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INTELLIGENT ELECTRONICS EXPLORES STRATEGIC ALTERNATIVES & DISCUSSES BUSINESS TRENDS

INTELLIGENT ELECTRONICS EXPLORES STRATEGIC ALTERNATIVES &
 DISCUSSES BUSINESS TRENDS
 EXTON, Pa., July 23 /PRNewswire/ -- In a BizMart symposium with analysts and the media today, Intelligent Electronics, Inc. (NASDAQ-NMS: INEL) said the company's recently announced plans to explore "strategic alternatives" for the company might include the sale, merger or spin-off of one or more of its operating divisions.
 Additionally, executives from the company discussed current trends in its BizMart operations and provided updates on the operations of Intelligent's other divisions.
 Chairman and CEO Richard D. Sanford said, "This company has achieved substantial size and growth, in part because of its ability to focus strategically and respond with pin-point accuracy to market changes. In light of the significant gap between the company's current market valuation and its inherent value, it is our fiduciary responsibility to consider all alternatives which might enhance shareholder value." Sanford confirmed Merrill Lynch & Co. had been retained to analyze and recommend various opportunities to the company's board of directors.
 Consumer Retail Division, BizMart
 In discussing the company's chain of 88 BizMart supercenters, Sanford said, "During the past 12 months, we have built a solid asset in BizMart and created a new paradigm in the marketplace. Customers have embraced our concept of offering an office products superstore and a computer superstore under one roof to provide everything their offices need to be more productive."
 "In an environment where 89 percent of our supercenters compete with other supercenters, we have consistently out-performed our competitors in several key performance indicators," said Sanford, referencing BizMart's annualized volume per store, year-to-year sales increases, and annualized sales per square foot. Sanford indicated BizMart's general and administrative expense ratio and store level operating expenses lead the industry, and he emphasized the importance of maintaining a lean infrastructure. In the year since Intelligent acquired BizMart, its supercenters have increased same store cash register sales an average of approximately 40 percent.
 Sanford said the company was adjusting BizMart's previously announced expansion plans to allow profitability to catch up with the company's investment. "During the past 12 months, we have invested in BizMart's growth. We have opened 31 supercenters and entered 24 new markets. We have reformatted all the supercenters, introduced name- brand computer merchandise, and built a solid infrastructure to fuel BizMart's continued growth," he said. At quarter end, approximately 40 percent of BizMart's stores will be under 12 months of age, with 21 of those locations less than six months old. "These young stores are showing strong growth potential and tracking in accordance with plan, as they gain sales momentum and build toward positive contributions," said Sanford.
 Sanford indicated the company was on target to bring its total store count to 92 by Aug. 1. By end of the current fiscal year, Jan. 30, 1993, Intelligent expects to have 100 to 105 BizMart supercenters in operation.
 Last fall the company rolled out a program in which interested members of its reseller network franchised the operations of computer departments within BizMart supercenters. Sanford said the program was introduced in the spirit of partnership when issues of contention and cannibalization between the company's reseller network and its BizMart chain were undetermined. During the current quarter, Sanford said the company and certain franchisees mutually agreed to return the operations of 20 computer departments to BizMart. He said the company agreed to refund franchise fees and repurchase inventories. Sanford noted that during the past year BizMart's margins have tended to lag behind competitors somewhat, primarily as a result of the franchise program and the chain's relatively higher proportion of computer sales.
 "After nine months, the market has divided into consumer, small business, and business-to-business segments. It is becoming increasingly apparent that large format retailers are not posing the threat to our network of more than 1600 systems resellers that some had expected. We are confident our resellers will continue to grow, co-existing with the emerging supercenter marketplace," said Sanford.
 The company said the expansion of company-owned computer department operations, seasonal softness, expenses of opening new stores, and a high percentage of young stores were impacting BizMart's performance this quarter.
 Reseller Network Division
 Intelligent's Reseller Network Division provides high technology products and services to its network of franchised and affiliated resellers in 700 markets and all 50 states of the nation. Sanford explained that the Reseller Network Division has recorded 15 percent to 20 percent year-to-year revenue growth throughout the past four quarters.
 Sanford said, in his opinion, this quarter marked the beginning of the turning point for margin pressures. "We are finally seeing the last of the margin squeeze. Vendor support programs have stabilized, and our programs to generate demand are beginning to contribute. The net effect is that only the most cost efficient organizations will continue to lead the industry," he said. Sanford indicated the division did not appear to be experiencing significant impact from distributors or large-format retailers.
 Distribution Services Division
 Additionally, Sanford spoke enthusiastically about the growth opportunities for the company's Distribution Services Division, which is actively participating in the emerging logistical services marketplace. The company recently announced an agreement in which it will provide fulfillment services to IBM's customers in the kindergarten through 12th grade educational markets. "Our strategy is to capitalize on our strengths in logistics and customer service. We plan to target additional opportunities as organizations continue to outsource more of their logistical needs to third parties," said Sanford.
 Intelligent Electronics, a leading source of office productivity solutions, operates three divisions: Consumer Retail, Reseller Network, and Distribution Services. The Consumer Retail Division's BizMart supercenters offer value-priced products and services for offices through more than 1.7 million square feet of retail selling space in 43 markets nationwide. The Reseller Network, composed of more than 1600 computer systems resellers and affiliates, provides sophisticated technology solutions to businesses in all 50 states of the nation. Distribution Services, with 450,000 square feet of warehouse space in Denver and in Chantilly, Va., represents a highly cost-efficient logistics system, shipping approximately $8 million and 1 million pounds of products each day.
 /delval/
 -0- 7/23/92
 /CONTACT: Patrice W. Johnson of Intelligent Electronics, 215-458-6706/
 (INEL) CO: Intelligent Electronics, Inc. ST: Pennsylvania IN: REA SU: ERN


LJ -- PH050 -- 2783 07/23/92 17:21 EDT
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Date:Jul 23, 1992
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