Our Business Services Group (BSG) caters to the particular needs of our delivery customers, from individuals and small businesses to large corporations. This division is comprised of our contract sales force, domestic call centers, electronic commerce business and our warehousing and delivery operations. It is Office Depot’s second largest contributor of sales and operating profit.

Business Services employs advanced technology to provide its customers with tailored office supply solutions through several different business channels, including contract, mail order, the Internet and other business-to-business electronic commerce. Each of these channels is supported by Office Depot’s powerful coast-to-coast distribution network, which encompasses 30 customer service centers, 44 satellite centers and a large fleet of Company-owned delivery trucks. This network gives Business Services a distinct competitive advantage by providing customers with guaranteed next business day delivery for in-stock items in most major markets, and same day delivery in some markets if customers place their orders before 11:00 a.m.

Our state-of-the-art Internet sites complement our catalog business by offering our customers a choice of ordering channels. We also maintain a customized Internet site for our corporate customers, which can be tailored by each customer to incorporate the product mix and authorization codes it chooses. Office Depot also offers electronic commerce solutions to our individual and small business customers via our public Web sites, accessible at www.officedepot.com and www.vikingop.com. We are confident that no other company in our industry offers more ways to conduct electronic commerce than Office Depot, or provides Web sites that surpass our award-winning Internet sites.

In 1999, BSG continued to pursue its aggressive campaign to win new contract customers and build its contract and commercial businesses. As a result, sales in BSG increased to $3.2 billion, up 9% from $2.9 billion in 1998.