of options and SARs at fair value. In conjunction with
the Split-Off, Ingram Industries options and SARs held by the Company's
employees and certain other Ingram Industries options, SARs and Incentive Stock
Units ("ISUs") were converted to or exchanged for Ingram Micro options
("Rollover Stock Options") to purchase Class A Common Stock. Approximately
10,989,000 Rollover Stock Options were outstanding immediately following the
conversion. The majority of the Rollover Stock Options 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 noncash compensation charge of approximately
$23,350 ($19,483 net of tax) in 1996 related to the vested portion of certain
Rollover Stock Options based on the difference between the estimated fair value
of such options at the applicable measurement dates and the exercise price of
such options. The weighted average fair value of Rollover Stock Options for pro
forma disclosure was $7.60.

1996 Equity Incentive Plan

As of April 30, 1996, the Company adopted the 1996 Equity Incentive Plan,
as amended (the "Plan"), and Ingram Industries approved the grant of options
under this plan. The Plan authorized the granting of options to purchase up to
12,000,000 shares of Common Stock. In June 1996, the Company issued options
under the Plan at $7.00 per share to purchase an aggregate of approximately
4,618,000 shares of Class B Common Stock 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 from the issue date.

In November 1996, the Company issued options under the Plan at $18.00 per
share (the initial public offering price) to purchase an aggregate of
approximately 5,137,000 shares of Class A Common Stock to certain executive
officers, employees and directors of the Company. Options to purchase 2,680,000
shares vest at the end of nine years; however, such options will vest earlier if
the Company achieves certain performance criteria. All such options expire ten
years from the issue date. The

F-17
<PAGE> 95
INGRAM MICRO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN 000S, EXCEPT PER SHARE DATA)

remaining options to purchase 2,457,000 shares vest and generally become
exercisable over five years and expire eight years from the issue date.

The weighted average fair value of options granted in 1996 for pro forma
disclosure was $3.87.

A summary of the status of the Company's stock option plans as of December
28, 1996 and changes during the year then ended is presented below:

WEIGHTED-
AVERAGE
SHARES EXERCISE
(000) PRICE
------ ---------
<S> <C> <C>
Rollover Stock Options 10,989 $ 1.83
Stock options granted during the year 9,756 12.79
Stock options exercised (1,078) 1.32
Forfeitures (20) 1.87
------ ---------
Outstanding at end of year 19,647 $ 7.30
====== =========
</TABLE>

The following table summarizes information about stock options outstanding
at December 28, 1996:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------------- --------------------------------
WEIGHTED
NUMBER AVERAGE WEIGHTED NUMBER WEIGHTED
RANGE OF EXERCISE PRICES OUTSTANDING REMAINING AVERAGE EXERCISABLE AT AVERAGE
PRICES AT 12/28/96 LIFE EXERCISE PRICE 12/28/96 EXERCISE PRICE
- ------------------------ ----------- --------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
$0.66 - $3.32 9,891 5.4 $ 1.83 1,748 $ 1.48
$ 7.00 4,618 7.5 7.00 - -
$18.00 5,138 7.8 18.00 200 18.00
----------- -------------- -------------- --------------
19,647 $ 7.30 1,948 $ 3.18
=========== ============== ============== ==============
</TABLE>

1996 Employee Stock Purchase Plan

In October 1996, the Board of Directors and stockholders adopted the 1996
Employee Stock Purchase Plan (the "ESPP"). The ESPP permits eligible employees
of the Company to purchase Class A Common Stock through payroll deductions,
provided that no employee may accrue the right to purchase more than $25 worth
of stock under all employee stock purchase plans of the Company in any calendar
year. Up to 1,000,000 shares of Class A Common Stock will be initially available
for sale under the ESPP. The initial offering period commenced on November 1,
1996 and will end on the last market trading day on or before December 31, 1998.
The purchase price under the initial offer is the lower of $18.00 per share or
the last reported transaction price of the Class A Common Stock reported on the
New York Stock Exchange on December 31, 1998. Employees may end their
participation in the ESPP at any time during an offering period, and they will
be paid their payroll deductions accumulated to date. Participation ends
automatically on termination of employment with the Company and will terminate
in all events on the last business day of October 2006.

The weighted average fair value of these purchase rights granted in 1996
was $4.79.

F-18
<PAGE> 96
INGRAM MICRO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN 000S, EXCEPT PER SHARE DATA)

NOTE 13 - COMMON STOCK

The Company has two classes of Common Stock, consisting of 265,000,000
authorized shares of $0.01 par value Class A Common Stock and 135,000,000
authorized shares of $0.01 par value Class B Common Stock, and 1,000,000
authorized 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 stockholders whereas
Class B stockholders are entitled to ten votes on each matter to be voted on by
the stockholders. The two classes of stock have the same 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; (ii) the sale or transfer of such share of Class B Common Stock to
any person not specifically authorized to hold such shares by the Company's
Certificate of Incorporation; 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.

Initial Public Offering

On November 1, 1996, the Company sold 23,200,000 shares of Class A Common
Stock at $18.00 per share in an initial public offering. Proceeds of $393,844,
net of underwriters' commissions and expenses of the offering aggregating
$23,756, were received and used to repay indebtedness to Ingram Industries in
the amount of $366,340. The remaining amount of $27,504 was used for working
capital purposes.

Key Employee Stock Purchase Plan

As of April 30, 1996, the Company adopted the Key Employee Stock Purchase
Plan (the "Stock Purchase 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 for sale to certain
employees pursuant to the Stock Purchase Plan, and subsequently sold 2,510,400
shares with proceeds of approximately $17,573. The shares sold thereby are
subject to certain restrictions on transfer and to repurchase by the Company
upon termination of employment prior to certain specified vesting dates at the
original offering price. The Company has repurchased 50,000 of such shares.

In addition, the Company granted, pursuant to the Stock Purchase 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 upon termination of employment. At December 28, 1996, 5,000 of
such shares have been forfeited to the Company. Unearned compensation in the
amount of $714 related to the restricted shares was recorded as a separate
component of stockholders' equity and is amortized to noncash compensation over
the vesting period. The amount amortized to noncash compensation in 1996 was
$180.

The detail of changes in the number of issued and outstanding shares of
Class A Common Stock, Class B Common Stock, and Redeemable Class B Common Stock
for the three year period ended December 28, 1996 and the thirteen weeks ended
March 29, 1997 is as follows:

F-19
<PAGE> 97
INGRAM MICRO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN 000S, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
COMMON STOCK
----------------------------- REDEEMABLE
CLASS A CLASS B CLASS B
------------ ------------ ------------
<S> <C> <C> <C>
JANUARY 1, 1994 -- 107,251,362 --
Shares issued during the year -- -- --
------------ ------------ ------------
DECEMBER 31, 1994 -- 107,251,362 --
Shares issued during the year -- -- --
------------ ------------ ------------
DECEMBER 30, 1995 -- 107,251,362 --
Shares issued during the year for:
Grant of restricted Class B Common Stock 102,000
Sale of Class A Common Stock 23,200,000
Sale of Redeemable Class B Common Stock 2,510,400
Repurchase of Redeemable Class B Common Stock (50,000)
Stock options exercised 1,077,696
Conversion of Class B Common Stock
to Class A Common Stock 770,000 (770,000)
------------ ------------ ------------
DECEMBER 28, 1996 25,047,696 106,583,362 2,460,400
Shares issued during the period for:
Stock options exercised 739,083 -- --
------------ ------------ ------------
MARCH 29, 1997 (UNAUDITED) 25,786,779 106,583,362 2,460,400
============ ============ ============
</TABLE>

F-20

<PAGE> 98
REPORT OF INDEPENDENT ACCOUNTANTS

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

In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income, of stockholders' equity and of cash flows
present fairly, in all material respects, the financial position of Ingram Micro
Inc. and its subsidiaries at December 30, 1995 and December 28, 1996, and the
results of their operations and their cash flows for each of the three fiscal
years in the period ended December 28, 1996, 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

Costa Mesa, California
February 18, 1997

F-21
<PAGE> 99
INGRAM MICRO INC.

ROLLOVER STOCK OPTION PLAN

SECTION 1. PURPOSE. The purpose of the Ingram Micro Inc. Rollover Stock
Option Plan is to provide for the granting of options to purchase shares of
Micro's common stock upon the conversion and cancellation of certain options to
purchase shares of, and ISUs and SARs relating to, common stock of Industries as
provided in the Conversion Agreement in connection with the split-off pursuant
to the Exchange Agreement.

SECTION 2. DEFINITIONS. As used in the Plan, the following terms shall have
the meanings set forth below:

"BOARD" means the Board of Directors of Micro.

"CAUSE" means commission of acts of dishonesty, disloyalty or acts
substantially detrimental to the welfare of Micro, Industries or Entertainment
or any of their respective Subsidiaries, as determined by the respective Boards
of Directors, or designated committees thereof.

"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.

"COMMITTEE" means a committee of the Board designated by the Board to
administer the Plan and composed of not less than the minimum number of persons
from time to time required by Rule 16b-3, each of whom, to the extent necessary
to comply with Rule 16b-3 only, is a "non-employee director" within the meaning
of Rule 16b-3. Until otherwise determined by the Board, the Compensation
Committee designated by the Board shall be the Committee under the Plan. If the
Board has not designated a committee to administer the Plan, the term
"Committee" shall mean the Board.

"CONVERSION AGREEMENT" means the Stock Option, SAR and ISU Conversion and
Exchange Agreement, dated as of the date of the Closing among the Ingram
Companies and the other Persons set forth on the signature pages thereof.

"EMPLOYEE" means an employee of Micro, Industries or Entertainment or any
of their respective Subsidiaries.

"EMPLOYER" means a Participant's employer on the date that an Option is
granted hereunder to such Participant or any of such Employer's respective
parent or subsidiary corporations.

"ENTERTAINMENT" means Ingram Entertainment Inc.

"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

"EXCHANGE AGREEMENT" means the Exchange Agreement dated as of September 4,
1996, as amended and restated as of October 17, 1996, among the Ingram Companies
and the other Persons set forth on the signature pages thereof.

"EXECUTIVE OFFICER" means, at any time, an individual who is an executive
officer of Micro within the meaning of Exchange Act Rule 3b-7 or who is an
officer of Micro within the meaning of Exchange Act Rule 16a-1(f).

"FAIR MARKET VALUE" means with respect to the Shares, as of any given date
or dates, the reported closing price of a share of such class of common stock on
such exchange or market as is the principal trading market for such class of
common stock. If such class of common stock is not traded on an exchange or
principal trading market on such date, the fair market value of a Share shall be
determined by the Committee in good faith taking into account as appropriate
recent sales of the Shares, recent valuations of the Shares, the lack of
liquidity of the Shares,

A-1

<PAGE> 100
the fact that the Shares may represent a minority interest and such other
factors as the Committee shall in its discretion deem relevant or appropriate.

"FIRST CLOSING" shall have the meaning ascribed thereto in the Exchange
Agreement.

"INCENTIVE STOCK OPTION" means a right to purchase Shares from Micro that
is granted under Section 6 of the Plan and that is intended to meet the
requirements of Section 422 of the Code or any successor provision thereto.

"INDUSTRIES" means Ingram Industries Inc.

"INGRAM COMPANY" means each of Micro, Industries and Entertainment and
their respective Subsidiaries.

"INGRAM FAMILY" means Martha Ingram, her descendants (including any adopted
Persons and their descendants) and their respective spouses.

"ISU" shall have the meaning ascribed thereto in the Conversion Agreement.

"MICRO" means Ingram Micro Inc.

"NON-QUALIFIED STOCK OPTION" means a right to purchase Shares from Micro
that is granted under Section 6 of the Plan and that is not intended to be an
Incentive Stock Option.

"OPTION" means an Incentive Stock Option or a Non-Qualified Stock Option.

"OPTION AGREEMENT" means the written agreement evidencing an Option in
substantially the form attached hereto as Annex 1.

"PARTICIPANT" means any Employee set forth in Schedule 1 to the Conversion
Agreement holding Options, ISUs or SARs outstanding as of the First Closing
under any Industries Equity-Based Plan (as defined in the Conversion Agreement)
and to the extent applicable, any heirs or legal representatives thereof.

"PERSON" means any individual, corporation, limited liability company,
partnership, association, joint-stock company, trust, unincorporated
organization, government or political subdivision thereof or other entity.

"PLAN" means this Rollover Stock Option Plan.

"PUBLIC OFFERING" means an underwritten registered public offering of
Shares of any class of common stock of Micro.

"PURCHASE AGREEMENT" means an agreement substantially in the form attached
hereto as Annex 2 or Annex 3, as the case may be, to be executed by Micro and a
Participant as a condition to the exercise, prior to a Public Offering, by such
Participant of any Option granted hereunder.

"RULE 16B-3" means Rule 16b-3 as promulgated and interpreted by the SEC
under the Exchange Act, or any successor rule or regulation thereto as in effect
from time to time.

"SAR" shall have the meaning ascribed thereto in the Conversion Agreement.

"SEC" means the Securities and Exchange Commission or any successor
thereto.

"SHARES" means shares of the Class A Common Stock, $.01 par value per
share, of Micro, or such other securities of Micro as may be designated by the
Committee from time to time pursuant to the provisions of the Plan.

A-2

<PAGE> 101
"SUBSIDIARY" means, with respect to Industries, Entertainment or Micro, any
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons performing
similar functions are directly or indirectly owned by such Person at any time
after the First Closing.

SECTION 3. ADMINISTRATION.

(a) Authority of Committee. The Plan shall be administered by the
Committee. Subject to the terms of the Plan and applicable law, and in addition
to other express powers and authorizations conferred on the Committee by the
Plan, the Committee shall have full power and authority to: (i) determine
whether, to what extent, and under what circumstances Options may be settled or
exercised in cash, Shares, other securities or other property, or suspended and
the method or methods by which Options may be settled, exercised or suspended;
(ii) determine whether, to what extent, and under what circumstances cash,
Shares, other securities, other property and other amounts payable with respect
to an Option shall be deferred either automatically or at the election of the
holder thereof or of the Committee; (iii) interpret and administer the Plan and
any instrument or agreement relating to, or Option made under, the Plan; (iv)
establish, amend, suspend, or waive such rules and regulations and appoint such
agents as it shall deem appropriate for the proper administration of the Plan;
and (v) make any other determination and take any other action that the
Committee deems necessary or desirable for the administration of the Plan. The
Committee shall treat each Participant equally under this Section 3(a) and
without regard to whether any such Participant is employed by Micro,
Entertainment or Industries or any of their respective parent or subsidiary
corporations, as the case may be.

(b) Committee Discretion Binding. Unless otherwise expressly provided in
the Plan, all designations, determinations, interpretations and other decisions
under or with respect to the Plan or any Option shall be within the sole
discretion of the Committee, may be made at any time and shall be final,
conclusive and binding upon all Persons, including any Ingram Company, any
Participant, any holder or beneficiary of any Option, any stockholder and any
Employee.

SECTION 4. SHARES AVAILABLE FOR OPTIONS.

(a) Shares Available. Subject to adjustment as provided in Section 4(b),
the number of Shares with respect to which Options may be granted under the Plan
shall be 12,000,000.

(b) Adjustments. In the event that the Committee determines that any
dividend or other distribution (whether in the form of cash, Shares, other
securities or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, split-off, spin-off,
combination, repurchase or exchange of Shares or other securities of Micro or
other similar corporate transaction or event affects the Shares such that an
adjustment is determined by the Committee to be appropriate in order to preserve
the benefits or potential benefits intended to be made available under the Plan,
then the Committee shall, in such manner as it may deem equitable, adjust any or
all of (i) the number of Shares of Micro (or number and kind of other securities
or property) with respect to which Options may thereafter be granted, (ii) the
number of Shares or other securities of Micro (or number and kind of other
securities or property) subject to outstanding Options, and (iii) the exercise
price with respect to any Option, or, if deemed appropriate, make provision for
a cash payment to the holder of an outstanding Option; provided, in each case,
that except to the extent deemed desirable by the Committee (A) with respect to
Options that are intended to qualify as Incentive Stock Options, no such
adjustment shall be authorized to the extent that such adjustment would cause
the Plan to violate Section 422(b)(1) of the Code and (B) with respect to any
Option, no such adjustment shall be authorized to the extent that such authority
would be inconsistent with the Plan's meeting the requirements of Section 162(m)
of the Code.

(c) Sources of Shares Deliverable Under Options. Any Shares delivered
pursuant to an Option may consist, in whole or in part, of authorized and
unissued Shares or of treasury Shares.

SECTION 5. ELIGIBILITY. Participation in the Plan is limited to those
Employees who qualify as Participants as

A-3

<PAGE> 102
of the First Closing.

SECTION 6. STOCK OPTIONS.

(a) Grant. The Employees to whom Options shall be granted, the number of
Shares to be covered by each Option, the option price therefor, the type of
Option and the conditions and limitations applicable to the exercise of the
Option shall be determined in accordance with the Conversion Agreement,
including Schedule 1 thereto. Options will be Incentive Stock Options,
Non-Qualified Stock Options or both, as provided in the Conversion Agreement. In
the case of Incentive Stock Options, the terms and conditions of such grants
shall be subject to and comply with such rules as may be prescribed by Section
422 of the Code.

(b) Exercise Price. The Committee shall establish the exercise price as
provided in Schedule 1 to the Conversion Agreement.

(c) Exercise. Each Option shall be exercisable at such times and subject to
such terms and conditions as the Committee may, subject to the Conversion
Agreement, specify in the applicable Option Agreement or thereafter. The
Committee may impose such conditions with respect to the exercise of Options,
including without limitation, any relating to the application of federal or
state securities laws, as it may deem necessary or advisable.

(d) Payment. No Shares shall be delivered pursuant to any exercise of an
Option until payment in full of the option price therefor is received by Micro.
Such payment may be made in cash, or its equivalent, or, if and to the extent
permitted by the Committee, by exchanging Shares owned by the optionee (which
are not the subject of any pledge or other security interest), or by a
combination of the foregoing, provided that the combined value of all cash and
cash equivalents and the Fair Market Value of any such Shares so tendered to
Micro as of the date of such tender is at least equal to such option price.

SECTION 7. TERMINATION OR SUSPENSION OF EMPLOYMENT. The following
provisions shall apply in the event of the Participant's termination of
employment unless the Committee shall have provided otherwise, either at the
time of the grant of the Option or thereafter.

(a) Nonqualified Stock Options.

(i) Termination of Employment. Except as the Committee may at any time
otherwise provide or as required to comply with applicable law, if the
Participant's employment with the Participant's Employer or any of its
Subsidiaries is terminated for any reason other than death, permanent and total
disability, retirement or Cause, the Participant's right to exercise any
Nonqualified Stock Option shall terminate, and such Option shall expire, on the
earlier of (A) the 60th day following such termination of employment or (B) the
date such Option would have expired had it not been for the termination of
employment. The Participant shall have the right to exercise such Option prior
to such expiration to the extent it was exercisable at the date of such
termination of employment and has not subsequently been exercised.

(ii) Death, Disability or Retirement. Except as the Committee may at
any time otherwise provide or as required to comply with applicable law, if the
Participant's employment with the Participant's Employer or any of its
Subsidiaries is terminated by reason of death, permanent and total disability,
or retirement, the Participant or his successor (if employment is terminated by
death) shall have the right to exercise any Nonqualified Stock Option during the
one-year period following such termination of employment, to the extent it was
exercisable and outstanding at the date of such termination of employment, but
in no event shall such option be exercisable later than the date the Option
would have expired had it not been for the termination of such employment. The
meaning of the terms "permanent and total disability" and "retirement" shall be
determined by the Committee.

(iii) Cause. On the date the Participant's employment with the
Participant's Employer or any of its Subsidiaries is terminated for Cause, the
Participant's right to exercise any Nonqualified Stock Option shall

A-4

<PAGE> 103
terminate and such Option shall expire.

(iv) Acceleration and Extension of Exercisability. Notwithstanding the
foregoing, the Committee may, in its discretion, provide at any time (A) that an
Option granted to a Participant may terminate at a date later than that set
forth above, provided such date shall not be beyond the date the Option would
have expired had it not been for the termination of the Participant's employment
and (B) that an Option may become immediately exercisable when it finds that
such acceleration would be in the best interests of Micro.

(b) Incentive Stock Options. Except as otherwise determined by the
Committee at the time of grant or otherwise or as required to comply with
applicable law, if the Participant's employment with the Participant's Employer
or any of its Subsidiaries is terminated for any reason other than for Cause,
the Participant shall have the right to exercise any Incentive Stock Option
during the 60 days after such termination of employment to the extent it was
exercisable at the date of such termination, but in no event later than the date
the Option would have expired had it not been for the termination of such
employment. If the Participant does not exercise such Option to the full extent
permitted by the preceding sentence, the remaining exercisable portion of such
Option automatically will be deemed a Non-Qualified Stock Option, and such
Option will be exercisable during the period set forth in Section 7(a) of the
Plan, provided that in the event that employment is terminated because of death
or the Participant dies in such 60-day period the Option will continue to be an
Incentive Stock Option to the extent provided by Section 421 or Section 422 of
the Code, or any successor provision, and any regulations promulgated
thereunder. On the date the Participant's employment with his Employer or any of
its Subsidiaries is terminated for Cause, the Participant's right to exercise
any Incentive Stock Option shall terminate and such Option shall expire.

(c) Any time spent by a Participant in the status of "leave without pay"
shall be disregarded for purposes of determining the extent to which any Option
or portion thereof has vested or otherwise become exercisable or nonforfeitable.

SECTION 8. AMENDMENT AND TERMINATION.

(a) Amendments to the Plan. Subject to the provisions of the Conversion
Agreement, the Board may amend, alter, suspend, discontinue, or terminate the
Plan or any portion thereof at any time; provided that no such amendment,
alteration, suspension, discontinuation or termination shall be made without
stockholder approval if such approval is necessary to comply with any tax or
regulatory requirement, including for these purposes any approval requirement
which is a prerequisite for exemptive relief from Section 16(b) of the Exchange
Act, for which or with which the Board deems it necessary or desirable to
qualify or comply. Notwithstanding anything to the contrary herein, the
Committee may amend the Plan in such manner as may be necessary so as to have
the Plan conform with local rules and regulations in any jurisdiction outside
the United States.

(b) Amendments to Options. Subject to the provisions of the Conversion
Agreement, the Committee may waive any conditions or rights under, amend any
terms of, or alter or suspend any Option theretofore granted, prospectively or
retroactively; provided that any such waiver, amendment, alteration or
suspension that would adversely affect the rights of any Participant or any
holder or beneficiary of any Option theretofore granted shall not to that extent
be effective without the consent of the affected Participant, holder or
beneficiary.

(c) Cancellation. Any provision of this Plan or any Option Agreement to the
contrary notwithstanding, the Committee may cause any Option granted hereunder
to be cancelled in consideration of a cash payment or alternative Option made to
the holder of such cancelled Option equal in value to the Fair Market Value of
such cancelled Option on the date of cancellation.

SECTION 9. GENERAL PROVISIONS.

(a) Nontransferability. No Option shall be assigned, alienated, pledged,
attached, sold or otherwise transferred or encumbered by a Participant, except
by will or the laws of descent and distribution provided,

A-5

<PAGE> 104
however, that an Option other than an Incentive Stock Option may be
transferable, to the extent set forth in the applicable Option Agreement, (i) if
such Option Agreement provisions do not disqualify such Option for exemption
under Rule 16b-3 or (ii) if such Option is not intended to qualify for exemption
under such rule.

(b) No Rights to Options. Except as provided in the Conversion Agreement or
herein, no Employee, Participant or other Person shall have any claim to be
granted any Option, and there is no obligation for uniformity of treatment of
Employees, Participants, or holders or beneficiaries of Options. The terms and
conditions of Options need not be the same with respect to each recipient.

(c) Share Certificates. All certificates for Shares or other securities of
Micro or any Subsidiary delivered under the Plan pursuant to any Option or the
exercise thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan or the rules,
regulations and other requirements of the Securities and Exchange Commission or
any stock exchange upon which such Shares or other securities are then listed
and any applicable laws or rules or regulations, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.

(d) Withholding. A Participant may be required to pay to the Participant's
Employer and such Employer shall have the right and is hereby authorized to
withhold from any payment due or transfer made under any Option or under the
Plan or from any compensation or other amount owing to a Participant the amount
(in cash, Shares, other securities or other property) of any applicable
withholding taxes in respect of an Option, its exercise, or any payment or
transfer under an Option or under the Plan and to take such other action as may
be necessary in the opinion of the Employer to satisfy all obligations for the
payment of such taxes.

(e) Option Agreements. Each Option hereunder shall be evidenced by an
Option Agreement which shall be delivered to the Participant and shall specify
the terms and conditions of the Option and any rules applicable thereto.

(f) No Limit on Other Compensation Arrangements. Nothing contained in the
Plan shall prevent Micro or any of its Subsidiaries from adopting or continuing
in effect other compensation arrangements, which may, but need not, provide for
the grant of options, restricted stock and Shares (subject to stockholder
approval if such approval is required), and such arrangements may be either
generally applicable or applicable only in specific cases.

(g) No Right to Employment. The grant of an Option shall not be construed
as giving a Participant the right to be retained in the employ of the
Participant's Employer or any other Ingram Company. Further, the Participant's
Employer may at any time dismiss a Participant from employment, free from any
liability or any claim under the Plan or otherwise, unless otherwise expressly
provided in the Plan or in any Option Agreement.

(h) Rights as a Stockholder. Subject to the provisions of the applicable
Option, no Participant or holder or beneficiary of any Option shall have any
rights as a stockholder with respect to any Shares to be distributed under the
Plan until he or she has become the holder of such Shares.

(i) Governing Law. The validity, construction, and effect of the Plan and
any rules and regulations relating to the Plan and any Option Agreement shall be
determined in accordance with the laws of the State of Delaware.

(j) Severability. If any provision of the Plan or any Option is or becomes
or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as
to any Person or Option, or would disqualify the Plan or any Option under any
law deemed applicable by the Committee, such provision shall be construed or
deemed amended to conform to the applicable laws, or if it cannot be construed
or deemed amended without, in the determination of the Committee, materially
altering the intent of the Plan or the Option, such provision shall be stricken
as to such jurisdiction, Person or Option and the remainder of the Plan and any
such Option shall remain in full force and effect.

(k) Other Laws. The Committee may refuse to issue or transfer any Shares or
other consideration under an Option if, acting in its sole discretion, it
determines that the issuance or transfer of such Shares or such other

A-6

<PAGE> 105
consideration might violate any applicable law or regulation or entitle Micro to
recover the same under Section 16(b) of the Exchange Act, and any payment
tendered to Micro by a Participant in connection therewith shall be promptly
refunded to the relevant Participant, holder or beneficiary. Without limiting
the generality of the foregoing, no Option granted hereunder shall be construed
as an offer to sell securities of Micro, and no such offer shall be outstanding,
unless and until the Committee in its sole discretion has determined that any
such offer, if made, would be in compliance with all applicable requirements of
the U.S. federal securities laws and any other laws to which such offer, if
made, would be subject.

(l) No Trust or Fund Created. Neither the Plan nor any Option shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between Micro or any of its Subsidiaries and a Participant or any
other Person. To the extent that any Person acquires a right to receive payments
from Micro or any of its Subsidiaries pursuant to an Option, such right shall be
no greater than the right of any unsecured general creditor of Micro or any of
its Subsidiaries.

(m) No Fractional Shares. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Option, and the Committee shall determine whether
cash or other securities or other property shall be paid or transferred in lieu
of any fractional Shares or whether such fractional Shares or any rights thereto
shall be cancelled, terminated, or otherwise eliminated.

(n) Execution of Purchase Agreement; Disposition of Shares. Prior to a
Public Offering, no Shares shall be issued pursuant to the exercise of an Option
unless and until a Purchase Agreement shall be executed by Micro and the
Participant. Each certificate representing Shares so acquired shall bear an
appropriate legend setting forth the restrictions on transfer of such Shares as
provided by such Purchase Agreement.

(o) Headings. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.

SECTION 10. TERM OF THE PLAN.

(a) Effective Date. The Plan shall be effective as of August 20, 1996,
subject to approval by the stockholders of Micro.

(b) Expiration Date. Subject to earlier termination by Micro, the Plan
shall expire 90 days after the First Closing. Unless otherwise expressly
provided in the Plan or in an applicable Option Agreement, any Option granted
hereunder may, and the authority of the Board or the Committee to amend, alter,
adjust or suspend any such Option or to waive any conditions or rights under any
such Option shall, continue after the authority for grant of new Options
hereunder has been exhausted or terminated.

A-7