"This alliance will strengthen our general merchandise/toy category by enabling us to offer a more complete and up-to-date selection of toys. Working with KB Toys will give us the power to react more quickly to the constantly changing customer demands in the toy category," said Chris Bodine, Executive Vice President of Merchandising and Marketing for CVS. "Our customers tend to be very busy, time-starved people who enjoy the convenience of shopping at CVS. This alliance will help us to make shopping at CVS easier for our customers by providing them with better access to popular toys," said Bodine.

"We are proud to enter into this alliance with CVS," said Sal Vasta, Executive Vice President of Strategic Business Development for KB Toys. "CVS has established itself as the nation's premier drug store chain by meeting America's healthcare needs through innovative customer service and industry leadership. This alliance furthers CVS' customer-focused objectives and the mission of KB Toys' strategic business team to develop new channels and provide clients with a process to maximize their toy business."

The alliance elevates the profile of the toy category within CVS, while leveraging the buying and merchandising efficiencies of KB Toys. KB Toys will use its more than 80 years experience, buying power and strong relationships within the toy industry to provide CVS with on-going access to merchandise programs that serve the needs of customers shopping in CVS' high-traffic environment.

CVS Toy Assortment to Represent Quality, Value and Selection

Beginning in 2003, CVS customers can expect a renewed assortment of toys representing increased quality, value and selection. KB Toys will provide CVS with several merchandise programs including a year-round assortment of quality toys offered at attractive price points in such staple categories as action figures, board games, crafts, dolls, puzzles, and vehicles. Custom merchandise programs featuring spring and summer seasonal toys as well as exclusive products developed by KB Toys will supplement the everyday assortment to meet the seasonal and impulse toy needs of CVS customers.

KB Toys to Provide On-going Support

In order to maximize CVS' toy business, KB Toys will provide CVS with a suite of value-added services and supply chain management including buying, merchandising, visual presentation, replenishment and logistics. KB Toys' strategic business unit, which currently has alliances with Sears, Safeway and QVC, will work in concert with CVS' merchandising and operations teams to implement the program.

About KB Toys

KB Toys is the nation's largest combined mall-based and online specialty toy retailer, operating more than 1,300 stores in all 50 states, the American Territory of Guam and the Commonwealth of Puerto Rico. KB Toys operates retail stores under the names KB Toys(R), KB Toy Works(R), KB Toy Outlet(TM), Toy Liquidators(R), KB Toy Express(R) and offers online shopping through KBtoys.com(TM) (http://www.kbtoys.com) and eToys(R) (http://www.etoys.com). KB Holdings, Inc., the parent corporation, is a privately held company headquartered in Pittsfield, Massachusetts.

About CVS

CVS is America's #1 pharmacy dispensing prescriptions in more stores than any other retailer. With annual revenues exceeding $22 billion, CVS has created innovative approaches to serve the healthcare needs of all of its customers through its more than 4,000 CVS/pharmacy stores; CVS ProCare, its specialty pharmacy business; CVS.com, its online pharmacy; and Pharmacare, its pharmacy benefit management company. General information about CVS is available through the Investor Relations portion of the Company's website, at http://www.CVS.com.