LONG-TERM EQUITY INCENTIVE PLAN

The Long-Term Equity Incentive Plan, which was approved by the Company's stockholders, effective October 1, 1997. This plan provides for the grants of stock options and other incentive awards, including restricted stock, to directors, officers and key employees. Under this plan, stock options must be granted at an option price that is greater than or equal to the market price of the stock on the date of the grant. If an employee owns at least 10% of the Company's outstanding common stock, the option price must be at least 110% of the market price on the date of the grant. Options granted under this plan become exercisable from one to five years after the date of grant, provided that the individual is continuously employed with the Company. All options granted expire no more than 10 years following the date of grant.

To date under this plan, 331,193 shares of restricted stock were issued at no cost to the employees, 63,565 of which have been canceled and 170,000 remain outstanding but restricted. The fair market value of these awards approximated $4.1 million at the date of the grants. Restricted stock issued under this plan may have vesting periods of up to four years from the date of grant. Compensation expense is recognized on a straight-line basis over the vesting period.

In April 2002, stockholders approved an amendment to the plan allowing the Compensation Committee of the Board of Directors to grant performance-based shares to our senior executives and directors. Performance-based shares are used as an incentive to increase shareholder returns with actual awards based on the Company's Total Shareholder Return over a three-year period, compared against the industry peer group. Compensation expense for the anticipated number of shares to be issued, if any, will be recognized over the vesting period. Depending on actual Company performance, shares issued may be more or less than amounts assigned. As of December 28, 2002, target awards of 258,250 shares have been assigned, but no performance-based shares have been issued.

Tax benefits are recorded based on an estimate of stock options activity. Each year, the prior year's estimated tax benefit is adjusted based on the actual stock sold during the year. Tax benefits received in excess of compensation expense recorded on nonqualified stock options are credited to additional paid-in capital.

LONG-TERM INCENTIVE STOCK PLAN

Prior to our merger with Viking Office Products ("Viking") in 1998, Viking's Long-Term Incentive Stock Plan allowed awards of up to 2,400,000 restricted shares of common stock to key Viking employees. Under this plan, 1,845,000 shares were issued at no cost to employees, of which 1,380,000 have been canceled or the restrictions satisfied, leaving 465,000 restricted shares outstanding. Pursuant to the merger agreement, shares issued under this plan were converted to Office Depot common stock, and no additional shares may be issued under the plan. The fair market value of these restricted stock awards approximated $10.0 million at the date of the grants. Prior to the merger, the vesting period was 15 years. Because of the plan's change in control provision, however, the employees now vest in their stock ratably over the 15-year period. Compensation expense is recognized on a straight-line basis over the vesting period.

A summary of the status of and changes in our stock option plans for the last three years is presented below.

	2002							2001							2000
	Shares			Weighted Average Exercise Price				Shares			Weighted Average Exercise Price				Shares			Weighted Average Exercise Price
Outstanding at beginning of year		35,750,521		$	13.46				36,406,229		$	12.81				33,507,066		$	15.31
Granted		6,926,250			16.39				7,509,000			10.63				9,937,750			8.73
Canceled		(3,014,831	)		14.74				(2,642,428	)		13.99				(6,608,072	)		16.45
Exercised		(8,162,308	)		10.80				(5,522,280	)		7.93				(430,515	)		6.18
Outstanding at end of year		31,499,632		$	14.69				35,750,521		$	13.46				36,406,229		$	12.81

As of December 28, 2002, the weighted average fair values of options granted during 2002, 2001, and 2000 were $6.38, $4.21, and $4.18, respectively.

The following table summarizes information about options outstanding at December 28, 2002.

						Options Outstanding										Options Exercisable
Range of Exercise Prices						Number Outstanding			Weighted Average Remaining Contractual Life (in years)			Weighted Average Exercise Price				Number Exercisable			Weighted Average Exercise Price
$	0.17	–	$	1.95			5,400			2.5		$	0.17				5,400		$	0.17
	1.96	–		2.94			-			-			-				-			-
	2.95	–		4.42			3,000			-			4.04				3,000			4.04
	4.43	–		6.64			375,360			6.9			6.30				235,983			6.24
	6.65	–		9.97			7,326,314			7.5			8.49				2,153,301			8.71
	9.98	–		14.96			6,101,702			5.8			11.66				4,183,239			11.98
	14.97	–		22.45			15,707,776			6.2			17.76				8,563,456			18.37
	22.46	–		25.00			1,980,080			5.7			24.19				1,649,580			24.20
$	0.17	–	$	25.00			31,499,632			6.4		$	14.69				16,793,959		$	15.93

EMPLOYEE STOCK PURCHASE PLAN

The Employee Stock Purchase Plan, which was approved by the Company's stockholders, effective July 1999, permits eligible employees to purchase our common stock at 85% of its fair market value. A similar plan is available to employees in the United Kingdom. Effective April 2002, share needs under this plan are now satisfied through open market purchases. However, the Company is authorized to issue up to 1,862,843 shares under this plan.

RETIREMENT SAVINGS PLANS

The Office Depot retirement savings plan, which was approved by the Board of Directors, allows eligible employees to contribute up to 18% of their salary, commissions and bonuses, up to $11,000 annually, to the plan on a pretax basis in accordance with the provisions of Section 401(k) of the Internal Revenue Code. Matching contributions of common stock that are made into the plan are equivalent to 50% of the first 6% of an employee's contributions. However, discretionary matching common stock contributions in addition to the normal match may be made. A separate, but identical, retirement savings plan is offered to employees of 4Sure.com. The Company also has a deferred compensation plan that permits eligible employees who are limited in the amount they can contribute to the 401(k) plan to alternatively make tax-deferred contributions of up to 18% of their salary, commissions and bonuses to this plan. Matching contributions to the deferred compensation plan are similar to those under our 401(k) retirement savings plan described above. During 2002, 2001, and 2000, $8.4 million, 4.0 million and 5.8 million, respectively, was recorded as compensation expense under these programs.

The following is a summary of the Company's equity compensation plans:

Plan	Number of securities to be issued upon exercise of outstanding options, warrants, and rights	Weighted average exercise price	Number of securities remaining available for future issuance
Long-Term Equity Incentive Plan (including the
Long-Term Incentive Stock Plan)(1)	31,499,632	$14.69	9,436,540
Employee Stock Purchase Plan (ESPP)	Not Applicable	Not Applicable	1,862,843(2)
Retirement Savings Plans	Not Applicable	Not Applicable	Not Applicable(2)

(1)	Outstanding options under the Long-Term Incentive Stock Plan are satisfied upon exercise with available securities from the Long-Term Equity Incentive Plan.
(2)	Effective April 2002, the Company now settles share needs under the ESPP, the 401(k) Plan, and related deferred compensation plan, by open market purchases through the respective plan administrators.