Profitability Improvement, Game Changing Capability

Executive OverviewSteve SparoughPartner

eps Summary:

on demand, leveraged buying for items & servicese-sourcing managed service supplier paid fee modelup to 50% shorter cycle times & level of effort WW reach to NA, SA, AP, India, Europe

eps drives EPS higher

eps improves EPSe-procurement services (eps)

eps game changing business model overview Client business transformation proof points Getting started Back Up: Software screen shots

Today’s Agenda

By the end of the meeting we will have discussed:

2 eps improves EPSe-procurement services (eps)

eBid (reverse auction) level-set

Auction(buyers bid price up)

$100

Time

$102.5

Event Opening

Event Closing

$105

$107.5

$110

$98.5

SellersCost

Reverse Auction(sellers bid price down)

$94.5

Time

$96

Event Opening

Event Closing

$98.5

$100

$102.5Buyer’sHave Paid Price

Reverse Auction Dynamic(Sellers are bidding price down for

commitment of larger, future revenue albeit at less margin)

$100

$0$20

$250

$0

$40

2.5x

$0

16%

20%

1x

1 yr Revenue

3 yrs Revenue

Cost

Op Profit Op Profit

Cost

3 eps improves EPSe-procurement services (eps)

eps’ Game Changing ValueReducing OpEx 10% has exponential impact on margin and shareholder value

4 $3Bn in Revenue would be required to replicate $200Mn in operating profit

1A. Impact on Operating Profit & Margin

Operating Profit

COGS

A 10% Reduction in OpEx Results in…..

38% Margin Improvement

100%

$7.866Bn

28%($2.2Bn)Op Ex

FY09 Revenue

100%

Incremental impact of $200Mn of reduced OpEx10%7.3%

64%($5.1Bn)

64%($5.1Bn)

25%($2Bn)

1B. Impact on Shareholder Value

10%

FDO Share Price; NYSEMarket Capitalization

A 10% reduction to OpEx Results in

10%$62$7.9Bn

41% Impact on Shareholder Value

Assumptions:

• P/E (TTM): 16• Corp Tax: 35%• Source: Yahoo Finance

$44$5.5Bn

Incremental impact of $145Mn of After Tax Earnings

eps improves EPSe-procurement services (eps)

ILLUSTRATIVE

eps unique value add

eps’ value add:Level 0 Objective 3rd partyCollaborative continuous improvementLevel 1Market research to optimize bid structure and determine savings opportunity WW supplier identification not bound by networksSupplier pre-qualificationCustom RFQ developmentLevel 2: Configurable s/w to create varying event s (language, currency, rank, price, weight)Supplier communication/trainingLevel 3: Time to identify /negotiate additional value add of suppliers

eps’ managed service creates four levels of value to maximize savings

Illustrative Project

5

$100

$90

Client’s Current Cost

$95 1st threshold of value

Time

Cost

$N

Project Beginning

Event Closing

Level of Value Created

[captured thru eps reverse auction]

Initial Value Created

[captured thru eps primary research]

2

1

2nd threshold of value

$94

$92$91

$93

3rd threshold of value

Level of Value Created

[captured thru client’s final negotiation w/supplier

3

eps improves EPSe-procurement services (eps)

For The Supplier:•No fee unless they win

•Additional sales channel at lower cost

•eBid managed service & tool

– 3rd party facilitation

– A transparent & fair bid process

– ID of market pricing for benchmarking

– Web based, no S/W to install

– Instant notice of RFQ’s

– All eBids are awarded

•Other

– Catalyst to reduce costs & restore margin

eps benefitseps is win-win for buyers and suppliers

Lower costs @ less time New Revenue @ Lower Cost

For The Buyer:

• No client paid fee (supplier paid fee structure)

• eBid managed service & tool– Enables quicker time-to-value

– Up to 80% less client time expended per sourcing project

– Each bid is customized to client’s requirements

– Market data to support eBid strategy

– Open, competitive bidding leading to 5%-24%++ cost savings

– Benefit of 10 years experience & best practices on every eBid

Time spent on sourcing or sales activityActivity completed by eps

6 eps improves EPSe-procurement services (eps)

eps enables & optimizes leveraged buying

7

Lighting Requirement Store A

B. B

id R

equi

rem

ents Lighting Requirement Store B

Lighting Requirement Store C

Lighting Requirement Store D

Re-lamping Requirement Store A, B

Lamp Servicing Requirement Store A, D

StoreA

Store C

Lamp Servicing Requirement Store C, B

Store D

Re-lamping Requirement Store C, D

Store B

ILLUSTRATVE

eps improves EPSe-procurement services (eps)

eps game changing business model overview Client business transformation proof points Getting started Back Up: Software screen shots

Today’s Agenda

By the end of the meeting we will have discussed:

8 eps improves EPSe-procurement services (eps)

$200K

$165K

Vehicles

Savings of 10% + have been achieved across most categories

Size of Bubble : (Relative Value Generated from ebids)

$1.5M

$1.75M

$2M

$2.25M

5% 10% 15% 20% 25% 30% 35% 40% 45%

$250K

$500K

$750K

$1M

$1.25M

% Savings

Bid

Val

ue

$62KEnergy

9

$780K

Store Shelving/Fixtures

$240K

StoreRe-model

$27K

StoreConst’n

$119KDSL Service

$550K

StoreLighting Services

$120K

PoS H/W, S/W*

$48KRoofing$52K

HVAC

50%

$90K

PkgSupplies

$140K

Temp Labor

$150K

Wireless

$212.5K

Office SuppliesPrintServices

$266K

Media Services

$150K

DMARC Extensions&

Service

eps improves EPSe-procurement services (eps)

eps game changing business model overview Client business transformation proof points Getting started Back Up: Software screen shots

Today’s Agenda

By the end of the meeting we will have discussed:

11 eps improves EPSe-procurement services (eps)

in

2. Administer ebid 1. Design project 3. Due Diligence & Award

Capture Value

Draft SpecsDraft Specs

QA & Format RFQ QA & Format RFQ

Prepare Suppliers

(Conduct Pre-Event Site Tours;

Distribute Samples)

Prepare Suppliers

(Conduct Pre-Event Site Tours;

Distribute Samples)

Contact Low BiddersContact Low Bidders

1

5

Answer RFQ QuestionsAnswer RFQ Questions

Distribute RFQ to Suppliers

Distribute RFQ to Suppliers

Perform Due DiligencePerform Due Diligence

Award ContractAward Contract

Negotiate Contract

Negotiate Contract

3

4

1

2

3

4

eps’ process

Authorization is needed to begin supporting you

eBid Managed Service step

Client responsibility

0. Plan projects

3

Review and sign eps engagement authorization

Review and sign eps engagement authorization

Analyze Spend Opportunity Analyze Spend Opportunity

Conduct eBid

Event

Conduct eBid

Event

8

Distribute Event Access Code to pre-Qualified Suppliers

Distribute Event Access Code to pre-Qualified Suppliers

1

2

Engage Buyers; Confirm eBid Readiness

Engage Buyers; Confirm eBid Readiness

3

Confirm RFQ Confirm RFQ 2

Prepare Suppliers for eBid Event

Prepare Suppliers for eBid Event

6

Research suppliersResearch suppliers

Confirm SpecsConfirm Specs

5

4

Conduct Market Check

Conduct Market Check

6

Cut Blanket Purchase Order

Cut Blanket Purchase Order

5

7

Sequence eBid events Sequence eBid events

4

Purchase Review Purchase Review

2

Define eBid scope (objective, volume, current price, switching costs, incumbent suppliers, service level, T&Cs, event & award timeline)

Define eBid scope (objective, volume, current price, switching costs, incumbent suppliers, service level, T&Cs, event & award timeline)

4.

Lessons LearnedLessons Learned

6

12

* If the award threshold price and specs are not met, a client need not award

Go/ No-Go

1

eps improves EPSe-procurement services (eps)

Store ServicesCleaning & MaintenanceGeneral ContractingElectrical Work and MaintenanceFixtures and InstallationFlooring and InstallationPaintingPavingSnow RemovalSecurity ServiceSignage and InstallationWaste Management

Office ItemsFurnitureOffice Supplies

Professional Services Advertising/Media Services Audit/Accounting ServiceCall Center ServiceCredit ServiceEngineering ServiceFood ServicesHealth AssessmentHuman ResourceIT ConsultingLeasing ServiceLegal ServicesLimo/Van ServicesMail ServiceMarketing ServicesMedical ServicesOutsourcing ServicePayroll ServicePrinting (Marketing, HR)Real Estate ServicesTemporary LaborTraining

IT Equip./Services Cell PhonesComputer RentalsComputing StorageCopiersData StreamingDatabase Mining / WarehousingDSLHard DrivesKey BoardsLaptops, Cell Phones etc.Midrange ComputersModemsMonitorPoS Equipment, Istallation and Maintenance PrintersSoftwareTelecommunicationsVideo Cards

Travel/Transport/Freight Air TravelHotels RoomsInternational Air FreightLogisticsRoadside Assistance

Store & DC SuppliesAbrasives BagsCleanersCorrugateDunnageLabelsLight Bulbs & BallastsMaterial Handling PackagingPaperPlastic TotesReceipt Tape Safety SuppliesToolsUniforms

Potential indirect spend events

13 eps improves EPSe-procurement services (eps)

eps game changing business model overview Client business transformation proof points Getting started Back Up: Software screen shots

Today’s Agenda

By the end of the meeting we will have discussed:

14 eps improves EPSe-procurement services (eps)

RFX TEMPLATESRFX TEMPLATES

eps supports different sourcing strategies

15 eps improves EPSe-procurement services (eps)

Bid administration screen

16 eps improves EPSe-procurement services (eps)

Bidder enters bids

Bidder enters bids

Feedback on ranks and bid prices

Feedback on ranks and bid prices

Supplier bidding screen

17 eps improves EPSe-procurement services (eps)

Buyer detailed view

Bid price after applying handicap

Download result to

Excel

18 eps improves EPSe-procurement services (eps)

Thank You

Steve SparoughPartner,

Account Executive1-303-521-8136 (mobile)sparough@my-eps.com

19

eps d

rives

EPS

hig

her

eps improves EPSe-procurement services (eps)