Event Brief of Q3 2003 Office Depot Inc. Earnings Conference Call - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

CORPORATE PARTICIPANTS

. Ilene Dunn, Office Depot Inc., VP, IR . Bruce Nelson, Office Depot Inc., Chairman, CEO . Charlie Brown, Office Depot Inc., CFO

OVERVIEW

Company reported 3Q03 EPS of $0.29 per share, up 4% QoverQ, and a cash balance of $823m. By year-end, 25-30 millennium stores will open and 18 test stores are planned to open in Albertson's grocery stores in Chicago, Los Angeles, and Phoenix. Q&A Focus: new initiatives, comp trends, merchandizing.

FINANCIAL DATA

A. Key Data From Call 1. 3Q03 EPS = $0.29 2. Cash Balance = $823m

3. Free Cash Flow = $262m

PRESENTATION SUMMARY

S1. Business Overview (B.N.) 1. Highlights 1. Reports EPS $0.29 per share, up 4% from a year ago. 2. International sales grew 71% in local currencies and 91% in US dollars. 3. North American retail traffic and transaction were up. 4. North American retail supply category comped positive. 5. Reports cash balance of $823m.

6. Guilbert integration delivering promised results and proceeding on plan. 7. Completed successful $400m long-term debt offering. 1. Helped to pay for Guilbert acquisition. 8. Added significant management talent, particularly in North American Merchandising Dept. 1. Co. believes they will help drive results long-term. 9. Through appointment of internal exec-head, strengthened supply chain. 10. Promoted industry veteran at co. to contract sales. 1. This organization strengthened as well. 2. Consolidated Results: 1. Sales grew 13% in 3Q and 7% for first nine months.

2. Sales increases in BSD, e-commerce, and international,

including positive currency impact, were partly offset by negative North American retail comps up 2%. 3. International sales were down 1% for 3Q and down 2% for first nine months. 4. E-commerce sales continue to track positively with 24% growth

for $672m. 1. On track to achieve $2.5b for 2003. 5. Consolidated operating profit includes results of Guilbert. 6. Has continued growth in North America large customer segment although North American retail comps remain soft. 7. For 3Q, excluding impact of ITF, consolidated GMs were down 27 basis points from 2002.

1. This is a product mix issue rather than pricing issue. 8. Operating expenses were up 40 basis points, slightly above

last year. 9. Operating profit was down 67 basis points, slightly below last year. 1. Most of this was in North American retail. 10. 3Q operating performance reflects very strong European

results: 1. Favorable currency rates; 2. Addition of Guilbert operations; 3. Strong organic growth in BSD European contract business. 11. Continued growth in North America large customer segment. 3. Guilbert integration 1. 3Q operating results include approx. $6m Guilbert integration costs. 2. SGA costs were flat although up in dollars due to result of integration and full quarter impact of Guilbert. 3. On diluted EPS basis, $0.29 share vs. $0.28 GAAP last year. 4. There was a slight positive impact of ITF. 5. Experienced slight benefit from declining tax rate as part of strategy and result of having so much business outside the US. 4. International: 1. Sales grew 71% local currency, 91% in US. 2. Excluding Guilbert, sales in dollars in Europe grew 11%. 3. E-commerce grew 60%. 4. European sales continue to be growth vehicle for the co. as planned for some time.

1. Co. made number of investments in Europe in past few years in startups, new countries, and Guilbert. 2. Significant part of co. business with enormous growth characteristics. 3. Accelerated sales throughout Europe, predominantly in 3Q. 4. Some softness still in France and Germany. 5. However, strong sales results in other European countries. 5. Operating profit segment grew 88% in dollars, 70% in local currencies. 1. Foreign currency translation did benefit operating profit by approx. $5m. 6. Gross profit was down 266 bps. 1. This includes Guilbert into mix.

2. Higher prospecting in Viking catalogue model in some European countries results in lower GMs but accelerates growth. 7. Operating and selling expenses were down 254 bps as co. continues improvements to cost structure and run high growth business efficiently from cost perspective. 8. Guilbert operating on plan and delivering synergies. 9. 4Q03 Segment Outlook: 1. Accelerating growth going on in Europe. 2. Will see best growth quarter in 4Q in Europe in local currencies as co. has seen all year. 3. Operating margins will show some improvement as co. manages costs. 4. GMs will be down QoverQ, again with inclusion of Guilbert. 5. Business is in accelerating mode. 5. North American Business Services Group: 1. Sales in total were flat for 3Q and up 2% for first nine

months. 2. Contract grew 3% reflecting continued growth in large customer segment. 3. Co. has always had large position …