MERGER: CVS Corporation [CVS] and Caremark Rx. Inc. [CMX]

Issue:

On 3/22/07, Caremark Rx, Inc. [CMX] was merged into CVS Corporation [CVS]. CMX shareowners will be entitled to receive 1.67 shares of CVS for each share of CMX common stock that they own.

Cause:

This is a tax free merger.

If you are a CMX shareholder, you can enter the merger in accordance with the instructions at http://phx.corporate-ir.net/phoenix.zhtml?c=99533&p=irol-faqs1#30909

Here is the data you will need:

1. Transaction Date - 3/22/07
2. Old Security - Caremark Rx, Inc. [CMX]
3. Cash received in lieu of fractional shares - from broker statement.
4. New security - CVS/Caremark Corporation [CVS]
5. Shares received - 1.67 times number of CMX shares held. Include any fractional shares.
6. Price per share of new company - 34.31

CMX shareholders will receive a special one-time cash distribution of $7.50 per CMX share. The company believes that this distribution should be reported as an ordinary dividend, but acknowledges that the IRS might consider it a part of the merger consideration. If that were to happen, the amount would be taxable as capital gain income to the extent that there is gain on the total merger consideration received less the cost basis for the CMX shares. We recommend that the distribution be treated as an ordinary dividend, but caution CMX shareholders to be alert for any notifications from CVS as to changes in this treatment.

CVS shareholders will not enter the merger, but will need to change the name of the company from CVS Corporation to CVS/Caremark Corporation. The ticker symbol will remain CVS.