Ingram Entertainment Inc. Announces Independence

LA VERGNE, TN –Ingram Entertainment Inc. Chairman and President David B. Ingram formally announced today that Ingram Entertainment Inc., the nation’s largest distributor of prerecorded videocassettes, is now an independent company and is no longer a wholly owned subsidiary of the Ingram Industries Inc. organization. Mr. Ingram and Thomas H. Lunn, Vice Chairman, are the major stockholders controlling approximately 99% of the stock in the company.

Ingram Entertainment Inc. had been under the Ingram Industries Inc. umbrella of companies since it was formed in 1980. Martha R. Ingram is Chairman of the Board of the diversified Ingram Industries Inc. which today is comprised of Ingram Book Group, Ingram Marine Group and Ingram Insurance Group. Ingram Industries Inc. was also the parent company of Ingram Micro Inc., which on October 31, 1996, became an independent public company trading on the NYSE. Both Ingram Entertainment Inc. and Ingram Industries Inc. remain privately held companies.

Ingram Industries Inc. was founded by E. Bronson Ingram in 1977 after the division of Ingram Corp. It included Ingram Book Company which was founded in 1970 after the 1964 purchase of Tennessee Book Company. A new division was created in 1980 to distribute video to bookstores. Ingram Video became a separate, wholly owned subsidiary in 1981. In 1982, the company began distribution to video stores. The company grew through the 1987 acquisition of Home Entertainment and the 1989 acquisition of Metro Video.

In the late 80’s and early 90’s, the company began to diversify by adding audio and laser disc lines. The name was changed in 1990 to Ingram Entertainment Inc. In June 1992, Ingram Entertainment Inc., then the second largest distributor in the industry, acquired and merged with Commtron Corp., the largest entertainment software distributor.

The predecessor company of Commtron Corp. was a privately held citizens band radio distributor that grew into a major distributor of consumer electronics. The company added video in 1979 and was acquired by Bergen Brunswig in 1982. It became publicly held in 1986. With the merger with Commtron Corp., Ingram Entertainment Inc. added not only management and associates, but also electronics, video games and Monarch Home Video Inc. Monarch Home Video Inc. is a supplier of independently produced feature films.

David Ingram became President of Ingram Entertainment Inc. in August 1994. He advanced to his position of Chairman and President in April 1996. In January 1996, Ingram Entertainment Inc. began operating separately from Ingram Industries Inc. in preparation for its official independence, which was delayed from the originally planned October 31, 1996 date due to certain IRS restrictions relating to the company’s 1992 merger with Commtron Corp.

A comparison of financial information over six years shows Ingram Entertainment Inc.’s growth as a company. In 1991, the company had gross sales of $362 million and total revenues of $341 million. The company shipped 13.4 million units. In 1992, the company had gross sales of $734 million and total revenues of $687 million. The total number of units shipped was 35.2 million. The sales jump in 1992 was due to the June merger with Commtron Corp. In 1993, gross sales increased to $902 million and total revenues increased to $829 million while total units shipped went up to 42.5 million. In September of 1993, Ingram Entertainment Inc. stopped supplying Blockbuster Corporation, which at the time represented $200 million of annualized business for the company. Since the mid 80’s, Blockbuster had received its video products from Ingram Entertainment Inc., and East Texas Distributors, but decided it could reduce costs by going with one distributor. Ingram chose to pursue other video business rather than become too reliant on such a large customer. In 1994, the company made up much of the $200 million in lost business by aggressively pursuing other video retailers as well as the emerging grocery and drug marketplace. 1995 and 1996 were years of steady growth for Ingram Entertainment. For 1997, the company expects gross sales to approach the $1.1 billion mark with total revenues nearing the $950 million.

Currently, Ingram Entertainment Inc. represents 450 vendors and distributes to more than 12,000 customers representing 32,000 store fronts. Over 1,000 Ingram Entertainment Inc. associates work in 23 locations across the nation. The company sells video, DVD hardware and software, electronics products like TVs and VCRs, video game hardware and software, including Nintendo 64, Sony Playstation and Sega Saturn, CD-ROM multimedia products and audio books. The company also handles sales of used entertainment software products.

Ingram Entertainment Inc. has a number of subsidiary companies. Human Solutions Inc. specialized in the preparation of training modules for human resources departments. Ingram Creative Marketing Inc. is a full-service marketing, advertising and public relations agency serving all types of clients. This company is particularly skilled in PR, graphic design, and web page design. Monarch Home Video Inc. is Ingram Entertainment Inc.’s captive label which distributes independent product including the recently released Highlights of the 1997 Masters Tournament and Ernest Goes to Africa. Ingram Entertainment Inc. holds a controlling interest in Video Financial Services Inc. which provides floorplanning financing for select video titles as well as asset based lending to the video community. Ingram/LeBrun Music Inc. provides music publishing and production services from its location on Music Row in Nashville. Other subsidiaries of Ingram Entertainment Inc. include Incentives Etc. and Ingram Alternative Markets Inc. Ingram Entertainment Inc. holds a majority interest in SpeedServ Inc. which provides entertainment products fulfillment on the Internet from its, and web sites. Ingram Entertainment Inc. holds a minority interest in the full-service advertising agency McGee, Best, Frank & Ingram.

Ingram Entertainment Inc. takes an active role in the promotion of the video industry. In the summer of 1996, it launched its “Have You Rented A Video Lately?” bumper sticker campaign. The campaign began in June when all Ingram Entertainment Inc. associates displayed bumper stickers or static window clings. In 1997, the second phase of the program was introduced. Using retailer posters and other advertising venues, the program promotes “The Value of Video.” Ingram Entertainment Inc. is a member of several major trade associations including Video Software Dealers Association and National Association of Video Distributors.

Ingram Entertainment Inc. is the nation’s largest leading video supplier for supermarkets and drug chains. The company is also the leader in “sell-through proceed” video sales to all classes of retail except for certain mass merchants such as Wal-Mart and Kmart, which purchase these products directly from the studios. The company has a variety of video specialty accounts ranging from multi-store chains to one-store accounts. Some of the Ingram Entertainment Inc.’s larger customers include Hollywood Entertainment, West Coast Entertainment, Blockbuster, Movie Gallery, Walgreens, Cracker Barrel, Safeway, Circuit City and Best Buy.

The vendors Ingram Entertainment Inc. does business with are household names such as Buena Vista Video (Walt Disney Home Video), Warner Home Video, MCA/Universal, Columbia TriStar Home Video, Fox Home Video, Sega of America, Nintendo of America, and Sony of America. In the second half of this year, the company’s core video business is expected to be fueled by exciting releases from major studios. Priced for rental, the following titles are expected to be released: The English Patient, Dante’s Peak, Volcano, Fifth Element, and Con Air. During this time period at lower pricing, our retailers can expect: Liar, Liar, Batman & Mr. Freeze, Jungle 2 Jungle, Pooh’s Grand Adventure, Cats Don’t Dance, Annie, Mary Poppins, and Sleeping Beauty.

Ingram Entertainment Inc. plays an active role in the community. The 1995 United Way conducted jointly with other Ingram companies headquartered in La Vergne won the Hortense B. Ingram Award from United Way. In 1996, Ingram Entertainment Inc. conducted its own campaign and raised $50,500 for the United Way efforts for Middle Tennessee and Des Moines, Iowa. The funds were raised from donations by associates and from several in-house events. Ingram Entertainment Inc. associates also gave their time by participating in the United Way sponsored Day of Caring. Plans for 1997 campaign are underway.

Ingram Entertainment Inc. President David Ingram is optimistic about the split from Ingram Industries Inc., “Now that IEI is operating as a separate company, I am able to focus my full attention on it. Part of the reason I wanted to spin IEI off from the other Ingram companies is that I wanted to be able to make decisions that were good for IEI and its associates without having to worry about what the other companies might want. So, as IEI goes forward as a separate company, the goals that we set earlier in the decade now become even more accessible thanks to our increased flexibility. Today, we have the opportunity to explore a broader spectrum of possibilities than ever before.”

Ingram Entertainment Inc. is headquartered in La Vergne, Tennessee, a suburb of Nashville. The company headquarters is a 100,000 sq. ft., two-story building situated on a 13-acre tract of land. It was completed in May 1993, and is home now to 350 associates. The company operates another large facility in Des Moines, Iowa, its National Sales Center, which employs 135 associates.

Ingram Entertainment Inc. is the leading national distributor of home entertainment products including prerecorded videocassettes, electronics, video game hardware and software, DVD hardware and software, multimedia, audio books, accessories, and used prerecorded videocassettes. The company services over 12,000 retail accounts including video specialty stores, music stores, supermarkets and drug chains. Ingram Entertainment Inc. is headquartered in La Vergne, Tennessee and operates out of 23 locations.