CVS Caremark Corporation (CVS)

Pharmacy ~ Pharmacy revenues represented 69.6% of total revenues in 2006, compared to 70.2% in 2005, and 70.0% in 2004. We believe that our pharmacy operations will continue to represent a critical part of our business due to our ability to attract and retain managed care customers, favorable industry trends (e.g., an aging American population consuming a greater number of prescription drugs, pharmaceuticals being used more often as the first line of defense for managing illness, the proliferation of new pharmaceutical products, and a new federally funded prescription drug benefit which, was promulgated on January 1, 2006, as part of the Medicare Prescription Drug Improvement and Modernization Act of 2003 (“Medicare Modernization Act”)) and our on-going program of purchasing customer lists from independent pharmacies. We believe our pharmacy business benefits from our investment in both people and technology. Given the nature of prescriptions, people want their prescriptions filled accurately and ready when promised, by professional pharmacists using the latest tools and technology. As such, our Pharmacy Service Initiative (“PSI”), which is designed to resolve potential problems at the point of drop-off that could delay a prescription being filled, has enabled us to give customers what they want. Further evidencing our belief in the importance of pharmacy service is our continuing investment in technology, such as our Excellence in Pharmacy Innovation and Care (“EPIC”) system, our touch-tone telephone reorder system, Rapid RefillTM and our online business, CVS.com.