TRANSFORMING OFFICE DEPOT

A PLAN FOR RENEWAL AND REINVIGORATION

August 2, 2013

DISCLAIMER

General Considerations This presentation is for general informational purposes only, is not complete and does not constitute an agreement, offer, a solicitation of an offer, or any advice or recommendation to enter into or conclude any transaction or confirmation thereof. This presentation should not be construed as legal, tax, investment, financial or other advice. It does not have regard to the specific investment objective, financial situation, suitability, or the particular need of any specific person who may receive this presentation, and should not be taken as advice on the merits of any investment decision. The views expressed in this presentation represent the opinions of Starboard Value LP and the funds it manages (collectively, Starboard Value) and the nationally-recognized restructuring firm Starboard Value has engaged to assist in the development of this presentation. The views expressed herein are based on publicly available information with respect to Office Depot, Inc. (the "Issuer") and the other companies referred to herein. Starboard Value recognizes that there may be confidential information in the possession of the companies discussed in this presentation that could lead such companies to disagree with Starboard Values conclusions. Certain financial information and data used herein have been derived or obtained from filings made with the Securities and Exchange Commission ("SEC") or other regulatory authorities and from other third party reports. Starboard Value has not sought or obtained consent from any third party to use any statements or information indicated herein as having been obtained or derived from statements made or published by third parties. Any such statements or information should not be viewed as indicating the support of such third party for the views expressed herein. Starboard Value does not endorse third-party estimates or research which are used in this presentation solely for illustrative purposes. No warranty is made that data or information, whether derived or obtained from filings made with the SEC or any other regulatory agency or from any third party, are accurate. Neither Starboard Value nor its consultants shall be responsible or have any liability for any misinformation contained in any third party, SEC or other regulatory filing or third party report. There is no assurance or guarantee with respect to the prices at which any securities of the Issuer will trade, and such securities may not trade at prices that may be implied herein. The estimates, projections, pro forma information and potential impact of the analyses set forth herein are based on assumptions that Starboard Value and its consultants believe to be reasonable as of the date of this presentation, but there can be no assurance or guarantee that actual results or performance of the Issuer will not differ, and such differences may be material. This presentation does not recommend the purchase or sale of any security. Starboard Value reserves the right to change any of its opinions expressed herein at any time as it deems appropriate. Starboard Value disclaims any obligation to update the data, information or opinions contained in this presentation. Forward-Looking Statements This presentation contains forward-looking statements. All statements contained in this presentation that are not clearly historical in nature or that necessarily depend on future events are forward-looking, and the words anticipate, believe, expect, potential, opportunity, estimate, plan, and similar expressions are generally intended to identify forward-looking statements. The projected results and statements contained in this presentation that are not historical facts are based on current expectations, speak only as of the date of this presentation or any such earlier date referenced in the presentation and involve risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such projected results and statements. In light of the significant uncertainties inherent in the projected results and forward-looking statements included in this presentation, the inclusion of such information should not be regarded as a representation as to future results or that the objectives and plans expressed or implied by such projected results and forward-looking statements will be achieved. Under no circumstances is this presentation to be used or considered as an offer to sell or a solicitation of an offer to buy any security.

INTRODUCTION

Starboard Value is the largest shareholder of Office Depot, owning approximately 14.6% of the outstanding shares of the Company We have engaged one of the worlds leading restructuring and turnaround firms Along with this leading restructuring firm, and our director nominees, we have spent the last nine months developing a detailed plan to significantly improve the operating performance and value of Office Depot We have assembled a team of extremely talented former retail operators who are ready, willing and able to tackle each opportunity in this presentation We have a high degree of confidence that our team can extract substantial operational value that will accrue to Office Depot shareholders

TABLE OF CONTENTS
I. Real change is required at Office Depot
A. B. C. ODP is losing its customer franchise ODP is failing strategically and operationally ODPs new real estate strategy is flawed Efficiency and effectiveness initiatives Growth Strategy New real estate strategy

II.

Business model transformation opportunity

A. B. C.

III.

100 day plan

REAL CHANGE IS REQUIRED AT OFFICE DEPOT

REAL CHANGE IS REQUIRED AT OFFICE DEPOT

The situation is serious - Office Depot is losing its customers, relevancy, and viability as an Office Products and Services retailer

The Problem

The Answer We have a Winning Plan: Our Plan is Balanced

Topline Growth Efficiency & Effectiveness

Our Plan is Urgent

100 Day Recovery Plan Improvements in 12 Months

Our Plan is Deliberate

Competitive Repositioning New Services and Categories New Investments

Notes: 1) Survey results (Net Promoter Score) of 2,014 consumer, small & medium business office supply customers, conducted by an independent survey organization from December 19th through December 26th, 2012 ; SMB: Services- ODP(9%) v. SPLS (30%), Supplies ODP(15%) v. SPLS(40%), Equipment- ODP(15%) v. SPLS(40%); Consumer: Services ODP(19%) v. SPLS(43%), Supplies ODP(37%) v. SPLS(39%), Equipment- ODP(24%) v. SPLS(38%) 2) ODP SEC Form 10Q (05/01/2012): Average order value was slightly negative and customer transaction counts declined approximat ely 5% compared to the same period last year. ODP SEC Form 10Q (8/07/2012): Average order value was slightly negative in the second quarter and customer transaction count s declined approximately 3% compared to the same period last year. ODP SEC Form 10Q (11/06/2012): Average order value was slightly negative in the third quarter and customer transaction count s declined approximately 4% compared to the same period last year. Q4 2012 ODP Earnings Summary (2/20/2013): Average order value was relatively flat in the fourth quarter and customer transac tion counts declined approximately 5% compared to the same period last year.

REAL CHANGE IS REQUIRED AT OFFICE DEPOT

ODP leadership is responsible for destroying shareholder value and continuing to lose market share to its competitors Headlines Destroyed $9.3B (86%) in enterprise value since 2006 7% average decline in comps per year since 2007 Losing North American market share to Staples: ODP Change in Market Share: -4% vs. Staples +6% Trailing Staples by a factor of 2.5x in customer loyalty across Supplies, Equipment and Business Services Responsible for significant strategic and operational failures Market Share Historical North American Retail Market Share Office Depot vs. Staples and OfficeMax(1)
SPLS: Gained 6% Market Share Market Share Gap ODP: Lost 4% Market Share

OMX: Lost 3 % Market Share

Short and intermediate term headwinds remain strong and will require transformational leadership and innovative solutions

Notes: 1) Source: IBISWorld report

REAL CHANGE IS REQUIRED AT OFFICE DEPOT

Since 2006, ODP has destroyed $9.3B (86%) in Enterprise value(1) - Deeper and faster than either competitor ODP Enterprise Value(2)
Memo: Closing Stock Price
38.17
$9.3B (86%) Decline

($ in billions)

SPLS Enterprise Value(2)

Memo: Closing Stock Price

($ in billions)

Enterprise Value ($B)

$12 $10

$20

Enterprise Value ($B)

$6.4B (39%) Decline

$8
$6 $4 $2 $2006 2007 2008 2009 2010 2011 2012
13.91
6.45

$15

26.70

13.43

20.74
16.34

22.78

$10 $5
$-

21.45 11.40

2.98

5.40

2.15

3.28

2006

2007

2008

2009

2010

2011

2012

OMX Enterprise Value(2)

Memo: Closing Stock Price

($ in billions)

Enterprise Value(2) Comparison

ODP SPLS OMX

($ in billions)

Enterprise value ($B)

$6 $5
$4 $3 $2 $1

Enterprise Value ($B)

49.65

$3.6B (72%) Decline

$20
$16

20.66

7.64

12.69

17.70 4.54 9.76

$12
$8

$4
$-

$2007 2008 2009 2010 2011 2012 Notes: 2006 1) As of 12/31/2012 2) Enterprise Value = Market Cap + Debt + Preferred Stock Cash and Cash Equivalents 3) Source: marketcapchart.org, Yahoo Finance and Company 10-K SEC Filings

2006

2007

2008

2009

2010

2011

2012

WEAK HISTORICAL OPERATIONAL PERFORMANCE

Since 2007, Office Depots retail comp sales and sales per square foot have declined dramatically

North American Retail Comp Sales % Change

0% -1%

North American Retail Sales $ Per Sq Ft (1)

$280 $250 $220 $190 $254
-$79 / sqft (1)

-2%
-3% -4% -5% -5.0% 2007

$175

$160 $130 -5.0%

$100 2012 2007 2012

-6%

Notes: 1) 2007 Sales Per Sq Ft is adjusted for inflation to 2012 Dollars (source: http://www.bls.gov/data/inflation_calculator.htm) 2) Source: Company 10-K SEC Filings

WEAK HISTORICAL FINANCIAL PERFORMANCE

Despite a massive revenue decline of $4.8 billion from 2007 to 2012, total G&A expense has actually increased, causing G&A expense as a percentage of revenue to increase from 4.2% to 6.3% and Adj. EBITDA margins to decline from 5.3% to 3.1% over this same time period Total Company Revenue
$18,000 $16,000 $14,000
$12,000 $10,000 $8,000 $15,528
-$4.8 Billion

($ in millions)

Total Company G&A Expenses(1)

$680
$670

($ in millions)
$673

+$27 Million

$660

$10,696

$650 $640 $630

$646

2007

2012

2007

2012

Total G&A Expense as % of Revenue

7.0%
6.0% 5.0% 4.0% 4.2% 6.3%

Adjusted EBITDA(1)
1000 800 600 400 200 0 $832

($ in millions)

-$499 Million
$333

3.0%
2.0% 1.0% 0.0%

2007

2012

2007

2012

Notes: 1) Non-GAAP figures which exclude charges of $40M and $127M for 2007 and 2012, respectively, and Depreciation & Amortization of $281M and $203M for 2007 and 2012, respectively

10

OFFICE DEPOT HAS SIGNIFICANTLY UNDERPERFORMED COMPARED TO PEERS

Office Depots revenue growth, market share, retail comp sales, and retail sales per square foot have underperformed Staples Revenue CAGR
30% 20% 10% 0% -10% -20% ODP SPLS OMX 2007 2008 2009 2010 2011 2012

North American Retail Market Share

40%

30% 20%
10% 0% 2007 2008 ODP 2009 SPLS 2010 OMX 2011 2012

North American Retail Comp Sales % Change

5%

North American Retail Sales per Square Foot (1)

$300

0% 2007 -5%
-10%

$250
2008 2009 2010 2011 2012

$200
$150 $100

-15% ODP SPLS OMX

2007

2008 ODP

2009 SPLS

2010 OMX

2011

2012

Notes: 1) Non-inflation adjusted dollars

11

OFFICE DEPOT HAS SIGNIFICANTLY UNDERPERFORMED COMPARED TO PEERS

Office Depots operating margins are also significantly below peer levels due to higher operating expenses, clearly indicating that the Company has not reduced spending levels sufficiently to offset declines in revenues

2012 Financials
ODP Revenue Sales / Sqft Adj. Operating Profit (1) Operating Margin $ $ 10,696 $175 96 0.9% $

($ in millions)
SPLS $ 24,381 $240 1,548 6.3% $ $ OMX 6,920

2012 Adj. Operating Margins

7%
6% 6.3%

5%
$157 139 2.0%
4%

3%
2.0% 2%

1%
0%

0.9%

ODP

SPLS

OMX

Notes: 1) One time charges for ODP, SPLS and OMX are $127M, $1,038M and $115M, respectively

12

OFFICE DEPOTS RECENT POOR PERFORMANCE IS PARTICULARLY ALARMING

Recent revenue, same store sales, and operating margins continue to be the worst among OSS peers
Avg. 4Q12/1Q13 Revenue %Change
0%
-2% -4% -6% -8% -10% Staples -8.6% Office Depot Office Max -6.5% -0.1%

Avg. 4Q12/1Q13 SG&A as %Revenue

30% 25% 20% 15% 23% 24%

20%

10%
5% 0% Staples Office Depot Office Max

Avg. 4Q12/1Q13 Comp Store Sales %Change

0%

Avg. 4Q12/1Q13 Adjusted Op. Profit as %Revenue(1)

8% 6.0% 6%

-1%
-2% -3% -4% -5% -6% Staples -5% Office Depot Office Max 0% -2% -4% 2% 4%

1.5% 1.1%

Staples

Office Depot

Office Max

Notes: 1) Adjusted Op. Profit as reported in each companys 10-Q SEC filings and reconciliation of non-GAAP financial measures 2) Source: Companies 10-K and 10-Q SEC filings

13

REAL CHANGE IS REQUIRED AT ODP

Conclusions The current leadership team is not capable of producing the transformational change required to position them for omni-channel growth in the future

The company will require radical action to stop losing customers, reverse basket declines, and recover market share
Despite modest improvements in recent years, the existing cost structure is not sustainable

The situation is seriousThe time for change is now

14

ODP IS LOSING ITS CUSTOMER FRANCHISE

CUSTOMER LOYALTY CAN BE MEASURED BY THE NET PROMOTER SCORE (NPS)

The NPS is a standard retail industry measure used to determine a customers loyalty that can provide insight into the customer experience and how likely that customer is to both come back to the store / brand as well as recommend the store / brand to someone else In order to gauge Office Depots NPS, we conducted an independent survey of over 2,000 consumer and SMB office supply customers We asked the following Question: How likely are you to recommend [store brand] to a friend or colleague?
Very Likely 10 9

Promoters

% Promoters
INSIGHT: 80% of positive comments about a brand come from promoters

Passives

8 7

6 5 4

(minus)

Detractors

% Detractors
INSIGHT: 80% of negative comments about a brand come from detractors

3 2 1 0

Very Unlikely

Net Promoter Score (NPS)

GENERAL RULE OF THUMB: 40% or higher is considered an acceptable NPS score

16

ODPS SMALL BUSINESS CUSTOMER LOYALTY IS POOR

Office Depot has fewer loyal small business customers than its competitors across its three key categories, Office Supplies, Office Equipment, and Business Services, based on its Net Promoter Scores (NPS)(1), an industry standard metric for loyalty comparisons Average
Office Supplies
60% 60% 50% 40% 30%

Target industry rate (>40%)

Office Equipment
40%
30%

Business Services

50%
40%

30%
20% 10% 0%

20%
10% 0%

20%
10% 0%

Office Depot

UPS Store

FedEx Office

OfficeMax

Office Depot

OfficeMax

Amazon

Staples

-10%

SMB customers are approximately two-thirds less loyal to Office Depot than established competitor Staples and emerging competitors Costco and Amazon when shopping for Office Supplies

A similar SMB customer loyalty gap exists between Office Depot and leading competitors Costco, Staples, and Amazon in Office Equipment

Office Depot

OfficeMax

Amazon

Staples

SMB customer loyalty is lowest in Business Services, where Office Depot ranks lowest and trails stronger peers by either a 2:1 or even 3:1 margin
Importantly, Office Depot trails the most in what should be the highest profit margin category

Notes: 1) NPS survey results of 2,014 consumer, small and medium-sized business office supply customers conducted by an independent survey organization from December 19, 2012, to December 26, 2012

Staples

Costco

Costco

17

ODPS CONSUMER LOYALTY IS BELOW AVERAGE

Among consumers, loyalty (as measured by Net Promoter Score(1)) to Office Depot is comparable to its peers in Office Supplies, but it is significantly lower in Office Equipment and Business Services Average
Office Supplies
60% 50% 60% 50%

Target industry rate (>40%)

Office Equipment
50%

Business Services

40%
30% 20% 10% 0%

40%
30% 20% 10% 0%

40%
30% 20% 10% 0%

Amazon

Staples

Staples

Amazon

UPS Store

Office Depot

Office Depot

Consumer loyalty to Office Depot is average in Office Supplies, an area where consumers generally view the sector more favorably than SMB customers

Office Depot ranks last in consumer loyalty in Office Equipment, well below direct peers, Staples and OfficeMax, and even further below industry leaders, Amazon and Costco

Staples dominates consumer loyalty in business services, with an NPS score more than two times higher than Office Depots

Office Depot generates higher NPS scores among consumers (although still at or near the bottom and well below the target rate), a customer that is generally less profitable and less recurring than SMB customers
Notes: 1) NPS survey results of 2,014 consumer, small and medium-sized business office supply customers conducted by an independent survey organization from December 19, 2012, to December 26, 2012

Office Depot

FedEx Office

OfficeMax

OfficeMax

OfficeMax

Staples

Costco

Costco

18

ODP IS LOSING ITS CUSTOMER FRANCHISE

ODPs most loyal customers are less loyal than the competitions. The loyalty advantage enjoyed by Staples manifests itself in customer stickiness, making Staples customers more intensely loyal to Staples than loyal ODP and OMX customers are to their brands

Percent of #1 Ranking by Each Store Brands Loyal Customers Consumer Small and Medium Business (SMB)

Staples loyalty advantage, e.g., core consumers who rank their retailer as number one versus other retailers, is statistically significant across all key dimensions making it unlikely that core Staples consumers will ever switch to ODP or OMX

With virtually no statistically significant difference between ODP and OMX across five of six key competitive dimensions, the proposed merger of ODP and OMX is unlikely to attract Staples SMB customers

Notes: 1) Source: Survey Results. Percentage of core customers who ranked their primary office provider as #1 in each of 6 dimensions

19

ODP IS LOSING ITS CUSTOMER FRANCHISE

For several years, Office Depots comparable store sales have continuously declined, despite managements repeated optimistic statements about improvement initiatives in the North American Retail Division (NAR) Key Retail Metrics(1)(2)
2007
Customer Trans. Counts

ODP Presentation Transcripts (2)

2008 2009 2010 2011 2012 I'm really excited about these initiatives and ready for customers to return to our stores and be delighted by the service they receive and the product offerings available in 2012 and beyond - Kevin Peters, former President of ODP NAR, during 2011 Q4 Earnings Call while we run a good retail operation, it's clear to me that we can get better. To raise the bar, we're targeting our efforts and resources in 2011 on a more narrowly defined set of initiatives that will improve the customer shopping experience and enhance our profitability - Kevin Peters, former President of ODP NAR, during 2010 Q4 Earnings Call In North American retail we continue to focus on providing innovative products, services, and solutions to both our business customers and consumers, while continuing to manage our costs. These initiatives will position us well as the economy recovers. - Chuck Rubin, former President of ODP NAR, during 2009 Q4 Earnings Call

ODP

Average Order Value Comp. Store Sales Customer Trans. Counts

-5%

-13%

-14%

-1%

-2%

-5%

SPLS

Average Order Value Comp. Store Sales Customer Trans. Counts

-3%

-9%

-2%

-1%

0%

-2%

OMX

Average Order Value Comp. Store Sales

1%

-11%

-11%

-2%

-2%

-3%

Notes: 1) Source: Company Filings 2) Source: Seeking Alpha ODP Conference Call Transcripts

20

ODP IS LOSING ITS CUSTOMER FRANCHISE

Conclusions In a segment with already low customer loyalty, Staples dominates Office Depot across the board While most all of Office Depots loyalty scores are far below both target levels and its competitors levels, Office Depots SMB loyalty lags the most, clearly suggesting that the Company is not targeting the highly profitable SMBs effectively In addition to Staples, emerging players (Costco, Amazon, Walmart) will continue to reduce ODPs market share if the Company continues on its current course Customers are cross-shopping all channels, and ODP needs to re-engage both the SMBs and consumer to increase frequency, conversion, and unit volume

To reverse ODPs customer attrition, the Company will need a much deeper understanding of the customer and develop much more compelling value propositions

21

ODP IS FAILING STRATEGICALLY AND OPERATIONALLY

ODP HAS POORLY MANAGED GROSS MARGINS ACROSS SEVERAL DIMENSIONS

ODP has consistently under performed its competitors in recent years in gross margin and operating profitability

Gross Margin %
35% 30%
25% 20% 15% 10% 5% 0%

Operating Profit %
10% 8% 6% 4%

2%
0% -2% -4%

ODP (Adj.)

SPLS

OMX

ODP

SPLS

OMX

Between 2002 and 2005, ODP had better gross margin (1) than OMX. However since 2006, ODPs comparable gross margin has lagged both of its competitors

ODPs lagging margin productivity combined with a non-scalable and recalcitrant SG&A platform has resulted in consistently inferior financial performance to peers

Notes: 1) ODPs gross margin includes distribution cost, to make it comparable to those of SPLS and OMX. Distribution costs for 2007 a nd 2011 are provided in the Nov 2011 Investor Presentation, distribution cost for other years are assumed to be at similar level in terms of % of revenue 2) Source: Company 10-K SEC Filings, GAAP basis

23

ODPS G&A EXPENSES ARE BLOATED

From 2007 to 2012, Office Depots revenue declined $4.8 billion, yet G&A expenses actually increased $27 million over the same time period. As a result, total G&A expenses increased from 4.2% of revenue in 2007 to 6.3% of revenue in 2012, and G&A expenses per store increased from $471 to $545 over the same time period(1)

Revenue
$18,000 $16,000 $14,000
$12,000 $10,000 $8,000 $15,528
-$4.8 Billion

($ in millions)

G&A Expenses
$680 $670

($ in millions)
$673

+$27 Million
$660 $650

$10,696

$646

$640
$630

2007

2012

2007

2012

G&A Expenses as a % of Revenue

7.0%
6.0% 5.0% 4.0% 4.2% 6.3%

G&A Expenses per Store

$550 $525

($ in thousands)
$545

+$74 Thousand
$500 $475 $471

3.0%
2.0% 1.0% 0.0%

$450 2007 2012

2007 2012

Notes: 1) Source: Company 10-K SEC Filings, GAAP basis

24

ODPS G&A EXPENSES ARE BLOATED

Based on our research, we believe that the Companys G&A expenses are bloated across several categories, including Information Technology, Finance, and Merchandising, and are significantly higher than median benchmark performance for global retailers

Information Technology
IT Spend
Estimated Spend ($M)

Finance
Finance Spend Headcount
Estimated Spend ($M)

Merchandising
Merchandising Spend $100
$55M Opportunity

Headcount

$250
$200 $150 $100 $50

$100M Opportunity

2000
Headcount

Estimated Spend ($M)

$300

2400

$200 $160 $120 $80

$40 $0

$60M Opportunity

2000 1600
Headcount

$80 $60
$40 $20 $0

1600 1200 800 400

1200 800
400 0

$0

Compared to industry benchmarks, ODP is spending an additional $215 million on G&A

Previous opportunities + G&A opportunity Cumulative opportunity $ 0 million

$215 million $215 million

25

ODPS ADVERTISING EXPENSES ARE EXCESSIVE AND INEFFICIENT

Office Depots advertising expenses are substantially higher as a percentage of revenue than their peers
In 2012, Office Depot spent $372 million, or 3.5% of revenue, on advertising expenses, versus Staples, which spent $534 million, or 2.2% of revenue, and OfficeMax, which spent $212 million, or 3.1% of revenue

Advertising Expenses v. Direct Peers ODP Total 2012 Revenue Total 2012 Advertising Expenses (1) % of Total Revenue $ 10,696 372 3.5% $ SPLS

($ in millions) OMX $ 6,920 212 3.1%

24,381 534 2.2%

Given Office Depots significantly larger scale than OfficeMax, we question why the Company is spending a higher percentage of revenue on advertising

Notes: 1) $30 million advertising expenditure on NASCAR is excluded from ODPs 2012 advertising expenses

26

ODPS ADVERTISING EXPENSES ARE EXCESSIVE AND INEFFICIENT

Furthermore, the mix of Office Depots advertising expenditures is inefficient We believe that the vast majority of Office Depots advertising dollars are spent on expensive, low ROI channels including television and print (including catalog) Furthermore, Office Depot has historically spent approximately $30 million on NASCAR advertising alone NASCAR audiences are male-dominated, while ODPs core customers are predominantly female Our research indicates that this is extremely expensive and low ROI advertising, particularly given that it does not address Office Depots core female customer Advertising Expense Mix vs. Global Retail Benchmark (1) ODP (Estimated Mix) TV Benchmark 40%

80 ~ 90%
Print Radio Online / Mobile / Social Other TOTAL
Notes: 1) Representative benchmark for global, multi-channel retail advertising mix

15 ~ 20% 10% 10 ~ 20% 25% 5 ~ 10% 100% 100% 27

ODPS ADVERTISING EXPENSES ARE EXCESSIVE AND INEFFICIENT

Across all three of its business segments, we estimate that Office Depots advertising expense -torevenue ratios are also significantly higher than industry benchmarks Advertising Expenses Opportunities
2012 ODP ($000) Sales Advertising Spend(1) Less: NASCAR Advertising as % Sales (adjusted) Benchmark (Median) (2) Opportunities ($000): Revised Advertising Spend Revised Advertising as % of Sales Total NAR $4,457,826 $151,900 ($15,000) 3.1% 2.5-2.7% $121,920 2.7% BSD $3,214,915 $144,700 ($15,000) 4.0% 2.5-3.0% $111,675 3.5%

($ in thousands)
INT $3,022,911 $105,800 $0 3.5% 2.0-2.5% $73,805 2.4% Total (3) $10,695,652 $402,400 ($30,000) 3.5% 2.0-3.0% $307,400 2.9% $95,000

Compared to industry benchmarks, ODP is spending an additional $95 million on advertising

Previous opportunities + Advertising opportunity Cumulative opportunity

Notes: 1) Divisional allocation is estimated 2) Median performance for global retail >$10B in revenue 3) Source: Company 10-K SEC filings and Investor Presentation from November, 2012 (for spending on NASCAR)

$215 million $ 95 million $310 million

28

ODPS DISTRIBUTION EXPENSES ARE WELL ABOVE PEER LEVELS

ODP has an opportunity to improve profitability by implementing key actions to achieve median benchmark performance for Distribution expense ODPs distribution and warehouse network is less efficient than peers due to: Reliance on expensive third party arrangements for out-bound delivery and direct import Poorly thought-out and expensive International distribution network Maintaining the same physical network footprint (since 2010) despite declining sales North American Retail
Distribution Spend ($M)
$40M Opportunity

Business Solution Division

Distribution Spend ($M)

International
Distribution Spend ($M)

$250 $200

$250 $200

$48M Opportunity

$350 $300

$34M Opportunity

$250
$200 $150

$150
$100 $50 $0 Est. ODP Benchmark

$150
$100 $50 $0 Est. ODP Benchmark

$100
$50 $0 Est. ODP Benchmark

Compared to industry benchmarks, ODP is spending an additional $122 million on distribution

Previous opportunities + Distribution opportunity Cumulative opportunity $310 million $122 million $432 million

29

MANAGEMENT HAS FAILED TO IMPLEMENT EFFECTIVE SKU RATIONALIZATION

ODP is over-assorted in stores and under-assorted online

With approximately 10,000 SKUs per store, Office Depot is carrying more SKUs in its stores relative to Staples at approximately 7,000 SKUs, resulting in slower inventory turns, excessive inventory investment and inefficient labor deployment
In contrast, ODP is carrying fewer SKUs online than both competitors, resulting in a weaker ability to support its customers need for deep catalog items, and an inability for the store to recommend an omni-channel solution when items are not available in the store
Estimated SKU Count Stores (1) 10,000 7,000 Online (2) 72,000 100,000+

11,000

80,000 to 100,000

ODP should reduce its in-store SKU count by improving its line logic, providing a good/better/best product assortment, consolidate its supplier base to reallocate open-to-buy to preferred vendors, and realign its private label strategy ODP should assort a deep online catalog through direct sourcing, supplier network, and a new marketplace platform to drive average order value to competitive levels
Notes: 1) Source: Company 10-K SEC filings, presentation to investors, and internet research 2) Source: eDataSource, March 20, 2012, and internet research

30

POTENTIAL SKU AND SUPPLIER COUNT OPPORTUNITY

By rationalizing its excessive SKU count and supply base, Office Depot has an opportunity to improve profitability by $33 million
SKU Count Opportunity ($ in thousands)

2012 Revenue(1) COGS (2) % COGS Impacted Savings Opportunity % Opportunity

NAR $4,458,000 $3,044,000 15% 5% $23,000

BSD $3,215,000 $1,969,000 10% 5% $10,000

Total $7,673,000 $5,013,000 13% 5% $33,000

Previous opportunities + SKU/Supplier rat. oppy. Cumulative opportunity

Notes: 1) Source: ODP 10-K SEC filing for 2012 2) Excludes occupancy costs which is estimated to be 6% of revenue

$432 million $ 33 million $465 million

31

ODPS PRIVATE LABEL STRATEGY IS FLAWED DIRECT SOURCING

Office Depots direct sourcing mix of private label products is too low, which indicates that gross margins and profitability should also be higher The margin benefit of direct sourced, private label SKUs is approximately 400 to 600 basis points higher than private label products sourced through an agent, which is currently Office Depots primary method of sourcing private label SKUs While Office Depots current private label penetration mix is roughly in line with peer levels at approximately 25%, we believe the Companys direct, private label SKU penetration of 11% to 12% is too low
Direct Sourced Private Label SKU Penetration(1)
60%
50% 40% 30%

Benefits (2)

All figures are in $Millions

Revenue COGS (@ 65%) (3) COGS transitioned to DL (Approximately 11% of total) EBIT Improvement (~ 500 bps) Previous opportunities + PL direct sourcing oppy.

$10,696 6,952 765 $38 $465 million $ 38 million $503 million

20%
10% 0%

ODP

Peer Group

Best in Class (Retail)

Notes: 1) Peer group is defined as multi-channel retailers with revenue greater than $10B 2) Source: Company 10-K SEC filing 3) Reported COGS & Occupancy Costs at 70% of revenue, subtracting approx. 5% for occupancy costs

Cumulative opportunity

32

ODPS PRIVATE LABEL STRATEGY IS FLAWED SKU DIFFERENTIATION

Further, the execution of Office Depots private label program does not provide a clear value alternative to the customer, resulting in customer confusion and possible lost sales Note the convoluted shredder offerings at Office Depot store #2385 in Fort Myers, FL ODP offers13 different shredders in this store, 9 of which were its own private label brands, a figure that is excessive relative to a more effective good, better, best strategy The Companys pricing strategy also lacked focus and was extremely confusing, with no clear logic behind pricing decisions

Lack of Pricing Logic between Different Private Label Products (1)

Brand Ativa Ativa Ativa Ativa

Price ($) 89 89 89 109

Crosscut X X X X

Capacity (Sheets)
10 12 12 12 Private label products with different features priced the same

Private label products with same features priced differently

Notes: 1) Ativa is ODPs Private Label product

33

ODPS PRIVATE LABEL STRATEGY IS FLAWED SKU DIFFERENTIATION

We also observed some Private Label products being priced at or higher than some of the national brands with superior features

Lack of Pricing Logic between Different Private Label and National Brand Products (1)

Brand Fellowes Ativa Ativa Swingline

Price ($) 125 149 149 149

Crosscut X X X Micro

Capacity (Sheets)
12 8 8 17 Private label products priced higher than national brand despite having fewer features Private label products priced the same as national brand despite having fewer features

Office Depot is clearly over skud and its private label strategy lacks any clear focus, resulting in customer confusion and lost sales

Notes: 1) Ativa is ODPs Private Label product

34

ODP HAS A LOW MIX OF HIGH-MARGIN SERVICES

Office Depot is significantly underpenetrated in the sale of high-margin services, including copy and print, shipping and tech support Services generally carry gross margins of approximately 60% compared to Office Depots average store gross margins of approximately 25% to 35%, as well as substantially higher operating margins We estimate that services account for approximately 6% of Office Depots North American Retail Division revenue, which is well below the 9% of Staples North American Retail revenue generated from high-margin services Services as a Percentage of North American Retail Revenue

6%

9%

ODP

SPLS
91%

94%

Services
Products

35

ODP HAS A HIGH MIX OF LOW-MARGIN ENTERPRISE CUSTOMERS

The mix of large, low-margin enterprise customers in Office Depots Business Solutions Division is significantly higher than the competition
Business Solutions Division Customer Mix (1)

Office Depot has a long history of incentivizing its BSD sales force to target revenue growth, so its sales people generally target large revenue enterprise accounts even though they carry little operating margin contribution As a result, we believe that approximately 65% or more of the Companys BSD revenues are generated by these customers, versus Staples at approximately 35%

35%

35%

SPLS

35%
65%

ODP
65%

SPLS
65%

SMB

All Other

SMB

All Other

SMB

All Other

The problem with Office Depots strategy is that these enterprise customers generally carry razor thin gross margins and are often unprofitable Alternatively, small to medium sized businesses (SMBs), which Staples primarily serves, typically offer margins more than 1,000 basis points higher than larger national enterprise accounts

Enterprise versus SMB Gross Margin Differential

40%
+1000 bps

37%
27%

30%
20% 10% 0%

Large Business

Small/Medium Business

Notes: 1) Source: Industry analysis

36

INCENTIVIZING BASED ON PROFIT RATHER THAN REVENUE CAN RESULT IN SIGNIFICANT IMPROVEMENT IN FINANCIAL PERFORMANCE

W.B. Mason is a distributor of office products to businesses in New England and other states on the East Coast

By focusing on the SMB and incentivizing its sales force based on operating profit, W.B. Mason is able to achieve an operating margin that is much higher than that of the Business Solutions Division of ODP
Example: Office Depot vs. W.B. Mason
12% 10%

8%
Operating Margin % +8%

6% 4%

2%
0% ODP BSD
(1)

W.B. Mason

Notes: 1) Estimated BSD divisional operating profit, as reported in 8-K filed on April 30, 2012, including allocated corporate G&A expenses, and excluding BSD divisional charges and allocated corporate charges

37

ODPS WEB CAPABILITY LACKS KEY FEATURES AFFECTING PROFITABILITY

There are weaknesses in the current website(s) that result in reduced site traffic, reduced conversion/sales, and higher operational costs than competitors Weakness
No personalization evident on website Recommendation engine is less robust than other leading websites

Implication

Personalization & Recommendation

On-line Returns & Reverse Logistics

Currently ODP requires customers to call their Service Center to generate a return authorization and schedule a pick-up of the item
SPLS and OMX both allow selfgeneration of return authorizations

With no evident personalization capability and a limited recommendation engine, ODPs sales per customer is far lower than it otherwise should be. In addition, having customers call a service center to generate a return authorization, results in frustration among the customer base, lower conversion rates, and higher costs
38

ODP IS FAILING STRATEGICALLY AND OPERATIONALLY

Conclusions ODP failed to move deep enough and fast enough on operating expense reductions Assortment optimization, direct sourcing, and SKU right-sizing can produce significant margin improvement

ODPs Private Label strategy must be overhauled

Significant improvement in services revenue mix can be achieved There is significant opportunity to develop an effective web strategy to capture more sales online

ODPs current strategy is not working and their executional performance is putting the company at risk

39

SUMMARY OF EFFICIENCY & EFFECTIVENESS OPPORTUNITIES

In $ Million
$600 $503

$500 $122 $400 $95 $300 $215 $200

$38 $33

$100

$0 G&A Advertising Distribution SKU/Supplier Rationalization Direct Sourcing Total E&E Opportunity

40

ODPS NEW REAL ESTATE STRATEGY IS FLAWED

ODPS CURRENT NORTH AMERICAN RETAIL REAL ESTATE STRATEGY HAS FAILED

According to ODPs 10-Q SEC filing for Q3, 2012: In the third quarter of 2012, impairment charges were taken for 360 stores, over 30% of total 1,114 stores Approximately 230 stores will be reduced to salvage value of $7 million

Approximately 130 stores will be reduced to fair value of $39 million

The North American Retail Division has taken charges recently which significantly reduced its operating income(1): Time Period Q1, 2013 2012 2011 2010 Charge $5 million $126 million $14 million $25 million

Reported NAR Divisional Income (2)

$15 million ($102 million) $28 million $31 million

Notes: 1) Source: ODPs 10-Q SEC filing for Q3, 2013 and 8-K SEC filing dated April 30, 2013 2) Divisional operating income as reported in 8-K filing dated April 30, 2013 and 10-Q for Q1, 2013, and does not include unallocated corporate expenses and charges

42

ODP PLANS TO DRAMATICALLY ALTER ITS REAL ESTATE FOOTPRINT

A significant number of ODP stores have leases for renewal over the next 5 years At end of 2012, ODP operated 1,112 stores in North America Over the next three years, approximately 440 stores (40% of store base) have leases up for renewal

In addition, approximately 280 stores (25% of the store base) have leases up for renewal in the following 2 years
In total, approximately 720 stores (65% of the store base) have leases up for renewal within 5 years
(1)

ODP has publicly stated its plans to significantly downsize the current store base
Current average store size is approximately 23,000 sqft

ODP will convert 440 (or approximately 40%) of its stores into small format (~ 6,000 sqft): 275 stores in next 3 years, additional 165 stores in the following 2 years ODP will convert 85 stores (or approximately 8%) into mid-size format (~15,000 sqft): 60 stores in next 3 years, additional 25 stores in the following 2 years ODP will close 50 stores as their base lease period ends Remaining stores will remain as configured, or have leases reaching renewal period more than 5 years into the future

In total, Office Depot plans to either downsize or close 52% of its store base over the next five years
Notes: 1) Source: ODPs 10-Q SEC filing for Q3, 2012, and 10-K SEC filing for 2012

43

ODP HAS OUTLINED OPTIMISTIC FINANCIAL BENEFITS

According to ODP(1), after remodeling, small stores (6,000 sqft footprint) will: Retain 90% of revenue

Reduce SKU count per store by as much as 50%

Achieve significant savings in rent expenses due to smaller store footprint

ODP believes that total benefit of converting to small and medium-format stores will result in higher margin overall for ODP

Illustrative example of ODPs four wall margin in its small format store assuming 90% revenue retention, improved Gross Margin from higher mix of service revenue, rent savings, and labor cost savings
All $ figures are in thousands except sqft Square footage Revenue Gross margin (2)(3) Operating expenses (4)(5) Operating profit Current Store (1) 23,000 $4,000 $960 $727 $233 Small Format Store 6,000 $3,600 $1,154 $661 $493

Operating profit margin

Total operating profit impact per converted store

5.8%

13.7%
$260

Notes: 1) Source: ODPs 10-K SEC filing for 2012, and transcript of Q3, 2012 ODP Earnings Conference Call on November 6, 2012 2) Includes Distribution costs 3) Assume the small format stores will carry 2% higher gross margin due to higher percentage of high-margin product/service revenue, and rent savings of $218K per store due to smaller store (23K sqft to 6K sqft, and rent increase from $16/sqft to $25/sqft) 4) Excludes distribution costs already included in COGS and Occupancy Costs 5) Assume a small format stores requires on average 1.5 less FTE for a total of $66K per year

44

THESE ASSUMPTIONS ARE UNREALISTIC

The assumption by Office Depot that it will retain 90% of its sales in its small store format (6,000 square feet), implies that revenue per square foot will be $600, compared to the current format of only $175 per square foot

Store Format
Current (1) Mid-Size Small

Square Foot
22,948 15,000 6,000

Rev / Store ($K) (2)

$4,009 $4,000 $3,600

Rev / Sqft
$175 $267 $600

For these assumptions to be true, the new small-format stores (which ODP plans to convert ~40% of its store base), would need to have over twice the revenue per square foot as the average Staples store and even higher than the leading Department Store Neiman Marcus

Sales Per Square Foot Retail Specialty Stores (3)

Rev ($) / sqft

$1,000 $800

$6,050

OSS

$600
$400 $200

$-

Notes: 1) Figures for current format stores are from ODPs 10-K SEC filling for 2012 2) For small format stores, Rev/Store is assumed to be 90% of current store average 3) Source: Companies SEC filings

45

WE QUESTION THE ACTUAL PROFITABILITY OF ODPS SMALL FORMAT STORES

Assuming a more realistic, but still difficult to achieve revenue per square foot for the small format store of $300/sqft, which is still higher than that of Staples and off-price stores leader TJ Maxx (both at $285/sqft) and 70% higher than ODPs current average ($175/sqft), the likely impact on operating profit due to the conversion to the small-format store would actually be a loss of $208K per converted store compared to the current store.
All $ figures are in thousands except square footage & $/sqft Square foot Current Store (1) 23,000 Small Format Store 6,000

Revenue / Sqft
Revenue Gross margin (2)(3) Operating expenses (4)(5)

$175
$4,000 $960 $727

$300
$1,800 $686 $661

Operating profit
Operating profit margin Total operating profit impact per converted store

$233
5.8%

$25
1.4% $(208)

If ODP converts 440 stores to the small store format as currently planned, we believe operating profit would be negatively impacted by approximately $92 million per year, even if ODP can increase its sales per square foot to $300/sqft (higher than Staples at $285/sqft)
Notes: 1) Source: ODPs 10-K SEC filing for 2012, and transcript of Q3, 2012 ODP Earnings Conference Call on November 6, 2012 2) Includes Distribution costs 3) Assume the small format stores will carry 2% higher gross margin due to higher percentage of high-margin product/service revenue, and rent savings of $218K per store due to smaller store (23K sqft to 6K sqft, and rent increase from $16/sqft to $25/sqft) 4) Excludes distribution costs already included in COGS and Occupancy Costs 5) Assume a small format stores requires on average 1.5 less FTE for a total of $66K per year

46

THE CONVERSION TO MEDIUM-FORMAT STORES HAS A FAR BETTER CHANCE OF SUCCESS

Our initial analysis suggests that converting current stores to a medium size format (with $267 sales / sqft) has a much better chance of success, and will be accretive to ODPs profitability
All $ figures are in thousand except square footage & $/sqft Square foot Revenue / Sqft Revenue impact Gross margin (2)(3) Operating expenses (4)(5) Operating profit Operating profit margin Total operating profit impact per converted store Current Store (1) 23,000 $175 $4,000 $960 $727 $233 5.8% Medium Format Store 15,000 $267 $4,000 $1,028 $694 $334 8.4% $101

We believe reducing square footage from 23,000 to 15,000, if done properly, results in limited to no decline in total store revenue, but carries the advantage of reducing rent, labor costs and SKUs to improve profitability

Office Depot could also decide to use extra real estate in select locations as small/local distribution centers for same-day delivery
Notes: 1) Source: ODPs 10-K SEC filing for 2012, and transcript of Q3, 2012 ODP Earnings Conference Call on November 6, 2012 2) Includes Distribution costs 3) Assume same COGS %, and savings in rent of $68K per store per year, due to smaller store footprint and rent increase of $16/sqft to $20/sqft 4) Excludes Distribution costs 5) Labor cost savings due to smaller footprint and SKU reduction is assumed to average 0.75 FTE for medium stores (~33K/year)

47

IMPACT TO OPERATING PROFIT

If the current store strategy is executed as planned, ODP will spend $300 million in capital expenditures over 5 years and result in a negative annual impact of $103 million in operating profit (note: 2012 adjusted operating profit is $96 million)
All $ figures are in thousand except $/sqft Planned opening (closing) store count Per store Square foot Revenue / Sqft Revenue Gross margin (2)(3) Operating expenses (4)(5) Operating profit Operating profit margin Total operating profit impact for all stores Incremental Depreciation (6) Total operating profit impact Capital expenditure ($60 million / year over 5 years) (1) 23,000 $175 $4,000 $960 $727 $233 5.8% 15,000 $267 $4,000 $1,028 $694 $334 8.4% 6,000 $300 $1,800 $686 $661 $25 1.4% $ (82,935) $ (20,000) $(102,935) $ 300,000 Current (1) (525) Medium 85 Small 440

Notes: 1) Source: ODPs 10-K SEC filing for 2012, and transcript of Q3, 2012 ODP Earnings Conference Call on November 6, 2012 2) Includes Distribution costs 3) Assume same Gross Margin % for medium store, and 2% improvement in GM% for small store, and net rent savings resulting from smaller store footprint 4) Excludes Distribution costs 5) Average labor cost savings due to smaller footprint and SKU reduction is assumed to be $33K/year for medium stores and $66K/year for small stores 6) Assume $300 million total capital expenditure depreciated over 15 years

48

CONCLUSION ON CURRENT REAL ESTATE STRATEGY

Current strategy has low likelihood of success Large scale success for small format stores requires heretofore unachieved sales productivity by any OSS retailer Small format stores may work in selected locations to replace current underperforming stores, but doing so for 440 stores (40% of the chain) is highly unrealistic Requires $300 million capital investment over 5 years Potentially result in an incremental annual loss of approximately $103 million in operating profit based on more realistic performance assumptions, which will reduce ODPs adjusted operating profit from $96 million to negative $7 million (1)

We seriously question whether the management and Board fully analyzed the small store format before deciding to roll it out to approximately 40% of its store base Based on our analysis, we question why the Board of Directors would approve such a risky and unrealistic real estate strategy? The real estate strategy should be re-evaluated immediately

Notes: 1) Based on ODP 10-K SEC filing for 2012

49

TOTAL MARGIN IMPROVEMENT OPPORTUNITIES

After implementing our plan, we believe that ODP has the opportunity to achieve $776 million in annual EBIT (7.3% margin) after full implementation of the Efficiency & Effectiveness Initiatives and the Growth Strategy Annual EBIT Run Rate After Full Implementation

In $ Million
$1,200

Efficiency & Effectiveness Initiatives

Growth Strategy

$317 $1,000

$1,075

$299

$776 $800 $89 $600 $122 $33 $38 $43 $27 7.3% Margin

$400 $215 $200 $96 0.9% Margin

$95

$0

Notes: 1) Based on ODP 10-K for 2012

50

EFFICIENCY AND EFFECTIVENESS INITIATIVES DETAILS

POTENTIAL G&A EXPENSE OPPORTUNITY

We believe Office Depot has a significant opportunity to improve profitability by approximately $215 million by implementing key actions to achieve median benchmark performance for G&A expense G&A Expense Opportunity ($ in thousands)

Total 2012 Sales:

($ in thousands) All Divisions: IT Finance Merchandising Total

$10,695,000
Est. 2012 ODP at Spend1 Est. ODP % Benchmark %2 Benchmark Opportunity $242,777 2.27% 1.40% $149,730 $100,000 $168,981 1.58% 1.01% $108,020 $60,000 $81,282 0.76% 0.25% $26,738 $55,000 $493,040 4.61% 2.66% $284,487 $215,000

Previous opportunities + G&A opportunity Cumulative opportunity

Notes: 1) Estimated ODP G&A cost distribution based on external interviews and estimates 2) Industry Benchmarks: Median Performance for Global Retail Cohort >$10B

0 million

$215 million $215 million

52

POTENTIAL G&A EXPENSE OPPORTUNITY

Key action levers to achieve benchmark performance include:

Key Action Levers Global service delivery model rationalization

Details Expansion of shared services to support NAR, BSD and INT Rationalize/consolidate local support Expand global transaction processing centers , i.e., AP and HR Further standardize business processes across divisions Expand outsourcing for cost advantage Reduce fixed cost base, e.g. IT infrastructure Move to variable pricing for outside services, e.g., IT network bandwidth Prioritize projects, re-assign internal staff to high priority efforts Eliminate non-critical expenditures

Streamlining and consolidating global G&A functions and processes (e.g., COEs, low cost/third party transaction centers) Reducing per unit transaction costs

Reducing / eliminating outside consultants and rationalizing all external expenditures

Implementing demand management

Adjusting consumption of G&A reports and other services to benchmark targets (affordability)

53

POTENTIAL ADVERTISING EXPENSE OPPORTUNITY

We believe Office Depot has a significant opportunity to improve profitability by approximately $95 million by reducing advertising expenses and more effectively allocating advertising dollars, with a focus on ROI Advertising Expense Opportunity
2011 ODP ($000) Sales Est. Advertising Spend Less: NASCAR Advertising as % Sales (adjusted) Benchmark (Median) (1) 2011 SPLS ($000) Sales Est. Advertising Advertising as % Sales Opportunities ($000): NAR Reductions Percentage savings Amount BSD/INT Reductions Percent savings Amount Revised Advertising Spend Revised Advertising as % of Sales Total NAR $4,457,826 $151,900 ($15,000) 3.1% 2.5-2.7% $11,827,906 $257,171 2.2% BSD $3,214,915 $144,700 ($15,000) 4.0% 2.5-3.0% $8,108,402 $198,656 2.5%

($ in thousands)
INT $3,022,911 $105,800 $0 3.5% 2.0-2.5% $4,444,202 $77,774 1.8% Total $10,695,652 $402,400 ($30,000) 3.5% 2.0-3.0% $24,380,510 $533,600 2.2%

20% $30,000

$30,000

$121,920 2.7%

23% $33,000 $111,675 3.5%

30% $32,000 $73,805 2.4%

$65,000 $307,400 2.9% $95,000

Previous opportunities + Advertising opportunity Cumulative opportunity

$215 million $ 95 million $310 million

54

POTENTIAL ADVERTISING EXPENSE OPPORTUNITY

Key action levers to achieve benchmark performance include:
North American Retail Key Action Levers Evaluate media mix / efficacy (e.g., print, TV, online) Details Evaluate return / lift of media spending by type Determine appropriate allocation of advertising expenditure among media types Reallocate advertising spend to maximize return Reduce advertising in markets with marginal returns Increase advertising spending in key competitive markets Optimize frequency of inserts based on market performance Structure advertising to increase vendor contribution (vendor funded space) Optimize number of pages based on market performance Evaluate paper specification to reduce cost

Focus on competitive and winnable markets, increase dark markets Evaluate frequency: 4x month 2x month Increase vendor participation Reduce size Evaluate quality

Business Solutions Division & International Key Action Levers Converted printed catalog to online Rationalize catalog content and frequency

Details Convert and expand online options for printed catalog Evaluate number and timing of special catalogs Rationalize seasonal special editions

55

POTENTIAL DISTRIBUTION EXPENSE OPPORTUNITY

We believe Office Depot has a significant opportunity to improve profitability by approximately $122 million by addressing its relatively high distribution expenses ODPs distribution and warehouse network is less efficient than peers due to: Reliance on expensive third party arrangements for out-bound delivery and direct import Poorly thought-out and expensive International distribution network Maintaining the same physical network footprint (since 2010) despite declining sales

Distribution Expense Opportunity

($000) All Divisions: NAR BSD INT Total Est. 2012 Spend(1) $196,244 $224,609 $290,610 $711,462 Est. ODP % 4.4% 7.0% 9.6% 6.7% Benchmark %(2) 3-4% 5-6% 8-9% 5.5% ODP at Benchmark

($ in thousands)

2012 Sales $4,460,087 $3,208,696 $3,026,870 $10,695,653

Opportunity $40,000 $48,000 $34,000 $122,000 $310 million $122 million $432 million

$133,803 - 178,403 $160,435 - 192,522 $242,150 - 272,418 $577,760 - 692,650 Previous opportunities + Distribution opportunity Cumulative opportunity

Notes: 1) Total distribution as reported in 2012 10-K, estimated ODP costs allocation to different divisions 2) Industry Benchmarks: Median Performance for Global Retail Cohort >$10B

56

POTENTIAL DISTRIBUTION EXPENSE OPPORTUNITY

Key action levers to achieve benchmark performance include:

Key Action Levers Increasing direct import volume

Details Reduce or eliminate reliance on third party logistics service providers for imported products

Facility consolidation

Reduce number of US distribution centers from 15 to 10 Evaluate selected store space for local order fulfillment
Implement demand-driven delivery to stores (from static schedule at ~3x/week to dynamic scheduling based on demand) Evaluate and optimize distribution strategy based on product segment and profitability Implement supplier benefits and penalties to improve delivery performance, including Total Cost Model Reduce the cost of product returns process

Optimizing delivery frequency

Implementing segmented flows based on customer needs Improving OTRQ (On-Time Right Quantity) performance and penalties Reduce cost of reverse logistics

57

POTENTIAL PRIVATE LABEL DIRECT SOURCING OPPORTUNITY

We believe Office Depot has an opportunity to improve profitability by approximately $38 million by significantly increasing its mix of direct sourced, private label SKUs

We believe there is an opportunity to increase direct sourced, private label penetration from approximately 11-12% currently to approximately twice as high while reducing agent-procured private label SKUs We estimate that this mix shift would drive 400 to 600 basis points of margin improvement, or $30 million to $45 million of increased profitability, for items sourced directly ($ in millions) $10,696 6,913

Private Label Direct Sourcing Opportunity Revenue COGS @ 65%

COGS transitioned to direct source

Opportunity (@ ~ 500 bps)

760
$38

Previous opportunities + PL direct sourcing oppy. Cumulative opportunity

$432 million $ 38 million $470 million

58

POTENTIAL PRIVATE LABEL DIRECT SOURCING OPPORTUNITY

Office Depot must:

Key Action Levers Drive direct sourcing as the preferred alternative to sourcing through agents, with select exceptions based on cost and quality Develop and reinforce clear strategy that guides the development and inclusion of private label products

Details Expand and accelerate direct sourcing capabilities Assign aggressive targets by category for direct sourcing penetration Adopts a price leader private label strategy that delivers improved quantity and quality over national brands Set aggressive private label profitability targets by category Correct and rationalize private label product positioning strategy

Improve the line logic of good, better, best, and assort the right balance of features and benefits to allow the customer a clear choice

59

POTENTIAL SKU AND SUPPLIER COUNT OPPORTUNITY

By rationalizing its excessive SKU count and supply base, Office Depot has an opportunity to improve profitability by $33 million
SKU Count Opportunity ($ in thousands)

2012 Revenue COGS (1) % Procurement Cost Impacted Savings Opportunity % Opportunity

NAR $4,458,000 $3,044,000 15% 5% $23,000

BSD $3,215,000 $1,969,000 10% 5% $10,000

Total $7,673,000 $5,013,000 13% 5% $33,000

Previous opportunities + SKU/Supplier rat. oppy. Cumulative opportunity

Notes: 1) Excludes occupancy costs which is estimated to be 6% of revenue 2) Source: ODP 10-K SEC filing for 2011

$470 million $ 33 million $503 million

60

POTENTIAL SKU AND SUPPLIER COUNT OPPORTUNITY

Key Improvement Actions:

Key Action Levers Realigning the private label strategy

Details Develop a good, better, best product assortment Develop a more effective line logic Standardize pricing standards Evaluate vendor by economic performance and total cost model by product category Rationalize supplier base while respecting risk management needs Expand ODP online presence, increase advertising spending in online channel Develop a deep online catalog through direct sourcing, a supplier network, and a new marketplacedriven platform

Consolidating the supplier base to reallocate open-tobuy preferred vendors

Drive average order value to competitive levels

61

POTENTIAL SERVICES OPPORTUNITY

We believe Office Depot has an opportunity to improve profitability by approximately $16 million to $47 million by significantly increasing its mix of high-margin services as a percentage of revenue The analysis below shows the operating income benefits if service revenue as percentage of total sales is increased to certain levels. For specific actions and cost-benefit analysis, please see the Services / Categories Extension discussion in the Growth Strategy section Services Opportunity Per Store Service as % Revenue Revenue (1) Additional service revenue Gross margin improvement (30%) Net additional labor (2) Net operating profit impact Total OP impact for all 1,112 stores Current 6% $4,000 $ $ $ $ 120 36 22 14 $ $ $ $ 240 72 44 28 $ $ $ $ 360 108 66 42 9% ($ in thousands) Potential Opportunity 12% 15%

$15,600

$31,100

$46,700

Notes: 1) Revenue per store is based on ODPs 2012 10-K SEC filing. ODP has 1,112 stores open at end of 2012 2) Assuming on average, every 3% improvement of service revenue as % total sales will require additional 1/3 FTE resource per store, or $66K / 3 = $22K per store

62

POTENTIAL BUSINESS CUSTOMER MIX OPPORTUNITY

By increasing Business Solutions Divisions (BSD) mix of highly-profitable SMB customers, and decreasing the mix of low-margin enterprise customers, by 10% to 15%, we estimate that Office Depot could improve profitability by $32 million to $48 million The analysis below shows the operating income benefits if higher percentage of total sales to smalland medium-sized businesses can be achieved. For specific actions and cost-benefit analysis, please see the Services / Categories Extension discussion in the Growth Strategy section
Customer Mix Opportunity ($ in millions)

2012 BSD revenue Current % sales to SMB SMB mix improved to Additional revenue to SMB Margin improvement (1,000 bps)

$3,215 35% 45% $321 $ 32 50% $482 $ 48

63

SUMMARY AND RISK ADJUSTMENT EFFICIENCY & EFFECTIVENESS OPPORTUNITIES

In $ Million
$600 $500 $122 $400 $95 $300 $215 $200 $100 $38 $33 $503

$178

$325

$0

64

GROWTH STRATEGY

THERE ARE SIGNIFICANT OPPORTUNITIES WITH THE EXISTING ASSET BASE TO DRIVE SUBSTANTIAL GROWTH
Office Depot should not only focus on operational improvement, but also explore opportunities to reach more customers and offer solutions rather than simply products or services
Core assets already in place to support growth Over 1000 US Retail locations interacting with 1000s of customers and SMBs daily A mature and experienced business services segment providing products and services to consumers and SMBs

5th largest e-commerce website

Products are only part of the solution ODP should consider providing higher margin services Partner(s) can be leveraged to reduce the required capital investments and fill gaps in ODPs capabilities needed to offer extended categories of services, e.g., web site development ODP should target currently underserved SMBs by becoming a one-stop solutions provider to SMBs through a deliberate omni-channel strategy Focusing on SMBs will not alienate ODPs existing consumer customers

Become a complete solution provider to SMBs

Capitalize on ODPs position as the 5th largest online retailer, behind only Amazon, Staples, Apple and Dell (1) Examples from leading online retailers Wal-Mart & Amazon: Expanding online to have local stores/partners fulfill same day delivery Staples: Becoming one stop shop for business fulfillment, similar to Amazon Marketplace for businesses

Notes: 1) OfficeMax Investor Day presentation, Nov. 16, 2011

66

BECOMING A COMPLETE SOLUTIONS PROVIDER TO SMB

Office Depot should focus on building and extending it customer appeal through enabling omnichannel capabilities combined with new solutions and solutions focus
Develop omni-channel capabilities to serve SMBs and other customers regardless of how they shop Provide ODP employees with full visibility to customers history, open orders and preferences when interacting in stores, online, or over the phone Example: allow customers to place order online and pick up in stores in the same day

Uniquely tailor customers online and in-store experience to their needs and preferences
Change organizational focus and capabilities from product- or channel-centric to customercentric Develop incentive programs aligned with omni-channel strategy

Extend product and service offerings to become one-stop solutions provider to SMBs
Subscription-based tech support / IT services Managed print solutions Office design solutions Office Depot credit and loyalty programs Website & domain name services

Notes: 1) For a more detailed discussion, please go to the Services / Category Extension slides in Growth Strategy section

67

OPPORTUNITIES ON INTERNET PLATFORM

Office Depot has an opportunity to leverage its on-line platform to provide more products and services to SMBs and consumers
Although it is the 5th largest online retailer, Office Depot lags Staples (#2 behind only Amazon) in expanding into the internet platform Approximately 35% of Office Depots revenue came from online, compared to Staples at over 40% (1) Office Depots online store offers approximately 70 thousand SKUs, compared to Staples online store offering over 100 thousand SKUs Office Depot should offer more products in its online stores

Office Depot should investigate different approaches to expand its online presence, some of which have been adopted by other leading online retailers Becoming a one-stop solutions provider for SMBs, capable of satisfying all their needs Develop an ODP online store offering similar to Amazon Marketplace for SMBs, leveraging other sellers to offer more specialized products and services Re-allocate some of the space in large stores to hold inventory for online/same day fulfillment

Notes: 1) Online revenue figures for each company was provided by OfficeMax Investor Day presentation, Nov. 16, 2011

68

DRIVING NEW VALUE WITHIN ODP

Our vision is to focus on the needs of the SMB target customer, deliver crisp value propositions to serve their needs, and draw others who are attracted to the value propositions Mix of Segment Revenue (1) Margin Rate

35%

+1000 bps

35%

SPLS35%
65%

ODP
65%

SPLS
65%

SMB

All Other

SMB

All Other

SMB

All Other

Serving SMBs will not turn off others

Consumers are highly sensitive to convenience /location, which we intend to enhance Large businesses and the public sector are sensitive to value, which we intend to retain

SMBs are underserved

SMBs needs evolve as they grow, increasing their spend on adjacent categories Our research shows that SMBs are not well served in this space, based on NPS scores There is an opportunity for someone to emerge and address their needs

Consumers

SMBs Large Business Public Sector

Notes: 1) Source: Starboard Discloses 13.3% Ownership in Office Depot and Sends Letter to CEO and Board Directors, PRNewsWire, Septem ber 17, 2012

69

DRIVING NEW VALUE WITHIN ODP

SMBs have told us what a provider needs to demonstrate to win their loyalty We conducted focus groups, online surveys, and individual interviews of SMB owners and purchasing managers, and heard the following:

Respect Me and My Time I wouldnt go completely out of my way to a store thats pretty far away just to save 10, 5%..its not worth it, because Im very busy. Respondent

CORE NEEDS

$
Life

Business

Reward Me [membership rewards]..You can spend $50 dollars a year if youre getting some of those kinds of benefits...Its like Costco membership and quite often Ive gotten back some [reward dollars]I had one year that I maxed outthe more you spend, the more you get back. Respondent

My Business is My Life [supplies shopping]Im the purchasing agent for everything, and even though it takes away from my time selling and trying to move things forward Respondent 70

DRIVING NEW VALUE WITHIN ODP

To address the SMBs core needs, ODP must implement four Growth Strategy to reposition themselves as the provider of choice

Core Needs
Respect Me and My Time My Business is My Life Reward Me

GROWTH STRATEGY TO ADDRESS CORE NEEDS

Engagement Model
Redesign the way in which ODP engages the SMB, understands their needs, and provides solutions
New selling processes and tools Re-aligned incentives Institutionalize selling culture

True OmniChannel Presence

Recognize the customer whenever and wherever they choose to engage with us to improve the context of the engagement
Visibility of customer information across all channels Individualized shopping experience

Reinvented Loyalty Program

Dramatically simplify the rewards mechanisms to increase the perception of value and ease of use
New loyalty program ODP debit cards Simplified rules and rewards mechanisms

Services / Category Extensions

Expand services and adjacent categories where ODP can grow share of mind and share of spend
IT services Managed Print Office Design Web services Mobile phones / activation

71

DRIVING NEW VALUE WITHIN ODP NEW ENGAGEMENT MODEL

Our changes will transform the customer relationship with ODP from Order Taking to Solution Selling

Evidence of Problem

Declining average order value Declining traffic Interaction with staff in stores and BSD Online lack of personalization/ recommendation engine

Key Action Levers

Institutionalize a selling culture Deploy best-in-class sales processes and tools Provide employees with instant access to product and customer information Align incentives to solution selling Make employees customer segment aware and able to provide tailored solutions

Forthcoming employee testimonial: Selling is what I do and I have the skills and tools to be good at it

72

DRIVING NEW VALUE WITHIN ODP NEW ENGAGEMENT MODEL

Our changes will transform the customer relationship with ODP from Order Taking to Solution Selling

Revenue and Operating Profit Impact

$500
$400 $442 $290 $164 $66 $12 $(17) 2013 $54 $89

$ in millions

$300 $200 $100

$$(100)

$22 $(1)
2014 2015 2016 2017

Incremental Revenue
Assumptions: Incrementa Op Income Implementation begins in 2013 Improved engagement model entices increasing proportion of customers across all channels to shop more frequently Previous opportunities By 2017, 20% of ODPs customer base increase transaction frequency (1 additional transaction per year) + New Engagement Model Gross margin rate and basket size is equal to current base to isolate Cumulative opportunity impact of other initiatives

$503 million $ 89 million $592 million

Forthcoming employee testimonial: Selling is what I do and I have the skills and tools to be good at it

73

DRIVING NEW VALUE WITHIN ODP NEW ENGAGEMENT MODEL

Key action levers to achieve benchmark performance include:

Key Action Levers Institutionalize a selling culture

Details Implement customer selling and engagement model Align store labor model and schedule to emphasize customer engagement Implement daily sales tracking and scorecards Provide additional sales training to all associates Provide an integrated access to data across all channels Implement sales incentives which encourage broader solution selling Example: Creating an ink replenishment solution instead of simply selling ink cartridges Implement customer segmentation Develop unique segment value propositions

Deploy best-in-class sales processes and tools Provide employees with instant access to product and customer information Align incentives to solution selling

Make employees customer segment aware and able to provide tailored solutions

74

DRIVING NEW VALUE WITHIN ODP TRUE OMNI-CHANNEL PRESENCE

In the new ODP Omni-Channel model, associates will have real-time, in depth knowledge of individual customers in order to better serve them regardless of channel

Online performance lagging those of industry leaders Low presence of SMB in customer mix Difference customers have different channel preferences: Evidence of Problem
Segment Preferred Channels Relationship Construct Head of household
Store, Web, Mobile Loyalty Program, Club

Home Office
Store, Web, Mobile Loyalty + Subscription, Club

Office base 1-5 emp

Store, Web, Mobile Loyalty + Subscription, Club

Office base 6-24 emp

Store, Web, Catalog Contract + Subscription, Club

Multi-loc 25-75 emp

Web, Catalog, Account Contract + Subscription, Personalized

National, Global
Integrated Web, Account Contract, Integration, Personalized

Key Action Levers

Customer experience in all channels will be uniquely tailored to their needs and preferences ODP employees will have full visibility to customer history, open orders and preferences when interacting Organizational focus and capabilities will be customercentric rather than product- or channel-centric Incentives aligned with omni-channel strategy

Forthcoming customer testimonial: I see a reflection of my business in every interaction with ODP, regardless of channel

75

DRIVING NEW VALUE WITHIN ODP TRUE OMNI-CHANNEL PRESENCE

In the new ODP Omni-Channel model, associates will have real-time, in depth knowledge of individual customers in order to better serve them regardless of channel

Revenue and Operating Profit Impact

$250
$200 $198 $144

$ in millions

$150 $100 $50 $9 $(1) 2013 2014 $45 $7

$93
$30 $43

$19

$$(50)

2015

2016

2017

Incremental Revenue
Incremental Op Income
Assumptions: Implementation begins in 2013 Improved omni-channel experience entices customers to increase spend (personalization and recommendation drives transaction size) 20% of customers are positively impacted by omni-channel resulting in 10% increase in average order value

Previous opportunities + Omni-Channel Cumulative opportunity

$592 million $ 43 million $635 million

Forthcoming customer testimonial: I see a reflection of my business in every interaction with ODP, regardless of channel

76

DRIVING NEW VALUE WITHIN ODP TRUE OMNI-CHANNEL PRESENCE

Key action levers to achieve benchmark performance include:

Key Action Levers Customer experience in all channels will be uniquely tailored to their needs and preferences

Details Implement tailored customer engagement model based on segmentation

ODP employees will have full visibility to customer history, open orders and preferences when interacting
Organizational focus and capabilities will be customercentric rather than product- or channel-centric

Implement real time customer information capability

Implement customer segmentation Design customer-specific value propositions Create a mindset focused on fulfilling customer needs rather than selling products features

Incentives aligned with omni-channel strategy

Expand online market share

Create a consistent incentive structure across all channels

Develop an effective web strategy to compete more effectively with SPLS / OMX and other major online retailers with presence in the office supply market, e.g., Amazon.com and Costco

77

DRIVING NEW VALUE WITHIN ODP NEW LOYALTY PROGRAM

The new ODP loyalty program is simple to understand, convenient to use, and drives increased shopping frequency and spend

Evidence of Problem

NPS scores and customer interviews demonstrated that there is little loyalty in this industry, and customers would be willing to increase their frequency of purpose if the company offered clear and consistent value

Key Changes

Create an industry-leading customer loyalty program that is easy to understand and easy to use Debit card based Better visibility into customer behavior and subsequent tailoring The reinvention could include expansion to various business model: Private label debit cards Advantaged pricing for members Clubs Group rates on common SMB purchases like vehicles and insurance

Forthcoming customer testimonial: Being rewarded for my loyalty is effortless

78

DRIVING NEW VALUE WITHIN ODP NEW LOYALTY PROGRAM

The new ODP loyalty program is simple to understand, convenient to use, and drives increased shopping frequency and spend

Revenue and Operating Profit Impact

$350
$300
$ in millions

$267 $219

$297

$326

$250
$200

$150
$100 $50 $-

$118 $22
$5 2013 $16 2014 2015 2016 2017 $24 $27

Incremental Revenue
Assumptions: Implementation begins in 2013 By 2017, 33% of SMB and 15% of Consumers will enroll in the program Planning assumption: average order value will increase by 15% and transaction count will increase by 12.5% The program will offer customers with a 5% pricing incentive 5% of customer attrition can be avoided

Incremental Op Income

Previous opportunities + Loyalty Program Cumulative opportunity

$635 million $ 27 million $662 million

Forthcoming customer testimonial: Being rewarded for my loyalty is effortless

79

DRIVING NEW VALUE WITHIN ODP NEW LOYALTY PROGRAM

Key action levers to achieve benchmark performance include:

Key Action Levers Create an industry-leading customer loyalty program that is easy to understand and easy to use

Details Eliminate points and redemption process Implement standard percent off all purchases

Debit card based

Better visibility into customer behavior and subsequent tailoring

Implement an Office Depot-branded debit card

Capture detailed purchase data unique to each customer Implement personalized promotions and campaigns based on the captured data

Previous loyalty programs from other leading retailers have led to increased sales of 30~40%

80

DRIVING NEW VALUE WITHIN ODP SERVICE / CATEGORY EXTENSIONS

ODP will add key adjacent products/services to increase their share of the customers spend

Evidence of Problem

Percent of sales in services and high margin products is low compared to major competitors and industry leaders

Key Changes

Enter / accelerate adjacent categories with growing demand among SMBs Focus on subscription-based services to create lasting customer relationships

Forthcoming customer testimonial: My office is anywhere I am and Office Depot is at my fingertips

81

DRIVING NEW VALUE WITHIN ODP SERVICE / CATEGORY EXTENSIONS

ODP will add key adjacent products/services to increase their share of the customers spend

Revenue and Operating Profit Impact

$1,000 $800
$ in millions

$938

$714
$514

$600 $400

$200
$$12

$177
$39 2013

$179

$245

$317

$59
2014 2015 2016 2017

Incremental Revenue Incremental Op Income Assumptions: Implementation begins in 2013 Mobile/smart phone sales growing to 2 units/day/store Convert 4% of ODPs SMB customer base to comprehensive Previous opportunities subscription-based tech support model Have 50,000 printers/copiers (toner/paper) under a replenishment + Service/Cat. Extension arrangement Cumulative opportunity Capture 13.3% of the SMB Office Design spend
Forthcoming customer testimonial: My office is anywhere I am and Office Depot is at my fingertips

$662 million $317 million $979 million

82

DRIVING NEW VALUE WITHIN ODP SERVICE / CATEGORY EXTENSIONS

Key action levers to achieve benchmark performance include:

Key Changes Enter / accelerate adjacent categories with growing demand among SMBs

Details Mobile phones and activation in store Partner with mobile service providers to provide activation service in store in addition to selling mobile phones Expand managed print solutions in U.S. Accelerate and expand managed print services in existing and new SMB/corporate accounts Offer office design services Develop office design services to complement and expand office furniture product offering Expanded network of partner service offerings that address key pain points Develop a network of 3rd party value-add service partners to provide adjacent solutions, e.g., insurance, travel and accounting, to SMBs Develop recurring revenue stream through subscription-based services to SMBs, e.g. technical support

Focus on subscription-based services to create lasting customer relationships

83

DRIVING NEW VALUE WITHIN ODP

In addition to addressing the enablers, ODP must immediately begin conducting tests to determine customer and market acceptance

Enablers
Immediately Promising

14 Tests to Uncover Winning Propositions

Engagement Model True OmniChannel Presence Services / Category Extensions

Solution Bundles/ Packages

My Office Away From Home

Preferred Provider to SMB Groups

In-store Workshops for SMBs

Business Pro Network

Big Data for Small Business

Concierge for SMB

Club Model

Hub and Spoke

Outfit My Business

Family Friendly

Website Services

Eventually Promising

Reinvented Loyalty Program

Applicable In-store Applicable Omni-channel

Promote My Business

Meaningful Alliances

84

DRIVING NEW VALUE WITHIN ODP

Description of concepts to be tested Provide complete solution bundles at package pricing In-store and online
Today ODP does not easily allow the customer to visualize and understand all the pieces and parts that make a complete solution. ODP can create visual displays in store and online, along with checklists, supported by helpful advice and recommendations, to make any purchase more complete. This supports the Respect My Time value proposition, and if the solution bundle/package contains a promotional discount, also addresses Reward Me (could be linked to Loyalty Program). Convert excess space into working space for professionals who need a space to work whether just to get out of the house or while they are traveling. Outfit the space with office furniture that the professionals can purchase (funded by the vendors), WiFi, high-quality video conference capabilities, and secretarial services. The professional can easily access printing/copy and shipping services, and pick up any supplies needed. Technical support is also available. Space and secretarial services can be rented, with discounts for members of the loyalty program.

Solution Bundles/ Packages

My Office Away From Home

In-store office space Demonstrate solutions Capture product and service needs National and local partnerships Networking Co-marketing/promotion Educate SMBs Networking Traffic and engagement

Preferred Provider to SMB Groups

ODP has the opportunity to partner with professional and networking organizations that serve SMBs to become the preferred provider of business-oriented solutions. Imagine a national group like Ernst & Youngs Entrepreneur of the Year program, or the myriad local organizations represented in every market ODP serves. Through this effort, ODP can promote the organization in store and online, and likewise, the organization can promote ODP.

In-store Workshops for SMBs

Applicable In-store Applicable Omni-channel

ODP will promote sessions for local professionals to help customers understand critical topics for running their business, like accounting basics, records retention, critical legal issues, professional networking. These local professionals could be suppliers to ODP, and their services could be paid through ODPs POS system. While in -store, SMBs can pick up supplies for all their needs, and learn about additional services available through ODPs network.

85

DRIVING NEW VALUE WITHIN ODP

Description of concepts to be tested Appointment-based access to professionals Legal, insurance, marketing, tech support
Small businesses and entrepreneurs often dont have the resources and access to expertise that larger companies provide. The Business Pro network, an appointment-based service in store and online, offers access to a screened network of experts in incorporation, insurance, web design, marketing and technical support that can help you as needed, or on an ongoing basis. Since the service is billed through ODP, you qualify for rewards points and special offers.

Business Pro Network

Big Data for Small Business

Customer, industry and macro trends Knowledge and insight to make the SMB as smart as the large businesses
Personal solution assistant Commission-model

Large businesses have internal and external data available to them which, when analyzed effectively, gives them a competitive advantage in understanding markets, customers, trends, and disruptors. Big Data for Small Business offers customer, industry, and macro trends that provide the knowledge and insights to micro, small and medium businesses through a web portal subscription, for a fee or as a benefit of a loyalty program.

Concierge for SMB

Introducing Your Concierge from ODP, your personal solution assistant that is there to advise and support your ever changing needs. The Concierge works on a commission basis, and is your advocate for finding the solution that fits within your budget.

Club Model

Access to exclusives and group rates Day-in-day-out savings

SMBs are worried about their bottom line, dont have spare time, and they need peace of mind that they are not overpaying since its coming directly out of their pocket. They do some homework here and there but ultimately gravitate to a pattern that they do not have to overthink. For a modest annual fee, the small SMB would get many perks that larger accounts get (guaranteed discounts, free delivery, pooled resources, etc.) Most importantly, they would get a comprehensive assortment of office supplies and equipment with dayin-day-out savings so they no longer have to go from place to place looking for the best option.

Applicable In-store

Applicable Omni-channel

86

DRIVING NEW VALUE WITHIN ODP

Description of concepts to be tested Club-like model Courier delivery for urgent needs Fulfilled from central store location
Business customers prefer to do most of their business supplies, equipment and services online and/or with a preferred supplier (with or without an account). But every need isnt predictable and some stuff cant wait for a 1-2 day delivery. If ODP scales back stores, the customer would still have an immediate fulfillment option that would get them the same pricing discounts/rewards that they get with direct fulfillment. They could go to a centralized hub location or have it couriered to their office whatever option was preferred. For a small annual fee and participation in the loyalty program, the customer the customer would be entitled to a set number of emergency deliveries.

Hub and Spoke

Outfit My Business

Office design Solution upsell Branded alliances (e.g., IKEA, Pottery Barn) Scrapbooking/crafts Stay and play, while parents take care of business Develop customized websites Domain name registration

Available in-store and online, ODP will provide appointment-based access to a professional designer (DesignPro), who will visit your office location (or at an ODP store) to discuss your needs and design the right environment for you. From office furniture, to the perfect break room, to the technical infrastructure required to operate your business, the DesignPro can pull together options and pricing. Furniture options could include product from non-traditional partners, like Ikea or Pottery Barn.

Family Friendly

Convert excess space into a family friendly zone, which encourages kids and their parents to be creative. Partner with Archivers to provide scrapbooking and crafts items. Classes and events can be scheduled to encourage interaction with other families. SMB Parents can take advantage of services which can be scheduled to coincide with the kids classes, including meetings with professionals (legal, tax, etc.) as well as printing, shipping and technical support. Bring your tablets and smartphones to download the latest family friendly apps. Develop partnerships with leading online service providers to enable ODP to assist SMBs in developing their website and e -commerce capabilities. Help SMBs to register domain name, build and maintain website, and e commerce platform

Website Services

Applicable In-store

Applicable Omni-channel

87

DRIVING NEW VALUE WITHIN ODP

Description of concepts to be tested Setup your web and social networking Online/in-store network to connect small businesses
Most small businesses need help when they are starting out with website design, logo creation, and business cards. But how do they get word out to their target customers that they are in business? ODP can help by creating an in-store and online network to help businesses connect to each other, with localization, reviews/recommendations, and if services are selected, rewards can be offered to the buyer, paid by the seller, with a referral fee to ODP to maintain the network. Events can be hosted in store and online. ODP can expand options available to its customers and increase its brand perception by forging productive alliances with other brands. Imagine Ikea furniture available in-store and online or Archivers for scrapbooking and craft related products. ODP should pursue only those relationships which augment their positioning as the solution provider to SMBs, or address underutilization of space or expanded online assortment requirements. This should augment existing offerings, or be a preferred outsource where internal capabilities to manage the category are inefficient or non-existent.

Promote My Business

Meaningful Alliances

Category partnerships Brand enhancement

Applicable In-store

Applicable Omni-channel

88

WE BELIEVE...

ODP needs to focus on SMB as the target customer Sustaining the current operating model will not address the SMBs needs There are four transformational enablers that ODP must address to set the stage for growth There is room in the industry for a new player who will change the game to serve the SMB needs across all channels

ODP needs transformation, not just optimization

89

NEW REAL ESTATE STRATEGY

NEW REAL ESTATE STRATEGY MEDIUM SIZE STORES

Our initial analysis suggests that converting current stores to medium size format has much better chances of success, and will be accretive to ODPs profitability
All $ figures are in thousand except square footage & $/sqft Square foot Revenue / Sqft Revenue impact Gross margin (2)(3) Current Store (1) 23,000 $175 $4,000 $960 Medium Format Store 15,000 $267 $4,000 $1,028

Operating expenses (4)(5)

Operating profit Operating profit margin Total operating profit impact per converted store

$727
$233 5.8%

$694
$334 8.4% $101

Notes: 1) Source: ODPs 10-K SEC filing for 2012, and transcript of Q3, 2012 ODP Earnings Conference Call on November 6, 2012 2) Includes Distribution costs 3) Assume same COGS %, and savings in rent of $68K per store per year, due to smaller store footprint and rent increase of $16/sqft to $20/sqft 4) Excludes Distribution costs 5) Labor cost savings due to smaller footprint and SKU reduction is assumed to average 0.75 FTE for medium stores (~33K/year)

91

NEW REAL ESTATE STRATEGY REPLACE LARGE STORE WITH 2 OR MORE SMALLER/MEDIUM STORES IN SELECTED LOCAL MARKETS

In markets with high customer density, it may be advantageous to have two or more smaller stores instead of one giant store Proximity to more customers in the area More flexibility in planning store layouts, product assortments, and promotions

Better engagement with customers, better customer experience

However, as shown in our earlier analysis, the small store approach may not be financially beneficial if applied to a large number of stores Target stores must be judiciously selected, cost-benefit trade-offs thoroughly analyzed, and the conversions carefully planned and executed in order to reap the benefit offered by the small store model

92

NEW REAL ESTATE STRATEGY ALLOCATE PART OF THE LARGE STORE FOOTPRINT TO FULFILL ONLINE ORDERS

For large stores with long-term leases, part of the store may be converted to warehouses to fulfill local online orders Exploit comparative fulfillment advantage based on proximity to customers Better (in terms of time and cost) able to fulfill next-day/same-day, delivery orders for local customers This can be leveraged to compete with online retail giants such as Amazon Improved customer availability for both in-store and online fulfillment

93

100 DAY PLAN

OUR PLAN IS URGENT WE INTEND TO ACHIEVE RUN-RATE VELOCITY WITHIN 12-18 MONTHS
Subsequent planning and implementation work will follow the initial 100 Days that will be required to achieve run rate savings within a 12 to 18 month time frame
I. Strategic and Operational Assessment & Launch Quick Hits
Assess, validate, and quantify opportunities Strategy: SBU Assessment (Performance, Trajectory, Capabilities, Investments) Revenue: Merchandising Effectiveness, Marketing Effectiveness, Channel Assessment Operations: Distribution, Sourcing, Retail Ops SG&A: Selling Costs, G&A, Corporate Structure Assess structure and talent across the organization Identify and take immediate action on quick hit opportunities

II. Optimize Current State, Execute Close-in Opportunities, Validate and Plan for Long-term
Work with management and BOD to select and prioritize opportunities Develop performance improvement plan with milestones and measurements Determine where resources are required to support plan implementation Assign budget oversight and accountability Refine analysis on longer-term opportunities recommended for further study

Refine

III. Long-term Recovery Strategy

Implement changes across entire organization Transition ownership and execution from SWAT teams to on-going/daily operational management

ACTIONS

Oversee and track success

Develop long-term, multi-channel merchandising, marketing, and category/service strategy

100 Days

TIME

On-going

95

TOTAL MARGIN IMPROVEMENT OPPORTUNITIES

After implementing our plan, we believe that ODP has the opportunity to achieve $776 million in annual EBIT (7.3% margin) after full implementation of the Efficiency & Effectiveness Initiatives and the Growth Strategy Annual EBIT Run Rate After Full Implementation

In $ Million
$1,200

Efficiency & Effectiveness Initiatives

Growth Strategy

$317 $1,000

$1,075

$299

$776 $800 $89 $600 $122 $33 $38 $43 $27 7.3% Margin

$400 $215 $200 $96 0.9% Margin

$95

$0

Notes: 1) Based on ODP 10-K for 2012

96

SUMMARY LEVEL PLAN

The work plan is aligned against the business case objectives and organized by our major efficiency & effectiveness initiatives and the strategic growth enablers
Potential Day EBIT Improvement $M

Day 100

Efficiency & Effectiveness Initiatives

Business Unit Strategic Review G&A Advertising Distribution SKU / Supplier Rationalization Direct Sourcing Merger Planning

--$215 $95 $122 $33 $38 --$89 $43 $27 $317

Topline Growth Enables

New Engagement Model True Omni-channel Reinvent Loyalty Program Services / Category Extensions

97

DETAILED LEVEL PLAN

Week Statu s Owner 1 2 3 4 5 6 7 8 9 10 11 12 13 14

Business Unit Strategic Review

Assess North American Retail Business Unit Strategy review and SWOT Current/Project Performance P&L/Assets/Operational Metrics Forecast/Trajectory review Capabilities review Organization and Talent review Key programs and investments Assess Business Solutions Division Business Unit Strategy review and SWOT Current/Project Performance P&L/Assets/Operational Metrics Forecast/Trajectory review Capabilities review Organization and Talent review Key programs and investments Assess International Business Unit Strategy review and SWOT Current/Project Performance P&L/Assets/Operational Metrics Forecast/Trajectory review Capabilities review Organization and Talent review Key programs and investments Assess Potential Merger Implications to Priorities Based on Merger progress and timing Over-weight Achievement of Financial Goals Validate Strategic Reviews against Hypothesis Prioritize focus areas based on assessment

98

DETAILED LEVEL PLAN

Week Statu s Owner 1 2 3 4 5 6 7 8 9 10 11 12 13 14

G&A
Review current investment portfolio Capital and Expense IT new development Store capital - Open, Close, Reset Web Other Build revised/realigned Investment Portfolio Assess internal general and administrative data Review financials Validate against hypothesis Prioritize focus areas based on assessment Functional within Business Unit Web site and supporting functions BSD-Retail Cross-functional synergies Assess key non-merch vendors and suppliers Assess Corp Organizational structure Management talent / capability Prioritize focus areas based on assessment Cross-functional synergies Talent / capability gaps Review HR policies and practices To meet regulatory requirements Understand HR Corp strategy and Organization Review key HR employee contracts / agreements Review Compensation and Benefits Understand current benefits plans and contract terms Inventory health and wellness plans - employees and retirees Understand financial and legal obligations Develop strategy to rationalize and optimize benefits policies, plans and terms Define org structure, reporting relationships, roles and responsibilities Rationalize corp titles, functions, and job descriptions Rationalize BU titles, functions, and job descriptions

99

DETAILED LEVEL PLAN

Week Statu s Create action plans against G&A targets By Corporate Functional area Retail Field organization Regional District Retail Stores Time Allocation assessment - % cust facing Large format Small format BSD Field organization Direct Contract BSD Call Centers - internal and 3rd party Direct Contract Web Site Management and Content Management Site support and maintenance Cross functional synergies NA Retail and BSD Global Prioritize by $, cust experience, and support of strategic change Vendor/Supplier key contract renegotiations Top 10 largest contracts to lower cost near term Implement prioritized changes Renegotiate non-merch procurement contracts HR and Change Management task force Scorecard and Measure G&A reduction targets Escalate variances Modify plans to recapture variance Owner 1 2 3 4 5 6 7 8 9 10 11 12 13 14

100

DETAILED LEVEL PLAN

Week Statu s Owner 1 2 3 4 5 6 7 8 9 10 11 12 13 14

Advertising
Assess current spend and effectiveness Measure effectiveness and historical trend By Advertising channel Print TV/Radio Web Mobile Social

Validate against hypotheses Advertising Agency assessment Benchmark agency effectiveness

Confirm current agency or begin process to change Develop Agency change out plan Adjust spend in controlled tests By customer segment By advertising channel Print TV/Radio Web Mobile Social Measure results to cost reduction targets against traffic and market share Escalate variances Start, Stop, Continue, Modify Make adjustments to attain results

101

DETAILED LEVEL PLAN

Week Statu s Owner 1 2 3 4 5 6 7 8 9 10 11 12 13 14

Store Model - U.S. Footprint

Assess store performance of various models/sizes current deployed Against competition Customer perception of each Risk adjust based on length of time in market
Validate against hypothesis Against potential new business strategies Include customer research in assessment Define near term plan to maximize store effectiveness By format in context of performance and lease Excess space scenarios Build out options for excess space Cost Benefit analysis for space options Prioritize changes Implement quick hit changes to achieve quick hit improvements Define mid-term excess space options Scorecard and Measure Escalate variances

Store Model - U.S. New Store Opening

Assess NSO (New Store Opening) capability Review current NSO process Against external benchmark By store size Go-No go decision based on magnitude of cost take-out Create action plans to reduce capital per NSO Cost reduction workout exercise Revised NSO capital and expense targets Deploy new NSO process and cost structure Measure NSO cost reductions to target Escalate variances Make adjustments to attain results

102

DETAILED LEVEL PLAN

Week Statu s Owner 1 2 3 4 5 6 7 8 9 10 11 12 13 14

Real Estate - U.S.

Quick-Hit Real Estate assessment Review current Real Estate plan Pareto assessment By market penetration versus competitor By lease length and strength By store size Validate against hypotheses Prioritize changes Modify near-term Real Estate plan Store relocations Store openings by size Store closings Real Estate Strategy - Define long term strategy Design to support modified customer/channel strategy By market penetration versus competitor By customer demographic and trends Merge quick hit and long term strategies Deploy long term Real Estate strategy Store relocations Store openings by size Store closings

u u u u

u u u

Real Estate - International

Assess role of physical retail in international strategy 4 Wall Profitability analysis in total, by geography, by store include Customer channel preference in assessment Weight of International retail on G&A and Capital investment Direct affect on International business Affect on global cost and investment Consider country specific market share Consider country specific regulations Define long term Real Estate strategy Stay/Exit decision Build plan to fit strategy Execute new strategy

103

DETAILED LEVEL PLAN

Week Statu s Owner 1 2 3 4 5 6 7 8 9 10 11 12 13 14

Distribution
Assess Physical Supply Chain DC and Transportation Network Design Transportation Inbound from Supplier DC and Direct to Store Reverse Logistics Carrier Management Distribution Receiving, Putaway, Picking, Fulfillment Cross Docking Supplier Operational Compliance Direct to Customer - Web and Store sales Store Operations Scheduling, Receiving, Merchandising Returns Processing Delivery Benchmark current Delivery network Design Revamped Delivery model Reverse logistics Assess Inventory Management Inventory Planning and Execution Demand and Lead time Forecasting Order Cycle, Replenishment, Special Orders Assess Merchandise Planning & Analysis Sales, Margin, and Inventory Markdown Planning and Execution Open-to-Buy Create action plans and assess cost benefit of each Prioritize by $ and emerging biz strategy Implement quick hit changes Project team by major deliverable Measure Distribution improvement/cost reduction

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DETAILED LEVEL PLAN

Week Statu s Owner 1 2 3 4 5 6 7 8 9 10 11 12 13 14

Merchandising - Pricing, Buying, Sourcing

Assess Merchandising effectiveness Against Price, Mix/SKU Rationalization, Sourcing Across direct, web, retail Across branded and private label Validate against hypotheses Assess Merchandising processes and capabilities Current state mapping Benchmark to Tool Provider experience Create action plans and assess cost benefit of each Across Category Category specific Prioritize by $, cust experience, and support of strategic change Design, build and implement Quick Hit initiatives Tap current Merch systems capability Portfolio tactics defined Assortment plan revised Transition planning and management SKU Rationalization Private Label improvements Pricing improvement go get Measure Merchandising Effectiveness Quick Hit changes Against each initiative's Improvement targets Across Productivity, Profitable Growth, Customer Escalate Store Merch Effectiveness variances Stop, Continue, Modify Make adjustments to attain results Initial Design of long term capability improvements Portfolio Assortment SKU Rationalization Private Label improvement Pricing improvement Implement long term capability improvement

105

DETAILED LEVEL PLAN

Week Statu s Owner 1 2 3 4 5 6 7 8 9 10 11 12 13 14

Merchandising - Store Reset Process

Assess Store Merch Reset capability Review current store level merch reset process Against internal goals and external benchmarks Cost, Lift, Operational execution Create action plans and assess cost benefit of each By store model, geography, customer Prioritize by $, cust experience Store Merch Reset capability - finalize revised plan By store model and geography By individual store Measure Store Merch Reset process and cost reduction By store model and geography By individual store Escalate Store Merch Effectiveness variances Stop, Continue, Modify Make adjustments to attain results

106

DETAILED LEVEL PLAN

Week Statu s Owner 1 2 3 4 5 6 7 8 9 10 11 12 13 14

Merger Planning and Preparation

External Assessment of Merger Partner Similar Diligence Process to ODP Assessment Research to Understand Current Customer Validate Assumptions in Merger Business Case Assess Strategic Considerations Brand and Strategic Positioning Consumer and SMB Customer Validate Business and Financial Value of Merger What is Precious and What is Expendable Organization and Talent Considerations Leadership Structure Organizational Structure Leadership Talent Assessment Metrics, Goals, Incentive Plans during Transition Business Process Considerations - Initial View Accelerators and Barriers Business Capabilities to Support Merger Technology Capabilities to Support Merger Tactical Investment Considerations New Store Openings Distribution Network Marketing and Branding and Advertising Web Site Capability and Systems Investments BSD Change Initiatives currently Underway

107

DETAILED LEVEL PLAN

Week Statu s Owner 1 2 3 4 5 6 7 8 9 10 11 12 13 14

Engagement Model
Assess Sales Effectiveness BSD selling model Retail selling model Validate against hypotheses Compensation and incentive model Services delivery effectiveness Internally delivered 3rd Party delivered Assess Customer Support By channel By Customer segment Design new Engagement model BSD Sales Leadership Retail selling model Compensation model Field execution model Platform to support sales effectiveness Define requirements Select platform Define and build Quick Hits Implement Quick Hits Incremental to current engagement model Implement new engagement model Define pilot approach Deploy new engagement model to pilot Change Management program to support Measure Engagement model pilot Scale new Engagement model

108

DETAILED LEVEL PLAN

Week Statu s Owner 1 2 3 4 5 6 7 8 9 10 11 12 13 14

Omni-Channel
Assess core capabilities Scalability/Flexibility/Horizontal integration By sales channel By customer experience Create Capability map Assess core Systems Assess key systems required to support change Stability/Scalability/Supportability Architecture, Middle-ware, Infrastructure Vertical or Horizontal implementation Data Warehouse - Cust, Financial, Sales History, Depth, Cross-business unit Business Intelligence Reporting, Score carding AdHoc analytics Create Systems to Capabilities map Omni-Channel Customer experience Define Customer Portal architecture Define Employee omni-visibility to Customer Create Capability and Systems plan Design and Deploy Omni-channel Capabilities

109

DETAILED LEVEL PLAN

Week Statu s Owner 1 2 3 4 5 6 7 8 9 10 11 12 13 14

Loyalty Program
Assess internal customer data and insights Validate against hypotheses Compare to brand promise Compare to competitors Measure all significant change plans against VPs Create Customer Segments Perform a customer segmentation exercise Build out segment needs and value propositions Assess customer acceptance of value propositions Finalize go-forward customer segments Customer loyalty and satisfaction measurement Assess internal customer metrics Validate against initial survey Select and implement NPS / cust sat method Measure Customer Loyalty trends Measure all significant changes against cust loyalty Design new Loyalty Program Benchmark best-in-class Loyalty programs Validate against hypotheses Blend best-in-class with brand value proposition Select Program Partner and tap their expertise Implement new Loyalty Program Define pilot approach Select pilot market Deploy pilot Measure pilot success Scale new Loyalty Program

110

DETAILED LEVEL PLAN

Week Statu s Owner 1 2 3 4 5 6 7 8 9 10 11 12 13 14

Services / Category Extensions

Select new Categories Review currently in-process innovation pipeline Validate against hypotheses Select new Services Compensation and incentive model Services delivery effectiveness Internally delivered 3rd Party delivered Create benefits case and associated metrics Design pilots Select partner/vendors Define pilot approach Define execution model Select pilot market Implement changes Build out prioritized test environments Execute Prioritized tests Training and score carding Operations Measure pilot success Measure test results Go No-Go Scale new Services and Categories

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111

DETAILED LEVEL PLAN

Week Statu s Owner 1 2 3 4 5 6 7 8 9 10 11 12 13 14

100 Day Plan Deployment

Implement Program and Project Management Teams and tools in place Change Management process in place Put Governance in place Decision making, scorecarding, reporting Steering Committee assigned and up and running Investment and Spending Portfolio management

Business Unit Strategic Review

Assess North American Retail Assess Business Solutions Division Assess International Assess Potential Merger Implications by Business Unit

100 Day Plan Operation

Manage to the 100 Day Plan milestones Regular review, update, revision, celebration Escalation management Communication Plan - internal, external

100 Day Plan Outcomes

Analytics in place Assessments and findings complete Organizational changes implemented Launch Quick Hits Multi-year Plan created to achieve year 1 run rate targets to drive long term value creation

112

THE END

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