State of WA Trade Show October 28, 2010

1. State of WA Trade Show October 28, 2010 Save time and money when ordering office supplies, paper and toner

2. Agenda • Office Depot Team Introductions • Hard Cost – Ways to save on product costs • Soft Cost – Ordering efficiency • Sustainability • Q & A

3. Hard Cost – Ways to save on product costs • Essentials, Non Essentials and Exception Items • EssentialsOriginal Now Office Supplies 1049 1286 Ink/Toner 99 183 Paper 17 86 Marked with July 2009 – June 2010 = 58.9% Essential spend • Non Essentials – Items that are on the contract but discounted from the categories manufactures list price. Example: Writing instruments are priced at 65% off list price. List price $1.00 – your price $0.35. • Exception Items – Exempt from the category discounts and are priced at a discount from Office Depot’s public website. These items are reviewed monthly per the contract.

4. Hard Cost – Ways to save on product costs

5. Hard Cost – Ways to save on product costs • Sourcing Options • Kent Warehouse – 15,000 items stocked and delivered next day and able to check availability online. • Wholesaler - Additional 15,000 items stocked and delivered next day most of the time. Availability is marked Available* online. • Virtual Warehouse – Product that comes straight from the manufacturer to help save cost. Less than 2% of state sales comes from VW. Most of the product is toner and technology items. • Direct from Manufacturer (Special Order) – Not carried in our warehouse or wholesaler. Example: Large Outdoor Industrial Garbage Cans. Delivered 7 – 14 business days once order is placed. Please contact your Account Manager. • Tech Depot– Office Depot’s technology division • Dedicated Account Manager – Sean Raby Example: Customer (DSHS) wanted quote for headset and lifter. • Lowest quote from other companies was $225.00 just for the headset. • Our price from Tech Depot was $211.15 with headset and lifter. • They ordered 114 for a total savings of $13.85 per unit with a total savings of $1,578.90 not including the savings from the lifter.

6. Hard Cost – Ways to save on product costs • Minimum Delivery Fee • Orders under $50.00 pre-tax will have a $9.95 small order handling fee attached. • In the past 12 months 36.5% of the orders were under $50 • Volume Discounts • Volume discounts are given for stocked items only. 1% = $250.99 – $450.99 2% = $451.00 – $999.99 3% = $1,000.00 and above Example of greater than $50 order Example of less than $50 order

7. Hard Cost – Ways to save on product costs • Store Purchases • Emergency Purchasing • P-Card • Ensure Agency P-Card is linked so discount is applied • Track purchases online • Store Purchasing Card (SPC) • Bills to Account Billing • Track purchases online

8. Hard Cost – Ways to save on product costs • Original Equipment Manufacturer vs. Remanufactured • OEM – Original Equipment Manufacturers cartridges are made by HP, Canon, Lexmark, or other original manufacturers. They are usually manufactured using a combination of new and recycled parts at factories throughout the world • Remanufactured – “REMAN” cartridges are those that have been remanufactured for another use. Remanufacturing process involves disassembling, cleaning, refilling toner, replacing appropriate components, print testing and repackaging Note: Office Depot REMAN toners comes with a 100% No-Risk Quality Guarantee to perform to your complete satisfaction.

9. Hard Cost – Ways to save on product costs • Standard Yield vs. High Yield • A Model – Standard Yield Cartridge • X Model – High Capacity Cartridge - can reduce cost per page by up to 35% over standard yield • Dual Pack – Dual Pack – on average dual packs cost 10% less than their stand-alone counterparts • Examples: HP 42A • SKU 992280 - $154.37 • Cartridge yields up to 10,000 pages • $0.0154 per page • HP 42X • SKU 975384 - $232.99 • Cartridge yields up to 20,000 pages • $0.0116 per page • 24.54% Savings from 42A • HP 42XD • SKU 522810 - $387.04 • Cartridge yields up to 20,000 pages per cartridge • $0.0096 per page • 16.94% Savings from 42X and 37.32% from 42A

10. Hard Cost – Ways to save on product costs

11. Soft Cost – Ordering Efficiency • Processing Cost Reduce number of orders by 127,292 and save the State of WA an additional $1,060,770

12. Soft Cost – Ordering Efficiency You can build an order and place it when you are ready. This will help you create orders above $50.00, take advantage of the order size incentive and decrease order processing costs. • Step 1: At checkout you can place your order on hold by selecting the “Put this order on hold.” This will reserve the inventory for 5 working days. How to build your order for efficiency

13. Soft Cost – Ordering Efficiency • How to build your order for efficiency – Continued • Step 2:When you return back to continue ordering. Select “Order Tracking” under My Account menu • Step 3:Open your held order by clicking on the “Order Number” • Step 4:Click on the “Modify Order” button • Step 5:Click on the “Continue Shopping” button. This will bring you back into the shopping process. You can check out when completed or return back to Step 1 to put your order back on hold to continue building at a later date.

14. Soft Cost – Ordering Efficiency • Order Entry • Ecommerce = 90.4% of all orders placed • Telephone/Fax = 5.2% of all orders placed • Store Purchases = 4.3% of all orders placed • Special Orders = Less than 1% of all orders placed • Online Ordering • Singe Item Search • 6 Digit Office Depot SKU • Manufacturer Number • Item Description • Order by Item Number • Custom Shopping List

15. Soft Cost – Ordering Efficiency • Order Tracking under My Account • View On Hold Orders • Recent Orders • Place Returns • View POD • Reorder Items • Bill Management • Quickly access your account summary and detailed billing information to determine what is paid and what is outstanding • Search for invoices by date, due date, purchase order, ship to location or transaction type • Drill down into invoice activities , including payments, credits and adjustments • View print or export your invoices using a variety of formats • Pay your invoices online using multiple options • Pay one or multiple invoices at a time in one simple transaction • You can dispute an invoice online and receive a tracking number to follow its progress

16. Soft Cost – Ordering Efficiency • EFT vs. P-Card • Electronic Funds Transfer • Receive a 1% discount for paying by EFT • Receive an additional 1% discount for paying EFT, Net 10 • P-Card • Reduce Agency processing cost – Please see handout • No additional discounts are given with P-Card transactions • Most P-Cards have their own rebate program

17. Soft Cost – Ordering Efficiency

18. Sustainability • 698 Sustainable items on the 09205 contract essentials list • April 2006 – March 2007 = 9.5% Recycled spend • July 2009 – June 2010 = 51% Recycled spend • Office Depot offers more than 6,500 products with environmental attributes and certifications. This includes over 4,500 items with recycled content, over a thousand energy efficient technology and lighting products, and hundreds of items certified to be made with safer chemicals

19. Sustainability - Attributes REDUCED ENERGY & CARBON EMISSIONS REDUCED WASTE AND PRESSURE ON RESOURCES

20. 12 cases (1/mth) virgin 8.5x11 … requires approx. 1 ton of wood…which requires approx 8 trees Sustainability 12 cases 30% recycled 8.5x11…requires approx. 5/8 ton of wood…which requires approx 5 trees 12 cases 100% recycled 8.5x11…requires approx. 0 ton of wood…which requires 0 trees

21. Sustainability – Carbon footprint 3 days 5 days a week 1 day

22. Sustainability – Green Smart Cart Item is located that has a greener alternative

23. Sustainability – Green Smart Cart When the item is added to the shopping cart, the Green Smart Cart notification banner appears

24. Sustainability – Green Smart Cart End-user can choose to review the greener alternative by clicking View Items. The greener alternates are displayed

25. Sustainability – Green Smart Cart The end-user can choose each greener alternative separately by selecting choose this item and clicking the replace checked items button

26. Sustainability – Green Smart Cart The greener alternatives replace the previously added items with the same desired quantity.

27. Sustainability – Green Smart Cart If they do not choose the greener alternative, they are reminded every time they visit the shopping cart

28. Sustainability – Green Smart Cart Summary • The Green Smart Uses the following logic: • A greener alternative is offered if: • The account is active for Green Smart Cart • The alternative exists • The alternative is in stock at the fulfilling DC • The alternative is not restricted on the account

29. Sustainability – Tote Program • Environmentally Friendly Delivery : • Returnable totes • Re-use of original shipping cartons • Delivery in bags • Use of bags inside totes

30. Sustainability – Tote Program • Process of Tote Program: • Bag placed in tote at order induction. Packing list clipped to bag for picking • Product placed inside bag inside Tote during the picking process • Invoice and packing list placed inside bag with product • Bag is sealed closed after checking in repack • After invoice and packing list has been placed inside tote with product, label is placed on the top of the tote. • Surface of tote is designed to allow easy removal of label for placement on bag

31. Sustainability – Tote Program • Process of Tote Program - Continued: • Zip-ties placed on tote for security after checking • Zip ties cut at customer delivery • After ties have been cut, label is removed from the tote to place on interior bag • The label that was removed from tote is placed on the bag • Appropriate Hazmat labeling will be attached to tote based on product requirements to handle in-transit requirements. Interior bag will also have labeling for end-user awareness • Bag delivered to customer. Product, invoice and packing list are inside

32. Sustainability – Tote Program – Lifecycle Environmental Impact reduction through less wood, energy, greenhouse gases, wastewater and solid waste According to the Environmental Defense Paper Calculator (www.papercalculator.org) Lifecycle Environmental Impact Calculations for Unbleached Corrugate there are multiple environmental benefits of switching from bags to boxes, even though post consumer recycled content of the bags is not as high as boxes. * Environmental benefits will increase if strong bags with higher Post Consumer content can be sourced. ~ 1 ton less wood with bags ~ 55M BTUs less energy with bags ~ 8740lbs less CO2e with bags ~ 8758 gallons less water with bags ~ 933 lbs less solid waste with bags

33. Sustainability