CVS/pharmacy and IBM Sign 10-Year Human Resources Services Agreement

IBM today announced a 10-year Business Transformation Outsourcing (BTO) agreement designed to transform and manage key human resources (HR) transactional services for CVS/pharmacy.

CVS/pharmacy, America's largest retail pharmacy, operates more than 6,100 retail and specialty pharmacy stores across the US. CVS/pharmacy has more than 170,000 employees across the US.

Through its arrangement with IBM, CVS/pharmacy can improve service, and deliver enhanced human resources services in a more real-time, flexible manner. To achieve these goals, IBM will leverage enhanced tools and technologies complemented by best practices for process transformation. As part of the arrangement, IBM will also provide support for the administration of compensation, performance management, payroll, benefits, workforce analytics, recruiting and staffing. IBM will also provide HR call center support. This new generation of human resources services places an emphasis on ease and convenience for employees while providing CVS with flexibility in managing the variable costs associated with HR.

"In less than two years, CVS/pharmacy has added 55,000 employees throughout the U.S. through our strategic acquisitions. This rapid growth has stretched our current systems supporting human resources transactions," said V. Michael Ferdinandi, Senior Vice President, Human Resources and Corporate Communications, CVS/pharmacy. "Through this agreement with IBM, CVS/pharmacy will have access to the skills and technology needed to provide improved human resources tools to employees today and into the future as the company continues to grow. Our decision to purchase these services from IBM was not primarily driven by cost considerations, although this change in service delivery does achieve efficiencies for us," Ferdinandi added. "It also provides needed technology to improve human resources tools for our stores."

"Leading companies such as CVS/pharmacy are increasingly using business transformation outsourcing as a tool to drive strategic value, allowing them to become more flexible and adaptive while focusing employees on the company's core competencies," said Marc Lautenbach, General Manager, IBM Americas. "IBM's extensive experience in human resources services and the retail industry will bring innovation and new efficiencies to CVS/pharmacy and its employees."

CVS will be transitioning support for selected human resources transactions to IBM throughout 2006 and 2007.

About IBM

For more information, visit www.ibm.com.

CONTACT:

Adam Emery Media Relations IBM Global Services 914-766-4696 adame@us.ibm.com

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