Submarino Acquires Ingresso.com, Leader in Online Ticket Sales

Submarino Acquires Ingresso.com, Leader in Online Ticket Sales

SAO PAULO, Brazil, Oct. 31 /PRNewswire-FirstCall/ -- Submarino S.A. [Bovespa: SUBA3] announces the acquisition of 100% of the stock capital of Ingresso.com.br ("Ingresso.com"), a leading online retailer of movie, theater and entertainment tickets. With this acquisition, Submarino enters a new and attractive market while also offering its customers a new differentiated service. The price paid for the acquisition, adjusted by Ingresso.com's cash position, was R$ 8.3 million, equivalent to 7.0 times the 2005 projected EBITDA.

Ingresso.com
Ingresso.com has two business units:
* Online ticket sale: Through its website, http://www.ingresso.com.br/,
the company sells tickets for movies, theaters and entertainment
events and is currently the only company selling movie tickets through
the Internet in Brazil. In 2004, the company sold approximately one
million tickets to its active client base of 131,000 clients.

* Automation of movie theater and music hall box offices: Ingresso.com's
box office software runs 881 theaters nationwide.

In 2004, Ingresso.com's revenue reached R$ 4 million, representing a 77% growth over 2003. In that year, the company's EBITDA was R$ 969,000 (a 28.3% margin over net revenues).

The Market

The movie theater market in Brazil was estimated at R$ 770 million in 2004 with 115 million tickets sold. The market grew at an annual average rate of 22% from 2001 to 2004. We estimate that the level of penetration in Brazil is 0.6 tickets/year, while it is 1.4 in Mexico and 1.1 in Argentina. Online sale penetration is 1% over the total number of tickets sold. In the USA, online and telephone sales account for 10% of total tickets sold.

The Company believes that the market of other entertainment tickets (theaters and shows) is around R$ 280 million, equivalent to 7 million tickets sold in 2004. For comparison purposes, the entertainment ticket market in Mexico sells approximately 20 million tickets per year, in spite of having a population 43% lower than to Brazil.

Why the Company Acquired Ingresso.com

We believe there is tremendous potential for Ingresso.com operating together with Submarino. The main reasons that motivated the acquisition are:

* The Company will provide a differentiated service to our clients.
Ingresso.com is currently the only company selling movie theater
through the Internet in Brazil. Besides offering our clients the
widest selection of books, music and DVDs, the Company will, from now
on, provide them with the convenience of purchasing tickets at home.
Their film preferences will give us valuable information, which the
Company can use to offer them customized suggestions.

One of Submarino's priorities is to offer its customers a unique
shopping experience.

* The Company will enter a new and attractive market. Resale of tickets
represents a R$ 1 billion market with a very low online penetration.
Ingresso.com's growth will be driven by the growth of the
entertainment industry plus any gains in online penetration from
today's 1%. We believe penetration can increase since consumption of
tickets is concentrated in class A and B consumers, most of whom
already have Internet access.

The Company believe that wider awareness of Ingresso.com's services
will increase the number of tickets sold online, especially
considering that the low number of movie theaters often leads to long
lines and sold-out shows during weekends and for blockbuster films.
Additionally, the Company believe that Ingresso.com can grow in other
segments of entertainment (musical shows, soccer) as well as develop
the technology to sell tickets via alternative media (e.g. mobile
phones).

* The Company will obtain sale synergies. Ingresso.com's users (131
thousand active users by the end of 2004) are potential clients to
purchase merchandise from Submarino's assortment. Additionally,
Submarino's clients (approximately 1.2 million active clients) will
also be able to use the services provided by Ingresso.com.

* The Company likes the Ingresso.com team. The company has a highly
qualified team, with deep knowledge of the entertainment market and
will continue to manage day-to-day operations of Ingresso.com. Jorge
Reis and Mauro Goncalves, founding partners of Ingresso.com, are great
entrepreneurs who will help us expand the business as well as the
range of services that we offer.

Did The Company Pay a Fair Price?

The price to be paid for Ingresso.com is equivalent to R$ 8.3 million (base price, equivalent to the price of R$ 8.8 million less Ingresso.com cash position of R$ 0.5 million), plus an additional amount of up to R$ 2.1 million due in December 2007 if the company substantially exceeds the financial projections used to justify the price.

The base price represents a multiple of 7.0 times the EBITDA project for 2005. When calculating the base price, we did not take into account the synergies between Submarino and Ingresso.com.

Launching of a New Business

Starting today, the sale of tickets will be provided by Submarino. During November, the clients of Ingresso.com will receive a coupon welcoming them to the Submarino community. In the near future, our selection of DVDs and movie sound tracks will be offered on Ingresso.com web pages.

About Submarino

Submarino is the leading pure-play online retailers in Brazil. The company built a strong brand and a premium customer base by offering a superior breadth and depth of product selection with best-in-class customer service. Through its website http://www.submarino.com.br/ , the company offers more than 700,000 items across 24 product categories that are sourced from more than 1,100 suppliers, in addition to e-commerce services. Submarino delivers to the main cities in Brazil in up to two days and provides same-day delivery for certain items to the Sao Paulo metropolitan area.

For additional information please contact Submarino's investor relations area: ri@submarino.com.br .

IR Website: http://www.submarino.com.br/ri/

This release contains forward-looking statements relating to the prospects of the business, estimates for operating and financial results, and those related to growth prospects of Submarino. These are merely projections and, as such, are based exclusively on the expectations of Submarino's management concerning the future of the business and its continued access to capital to fund the Company's business plan. Such forward-looking statements depend, substantially, on changes in market conditions, government regulations, competitive pressures, the performance of the Brazilian economy and the industry, among other factors and risks disclosed in Submarino's filed disclosure documents and are, therefore, subject to change without prior notice.

Source: Submarino S.A.; Ingresso.com

CONTACT: ri@submarino.com.br

Web site: www.mz-ir.com

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