MEADWESTVACO CORP (Form: 10-K, Received: 02/28/2008 12:15:08)

Years ended December 31,

In millions

Segment profit ¹

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007

¨	TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER 1-31215

MeadWestvaco Corporation

(Exact name of registrant as specified in its charter)

Delaware

(State of incorporation)

31-1797999

(I.R.S. Employer Identification No.)

11013 West Broad Street

Glen Allen, VA 23060

Telephone 804-327-5200

(Address and telephone number of

registrant’s principal executive offices)

S ECURITIES R EGISTERED P URSUANT T O S ECTION 12(b) O F T HE A CT :

Title of each class

Name of each exchange

on which registered

Common Stock- $0.01 par value

New York Stock Exchange

S ECURITIES R EGISTERED P URSUANT T O S ECTION 12(g) O F T HE A CT : None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such a shorter period, the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

At June 30, 2007, the aggregate market value of common stock held by nonaffiliates was $6,379,792,327. Such determination shall not, however, be deemed to be an admission that any person is an “affiliate” as defined in Rule 405 under the Securities Act of 1933.

At January 31, 2008, the number of shares of common stock of the Registrant outstanding was 173,852,606.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s Proxy Statement for the Annual Meeting of Shareholders scheduled to be held on April 28, 2008, are incorporated by reference in Part III; definitive copies of said Proxy Statement will be filed with the Securities and Exchange Commission on or before March 27, 2008.

TABLE OF CONTENTS


	PART I
		Page
Item
1 .	Business	1
1A.	Risk factors	4
1B.	Unresolved staff comments	6
2 .	Properties	6
3 .	Legal proceedings	8
4 .	Submission of matters to a vote of security holders	8

	PART II

5 .	Market for registrant’s common equity, related stockholder matters and issuer purchases of equity securities	10
6 .	Selected financial data	12
7 .	Management’s discussion and analysis of financial condition and results of operations	14
7A.	Quantitative and qualitative disclosures about market risk	35
8 .	Financial statements and supplementary data	36
9 .	Changes in and disagreements with accountants on accounting and financial disclosure	77
9A.	Controls and procedures	77
9B.	Other information	77

	PART III

10 .	Directors, executive officers and corporate governance	78
11.	Executive compensation	78
12 .	Security ownership of certain beneficial owners and management and related stockholder matters	78
13 .	Certain relationships and related transactions, and director independence	78
14 .	Principle accounting fees and services	78

	PART IV

15 .	Exhibits, financial statement schedules	79

	Signatures	84

Part I

Item 1.

Business

General

MeadWestvaco Corporation (“MeadWestvaco” or the “company”), a Delaware corporation formed in 2001 following the merger of Westvaco Corporation and The Mead Corporation, provides packaging solutions to many of the world’s most-admired brands in the food and beverage, media and entertainment, personal care, home and garden, cosmetics, and health care industries and operates in more than 30 countries. MeadWestvaco’s business segments are (i) Packaging Resources, (ii) Consumer Solutions, (iii) Consumer & Office Products, and (iv) Specialty Chemicals.

Packaging Resources

The Packaging Resources segment produces bleached paperboard, Coated Natural Kraft ^® paperboard (CNK), kraft paperboard, linerboard and saturating kraft, and packaging for consumer products including packaging for media, beverage and dairy, produce, cosmetics, tobacco, pharmaceuticals and healthcare products. This segment’s paperboard products are manufactured at four U.S. mills and two mills located in Brazil. Bleached paperboard is used for packaging high-value consumer products such as pharmaceuticals, cosmetics, tobacco, food service, media products and aseptic cartons. CNK paperboard is used for a range of packaging applications, the largest of which for MeadWestvaco is multi-pack beverage packaging. Kraft paperboard is used for folding carton applications. Linerboard is used in the manufacture of corrugated boxes and containers. Saturating kraft is used in the manufacture of decorative laminates for kitchen countertops, furniture, flooring and wall panels, as well as pad stock for electronic components.

Consumer Solutions

The Consumer Solutions segment offers a full range of converting and consumer packaging solutions including printed plastic packaging and injection-molded products used for packaging media products such as DVDs, CDs, video games and software; cosmetics and pharmaceutical products; and dispensing and sprayer technology systems for personal care, healthcare, fragrance and home and garden markets. This segment designs and produces multi-pack cartons and packaging systems primarily for the beverage take-home market and packaging for the tobacco market. Paperboard and plastic are converted into packaging products at plants located in North America, South America, Asia and Europe. In addition, this segment manufactures equipment that is leased or sold to its beverage, dairy and other customers to package their products.

Consumer & Office Products

The Consumer & Office Products segment manufactures, sources, markets and distributes school and office products, time-management products and envelopes in North America and Brazil through both retail and commercial channels. MeadWestvaco produces many of the leading brand names in school supplies, time-management and commercial office products, including AMCAL ^® , AT-A-GLANCE ^® , Cambridge ^® , COLUMBIAN ^® , Day Runner ^® , Five Star ^® , Mead ^® and Trapper Keeper ^® .

Specialty Chemicals

The Specialty Chemicals segment manufacturers, markets and distributes specialty chemicals derived from sawdust and byproducts of the papermaking process in North America and Asia. Products include activated carbon used in emission control systems for automobiles and trucks, and chemicals used in printing inks, asphalt paving, adhesives and lubricants.

For a more detailed description of our business segments, including financial information, see Note R of Notes to Financial Statements included in Part II, Item 8.

Community Development and Land Management Group

In 2007, MeadWestvaco established a new business unit to manage higher-value opportunities for its U. S. landholdings. The Community Development and Land Management Group is expected to generate long-term value and sustainable cash flow from development and enhancement strategies across the company’s landholdings in the U. S., including engaging in value-added real estate development activities such as obtaining entitlements and establishing joint ventures and other development-related arrangements, while continuing to manage the supply of wood fiber used by the company’s mills.

Part of the company’s land management strategy involves segmenting and managing its U.S. landholdings for highest value opportunities. In 2007, the company completed two significant sales of non-strategic forestlands including approximately 62,000 acres located in West Virginia and approximately 228,000 owned acres and approximately 95,000 acres under long-term timber contracts located in Alabama and Georgia, which represents a permanent reduction to its forestlands asset base. In connection with the sale of the Alabama and Georgia forestlands, the company entered into a long-term fiber supply agreement with the buyer providing for future delivery of pulpwood and related products at market prices.

Notwithstanding the above, the company’s strategy continues to include providing a portion of our wood fiber from company-owned land and relying on private forestlands owners and private contractors and suppliers for the balance, based on the location of our mills and composition of surrounding forestlands ownership. We expect to continue to obtain our wood requirements from company-owned or controlled forestlands, from private forestland owners and private contractors or suppliers, including participants in our Cooperative Forest Management Program which provides an additional source of wood fiber from acreage owned by participating landowners and managed with assistance from company foresters. We believe that these sources will be able to adequately supply our needs.

As of December 31, 2007, we owned approximately 135,000 acres of forestlands in Brazil (more than 1,200 miles from the Amazon rainforests); and approximately 817,000 acres of forestlands in the U.S., including 311,000 acres in the Appalachian region and 506,000 acres in the Southeast.

Specialty Papers

The Specialty Papers business produces highly engineered materials that provide solutions for more technically demanding needs. These products and applications include friction papers used in the automotive industry, base papers for pressure sensitive tapes, coated covers for demanding commercial printing jobs and a variety of special application papers designed to meet the customized needs of our customers.

Marketing and distribution

The principal markets for our products are in North America, South America, Europe and Asia. We operate in over 30 countries and serve customers in approximately 100 nations. Our products are sold through a combination of our own sales force and paperboard merchants and distributors. The company has sales offices in key cities throughout the world.

Intellectual property

MeadWestvaco has a large number of foreign and domestic trademarks, trade names, patents, patent rights and licenses relating to its business. While, in the aggregate, intellectual property rights are material to our business, the loss of any one or any related group of such rights would not have a material adverse effect on our business, with the exception of the “Mead ^® ” trademark and the “AT-A-GLANCE ^® ” trademark for consumer and office products.

Competition

MeadWestvaco operates in a very challenging global marketplace and competes with many large, well-established and highly competitive manufacturers and service providers. In addition, our business is affected by a range of macroeconomic conditions, including industry capacity changes, a trend in the packaging, paperboard and forest products industry toward consolidation, global competition, economic conditions in the U.S. and abroad, and currency exchange rates.

We compete principally through quality, price, value-added products and services such as packaging solutions, customer service, innovation, technology and product design. Our proprietary trademarks and patents, in the aggregate, are also important to our competitive position in certain markets.

The Packaging Resources segment competes globally with manufacturers of value-added bleached and unbleached paperboard for packaging and graphic applications, as well as specialty paperboards. The Consumer Solutions segment competes globally with numerous packaging service providers in the package design, development, and manufacturing arenas, as well as the manufacture of dispensing and spraying systems. The Consumer & Office Products segment competes with national and regional converters, as well as foreign producers, especially from Asia. The Specialty Chemicals segment competes on a worldwide basis with producers of activated carbons, refined tall oil products, lignin-based chemicals and specialty resins.

Research

MeadWestvaco conducts research and development in the areas of packaging and chemicals. Innovative product development and manufacturing process improvement are the main objectives of these efforts. The company also evaluates and adapts for use new and emerging technologies that may enable new product development and manufacturing cost reductions.

Environmental laws and regulations

MeadWestvaco’s operations are subject to extensive regulation by federal, state and local authorities, as well as regulatory authorities with jurisdiction over foreign operations of the company. Due to changes in environmental laws and regulations, the application of such regulations, including those relating to global climate change, and changes in environmental control technology, it is not

possible for us to predict with certainty the amount of capital expenditures to be incurred for environmental purposes. Taking these uncertainties into account, we estimate that we will make approximately $26 million of environmental capital expenditures in 2008 and approximately $28 million in 2009. Approximately $19 million was spent on environmental capital projects in 2007.

We have been notified by the U.S. Environmental Protection Agency (EPA) or by various state or local governments that the company may be liable under federal environmental laws or under applicable state or local laws with respect to the cleanup of hazardous substances at sites previously operated or used by MeadWestvaco. The company is currently named as a potentially responsible party (PRP), or has received third-party requests for contribution under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) and similar state or local laws with respect to numerous sites. Some of these proceedings are described in more detail in Part I, Item 3. There are other sites which may contain contamination or which may be potential Superfund sites, but for which MeadWestvaco has not received any notice or claim. The potential liability for all of these sites will depend upon several factors, including the extent of contamination, the method of remediation, insurance coverage and contribution by other PRPs. We regularly evaluate our potential liability at these various sites. At December 31, 2007, MeadWestvaco had recorded liabilities of approximately $21 million for estimated potential cleanup costs based upon its close monitoring of ongoing activities and its past experience with these matters. The liabilities do not include the anticipated capital expenditures previously stated. Management believes that it is reasonably possible that costs associated with these sites may exceed amounts of recorded liabilities by an amount that could range from an insignificant amount to as much as $20 million. This estimate is less certain than the estimate upon which the recorded environmental liabilities were based. After consulting with legal counsel and after considering established liabilities, it is management’s judgment that the resolution of pending litigation and proceedings is not expected to have a material adverse effect on the company’s consolidated financial condition or liquidity. In any given period or periods, however, it is possible such proceedings or matters could have a material effect on the results of operations. Additional matters involving environmental proceedings for MeadWestvaco are set forth in Part I, Item 3.

Employees

MeadWestvaco employs approximately 24,000 people worldwide, of whom approximately 14,000 are employed in the U.S. and approximately 10,000 are employed internationally. Approximately 6,400 employees are represented by various labor unions under collective bargaining agreements. Additionally, most of MeadWestvaco’s European facilities have separate house union agreements or series of agreements specific to the workforce at each facility. MeadWestvaco has not recently experienced any work stoppages and considers its relationship with employees, including those covered by collective bargaining agreements, to be good. The company engages in negotiations with labor unions for new collective bargaining agreements from time to time and at present the company is in the process of negotiating new agreements at four manufacturing locations covering approximately 1,000 employees. Negotiations for an agreement at a fifth location covering approximately 1,000 employees have been held in abeyance pending the outcome of a petition for an election filed with the National Labor Relations Board by a competing labor union seeking to represent those employees. While it is the company’s objective to reach agreements without work stoppages, it cannot predict the outcome of these negotiations.

International operations

MeadWestvaco’s operations outside the U.S. are conducted through subsidiaries located in Canada, Mexico, South America, Europe and Asia. While there are risks inherent in foreign investments, we do not believe at this time that such risks are material to our overall business prospects. MeadWestvaco’s sales that were attributable to U.S. operations were 69%, 72% and 72% for the years ended December 31, 2007, 2006 and 2005, respectively. Export sales from MeadWestvaco’s U.S. operations were approximately 14%, 14% and 13% for the years ended December 31, 2007, 2006 and 2005, respectively. Sales that were attributable to foreign operations were 31%, 28% and 28 % for the years ended December 31, 2007, 2006 and 2005, respectively. For more information about U.S. and foreign operations, see Note R of Notes to Financial Statements included in Part II, Item 8.

Available information

Our Internet address is www.meadwestvaco.com. Please note that MeadWestvaco’s Internet address is included in this Annual Report on Form 10-K as an inactive textual reference only. The information contained on our website is not incorporated by reference into this Annual Report on Form 10-K and should not be considered part of this report. MeadWestvaco makes available on this website free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports as soon as reasonably practicable after we electronically file or furnish such materials to the U.S. Securities and Exchange Commission (SEC). You may access these filings via the hyperlink to the SEC website provided on the Investor Information page of our website. The MeadWestvaco Corporation’s Corporate Governance Principles , our charters (Nominating and Governance Committee, Audit Committee, Compensation and Organization Development Committee, Finance Committee, and Safety, Health and Environment Committee) and our Code of Conduct can be found at our website at the following address: http://us.meadwestvaco.com/AboutUs/InvestorRelations/CorporateGovernance/index.htm .

Item 1A.

Risk factors

Risks relating to our business

Certain of the company’s businesses are affected by cyclical market conditions which can significantly impact operating results and cash flows.

Certain of the company’s businesses are affected by cyclical market conditions that can significantly influence the demand for certain of the company’s products, as well as the pricing we can obtain for these products. The company’s paperboard business is particularly subject to cyclical market conditions. The company may be unable to sustain pricing in the face of weaker demand, and weaker demand may in turn cause us to take production downtime, particularly at our paperboard facilities. In addition to lost revenue from lower shipment volumes, production downtime causes unabsorbed fixed manufacturing costs due to lower production levels. As a result, the company’s results of operations and cash flows may be materially impacted in a period of prolonged and significant market weakness. Moreover, the company is not able to predict market conditions or its ability to sustain pricing and production levels during periods of weak demand with any degree of certainty. Market conditions will also impact the company’s ability to achieve its planned or announced price increases.

The company’s businesses are subject to significant cost pressures. Our ability to pass higher costs on to our customers through price increases or other adjustments is uncertain and dependent on market conditions.

The pricing environment for raw materials used in a number of our businesses continues to be challenging, as suppliers of certain raw materials have implemented price increases. Additionally, energy costs have risen significantly and remain volatile and unpredictable.

Further increases in the cost of raw materials or energy may materially impact our results of operations as depending on market forces and the terms of customer contracts, our ability to recover these costs through increased pricing may be limited.

Certain of the company’s consumer packaging converting businesses are affected by consumer behavior and new technology which can significantly impact operating results and cash flows.

Changes in consumer behavior and technology for the distribution of consumer products, such as music and video entertainment, can, and is having a dramatic impact on the demand for packaging products produced by the company’s packaging converting businesses.

The company faces intense competition in each of its businesses, and competitive challenges from lower cost manufacturers in overseas markets. If we cannot successfully compete in an increasingly global market place, our operating results may be adversely affected.

The company operates in competitive domestic and international markets and competes with many large, well-established and highly competitive manufacturers and service providers, both domestically and on a global basis. The company’s businesses are facing competition from lower cost manufacturers in Asia and elsewhere. In addition, there is a risk that growth in paperboard capacity could outpace demand. All of these conditions can contribute to substantial pricing and demand pressures, which could adversely affect the company’s operating results.

A key component of the company’s competitive position is MeadWestvaco’s ability to manage expenses successfully. This requires continuous management focus on reducing and improving efficiency through cost controls, productivity enhancements and regular appraisal of our asset portfolio.

The company’s operations are increasingly global in nature, particularly in our consumer packaging businesses. Our business, financial condition and results of operations could be adversely affected by the political and economic conditions of the countries in which we conduct business, by fluctuations in exchange rates and other factors related to our international operations.

Approximately 45% of the company’s annual revenues in 2007 were derived from export sales and sales from locations outside of the U.S. As our international operations and activities expand, we face increasing exposure to the risks of operating in many foreign countries. These factors include:

•

Changes in foreign currency exchange rates which could adversely affect our competitive position, selling prices and manufacturing costs, and therefore the demand for our products in a particular market.

•

Trade protection measures in favor of local producers of competing products, including government subsidies, tax benefits, trade actions (such as anti-dumping proceedings) and other measures giving local producers a competitive advantage over the company.

•

Changes generally in political, regulatory or economic conditions in the countries in which we conduct business.

These risks could affect the cost of manufacturing and selling our products, our pricing, sales volume, and ultimately our financial performance. The likelihood of such occurrences and their potential effect on the company vary from country to country and are unpredictable.

The company continues to realign and restructure its consumer packaging converting businesses. Although the company believes that it will implement and manage the reorganization effectively to achieve substantial savings for the company, these major changes have attendant inherent risks, including the potential for disruption in our packaging converting businesses and operations as we implement the realignment.

The company’s consumer packaging converting businesses continues to be transitioned into a focused consumer packaging converting group. The company’s leadership expects to successfully and seamlessly manage these transitions. However, any major reorganization presents challenges and it is possible that there could be disruptions in our business and operations during the transition period. Disruptions in production, quality control, customer service and innovation, as well as in other aspects of our operations, could negatively impact our results of operations.

The company is subject to extensive regulation under various environmental laws and regulations, and is involved in various legal proceedings related to the environment. Environmental regulation and legal proceedings have the potential for involving significant costs and liability for the company.

The company’s operations are subject to a wide range of general and industry-specific environmental laws and regulations. The company has been focused for some time on addressing public concerns regarding global climate change. In recent years, acting unilaterally, the company has successfully reduced its total carbon dioxide emissions, even as overall production has increased. The company is committed to obtaining additional reductions in these emissions as the efficient use of various forms of energy is enhanced. Certain pending legislation, however, would eventually mandate broad reductions of total greenhouse gas emissions in the U. S. several years after enactment. This legislation, could, unless it is modified in certain respects, eventually affect the long term results of some of the company’s more energy intensive operations

Changes in environmental laws and regulation, or their application, including but not limited to those relating to global climate change, could subject the company to significant additional capital expenditures and operating expenses. However, any such changes are uncertain and, therefore, it is not possible for the company to predict with certainty the amount of additional capital expenditures or operating expenses that could be necessary for compliance with respect to any such changes.

The company is also subject to various environmental proceedings and may be subject to additional proceedings in the future. In the case of known potential liabilities, it is management’s judgment that the resolution of pending litigation and proceedings is not expected to have a material adverse effect on the company’s consolidated financial condition or liquidity. In any given period or periods, however, it is possible such proceedings or matters could have a material effect on the results of operations. The company could also be subject to new environmental proceedings which could cause the company to incur substantial additional costs with resulting impact on results of operations.

Additional information regarding environmental proceedings involving MeadWestvaco is set forth in Part I, Item 3.

Our business could be adversely affected by strikes or work stoppages and other labor issues.

Approximately one-quarter of our employees are represented by various labor unions under collective bargaining agreements. The company engages in negotiations with labor unions for new collective bargaining agreements from time to time. If we are unable to negotiate new agreements without work stoppages, it could negatively impact our ability to manufacture our products and adversely affect results of operations.

The real estate industry is highly competitive and economically cyclical.

The company has announced plans to transition from a large-tract land seller to engaging in value-added real estate development activities, including obtaining entitlements and establishing joint ventures and other development-related arrangements. Many of our competitors in this industry have greater resources and experience in real estate development than we have currently. In addition, our ability to execute our plans to divest or otherwise realize the greater value associated with our forestlands may be affected by the following factors, among others:

•

General economic conditions, including credit markets and interest rates.

•

Local real estate market conditions, including competition from sellers of land and real estate developers.

•

Impact of federal, state and local laws and regulations affecting land use, land use entitlements, land protection and zoning.

Item 1B.

Unresolved staff comments

None.

Item 2.

Properties

MeadWestvaco is headquartered in Richmond, Virginia. MeadWestvaco believes that its facilities have sufficient capacity to meet current production requirements. For information concerning our forestlands, see Part I, Item 1. The locations of MeadWestvaco’s production facilities are as follows:


Packaging Resources
Blumenau, Santa Catarina, Brazil		North Charleston, South Carolina
Cottonton, Alabama		Pacajus, Ceara, Brazil
Covington, Virginia		Silsbee, Texas
Evadale, Texas		Summerville, South Carolina
Feira de Santana, Bahia, Brazil		Tres Barras, Santa Catarina, Brazil
Low Moor, Virginia		Valinhos, São Paulo, Brazil
Manaus, Amazonas, Brazil		Venlo, The Netherlands

Consumer Solutions
Ajax, Ontario, Canada		Mebane, North Carolina
Atlanta, Georgia		Melrose Park, Illinois (Leased)
Barcelona, Spain		Milan, Italy (Leased)
Bilboa, Spain		Moscow, Russian Federation (Leased)
Bristol, United Kingdom		Pittsfield, Massachusetts (Leased)
Buenos Aires, Argentina (Leased)		Roosendaal, The Netherlands
Bydgoszcz, Poland		San Luis Potosi, Mexico
Caguas, Puerto Rico (Leased)		Seoul, Korea
Chateauroux, France		Shimada, Japan
Corby, United Kingdom (Leased)		Slough, United Kingdom (Leased)
Deols, France		Smyrna, Georgia
Drunen, The Netherlands (Leased)		Svitavy, Czech Republic
Dublin, Ireland (Leased)		Swindon, United Kingdom (Leased)
Elizabethtown, Kentucky		Thalgau, Austria (Leased)
Enschede, The Netherlands		Tijuana, Mexico (Leased)
Freden, Germany		Toronto, Canada (Leased)
Grandview, Missouri		Tokyo, Japan
Graz, Austria		Trier, Germany
Grover, North Carolina		Troyes, France
Hemer, Germany		Uden, The Netherlands (Leased)
Jacksonville, Illinois		Valinhos, São Paulo, Brazil
Krakow, Poland		Warrington, Pennsylvania (Leased)
Lanett, Alabama		Warsaw, Poland (Leased)
Littlehampton, United Kingdom (Leased)		Washington Court House, Ohio
London, United Kingdom (Leased)		Winfield, Kansas
Louisa, Virginia (Leased)		Wuxi, People’s Republic of China
Manaus, Amazonas, Brazil


Consumer & Office Products
Alexandria, Pennsylvania		Kettering, Ohio
Bauru, São Paulo, Brazil		Los Angeles, California
Dallas, Texas		Sidney, New York
Enfield, Connecticut		Springfield, Massachusetts
Indianapolis, Indiana		Toronto, Ontario, Canada
Kenosha, Wisconsin		Williamsburg, Pennsylvania

Specialty Chemicals
Albuquerque, New Mexico		Shaxian, People’s Republic of China
Covington, Virginia		Waynesboro, Georgia
DeRidder, Louisiana		Wickliffe, Kentucky
North Charleston, South Carolina

Specialty Papers
Potsdam, New York		South Lee, Massachusetts

Community Development and Land Management Group and Forestry Centers
Rupert, West Virginia		Tres Barras, Santa Catarina, Brazil
Summerville, South Carolina		Waverly Hall, Georgia

Research Facilities
Raleigh, North Carolina (Leased)		Shekou Shenzhen, People’s Republic of China
North Charleston, South Carolina		Tres Barras, Santa Catarina, Brazil

Leases

For financial data on MeadWestvaco’s lease commitments, see Note H of Notes to Financial Statements included in Part II, Item 8.

Other information

A limited number of MeadWestvaco facilities are owned, in whole or in part, by municipal or other public authorities pursuant to standard industrial revenue bond financing arrangements and are accounted for as property owned by MeadWestvaco. MeadWestvaco holds options under which it may purchase each of these facilities from such authorities by paying a nominal purchase price and assuming the indebtedness of the industrial revenue bonds at the time of the purchase.

MeadWestvaco owns all of the facilities listed above, except as noted, and pending purchases.

Item 3.

Legal proceedings

In 1998 and 1999, the U.S. Environmental Protection Agency (EPA) issued Notices of Violation to eight paper industry facilities, including Westvaco’s Luke, Maryland mill, alleging violation of the prevention of significant deterioration (PSD) regulations under the Clean Air Act. On August 28, 2000, an enforcement action in Federal District Court in Maryland was brought by the EPA against Westvaco asserting violations in connection with capital projects at the mill carried out in the 1980s. The action alleges that Westvaco did not obtain PSD permits or install required pollution controls, and sought penalties of $27,500 per day for each claimed violation together with the installation of control equipment. MeadWestvaco strongly disagrees with the EPA’s allegations of Clean Air Act violations by Westvaco and is vigorously defending this action. On April 23, 2001, the Court granted Westvaco’s Motion for Partial Dismissal and dismissed the EPA’s claims for civil penalties under the major counts of the complaint. The Court held that these significant penalties were barred by the applicable statute of limitations. Following initial discovery, and in response to Motions for Partial Summary Judgment filed by Westvaco, the government abandoned several of its claims for injunctive relief. Motions for summary judgment on discrete issues were filed and a hearing was conducted in 2005. The motions remain pending. No trial date has been set, but a trial, if needed, is not expected to commence before late 2008. Based on information currently available, MeadWestvaco does not expect this proceeding will have a material adverse effect on our consolidated financial condition or liquidity. In any given period or periods, however, it is possible such proceeding could have a material effect on the results of operations.

In 2004, the company and other potentially responsible parties (PRPs) reached a settlement and signed a Consent Decree with the EPA concerning the Chattanooga Creek Superfund Site. Under the terms of the Consent Decree, the private PRPs, including MeadWestvaco, were required to implement final remedial action at the Chattanooga Creek Superfund Site, which was completed in 2007.

MeadWestvaco has established liabilities of approximately $21 million relating to environmental proceedings. Additional information is included in Part I, Item 1, and Note O of Notes to Financial Statements included in Part II, Item 8.

MeadWestvaco is involved in various other litigation and administrative proceedings arising in the normal course of business. Although the ultimate outcome of such matters cannot be predicted with certainty, we do not believe that the currently expected outcome of any proceeding, lawsuit or claim that is pending or threatened, or all of them combined, will have a material adverse effect on its consolidated financial condition or liquidity. In any given period or periods, however, it is possible such proceedings or matters could have a material effect on the results of operations.

Item 4.

Submission of matters to a vote of security holders

There were no matters submitted to a vote of security holders of MeadWestvaco, through the solicitation of proxies or otherwise, during the fourth quarter of 2007.

Executive officers of the registrant

The following table sets forth certain information concerning the executive officers of MeadWestvaco:


Name	Age*	Present position	Year in which service in present position began
John A. Luke, Jr.**	59	Chairman and Chief Executive Officer	2002
James A. Buzzard	53	President	2003
E. Mark Rajkowski	49	Senior Vice President and Chief Financial Officer	2004
Mark S. Cross	51	Senior Vice President	2006
Linda V. Schreiner	48	Senior Vice President	2002
Bruce V. Thomas	51	Senior Vice President	2007
Mark T. Watkins	54	Senior Vice President	2002
Wendell L. Willkie, II	56	Senior Vice President, General Counsel and Secretary	2002
Donna O. Cox	44	Vice President	2005
Robert E. Birkenholz	47	Treasurer	2004
John E. Banu	60	Controller	2002

*	As of February 28, 2008

**	Director of MeadWestvaco

MeadWestvaco’s officers are elected by the Board of Directors annually for one-year terms.

John A. Luke, Jr. , President and Chief Executive Officer, 2002-2003, Chairman of the Board, Chief Executive Officer and President of Westvaco, 1996-2002;

James A. Buzzard , Executive Vice President, 2002-2003, Executive Vice President of Westvaco, 2000-2002, Senior Vice President, 1999, Vice President, 1992-1999;

E. Mark Rajkowski , Vice President, Eastman Kodak Company and General Manager Worldwide Operations for Kodak’s Digital and Film Imaging Systems Business, 2003-2004; Chief Operating Officer of Eastman Kodak’s Consumer Digital Business, 2003; Vice President, Finance of Eastman Kodak, 2001-2002; Corporate Controller of Eastman Kodak, 1998-2001;

Mark S. Cross , Senior Vice President and Group President of Europe, Middle East and Africa Region, JohnsonDiversey 2003-2006; President, Kimberly-Clark Professional, 2001-2003;

Linda V. Schreiner , Senior Vice President of Westvaco, 2000-2002, Manager of Strategic Leadership Development, 1999-2000, Senior Manager of Arthur D. Little, Inc., 1998-1999, Vice President of Signet Banking Corporation, 1988-1998;

Bruce V. Thomas , President and Chief Executive Officer, Cadmus Communications Corporation, 2000-2007;

Mark T. Watkins , Vice President of Mead, 2000-2002, Vice President, Human Resources and Organizational Development of the Mead Paper Division, 1999, Vice President, Michigan Operations of Mead Paper Division, 1997;

Wendell L. Willkie, II , Senior Vice President and General Counsel of Westvaco, 1996-2002;

Donna O. Cox , Director, External Communications, 2003-2005, Manager, Integration / Internal Communications, 2002-2003, Public Affairs Manager of Westvaco’s Packaging Resources Group, 1999-2002;

Robert E. Birkenholz , Assistant Treasurer, 2003-2004; Assistant Treasurer, Amerada Hess Corporation, 1997-2002;

John E. Banu , Vice President of Westvaco, 1999-2002; Controller, 1995-1999.

There are no family relationships among executive officers or understandings between any executive officer and any other person pursuant to which the officer was selected as an officer.

Part II

Item 5.

Market for the registrant’s common equity, related stockholder matters and issuer purchases of equity securities

(a)

Market and price range of common stock

MeadWestvaco’s common stock is traded on the New York Stock Exchange under the symbol MWV.


	Year ended December 31, 2007				Year ended December 31, 2006
STOCK PRICES	High		Low		High		Low
First quarter	$	32.46	$	28.39	$	28.70	$	25.27
Second quarter		36.01		30.92		30.85		26.21
Third quarter		36.50		28.66		28.15		24.76
Fourth quarter		34.61		29.53		30.50		26.35

This table reflects the range of market prices of MeadWestvaco common stock as quoted in the New York Stock Exchange Composite Transactions.

(b)

Approximate number of common shareholders

At December 31, 2007, the number of shareholders of record of MeadWestvaco common stock was approximately 24,700. This number includes approximately 13,900 current or former employees of the company who were MeadWestvaco shareholders by virtue of their participation in our savings and investment plans.

(c)

Dividends

The following table reflects historical dividend information for MeadWestvaco for the periods indicated.


DIVIDENDS PER SHARE	Year ended December 31, 2007		Year ended December 31, 2006
First quarter	$	0.23	$	0.23
Second quarter		0.23		0.23
Third quarter		0.23		0.23
Fourth quarter		0.23		0.23

Year	$	0.92	$	0.92

MeadWestvaco currently expects that comparable cash dividends will continue to be paid in the future.

(d)

Common stock repurchases

During the quarter ended December 31, 2007, the company had the following common stock share repurchases:


	(a) Total Number of Shares (or Units) Purchased	(b) Average Price Paid per Share (or Unit) (1)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (1)	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (1)
October 1, 2007 – October 31, 2007	—		—	—	2,057,822
November 1, 2007 – November 30, 2007	10,000,000	$	31.27	10,000,000	6,086,979
December 1, 2007 – December 31, 2007	1,097,454	$	31.27	1,095,788	4,991,191

(1)	The company has two publicly announced share repurchase programs:

Under the first program, in October 2005 the company’s Board of Directors authorized the future purchase of up to 5 million shares of MeadWestvaco’s common stock, primarily to avoid dilution of earnings per share relating to the exercise of employee stock options. There were no stock purchases related to this program in the fourth quarter of 2007. The number of shares available under this program at December 31, 2007 was 2,057,822 shares. This program will expire upon the purchase of 5 million shares.

Under the second program, which was approved by the company’s Board of Directors on November 1, 2007, the company entered into an accelerated share repurchase agreement with a financial institution counterparty (the “Counterparty”) on November 20, 2007 to purchase $400 million of MeadWestvaco’s common stock. The agreement is a collared transaction in which the company agreed to purchase for $400 million a number of its shares to be determined based on the volume weighted average price (“VWAP”) of its common stock during a specified period of time, subject to certain provisions that establish minimum and maximum numbers of shares that may be purchased. The hedge period for determining the minimum and maximum numbers of shares to be purchased ended on December 14, 2007, resulting in a minimum number of shares of 11,095,788 and a maximum number of shares of 14,029,157. On November 21, 2007 and December 14, 2007, the Counterparty delivered 10,000,000 shares and 1,095,788 shares, respectively. Accordingly, the company received 11,095,788 shares through December 31, 2007, equivalent to the minimum number of shares to be delivered. The VWAP of MeadWestvaco’s common stock as defined in the agreement through December 31, 2007 was $31.27 per share. At the conclusion of the program, which will be no later than June 2008, the company may receive additional shares up to the maximum number of 14,029,157 for no additional payment. The maximum number of shares that may yet be purchased under this program at November 30, 2007 and December 31, 2007 was 4,029,157 and 2,933,369, respectively, computed as the maximum number of shares of 14,029,157 less the number of shares delivered to date. In certain extraordinary events that result in a substantial increase in the company’s stock price during a specified period of time up to a period of six months from the inception of the agreement, the company may be required to return some of the shares it received to the Counterparty.

Item 6.

Selected financial data

In millions, except per share data


	Years ended December 31,
	2007			2006			2005			2004			2003
EARNINGS
Net sales	$	6,906		$	6,530		$	6,170		$	6,060		$	5,566
Income from continuing operations		285			93			119			224			84
Discontinued operations		—			—			(91	)		(573	)		(62	)
Cumulative effect of accounting change		—			—			—			—			(4	)
Net income (loss)		285	¹		93	²		28	³		(349	) ⁴		18	⁵
Income from continuing operations:
Per share—basic		1.56			0.52			0.62			1.11			0.42
Per share—diluted		1.56			0.52			0.62			1.10			0.42
Net income (loss) per share—basic		1.56			0.52			0.14			(1.73	)		0.09
Net income (loss) per share—diluted		1.56			0.52			0.14			(1.72	)		0.09
Depreciation, depletion and amortization		520			517			491			489			479

COMMON STOCK
Number of common shareholders (in thousands)		24,700			27,410			29,630			34,730			36,740
Weighted average number of shares outstanding:
Basic		183			181			192			202			200
Diluted		184			181			193			204			202
Cash dividends	$	169		$	167		$	178		$	186		$	184
Per share:
Dividends declared		0.92			0.92			0.92			0.92			0.92
Book value		21.33			19.40			19.20			21.17			23.46

FINANCIAL POSITION
Working capital	$	712		$	550		$	988		$	882		$	910
Current ratio		1.5			1.4			1.9			1.5			1.6
Property, plant, equipment and forestlands, net	$	4,211		$	4,523		$	4,487		$	4,688		$	7,378
Total assets		9,837			9,285			8,908			11,646			12,470
Long-term debt, excluding current maturities		2,375			2,372			2,417			3,282			3,969
Shareholders’ equity		3,708			3,533			3,483			4,317			4,713
Debt to total capital		40	%		42	%		41	%		46	%		47	%

OPERATIONS ⁶
Primary production of paper, paperboard and market pulp (tons, in thousands)		3,980			3,950			3,945			6,702			6,318
New investment in property, plant, equipment and forestlands	$	347		$	302		$	305		$	317		$	393
Acres of forestlands owned (in thousands)		952			1,251			1,251			2,179			2,347
Employees (in thousands)		24,000			24,000			22,200			29,400			29,500

¹	2007 results include, after-tax restructuring charges of $54 million, or $0.29 per share, after-tax one-time costs related to the company’s cost initiative of $15 million, or $0.08 per share, and after-tax gains of $169 million, or $0.92 per share, from sales of forestlands.

2006 results include after-tax restructuring charges of $85 million, or $0.47 per share, after-tax one-time costs related to the company’s cost initiative of $26 million, or $0.14 per share, a gain on the sale of a payable-in-kind (PIK) note of $13 million, or $0.07 per share, an after-tax gain of $11 million, or $0.06 per share, from the sale of corporate real estate and after-tax gains of $18 million, or $0.10 per share, from sales of forestlands.

2005 results include an after-tax loss from discontinued operations associated with the sale of the printing and writing papers business of $91 million, or $0.48 per share, after-tax charges of $56 million, or $0.29 per share, related to the retirement of debt, after-tax restructuring charges of $20 million, or $0.10 per share, and after-tax gains of $37 million, or $0.19 per share, from sales of forestlands.

⁴

2004 results include an after-tax loss from discontinued operations associated with the sale of the printing and writing papers business of $573 million, or $2.82 per share, after-tax restructuring charges of $67 million, or $0.33 per share, and after-tax gains of $110 million, or $0.54 per share, from sales of forestlands.

⁵

2003 results include an after-tax loss from discontinued operations associated with the sale of the printing and writing papers business of $62 million, or $0.31 per share, an after-tax charge of $4 million, or $0.02 per share, for the cumulative effect of the initial adoption of Statement of Financial Accounting Standard (SFAS) No. 143, after-tax restructuring charges of $42 million, or $0.21 per share, after-tax charges of $17 million, or $0.08 per share, related to the early retirement of debt, after-tax gains of $8 million, or $0.04 per share, on the recovery of insurance settlements, and after-tax gains of $66 million, or $0.33 per share, from sales of forestlands.

⁶	Certain data for 2004 and all data for 2003 have not been revised to exclude discontinued operations.

Item 7.

Management’s discussion and analysis of financial condition and results of operations

OVERVIEW

For the year ended December 31, 2007, MeadWestvaco reported net income of $285 million, or $1.56 per share. Net income for the year included after-tax restructuring charges of $54 million, or $0.29 per share, related to employee separation costs, asset write-downs and other restructuring actions, and after-tax one-time costs of $15 million, or $0.08 per share, related to the company’s cost initiative. Also included in net income for 2007 were after-tax gains of $155 million, or $0.84 per share, from two significant large-tract forestlands sales of approximately 290,000 owned acres and approximately 95,000 acres under long-term timber contracts, and $14 million, or $0.08 per share, related to sales of small-tract forestlands. Comparable amounts for prior periods are noted later in this discussion. The amounts related to the items noted above are reflected in Corporate and Other for segment reporting purposes.

During 2007, the company generated strong revenue growth from higher selling prices and an improved product mix in many of its businesses, as well as from the addition of the dispensing and spraying systems business acquired in the third quarter of 2006 and the impact of favorable foreign exchange. These positive effects were partially offset by significant inflation in energy and raw material prices. In 2007, pre-tax input costs for energy, raw materials and freight were $141 million higher than in 2006, largely offsetting improvements in price and mix of $144 million. Cash flow provided by operating activities grew to $641 million in 2007 compared to $567 million in 2006, reflecting higher earnings and improvements in working capital.

MeadWestvaco’s business segments are (i) Packaging Resources, (ii) Consumer Solutions, (iii) Consumer & Office Products, and (iv) Specialty Chemicals. For the year ended December 31, 2007, profit from the company’s business segments increased 7% to $584 million compared to $546 million for the year ended December 31, 2006. During 2007, higher selling prices, improved product mix and productivity, and the impact of favorable foreign exchange, more than offset higher input costs for energy, raw materials and freight. Refer to the individual segment discussion that follows for detail information for each segment. In 2005, the company exited its printing and writing papers business, which is recorded as discontinued operations in the consolidated financial statements.

RESULTS OF OPERATIONS

The following table summarizes our results for the years ended December 31, 2007, 2006 and 2005, as reported in accordance with accounting principles generally accepted in the U.S. All references to per share amounts are presented on an after-tax basis.


	Years ended December 31,
*In millions, except per share data*	2007			2006			2005
Net sales	$	6,906		$	6,530		$	6,170
Cost of sales		5,710			5,399			5,087
Selling, general and administrative expenses		882			905			756
Interest expense		219			211			208
Other income, net		(305	)		(83	)		(16	)

Income from continuing operations before income taxes		400			98			135
Income tax provision		115			5			16

Income from continuing operations		285			93			119
Discontinued operations		—			—			(91	)

Net income	$	285		$	93		$	28

Net income per share – basic and diluted:
Income from continuing operations	$	1.56		$	0.52		$	0.62
Discontinued operations		—			—			(0.48	)

Net income	$	1.56		$	0.52		$	0.14

Comparison of Years ended December 31, 2007 and 2006

Sales were $6.91 billion and $6.53 billion for the years ended December 31, 2007 and 2006, respectively. Increased sales in 2007 were the result of the addition of the dispensing and spraying systems business acquired in the third quarter of 2006, higher selling prices, improved product mix and the impact of favorable foreign exchange, partially offset by lower volumes compared to 2006. Refer to the individual segment discussion that follows for detailed sales information for each segment.

Costs of sales were $5.71 billion and $5.40 billion for the years ended December 31, 2007 and 2006, respectively. Our gross margin in 2007 was approximately the same as 2006. In 2007, pre-tax input costs for energy, raw materials and freight were $141 million higher than in 2006. Restructuring charges and one-time costs included in cost of sales were $58 million and $53 million in 2007 and 2006, respectively. Maintenance costs are included in cost of sales and were $279 million in 2007 compared to $262 million in 2006.

Selling, general and administrative expenses were $882 million and $905 million for the years ended December 31, 2007 and 2006, respectively. Selling, general and administrative expenses as a percentage of sales were 12.8% and 13.9% for the years ended December 31, 2007 and 2006, respectively. Lower expense in 2007 compared to 2006 was due primarily to lower restructuring charges and one-time costs partially offset by the impact of the addition of the dispensing and spraying systems business acquired in the third quarter of 2006 and the impact of foreign exchange. Restructuring charges and one-time costs included in selling, general and administrative expenses were $48 million in 2007 compared to $102 million in 2006.

Pension income before settlements, curtailments and termination benefits was $54 million and $50 million for the years ended December 31, 2007 and 2006, respectively. Pension income is reflected in cost of sales and selling, general and administrative expenses, and is reported in Corporate and Other for segment reporting purposes.

Interest expense was $219 million and $211 million for the years ended December 31, 2007 and 2006, respectively. The increase in 2007 was primarily the result of higher interest from increased borrowings in connection with cash surrender value insurance policies compared to 2006.

Other income, net, was $305 million and $83 million for the years ended December 31, 2007 and 2006, respectively, and was comprised of the following:


	Years ended December 31,
*In millions*	2007			2006
Gains on sales of large-tract forestlands in West Virginia, Alabama and Georgia	$	(250	)		—
Gains on sales of small-tract forestlands		(24	)		(29	)
Gain on sale of corporate real estate		—			(18	)
Gain on sale of PIK note		—			(21	)
Interest income		(20	)		(20	)
Asset impairments		2			20
Transition services income		—			(5	)
Foreign currency exchange gains		(14	)		(2	)
Other, net		1			(8	)

	$	(305	)	$	(83	)

Gains on sales of large and small-tract forestlands were $274 million and $29 million related to sales of 393,000 acres and 8,000 acres in 2007 and 2006, respectively. During 2006, the company recorded a $21 million gain on the sale of a PIK note received as part of the consideration for the sale of the printing and writing papers business in 2005. As part of the company’s initiative to reduce its real estate footprint, the company sold corporate real estate for a gain of $18 million in 2006. In 2006, income of $5 million was recorded from services provided to NewPage Corporation pursuant to the printing and writing papers sale agreement.

The company’s annual effective tax rate was approximately 29% and 5% for the years ended December 31, 2007 and 2006, respectively. The increase in the rate in 2007 compared to 2006 was primarily due to a shift in the level and mix of domestic versus foreign earnings, including pre-tax domestic gains of $274 million in 2007 compared to $29 million in 2006 from sales of forestlands.

In addition to the information discussed above, the following sections discuss the results of operations for each of our business segments and Corporate and Other.

Packaging Resources


	Years ended December 31,
*In millions*	2007		2006
Sales	$	3,021	$	2,953
Segment profit ¹		322		275

¹	Segment profit is measured as results before restructuring charges and one-time costs, pension income, interest income and expense, income taxes, minority interest, discontinued operations, extraordinary items and cumulative effect of accounting changes.

Sales for the Packaging Resources segment were $3.02 billion in 2007 compared to $2.95 billion in 2006. Increased sales were the result of higher selling prices, the impact of favorable foreign exchange and strengthened demand in key products. In 2007, product mix improvement also favorably impacted sales compared to 2006. Shipments of bleached paperboard in 2007 were 1,579,000 tons, down 4% from 2006 reflecting, in part, a shift by the company away from lower value grades. Shipments of CNK in 2007 were 1,096,000 tons, down 3% from 2006, with declines in beverage sales partially offset by higher sales of general packaging grades. Shipments of unbleached paperboard in 2007 were 839,000 tons, up 1% from 2006, as a result of higher shipments of general packaging grades. In 2007, bleached paperboard prices were up 4%, CNK prices were up 6% and unbleached paperboard prices were up 6% compared to 2006. Sales for the company’s Brazilian packaging operation, Rigesa Ltda., increased 20% in 2007 over 2006 driven by improved volume and the impact of favorable foreign exchange, partially offset by lower selling prices.

Profit for the Packaging Resources segment increased 17% to $322 million in 2007 compared to $275 million in 2006, reflecting improvements in pricing, mix and productivity, partially offset by higher input costs for raw materials and energy and lower volume. Earnings in 2007 benefited by $88 million from price increases and mix improvements, $35 million from improved productivity and $9 million from the impact of favorable foreign exchange compared to 2006. Earnings in 2007 were negatively impacted by $77 million from higher input costs, $6 million from volume declines and $2 million from higher other costs compared to 2006.

Consumer Solutions

¹	Segment profit is measured as results before restructuring charges and one-time costs, pension income, interest income and expense, income taxes, minority interest, discontinued operations, extraordinary items and cumulative effect of accounting changes.

Sales for the Consumer Solutions segment increased 12% to $2.43 billion in 2007 compared to $2.17 billion in 2006. In 2007, sales improved in our beverage and healthcare business and benefited from the addition of the dispensing and spraying systems business acquired in the third quarter of 2006 and the impact of favorable foreign exchange. These positive effects were partially offset by decreased sales in the media business due to market-related declines.

Profit for the Consumer Solutions segment decreased 8% to $86 million in 2007 compared to $93 million in 2006. In 2007, earnings were negatively impacted by $26 million from higher input costs, $23 million from volume declines and $8 million from unfavorable pricing compared to 2006. In 2007, earnings benefited by $27 million from the impact of favorable foreign exchange and the earnings benefits from the dispensing and spraying systems business acquired in the third quarter of 2006, $20 million from improved productivity and $3 million from lower other costs compared to 2006.

Consumer & Office Products


	Years ended December 31,
*In millions*	2007		2006
Sales	$	1,147	$	1,143
Segment profit ¹		139		127

¹	Segment profit is measured as results before restructuring charges and one-time costs, pension income, interest income and expense, income taxes, minority interest, discontinued operations, extraordinary items and cumulative effect of accounting changes.

Sales for the Consumer & Office Products segment increased slightly to $1.15 billion in 2007 compared to $1.14 billion in 2006. In 2007, solid performance in the segment’s value-added branded consumer product lines, improved overall mix, the impact of favorable foreign exchange and solid performance in the Brazilian school products business were partially offset by lower volumes compared to 2006.

Profit for the Consumer & Office Products segment increased 9% to $139 million in 2007 compared to $127 million in 2006. In 2007, earnings were positively impacted by $43 million from price increases and mix improvements, $5 million from improved productivity and $4 million from other items, partially offset by higher input costs of $22 million and volume declines of $18 million compared to 2006. The effect of improved mix associated with the segment’s continued emphasis on proprietary, branded products was partially offset by lower basic product volume during 2007. This segment’s operating profit continues to be impacted by low-priced Asian imports.

Specialty Chemicals

¹	Segment profit is measured as results before restructuring charges and one-time costs, pension income, interest income and expense, income taxes, minority interest, discontinued operations, extraordinary items and cumulative effect of accounting changes.

Sales for the Specialty Chemicals segment were $493 million in 2007, unchanged from 2006. In 2007, higher selling prices in most markets were offset by year-over-year volume declines for carbon-based products due to lower automobile production volumes in North America compared to 2006, and year-over-year volume declines for printing ink resins due to weakness in the publication inks industry.

Profit for the Specialty Chemicals segment was $37 million in 2007 compared to $51 million in 2006. In 2007, decreased earnings reflect $25 million of higher input costs, volume declines of $11 million and other items of $11 million, partially offset by the positive effects of pricing and mix improvements of $33 million compared to 2006.

Corporate and Other


	Years ended December 31,
*In millions*	2007			2006
Sales	$	217		$	219
Corporate and Other loss ¹		(184	)		(448	)

¹	Corporate and Other loss may include goodwill impairment charges, minority interest, debt retirement charges, restructuring charges and one-time costs, net pension income, interest income and expense, and gains on asset sales.

Corporate and Other includes the company’s specialty paper business, forestry operations and corporate support staff services, and related assets and liabilities. The results also include income and expense items not directly associated with segment operations, such as certain legal charges and settlements, restructuring charges and one-time costs, pension income, interest income and expense, and other charges.

Corporate and Other loss was $184 million in 2007 compared to a loss of $448 million in 2006. The decrease in the loss reflects gains of $250 million in 2007 from sales of large-tract forestlands related to approximately 290,000 owned acres and approximately 95,000 acres under long-term timber contracts. In 2007 compared to 2006, lower restructuring charges and one-time costs of $65 million were partially offset by certain items in the 2006 results including a $21 million gain from the sale of a PIK note, an $18 million gain from the sale of corporate real estate and $5 million in transition services income from New Page Corporation. In 2007, gains from sales of small-tract forestlands were lower by $5 million and other costs were higher by $2 million compared to 2006.

Comparison of Years ended December 31, 2006 and 2005

Sales were $6.53 billion and $6.17 billion for the years ended December 31, 2006 and 2005, respectively. Increased sales in 2006 were the result of higher selling prices and improved product mix in many of our businesses, partially offset by weaker demand for certain products compared to 2005. The 2006 results include $206 million from the addition of the dispensing and spraying systems business, which was acquired in July 2006. Refer to the individual segment discussion that follows for detailed sales information for each segment.

Cost of sales was $5.40 billion and $5.09 billion for the years ended December 31, 2006 and 2005, respectively. Our gross margin in 2006 was approximately the same as 2005. In 2006, pre-tax input costs for energy, raw materials and freight were $159 million higher than in 2005. Restructuring charges included in cost of sales were $53 million and $18 million for the years ended December 31, 2006 and 2005, respectively. Maintenance costs and the effects of market-related downtime are reflected in cost of sales. Total maintenance costs in 2006 were $262 million compared to $244 million in 2005. In 2006, the company took no significant market-related downtime, while in 2005 the company took 109,000 tons of market-related downtime which had a negative impact on results of $31 million. In 2005, the mix of market-related downtime varied by business, but primarily occurred in the Packaging Resources segment. The effects of market-related downtime consist of the unabsorbed fixed manufacturing costs due to lower production, but do not include lost profits due to lower shipment levels.

Selling, general and administrative expenses were $905 million and $756 million for the years ended December 31, 2006 and 2005, respectively. Selling, general and administrative expenses as a percentage of sales were 13.9% and 12.3% for the years ended December 31, 2006 and 2005, respectively. Higher expense in 2006 was due primarily to increased restructuring charges and one-time costs, the addition of the dispensing and spraying systems business in July 2006 and higher share-based compensation compared to 2005. Restructuring charges included in selling, general and administrative expenses were $60 million in 2006 and $11 million in 2005. Incremental costs in selling, general and administrative expenses in 2006 compared to 2005 included certain one-time costs, the addition of the dispensing and spraying systems business and share-based compensation in the amounts of $42 million and $26 million, respectively.

Pension income from continuing operations, before settlements, curtailments and termination benefits was $50 million and $67 million for the years ended December 31, 2006 and 2005, respectively. Pension income is reflected in cost of sales and selling, general and administrative expenses, and is reported in Corporate and Other for segment reporting purposes.

Interest expense from continuing operations was $211 million and $208 million for the years ended December 31, 2006 and 2005, respectively. The increase in interest expense in 2006 compared to 2005 was the result of incremental short-term borrowings obtained in connection with the dispensing and spraying systems business acquisition. For 2005, interest expense associated with the company’s papers business, which was sold in the second quarter of 2005, was included in discontinued operations in the consolidated statements of operations in the amount of $20 million.

Other income, net was $83 million and $16 million for the years ended December 31, 2006 and 2005, respectively, and was comprised of the following:


	Years ended December 31,
*In millions*	2006			2005
Gains on sales of small-tract forestlands	$	(29	)	$	(60	)
Gain on sale of corporate real estate		(18	)		—
Gain on sale of PIK note		(21	)		—
Interest income		(20	)		(33	)
Asset impairments		20			—
Transition services income		(5	)		(25	)
Loss on the extinguishment of debt		—			90
Foreign currency exchange losses (gains)		(2	)		8
Other, net		(8	)		4

	$	(83	)	$	(16	)

Gains on sales of small-tract forestlands were $29 million and $60 million related to sales of 8,000 acres and 20,000 acres in 2006 and 2005, respectively. During 2006, the company recorded a $21 million gain on the sale of a PIK note received as part of the consideration for the sale of the printing and writing papers business in 2005. As part of the company’s initiative to reduce its real estate footprint, the company sold corporate real estate for a gain of $18 million in 2006. In 2006 and 2005, income of $5 million and $25 million, respectively, was recorded from services provided to NewPage Corporation pursuant to the printing and writing papers sale agreement. The company utilized cash proceeds from the sale of its printing and writing papers business to repay approximately $1 billion of debt in 2005 and, as a result, incurred charges for debt retirement of $90 million in 2005.

The company’s annual effective tax rate was approximately 5% and 12% for the years ended December 31, 2006 and 2005, respectively. The decline in the rate in 2006 compared to 2005 was primarily due to a shift in the level and mix of domestic versus foreign earnings.

In addition to the information discussed above, the following sections discuss the results of operations for each of our business segments and corporate and other.

Packaging Resources


	Years ended December 31,
*In millions*	2006		2005
Sales	$	2,953	$	2,836
Segment profit ¹		275		234

¹	Segment profit is measured as results before restructuring charges and one-time costs, pension income, interest income and expense, income taxes, minority interest, discontinued operations, extraordinary items and cumulative effect of accounting changes.

Sales for the Packaging Resources segment increased to $3.0 billion in 2006 compared to $2.8 billion in 2005. The sales increase of 4% for 2006 over 2005 was the result of higher selling prices and strengthened demand in key products. Product mix improvement also favorably impacted sales in 2006. Shipments of bleached paperboard in 2006 were 1,646,000 tons, down 2% from the prior year, reflecting the permanent shutdown of two machines in 2006. Shipments of CNK in 2006 were 1,082,000 tons, up 4% from 2005. Shipments of unbleached paperboard in 2006 were 838,000 tons, down 2% from the prior year, reflecting the intentional shift away from less profitable products. Compared to 2005, bleached paperboard prices in 2006 were up 3%, CNK open market prices were up 3% and unbleached paperboard prices were up 9%. Sales for the company’s Brazilian packaging operation, Rigesa Ltda., increased 8% in 2006 over 2005 driven by improved mix and improved volume, partially offset by lower selling prices.

Profit for the Packaging Resources segment increased to $275 million in 2006 compared to $234 million in 2005. The 18% improvement reflects improvements in pricing, volume and mix and productivity, partially offset by higher input costs for raw materials and energy. Earnings in 2006 benefited by $54 million from price increases and mix improvements, $5 million from volume improvement and $70 million from improved productivity. Earnings in 2006 were negatively affected by $77 million from higher input costs and $11 million in other operating cost increases compared to the prior year. The 2005 results reflect the impact of higher market-related downtime and the impact of two hurricanes.

Consumer Solutions


	Years ended December 31,
*In millions*	2006		2005
Sales	$	2,170	$	2,021
Segment profit ¹		93		102

¹	Segment profit is measured as results before restructuring charges and one-time costs, pension income, interest income and expense, income taxes, minority interest, discontinued operations, extraordinary items and cumulative effect of accounting changes.

Sales for the Consumer Solutions segment increased 7% to $2.2 billion in 2006 compared to $2.0 billion in 2005. Sales for 2006 include the results of the dispensing and spraying systems business, acquired in the third quarter of 2006. Excluding the impact of this acquisition, sales in 2006 declined 3% as compared to 2005. Sales improved slightly for our beverage business, but declined for other specialty packaging lines. Sales were particularly weak for media as demand for music packaging declined, game volumes decreased due to delayed next-generation console releases and the absence of DVD packaging business for the year’s “blockbuster” filmed entertainment titles.

Profit for the Consumer Solutions segment decreased 9% to $93 million in 2006 compared to $102 million in 2005. In 2006, earnings benefits from the acquisition of the dispensing and spraying systems business in July 2006, improved results in our beverage, personal care and tobacco businesses and certain cost improvements of $28 million were offset by $6 million in higher input costs, $7 million in volume decreases, $5 million in unfavorable price and mix and $19 million in higher other material and operating costs compared to 2005.

Consumer & Office Products


	Years ended December 31,
*In millions*	2006		2005
Sales	$	1,143	$	1,125
Segment profit ¹		127		130

¹	Segment profit is measured as results before restructuring charges and one-time costs, pension income, interest income and expense, income taxes, minority interest, discontinued operations, extraordinary items and cumulative effect of accounting changes.

Sales for the Consumer & Office Products segment increased slightly to $1.14 billion in 2006 compared to $1.13 billion in 2005. The 2% sales growth reflects solid performance in the segment’s value-added branded consumer product lines, improved overall mix and a solid performance in the Brazilian school products business, partially offset by customers shortening their supply chain which caused sales delays in certain products into the first quarter of 2007.

Profit for the Consumer & Office Products segment was $127 million in 2006 compared to $130 million in 2005. Results in 2006 were positively impacted by $45 million from price increases and mix improvements, offset by the negative impact of higher input and operating costs of $35 million and volume declines of $13 million compared to 2005. This segment’s profit continues to be impacted by low-priced Asian imports.

Specialty Chemicals

¹	Segment profit is measured as results before restructuring charges and one-time costs, pension income, interest income and expense, income taxes, minority interest, discontinued operations, extraordinary items and cumulative effect of accounting changes.

Sales for the Specialty Chemicals segment increased to a record $493 million in 2006 from $425 million in 2005 due to higher selling prices and strong demand for the segment’s industrial pine chemicals used in asphalt paving, dyes and proprietary publication ink resins and other industrial markets. Year-over-year volumes for carbon-based products were essentially flat due to lower automobile production volumes in North America.

Profit for the Specialty Chemicals segment was $51 million in 2006 compared to $39 million in 2005. In 2006, increased earnings reflect the positive effects of pricing and volume of $50 million and reduced selling, general and administrative expenses of $4 million, partially offset by higher input costs of $42 million compared to 2005.

Corporate and Other


	Years ended December 31,
*In millions*	2006			2005
Sales	$	219		$	213
Corporate and Other loss ¹		(448	)		(370	)

¹	Corporate and Other loss may include goodwill impairment charges, minority interest, debt retirement charges, restructuring charges and one-time costs, net pension income, interest income and expense, and gains on asset sales.

Corporate and Other loss was $448 million in 2006 compared to a loss of $370 million in 2005. The higher loss in 2006 compared to 2005 was the result of higher restructuring charges of $104 million, lower gains on small-tract forestlands sales of $31 million, lower transition services income from NewPage Corporation of $20 million, lower pension income of $17 million, one-time costs in 2006 of $42 million, offset by debt retirement charges of $90 million in 2005, a gain from the sale of the PIK note of $21 million in 2006, a gain on the sale of corporate real estate of $18 million in 2006, and lower other costs of $7 million in 2006 compared to 2005.

OUTLOOK

Overview

Given the uncertainty in the economy in 2008, MeadWestvaco will focus on those actions within its control to drive year-over-year revenue and earnings growth. Key drivers the company is focused on executing in 2008 are:

•

Profitable growth from targeted global packaging end-markets, including beverage, personal care, healthcare and tobacco;

•

Increasing sales in emerging markets, including China, India and Brazil;

•

Increasing sales from new innovative products, including Natralock®, Shellpak™ and other new applications across personal care and healthcare markets;

•

Ongoing efforts to offset input cost inflation with price improvement;

•

Improving cost productivity driven by ongoing and significant manufacturing, supply-chain and sourcing actions; and

•

Real estate sales generated by the company’s Community Development and Land Management Group.

Packaging Resources

In 2008, the Packaging Resources segment is focused on improving profitability by offsetting input cost inflation with price increases, allowing the segment to capture the full benefits of ongoing productivity improvements that the segment continues to pursue, including manufacturing and supply-chain enhancements and organizational streamlining actions. The market for MeadWestvaco’s high-quality paperboard is global. Notwithstanding a slowing North American economy, global supply and demand for the company’s principal paperboard grades remains balanced as economic expansion outside North America, particularly in emerging economies, continues to drive consumption and demand for raw materials.

Consumer Solutions

The Consumer Solutions segment provides complete packaging solutions to the world’s most recognized companies in the beverage and food, tobacco, personal care and healthcare industries. MeadWestvaco has targeted these markets because they are large and growing markets in which the company has leadership positions. In 2008, the segment is focused on generating significant year-over-year profit improvement. The segment is expecting solid overall revenue growth driven by personal care and healthcare business and by increased growth in emerging markets. The segment also expects contributions to its growth from new products, including Natralock ^® , the segment’s paperboard-based plastic clamshell replacement solution, Shellpak™, the segment’s adherence solution for prescription medications and the segment’s patented foamer and airless dispensing systems. These top-line drivers combined with ongoing productivity actions, including manufacturing and supply-chain enhancements, improved sourcing and organizational streamlining, are expected to more than offset input cost inflation and market-related declines in the segment’s media business.

Consumer & Office Products

The Consumer & Office Products segment is expecting performance in 2008 to be consistent with that of 2007. The segment generates most of its sales and profits in the second half of the year due to the strong seasonal nature of its market-leading school and time management products. Although the impact of a slowing North American economy on the segment’s business is hard to predict at this time, the segment is focused on generating modest year-over-year profit growth by increasing sell-through of its higher value proprietary branded products. The benefits of improved price and mix from this ongoing initiative in conjunction with continued productivity will be partially offset by continued high costs for uncoated paper, the segment’s principal raw material.

Specialty Chemicals

In 2008, global demand for MeadWestvaco’s pine chemicals, including proprietary chemicals used in the production of printing inks, asphalt, adhesives and lubricants is expected to remain solid. Price increases, geographic expansion and improved productivity are expected to more than offset higher costs for raw materials, mainly crude tall oil, the principal input used in the manufacture of pine chemicals, and modest volume declines in the segment’s carbon technology business as a result of lower North American auto sales.

Community Development and Land Management Group

In 2007, MeadWestvaco established a new division to maximize the value of its remaining 817,000 acres of owned forestlands in the U.S. through a new and sustainable business. The Community Development and Land Management Group is segmenting the company’s forestlands holdings according to highest best use (HBU) and entitle, enhance and/or sub-divide them to achieve maximum value. In 2008, management expects increased sales of small tracts at prices generally above traditional forestland. The exact amount and timing, however, are unpredictable due to market dynamics in areas where the business operates and to the prolonged sales cycle that is associated with the real estate asset class.

Cost initiative

As part of the cost initiative launched in 2005 to improve the efficiency of our business model, we are continuing to focus on reducing the cost structure across the company by moving to a more simplified, standardized global model. We are also reducing our real estate footprint and streamlining our warehousing and logistics network. The goal of this initiative was to reduce the overall cost structure of the company by $175 million to $200 million, before inflation, on an annual run-rate basis by the end of 2007. Specific actions were completed in 2007 which resulted in annual run-rate savings of $65 million, bringing cumulative run-rate savings through December 31, 2007 to $190 million, before inflation. We expect to drive productivity programs to achieve 3% year-over-year improvement.

Other items

Capital spending was $347 million in 2007 and is expected to be $330 million to $340 million in 2008. Depreciation, depletion and amortization expense was $520 million in 2007 and is expected to be about $500 million in 2008.

Interest expense was $219 million in 2007 and is expected to be $215 million to $225 million in 2008.

Management currently estimates overall pension income in 2008 to be about $80 million which will be derived primarily from the company’s domestic plans. This estimate assumes a discount rate of 6.25%, a salary increase rate of 4.0% and an expected rate of return on assets of 8.5%.

Recent developments in global credit markets, primarily related to the problems in the subprime mortgage market, have not had a material impact on the company’s investments, credit facilities or pension surplus. In addition, these developments have not had a material impact on the company’s relationships with its current vendors and customers. Management will continue to monitor potential changes in the subprime market and related markets which may have an impact on its businesses.

LIQUIDITY AND CAPITAL RESOURCES

Cash generated from operations provided the most significant source of funds for the company in 2007. Cash and cash equivalents totaled $245 million at December 31, 2007 compared to $156 million at December 31, 2006. In 2008, the company expects cash flow from operations to continue to be sufficient to fund capital expenditures, dividends to shareholders and scheduled debt payments. In addition, the company has available a $750 million committed revolving credit facility under an agreement that expires in December 2010. The credit facility was undrawn at December 31, 2007.

Operating activities

Cash provided by continuing operations was $641 million in 2007, compared to $567 million in 2006 and $305 million in 2005. The increase in operating cash flow in 2007 compared to 2006 was primarily attributable to increased earnings and improvements in working capital. Net income from continuing operations was $285 million, $93 million and $119 million in 2007, 2006 and 2005, respectively. See Note Q of Notes to Financial Statements included in Part II, Item 8 for discussion related to changes in working capital. Included in 2005 cash flow from working capital changes were tax payments of $160 million related to the sale of the printing and writing papers business. There was no cash flow from discontinued operations in 2007 and 2006, compared to cash used by discontinued operations of $78 million in 2005.

Investing activities

Cash used in investing activities was $236 million in 2007, compared to cash used in investing activities of $761 million in 2006 and cash provided by investing activities of $1,985 million in 2005. Asset sales, including sales of forestlands, generated $191 million of proceeds in 2007, compared to $165 million in 2006 and $109 million in 2005. Capital spending totaled $347 million in 2007, compared to $302 million in 2006 and $305 million in 2005. Proceeds of the sale of a debt security generated $109 million of proceeds in 2006. The primary source of funds in 2005 was proceeds of $2.2 billion from the sale of the printing and writing papers business.

During 2007, we acquired two manufacturers of high-quality, innovative dispensing and sprayer systems to strengthen our primary packaging offerings for a total purchase price of $52 million. During 2006, we acquired Calmar, a leading global manufacturer of high-quality and innovative dispensing and spraying systems, with manufacturing facilities in North America, Europe, Latin America and Asia for a total purchase price of $714 million. During 2005, we acquired DZN, The Design Group, a full service design and marketing company to enhance MeadWestvaco’s package design capabilities for a total purchase price of $5 million. See related discussion in Note P of Notes to Financial Statements included in Part II, Item 8.

Financing activities

Cash used in financing activities was $339 million in 2007, compared to cash provided by financing activities of $35 million in 2006 and cash used in financing activities of $2,181 million in 2005.

In 2007, the company entered into an accelerated share repurchase program with a financial institution counterparty to purchase $400 million of the company’s common stock. This program was funded by proceeds from sales of forestlands that closed in the third and fourth quarters of 2007. Under this program, as of December 31, 2007 the company received and retired 11.1 million shares and may receive additional shares up to 3 million under the provisions of agreement, which will be no later than June 2008. Under a separate share repurchase program, the company repurchased 2.6 million shares for $86 million in 2007.

In 2007, the company received $338 million in proceeds under a secured financing agreement with a bank collateralized by a $398 million installment note received as consideration from the sale of forestlands (the “Timber Note”). Under the terms of the agreement, the liability from this transaction is non-recourse to MeadWestvaco and shall be paid from the Timber Note proceeds upon its maturity. The non-recourse liability does not require any principal payments until its maturity in October 2027 and bears interest at a rate approximating the London Interbank Offered Rate (LIBOR). For further discussion related to this transaction, see Note D of Notes to Financial Statements included in Part II, Item 8.

The company’s Board of Directors declared dividends of $0.92 per share, paying a total of $169 million, $167 million and $178 million of dividends to shareholders for the years ended December 31, 2007, 2006 and 2005, respectively.

Proceeds from the issuance of common stock and exercises of stock options were $162 million, $53 million and $36 million for the years ended December 31, 2007, 2006 and 2005, respectively.

In 2006, the company repurchased and retired 1.3 million shares related to an obligation under a share put option to the former owner of a subsidiary. The cash impact of this transaction was approximately $47 million. The 1.3 million shares repurchased under the put option were not a reduction of the share repurchases authorized by the Board of Directors in 2005.

In 2005, proceeds received from the sale of the company’s printing and writing papers business were used to retire approximately $1 billion in debt and to repurchase approximately 24 million shares of outstanding common stock at a cost of $700 million. All of the repurchased shares of common stock were retired. In October 2005, the company’s Board of Directors authorized the future repurchase of an additional five million shares primarily to avoid dilution of earnings per share related to employee equity awards.

At December 31, 2007, the company had a $750 million bank credit facility that expires in December 2010. Borrowings under this agreement can be in unsecured domestic or eurodollar notes and at rates approximating prime or LIBOR at the company’s option. The $750 million credit agreement contains a financial covenant limiting the percentage of total debt (including a $338 million liability non-recourse to MeadWestvaco) to total capitalization (including deferred taxes) to 55% as well as certain other covenants of which the company is in compliance. The revolving credit facility was undrawn at December 31, 2007 and 2006.

At December 31, 2007 and 2006, the company had $68 million and $211 million of notes payable and current maturities of long-term debt and capital lease obligations, respectively. The maximum amounts of combined commercial paper outstanding during 2007 and 2006 were $279 million and $355 million, respectively. The average amounts of commercial paper outstanding during 2007 and 2006 were $118 million and $136 million, with an average interest rate of 5.4% and 5.5%, respectively. During 2007, the company obtained access to certain uncommitted credit lines. Short-term borrowings under these agreements were $45 million at December 31, 2007, with interest rates ranging from 5.3% to 7.3%. At December 31, 2007 and 2006, approximately 23% and 22% of the company’s long-term debt was variable rate, after factoring in the company’s interest-rate swaps. The weighted average interest rate on the company’s fixed-rate long-term debt was approximately 8.7% and approximately 8.8% for 2007 and 2006, respectively. The weighted average interest rate on the company’s variable-rate long-term debt was approximately 5.3% for both 2007 and 2006. The percentage of debt to total capital was 39.7% and 42.2% at December 31, 2007 and 2006, respectively.

EFFECTS OF INFLATION

Prices for energy, including natural gas, oil and electricity, and input costs for certain raw materials and freight, increased significantly in 2007 and 2006. The increase in these costs affected many of the company’s businesses. During 2007, the pre-tax input cost of energy, raw materials and freight was $141 million higher than in 2006. During 2006, the pre-tax input cost of energy, raw materials and freight was $159 million higher than in 2005.

ENVIRONMENTAL AND LEGAL MATTERS

Our operations are subject to extensive regulation by federal, state and local authorities, as well as regulatory authorities with jurisdiction over foreign operations of the company. Due to changes in environmental laws and regulations, the application of such regulations, including those relating to global climate change, and changes in environmental control technology, it is not possible for us to predict with certainty the amount of capital expenditures to be incurred for environmental purposes. Taking these uncertainties into account, we estimate that we will incur approximately $26 million in environmental capital expenditures in 2008 and approximately $28 million in 2009. Approximately $19 million was spent on environmental capital projects in 2007.

We have been notified by the U.S. Environmental Protection Agency (the “EPA”) or by various state or local governments that we may be liable under federal environmental laws or under applicable state or local laws with respect to the cleanup of hazardous substances at sites previously operated or used by the company. The company is currently named as a potentially responsible party (“PRP”), or has received third-party requests for contribution under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) and similar state or local laws with respect to numerous sites. There are other sites which may contain contamination or which may be potential Superfund sites, but for which MeadWestvaco has not received any notice or claim. The potential liability for all these sites will depend upon several factors, including the extent of contamination, the method of remediation, insurance coverage and contribution by other PRPs. The company regularly evaluates its potential liability at these various sites. At December 31, 2007, MeadWestvaco had recorded liabilities of approximately $21 million for estimated potential cleanup costs based upon its close monitoring of ongoing activities and its past experience with these matters. The company believes that it is reasonably possible that costs associated with these sites may exceed amounts of recorded liabilities by an amount that could range from an insignificant amount to as much as $20 million. This estimate is less certain than the estimate upon which the environmental liabilities were based. After consulting with legal counsel and after considering established liabilities, it is our judgment that the resolution of pending litigation and proceedings is not expected to have a material adverse effect on the company’s consolidated financial condition or liquidity. In any given period or periods, however, it is possible such proceedings or matters could have a material effect on the results of operations.

in asbestos cases and an analysis of the current cases, the company believes that it has adequate amounts accrued for potential settlements and judgments in asbestos-related litigation. At December 31, 2007, the company had recorded litigation liabilities of approximately $19 million, a significant portion of which relates to asbestos. Should the volume of litigation grow substantially, it is possible that the company could incur significant costs resolving these cases. After consulting with legal counsel and after considering established liabilities, it is our judgment that the resolution of pending litigation and proceedings is not expected to have a material adverse effect on the company’s consolidated financial condition or liquidity. In any given period or periods, however, it is possible such proceedings or matters could have a material effect on the results of operations.

The company is involved in various other litigation and administrative proceedings arising in the normal course of business. Although the ultimate outcome of such matters cannot be predicted with certainty, management does not believe that the currently expected outcome of any matter, lawsuit or claim that is pending or threatened, or all of them combined, will have a material adverse effect on the company’s consolidated financial condition or liquidity. In any given period or periods, however, it is possible such proceedings or matters could have a material effect on the results of operations.

CONTRACTUAL OBLIGATIONS

The company enters into various contractual obligations throughout the year. Presented below are the contractual obligations of the company as of December 31, 2007, and the time period in which payments under the obligations are due. Disclosures related to long-term debt, capital lease obligations and operating lease obligations are included in the Notes to Financial Statements included in Part II, Item 8. Also included below are disclosures regarding the amounts due under purchase obligations. Purchase obligation is defined as an agreement to purchase goods or services that is enforceable and legally binding on the company and that specifies all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction.

The company has included in the disclosure below all normal and recurring purchase orders, take-or-pay contracts, supply arrangements as well as other purchase commitments that management believes meet the definition of purchase obligations above.


	Payments due by period
*In millions*	Total		Less than 1 year 2008		1-3 years 2009 and 2010		3-5 years 2011 and 2012		More than 5 years 2013 and beyond
Contractual obligations:
Debt, excluding capital lease obligations	$	2,291	$	65	$	81	$	663	$	1,482
Interest on debt ⁽¹⁾		2,871		167		328		289		2,087
Capital lease obligations ⁽²⁾		375		14		25		21		315
Operating leases		368		49		83		68		168
Purchase obligations		1,075		668		150		43		214
Other long-term obligations ^{(3) (4)}		525		58		103		90		274

Total	$	7,505	$	1,021	$	770	$	1,174	$	4,540

⁽¹⁾	Amounts are based on weighted-average interest rates of 8.1% for fixed-rate long-term debt and 5.2% for variable-rate long-term debt for 2008. The weighted-average interest rates for years 2009 and thereafter are 8.8% for fixed-rate long-term debt and 5.3% for variable-rate long-term debt.

⁽²⁾	Amounts include both principal and interest payments.

⁽³⁾	Total excludes a $338 million liability that is non-recourse to MeadWestvaco. See related discussion in Note D of Notes to Financial Statements included in Part II, Item 8.

⁽⁴⁾	Total excludes $151 million of unrecognized tax benefits and $57 million of related accrued interest and penalties due to the uncertainty of timing of payment. See Note N of Notes to Financial Statements included in Part II, Item 8 for additional information.

SIGNIFICANT TRANSACTIONS

Forestlands sales

On September 24, 2007, the company completed the sale of approximately 62,000 acres of West Virginia forestlands for $93 million. The transaction resulted in a pre-tax gain of $83 million, or $0.28 per share, and is included in other income, net in the consolidated statements of operations.

On October 9, 2007, the company completed the sale of approximately 228,000 acres of owned forestlands and approximately 95,000 acres under long-term timber contracts in Alabama and Georgia for $400 million principally in the form of a long-term installment note supported by an irrevocable letter of credit from a bank obtained by the buyer of the forestlands. The transaction resulted in a pre-tax gain of $167 million, or $0.56 per share, and is included in other income, net in the consolidated statements of operations. The definitive agreement includes a long-term fiber supply agreement under which fiber will be sold to the company at market prices.

See Note B of Notes to Financial Statements included in Part II, Item 8 for further discussion of these transactions.

Accelerated share repurchase program

On November 20, 2007, the company entered into an accelerated share repurchase agreement with a financial institution counterparty (the “Counterparty”) to purchase $400 million of MeadWestvaco’s common stock. This program was funded by proceeds from sales of forestlands that closed in the third and fourth quarters of 2007. The agreement is a collared transaction in which the company agreed to purchase for $400 million a number of its shares to be determined based on the volume weighted average price of its common stock during a specified period of time, subject to certain provisions that establish minimum and maximum numbers of shares that may be purchased. The hedge period for determining the minimum and maximum numbers of shares to be purchased ended on December 14, 2007, resulting in a minimum number of shares of 11.1 million and a maximum number of shares of 14 million. On November 21, 2007 and December 14, 2007, the Counterparty delivered 10 million shares and 1.1 million shares, respectively. Accordingly, the company received 11.1 million shares through December 31, 2007, equivalent to the minimum number of shares to be delivered. At the conclusion of the program, which will be no later than June 2008, the company may receive additional shares up to the maximum number of 14 million for no additional payment. In certain extraordinary events that result in a substantial increase in the company’s stock price during a specified period of time up to a period of six months from the inception of the agreement, the company may be required to return some of the shares it received to the Counterparty. The purchased shares through December 31, 2007 were retired and recorded as a $400 million reduction to additional paid-in capital in the consolidated balance sheet pursuant to regulations of the State of Delaware, the state of incorporation of MeadWestvaco, and the approval by the company’s Board of Directors.

Restructuring charges

Year ended December 31, 2007

For the year ended December 31, 2007, the company recorded pre-tax charges of $85 million for employee separation costs, asset write-downs and other restructuring actions of which $57 million, $24 million and $4 million were recorded within cost of sales, selling, general and administrative expenses, and other income, net, respectively. In the fourth quarter of 2007, the company recorded pre-tax charges of $41 million of which $33 million, $6 million and $2 million were recorded within cost of sales, selling, general and administrative expenses, and other income, net, respectively.

Although these charges related to individual segments, such amounts are reflected in Corporate and Other for segment reporting purposes. The following table and discussion present additional detail of the 2007 charges by business segment:


*In millions*	Employee costs		Asset write- downs and other costs		Total
Packaging Resources	$	2	$	—	$	2
Consumer Solutions		11		12		23
Consumer & Office Products		2		3		5
All other		4		51		55

	$	19	$	66	$	85

Packaging Resources:

During the year ended December 31, 2007, the Packaging Resources segment incurred charges of $2 million for employee separation costs related to approximately 30 employees. The majority of the affected employees had separated from the company by December 31, 2007, and the remaining employees will be separated in 2008.

Consumer Solutions:

During the year ended December 31, 2007, the Consumer Solutions segment incurred charges of $23 million for employee separation costs, asset write-downs and other restructuring actions in connection with its packaging converting operations in the U.S. and Europe. These charges include employee separation costs of $11 million related to approximately 170 employees. The majority of the affected employees had separated from the company by December 31, 2007, and the remaining employees will be separated in 2008. The remaining $12 million was related to asset write-downs and other restructuring actions.

Consumer & Office Products:

During the year ended December 31, 2007, the Consumer & Office Products segment incurred charges of $5 million for employee separation costs, asset write-downs and other restructuring actions in connection with its consumer and office products manufacturing operations in the U.S. and Brazil. These charges include employee separation costs of $2 million related to approximately 40 employees. The majority of the affected employees had separated from the company by December 31, 2007, and the remaining employees will be separated in 2008. The remaining $3 million was related to asset write-downs and other restructuring actions.

All other:

During the year ended December 31, 2007, the company also recorded charges of approximately $4 million related to employee separation costs covering approximately 60 employees. The majority of the affected employees had separated from the company by December 31, 2007, and the remaining employees will be separated in 2008. Additionally, the company incurred charges of $51 million in connection with asset write-downs and other restructuring actions, of which $42 million was related to asset impairments and facility closure costs in connection with the company’s Specialty Papers business.

Year ended December 31, 2006

For the year ended December 31, 2006, the company recorded pre-tax charges of $133 million in connection with employee separation costs, asset write-downs and other restructuring actions, of which $53 million, $60 million and $20 million were recorded within cost of sales, selling, general and administrative expenses, and other income, net, respectively. Of these charges, $27 million was related to the Packaging Resources segment, $30 million was related to the Consumer Solutions segment and $8 million was related to the Consumer & Office Products segment. These charges related primarily to closing of a Consumer Solutions packaging and converting plant in the U.S. and various restructuring actions in the Packaging Resources, Consumer Solutions, and Consumer & Office Products segments in the U.S. and Europe, including asset impairments and employee separation costs covering approximately 1,340 employees. As of December 31, 2007, actions related to employee separation costs were substantially paid. In addition, $68 million was related to corporate and other of which $49 million was in connection with asset write-downs and other restructuring actions associated with ceased-use facilities and asset impairments.

Year ended December 31, 2005

For the year ended December 31, 2005, the company recorded pre-tax charges of $29 million for employee separation costs, asset write-downs and other restructuring actions, of which $18 million and $11 million were recorded within cost of sales and selling, general and administration expenses, respectively. Of these charges, $3 million was related to the Packaging Resources segment, $11 million was related to the Consumer Solutions segment, $8 million was related to the Consumer & Office Products segment, and $9 million was related to corporate and other. These charges included the closing of a Consumer Solutions converting plant in the U.S. and various other restructuring actions in the Packaging Resources, Consumer Solutions, and Consumer & Office Products segments in the U.S. and Europe, including asset impairments and employee separation costs covering approximately 300 employees. The company also recorded employee separation costs of $6 million in corporate and other covering approximately 190 employees. As of December 31, 2006, actions related to employee separation costs were substantially paid. In addition, the company sold previously written-down Consumer & Office Products assets, resulting in a gain of $2 million.

Acquisitions and dispositions

2007 acquisitions

During the third quarter of 2007, the company acquired two manufacturers of high-quality, innovative dispensing and sprayer systems to strengthen the company’s primary packaging business. These acquisitions provide the company with new technologies and increased access to customers in growing and important end markets. The technologies from these acquisitions will be integrated with the company’s North American, European and Asian production facilities to extend the company’s growth in critical markets such as personal care and home and garden. The aggregate purchase price of these acquisitions including direct transaction costs was $52 million.

2006 acquisitions

During the third quarter of 2006, the company acquired Saint-Gobain Calmar (“Calmar”) from Compagnie de Saint-Gobain. Calmar is a leading global manufacturer of high-quality and innovative dispensing and spraying systems, with manufacturing facilities in North America, Europe, Latin America and Asia. The acquisition of Calmar provides the company with increased access to growing and important end markets, geographies and strategic customers, valuable product pipeline and commercial synergies. These synergies include the combined entities’ ability to provide broader product and packaging solutions offerings. Excluding cash acquired, the purchase price including direct transaction costs was $714 million.

Discontinued operations

In connection with the sale of the company’s printing and papers writing business that occurred in 2005, the company recorded an after-tax loss from discontinued operations of $91 million for the year ended December 31, 2005. Results for 2005 were negatively impacted by sales-related costs, including lease termination charges; asset impairments; debt extinguishment costs; pension settlement and curtailment losses; and other related costs included in discontinued operations.

CRITICAL ACCOUNTING POLICIES

Our principal accounting policies are described in the Summary of Significant Accounting Policies in the Notes to Financial Statements included in Part II, Item 8. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of some assets and liabilities and, in some instances, the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Management believes the accounting policies discussed below represent those accounting policies requiring the exercise of judgment where a different set of judgments could result in the greatest changes to reported results. Management has discussed the development and selection of the critical accounting estimates with the Audit Committee of the Board of Directors, and the Audit Committee has reviewed the company’s disclosure.

Environmental and legal liabilities: We record accruals for estimated environmental liabilities when remedial efforts are probable and the costs can be reasonably estimated. These estimates reflect assumptions and judgments as to the probable nature, magnitude and timing of required investigation, remediation and monitoring activities, as well as availability of insurance coverage and contribution by other potentially responsible parties. Due to the numerous uncertainties and variables associated with these assumptions and judgments, and changes in governmental regulations and environmental technologies, accruals are subject to substantial uncertainties, and actual costs could be materially greater or less than the estimated amounts. We record accruals for other legal contingencies, which are also subject to numerous uncertainties and variables associated with assumptions and judgments, when the loss is probable and reasonably estimable. Liabilities recorded for claims are limited to pending cases based on the company’s historical experience, consultation with outside counsel and consultation with an actuarial specialist concerning the feasibility of reasonably estimating liabilities associated with claims that may arise in the future. We recognize insurance recoveries when collection is reasonably assured.

Restructuring and other charges: We periodically record charges for the reduction of our workforce, the closure of manufacturing facilities and other actions related to business improvement and productivity initiatives. These events require estimates of liabilities for employee separation payments and related benefits, demolition, facility closures and other costs, which could differ from actual costs incurred.

Pension and postretirement benefits : In August 2006, the President signed into law the Pension Protection Act of 2006 (“PPA”). The PPA establishes new minimum funding rules for defined benefit pension plans beginning in 2008. The company does not anticipate any required funding to the U.S. qualified retirement plans in the foreseeable future as a result of this legislation and due to the overfunded status of the plans.

In September 2006, the Financial Accounting Standards Board (FASB) issued SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans – An Amendment of FASB Statements No. 87, 88, 106, and 132(R) . SFAS No. 158 requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan in its balance sheet and to recognize the changes in the plan’s funded status in comprehensive income in the year in which the change occurs. These provisions of the Statement are effective as of the end of the first fiscal year ending after December 15, 2006. SFAS No. 158 also requires an employer to measure the funded status of a plan as of the date of its fiscal year end, which is consistent with the company’s measurement date. The impact of adopting SFAS No. 158 as of December 31, 2006 was an increase to accumulated other comprehensive loss in the amount of $57 million, net of tax, which principally represents the impact of recognizing previously unrecognized prior service cost and net actuarial losses.

Assumptions used in the determination of net pension cost and postretirement benefit expense, including the discount rate, the expected return on plan assets, and increases in future compensation and medical costs, are evaluated by the company, reviewed with the plan actuaries annually and updated as appropriate. Actual asset returns and compensation and medical costs, which are more favorable than assumptions, can have the effect of lowering expense and cash contributions, and, conversely, actual results, which are less favorable than assumptions, could increase expense and cash contributions. In accordance with generally accepted accounting principles, actual results that differ from assumptions are accumulated and amortized over future periods and, therefore, affect expense in such future periods.

In 2007, the company recorded pre-tax pension income before settlements, curtailments and termination benefits of $54 million, compared to $50 million in 2006 and $67 million in 2005. The company currently estimates overall pre-tax pension income in 2008 will increase by approximately $25 million, reflecting normal growth in service and interest cost off-set by asset returns, as well as actuarial gains related to favorable demographic assumption variances. The estimate assumes a long-term rate of return on plan assets of 8.50%, and a discount rate of 6.25%. The company determined the discount rate by referencing the Citigroup Pension Discount Curve. The company believes that using a yield curve approach more accurately reflects changes in the present value of liabilities over time since each cash flow is discounted at the rate at which it could effectively be settled. Previously, the company referenced indices for long-term, high quality bonds, ensuring that the durations of those indices were not materially different from the durations of the plans’ liabilities, or if different, that adjusting the discount rate would not have produced results that were materially different from using a common discount rate for all of its plans.

If the expected rate of return on plan assets were to change by 0.5%, annual pension income in 2008 would change by approximately $16 million. Similarly, if the discount rate were to change by 0.5%, annual pension income would change by approximately $0.5 million.

At December 31, 2007, the aggregate value of pension fund assets had increased to $3.5 billion from $3.4 billion at December 31, 2006, reflecting overall equity and fixed income market performance.

Prior service cost and actuarial gains and losses in the retirement and postretirement benefit plans subject to amortization are amortized over the average remaining service periods, which are about 10 years and 5 years, respectively, and are a component of accumulated other comprehensive income. In 2004, the company modified certain postretirement healthcare benefits to be provided to future retirees. This change reduced the postretirement benefit obligation by approximately $68 million, and is being amortized over the remaining life of the eligible employees, which is approximately 24 years.

Long-lived assets useful lives: Useful lives of tangible and intangible assets are based on management’s estimates of the periods over which the assets will be productively utilized in the revenue-generation process or for other useful purposes. Factors that affect the determination of lives include prior experience with similar assets, product life expectations and industry practices. The determination of useful lives dictates the period over which tangible and intangible long-lived assets are depreciated or amortized, typically using the straight-line method.

Tangible assets: We review long-lived assets other than goodwill and indefinite-lived intangible assets for impairment in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-lived Assets . The statement requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The review for impairment involves management to predict the estimated cash flows that will be generated by the long-lived asset over its remaining estimated useful life. Considerable judgment must be exercised as to determining future cash flows and their timing and, possibly, choosing business value comparables or selecting discount rates to use in any value computations.

Intangible assets: Business acquisitions often result in recording intangible assets. Intangible assets are recognized at the time of an acquisition, based upon their fair value. Similar to long-lived tangible assets, intangible assets are subject to periodic impairment reviews whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. As with tangible assets, considerable judgment must be exercised.

Goodwill : Goodwill arises in business combinations when the purchase price of assets acquired exceeds the appraised value. As with tangible and other intangible assets, periodic impairment reviews are required, at least annually, as well as when events or circumstances change. As with its review of impairment of tangible and intangible assets, management uses judgment in assessing goodwill for impairment. We will review the recorded value of our goodwill annually in the fourth quarter or sooner, if events or changes in circumstances indicate that the carrying amount may exceed fair value. The review for impairment requires management to predict the estimated cash flows that will be generated by the long-lived asset over its remaining estimated useful life. Considerable judgment must be exercised in determining future cash flows and their timing and, possibly, choosing business value comparables or selecting discount rates to be used in any value computations.

Revenue recognition: We recognize revenue at the point when title and the risk of ownership passes to the customer. Substantially all of our revenues are generated through product sales, and shipping terms generally indicate when title and the risk of ownership have passed. Revenue is recognized at shipment for sales when shipping terms are FOB (free on board) shipping point unless risk of loss is maintained under freight terms. For sales where shipping terms are FOB destination, revenue is recognized when the goods are received by the customer. We provide for all allowances for estimated returns and other customer credits such as discounts and volume rebates, when the revenue is recognized, based on historical experience, current trends and any notification of pending returns. The customer allowances are, in many instances, subjective and are determined with significant management judgment and are reviewed regularly to determine the adequacy of the amounts. Changes in economic conditions, markets and customer relationships may require adjustments to these allowances from period to period. Also included in net sales is service revenue which is recognized as the service is performed. Revenue is recognized for leased equipment to customers on a straight-line basis over the estimated term of the lease and is included in net sales of the company.

Income taxes : Income taxes are accounted for in accordance with SFAS No. 109, Accounting for Income Taxes, which recognizes deferred tax assets and liabilities based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities given the enacted tax laws.

We evaluate the need for a deferred tax asset valuation allowance by assessing whether it is more likely than not that the company will realize its deferred tax assets in the future. The assessment of whether or not a valuation allowance is required often requires significant judgment, including the forecast of future taxable income and the valuation of tax planning initiatives. Adjustments to the deferred tax valuation allowance are made to earnings in the period when such assessment is made.

The company has tax jurisdictions located in many areas of the world and is subject to audit in these jurisdictions. Tax audits by their nature are often complex and can require several years to resolve. In the preparation of the company’s financial statements, management exercises judgments in estimating the potential exposure to unresolved tax matters and applies the guidance pursuant to FIN 48 which employs a more likely than not criteria approach for recording tax benefits related to uncertain tax positions. While actual results could vary, in management’s judgment, the company has adequate tax accruals with respect to the ultimate outcome of such unresolved tax matters.

Each quarter, management must estimate our effective tax rate for the full year. This estimate includes assumptions about the level of income that will be achieved for the full year in both our domestic and international operations. The forecast of full-year earnings includes assumptions about markets in each of our businesses as well as the timing of certain transactions, including forestland sales gains and restructuring charges. Should business performance or the timing of certain transactions change during the year, the level of income achieved may not meet the level of income estimated earlier in the year at interim periods. This change in the income levels and mix of earnings can result in significant adjustments to the tax provision in the quarter in which the estimate is refined.

NEW ACCOUNTING STANDARDS

In March 2005, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin (“SAB”) No. 107, Share-Based Payment. SAB No. 107 addresses the interaction between SFAS No. 123R and certain SEC rules and regulations and provides the SEC staff’s views regarding the valuation of share-based payment arrangements for public companies. The company followed the interpretive guidance set forth in SAB No. 107 during its adoption of SFAS No. 123R.

In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections, which replaces Accounting Principals Board (APB) Opinions No. 20, Accounting Changes and SFAS No. 3, Reporting Accounting Changes in Interim Financial Statements – An Amendment of APB Opinion No. 28. SFAS No. 154 provides guidance on the accounting for and reporting of accounting changes and error corrections. It establishes retrospective application, unless impracticable, as the required method for reporting a change in accounting principle and the reporting of a correction of an error and for reporting a change when retrospective application is impracticable. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005, and was adopted by the company in the first quarter of 2006. The adoption of SFAS No. 154 did not have an impact on the company’s consolidated financial statements.

In July 2006, the FASB issued Interpretation No. 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes , which clarifies the accounting for uncertainty in income taxes recognized in the financial statements in accordance with SFAS No. 109, Accounting for Income Taxes . FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. This Interpretation is effective for fiscal years beginning after December 15, 2006. The cumulative effect of applying FIN 48 was recorded as an adjustment to retained earnings as of the beginning of the period of adoption. See Note N of Notes to Financial Statements included in Part II, Item 8 for discussion of the effects of this accounting change.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements . SFAS No. 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. This Statement does not require any new fair value measurements, but applies to existing accounting pronouncements that require or permit fair value measurement as the relevant measurement attribute. This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years and is to be applied prospectively as of the beginning of the year in which it is initially applied. The company is currently evaluating the provisions of this statement.

In September 2006, the FASB issued SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans – An Amendment of FASB Statements No. 87, 88, 106, and 132(R) . SFAS No. 158 requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan in its balance sheet and to recognize the changes in the plan’s funded status in comprehensive income in the year in which the change occurs. These provisions of the Statement are effective as of the end of the first fiscal year ending after December 15, 2006. SFAS No. 158 also requires an employer to measure the funded status of a plan as of the date of its fiscal year end, which is the Company’s measurement date. Pursuant to the Statement’s adoption, the net after-tax charge to accumulated other comprehensive loss in the fourth quarter of 2006 was $57 million. This adjustment principally represents the recognition of previously unrecognized prior service costs and net actuarial losses and the impact of recording additional minimum liabilities for certain under-funded plans. This Statement will not affect the company’s funding obligations under the Employee Retirement Income Security Act of 1974 (ERISA) and we do not currently anticipate any required company contributions to the U.S. qualified retirement plans in the foreseeable future.

In September 2006, the SEC issued SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements . SAB No. 108 requires that public companies utilize a “dual-approach” to assessing the quantitative effects of financial misstatements. This dual approach includes both an income statement focused assessment and a balance sheet focused assessment. The guidance in SAB No. 108 must be applied to annual financial statements for fiscal years ending after November 15, 2006. The adoption of SAB No. 108 did not have an effect on the company’s consolidated financial position or results of operations.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities – Including an Amendment of FASB Statement No. 115 . This Statement permits an entity to measure certain financial assets and financial liabilities at fair value, which would result in the reporting of unrealized gains and losses in earnings at each subsequent reporting date. The fair value option may be elected on an instrument-by-instrument basis, with few exceptions, as long as it is applied to the instrument in its entirety. The Statement establishes presentation and disclosure requirements to help financial statement users understand the effect of an entity’s election on its earnings, but does not eliminate the disclosure requirements of other accounting standards. This Statement will be effective as of the beginning of the first fiscal year that begins after November 15, 2007, and is to be applied prospectively as of the beginning of the year in which it is initially applied. The company is currently evaluating the provisions of this Statement.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (“SFAS No. 141(R)”). This Statement replaces SFAS No. 141, Business Combinations, and requires an acquirer to recognize the assets acquired, the liabilities assumed, including those arising from contractual contingencies, any contingent consideration, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date, with limited exceptions specified in the statement. SFAS No. 141(R) also requires the acquirer in a business combination achieved in stages (sometimes referred to as a step acquisition) to recognize the identifiable assets and liabilities, as well as the noncontrolling interest in the acquiree, at the full amounts of their fair values (or other amounts determined in accordance with SFAS No. 141(R)). In addition, SFAS No. 141(R)’s requirement to measure the noncontrolling interest in the acquiree at fair value will result in recognizing the goodwill attributable to the noncontrolling interest in addition to that attributable to the acquirer. SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements . SFAS No. 160 amends Accounting Research Bulletin 51, Consolidated Financial Statements , to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. This Statement clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. SFAS No. 160 also changes the way the consolidated income statement is presented by requiring consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the noncontrolling interest, and requires disclosure on the face of the consolidated statements of operations of the amounts of consolidated net income attributable to the parent and to the noncontrolling interest. SFAS No. 160 is effective for fiscal periods, and interim periods within those fiscal years, beginning on or after December 15, 2008. The company is currently assessing the potential impact that the adoption of SFAS No. 160 could have on its consolidated financial statements.

There were no other accounting standards issued in 2007 that had or are expected to have a material impact on the company’s financial position or results of operations.

Forward-looking Statements

Certain statements in this document and elsewhere by management of the company that are neither reported financial results nor other historical information are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such information includes, without limitation, the business outlook, assessment of market conditions, anticipated financial and operating results, strategies, future plans, contingencies and contemplated transactions of the company. Such forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors which may cause or contribute to actual results of company operations, or the performance of achievements of each company, or industry results, to differ materially from those expressed or implied by the forward-looking statements. In addition to any such risks, uncertainties and other factors discussed elsewhere herein, risks, uncertainties, and other factors that could cause or contribute to actual results differing materially from those expressed or implied for the forward-looking statements include, but are not limited to, events or circumstances which affect the ability of MeadWestvaco to realize improvements in operating earnings from the company’s ongoing cost reduction initiatives; the reorganization of the company’s packaging business units; competitive pricing for the company’s products; changes in raw materials pricing; energy and other costs; fluctuations in demand and changes in production capacities; changes to economic growth in the United States and international economies; government policies and regulations, including, but not limited to those affecting the environment and the tobacco industry; the company’s continued ability to reach agreement with its unionized employees on collective bargaining agreements; the company’s ability to execute its plans to divest or otherwise realize the greater value associated with its forestlands; adverse results in current or future litigation; currency movements; and other risk factors discussed in this Annual Report on Form 10-K and in other filings made from time to time with the SEC. MeadWestvaco undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Investors are advised, however, to consult any further disclosures made on related subjects in the company’s reports filed with the SEC.

Item 7A.

Quantitative and qualitative disclosures about market risk

Interest rates

It is management’s objective to manage its interest expense through a blend of fixed and floating interest rate instruments. The company primarily funds itself with long-term debt, having final maturities ranging from two to 40 years at date of issue, and with short-term variable-rate borrowings. The company uses interest-rate swaps in managing its mix of fixed and floating rate debt. See Note G of Notes to Financial Statements included in Part II, Item 8 for related discussion.

Foreign currency

The company has foreign-based operations, primarily in South America, Canada, Mexico, Europe and Asia, which accounted for approximately 31% of its 2007 net sales. In addition, certain of the company’s domestic operations have sales to foreign customers. In the conduct of its foreign operations, the company also makes intercompany sales and receives royalties and dividends denominated in many different currencies. All of this exposes the company to the effect of changes in foreign currency exchange rates.

Flows of foreign currencies into and out of the company’s domestic operations are generally stable and regularly occurring and are recorded at fair market value in the company’s financial statements. The company’s foreign currency management policy permits it to enter into foreign currency hedges when these flows exceed a threshold, which is a function of these cash flows and forecasted annual operations. During 2007 and 2006, the company entered into foreign currency hedges to partially offset the foreign currency impact of these flows on operating income. See Note G of Notes to Financial Statements included in Part II, Item 8 for related discussion.

The company also issues intercompany loans to its foreign subsidiaries in their local currencies, exposing it to the effect of changes in spot exchange rates between loan issue and loan repayment dates. Generally, management uses foreign-exchange hedge contracts with terms of less than one year to hedge these exposures. When applied to the company’s derivative and other foreign currency sensitive instruments at December 31, 2007, a 10% adverse change in currency rates would have about a $27 million effect on the company’s results.

Natural gas

In order to better predict and control the future cost of natural gas consumed at the company’s mills and plants, the company engages in financial hedging of future gas purchase prices. Gas usage is relatively predictable month-by-month. The company hedges primarily with financial instruments that are priced based on New York Mercantile Exchange (NYMEX) natural gas futures contracts. See Note G of Notes to Financial Statements included in Part II, Item 8 for related discussion.

Item 8.

Financial statements and supplementary data

Index


		Page
Report of independent registered public accounting firm		37

Consolidated statements of operations for the years ended December 31, 2007, 2006 and 2005		38

Consolidated balance sheets at December 31, 2007 and 2006		39

Consolidated statements of shareholders’ equity for the years ended December 31, 2007, 2006 and 2005		40

Consolidated statements of cash flows for the years ended December 31, 2007, 2006 and 2005		41

Notes to financial statements		42

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of MeadWestvaco Corporation

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, shareholders’ equity, and cash flows present fairly, in all material respects, the financial position of MeadWestvaco Corporation and its subsidiaries at December 31, 2007 and 2006, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2007 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting under Item 9A. Our responsibility is to express opinions on these financial statements and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As discussed in Note N to the consolidated financial statements, the Company changed the manner in which it accounts for uncertain tax positions effective January 1, 2007. As discussed in Notes J and K to the consolidated financial statements, the Company changed the manner in which it accounts for share-based compensation in fiscal 2006 and the manner in which it accounts for defined benefit pension and other postretirement plans effective December 31, 2006.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

Richmond, Virginia

February 28, 2008

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF OPERATIONS


	Years ended December 31,
*In millions, except per share data*	2007			2006			2005
Net sales	$	6,906		$	6,530		$	6,170

Cost of sales		5,710			5,399			5,087
Selling, general and administrative expenses		882			905			756
Interest expense		219			211			208
Other income, net		(305	)		(83	)		(16	)

Income from continuing operations before income taxes		400			98			135
Income tax provision		115			5			16

Income from continuing operations		285			93			119
Discontinued operations		—			—			(91	)

Net income	$	285		$	93		$	28

Net income per share – basic and diluted:
Income from continuing operations	$	1.56		$	0.52		$	0.62
Discontinued operations		—			—			(0.48	)

Net income	$	1.56		$	0.52		$	0.14

Shares used to compute net income per share:
Basic		182.6			180.8			191.7
Diluted		183.6			181.2			192.7

The accompanying notes are an integral part of these financial statements.

M EAD W ESTVACO C ORPORATION AND CONSOLIDATED SUBSIDIARY COMPANIES

FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS


	December 31,
*In millions, except share and per share data*	2007		2006
ASSETS
Cash and cash equivalents	$	245	$	156
Accounts receivable, net		1,009		1,011
Inventories		790		715
Other current assets		123		133

Current assets		2,167		2,015

Property, plant, equipment and forestlands, net		4,211		4,523

Prepaid pension asset		1,213		920
Goodwill		840		851
Other assets		1,406		976

	$	9,837	$	9,285

LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	$	640	$	552
Accrued expenses		747		702
Notes payable and current maturities of long-term debt		68		211

Current liabilities		1,455		1,465

Long-term debt		2,375		2,372
Other long-term obligations		1,071		738
Deferred income taxes		1,228		1,177

Commitments and Contingencies

Shareholders’ equity:
Common stock, $0.01 par
Shares authorized: 600,000,000
Shares issued and outstanding: 2007 – 173,839,186 (2006 – 182,107,136)		2		2
Additional paid-in capital		3,080		3,370
Retained earnings		276		168
Accumulated other comprehensive income (loss)		350		(7	)

		3,708		3,533

	$	9,837	$	9,285

The accompanying notes are an integral part of these financial statements.

M EAD W ESTVACO C ORPORATION AND CONSOLIDATED SUBSIDIARY COMPANIES

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY


*In millions*	Outstanding shares		Common stock		Additional paid-in Capital	Retained earnings			Accumulated other comprehensive income (loss)			Total shareholders’ equity
Balance at December 31, 2004	203.9		$	2	$3,952	$	394		$	(31	)	$	4,317
Comprehensive income:
Net income	—			—	—		28			—			28
Foreign currency translation	—			—	—		—			(20	)		(20	)
Minimum pension liability adjustment	—			—	—		—			2			2
Unrealized gain on derivative instruments, net	—			—	—		—			2			2
Unrealized loss on investment in debt security, net	—			—	—		—			(9	)		(9	)

Comprehensive income													3

Tax benefit on nonqualified stock options	—			—	2		—			—			2
Cash dividends	—			—	—		(178	)		—			(178	)
Foreign operations concurrent reporting	—			—	—		(1	)		—			(1	)
Restricted stock grants issued	0.3			—	8		—			—			8
Stock repurchased	(23.9	)		—	(701)		—			—			(701	)
Share put option	(0.3	)		—	—		—			—			—
Unamortized restricted stock	—			—	(3)		—			—			(3	)
Exercise of stock options	1.4			—	36		—			—			36

Balance at December 31, 2005	181.4			2	3,294		243			(56	)		3,483
Comprehensive income:
Net income	—			—	—		93			—			93
Foreign currency translation	—			—	—		—			109			109
Minimum pension liability adjustment	—			—	—		—			(7	)		(7	)
Unrealized loss on derivative instruments, net	—			—	—		—			(5	)		(5	)
Reversal of unrealized loss on investment in debt security, net	—			—	—		—			9			9

Comprehensive income													199

Adoption of FASB Statement No. 158	—			—	—		—			(57	)		(57	)
Tax benefit on nonqualified stock options	—			—	2		—			—			2
Cash dividends	—			—	—		(167	)		—			(167	)
Foreign operations concurrent reporting	—			—	—		(1	)		—			(1	)
Share-based employee compensation	—			—	21		—			—			21
Share put option	(1.3	)		—	—		—			—			—
Exercise of stock options	2.0			—	53		—			—			53

Balance at December 31, 2006	182.1			2	3,370		168			(7	)		3,533
Comprehensive income:
Net income	—			—	—		285			—			285
Foreign currency translation	—			—	—		—			187			187
Adjustments related to pension and other benefit plans	—			—	—		—			171			171
Unrealized loss on derivative instruments, net	—			—	—		—			(1	)		(1	)
Adoption of FASB Interpretation No. 48	—			—	—		(8	)		—			(8	)

Comprehensive income													634

Tax benefit on nonqualified stock options	—			—	8		—			—			8
Cash dividends	—			—	—		(169	)		—			(169	)
Stock repurchased	(13.7	)		—	(486)		—			—			(486	)
Share-based employee compensation	—			—	26		—			—			26
Exercise of stock options	5.4			—	162		—			—			162

Balance at December 31, 2007	173.8		$	2	$3,080	$	276		$	350		$	3,708

The accompanying notes are an integral part of these financial statements.

M EAD W ESTVACO C ORPORATION AND CONSOLIDATED SUBSIDIARY COMPANIES

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF CASH FLOWS


*In millions*	2007			2006			2005
Cash flows from operating activities
Net income	$	285		$	93		$	28
Discontinued operations		—			—			91
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization		520			517			491
Deferred income taxes		(13	)		(56	)		(17	)
Gains on sales of assets		(274	)		(60	)		(56	)
Gain on sale of debt security		—			(21	)		—
Loss on early retirement of long-term debt		—			—			90
Pension income before settlements, curtailments and termination benefits		(54	)		(50	)		(67	)
Impairment of long-lived assets		46			43			10
Appreciation of cash surrender value policies		(33	)		(32	)		(12	)
Changes in working capital, excluding the effects of acquisitions and dispositions		143			129			(271	)
Other, net		21			4			18

Net cash provided by operating activities of continuing operations		641			567			305
Discontinued operations		—			—			(78	)

Net cash provided by operating activities		641			567			227

Cash flows from investing activities
Additions to property, plant and equipment		(347	)		(302	)		(305	)
Payments for acquired businesses, net of cash acquired		(52	)		(714	)		(5	)
Proceeds from sale of business		—			—			2,186
Proceeds from sale of debt security		—			109			—
Proceeds from dispositions of assets		191			165			109
Contribution to joint venture		(13	)		—			—
Sale of short-term investments		—			—			5
Other		(15	)		(19	)		(7	)
Discontinued operations		—			—			2

Net cash provided by (used in) investing activities		(236	)		(761	)		1,985

Cash flows from financing activities
Proceeds from issuance of long-term debt		12			7			1
Proceeds from secured borrowing (non-recourse to MeadWestvaco)		338			—			—
Repayment of long-term debt		(50	)		(2	)		(1,133	)
Stock repurchased and put option		(486	)		(47	)		(711	)
Dividends paid		(169	)		(167	)		(178	)
Notes payable and other short-term borrowings, net		(128	)		148			(19	)
Changes in book overdrafts		(21	)		43			(14	)
Proceeds from issuance of common stock and exercises of stock options		162			53			36
Other financing activities		3			—			—
Discontinued operations		—			—			(163	)

Net cash provided by (used in) financing activities		(339	)		35			(2,181	)

Effect of exchange rate changes on cash		23			18			(4	)

Increase (decrease) in cash and cash equivalents		89			(141	)		27

Cash and Cash equivalents:
At beginning of period		156			297			270

At end of period	$	245		$	156		$	297

The accompanying notes are an integral part of these financial statements.

M EADWESTVACO C ORPORATION AND CONSOLIDATED SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS

Summary of significant accounting policies

Basis of consolidation and preparation of financial statements: The consolidated financial statements include all majority-owned or controlled entities, and all significant intercompany transactions are eliminated. MeadWestvaco’s business segments are (i) Packaging Resources, (ii) Consumer Solutions, (iii) Consumer & Office Products, and (iv) Specialty Chemicals.

Estimates and assumptions: The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of some assets and liabilities and, in some instances, the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Translation of foreign currencies: The local currency is the functional currency for substantially all of the company’s significant operations outside the U.S . The assets and liabilities of the company’s foreign subsidiaries are translated into U.S. dollars using period-end exchange rates, and adjustments resulting from these financial statement translations are included in accumulated other comprehensive income or loss in the consolidated balance sheets. Revenues and expenses are translated at average rates prevailing during the period.

Cash equivalents: Highly liquid securities with an original maturity of three months or less are considered to be cash equivalents.

Accounts receivable and allowance for doubtful accounts : Trade accounts receivable are recorded at the invoice amount and generally do not bear interest. The allowance for doubtful accounts is the company’s best estimate of the amount of probable loss in the existing accounts receivable. The company determines the allowance based on historical write-off experience by industry. Past due balances over a specified amount are reviewed individually for collectibility. Account balances are charged off against the allowance when it is probable that the receivable will not be recovered.

Inventories: Inventories are valued at the lower of cost or market. Cost is determined using the last-in, first-out method for substantially all raw materials, finished goods and production materials of U.S. manufacturing operations. Cost of all other inventories, including stores and supplies inventories and inventories of non-U.S. manufacturing operations, is determined by the first-in, first-out or average cost methods.

Property, plant, equipment and forestlands: Owned assets are recorded at cost. Also included in the cost of these assets is interest on funds borrowed during the construction period. When assets are sold, retired or disposed of, their cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in cost of sales. Gains on sales of forestlands are recorded in other income, net. Costs of renewals and betterments of properties are capitalized; costs of maintenance and repairs are charged to expense. Costs of reforestation of forestlands are capitalized. These costs include the costs of seedlings, site preparation, planting of seedlings and early-stage fertilization.

Depreciation and depletion: The cost of plant and equipment is depreciated, utilizing the straight-line method, over the estimated useful lives of the assets, which range from 20 to 40 years for buildings and 5 to 30 years for machinery and equipment. Timber is depleted as timber is cut at rates determined annually based on the relationship of undepleted timber costs to the estimated volume of recoverable timber. Timber volumes used in calculating depletion rates are based upon merchantable timber volumes at a specific point in time. The depletion rates for company-owned land do not include an estimate of either future reforestation costs associated with a stand’s final harvest or future volume in connection with replanting of a stand subsequent to the final harvest.

Impairment of long-lived assets: The company periodically evaluates whether current events or circumstances indicate that the carrying value of its long-lived assets, including intangible assets, to be held and used may not be recoverable. If such circumstances are determined to exist, an estimate of undiscounted future cash flows produced by the long-lived asset, or the appropriate grouping of assets, is compared to the carrying value to determine whether an impairment exists . If an asset is determined to be impaired, the loss is measured based on quoted market prices in active markets, if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including a discounted value of estimated future cash flows. The company reports an asset to be disposed of at the lower of its carrying value or its estimated net realizable value.

Goodwill: The company has classified as goodwill the excess of the acquisition cost over the fair values of the net tangible and intangible assets of businesses acquired. The company has determined its reporting units to be components within its Packaging Resources, Consumer Solutions, Consumer & Office Products and Specialty Chemicals segments. In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 142, Goodwill and Other Intangible Assets , goodwill is required to be tested at least annually. SFAS No. 142 requires that goodwill be tested for impairment using a two-step process. The first step is to identify

NOTES TO FINANCIAL STATEMENTS

a potential impairment and the second step is to measure the amount of the impairment loss, if any. Goodwill is deemed to be impaired if the carrying amount of a reporting unit’s goodwill exceeds its estimated fair value. See Note C and Note P for further information.

Other assets: Capitalized software, equipment leased to customers and other amortizable and indefinite-lived intangible assets are included in other assets. Capitalized software and other amortizable intangibles are amortized using the straight-line and cash flows methods over their estimated useful lives of 3 to 21 years. Equipment leased to customers is amortized using the sum-of-the-years-digits method over the estimated useful life of the machine, generally 10 years. Revenue is recognized for the leased equipment on a straight-line basis over the life of the lease and is included in net sales. The company records software development costs in accordance with the American Institute of Certified Public Accountants’ Statement of Position 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use. See Note C and Note D for further information.

Financial instruments: The company has, where appropriate, estimated the fair value of financial instruments. These fair value amounts may be significantly affected by the assumptions used, including the discount rate and estimates of cash flow. Accordingly, the estimates presented are not necessarily indicative of the amounts that could be realized in a current market exchange. Where these estimates approximate carrying value, no separate disclosure of fair value is shown. The company utilizes well-defined financial derivatives in the normal course of its operations as a means to manage some of its interest rate, foreign currency and commodity risks. For those derivative instruments, the company has formally designated each as a hedge of specific and well-defined risks. See Note G for further information.

Investment in debt securities : Investments in debt securities are classified as either held to maturity, trading or available-for-sale in accordance with SFAS No. 115, Accounting for Investments in Debt and Equity Securities , as determined by management on an annual basis. Those investments classified as trading or available-for-sale securities are measured at fair value in the consolidated balance sheets. Unrealized gains or losses on trading securities are recorded to the consolidated statements of operations. Unrealized gains or losses on available-for-sale securities are reported in accumulated other comprehensive loss unless it is determined that a loss exists and that loss is determined as “other-than-temporary” in accordance with Staff Positions No. 115-1 and SFAS No. 124-2, The Meaning of Other-than-Temporary Impairment and Its Application to Certain Investments .

Environmental and legal liabilities: Environmental expenditures that increase useful lives of assets are capitalized, while other environmental expenditures are expensed. Liabilities are recorded when remedial efforts are probable and the costs can be reasonably estimated. The company recognizes a liability for other legal contingencies when a loss is probable and reasonably estimable. Liabilities recorded for claims are limited to pending cases based on the company’s historical experience, consultation with outside counsel and consultation with an actuarial specialist concerning the feasibility of reasonably estimating liabilities associated with claims that may arise in the future. The company recognizes insurance recoveries when collection is reasonably assured. See Note O for further information.

Asset retirement obligations: The company records obligations associated with the retirement of tangible long-lived assets as liabilities when incurred. Subsequent to initial measurement, the company recognizes changes in the amounts of the obligations, as necessary, resulting from the passage of time and revisions to either the timing or amount of estimated cash flows. Effective December 31, 2005, the company adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations – an Interpretation of FASB Statement No. 143, which clarifies that the term conditional asset retirement obligation, as used in SFAS No. 143, refers to a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity. An entity is required to recognize a liability for the fair value of a conditional asset retirement obligation if the fair value of the liability can be reasonably estimated. The company has certain conditional and unconditional asset retirement obligations associated with owned or leased property plant and equipment, including leases, surface impoundments, asbestos, and water supply wells. Management does not have sufficient information to estimate the fair value of certain obligations, primarily associated with surface impoundments and asbestos, because the settlement date or range of potential settlement dates have not been specified and information is not available to apply expected present value techniques.

Revenue recognition: The company recognizes revenues at the point when title and the risk of ownership passes to the customer. Substantially all of the company’s revenues are generated through product sales and shipping terms generally indicate when title and the risk of ownership have passed. Revenue is recognized at shipment for sales where shipping terms are FOB (free on board) shipping point unless risk of loss is maintained under freight terms. For sales where shipping terms are FOB destination, revenue is

NOTES TO FINANCIAL STATEMENTS

recognized when the goods are received by the customer. The company provides allowances for estimated returns and other customer credits such as discounts and volume rebates, when the revenue is recognized, based on historical experience, current trends and any notification of pending returns. Also included in net sales is service revenue which is recognized as the service is performed. Revenue is recognized for leased equipment to customers on a straight-line basis over the estimated term of the lease and is included in net sales of the company.

Shipping and handling costs: Shipping and handling costs are classified as a component of cost of sales. Amounts billed to a customer in a sales transaction related to shipping and handling are classified as revenue.

Research and development: Included in cost of sales and selling, general and administrative expense are expenditures for research and development of $62 million, $65 million and $50 million for the years ended December 31, 2007, 2006 and 2005, respectively, which were expensed as incurred.

Income taxes: Deferred income taxes are recorded for temporary differences between financial statement carrying amounts and the tax basis of assets and liabilities. Deferred tax assets and liabilities reflect the enacted tax rates in effect for the years the differences are expected to reverse. The company evaluates the need for a deferred tax asset valuation allowance by assessing whether it is more likely than not that it will realize its deferred tax assets in the future.

The company recognizes tax benefits from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based upon the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.

The company recognizes interest and penalties related to unrecognized tax benefits in income taxes in the consolidated statements of operations.

Share-based compensation: The company adopted SFAS No. 123R, Share-Based Payment , as of January 1, 2006 using the modified prospective method, therefore 2005 was not restated. The cumulative effect of a change in accounting principle associated with the adoption of SFAS No. 123R was not material to the consolidated financial statements. Under this new Statement in the year of adoption, pre-tax share-based compensation expense for the year ended December 31, 2006 was $21 million, including the incremental pre-tax cost of $10 million relating to stock options and stock appreciation rights. The incremental impact of adopting this Statement was a reduction to net income of $6 million, or $0.03 per share, for the year ended December 31, 2006.

The company has elected to record the compensation expense for graded and cliff vesting awards on a straight-line basis over the vesting period, generally three years. The company has used the “long-haul” method to determine the pool of tax benefits or deficiencies resulting from tax deductions related to awards of equity instruments that exceed or are less than the cumulative compensation cost for those instruments recognized for financial reporting. Substantially all compensation expense related to share-based awards is recorded as a component of selling, general and administrative expenses in the consolidated statements of operations. For stock-settled awards, the company issues previously authorized new shares. See Note J for further detail on share-based compensation.

Prior to January 1, 2006, the company measured compensation cost for share-based compensation awards issued to employees and directors using the intrinsic value-based method of accounting in accordance with Accounting Principles Board (APB) Opinion No. 25. The company applied APB Opinion No. 25, Accounting for Stock Issued to Employees , as amended, in accounting for its plans. In January 2003, the company adopted the disclosure provisions of SFAS No. 148, Accounting for Stock-Based Compensation-Transition and Disclosure . SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value-based method of accounting for share-based employee compensation and amends the disclosure requirements of SFAS No. 123, Accounting for Stock-Based Compensation .

NOTES TO FINANCIAL STATEMENTS

If compensation cost for the company’s share-based compensation awards had been determined based on the fair value method for the year ended December 31, 2005, the company’s net income and net income per share would have been reduced to the pro forma amounts as follows:


*In millions, except per share data*	2005
Net income – as reported	$	28
Add: Share-based compensation expense included in reported net income, net of related tax effect		3
Deduct: Total share-based compensation expense determined under fair value-based method for all awards, net of related tax effect		11

Pro forma net income	$	20


Net income per share – basic and diluted:
As reported	$	0.14
Pro forma		0.11

The pro forma amounts and fair value of each award grant were estimated on the date of grant using a binomial option pricing model with the following weighted-average assumptions used for grants in 2005: risk-free interest rates of 3.98%; expected dividend yields of 3.05%; expected lives of six years; and expected volatility of 32%.

Net income per share: Basic net income per share for all the periods presented has been calculated using the weighted average shares outstanding. In computing diluted net income per share, incremental shares issuable upon the assumed exercise of stock options and other stock-based compensation awards have been added to the weighted average shares outstanding, if dilutive. For the years ended December 31, 2007, 2006, and 2005, 2.1 million, 12.4 million and 8.0 million equity awards, respectively, were excluded from the calculation of weighted average shares, as the exercise price per share was greater than the average market value, resulting in an antidilutive effect on diluted earnings per share.

Related party transactions: The company has certain related party transactions in the ordinary course of business that are insignificant and the terms of which are no more or less favorable to the company than the terms of any other arms-length transaction.

Discontinued operations: Effective April 30, 2005, the company completed the sale of its printing and writing papers business, including its coated and carbonless papers operations consisting of five mills, and approximately 900,000 acres of related forestlands to an affiliate of Cerberus Management LLC, a private investment firm. See Note P for additional information. In the quarter ended March 31, 2005, the company began reporting the printing and writing papers business as a discontinued operation.

New accounting standards

In March 2005, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin (“SAB”) No. 107, Share-Based Payment . SAB No. 107 addresses the interaction between SFAS No. 123R and certain SEC rules and regulations and provides the SEC staff’s views regarding the valuation of share-based payment arrangements for public companies. The company followed the interpretive guidance set forth in SAB No. 107 during its adoption of SFAS No. 123R.

In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections, which replaces APB Opinions No. 20, Accounting Changes and SFAS No. 3, Reporting Accounting Changes in Interim Financial Statements – An Amendment of APB Opinion No. 28. SFAS No. 154 provides guidance on the accounting for and reporting of accounting changes and error corrections. It establishes retrospective application, unless impracticable, as the required method for reporting a change in accounting principle and the reporting of a correction of an error and for reporting a change when retrospective application is impracticable. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005, and was adopted by the company in the first quarter of 2006. The adoption of SFAS No. 154 did not have an impact on the company’s consolidated financial statements.

NOTES TO FINANCIAL STATEMENTS

for Income Taxes . FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. This Interpretation is effective for fiscal years beginning after December 15, 2006. The cumulative effect of applying FIN 48 was recorded as an adjustment to retained earnings as of the beginning of the period of adoption. See Note N for discussion of the effects of this accounting change.

In September 2006, the FASB issued SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans – An Amendment of FASB Statements No. 87, 88, 106, and 132(R) . SFAS No. 158 requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan in its balance sheet and to recognize the changes in the plan’s funded status in comprehensive income in the year in which the change occurs. These provisions of the Statement are effective as of the end of the first fiscal year ending after December 15, 2006. SFAS No. 158 also requires an employer to measure the funded status of a plan as of the date of its fiscal year end, which is the Company’s measurement date. Pursuant to the Statement’s adoption, the net after-tax charge to accumulated other comprehensive loss in the fourth quarter of 2006 was $57 million. This adjustment principally represents the recognition of previously unrecognized prior service costs and net actuarial losses and the impact of recording additional minimum liabilities for certain under-funded plans. This Statement will not affect the company’s ERISA funding obligations and we do not currently anticipate any required company contributions to the U.S. qualified retirement plans in the foreseeable future.

NOTES TO FINANCIAL STATEMENTS

There were no other accounting standards issued in 2007 that had or are expected to have a material impact on the company’s financial position or results of operations.

NOTES TO FINANCIAL STATEMENTS

A. Current assets

Cash equivalents of $57 million and $39 million at December 31, 2007 and 2006, respectively, are valued at cost, which approximates market value. Trade receivables have been reduced by an allowance for doubtful accounts of $18 million and $15 million at December 31, 2007 and 2006, respectively. Receivables also include $70 million and $64 million from sources other than trade at December 31, 2007 and 2006, respectively. Inventories at December 31, 2007 and 2006 are comprised of:


	December 31,
*In millions*	2007		2006
Raw materials	$	186	$	182
Production materials, stores and supplies		109		107
Finished and in-process goods		495		426

	$	790	$	715

Approximately 58% and 60% of inventories at December 31, 2007 and 2006, respectively, are valued using the last-in, first-out (“LIFO”) method. If inventories had been valued at current cost, they would have been $927 million, $838 million and $813 million at December 31, 2007, 2006 and 2005, respectively. The effects of LIFO layer decrements in 2007 and 2005 were not significant to the company’s results of operations. The effect of a LIFO layer decrement in 2006 was an increase of $0.02 to earnings per share.

B. Property, plant, equipment and forestlands

Depreciation and depletion expense was $430 million, $433 million and $404 million for the years ended December 31, 2007, 2006 and 2005, respectively.


	December 31,
*In millions*	2007			2006
Land and land improvements	$	284		$	276
Buildings		970			947
Machinery and other		6,318			6,083

		7,572			7,306
Less: accumulated depreciation		(3,793	)		(3,501	)

		3,779			3,805
Forestlands		247			488
Construction in progress		185			230

	$	4,211		$	4,523

In 2007, the company completed two significant sales of non-strategic forestlands. In the third quarter, the company sold approximately 62,000 acres located in West Virginia for $93 million in cash proceeds. In the fourth quarter, the company sold approximately 228,000 owned acres and approximately 95,000 acres under long-term timber contracts located in Alabama and Georgia for cash proceeds of $2 million and a long-term installment note of $398 million supported by an irrevocable letter of credit from a bank obtained by the buyer of the forestlands. In connection with the sale of the Alabama and Georgia forestlands, the company entered into a long-term fiber supply agreement with the buyer providing for future delivery of pulpwood and related products at market prices under a take-or-pay arrangement with certain minimum annual volumes. The aggregate book value of the assets related to these sales was $238 million, which resulted in a pre-tax gain of $250 million, net of transaction costs, included in other income, net in the consolidated statements of operations. These sales are part of the company’s strategy to segment and manage its U.S. land holdings for highest value opportunities, and represent a permanent reduction to its forestlands asset base.

NOTES TO FINANCIAL STATEMENTS

C. Goodwill and other intangible assets

Unless otherwise deemed necessary by changes in circumstances, the company performs its annual impairment review during the fourth quarter of each year. No goodwill impairment charge was necessary as a result of the 2007, 2006 or 2005 annual impairment reviews.

During 2007, the company acquired two manufacturers of dispensing and sprayer systems resulting in goodwill in the amount of $24 million. During 2006, the company completed its acquisition of Saint-Gobain Calmar from Compagnie de Saint-Gobain resulting in goodwill in the amount of $302 million. See Note P for further discussion.

As of December 31, 2007, goodwill allocated to each of the company’s business segments was $68 million to Packaging Resources, $573 million to Consumer Solutions, $190 million to Consumer & Office Products, and $9 million to Specialty Chemicals.

The changes in the carrying amount of goodwill for the years ended December 31, 2007 and 2006 are as follows:


*In millions*	2007			2006
Beginning balance	$	851		$	559
Acquired goodwill ¹		24			302
Adjustments ²		(35	)		(10	)

Ending balance	$	840		$	851

¹	Represents goodwill associated with certain acquisitions included in the Consumer Solutions segment. See Note P for discussion of acquired goodwill.

²	Represents adjustments to tax contingencies, foreign currency translation and certain purchase price allocations.

The following table summarizes intangible assets subject to amortization included in other assets:


	December 31, 2007				December 31, 2006
*In millions*	Gross carrying amount		Accumulated amortization		Gross carrying amount		Accumulated amortization
Trademarks and trade names	$	212	$	67	$	208	$	53
Customer contracts and lists		293		62		278		46
Patents		73		38		59		28
Other – primarily licensing rights		29		19		30		15

	$	607	$	186	$	575	$	142

In connection with the company’s acquisition of Saint-Gobain Calmar in 2006, the company acquired indefinite-lived intangible assets which had net book values of $97 million and $91 million at December 31, 2007 and 2006, respectively, with the year-over-year change reflecting the impact of foreign exchange. See Note P for further discussion.

The company recorded amortization expense of $43 million, $37 million and $33 million for the years ending December 31, 2007, 2006 and 2005, respectively, relating to intangible assets subject to amortization. Intangible assets subject to amortization are amortized over their estimated useful lives which range from 3 to 20 years. Intangible assets that have been determined to have indefinite lives are not subject to amortization and are reviewed at least annually for impairment.

Based on the current carrying values of intangible assets subject to amortization, estimated amortization expense for the next five years is as follows: 2008 -$39 million, 2009 -$38 million, 2010 -$37 million, 2011 -$33 million, and 2012 -$32 million.

NOTES TO FINANCIAL STATEMENTS

D. Other assets


	December 31,
*In millions*	2007		2006
Identifiable intangible assets	$	518	$	524
Restricted asset ⁽¹⁾		398		—
Cash surrender value of life insurance, net of borrowings		193		197
Capitalized software, net		63		62
Equipment leased to customers, net		102		95
Other		132		98

	$	1,406	$	976

⁽¹⁾

As part of the consideration for the sale of approximately 228,000 acres of owned forestlands and 95,000 acres under long-term timber contracts, the company received an installment note in the amount of $398 million (the “Timber Note”). The Timber Note does not require any principal payments until its maturity in October 2027 and bears interest at a rate approximating LIBOR. In addition, the Timber Note is supported by an irrevocable letter of credit from a bank obtained by the buyer of the forestlands.

Using the Timber Note as collateral, the company received $338 million in proceeds under a secured financing agreement with a bank. Under the terms of the agreement, the liability from this transaction is non-recourse to MeadWestvaco and shall be paid from the Timber Note proceeds upon its maturity. As a result, the Timber Note is not available to satisfy the obligations of MeadWestvaco. The non-recourse liability does not require any principal payments until its maturity in October 2027 and bears interest at a rate approximating LIBOR. The $338 million non-recourse liability is included in other long-term obligations in the consolidated balance sheet at December 31, 2007.

E. Accounts payable and accrued expenses


	December 31,
*In millions*	2007		2006
Accounts payable:
Trade	$	574	$	465
Other		66		87

	$	640	$	552


Accrued expenses:
Taxes, other than income	$	39	$	28
Interest		66		64
Payroll and employee benefit costs		271		264
Accrued rebates and allowances		106		118
Environmental and litigation – current portion		27		30
Income taxes payable		79		12
Freight		12		11
Restructuring charges		29		50
Other		118		125

	$	747	$	702

NOTES TO FINANCIAL STATEMENTS

F. Notes payable and long-term debt

Notes payable and current maturities of long-term debt and capital lease obligations consisted of the following:


	December 31,
*In millions*	2007		2006
Commercial paper borrowings	$	—	$	148
Short-term bank loans		45		—
Other short-term borrowings		2		11
Current maturities of long-term debt and capital lease obligations		21		52

	$	68	$	211

The maximum amounts of combined commercial paper borrowings outstanding during the years ended December 31, 2007 and 2006 were $279 million and $355 million, respectively. The average amounts of commercial paper borrowings outstanding during the years ended December 31, 2007 and 2006 were $118 million and $136 million, respectively, with an average interest rate of 5.4% and 5.5%, respectively.

During 2007, the company obtained access to certain uncommitted credit lines. Short-term borrowings under these agreements were $45 million at December 31, 2007, with interest rates ranging from 5.3% to 7.3%. Other short-term borrowings of $2 million and $11 million at December 31, 2007 and 2006, respectively, are related to certain foreign operations.

MeadWestvaco has a $750 million bank credit agreement that matures on December 1, 2010. Borrowings under the agreement can be unsecured domestic or eurodollar notes at rates approximating prime or LIBOR at the company’s option. The $750 million credit agreement contains a financial covenant limiting the percentage of total debt (including a $338 million liability non-recourse to MeadWestvaco) to total capitalization (including deferred taxes) to 55%, as well as certain other covenants with which the company was in compliance at December 31, 2007. The credit facility was undrawn at December 31, 2007 and 2006.

Long-term debt consisted of the following:


	December 31,
*In millions*	2007			2006
Debentures, rates from 6.80% to 9.75%, due 2017-2047	$	1,181		$	1,227
Notes, rates from 6.85% to 7.10%, due 2009-2012		696			676
Sinking fund debentures, rates from 7.50% to 7.65%, due 2008-2027		299			299
Capital lease obligations:
Industrial Development Revenue Bonds, rate 7.67%, due 2027		80			80
Industrial Development Revenue Bonds, rate 6.35%, due 2035		51			51
Industrial Development Revenue Bonds, rate 6.10%, due 2030		7			7
Pollution Control Revenue Bonds, rate 6.375%, due 2026		6			6
Other capital lease obligations		8			4
Other long-term debt		68			74

		2,396			2,424
Less: amounts due within one year		(21	)		(52	)

Long-term debt	$	2,375		$	2,372

As of December 31, 2007, outstanding debt (excluding capital lease obligations) maturing in the next five years is as follows: 2008 -$65 million, 2009 -$66 million, 2010 -$15 million, 2011 -$15 million, and 2012 -$648 million.

As of December 31, 2007, capital lease obligations maturing in the next five years are as follows: 2008 -$3 million, 2009 -$4 million, 2010 -$1 million, 2011 -$1 million, and 2012 -$-0- million.

The weighted average interest rate on the company’s fixed-rate long-term debt was approximately 8.7% and approximately 8.8% for 2007 and 2006, respectively. The weighted average interest rate on the company’s variable-rate long-term debt was approximately 5.3% for both 2007 and 2006. The percentage of debt to total capital was 39.7% and 42.2% at December 31, 2007 and 2006, respectively.

NOTES TO FINANCIAL STATEMENTS

At December 31, 2007, the book value of financial instruments included in long-term debt was $2.4 billion and the fair value was estimated to be $2.5 billion. At December 31, 2006, the book value of financial instruments included in long-term debt was $2.4 billion and the fair value was estimated to be $2.6 billion. The difference between book value and fair value is derived from the difference between the period-end market interest rate and the stated rate for the company’s fixed-rate, long-term debt. The company has estimated the fair value of financial instruments based upon quoted market prices for the same or similar issues or on the current interest rates available to the company for debt of similar terms and maturities.

The company utilized a portion of the cash proceeds from the sale of its printing and writing papers business in 2005 to retire approximately $1 billion of debt. The charge incurred to retire the debt in 2005 was $90 million and is included in discontinued operations in the consolidated statements of operations.

G. Financial instruments

The company uses various derivative financial instruments as part of an overall strategy to manage exposure to market risks associated with interest rate, foreign currency exchange rate and natural gas price fluctuations. The company does not hold or issue derivative financial instruments for trading purposes. The risk of loss to the company in the event of nonperformance by any counterparty under derivative financial instrument agreements is not considered significant by management. Although the derivative financial instruments expose the company to market risk, fluctuations in the value of the derivatives are mitigated by expected offsetting fluctuations in the matched instruments. All derivative instruments are required to be recorded in the consolidated balance sheets as assets or liabilities, measured at fair value. If the derivative is designated as a fair-value hedge, the changes in the fair value of the derivative and of the hedged item attributable to the hedged risk are recognized in earnings. If the derivative is designated as a cash-flow hedge, the effective portion of the change in the fair value of the derivative is recorded in other comprehensive income and is recognized in the consolidated statements of operations when the hedged item affects earnings. Ineffective portions of changes in the fair value of cash-flow hedges and financial instruments not designated as hedges are recognized in earnings.

Natural gas

In order to better predict and control the future cost of natural gas consumed at the company’s mills and plants, the company engages in financial hedging of future gas purchase prices. Gas usage is relatively predictable month-by-month. The company hedges primarily with financial instruments that are priced based on New York Mercantile Exchange (NYMEX) natural gas futures contracts. The company does not hedge basis ( the effect of varying delivery points or locations) or transportation (the cost to transport the gas from the delivery point to a company location) under these transactions.

Unrealized gains and losses on contracts maturing in future months are recorded in accumulated other comprehensive income and are charged or credited to earnings for the ineffective portion of the hedge. Once a contract matures, the company has a realized gain or loss on the contract up to the quantities of natural gas in the forward swap agreements for that particular period, which are charged or credited to earnings when the related hedge item affects earnings. The estimated pre-tax loss to be recognized in earnings in 2008 is $2 million. As of December 31, 2007, the maximum remaining term of existing hedges was less than two years. For the years ended December 31, 2007, 2006 and 2005, no amounts of gains or losses were recognized in earnings due to the probability that forecasted transactions will not occur.

Natural gas hedging activities in accumulated other comprehensive income (loss), net of tax:


*In millions*	2007			2006
Balance at January 1	$	(3	)	$	—
Net losses associated with current period hedging transactions		(1	)		(4	)
Reclassified to earnings due to:
Hedge ineffectiveness		—			—
Realized hedge losses		3			1

Net reclassification to earnings		3			1

Balance at December 31	$	(1	)	$	(3	)

NOTES TO FINANCIAL STATEMENTS

Interest rate risk

The company utilizes interest-rate swap agreements to manage a portion of its interest-rate risk on its debt instruments. As part of an overall strategy to maintain an appropriate level of exposure to interest-rate fluctuations, the company has developed a targeted mix of fixed-rate and variable-rate debt. To efficiently manage this mix, the company may utilize interest-rate swap agreements.

The company has interest-rate swaps designated as fair-value hedges of certain fixed-rate borrowings. There were no interest-rate swaps designated as cash-flow hedges at December 31, 2007, 2006, and 2005. The maturity dates on these swaps match the maturity dates of the underlying debt. During the years ended December 31, 2007, 2006 and 2005, the interest-rate swaps were an effective hedge and, therefore, required no charge to earnings due to ineffectiveness in accordance with SFAS No. 133.

Details on the interest-rate swaps are presented below:


	December 31,
*In millions*	2007		2006
Notional amount of swapped debt	$	525	$	525
Fair value of swaps		16		(3	)

Foreign currency risk

The company uses foreign currency forward contracts to manage some of the foreign currency exchange risks associated with certain short-term foreign intercompany loans, some foreign currency sales and purchases of its international operations, and some foreign sales of its U.S. operations. Using such forward contracts, the company receives or pays the difference between the contracted forward rate and the exchange rate at the settlement date. These contracts are used to hedge the variability of exchange rates on the company’s cash flows.

The forward contracts related to certain intercompany loans are short term in duration and are not designated as hedging instruments under SFAS No. 133. Information about these forward contracts is presented below:


	December 31,
*In millions*	2007			2006
Notional amount of foreign currency forward contracts	$	115		$	55
Fair value of foreign currency forward contracts		(1	)		—

Other forward contracts, which are for terms of up to one year, are designated as cash-flow hedges under SFAS No. 133. The notional amount of those forward contracts was $150 million and $62 million at December 31, 2007 and 2006, respectively. The estimated pre-tax loss to be recognized in earnings in 2008 is $4 million. For the years ended December 31, 2007, 2006 and 2005, no amounts of gains or losses were recognized in earnings due to the probability that forecasted transactions will not occur.

Foreign currency hedging activities in accumulated other comprehensive income (loss), net of tax:


*In millions*	2007			2006			2005
Balance at January 1	$	—		$	2		$	—
Net gains (losses) associated with current period hedging transactions:		(7	)		(3	)		5
Reclassified to earnings due to:
Hedge ineffectiveness		—			—			—
Realized hedge (gains) losses		4			1			(3	)

Net reclassification to earnings		4			1			(3	)

Balance at December 31	$	(3	)	$	—		$	2

NOTES TO FINANCIAL STATEMENTS

H. Lease commitments

The company leases a variety of assets for use in its operations. Leases for administrative offices, converting plants and storage facilities generally contain options, which allow the company to extend lease terms for periods up to 25 years or to purchase the properties. Certain leases provide for escalation of the lease payments as maintenance costs and taxes increase. Minimum rental payments pursuant to agreements as of December 31, 2007 under operating leases that have noncancellable lease terms in excess of 12 months and under capital leases are as follows:


*In millions*	Operating leases		Capital leases
2008	$	49	$	14
2009		38		14
2010		45		11
2011		37		11
2012		31		10
Later years		168		315

Minimum lease payments	$	368		375

Less: amount representing interest				223

Capital lease obligations			$	152

Rental expense under operating leases was $87 million, $83 million and $75 million for the years ended December 31, 2007, 2006 and 2005, respectively.

I. Shareholders’ equity

The value included in common stock at December 31, 2007 and 2006 reflects the outstanding shares of common stock at $0.01 par value per share.

On November 20, 2007, the company entered into an accelerated share repurchase agreement with a financial institution counterparty (the “Counterparty”) to purchase $400 million of MeadWestvaco’s common stock. The agreement is a collared transaction in which the company agreed to purchase for $400 million a number of its shares to be determined based on the volume weighted average price of its common stock during a specified period of time, subject to certain provisions that establish minimum and maximum numbers of shares that may be purchased. The hedge period for determining the minimum and maximum numbers of shares to be purchased ended on December 14, 2007, resulting in a minimum number of shares of 11.1 million and a maximum number of shares of 14 million. On November 21, 2007 and December 14, 2007, the Counterparty delivered 10 million shares and 1.1 million shares, respectively. Accordingly, the company received 11.1 million shares through December 31, 2007, equivalent to the minimum number of shares to be delivered. At the conclusion of the program, which will be no later than June 2008, the company may receive additional shares up to the maximum number of 14 million for no additional payment. In certain extraordinary events that result in a substantial increase in the company’s stock price during a specified period of time up to a period of six months from the inception of the agreement, the company may be required to return some of the shares it received to the Counterparty. The purchased shares through December 31, 2007 were retired and recorded as a $400 million reduction to additional paid-in capital in the consolidated balance sheet pursuant to regulations of the State of Delaware, the state of incorporation of MeadWestvaco, and the approval by the company’s Board of Directors.

In October of 2005, the company’s Board of Directors authorized the future purchase of up to 5 million shares of MeadWestvaco’s common stock, primarily to avoid dilution of earnings per share relating to the exercise of employee stock options. The number of shares available for purchase under this program at December 31, 2007 was 2.1 million.

During the year ended December 31, 2005, approximately $700 million of the approximately $2.2 billion in proceeds from the sale of the company’s printing and writing papers business was used to purchase a total of almost 24 million, or 12%, of the company’s outstanding common shares. The purchased shares, upon retirement, were recorded as a reduction of approximately $700 million to additional paid-in capital in the consolidated balance sheet pursuant to the regulations of the State of Delaware, the state of incorporation of MeadWestvaco, and the approval by the company’s Board of Directors.

NOTES TO FINANCIAL STATEMENTS

The cumulative components at year end of accumulated other comprehensive income (loss) for 2007 and 2006 are as follows:


	December 31,
*In millions*	2007			2006
Foreign currency translation	$	257		$	70
Adjustments related to pension and other benefit plans		97			(74	)
Unrealized loss on derivative instruments		(4	)		(3	)

	$	350		$	(7	)

At December 31, 2007, there were authorized and available for issue 30 million shares of preferred stock, par value $0.01 per share, of which six million shares were designated as Series A Junior Participating Preferred Stock and reserved for issuance upon exercise of the rights.

Dividends declared were $0.92 per share in each of the years ended December 31, 2007, 2006 and 2005. Dividends paid were $169 million, $167 million and $178 million for the years ended December 31, 2007, 2006 and 2005, respectively.

The company had an original obligation to the former owner of a subsidiary to buy back 1.6 million shares (share put) of MeadWestvaco stock issued as part of the purchase price at a fixed rate; the value of this share repurchase approximated $58 million. During 2005, the company purchased and retired 0.3 million of these shares for $11 million. In 2006, the company repurchased and retired the remaining 1.3 million shares for $47 million.

NOTES TO FINANCIAL STATEMENTS

J. Share-based compensation

The company adopted SFAS No. 123R as of January 1, 2006 using the modified prospective method, therefore 2005 was not restated. The cumulative effect of a change in accounting principle associated with the adoption of SFAS No. 123R was not material to the consolidated financial statements. Under this new Statement in the year of adoption, pre-tax share-based compensation expense for the year ended December 31, 2006 was $21 million, including the incremental pre-tax cost of $10 million relating to stock options and stock appreciation rights. The incremental impact of adopting this Statement was a reduction to net income of $6 million, or $0.03 per share, for the year ended December 31, 2006.

Officers and key employees have been granted share-based awards under various stock-based compensation plans, all of which have been approved by the company’s shareholders. At December 31, 2007, MeadWestvaco had five such plans under which share-based awards are available for grant. There was an aggregate of 28 million shares initially reserved under the 1991 and 1996 Stock Option Plans, the 1995 Salaried Employee Stock Incentive Plan, the 1999 Salaried Employee Stock Incentive Plan and the 2005 Performance Incentive Plan for the granting of stock options, stock appreciation rights (“SARs”), restricted stock and restricted stock units to key employees. For all of the employee plans, there were approximately 9 million shares available for grant at December 31, 2007. The vesting of such awards may be conditioned upon either a specified period of time or the attainment of specific performance goals as determined by the plan. Grants of stock options and other share-based compensation awards are approved by the Compensation and Organization Development Committee of the Board of Directors. The exercise price of all stock options equals the market price of the company’s stock on the date of grant. Stock options and SARs are exercisable after a period of three years and expire no later than 10 years from the date of grant. Under certain employee plans, stock options may be granted with or without SARs or limited SARs, which are exercisable upon the occurrence of certain events related to changes in corporate control. Granting of SARs is generally limited to employees of the company who are located in countries where the issuance of stock options is not advantageous.

Options to purchase 1.3 million shares issued under the 1996 Stock Option Plan are accompanied by a feature that allows option holders who exercise their stock options and hold the common shares they received at exercise to receive an additional stock option grant with an exercise price at the then-current market price.

The MeadWestvaco Corporation Compensation Plan for Non-Employee Directors provides for the grant of stock awards up to 500,000 shares to outside directors in the form of stock options or restricted stock units. Non-employee members of the Board of Directors are currently granted restricted stock units, which vest immediately and are distributed in the form of stock shares on the date that a director ceases to be a member of the Board of Directors. In 2007, 2006 and 2005, the total annual grants consisted of 29,241, 25,558, and 24,710 restricted stock units, respectively, for non-employee directors. There were 302,887 shares remaining for grant under this plan at December 31, 2007.

Stock options and stock appreciation rights

The company has estimated the fair value of its stock option and SAR awards granted after January 1, 2006, using a lattice-based option valuation model. Lattice-based option valuation models utilize ranges of assumptions over the expected term of the options and SARs. Expected volatilities are based on the historical and implied volatility of the company’s stock. The company uses historical data to estimate option and SAR exercises and employee terminations within the valuation model. The expected term of options and SARs granted is derived from the output of the valuation model and represents the period of time that options and SARs granted are expected to be outstanding. The company measures compensation expense related to the SARs at the end of each period.

Changes in the fair value of options (in the event of an award modification) and SARs are reflected as an adjustment to compensation expense in the periods in which the changes occur. The risk-free rate for the period within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. A summary of the assumptions is as follows:

NOTES TO FINANCIAL STATEMENTS


Lattice-based option valuation assumptions	2007			2006
Weighted average fair value of stock options granted during the period	$	9.01		$	7.64
Weighted average fair value of SARs granted during the period		8.07			7.06
Expected dividend yield for stock options		2.86	%		3.27	%
Expected dividend yield for SARs		2.98	%		3.38	%
Expected volatility		28	%		28	%
Average risk-free interest rate for stock options		4.83	%		4.71	%
Average risk-free interest rate for SARs		4.72	%		4.78	%
Average expected term for options and SARs (in years)		7.4			8.0

The following table summarizes stock option and SAR activity in the plans.


*Shares in thousands*	Options		Weighted average exercise price		SARs		Weighted average exercise price		Weighted average remaining contractual term	Aggregate intrinsic value (in millions)
Outstanding at January 1, 2005	15,917		$	28.94	113		$	26.80
Granted	1,518			30.18	143			30.21
Exercised	(1,462	)		26.52	(9	)		25.48		$	5.6
Cancelled	(960	)		29.36	(20	)		29.69

Outstanding at December 31, 2005	15,013			29.27	227			28.75
Granted	1,050			28.13	309			27.46
Exercised	(2,096	)		26.90	(2	)		25.51			4.9
Cancelled	(972	)		30.21	(44	)		29.28

Outstanding at December 31, 2006	12,995			29.49	490			29.55
Granted	1,138			32.21	84			32.11
Exercised	(5,540	)		29.42	(33	)		27.14			21.9
Cancelled	(653	)		31.61	(45	)		29.20

Outstanding at December 31, 2007	7,940			29.75	496			28.91	4.9 years		18.7
Exercisable at December 31, 2007	5,982			29.70	214			28.88	3.5 years		15.6
Exercisable at December 31, 2006	10,989			29.58	131			27.88	3.2 years		14.4

At December 31, 2007, there was $12 million of unrecognized pre-tax compensation cost related to nonvested stock options and SARs, which is expected to be recognized over a weighted-average period of 1.5 years. Pre-tax compensation expense for stock options and SARs was $11 million for 2007 and the tax benefit associated with this expense was $4 million.

Total cash received from the exercise of share-based awards in 2007 was $162 million.

Restricted stock and restricted stock units

A restricted stock unit is the right to receive a share of company stock. Employee restricted stock and restricted stock units vest over a three-year period. Awards granted in 2007, 2006 and 2005 consisted of both service and performance vesting restricted stock units. Under the employee plans, the owners of the stock are entitled to voting rights and to receive dividends, but will forfeit the stock if the individual holder separates from the company during the three-year vesting period or if predetermined goals are not accomplished relative to return on invested capital, revenue from new products, total procurement savings and reduction in selling, general and administrative expenses. The fair value of each share of restricted stock and restricted stock unit is the closing market price of the company’s stock on the date of grant, and the compensation expense is charged to operations over the vesting period. Performance-based awards granted to employees in 2007, 2006 and 2005 were 510,000, 510,170 and 281,420, respectively. None of these grants were vested at December 31, 2007.

NOTES TO FINANCIAL STATEMENTS

The following table summarizes restricted stock and restricted stock unit activity in the employee and director plans.


*Shares in thousands*	Shares		Average grant date fair market value
Outstanding at January 1, 2005	303		$	28.46
Granted	308			29.87
Forfeited	(4	)		29.33
Released	(8	)		28.46

Outstanding at December 31, 2005	599			29.00
Granted	851			28.03
Forfeited	(77	)		27.70
Released	(40	)		28.74

Outstanding at December 31, 2006	1,333			28.88
Granted	909			28.96
Forfeited	(117	)		29.77
Released	(223	)		27.43

Outstanding at December 31, 2007	1,902			30.41

At December 31, 2007 and 2006, there was approximately $29 million and $19 million of unrecognized pre-tax compensation cost related to nonvested restricted stock and restricted stock units, which is expected to be recognized over a weighted-average period of 1.6 years. Pre-tax compensation expense for restricted stock and restricted stock units was $15 million, $11 million and $5 million for 2007, 2006 and 2005, respectively, and the tax benefit associated with this expense was $5 million, $4 million and $2 million, respectively. Dividends, which are payable in stock, accrue on the restricted stock unit grants and are subject to the same terms as the original grants.

K. Employee retirement, postretirement and postemployment benefits

Retirement plans

MeadWestvaco provides retirement benefits for substantially all U.S. and certain non-U.S. employees under several noncontributory trusteed plans and also provides benefits to employees whose retirement benefits exceed maximum amounts permitted by current tax law under unfunded benefit plans. Benefits are based on either a final average pay formula or a cash balance formula for the salaried plans and a unit benefit formula for the bargained hourly plans. Prior service costs are amortized on a straight-line basis over the average remaining service period for active employees. Contributions are made to the funded plans in accordance with ERISA requirements.

In August 2006, the President signed into law the Pension Protection Act of 2006 (PPA). The PPA establishes new minimum funding rules for defined benefit pension plans beginning in 2008. The company does not anticipate any required funding to the U.S. qualified retirement plans as a result of this legislation in the foreseeable future due to the overfunded status of the plans.

In September 2006, the FASB issued SFAS No. 158 , Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans—An Amendment of FASB Statement Nos. 87, 88, 106, and 132(R). SFAS No. 158 requires an employer to recognize the overfunded or underfunded status of a defined benefit and postretirement plan in its balance sheet and to recognize the changes in the plan’s funded status in comprehensive income in the year in which the change occurs. These provisions of the Statement are effective as of the end of the first fiscal year ending after December 15, 2006. SFAS No. 158 also requires an employer to measure the funded status of a plan as of the date of its fiscal year end, which is consistent with the Company’s measurement date. The impact of adopting SFAS No. 158 as of December 31, 2006 was a net increase to accumulated other comprehensive loss in the amount of $57 million, net of tax.

In October 2006, the Board of Directors approved the creation of a cash balance formula within the Company’s existing retirement plans for salaried and non-bargained hourly employees. The formula will provide cash balance credits at the rate of 4%—8% of eligible earnings, depending upon age and years of service points, with interest credited annually at the 30-year Treasury rate. Effective July 1, 2006, all U.S. Calmar employees began accruing cash balance credits under this new formula. Effective January 1, 2007, all newly hired U.S. employees will accrue benefits under this new formula. Effective January 1, 2008, all U.S. employees age 40 and over at that time will be provided the opportunity to make a one-time choice between the existing final average pay and cash balance formulas and all U.S. employees less than age 40 at that time will begin accruing cash balance credits under this formula. The adoption of this change reduced retirement plan liabilities by $25 million as of December 31, 2006 and increased net periodic pension income by $1 million and $10 million in 2006 and 2007, respectively.

NOTES TO FINANCIAL STATEMENTS

Net periodic pension cost (income) relating to employee retirement benefits was $(54) million, $(49) million and $48 million for the years ended December 31, 2007, 2006 and 2005, respectively. In accordance with the provisions of SFAS No. 88 , Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits, settlements, curtailments and termination benefits associated with merger-related and restructuring activities were recorded. Net periodic pension cost (income) reflects cumulative favorable investment returns on plan assets. Prior service cost and actuarial gains and losses subject to amortization are amortized on a straight-line basis over the average remaining service, which is about 10 years.

The components of net pension cost (income) for each of the periods presented are as follows:


	Years ended December 31,
*In millions*	2007			2006			2005
Service cost-benefits earned during the period	$	53		$	59		$	53
Interest cost on projected benefit obligation		147			142			141
Expected return on plan assets		(265	)		(262	)		(273	)
Amortization of prior service cost		6			7			7
Amortization of net loss		5			4			2

Pension income before settlements, curtailments and termination benefits		(54	)		(50	)		(70	)
Settlements		—			—			115
Termination benefits		—			1			3

Net periodic pension cost (income)	$	(54	)	$	(49	)	$	48

The components of other changes in plan assets and benefit obligations recognized in other comprehensive income:


	2007			2006
Net actuarial loss (gain)	$	(260	)	$	111
Amortization of net actuarial loss		(5	)		—
Prior service cost		—			41
Amortization of prior service cost		(6	)		—

Total recognized in other comprehensive income	$	(271	)	$	152


Total recognized in net periodic pension cost (income) and other comprehensive income	$	(325	)	$	103

The estimated net actuarial loss and prior service cost for the defined benefit retirement plans that will be amortized from accumulated other comprehensive income into net periodic benefit cost in 2008 is $1 million and $5 million, respectively.

In January 2005, the company reached an agreement to sell its printing and writing papers business and related assets. As a result, in 2005 a settlement loss in the retirement plans of $110 million was recorded. Tabular amounts for 2005 were not adjusted for discontinued operations resulting from the sale. Net pension income from continuing operations, before settlements, curtailments and termination benefits was $67 million in 2005.

Postretirement benefits

MeadWestvaco provides life insurance for substantially all retirees and medical benefits to certain retirees in the form of cost subsidies until Medicare eligibility is reached and to certain other retirees, medical benefits up to a maximum lifetime amount. The company funds certain medical benefits on a current basis with retirees paying a portion of the costs. Certain retired employees of businesses acquired by the company are covered under other medical plans that differ from current plans in coverage, deductibles and retiree contributions. Prior service cost and actuarial gains and losses subject to amortization are amortized over the average remaining service, which is about 5 years. In 2004, the company modified certain postretirement healthcare benefits to be provided to future retirees. This change reduced the postretirement benefit obligation by about $68 million, and is being amortized over the remaining life of the eligible employees, which is approximately 24 years.

NOTES TO FINANCIAL STATEMENTS

The components of net postretirement benefits cost (income) for each of the periods presented are as follows:


	Years ended December 31,
*In millions*	2007			2006			2005
Service cost-benefits earned during the period	$	3		$	3		$	5
Interest cost		7			8			9
Net amortization		(1	)		(1	)		—

Postretirement expense before curtailments and termination benefits		9			10			14
Curtailments		—			—			(29	)

Net periodic postretirement benefits cost (income)	$	9		$	10		$	(15	)

The components of other changes in plan assets and benefit obligations recognized in other comprehensive income:


	2007		2006
Net actuarial gain	$	—	$	(15	)
Prior service benefit		—		(33	)
Amortization of prior service benefit		1		—

Total recognized in other comprehensive income	$	1	$	(48	)


Total recognized in net periodic postretirement benefit cost (income) and other comprehensive income	$	10	$	(38	)

The estimated net actuarial gain and prior service benefit for the postretirement plans that will be amortized from accumulated other comprehensive income into net periodic postretirement benefit cost in 2008 is $2 million, allocated equally between components.

In 2005, a curtailment gain of $29 million related to the sale of the printing and writing papers business was recorded. Tabular amounts were not adjusted for discontinued operations resulting from the sale. Net periodic postretirement benefit cost from continuing operations, before curtailments and termination benefits was $13 million in 2005.

The following table also sets forth the funded status of the plans and amounts recognized in the consolidated balance sheets at December 31, 2007 and 2006, based on a measurement date of December 31 for each period.

NOTES TO FINANCIAL STATEMENTS

Obligations, assets and funded status


	Qualified U.S. Retirement Plans						Nonqualified U.S. and Non - U.S. Retirement Plans						Postretirement Benefits
	Years ended December 31,						Years ended December 31,						Years ended December 31,
*In millions*	2007			2006			2007			2006			2007			2006
Change in benefit obligation:
Benefit obligation at beginning of period	$	2,438		$	2,484		$	201		$	159		$	131		$	153
Service cost		47			54			6			5			3			3
Interest cost		136			133			11			9			7			8
Actuarial loss (gain)		(135	)		(57	)		(28	)		14			(1	)		(14	)
Plan amendments		—			(19	)		—			1			—			—
Acquisitions		—			—			—			10			—			—
Foreign currency exchange rate changes		—			—			7			10			1			—
Employee contributions		—			—			—			—			15			16
Termination benefit costs		16			14			—			1			—			—
Settlements		—			—			(1	)		—			—			—
Benefits paid (including termination benefits)		(177	)		(171	)		(8	)		(8	)		(32	)		(35	)

Benefit obligation at end of year	$	2,325		$	2,438		$	188		$	201		$	124		$	131


Change in plan assets:
Fair value of plan assets at beginning of period	$	3,358		$	3,120		$	60		$	50		$	—		$	—
Actual return on plan assets		357			409			3			5			—			—
Company contributions		—			—			11			9			17			19
Foreign currency exchange rate changes		—			—			4			4			—			—
Employee contributions		—			—			—			—			15			16
Settlements		—			—			(1	)		—			—			—
Benefits paid (including termination benefits)		(177	)		(171	)		(8	)		(8	)		(32	)		(35	)

Fair value of plan assets at end of year	$	3,538		$	3,358		$	69		$	60		$	—		$	—


Over (under) funded status at end of year	$	1,213		$	920		$	(119	)	$	(141	)	$	(124	)	$	(131	)

Amounts recognized in the balance sheet consist of:
Noncurrent assets – prepaid pension asset	$	1,213		$	920		$	—		$	—		$	—		$	—
Current liabilities		—			—			(6	)		(5	)		(15	)		(18	)
Noncurrent liabilities		—			—			(113	)		(136	)		(109	)		(113	)

Total net pension asset (liability)	$	1,213		$	920		$	(119	)	$	(141	)	$	(124	)	$	(131	)


Amounts recognized in accumulated other comprehensive income (pre-tax) consist of:
Net actuarial loss (gain)	$	(159	)	$	75		$	20		$	51		$	(15	)	$	(15	)
Prior service cost (benefit)		38			45			(3	)		(4	)		(32	)		(33	)

Total recognized in accumulated other comprehensive income	$	(121	)	$	120		$	17		$	47		$	(47	)	$	(48	)

The accumulated benefit obligation for all defined benefit plans was $2,699 million and $2,513 million at December 31, 2007 and 2006, respectively.

NOTES TO FINANCIAL STATEMENTS

Information for pension plans with an accumulated benefit obligation in excess of plan assets as of December 31:


*In millions*	2007		2006
Projected benefit obligation	$	165	$	184
Accumulated benefit obligation		156		165
Fair value of plan assets		47		45

Assumptions

The weighted average assumptions used to determine the company’s benefit obligations at December 31:


	2007		2006
Retirement benefits:
Discount rate	6.22	%	5.71	%
Rate of compensation increase	3.97	%	3.97	%

Postretirement benefits:
Discount rate	6.23	%	5.74	%
Healthcare cost increase	8.48	%	8.97	%
Prescription drug cost increase	10.21	%	12.92	%

The weighted average assumptions used to determine net periodic pension cost and net postretirement benefits cost for the years presented:


	Years ended December 31,
	2007		2006		2005
Retirement benefits:
Discount rate	5.71	%	5.48	%	5.68	%
Rate of compensation increase	3.97	%	3.99	%	3.98	%
Expected return on plan assets	8.46	%	8.47	%	8.48	%

Postretirement benefits:
Discount rate	5.74	%	5.50	%	5.60	%
Healthcare cost increase	8.97	%	10.00	%	12.00	%
Prescription drug cost increase	12.92	%	14.00	%	—

MeadWestvaco’s approach to developing capital market assumptions combines an analysis of historical performance, the drivers of investment performance by asset class and current economic fundamentals. For returns, the company utilizes a building block approach starting with an inflation expectation and adds an expected real return to arrive at a long-term nominal expected return for each asset class. Long-term expected real returns are derived in the context of future expectations for the U.S. Treasury real yield curve. The company derives return assumptions for all other equity and fixed income asset classes by starting with either the U.S. Equity or U.S. Fixed Income return assumption and adding a risk premium, which reflects any additional risk inherent in the asset class.

The company determined the discount rates by referencing the Citigroup Pension Discount Curve. The company believes that using a yield curve approach more accurately reflects changes in the present value of liabilities over time since each cash flow is discounted at the rate at which it could effectively be settled. Previously, the company referenced indices for long-term, high quality bonds, ensuring that the durations of those indices were not materially different from the duration of the plans’ liabilities, or if different, that adjusting the discount rate would not have produced results that were materially different from using a common discount rate for all of its plans.

The annual rate of increase in healthcare and prescription drug costs is assumed to decline ratably each year until reaching 5% in 2015 and thereafter. The effect of a 1% increase in the assumed combined cost trend rate would increase the December 31, 2007 accumulated postretirement benefit obligation by $4 million and the total service and interest cost for 2007 by $0.5 million. The effect of a 1% decrease in the assumed healthcare cost trend rate would decrease the December 31, 2007 accumulated postretirement benefit obligation by $4 million and the total service and interest cost for 2007 by $0.5 million.

NOTES TO FINANCIAL STATEMENTS

The company also has defined contribution plans that cover substantially all U.S. and certain non-U.S. based employees. Expense for company matching contributions under these plans was $30 million, $28 million and $30 million for the years ended December 31, 2007, 2006 and 2005, respectively.

Retirement plan assets

The MeadWestvaco U.S. retirement plan asset allocation at December 31, 2007 and 2006, long-term target allocation, and expected long-term rate of return by asset category are as follows:


	Target allocation		Percentage of plan assets at December 31,				Weighted average expected long-term rate of return
Asset category:			2007		2006		2007
Equity securities	40	%	45	%	66	%	9.99	%
Debt securities	50	%	51	%	30	%	6.33	%
Real estate and private equity	10	%	4	%	4	%	12.26	%

Total	100	%	100	%	100	%

The MeadWestvaco Master Retirement Trust maintains a well-diversified investment program through both the long-term allocation of trust fund assets among asset classes and the selection of investment managers whose various styles are fundamentally complementary to one another and serve to achieve satisfactory rates of return. Active management of assets is used in asset classes and strategies where there is the potential to add value over a benchmark. The long-term trust fund asset allocation policy emphasizes protecting the plans’ funded status. The equity class of securities is expected to provide the long-term growth necessary to cover the growth of the plans’ obligations. The policy may also allocate funds to other asset classes that serve to enhance long-term, risk-adjusted return expectations. Long-duration fixed income securities and interest rate swaps are used to better match the interest rate sensitivity of plan assets and liabilities. Investment risk is measured and monitored on an ongoing basis through annual liability measurements, periodic asset/liability studies and quarterly investment portfolio reviews. A portion of the overall fund will remain in short-term fixed income investments in order to meet the ongoing operating cash requirements of the plans.

Cash flows

Contributions:

The company does not anticipate any required contributions to the U.S. qualified retirement plans in the foreseeable future as the plans are not required to make any minimum regulatory funding contribution. However, the company expects to contribute $5 million to the funded non-U.S. pension plans in 2008.

The company expects to pay $24 million in benefits to participants of the nonqualified and unfunded non-U.S. retirement and postretirement plans in 2008. The table below presents estimated future benefits payments, substantially all of which are expected to be funded from plan assets.

Estimated future benefit payments:


*In millions*	Retirement benefits		Postretirement benefits before Medicare Part D subsidy		Medicare Part D subsidy
2008	$	150	$	16	$	(1	)
2009		157		16		(1	)
2010		161		16		(1	)
2011		165		16		(1	)
2012		177		15		(1	)
2013 – 2017		961		58		(4	)

Postemployment benefits

MeadWestvaco provides limited postemployment benefits to former or inactive employees, including short-term and long-term disability, workers’ compensation, severance, and health and welfare benefit continuation.

NOTES TO FINANCIAL STATEMENTS

L. Restructuring charges

Year ended December 31, 2007


*In millions*	Employee costs		Asset write- downs and other costs		Total
Packaging Resources	$	2	$	—	$	2
Consumer Solutions		11		12		23
Consumer & Office Products		2		3		5
All other		4		51		55

	$	19	$	66	$	85

Packaging Resources:

Consumer Solutions:

Consumer & Office Products:

All other:

NOTES TO FINANCIAL STATEMENTS

Year ended December 31, 2006

Year ended December 31, 2005

Summary of restructuring accruals

The activity in the accrued restructuring balances was as follows for the year ended December 31, 2005 to the year ended December 31, 2007:


*In millions*	Employee costs			Other costs			Total
Balance of restructuring accruals at December 31, 2004	$	13		$	8		$	21
Current charges		16			8			24
Payments		(22	)		(12	)		(34	)

Balance of restructuring accruals at December 31, 2005		7			4			11
Current charges		50			17			67
Payments		(27	)		(6	)		(33	)
Acquisition reserve ⁽¹⁾		5			—			5

Balance of restructuring accruals at December 31, 2006		35			15			50
Current charges		19			8			27
Payments		(38	)		(10	)		(48	)

Balance of restructuring accruals at December 31, 2007	$	16		$	13		$	29

⁽¹⁾	In connection with the acquisition of Calmar, the company established a reserve under purchase accounting for restructuring actions. See Note P for further discussion.

NOTES TO FINANCIAL STATEMENTS

M. Other income, net

Components of other income, net are as follows:


	Years ended December 31,
*In millions*	2007			2006			2005
Gains on sales of large-tract forestlands in West Virginia, Alabama, and Georgia	$	(250	)	$	—		$	—
Gain on sales of small-tract forestlands		(24	)		(29	)		(60	)
Gain on sale of corporate real estate		—			(18	)		—
Gain on sale of PIK note		—			(21	)		—
Interest income		(20	)		(20	)		(33	)
Asset impairments		2			20			—
Transition services income		—			(5	)		(25	)
Loss on the extinguishment of debt		—			—			90
Foreign currency exchange losses (gains)		(14	)		(2	)		8
Other, net		1			(8	)		4

	$	(305	)	$	(83	)	$	(16	)

Gains on sales of large and small-tract forestlands were $274 million, $29 million and $60 million related to sales of 393,000 acres, 8,000 acres and 20,000 acres in 2007, 2006 and 2005, respectively (see Note B for discussion of significant 2007 forestlands sales). During 2006, the company recorded a $21 million gain on the sale of a PIK note received as part of the consideration for the sale of the printing and writing papers business in 2005. As part of the company’s initiative to reduce its real estate footprint, the company sold corporate real estate for a gain of $18 million in 2006. In 2006 and 2005, income of $5 million and $25 million, respectively, was recorded from services provided to NewPage Corporation pursuant to the printing and writing papers sale agreement (see Note P for further detail on the sale). In 2006, asset impairment charges recorded in other income, net include a $13 million write-down of an investment that was subsequently sold in 2007. The company utilized cash proceeds from the sale of its printing and writing papers business to repay approximately $1 billion of debt in 2005 and, as a result, incurred charges for debt retirement of $90 million.

NOTES TO FINANCIAL STATEMENTS

N. Income taxes

Earnings from continuing operations before income taxes are comprised of the following:


	Years ended December 31,
*In millions*	2007		2006			2005
U.S. earnings (loss)	$	230	$	(50	)	$	(27	)
Foreign earnings		170		148			162

	$	400	$	98		$	135

The significant components of the income tax provision are as follows:


	Years ended December 31,
*In millions*	2007			2006			2005
Current:
U.S. federal	$	43		$	6		$	103
State and local		13			16			13
Foreign		42			39			46

		98			61			162

Deferred:
U.S. federal		18			(38	)		(165	)
State and local		5			(18	)		(37	)
Foreign		(6	)		—			(1	)

Provision (benefit) for deferred income taxes		17			(56	)		(203	)

		115			5			(41	)
Allocation to discontinued operations		—			—			(57	)

Income tax provision ¹	$	115		$	5		$	16

¹	Related to continuing operations.

The following table summarizes the major differences between the actual income tax provision attributable to continuing operations and taxes computed at the U.S. federal statutory rate:


	Years ended December 31,
*In millions*	2007			2006			2005
Income tax provision computed at the U.S. federal statutory rate of 35%	$	140		$	35		$	47
State and local income taxes, net of federal benefit		6			(8	)		(11	)
Foreign income tax rate differential		(24	)		(12	)		(14	)
Valuation allowances		3			6			2
Credits		(1	)		(3	)		(4	)
Other		(9	)		(13	)		(4	)

Income tax provision ¹	$	115		$	5		$	16

Effective tax rate ¹		28.8	%		5.4	%		11.9	%

¹	Related to continuing operations.

NOTES TO FINANCIAL STATEMENTS

The principal current and noncurrent deferred tax assets and liabilities were as follows:


	December 31,
*In millions*	2007			2006
Deferred tax assets:
Employee benefits	$	174		$	154
Postretirement benefit accrual		36			62
Other accruals and reserves		64			76
Net operating loss and other credit carry forwards		190			147
Other		74			75

Total deferred tax assets		538			514
Valuation allowance		(131	)		(126	)

Net deferred tax assets		407			388

Deferred tax liabilities:
Depreciation and depletion		(928	)		(933	)
Nontaxable pension asset		(422	)		(364	)
State and local taxes		(104	)		(84	)
Identifiable intangibles		(98	)		(85	)
Other		(41	)		(39	)

Total deferred tax liabilities		(1,593	)		(1,505	)

Net deferred liability	$	(1,186	)	$	(1,117	)


Included in the balance sheet:
Current assets - deferred tax asset	$	42		$	60
Noncurrent net deferred tax liability		(1,228	)		(1,177	)

Net deferred liability	$	(1,186	)	$	(1,117	)

The company has a $5 million federal net operating loss carryover subject to certain limitations on utilization imposed by the Internal Revenue Code. In addition, the company has state and foreign tax net operating loss carryforwards which are available to reduce future taxable income in various state and foreign jurisdictions. The company’s valuation allowance against deferred tax assets primarily relates to the state and foreign tax net operating losses for which the ultimate realization of future benefits is uncertain.

At December 31, 2007 and 2006, no deferred income taxes have been provided for the company’s share of undistributed net earnings of foreign operations due to management’s intent to reinvest such amounts indefinitely. The determination of the amount of such unrecognized tax liability is not practical. Those earnings, including foreign currency translation adjustments, totaled $1,345 million and $985 million for the years ended December 31, 2007 and 2006, respectively.

The company adopted the provisions of FIN 48 on January 1, 2007. As a result of the implementation of FIN 48, the company recorded a decrease of opening retained earnings and goodwill in the amount of $8 million and $39 million, respectively. A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:


	2007 ¹
Balance at January 1, 2007	$	186
Additions based on tax positions related to the current year		14
Additions for tax positions of prior years		32
Reductions for tax positions of prior years		(15	)
Reductions for tax positions due to lapse of statute		(2	)
Settlements		(64	)

Balance at December 31, 2007	$	151

¹	The above table includes foreign currency translation effects of approximately $5 million.

NOTES TO FINANCIAL STATEMENTS

The company has operations in many areas of the world and is subject, at times, to audit in these jurisdictions. These audits, by their nature are complex and can require several years to resolve. The final resolution of any such tax audits could result in either a reduction in the company’s accruals or an increase in its income tax provision, both of which could have an impact on the results of operations in any given period. With a few exceptions, the company is no longer subject to U.S. federal, state and local, or foreign income tax examinations by tax authorities for years prior to 2002. The company regularly evaluates, assesses and adjusts these accruals in light of changing facts and circumstances, which could cause the effective tax rate to fluctuate from period to period. Of the total $151 million liability for unrecognized tax benefits at December 31, 2007, $123 million could impact the annual effective tax rate in future periods. The remaining balance of this liability would be adjusted through the consolidated balance sheet without impacting the company’s annual effective tax rate.

During 2007, the company settled audits with the Internal Revenue Service for tax years 1999-2001. The Internal Revenue Service exam for tax years 2002-2003 is open and currently is not expected to close in 2008. Management does not anticipate any potential settlement for tax years 2002-2003 to result in a material change to the company’s financial position. In addition, the company is in advanced stages of audits in certain foreign jurisdictions and certain domestic states. Based on the resolution of the various audits mentioned above, it is reasonably possible that the balance of unrecognized tax benefits may change by $15 million to $25 million during 2008.

Pursuant to agreements for the purchase of certain businesses, the company is indemnified by the sellers for tax costs and contingencies related to pre-acquisition periods for such businesses. The company estimates such pre-acquisition tax costs and contingencies to be $7 million at December 31, 2007.

The company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense in the consolidated statements of operations, which is consistent with the recognition of these items in prior reporting periods. During the years ended December 31, 2007 and 2006, the company recognized $16 million and $10 million, respectively, in interest expense and penalties. The company accrued $57 million and $15 million for the payment of interest and penalties at December 31, 2007, and 2006, respectively.

Approximately $94 million of deferred income tax expense and $34 million of deferred income tax benefit was provided for in components of other comprehensive income (loss) during the years ended December 31, 2007 and 2006, respectively.

O. Environmental and legal matters

The company has been notified by the U.S. Environmental Protection Agency (the “EPA”) or by various state or local governments that it may be liable under federal environmental laws or under applicable state or local laws with respect to the cleanup of hazardous substances at sites previously operated or used by the company. The company is currently named as a potentially responsible party (“PRP”), or has received third-party requests for contribution under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) and similar state or local laws with respect to numerous sites. There are other sites which may contain contamination or which may be potential Superfund sites, but for which MeadWestvaco has not received any notice or claim. The potential liability for all these sites will depend upon several factors, including the extent of contamination, the method of remediation, insurance coverage and contribution by other PRPs. The company regularly evaluates its potential liability at these various sites. At December 31, 2007, MeadWestvaco had recorded liabilities of approximately $21 million for estimated potential cleanup costs based upon its close monitoring of ongoing activities and its past experience with these matters. The company believes that it is reasonably possible that costs associated with these sites may exceed amounts of recorded liabilities by an amount that could range from an insignificant amount to as much as $20 million. This estimate is less certain than the estimate upon which the environmental liabilities were based. After consulting with legal counsel and after considering established liabilities, it is our judgment that the resolution of pending litigation and proceedings is not expected to have a material adverse effect on the company’s consolidated financial condition or liquidity. In any given period or periods, however, it is possible such proceedings or matters could have a material effect on the results of operations.

NOTES TO FINANCIAL STATEMENTS

As with numerous other large industrial companies, the company has been named a defendant in asbestos-related personal injury litigation. Typically, these suits also name many other corporate defendants. All of the claims against the company resolved to date have been concluded before trial, either through dismissal or through settlement with payments to the plaintiff that are not material to the company. To date, the costs resulting from the litigation, including settlement costs, have not been significant. As of December 31, 2007, there were approximately 350 lawsuits. Management believes that the company has substantial indemnification protection and insurance coverage, subject to applicable deductibles and policy limits, with respect to asbestos claims. The company has valid defenses to these claims and intends to continue to defend them vigorously. Additionally, based on its historical experience in asbestos cases and an analysis of the current cases, the company believes that it has adequate amounts accrued for potential settlements and judgments in asbestos-related litigation. At December 31, 2007, the company had recorded litigation liabilities of approximately $19 million, a significant portion of which relates to asbestos. Should the volume of litigation grow substantially, it is possible that the company could incur significant costs resolving these cases. After consulting with legal counsel and after considering established liabilities, it is our judgment that the resolution of pending litigation and proceedings is not expected to have a material adverse effect on the company’s consolidated financial condition or liquidity. In any given period or periods, however, it is possible such proceedings or matters could have a material effect on the results of operations.

MeadWestvaco is involved in various other litigation and administrative proceedings arising in the normal course of business. Although the ultimate outcome of such matters cannot be predicted with certainty, management does not believe that the currently expected outcome of any matter, lawsuit or claim that is pending or threatened, or all of them combined, will have a material adverse effect on the company’s consolidated financial condition or liquidity. In any given period or periods, however, it is possible such proceedings or matters could have a material effect on the results of operations.

P. Acquisitions and dispositions

2007 acquisitions

During the third quarter of 2007, the company acquired two manufacturers of high-quality, innovative dispensing and sprayer systems to strengthen the company’s dispensing and spraying systems business. The aggregate purchase price of these acquisitions was $52 million and resulted in $17 million of identifiable intangible assets that will be amortized over their estimated useful lives of 3 to 16 years, and goodwill of $24 million with the remainder allocated to fixed assets and working capital items. For both acquisitions, the total purchase price was allocated based on the fair values of the assets acquired and liabilities assumed, in accordance with SFAS No. 141. The amount of goodwill was determined by comparing the total cash purchase price to the total fair values of the assets acquired and liabilities assumed. Approximately $2 million of goodwill resulting from these transactions is deductible for tax purposes. The amount paid for these acquisitions that resulted in goodwill was primarily due to these businesses providing the company with new technologies and increased access to customers in growing and important end markets. The technologies from these acquisitions will be integrated with the company’s North American, European and Asian production facilities to extend the company’s growth in critical markets such as personal care and home and garden. Results of operations for these acquisitions are included in the consolidated financial statements periods subsequent to their acquisition dates and are included in the Consumer Solutions segment. These acquisitions did not have a material effect on the company’s consolidated financial statements and as such, pro forma results for these acquisitions are not presented.

2006 acquisitions

Excluding cash acquired, the purchase price including direct transaction costs was $714 million. The results of Calmar are included in the consolidated financial statements from the acquisition date and are included in the company’s Consumer Solutions segment. The acquisition was recorded by allocating the total consideration to the assets acquired, including intangible assets, and liabilities assumed, based on their estimated fair values at the acquisition date. Goodwill associated with this acquisition is not deductible for tax purposes.

The acquisition of Calmar was the culmination of a very competitive auction process. The amount paid for the business that resulted in goodwill was primarily due to Calmar’s status in its markets and the enviable relationships it has with its many customers throughout the world. The acquisition of Calmar provides the company with increased access to growing and important end markets, geographies and strategic customers, valuable product pipeline and commercial synergies. These synergies include the combined entities’ ability to provide broader product and packaging solutions offerings. The total purchase price was allocated based on the fair values of the assets acquired and liabilities assumed, in accordance with SFAS No. 141.

NOTES TO FINANCIAL STATEMENTS

The following table summarizes the purchase price allocation based on the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition (in millions):


Accounts receivable	$	76
Inventories		57
Property, plant, equipment and land		197
Amortizable and indefinite-lived intangible assets		277
Goodwill		302
Other assets		21
Accounts payable and accrued liabilities		(68	)
Long-term deferred income taxes		(127	)
Debt and other long-term obligations		(21	)

	$	714

The components of the amortizable and indefinite-lived intangible assets listed in the above table as of the acquisition date were as follows (in millions):


	Amount		Life
Customer contracts and lists	$	168	21 years
Trademarks and tradenames		91	Indefinite
Patents		18	3-7 years

	$	277

The trademarks and tradenames were deemed to have indefinite lives and, accordingly, are not being amortized, but will be subject to periodic impairment testing. The customer contracts and lists and the patents are being amortized on a method based upon estimated future cash flows associated with these assets.

The following unaudited pro forma financial information presents the combined results of operations of the company and Calmar as if the acquisition had occurred at January 1, 2006 (in millions, except per share amounts):


	2006
Net sales	$	6,754
Income from continuing operations before income taxes		95
Net income		95

Net income per share:
Basic	$	0.53
Diluted		0.52

Pro forma net income includes after-tax expense of $8 million for the amortization of purchased intangibles and depreciation associated with a step-up in property, plant and equipment. Pro forma net income also includes after-tax acquisition-related charges of $3 million due to expensing a fair value adjustment for inventory. Pro forma net income assumes an income tax provision at the combined effective tax rates of the company and Calmar. Included in pro forma net income is a $6 million income tax benefit recorded in Calmar’s historical income statement for the release of a deferred tax asset valuation allowance. In addition, pro forma net income includes after-tax interest expense of $25 million for the amount borrowed and the cash utilized to acquire Calmar.

The pro forma financial information is not intended to represent or be indicative of the company’s consolidated results of operations or financial condition that would have been reported had the acquisition been completed as of the beginning of the period presented and should not be taken as indicative of the company’s future consolidated results of operations or financial condition.

2005 acquisitions

During the fourth quarter of 2005, the company acquired DZN, The Design Group (“DZN”) for approximately $5 million. DZN is a full service design and marketing company based in Los Angeles, California, which has enhanced the company’s package design

NOTES TO FINANCIAL STATEMENTS

capabilities, enabling the company to provide a more competitive and comprehensive set of creative design services, and is included in the company’s Consumer Solutions segment. The purchase price allocation resulted in approximately $5 million of recorded goodwill. Goodwill associated with this acquisition is not deductible for tax purposes. Pro forma results for this acquisition are not presented, as the transaction was not material to the company’s consolidated financial statements for the year ended December 31, 2005.

Dispositions

On January 14, 2005, the company entered into an agreement to sell its printing and writing papers business, including its coated and carbonless papers operations, and related forestlands to an affiliate of Cerberus Management LLC, a private investment firm.

Effective April 30, 2005, this divestiture was completed. Upon closing, the company received proceeds from the buyer of $2.2 billion in cash (subject to certain adjustments) and $100 million in aggregate principal amount of senior unsecured payable-in-kind (“PIK”) promissory notes (fair value of $75 million at date of issuance) of a subsidiary of the purchaser. As a result of the sale, the company incurred a pre-tax accounting loss on sale of approximately $916 million ($687 million after tax), of which $710 million ($548 million after tax) was recorded in the fourth quarter of 2004 for impairments of goodwill and other long-lived assets, and pension and other employee benefit settlements and curtailments. The remaining $206 million ($139 million after tax) in charges was recorded in the first half of 2005. The company began reporting the papers business as a discontinued operation in the first quarter of 2005.

The company recorded a loss from discontinued operations, net of income taxes, of $91 million, or $0.48 per share, for the year ended December 31, 2005. Included in discontinued operations is interest expense directly attributable to the papers business and an allocation of general interest expense pursuant to the guidance under Emerging Issues Task Force (EITF) 87-24: Allocation of Interest to Discontinued Operations . Under the guidance of SFAS No. 144, assets associated with the sale of the printing and writing papers business were classified as held-for-sale and were not depreciated or amortized in 2005. Included in discontinued operations for 2005 was the benefit of a LIFO decrement of about $30 million. In connection with the sale of the printing and writing papers business, the company provided certain guarantees and indemnities to the buyer and other parties. These obligations include both potential environmental matters as well as certain contracts with third parties. The company has evaluated these guarantees and indemnifications in accordance with FASB Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees , Including Indirect Guarantees of Indebtedness of Others , which did not result in a material impact on the company’s consolidated financial statements.

The following table shows the major categories for discontinued operations in the consolidated statements of operations for the year ended December 31, 2005, which includes both the loss on the sale and results of operations for the printing and writing papers business. For the year ended December 31, 2005, there are only four months of operations included, as the business was sold on April 30, 2005.


*In millions, except per share amount*	2005
Net sales	$	712
Cost of sales		611
Selling, general and administrative expenses		26
Interest expense		20
Other expense, net		203

Loss from discontinued operations before income taxes		(148	)
Income tax benefit		(57	)

Net loss from discontinued operations	$	(91	)


Net loss from discontinued operations per share – diluted	$	(0.48	)

Results of operations, excluding the loss on sale, for the year ended December 31, 2005, was income of $48 million.

NOTES TO FINANCIAL STATEMENTS

Q. Cash flows

Changes in current assets and liabilities, net of acquisitions and dispositions, were as follows:


	Years ended December 31,
*In millions*	2007			2006			2005
Decrease (increase) in:
Receivables	$	50		$	(8	)	$	(52	)
Inventories		(36	)		72			21
Prepaid expenses		(2	)		(7	)		(3	)

Increase (decrease) in:
Accounts payable and accrued expenses		59			68			(57	)
Income taxes payable ¹		72			4			(180	)

	$	143		$	129		$	(271	)


	Years ended December 31,
*In millions*	2007			2006			2005
Cash paid for:
Interest	$	219		$	209		$	220
Less capitalized interest		(2	)		(2	)		(3	)

Interest paid, net	$	217		$	207		$	217


Income taxes paid (refunded), net	$	37		$	(4	)	$	225

¹	Includes approximately $160 million in 2005 related to taxes payable upon the sale of the printing and writing papers business.

In connection with the sale of certain large-tract forestlands in 2007, the company received a $398 million long-term installment note which does not require any principal payments until its maturity in May 2027. See Note B and Note D for related discussion.

NOTES TO FINANCIAL STATEMENTS

R. Business segment information

MeadWestvaco’s business segments are (i) Packaging Resources, (ii) Consumer Solutions, (iii) Consumer & Office Products, and (iv) Specialty Chemicals.

Corporate and Other includes the company’s specialty papers and forestry operations as well as corporate support staff services and related assets and liabilities, including merger-related goodwill. The results include income and expense items not directly associated with continuing segment operations, such as restructuring charges and one-time costs, legal settlements, net pension income, interest income and expense, goodwill impairment charges, gains on sales of forestlands and corporate real estate and other activities.

The segments are measured on operating profits before restructuring charges and one-time costs, interest income and expense, minority interest, income taxes, extraordinary items and cumulative effect of accounting changes. The segments follow the same accounting principles described in the Summary of Significant Accounting Policies . Sales between the segments are recorded primarily at market prices.

No single customer or foreign country accounted for 10% or more of consolidated trade sales or assets in the periods presented:


	Years ended December 31,
*In millions*	2007		2006		2005
Total sales outside of the U.S.	$	2,131	$	1,842	$	1,745
Export sales from the U.S.		993		880		829
Long-lived assets located outside the U.S.		1,396		1,176		772
Long-lived assets located in the U.S.		6,274		6,094		6,106

NOTES TO FINANCIAL STATEMENTS

Financial information by business segment follows:


*In millions*	Trade sales		Inter-segment sales			Total sales			Segment profit (loss)			Depreciation, depletion and amortization		Segment assets		Capital expenditures
Year ended December 31, 2007
Packaging Resources	$	2,650	$	371		$	3,021		$	322		$	221	$	3,189	$	122
Consumer Solutions ¹		2,430		1			2,431			86			180		2,742		144
Consumer & Office Products		1,147		—			1,147			139			35		803		10
Specialty Chemicals		493		—			493			37			23		371		33
Corporate and Other ^2,3		186		31			217			(184	)		61		2,732		38

Total		6,906		403			7,309			400			520		9,837		347
Intersegment eliminations		—		(403	)		(403	)		—			—		—		—

Consolidated totals ⁴	$	6,906	$	—		$	6,906		$	400		$	520	$	9,837	$	347


Year ended December 31, 2006
Packaging Resources	$	2,564	$	389		$	2,953		$	275		$	223	$	3,169	$	126
Consumer Solutions ¹		2,169		1			2,170			93			160		2,571		96
Consumer & Office Products		1,143		—			1,143			127			39		824		11
Specialty Chemicals		468		25			493			51			21		342		26
Corporate and Other ^2,3		186		33			219			(448	)		74		2,379		43

Total		6,530		448			6,978			98			517		9,285		302
Intersegment eliminations		—		(448	)		(448	)		—			—		—		—

Consolidated totals ⁴	$	6,530	$	—		$	6,530		$	98		$	517	$	9,285	$	302


Year ended December 31, 2005
Packaging Resources	$	2,446	$	390		$	2,836		$	234		$	222	$	3,288	$	141
Consumer Solutions		2,021		—			2,021			102			150		1,641		96
Consumer & Office Products		1,125		—			1,125			130			39		843		11
Specialty Chemicals		396		29			425			39			20		328		18
Corporate and Other ^2,3		182		31			213			(370	)		60		2,808		39

Total		6,170		450			6,620			135			491		8,908		305
Intersegment eliminations		—		(450	)		(450	)		—			—		—		—

Consolidated totals ⁴	$	6,170	$	—		$	6,170		$	135		$	491	$	8,908	$	305

¹	Full year 2007 and the third and fourth quarters of 2006 include the results of Calmar, acquired in July 2006.

²	Revenue included in Corporate and Other includes specialty papers sales and timber sales of the forestry operation, and excludes proceeds from the sale of forestlands.

³	Corporate and Other may include goodwill impairment charges, minority interest, debt retirement charges, restructuring charges and one-time costs, pension income, interest expense and income and gains on asset sales.

⁴	Consolidated totals represent income from continuing operations before income taxes.

NOTES TO FINANCIAL STATEMENTS

S. Selected quarterly information (unaudited)


	Years ended December 31,
*In millions, except per share data*	2007 ¹			2006 ²
Sales:
First	$	1,552		$	1,434
Second		1,706			1,570
Third		1,796			1,751
Fourth		1,852			1,775

Year	$	6,906		$	6,530


Gross profit:
First	$	243		$	217
Second		308			252
Third		343			335
Fourth		302			327

Year	$	1,196		$	1,131


Net income (loss):
First	$	(16	)	$	3
Second		32			(7	)
Third		121			56
Fourth		148			41

Year	$	285		$	93


Net income (loss) per common share, basic and diluted:
First	$	(0.09	)	$	0.02
Second		0.17			(0.04	)
Third		0.66			0.31
Fourth		0.82			0.23

First quarter 2007 results include after-tax restructuring charges of $10 million, or $0.05 per share, related to employee separation costs, asset write-downs and other restructuring actions; after-tax one-time costs of $3 million, or $0.02 per share, related to the company’s cost initiative; and after-tax gains of $1 million, or $0.00 per share, related to sales of forestlands. Second quarter 2007 results include after-tax restructuring charges of $5 million, or $0.03 per share, related to employee separation costs, asset write-downs and other restructuring actions; after-tax one-time costs of $5 million, or $0.03 per share, related to the company’s cost initiative; and after-tax gains of $3 million, or $0.02 per share, related to sales of forestlands. Third quarter 2007 results include after-tax restructuring charges of $13 million, or $0.07 per share, related to employee separation costs, asset write-downs and other restructuring actions; after-tax one-time costs of $4 million, or $0.02 per share, related to the company’s cost initiative; and after-tax gains of $56 million, or $0.31 per share, related to sales of forestlands. Fourth quarter 2007 results include after-tax restructuring charges of $26 million, or $0.14 per share, related to employee separation costs, asset write-downs and other restructuring actions; after-tax one-time costs of $3 million, or $0.02 per share, related to the company’s cost initiative; and after-tax gains of $110 million, or $0.60 per share, related to sales of forestlands.

First quarter 2006 results include after-tax restructuring charges of $2 million, or $0.01 per share, related to employee separation costs, asset write-downs and other restructuring actions; after-tax one-time costs of $1 million, or $0.01 per share, related to the company’s cost initiative; and after-tax gains of $2 million, or $0.01 per share, related to sales of forestlands. Second quarter 2006 results include after-tax restructuring charges of $37 million, or $0.20 per share, related to employee separation costs, asset write-downs and other restructuring actions; after-tax one-time costs of $6 million, or $0.04 per share, related to the company’s cost initiative; an after-tax gain of $13 million, or $0.07 per share, related to the sale of a note received as part of the consideration for the sale of the printing and writing papers business in 2005; and after-tax gains of $3 million, or $0.02 per share, related to sales of forestlands. Third quarter 2006 results include after-tax restructuring charges of $12 million, or $0.07 per share, related to employee separation costs, asset write-downs and other restructuring actions; after-tax one-time costs of $6 million, $0.03 per share, related to the company’s cost initiative; and after-tax gains of $3 million, or $0.02 per share, related to sales of forestlands. Fourth quarter 2006 results include after-tax restructuring charges of $34 million, or $0.19 per share, related to employee separation costs, asset write-downs and other restructuring actions; after-tax one-time costs of $12 million, or $0.06 per share, related to the company’s cost initiative; an after-tax gain of $11 million, or $0.06 per share, related to the sale of corporate real estate; and after-tax gains of $10 million, or $0.05 per share, related to sales of forestlands.

Item 9.

Changes in and disagreements with accountants on accounting and financial disclosure

None.

Item 9A.

Controls and procedures

Management’s report on internal control over financial reporting.

Management is responsible for establishing and maintaining adequate internal control over financial reporting for the company. In order to evaluate the effectiveness of internal control over financial reporting, management has conducted an assessment, including testing, using the criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The company’s internal control over financial reporting, as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934 (Exchange Act), is a process designed to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Based on our assessment, under the criteria established in Internal Control – Integrated Framework, issued by the COSO, management has concluded that the company maintained effective internal control over financial reporting as of December 31, 2007.

Evaluation of the company’s disclosure controls and procedures.

As of the end of the period covered by this Annual Report on Form 10-K, we evaluated the effectiveness of our “disclosure controls and procedures” (as defined in Rule 13a-15(e) of the Exchange Act). This evaluation was conducted under the supervision and with the participation of management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”). Based on the evaluation of disclosure controls and procedures, our CEO and CFO have concluded that the disclosure controls and procedures were effective, as of December 31, 2007, to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 have been accumulated and communicated to management, including our CEO and CFO, and other persons responsible for preparing such reports to allow timely decisions regarding required disclosure and that it is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Changes in internal control over financial reporting.

During the fiscal year ended December 31, 2007, there was no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially effect, our internal control over financial reporting.

Item 9B.

Other information

None.

Part III

Item 10.

Directors, executive officers and corporate governance

Information required by this item for MeadWestvaco’s directors will be contained in MeadWestvaco’s 2008 Proxy Statement, pursuant to Regulation 14A, to be filed with the SEC on or before March 27, 2008, and is incorporated herein by reference. A portion of the information required by this item for MeadWestvaco’s executive officers is also contained in Part I of this report under the caption “Executive officers of the registrant.”

Item 11.

Executive compensation

Information required by this item will be contained in MeadWestvaco’s 2008 Proxy Statement, pursuant to Regulation 14A, to be filed with the SEC or before March 27, 2008, and is incorporated herein by reference.

Item 12.

Security ownership of certain beneficial owners and management and related stockholder matters

Information required by this item will be contained in MeadWestvaco’s 2008 Proxy Statement, pursuant to Regulation 14A, to be filed with the SEC on or before March 27, 2008, and is incorporated herein by reference.

Item 13.

Certain relationships and related transactions, and director independence

Item 14.

Principal accounting fees and services

Part IV

Item 15.

Exhibits, financial statement schedules

(a)	Documents filed as part of this report:

1.	Consolidated financial statements

The consolidated financial statements of MeadWestvaco Corporation and consolidated subsidiaries are listed in the index which is included in Part II, Item 8.

2.	Consolidated financial statement schedules

All financial statement schedules have been omitted because they are inapplicable, not required, or shown in the consolidated financial statements and notes thereto contained herein.

3.	Exhibits


3.1		Amended and Restated Certificate of Incorporation of the Registrant, previously filed as Exhibit 99.1 to the company’s Form 8-K on May 1, 2006, and incorporated herein by reference.

3.2*		Amended and Restated By-laws of the Registrant dated February 25, 2008.

4.1		Indenture dated as of April 2, 2002 by and among the Registrant, Westvaco Corporation, The Mead Corporation and The Bank of New York, as Trustee, previously filed as Exhibit 4.1 to the company’s Form 8-K on April 2, 2002, and incorporated herein by reference.

4.2		Form of Indenture, dated as of March 1, 1983, between Westvaco Corporation and The Bank of New York (formerly Irving Trust Company), as trustee, previously filed as Exhibit 2 to Westvaco’s Registration Statement on Form 8-A on January 24, 1984, and incorporated herein by reference.

4.3		First Supplemental Indenture between Westvaco Corporation and The Bank of New York dated January 31, 2002, previously filed as Exhibit 4(a) to the company’s Form 8-K on February 1, 2002, and incorporated herein by reference.

4.4		Second Supplemental Indenture between the Registrant and The Bank of New York dated December 31, 2002, previously filed as Exhibit 4.1 to the company’s Form 8-K on January 7, 2003, and incorporated herein by reference.

4.5		Indenture dated as of February 1, 1993 between The Mead Corporation and The First National Bank of Chicago, as Trustee, previously filed as Exhibit 4.vv to the company’s Annual Report on Form 10-K for the Transition Period ended December 31, 2001, and incorporated herein by reference.

4.6		First Supplemental Indenture between The Mead Corporation and Bank One Trust Company, NA dated January 31, 2002, previously filed as Exhibit 4.3 to the company’s Form 8-K on February 1, 2002, and incorporated herein by reference.


4.7		Second Supplemental Indenture between MW Custom Papers, Inc. and Bank One Trust Company, N.A. dated December 31, 2002, previously filed as Exhibit 4.4 to the company’s Form 8-K on January 7, 2003, and incorporated herein by reference.

4.8		Third Supplemental Indenture between the Registrant and Bank One Trust Company, N.A. dated December 31, 2002, previously filed as Exhibit 4.5 to the company’s Form 8-K on January 7, 2003, and incorporated herein by reference.

4.9		Rights Agreement dated as of January 29, 2002 between the Registrant and The Bank of New York, previously filed as Item 2 to the company’s Form 8-A on January 29, 2002, and incorporated herein by reference.

4.10		Amendment to Rights Agreement dated as of December 21, 2007 between Registrant and the Bank of New York Mellon filed as Exhibit 4.2 to the company’s Form 8-A/A on December 26, 2007, and incorporated herein by reference.

10.1+		The Mead Corporation 1991 Stock Option Plan, as amended through June 24, 1999, previously filed as Exhibit 10.xxvii to the company’s Annual Report on Form 10-K for the transition period ended December 31, 2001, and incorporated herein by reference.

10.2+		The Mead Corporation 1996 Stock Option Plan, as amended through June 24, 1999 and amended February 22, 2001, previously filed as Exhibit 10.3 to Mead’s Quarterly Report on Form 10-Q for the period ended July 4, 1999 and Appendix 2 to Mead’s definitive proxy statement for the 2001 Annual Meeting of Shareholders, and incorporated herein by reference.

10.3+		Amendment to The Mead Corporation 1996 Stock Option Plan, effective April 23, 2002, previously filed as Exhibit 10.3 to the company’s Quarterly Report on Form 10-Q for the period ended June 30, 2002, and incorporated herein by reference.

10.4+*		Amendment to the Mead Corporation 1996 Stock Option Plan effective January 23, 2007.

10.5+		1985 Supplement to The Mead Corporation’s Incentive Compensation Election Plan, as amended November 17, 1987, and as further amended October 29, 1988; as amended effective June 24, 1998; as amended effective October 26, 2001, previously filed as Exhibit 10.xxix to the company’s Annual Report on Form 10-K for the Transition Period ended December 31, 2001, and incorporated herein by reference.

10.6+		Restated Supplemental Executive Retirement Plan effective January 1, 1997; as amended effective June 24, 1998; as amended effective August 28, 2001, previously filed as Exhibit 10.xxxii to the company’s Annual Report on Form 10-K for the Transition Period ended December 31, 2001, and incorporated herein by reference.

10.7+		Third Amendment to The Mead Corporation Supplemental Executive Retirement Plan in which executive officers participate, previously filed as Exhibit 10.1 to the company’s Quarterly Report on Form 10-Q for the period ended March 30, 2002, and incorporated herein by reference.

10.8+		Restated Benefit Trust Agreement dated August 27, 1996 between The Mead Corporation and Society Bank, National Association; as amended effective June 24, 1998; as amended effective October 28, 2000; as amended effective June 28, 2001; as amended August 28, 2001, previously filed as Exhibit 10.xxxiv to the company’s Annual Report on Form 10-K for the Transition Period ended December 31, 2001, and incorporated herein by reference.

10.9+		The Mead Corporation Restricted Stock Plan effective December 10, 1987, as amended through June 24, 1999, previously filed as Exhibit 10.xxxv to the company’s Annual Report on Form 10-K for the Transition Period ended December 31, 2001, and incorporated herein by reference.

10.10+*		Amendment to the Mead Corporation Restricted Stock Plan effective January 23, 2007.


10.11+		Ninth Amendment to The Mead Corporation Restricted Stock Plan, previously filed as Exhibit 10.5 to the company’s Quarterly Report on Form 10-Q for the period ended March 31, 2002, and incorporated herein by reference.

10.12+		The Mead Corporation Deferred Compensation Plan for Directors, as amended through October 29, 1988; as amended effective June 24, 1998; as amended effective October 26, 2001, previously filed as Exhibit 10.xxxvi to the company’s Annual Report on Form 10-K for the Transition Period ended December 31, 2001, and incorporated herein by reference.

10.13+		1985 Supplement to The Mead Corporation Deferred Compensation Plan for Directors, as amended through October 29, 1988; as amended effective June 24, 1998; as amended effective October 26, 2001, previously filed as Exhibit 10.xxxvii to the company’s Annual Report on Form 10-K for the Transition Period ended December 31, 2001, and incorporated herein by reference.

10.14+		The Mead Corporation Amended and Restated Directors Capital Accumulation Plan effective January 1, 2000; as amended effective October 26, 2001, previously filed as Exhibit 10.xxxviii to the company’s Annual Report on Form 10-K for the Transition Period ended December 31, 2001, and incorporated herein by reference.

10.15+		The Westvaco Corporation 1995 Salaried Employee Stock Incentive Plan, effective February 28, 1995, previously filed at Exhibit 99 to Westvaco’s Registration Statement on Form S-8 on February 28, 1995, and incorporated herein by reference.

10.16+		Amendment to Westvaco Corporation 1995 Salaried Employee Stock Incentive Plan, effective April 23, 2002, previously filed as Exhibit 10-2 to the company’s Quarterly Report on Form 10-Q for the period ended June 30, 2002, and incorporated herein by reference.

10.17+		The Westvaco Corporation 1999 Salaried Employee Stock Incentive Plan, effective September 17, 1999, previously filed as Appendix A to Westvaco’s definitive proxy statement for the 1999 Annual Meeting of Shareholders, and incorporated herein by reference.

10.18+		Amendment to Westvaco Corporation 1999 Salaried Employee Stock Incentive Plan effective as of April 23, 2002, previously filed as Exhibit 10.1 to the company’s Quarterly Report on Form 10-Q for the period ended June 30, 2002, and incorporated herein by reference.

10.19+*		Amendment to the Westvaco Corporation 1999 Salaried Employee Stock Incentive Plan effective January 23, 2007.

10.20+		The MeadWestvaco Corporation Compensation Plan for Non-Employee Directors, previously filed as Exhibit B to the company’s definitive Proxy Statement for the 2002 Annual Meeting of Shareholders, and incorporated herein by reference.

10.21+*		Amendment to the MeadWestvaco Corporation Compensation Plan for Non-Employee Directors effective January 23, 2007.

10.22		Equity and Asset Purchase Agreement dated January 14, 2005 between Registrant and Maple Acquisition LLC, previously filed on the company’s Form 8-K on January 21, 2005, for the sale of its papers business and associated assets, and incorporated herein by reference.


10.23		$1 billion Five-Year Credit Agreement dated as of December 1, 2004 among the Registrant, The Bank of New York, as agent, and the banks named therein, as amended on December 1, 2005 to reduce the Credit Facility from $1 billion to $750 million and to extend the maturity date to December 1, 2010, previously filed as Exhibit 99.1 on the company’s Form 8-K on December 19, 2005, and incorporated herein by reference.

10.24+		MeadWestvaco Corporation 2005 Performance Incentive Plan, previously filed as Annex D to the company’s definitive Proxy Statement for the 2005 Annual Meeting of Shareholders, and incorporated herein by reference.

10.25+*		Amendment to the MeadWestvaco Corporation 2005 Performance Incentive Plan effective January 23, 2007.

10.26+		MeadWestvaco Corporation Executive Retirement Plan effective January 29, 2004, as previously filed as Exhibit 10.33 to the company’s Annual Report on Form 10-K for the year ended December 31, 2005, and incorporated herein by reference.

10.27+*		Amendments to the MeadWestvaco Corporation Executive Retirement Plan effective September 1, 2006.

10.28+		MeadWestvaco Corporation Retirement Restoration Plan effective January 1, 2003, previously filed as Exhibit 10.32 to the company’s Annual Report on Form 10-K for the year ended December 31, 2004, and incorporated herein by reference.

10.29+		MeadWestvaco Corporation Deferred Compensation Plan effective January 1, 2003, previously filed as Exhibit 10.33 to the company’s Form 10-K for the year ended December 31, 2006, and incorporated herein by reference.

10.30		Definitive Agreement dated April 27, 2006 between Registrant and Compagnie de Saint-Gobain (for the acquisition of Saint-Gobain Calmar), previously filed as Exhibit 99.2 to the company’s Form 8-K on April 28, 2006, and incorporated herein by reference.

10.31+		MeadWestvaco Corporation Compensation Program for Non-Employee Directors effective January 23, 2007, previously filed as Exhibit 10.35 to the company’s Annual Report on Form 10-K for the year ended December 31, 2006, and incorporated herein by reference.

10.32+*		Form of Employment Agreement dated January 1, 2008, for John A. Luke, Jr., James A. Buzzard, E. Mark Rajkowski and Wendell L. Willkie, II.

10.33+*		Form of Employment Agreement dated January 1, 2008, for Mark T. Watkins.

10.34+*		Summary of MeadWestvaco Corporation Long-Term Incentive Plan under 2005 Performance Incentive Plan, as amended.

10.35+*		Summary of MeadWestvaco Corporation Annual Incentive Plan under 2005 Performance Incentive Plan, as amended.


21.*		Subsidiaries of the Registrant.

23.1*		Consent of PricewaterhouseCoopers LLP.

31.1*		Rule 13a-14(a) Certification by Chief Executive Officer.

31.2*		Rule 13a-14(a) Certification by Chief Financial Officer.

32.1*		Section 1350 Certification by Chief Executive Officer.

32.2*		Section 1350 Certification by Chief Financial Officer.

*	Filed herewith.

+	Management contract or compensatory plan or arrangement.

We agree to furnish copies of other instruments defining the rights of holders of long-term debt to the Commission upon its request.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	MEADWESTVACO CORPORATION
	(Registrant)

February 28, 2008

	/s/ E. Mark Rajkowski
	Name:	E. Mark Rajkowski
	Title:	Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


Signatures	Title	Date

/s/ John A. Luke, Jr.	Chairman of the Board of Directors and Chief Executive Officer	February 28, 2008
John A. Luke, Jr.

/s/ E. Mark Rajkowski	Senior Vice President (Chief Financial Officer)	February 28, 2008
E. Mark Rajkowski	Senior Vice President (Chief Financial Officer)

/s/ John E. Banu	Controller (Principal Accounting Officer)	February 28, 2008
John E. Banu	Controller (Principal Accounting Officer)

/s/ Michael E. Campbell	Director	February 28, 2008
Michael E. Campbell

/s/ Dr. Thomas W. Cole, Jr.	Director	February 28, 2008
Dr. Thomas W. Cole, Jr.

/s/ James G. Kaiser	Director	February 28, 2008
James G. Kaiser

/s/ Richard B. Kelson	Director	February 28, 2008
Richard B. Kelson

/s/ James M. Kilts	Director	February 28, 2008
James M. Kilts

/s/ Susan J. Kropf	Director	February 28, 2008
Susan J. Kropf

/s/ Douglas S. Luke	Director	February 28, 2008
Douglas S. Luke

/s/ Robert C. McCormack	Director	February 28, 2008
Robert C. McCormack

/s/ Timothy H. Powers	Director	February 28, 2008
Timothy H. Powers

/s/ Edward M. Straw	Director	February 28, 2008
Edward M. Straw

/s/ Jane L. Warner	Director	February 28, 2008
Jane L. Warner

EXHIBIT INDEX


3.2		Amended and Restated By-Laws of the Registrant dated February 25, 2008.

10.4		Amendment to the Mead Corporation 1996 Stock Option Plan effective January 23, 2007.

10.10		Amendment to the Mead Corporation Restricted Stock Plan effective January 23, 2007.

10.19		Amendment to the Westvaco Corporation 1999 Salaried Employee Stock Incentive Plan effective January 23, 2007.

10.21		Amendment to the MeadWestvaco Corporation Compensation Plan for Non-Employee Directors effective January 23, 2007.

10.25		Amendment to the MeadWestvaco Corporation 2005 Performance Incentive Plan effective January 23, 2007.

10.27		Amendments to the MeadWestvasco Corporation Executive Retirement Plan effective September 1, 2006.

10.32		Form of Employment Agreement dated January 1, 2008, for John A. Luke, Jr., James A. Buzzard, E. Mark Rajkowski and Wendell L. Willkie, II.

10.33		Form of Employment Agreement dated January 1, 2008, for Mark T. Watkins.

10.34		Summary of MeadWestvaco Corporation Long-Term Incentive Plan under 2005 Performance Incentive Plan, as amended.

10.35		Summary of MeadWestvaco Annual Incentive Plan under 2005 Performance Incentive Plan, as amended.

21.		Subsidiaries of the Registrant.

23.1		Consent of PricewaterhouseCoopers LLP.

31.1		Rule 13a-14(a) Certification by Chief Executive Officer.

31.2		Rule 13a-14(a) Certification by Chief Financial Officer.

32.1		Section 1350 Certification by Chief Executive Officer.

32.2		Section 1350 Certification by Chief Financial Officer.

Exhibit 3.2

BYLAWS

MEADWESTVACO CORPORATION

INCORPORATED UNDER THE LAWS OF DELAWARE

WORLD HEADQUARTERS

11013 West Broad Street

Glen Allen, Virginia 23060

TABLE OF CONTENTS


		Page
ARTICLE I	MEETINGS OF STOCKHOLDERS	1-1
Section 1.1.	Place of Meetings	1-1
Section 1.2.	Annual Meetings	1-1
Section 1.3.	Special Meetings	1-1
Section 1.4.	Notice of Meetings	1-1
Section 1.5.	Postponement	1-1
Section 1.6.	Quorum	1-1
Section 1.7.	Chairman; Secretary	1-1
Section 1.8.	Inspectors of Election; Opening and Closing the Polls	1-1
Section 1.9.	Voting	1-2
Section 1.10.	Meeting Required	1-2
Section 1.11.	Notification of Proposals	1-2

ARTICLE II	BOARD OF DIRECTORS	2-1
Section 2.1.	General Powers, Number, Qualifications and Term of Office	2-1
Section 2.2.	Age Limitation	2-1
Section 2.3.	Election of Directors; Vacancies; New Directorships	2-1
Section 2.4.	Removal of Directors	2-1
Section 2.5.	Notification of Nomination	2-1
Section 2.6.	Place of Meetings	2-1
Section 2.7.	Regular Meetings	2-2
Section 2.8.	Special Meetings	2-2
Section 2.9.	Notice of Special Meetings	2-2
Section 2.10.	Quorum and Manner of Acting	2-2
Section 2.11.	Chairman; Secretary	2-2
Section 2.12.	Compensation	2-2
Section 2.13.	Indemnity	2-2

ARTICLE III	COMMITTEES	3-1
Section 3.1.	Committees of Directors	3-1
Section 3.2.	Removal; Vacancies	3-1
Section 3.3.	Compensation	3-1

ARTICLE IV	OFFICERS	4-1
Section 4.1.	Number	4-1
Section 4.2.	Election; Term of Office and Qualifications	4-1
Section 4.3.	Removal	4-1
Section 4.4.	Salaries	4-1
Section 4.5.	The Chairman of the Board	4-1
Section 4.6.	The President	4-1
Section 4.7.	The Vice Presidents	4-1
Section 4.8.	The Assistant Vice Presidents	4-1
Section 4.9.	The Secretary	4-2
Section 4.10.	The Assistant Secretaries	4-2
Section 4.11.	The Treasurer	4-2
Section 4.12.	The Assistant Treasurers	4-2
Section 4.13.	The Controller	4-2
Section 4.14.	The Assistant Controllers	4-2


		Page
ARTICLE V	AUTHORITY TO ACT AND SIGN FOR THE CORPORATION	5-1
Section 5.1.	Contracts, Agreements, Checks and Other Instruments	5-1
Section 5.2.	Bank Accounts; Deposits; Checks, Drafts and Orders Issued in the Corporation’s Name	5-1
Section 5.3.	Delegation of Authority	5-1
Section 5.4.	Stock Certificates	5-1
Section 5.5.	Voting of Stock in Other Corporations	5-1
Section 5.6.	Sale and Transfer of Securities	5-1

ARTICLE VI	STOCK	6-1
Section 6.1.	Certificates of Stock	6-1
Section 6.2.	Transfer of Stock	6-1
Section 6.3.	Transfer Agents and Registrars	6-1
Section 6.4.	Record Dates	6-1
Section 6.5.	Electronic Securities Recordation	6-1

ARTICLE VII	SUNDRY PROVISIONS	7-1
Section 7.1.	Offices	7-1
Section 7.2.	Seal	7-1
Section 7.3.	Books and Records	7-1
Section 7.4.	Fiscal Year	7-1
Section 7.5.	Independent Public Accountants	7-1
Section 7.6.	Waiver of Notice	7-1
Section 7.7.	Amendments	7-1

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BYLAWS

MEADWESTVACO CORPORATION

ARTICLE I

MEETINGS OF STOCKHOLDERS

SECTION 1.1. Place of Meetings . The annual meeting of stockholders for the election of directors and all special meetings for that or for any other purpose shall be held at such time and place, either within or without the State of Delaware as may from time to time be designated by the Board of Directors.

SECTION 1.2. Annual Meetings. The annual meeting of stockholders for elections of directors, and for the transaction of such other business as may be required or authorized to be transacted by stockholders, shall be held on such date and time as designated from time to time by the Board of Directors.

SECTION 1.3. Special Meetings. A special meeting of stockholders for any purpose may be called at any time only by order of the Board of Directors pursuant to a resolution approved by a majority of the Board of Directors, by the Chairman of the Board, or by the President. At any such special meeting the only business transacted shall be in accordance with the purposes specified in the notice calling such meeting.

SECTION 1.4. Notice of Meetings . Except as may otherwise be provided by statute or the Certificate of Incorporation, the Secretary or an Assistant Secretary shall cause written notice of the place, date and hour for holding each annual and special meeting of stockholders to be given not less than ten days nor more than sixty days before the date of the meeting to each stockholder entitled to vote at such meeting by mailing the notice, postage prepaid, to the stockholder at his post office address as it appears on the records of the Corporation. Notice of each special meeting shall contain a statement of the purpose or purposes for which the meeting is called. Except as otherwise provided by statute, no notice of an adjourned meeting need be given other than by announcement at the meeting which is being adjourned of the time and place of the adjourned meeting.

SECTION 1.5. Postponement . Any previously scheduled annual or special meeting of stockholders may be postponed by resolution of the Board of Directors, upon public notice given prior to the date scheduled for such meeting.

SECTION 1.6. Quorum . The holders of shares of the outstanding stock of the Corporation representing a majority of the total votes entitled to be cast at any meeting of stockholders, if present in person or by proxy, shall constitute a quorum for the transaction of business unless a larger proportion shall be required by statute or the Certificate of Incorporation. The Chairman of a meeting of stockholders may adjourn such meeting from time to time, whether or not there is a quorum of stockholders at such meeting. In the absence of a quorum at any stockholders’ meeting, the stockholders present in person or by proxy and entitled to vote may, by majority vote, adjourn the meeting from time to time until a quorum shall attend. At any such adjourned meeting, at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally called. The lack of the required quorum at any meeting of stockholders for action upon any particular matter, shall not prevent action at such meeting upon other matters which may properly come before the meeting, if the quorum required for taking action upon such other matters shall be present.

SECTION 1.7. Chairman; Secretary . The Chairman of the Board shall call meetings of the stockholders to order and shall act as Chairman. If there is no Chairman of the Board, or in the event of his absence or disability, the President, or in the event of his absence or disability, one of the Executive Vice Presidents (in order of first designation as an Executive Vice President) present, or in absence of all Executive Vice Presidents, one of the Senior Vice Presidents (in order of first designation as a Senior Vice President) present, or in the absence also of all Senior Vice Presidents, one of the Vice Presidents (in order of first designation as a Vice President) present, shall call meetings of the stockholders to order and shall act as Chairman thereof. The Secretary of the Corporation, or any person appointed by the Chairman, shall act as Secretary of the meeting of stockholders.

SECTION 1.8. Inspectors of Election; Opening and Closing the Polls . The Board of Directors in advance of any meeting of stockholders shall appoint two or more inspectors of election to act at such meeting or any adjournment thereof. In the event of the failure of the Directors to make such appointments, or if any inspector shall for any reason fail to attend or to act at any meeting, or shall for any reason cease to be an inspector before completion of his duties, the appointments shall be made by the Chairman of the meeting.

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The Chairman of the meeting shall fix and announce at the meeting the date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting.

SECTION 1.9. Voting . At each meeting of the stockholders each stockholder entitled to vote thereat shall, except as otherwise provided in the Certificate of Incorporation, be entitled to one vote in person or by proxy for each share of the stock of the Corporation registered in his name on the books of the Corporation on the date fixed pursuant to Section 6.4 of these Bylaws as the record date fixed for such meeting.

At each meeting of the stockholders at which a quorum is present, all matters (except as otherwise provided in Section 2.4 or Section 7.7 of these Bylaws, in the Certificate of Incorporation, or by statute) shall be decided by the affirmative vote of the majority of the shares present in person or represented by proxy at such meeting and entitled to vote on the subject matter.

The Board of Directors, in its discretion, or the officer of the Corporation presiding at the meeting of stockholders, in his discretion, may require that any votes cast at such meeting shall be by written ballot.

SECTION 1.10. Meeting Required . Any action by stockholders of the Corporation shall be taken at a meeting of stockholders and no corporate action may be taken by written consent of stockholders entitled to vote upon such action.

SECTION 1.11. Notification of Proposals . The proposal of business, other than nominations, which are governed by Section 2.5 of these Bylaws, to be considered by the stockholders may be made at an annual meeting of stockholders (a) pursuant to the Corporation’s notice of meeting, (b) by or at the direction of the Board of Directors or (c) by any stockholder of the Corporation who was a stockholder of record at the time of giving of notice provided for in this Bylaw, who is entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 1.11.

For business to be properly brought before an annual meeting by a stockholder pursuant to clause (c) of the first paragraph of this Section 1.11, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and such other business must otherwise be a proper matter for stockholder action. To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the first anniversary of the preceding year’s annual meeting, provided, however, that in the event that the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the stockholder to be timely must be delivered not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the seventh day following the day on which public announcement of the date of such meeting is first made by the Corporation. In no event shall the public announcement of an adjournment of an annual meeting commence a new time period for the giving of a stockholder’s notice as described above. Such stockholder’s notice shall set forth (a) as to the business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner; if any, on whose behalf the proposal is made; and (b) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the proposal is made (i) the name and address of such stockholder, as they appear on the Corporation’s books, and of such beneficial owner and (ii) the class and number of shares of the Corporation which are owned beneficially and of record by such stockholder and such beneficial owner.

Only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 1.11. Except as otherwise provided by law, the Chairman of the meeting shall have the power and duty to determine whether any business proposed to be brought before the meeting was proposed in accordance with the procedures set forth in this Section 1.11 and, if any proposed business is not in compliance with this Section 1.11, to declare that such defective proposal shall be disregarded.

For purposes of this Section 1.11, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Securities and Exchange Act of 1934 (the “Exchange Act”).

Notwithstanding the foregoing provisions of this Section 1.11, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 1.11. Nothing in this Section 1.11 shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.

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ARTICLE II

BOARD OF DIRECTORS

SECTION 2.1. General Powers, Number, Qualifications and Term of Office. The business and property of the Corporation shall be managed and controlled by the Board of Directors. The Board of Directors shall consist of a number of directors to be determined from time to time only by resolution adopted by the Board of Directors.

Until the annual meeting of stockholders to be held in 2009, the directors shall be and are divided into classes. The directors elected at the annual meeting of stockholders held in 2004 shall serve for a term ending on the date of the annual meeting of stockholders to be held in 2007; the directors elected at the annual meeting of stockholders held in 2005 shall serve for a term ending on the date of the annual meeting of stockholders to be held in 2008; and the directors elected at the annual meeting of stockholders held in 2006 shall serve for a term ending on the date of the annual meeting of stockholders to be held in 2009. At each annual meeting of the stockholders of the Corporation commencing with the 2007 annual meeting, directors elected to succeed those directors whose terms then expire shall hold office for a term expiring at the next succeeding annual meeting of stockholders after their election. Each director of the Corporation shall hold office as provided above and until his or her successor shall have been elected and qualified.

SECTION 2.2. Age Limitation . No person shall serve as a director of the Corporation following the annual meeting of stockholders after attaining age 72; provided , that on an exceptional basis, the Board may extend a director’s term for a limited period.

SECTION 2.3. Election of Directors; Vacancies; New Directorships . Subject to Section 2.1 of this Article, directors shall be elected annually in the manner provided in these Bylaws. At each annual or special meeting of the stockholders for the election of directors, at which a quorum is present, the persons receiving the greatest number of votes shall be the directors. Any vacancies on the Board of Directors caused by death, removal, resignation or any other cause and any newly created directorships resulting from any increase in the authorized number of directors, may be filled only by a majority of the directors then in office, even though less than a quorum, at any regular or special meeting of the Board of Directors, and any director so elected shall hold office for the remainder of the term that was being served by the director whose absence creates the vacancy, or, in the case of a vacancy created by an increase in the number of directors, a term expiring at the next annual meeting of stockholders, and in each case until such director’s successor shall have been duly elected and qualified.

SECTION 2.4. Removal of Directors . Any director may be removed without cause, at any time, by the affirmative vote of the holders of at least a majority of the combined voting power of the then-outstanding shares of all classes and series of stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, at a special meeting of stockholders duly called and held for the purpose or at an annual meeting of stockholders; provided, however, that, if a director’s term was scheduled at the time of its commencement to extend beyond the next annual meeting of stockholders, such removal may only be for cause and only by the affirmative vote of the holders of at least 75 percent of the combined voting power of the then-outstanding shares of all classes and series of stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class.

SECTION 2.5. Notification of Nomination . Nominations for the election of directors may be made by the Board of Directors or by any stockholder entitled to vote for the election of directors. Any stockholder entitled to vote for the election of directors at a meeting may nominate persons for election as directors only if written notice of such stockholder’s intent to make such nomination is given, either by personal delivery or by the United States mail, postage prepaid, to the Secretary of the Corporation, not later than (i) with respect to an election to be held at an annual meeting of stockholders, 90 days in advance of such meeting, and (ii) with respect to an election to be held at a special meeting of stockholders for the election of directors, the close of business on the seventh day following the date on which notice of such meeting is first given to stockholders. Each such notice shall set forth: (a) the name and address of the stockholder who intends to make the nomination and of the person or persons to be nominated, (b) a representation that such stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice, (c) a description of all arrangements or understandings between such stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by such stockholder, (d) such other information regarding each nominee proposed by such stockholder as would have been required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission had each nominee been nominated, or intended to be nominated by the Board of Directors, and (e) the consent of each nominee to serve as a director of the Corporation if so elected. The chairman of the meeting may refuse to acknowledge the nomination of any person not made in compliance with the foregoing procedures.

SECTION 2.6. Place of Meetings . The Board of Directors may hold its meetings at such place or places, within or without the State of Delaware, as it may from time to time determine. In the absence of any such determination, such meetings shall be held at the principal business office of the Corporation. Any meeting may be held upon direction to the Secretary by the Chairman of the Board, or, in his absence, by the President at any place, provided that notice of the place of such meeting, whether regular or special, shall be given in the manner provided in Section 2.9 of this Article.

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SECTION 2.7. Regular Meetings . Regular meetings of the Board of Directors shall be held in each year on such dates as a resolution of the Board of Directors may designate at the beginning of each year. Any regular meeting of the Board may be dispensed with upon order of the Board of Directors, or by the Chairman of the Board, or, in his absence, the President if notice thereof is given to each director at least one day prior to the date scheduled for the meeting. If any day fixed for a regular meeting shall be a legal holiday, then such meeting shall be held on the next succeeding business day not a legal holiday. No notice shall be required for any regular meeting of the Board, except that notice of the place of such meeting shall be given (as provided in Section 2.9) if such meeting is to be held at a place other than the principal business office of the Corporation or if the meeting is held on a date other than that established at the beginning of each year by a resolution of the Board of Directors.

SECTION 2.8. Special Meetings . Special meetings of the Board of Directors shall be held whenever called by the direction of the Chairman of the Board, the President, an Executive Vice President, or a majority of the Board of Directors then in office.

SECTION 2.9. Notice of Special Meetings . Notice of the place, day and hour of every special meeting of the Board of Directors shall be given by the Secretary or an Assistant Secretary to each director at least twelve hours before the meeting, by telephone, telegraph or cable, telecopier or e-mail, or by delivery to him personally or to his residence or usual place of business, or by mailing such notice at least three days before the meeting, postage prepaid, to him at his last known post office address according to the records of the Corporation. Except as provided by statute, or by Section 4.3 or Section 7.7 of these Bylaws, such notice need not state the business to be transacted at any special meeting. No notice of any adjourned meeting of the Board of Directors need be given. A meeting may be held at any time without notice if all the directors are present or if those not present waive notice of the meeting in accordance with Section 7.6 of these Bylaws.

SECTION 2.10. Quorum and Manner of Acting . A whole number of directors equal to at least a majority of the total number of directors as determined by resolution in accordance with Section 2.1, regardless of any vacancies, shall constitute a quorum for the transaction of business at any meeting except to fill vacancies in accordance with Section 2.1 and Section 2.3 of this Article, and the act of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board of Directors unless otherwise provided by statute or these Bylaws. In the absence of a quorum, a majority of the directors present may adjourn the meeting from time to time without further notice until a quorum be had. At any such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally scheduled. The directors present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough directors to leave less than a quorum.

SECTION 2.11. Chairman; Secretary . At each meeting of the Board of Directors, the Chairman of the Board shall act as Chairman. If there is no Chairman of the Board, or in the event of his absence or disability, the President or in his absence or disability, one of the Executive Vice Presidents who is also a director, or in their absence, a director chosen by a majority of the directors present, shall act as Chairman. The Secretary, or in his absence or disability, an Assistant Secretary, or any person appointed by the Chairman of the meeting, shall act as Secretary of the meeting.

SECTION 2.12. Compensation . Each director except a director who is an active employee of the Corporation in receipt of a salary shall be paid such sums as director’s fees as shall be fixed by the Board of Directors. Each director may be reimbursed for all expenses incurred in attending meetings of the Board of Directors and in transacting any business on behalf of the Corporation as a director. Nothing in this Section 2.12 shall be construed to preclude a director from serving the Corporation in any other capacity and receiving compensation therefor.

SECTION 2.13. Indemnity . Each director, officer and employee, past or present, of the Corporation, and each person who serves or may have served at the request of the Corporation as a director, officer or employee of another corporation and their respective heirs, administrators and executors, shall be indemnified by the Corporation in accordance with, and to the fullest extent provided by, the provisions of the General Corporation Law of the State of Delaware as it may from time to time be amended. Each agent of the Corporation and each person who serves or may have served at the request of the Corporation as an agent of another corporation, or as an employee or agent of any partnership, joint venture, trust or other enterprise may, in the discretion of the Board of Directors, be indemnified by the Corporation to the same extent as provided herein with respect to directors, officers and employees of the Corporation.

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ARTICLE III

COMMITTEES

SECTION 3.1. Committees of Directors . The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. Such resolution shall specify a designation by which a committee shall be known, shall fix its powers and authority, and may fix the term of office of its members. Any such committee, to the extent provided in the resolution of the Board of Directors, or in the Bylaws of the Corporation, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; except as otherwise provided by statute.

SECTION 3.2. Removal; Vacancies . The members of committees of directors shall serve at the pleasure of the Board of Directors. Subject to Section 3.1, any member of a committee of directors may be removed at any time and any vacancy in any such committee may be filled by majority vote of the whole Board of Directors.

SECTION 3.3. Compensation . The Board of Directors may by resolution determine from time to time the compensation, if any, including reimbursement for expenses, of members of any committee of directors for services rendered to the Corporation as a member of any such committee.

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ARTICLE IV

OFFICERS

SECTION 4.1. Number . The officers of the Corporation shall be chosen by the Board of Directors and shall be a Chairman of the Board, a President, one or more Vice Presidents, a Secretary and a Treasurer. Officers of the Corporation may also include a Controller, Assistant Vice Presidents, Assistant Secretaries, Assistant Treasurers, and Assistant Controllers. One or more persons may hold any two of such offices. The Chairman of the Board shall be chosen from the Board of Directors and the Chairman or the President shall be designated by the Board of Directors as the Chief Executive Officer of the Corporation. Subject to the direction of the Board of Directors, the Chief Executive Officer shall have general supervision of the business and affairs of the Corporation and over its officers, employees and agents with such powers and duties incident to being Chief Executive Officer of a corporation, and as are provided for him in these Bylaws. In addition, the Chief Executive Officer shall exercise such other powers and perform such other duties as may be assigned to him by the Board of Directors. The Board of Directors may add additional titles to any office to indicate seniority or additional responsibility.

SECTION 4.2. Election; Term of Office and Qualifications . The officers shall be chosen annually by the Board of Directors at its first regular meeting following the annual meeting of stockholders and each shall hold office until the corresponding meeting in the next year and until his successor shall have been elected and shall qualify, or until his earlier death or resignation or until he shall have been removed in the manner provided in Section 4.3. Any vacancy in any office shall be filled for the unexpired portion of the term by the Board of Directors at any regular or special meeting.

SECTION 4.3. Removal . Other than the Chairman of the Board, any officer may be removed from office, either with or without cause, by the Chief Executive Officer or, the majority of the whole Board of Directors at a special meeting called for that purpose, or at a regular meeting.

SECTION 4.4. Salaries . The Board of Directors shall have authority to determine any and all salaries of employees of the Corporation. The Board may by resolution authorize a committee of directors (none of whom shall be an officer or employee of the Corporation) to fix any such salaries. Salaries not determined by the Board of Directors, or by a committee of directors, may be fixed by the Chief Executive Officer.

SECTION 4.5. The Chairman of the Board . The Chairman of the Board shall be an officer and employee of the Corporation and shall preside at all meetings of the stockholders and of the Board of Directors. The Chairman of the Board shall have all powers and perform all duties incident to the office of a Chairman of the Board of a corporation, and as are provided for him in these Bylaws, and shall exercise such other powers and perform such other duties as may be assigned to him by the Board of Directors. If there is no President or in the event of his or her death or disability, the Chairman of the Board shall perform the duties and exercise the powers of the President.

SECTION 4.6. The President . The President shall have all powers and perform all duties incident to the office of the President as are provided for him in these Bylaws and shall exercise such other powers and perform such other duties as may be assigned to him by the Board of Directors, the Chairman of the Board or the Chief Executive Officer.

SECTION 4.7. The Vice Presidents . The Vice Presidents shall have such powers and perform such duties as are provided for them in these Bylaws and as may be assigned to them, or any of them, by the Board of Directors or the Chief Executive Officer or the Chairman of the Board. The Executive Vice Presidents (in order of first designation as an Executive Vice President), in the event of the death or disability of the President and the Chairman of the Board, shall perform all the duties of the President and when so acting shall have the powers of the President. In the event of the death or disability of the President, the Chairman of the Board (if such Person is an officer of the Corporation) and all Executive Vice Presidents, the available Senior Vice President (in order of first designation as a Senior Vice President), or in the event of the death or disability also of all Senior Vice Presidents, the Vice President who is available and was first elected a Vice President prior to all other available Vice Presidents shall perform all the duties of the President and when so acting shall have the powers of the President. A Vice President performing the duties and exercising the powers of the President shall perform the duties and exercise the powers of the Chief Executive Officer if there is no Chairman of the Board or in the event of the death or disability of the Chairman of the Board.

SECTION 4.8. The Assistant Vice Presidents . The Assistant Vice Presidents shall have such powers and perform such duties as may be assigned to them, or any of them, by the Board of Directors or the Chief Executive Officer.

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SECTION 4.9. The Secretary . The Secretary shall keep, or cause to be kept in books provided for the purpose, the minutes of the meeting of stockholders and of the Board of Directors and any minutes of Committees of the Board of Directors; shall see that all notices are duly given in accordance with the provisions of these Bylaws and as required by statute; shall be custodian of the records and of the corporate seal or seals of the Corporation; and shall cause the corporate seal to be affixed to any document the execution of which, on behalf of the Corporation, under its seal, is duly authorized and when so affixed, may attest the same. The Secretary shall have all powers and perform all duties incident to the office of a secretary of a corporation and as are provided for in these Bylaws and shall exercise such other powers and perform such other duties as may be assigned by the Board of Directors, or, as to matters not related to the Board of Directors, the Chief Executive Officer or, as to matters related to the Board of Directors, the Chairman of the Board.

SECTION 4.10. The Assistant Secretaries . In the absence or disability of the Secretary, the Assistant Secretary designated by the Secretary shall perform all the duties of the Secretary and, when so acting, shall have all the powers of and be subject to all the restrictions upon the Secretary. The Assistant Secretaries shall exercise such powers and perform such duties as are provided for them in these Bylaws and as may be assigned to them, or any of them, by the Board of Directors, the Chief Executive Officer or the Secretary.

SECTION 4.11. The Treasurer . The Treasurer shall have general charge of and general responsibility for all funds, securities, and receipts of the Corporation and shall deposit, or cause to be deposited, in the name of the Corporation, all moneys or other valuable effects in such banks, trust companies or other depositories as shall from time to time be designated in accordance with Section 5.2 of these Bylaws. He shall have all powers and perform all duties incident to the office of a treasurer of a corporation and as are provided for him in these Bylaws and shall exercise such other powers and perform such other duties as may be assigned to him by the Board of Directors or the Chief Executive Officer.

SECTION 4.12. The Assistant Treasurers . In the absence or disability of the Treasurer, the Assistant Treasurer designated by the Treasurer shall perform all the duties of the Treasurer and, when so acting, shall have all the powers of and be subject to all the restrictions upon the Treasurer. The Assistant Treasurers shall exercise such powers and perform such duties as are provided for them in these Bylaws and as may be assigned to them, or any of them, by the Board of Directors, the Chief Executive Officer or the Treasurer.

SECTION 4.13. The Controller . The Controller shall have general charge and supervision of financial reports; he shall maintain adequate records of all assets, liabilities and transactions of the Corporation; he shall keep the books and accounts and cause adequate audits thereof to be made regularly; he shall exercise a general check upon the disbursements of funds of the Corporation; and in general shall perform all duties incident to the office of a controller of a corporation, and shall exercise such other powers and perform such other duties as may be assigned to him by the Board of Directors or the Chief Executive Officer.

SECTION 4.14. The Assistant Controllers . In the absence or disability of the Controller, the Assistant Controller designated by the Controller shall perform all the duties of the Controller and, when so acting, shall have all the powers of and be subject to all the restrictions upon the Controller. The Assistant Controllers shall exercise such other powers and perform such other duties as from time to time may be assigned to them, or any of them, by the Board of Directors, the Chief Executive Officer or the Controller.

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ARTICLE V

AUTHORITY TO ACT AND SIGN FOR THE CORPORATION

SECTION 5.1. Contracts, Agreements, Checks and Other Instruments . Except as may be otherwise provided by statute or by the Board of Directors, the Chairman of the Board, the President, any Vice President, the Secretary, the Treasurer, and each of them, may make, sign, endorse, verify, acknowledge and deliver, in the name and on behalf of the Corporation, all deeds, leases and other conveyances, contracts, agreements, checks, notes, drafts and other commercial paper, bonds, assignments, bills of sale, releases, reports and all other instruments and documents deemed necessary or advisable by the officer or officers executing the same for carrying on the business and affairs of the Corporation, subject, however, to Section 5.4 relating to stock certificates of the Corporation, to Section 5.5 relating to execution of proxies and to Section 5.6 relating to securities held by the Corporation.

SECTION 5.2. Bank Accounts; Deposits; Checks, Drafts and Orders Issued in the Corporation’s Name . Except as otherwise provided by the Board of Directors, any two of the following officers: the Chairman of the Board, the President, any Vice President, and the Treasurer may from time to time, (1) open and keep in the name and on behalf of the Corporation, with such banks, trust companies or other depositories as they may designate, general and special bank accounts for the funds of the Corporation, (2) terminate any such bank accounts and (3) select and contract to rent and maintain safe deposit boxes with depositories as they may designate and terminate such contracts and authorize access to any safe deposit box by any two employees designated for such purposes, at least one of whom shall be an officer, and revoke such authority. Any such action by two of the officers as specified above shall be made by an instrument in writing signed by such two officers.

All funds and securities of the Corporation shall be deposited in such banks, trust companies and other depositories as are designated by the Board of Directors or by the aforesaid officers in the manner hereinabove provided, and for the purpose of such deposits, the Chairman of the Board, the President, any Vice President, the Secretary, the Treasurer or an Assistant Treasurer, and each of them, or any other person or persons authorized by the Board of Directors, may endorse, assign and deliver checks, notes, drafts, and other orders for the payment of money which are payable to the Corporation. Except as otherwise provided by the Board of Directors, all checks, drafts or orders for the payment of money, drawn in the name of the Corporation, may be signed by the Chairman of the Board, the President, any Executive or Senior Vice President, the Secretary or the Treasurer or by any other officers or any employees of the Corporation who shall from time to time be designated to sign checks, drafts, or orders on all accounts or on any specific account of the Corporation by an “instrument of designation” signed by any two of the following officers: the Chairman of the Board, the President, any Executive or Senior Vice President, and the Treasurer.

SECTION 5.3. Delegation of Authority . The Board of Directors, the Chairman of the Board, the President, any Vice President, the Treasurer or the Secretary may appoint such managers and attorneys and agents of the Corporation (who also may be employees of the Corporation) as may be deemed desirable who shall serve for such periods, have such powers, bear such titles and perform such duties as the Board of Directors, the Chairman of the Board, the President, any Vice President, the Treasurer or the Secretary may from time to time prescribe.

SECTION 5.4. Stock Certificates . All certificates of stock issued by the Corporation shall be executed in accordance with Section 6.1 of these Bylaws.

SECTION 5.5. Voting of Stock in Other Corporations . Stock in other corporations, which may from time to time be held by the Corporation, may be represented and voted at any meeting of stockholders of such other corporation by proxy executed in the name of the Corporation by the Chairman of the Board, the President, any Executive Vice President or the Treasurer, with the corporate seal affixed and attested by the Secretary.

SECTION 5.6. Sale and Transfer of Securities . The Chairman of the Board, the President or any Executive or Senior Vice President, the Treasurer or the Secretary are authorized to sell, transfer, endorse and assign any and all shares of stock, bonds and other securities owned by or standing in the name of the Corporation. The executing officers or officer may execute and deliver in the name and on behalf of the Corporation any instrument deemed necessary or advisable by the executing officers or officer to accomplish such transactions.

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ARTICLE VI

STOCK

SECTION 6.1. Certificates of Stock . Each holder of stock shall be entitled to have a certificate or certificates, certifying the number and kind of shares owned by him in the Corporation signed by the Chairman of the Board, the President or an Executive Vice President and the Secretary and sealed with the seal of the Corporation. Where such certificate is signed by a transfer agent and by a registrar, the signatures of Corporation officers and the corporate seal may be facsimile, engraved or printed. In case any officer who shall have signed, or whose facsimile signature shall have been used on any such certificate, shall cease to be such officer of the Corporation, whether caused by death, resignation or otherwise, before such certificate shall have been delivered by the Corporation, such certificate shall nevertheless be deemed to have been adopted by the Corporation and may be issued and delivered as though the person who signed the same, or whose facsimile signature shall have been used thereon, had not ceased to be such officer of the Corporation. The certificates for shares of the capital stock of the Corporation shall be in such forms as shall be approved by the Board of Directors.

SECTION 6.2. Transfer of Stock . Shares of stock shall be transferable only on the books of the Corporation by the holder thereof, in person or by duly authorized attorney, upon the surrender of the certificate, properly endorsed, representing the shares to be transferred.

SECTION 6.3. Transfer Agents and Registrars . The Corporation may have a transfer agent and a registrar of its stock for different locations appointed by the Board of Directors from time to time. The Board of Directors may direct that the functions of transfer agent and registrar be combined and appoint a single agency to perform both functions at one or more locations. Duties of the transfer agent, registrar and combined agency may be defined from time to time by the Board of Directors. No certificate of stock shall be valid until countersigned by a transfer agent and until registered by a registrar even if both functions are performed by a single agency.

SECTION 6.4. Record Dates . The Board of Directors shall have power to fix in advance a record date to determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof or to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action and such record date shall not be more than sixty nor less than ten days before the date of any meeting, nor more than sixty days prior to any other action.

SECTION 6.5. Electronic Securities Recordation . Notwithstanding the provisions of Section 6.1 of this Article VI, the Corporation may adopt a system of issuance, recordation and transfer of its shares by electronic or other means not involving any issuance of certificates, provided the use of such system by the Corporation is permitted in accordance with applicable law.

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ARTICLE VII

SUNDRY PROVISIONS

SECTION 7.1. Offices . The Corporation’s principal office, principal place of business, and principal business office shall be at 11013 West Broad Street, Glen Allen, Virginia 23060. In the State of Delaware the Corporation’s registered office shall be in the City of Wilmington, County of New Castle. The Corporation may also have other offices at such other places as the business of the Corporation may require.

SECTION 7.2. Seal . The corporate seal of the Corporation shall have inscribed thereon the following words and figures: MeadWestvaco Corporation 2001 Incorporated Delaware. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or otherwise reproduced. A duplicate seal or duplicate seals may be provided and kept for the necessary purposes of the Corporation.

SECTION 7.3. Books and Records . The Board of Directors may determine from time to time whether, and, if allowed, when and under what conditions and regulations, the books and records of the Corporation, or any of them, shall be open to the inspection of stockholders, and the rights of stockholders in this respect are and shall be limited accordingly (except as otherwise provided by statute). Under no circumstances shall any stockholder have the right to inspect any book or record or receive any statement for an improper or illegal purpose. Subject to the provisions of statutes relating thereto, the books and records of the Corporation may be kept outside the State of Delaware at such places as may be from time to time designated by the Board of Directors.

SECTION 7.4. Fiscal Year . Unless otherwise ordered by the Board of Directors, the fiscal year of the Corporation shall be twelve calendar months beginning on the first day of January in each year.

SECTION 7.5. Independent Public Accountants . The Audit Committee of the Board of Directors shall appoint annually an independent public accountant or firm of independent public accountants to audit the books of the Corporation for each fiscal year; this appointment shall be subject to shareholder ratification at the annual meeting next succeeding the appointment.

SECTION 7.6. Waiver of Notice . Any shareholder or director may waive any notice required to be given by law or by the provisions of the Certificate of Incorporation or by these Bylaws; provided that such waiver shall be in writing and signed by such shareholder or director or by the duly authorized attorney of the shareholder, either before or after the meeting, notice of which is being waived.

SECTION 7.7. Amendments . The Board of Directors shall have power to make, alter and amend any Bylaws of the Corporation by a vote of a majority of the whole Board at any regular meeting of the Board of Directors, or any special meeting of the Board if notice of the proposed Bylaw, alteration or amendment be contained in the notice of such special meeting; provided, however, that no Bylaw shall be deemed made, altered or amended, by the Board of Directors unless the resolution authorizing the same shall specifically state that a Bylaw is thereby being made, altered or amended. Except as otherwise provided in these Bylaws or the Certificate of Incorporation, the shareholders of the Corporation may make, alter, amend or repeal any Bylaws of the Corporation by the affirmative vote of the majority of the stock entitled to vote at any annual or special meeting.

Certificate

I certify that this is a true and correct copy of the Bylaws of MeadWestvaco Corporation.



		(Assistant) Secretary
Date
		Corporate Seal

Exhibit 10.4

AMENDMENT

The Mead Corporation 1996 Stock Option Plan

The following resolution was adopted by the Board of Directors of MeadWestvaco Corporation on January 23, 2007:

FURTHER RESOLVED, that The Mead Corporation 1996 Stock Option Plan shall be revised by amending Section 11, Adjustments Upon Changes in Capitalization, to read as follows:

“In the event of a change in outstanding Shares by reason of a Share dividend, recapitalization, merger, consolidation, split-up, combination or exchange of Shares, or the like, or in the event of any similar corporate transaction, the maximum number of Shares subject to option during the existence of the Plan, the number of Limited Rights which may be granted under the Plan, the number of Shares subject to, and the option price of, each outstanding option, the maximum number of Shares or Limited Rights which may be granted to any individual over the term of the Plan, the number of limited Rights outstanding and the Fair Market Value of a Share on the date a Limited Right is granted shall be equitably adjusted by the Committee.”

Exhibit 10.10

AMENDMENT

The Mead Corporation Restricted Stock Plan

The following resolution was adopted by the Board of Directors of MeadWestvaco Corporation on January 23, 2007:

FURTHER RESOLVED, that The Mead Corporation Restricted Stock Plan shall be revised by amending Article IV. Section 1, Adjustments Upon Changes in Capitalization , to read as follows:

“Upon any change in the outstanding Shares by virtue of a share dividend or split, recapitalization, merger, consolidation, combination or exchange of shares or other similar change, the number of Restricted Shares which may be granted under the Plan (or the class of shares which may be granted as Restricted Shares) shall be adjusted on an equitable basis by the Committee. Unless the Committee shall otherwise determine, any securities and other property received by a Participant in connection with or as a result of any such change with respect to Restricted Shares (excluding dividends paid in cash) shall be subject to the restrictions then applicable to Restricted Shares under the Plan (including forfeiture), and shall be deposited promptly with the Company to be held in custody until the restrictions cease to apply to the Restricted Shares to which such securities or other property relates.

Notwithstanding the foregoing, however, in the event any rights to purchase Shares are issued pursuant to the Company’s Shareholder Rights Plan (or any successor plan) with respect to Restricted Shares, such rights shall cease to be subject to the restrictions applicable to the underlying Restricted Shares at such time, if any, as such rights become exercisable.”

Exhibit 10.19

AMENDMENT

Westvaco Corporation 1999 Salaried Employee Stock Incentive Plan

The following resolution was adopted by the Board of Directors of MeadWestvaco Corporation on January 23, 2007:

FURTHER RESOLVED, that the Westvaco Corporation 1999 Salaried Employee Stock Incentive Plan shall be revised by amending Section 5, Adjustment for Changes in Capitalization , to read as follows:

“The aggregate number of common shares authorized under Section 3 and the number of shares subject to stock options, stock appreciation rights or Restricted Stock grants, and the individual grant limits in Section 4, above, shall be automatically adjusted on an equitable basis by the Committee on the same basis for any changes in the number of outstanding common shares in the event of a recapitalization, stock split, stock dividend, merger, spinoff, or any other similar change in capitalization. There shall also be a similar adjustment in the number and kind of shares subject to outstanding stock options and stock appreciation rights, in the related option price, and in the number of outstanding grants of Restricted Stock. In no event shall the value of any outstanding stock options, stock appreciated rights or Restricted Stock be diminished in any material respect. Incentive Stock Options shall be preserved in accordance with the provisions of Section 422(a) of the Internal Revenue Code of 1986, as amended or superseded. Any resulting fractional share, however, shall be eliminated.”

Exhibit 10.21

AMENDMENT

MeadWestvaco Corporation Compensation Plan for Non-Employee Directors

The following resolution was adopted by the Board of Directors of MeadWestvaco Corporation on January 23, 2007:

FURTHER RESOLVED, that the MeadWestvaco Corporation Compensation Plan for Non-Employee Directors shall be revised by amending Section 7.2, Adjustment for Changes in Capitalization , to read as follows:

“In the event of any change in corporate capitalization (including, but not limited to, a change in the number of shares of Common Stock outstanding), such as a stock split or a corporate transaction, such as any merger, consolidation, separation, including a spin-off, or other distribution of stock or property of the Company, any reorganization (whether or not such reorganization comes within the definition of such term in Section 368 of the Code) or any partial or complete liquidation of the Company, the Compensation Committee or Board shall equitably adjust in the aggregate number and kind of shares provided for under Section 1(a) of the Plan, in the number of Options to be granted automatically pursuant to Article VI, and in the number, kind and option price of shares subject to outstanding Stock Units and Options, provided , that no such adjustment shall be made to outstanding Stock Units with respect to any dividend or other distribution for which Dividend Equivalents are credited to the applicable Stock Unit Account as provided in Section 4.2 of the Plan; and provided, further, that any resulting fractional share that would otherwise be subject to an Option shall be eliminated.”

Exhibit 10.25

AMENDMENT

MeadWestvaco Corporation 2005 Performance Incentive Plan

The following resolution was adopted by the Board of Directors of MeadWestvaco Corporation on January 23, 2007:

RESOLVED, that, MeadWestvaco Corporation 2005 Performance Incentive Plan shall be revised by amending subsections (a) and (b) of Section 4.1, Adjustment of and Changes to Common Stock , to read as follows:

“(a) In the event of a reorganization, reclassification, combination of shares, stock split, reverse stock split, spin-off, dividend (other than regular, quarterly cash dividends), or another such transaction or event, then the number and kind of Shares that have been authorized for issuance under the Plan, whether such Shares are then currently subject to or may become subject to an Award under the Plan, as well as the per share limits set forth in Section 2.2 of this Plan, shall be equitably adjusted by the Committee to reflect such increase or decrease or change in the kind of securities outstanding. The terms of each outstanding Award shall also be equitably adjusted by the Committee as to price, number and kind of Shares subject to such Award and other terms to reflect the foregoing events.

(b) In the event there shall be any other change in the number or kind of outstanding Shares, or any stock or other securities into which such Shares shall have been changed, or for which Shares shall have been exchanged, whether by reason of a change of control, other merger, consolidation or otherwise, then the Committee shall make such equitable adjustments to the number and kind of Shares that have been authorized for issuance under the Plan, whether such Shares are then currently subject to or may become subject to an Award under the Plan, as well as the per share limits set forth in Section 2.2 of this Plan. The terms of each outstanding Award shall also be equitably adjusted by the Committee as to price, number and kind of Shares subject to such Award and other terms to reflect the foregoing events. In addition, in the event of a change described in this paragraph that does not occur in connection with a Change of Control, the Committee

may accelerate the time or times at which any Award may be exercised and may provide for cancellation of such accelerated Awards that are not exercised within a time prescribed by the Committee in its sole discretion. Notwithstanding anything to the contrary herein, any adjustment to ISOs granted pursuant to this Plan shall comply with the requirements, provisions and restrictions of section 424 of the Code, and any adjustment to NQSOs granted pursuant to this Plan shall comply with the requirements, provisions and restrictions of section 409A of the Code.”

Exhibit 10.27

MEADWESTVACO CORPORATION

Amendments to the

MeadWestvaco Corporation Executive Retirement Plan

The MeadWestvaco Corporation Executive Retirement Plan (the “MERP”) is hereby amended, as set forth below.

1. Effective for individuals who are Active Participants in the Executive Retirement Plan on or after September 1, 2006:

a. Section 1.04(b) of the MERP is amended to state “Appendix B lists individuals who became participants in the Plan on January 29, 2004.”

b. Section 2.01(gg) of the MERP (definition of “Years of Appendix B Service”) is deleted, the remainder of the Section 2.01 is renumbered, and cross-references within the Plan are updated accordingly.

c. Section 2.01(ii) of the MERP (definition of “Years of Plan Benefit Service”) is amended to state as follows:

(ii)

“ Years of Plan Benefit Service ” shall mean a Participant’s Years of Benefit Service, except that a Participant’s Years of Plan Benefit Service shall not exceed the number determined by subtracting 30 from his age (in years and completed months) on the date he commenced employment with the Employer or an Affiliate, and provided that a Participant who becomes an Inactive Participant and does not subsequently become an Active Participant shall not accrue Years of Benefit Service for the period after he ceased to be an Active Participant.

d. Section 2.01(jj) of the MERP (definition of “Years of Plan Service”) is deleted and the remainder of Section 2.01 is renumbered accordingly.

e. Section 3.01(b) of the MERP is amended by replacing the second sentence thereof with the following sentence: “The persons listed in Appendix B became Active Participants on January 29, 2004.”

f. Section 4.01(a)(2) of the MERP is amended to state:

(2)

equals the total amount determined to be payable to the Participant under the Qualified Plans, expressed as an annual amount payable as a single-life annuity beginning on the first day of the month coincident with or next following his termination of employment with the Employer and Affiliates, but not including any restructuring or other supplemental benefits payable to the Participant under such Qualified Plans, and determined using the interest rate and mortality assumptions applicable under the Qualified Plan for purposes of converting the Participant’s cash balance benefit, if any, under that Qualified Plan to a single-life annuity.

g. Section 4.04(a) of the MERP is amended by adding the following paragraph at the end thereof:

Notwithstanding any provision in the Plan to the contrary, an Authorized Party shall have discretion to allow acceleration of payment to the extent that it determines, after consultation with counsel, that neither the Company nor the Participant, surviving spouse, joint annuitant, alternate payee or beneficiary, as the case may be, will be subjected to adverse tax consequences under 409A of the Code or other applicable law as a result of such acceleration. By way of example, payment may be accelerated to the extent necessary to pay Federal Insurance Contributions Act (FICA) taxes under Sections 3101, 3121(a), and 3121(v)(2) of the Code on benefits payable under the Plan.

h. Section 4.05 of the MERP is clarified by deleting the parenthetical “(based only on his service as an Active Participant).”

i. Section 4.06(a) of the MERP is amended by replacing the term “Years of Plan Service” with the term “Years of Benefit Service.”

j. Section 4.06(b) of the MERP is clarified by deleting each occurrence of the phrase “based on service as an Active Participant.”

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k. Section 5.01 of the MERP is amended by replacing each occurrence of the term “Years of Plan Service” with the term “Years of Benefit Service.”

l. Appendix B of the MERP is recaptioned “Participants Who Became Active Participants on January 29, 2004” and amended to provide as indicated in the attached Exhibit A.

2. Effective July 17, 2006, Section 8.09(a) of the MERP is amended by replacing the term “State of Connecticut” with “Commonwealth of Virginia.”

* * * * *

IN WITNESS WHEREOF, the undersigned has executed the above amendment.

/s/ John A. Luke, Jr.

John A. Luke, Jr.

Chairman and Chief Executive Officer


APPROVALS
LAW DEPARTMENT

By		/s/ John J. Carrara
John J. Carrara
Associate General Counsel and Assistant Secretary

FILED: December , 2006

By		/s/ Wendell L. Willkie, II
Wendell L. Willkie, II
Senior Vice President, General Counsel and Secretary

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EXHIBIT A

MeadWestvaco Corporation Executive Retirement Plan

Appendix B

Participants Who Became Active Participants on January 29, 2004

Participant

John A. Luke

James A. Buzzard

Wendell L. Willkie, II

Linda V. Schreiner

Rita V. Foley

James M. McGrane

Benjamin F. Ward

Richard N. Burton

David A. Reinhart

Daniel J. McIntyre*

* Mr. McIntyre has since terminated employment with the Employer and Affiliates. Pursuant to Section 5.02(a) of the Plan in effect at the time of termination of employment, Mr. McIntyre does not have a right to any benefit or payment under the Plan.

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Exhibit 10.32

EMPLOYMENT AGREEMENT

Amended and Restated as of January 1, 2008

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT by and between MeadWestvaco Corporation, a Delaware corporation (the “Company”) and [ ] the “Executive”), is dated as of January 1, 2008.

RECITALS

WHEREAS, the Executive and the Company are parties to an Employment Agreement, dated as of January 29, 2004 (the “Existing Agreement”), which was entered into based upon the determination of the Board of Directors of the Company (the “Board”) that it was in the best interests of the Company and its shareholders to assure that the Company will have the continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined below) of the Company. The Board believes it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control and to encourage the Executive’s full attention and dedication to the Company currently and in the event of any threatened or pending Change of Control, and to provide the Executive with compensation and benefits arrangements upon a Change of Control which ensure that the compensation and benefits expectations of the Executive will be satisfied and which are competitive with those of other corporations. Therefore, in order to accomplish these objectives, the Board caused the Company to enter into the Existing Agreement.

WHEREAS, the Company and Executive desire to amend the Existing Agreement to comply with section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and make other appropriate changes to comply with applicable law.

NOW, THEREFORE, IT IS HEREBY AGREED that the Existing Agreement is amended and restated as follows:

1. Change of Control . For the purpose of this Agreement, a “Change of Control” shall mean:

(a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (i) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section 1; or

(b) Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(c) Consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving the Company or any of its subsidiaries, or a sale or other disposition of all or substantially all of the assets of the Company (as determined under applicable Delaware General Corporation Law) (each, a “Business Combination”), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities that were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) (the “Resulting Corporation”) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding the Resulting Corporation and its affiliates or any employee benefit plan (or related trust) of the Resulting Corporation and its affiliates) beneficially owns, directly or indirectly, 20% or more of, respectively, the then-outstanding shares of common stock of the Resulting corporation or the combined voting power of the then outstanding voting securities of the Resulting Corporation except to the extent that such ownership existed with respect to the Company prior to the Business Combination, and (iii) at least a majority of the members of the board of directors of the Resulting Corporation (the “Resulting Board”) were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

(d) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

2. Certain Other Definitions . (a) “Affiliated Companies” shall include any company controlled by, controlling or under common control with the Company.

(b) The “Change of Control Period” shall mean the period commencing on the date hereof and ending on the second anniversary of the date hereof, as subsequently extended as described below. The Change of Control Period shall be automatically extended for successive one-year periods unless the Company notifies the Executive in writing, at least one year prior to the end of the then current term, that the Change of Control Period will not be extended; provided, however, that the Change of Control Period and this Agreement shall terminate if the Executive’s employment with the Company terminates for any reason before a Change of Control, except as provided in Section 2(c) and Section 13(f) below.

(c) The “Effective Date” shall mean the first date during the Change of Control Period on which a Change of Control occurs. Anything in this Agreement to the contrary notwithstanding, if a Change of Control occurs and if the Executive’s employment with the Company is terminated prior to the date on which the Change of Control occurs, and if it is reasonably demonstrated by the Executive that such termination of employment (i) was at the request of a third party who has taken steps reasonably calculated to effect a Change of Control or (ii) otherwise arose in connection with or anticipation of a Change of Control, then for all purposes of this Agreement the “Effective Date” shall mean the date immediately prior to the date of such termination of employment.

(d) “Merger of Equals Period” shall mean (i) any portion of the Employment Period (as defined in Section 3) up to and including the first anniversary of the Effective Date during which the conditions set forth in the next sentence are met, and (ii) if the conditions set forth in the next sentence are met on the first anniversary of the Effective Date, the portion of the Employment Period that follows the first anniversary of the Effective Date. The conditions referred to in the preceding sentence are that (A) the Change of Control that occurred on the Effective Date was a Business Combination, and (B) at the time in question, (I) at least 50% of the members of the Resulting Board are individuals who were members of the Incumbent Board (as defined in Section 1(b)) at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination, and (II) either (x) the position of chief executive officer of the Resulting Corporation is occupied by an individual who was employed by the Company immediately before such Business Combination, or (y) a majority of the leadership positions reporting directly to the chief executive officer of the Resulting Corporation are occupied by individuals who were employed by the Company immediately before such Business Combination.

(e) The “Multiple” means three.

(f) “Peer Executives” shall mean, at any given time, the other persons employed by the Company or any of the Affiliated Companies who either (1) were, immediately before the Effective Date, party to agreements with the Company substantially in the form of this Agreement (without regard to the definition of “Multiple”) or (2) are similarly situated executives who were employed, before the Effective Date, by the other party to the transaction constituting a Change of Control hereunder.

(g) “Relevant Time” shall mean immediately before the Effective Date, except to the extent otherwise provided in Section 4(b)(ix).

3. Employment Period . The Company hereby agrees to continue the Executive in its employ, subject to the terms and conditions of this Agreement, for the period commencing on the Effective Date and ending on the second anniversary of such date (the “Employment Period”). The Employment Period shall terminate upon the termination of the Executive’s employment for any reason.

4. Terms of Employment . (a) Position and Duties . (i) During the Employment Period, there shall be no material reduction in the Executive’s position, authority, duties, responsibilities or salary grade as compared to those held, exercised and assigned to the Executive at the Relevant Time. Notwithstanding the foregoing, during any Merger of Equals Period, the Executive’s position may be changed in a manner violating the requirements of this Section 4(a)(i), provided that the Executive continues to have responsibilities and authority that are, in the aggregate, comparable to those held by the Executive at the Relevant Time; and provided, further, that neither a reduced scope of the Executive’s responsibilities resulting from the fact that the Change of Control has created a larger organization, nor a change in the Executive’s title and reporting responsibilities, shall be the sole basis for determining whether the requirements of this sentence are met.

(ii) During the Employment Period, the Executive’s services shall be performed at the location where the Executive was employed immediately preceding the Effective Date, or at any other location that does not result in the Executive’s commuting distance from, the Executive’s residence being increased by more than 40 miles; provided , that if the Executive voluntarily changes his residence after the Effective Date, then a new work location shall not be considered to have increased the Executive’s commuting distance by more than 40 miles unless such an increase both (1) occurs in relation to the Executive’s new residence and (2) would have occurred even if the Executive had not changed his residence.

(iii) During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote reasonable attention and time during normal business hours to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to the Executive hereunder, to use the Executive’s reasonable best efforts to perform faithfully and efficiently such responsibilities. During the Employment Period it shall not be a violation of this Agreement for the Executive to (A) serve on corporate, civic or charitable boards or committees, (B) deliver lectures, fulfill speaking engagements or teach at educational institutions and (C) manage personal investments, so long as such activities do not significantly interfere with the performance of the Executive’s responsibilities as an employee of the Company in accordance with this Agreement. It is expressly understood and agreed that to the extent that any such activities have been conducted by the Executive prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of the Executive’s responsibilities to the Company.

(b) Compensation .

(i) Base Salary . During the Employment Period, the Executive shall receive an annual base salary (“Annual Base Salary”) which shall be not less than the Executive’s annual base salary from the Company and the Affiliated Companies as in effect immediately before the Effective Date, except as otherwise permitted below in this Section 4(b)(i). Any increase in Annual Base Salary during the Employment Period shall not serve to limit or reduce any other obligation to the Executive under this Agreement, and except as provided in the next sentence, the Annual Base Salary shall not be reduced during the Employment Period. Notwithstanding the foregoing during any Merger of Equals Period the Annual Base Salary may be decreased if all the annual base

salaries of all of the Peer Executives are decreased by the same or a greater percentage. The term Annual Base Salary as utilized in his Agreement shall refer to Annual Base Salary as increased or decreased to the extent permitted by this Section 4(b)(i).

(ii) Incentive Compensation Opportunities . In addition to the Annual Base Salary, the Executive shall be granted, during the Employment Period, cash-based and equity-based awards representing the opportunity to earn incentive compensation on terms and conditions no less favorable to the Executive, in the aggregate, than those provided generally at any time after the Effective Date to the Peer Executives or, if more favorable to the Executive, than those provided by the Company and the Affiliated Companies for the Executive immediately before the Effective Date. In determining whether the Executive’s incentive compensation opportunities during the Employment Period meet the requirements of the preceding sentence, there shall be taken into account all relevant terms and conditions, including, without limitation and to the extent applicable, the potential value of such awards at minimum, target and maximum performance levels, and the difficulty of achieving the applicable performance goals.

(iii) Savings and Retirement Plans . During the Employment Period, the Executive shall be entitled to participate in all savings and retirement plans, practices, policies and programs applicable generally to the Peer Executives, on comparable terms and conditions, but in no event shall such plans, practices, policies and programs provide the Executive with savings opportunities and retirement benefits, in each case, less favorable, in the aggregate, to the Executive than those provided by the Company and the Affiliated Companies to the Executive at the Relevant Time.

(iv) Welfare Benefit Plans . During the Employment Period, the Executive and/or the Executive’s family, as the case maybe, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company and the Affiliated Companies (including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs) (collectively, “Welfare Benefits”) to the extent applicable generally to the Peer Executives, on comparable terms and conditions, but in no event shall such Welfare Benefits for the Executive be less favorable, in the aggregate, to the Executive than the Welfare Benefits provided by the Company and the Affiliated Companies to the Executive at the Relevant Time.

(v) Expenses . During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the policies, practices and procedures as in effect for the Peer Executives; provided, that such policies, practices and procedures shall not be less favorable to the Executive than those provided by the Company and the Affiliated Companies to the Executive at the Relevant Time.

(vi) Fringe Benefits . During the Employment Period, the Executive shall be entitled to fringe benefits, including, without limitation, tax and financial planning services, payment of club dues, and, if applicable, use of an automobile and payment of related expenses, as in effect for Peer Executives; provided, that such fringe benefits shall not be less favorable, in the aggregate, to the Executive than those provided by the Company and the Affiliated Companies to the Executive at the Relevant Time.

(vii) Office and Support Staff . During the Employment Period, the Executive shall be entitled to an office or offices of a size and with furnishings and other appointments, and to personal secretarial and other assistance, as in effect for the Peer Executives; provided, that such facilities and assistance shall not be less favorable, in the aggregate, to the Executive than those provided by the Company and the Affiliated Companies to the Executive at the Relevant Time.

(viii) Vacation . During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the plans, policies, programs and practices of the Company and the Affiliated Companies as in effect for the Peer Executives; provided, that such plans, policies, programs and practices shall not be less favorable to the Executive than those provided by the Company and the Affiliated Companies to the Executive at the Relevant Time.

(ix) Changes During Merger of Equals Period . Notwithstanding the foregoing, during any Merger of Equals Period, the incentive compensation opportunities and benefits provided to the Executive may be changed in a manner violating the requirements of any of Sections 4(b)(ii)-(viii), if such changes apply to Peer Executives generally. Following any such change, the “Relevant Time” for determining whether such requirements continue to be satisfied with respect to the particular benefit that has been changed shall be immediately following the effectiveness of such change.

5. Termination of Employment .

(a) Death or Disability . The Executive’s employment shall terminate automatically upon the Executive’s death during the Employment Period. If the Company determines in good faith that the Disability of the Executive has occurred during the Employment Period (pursuant to the definition of Disability set forth below), it may give to the Executive written notice in accordance with Section 12(b) of this Agreement of its intention to terminate the Executive’s employment. In such event, the Executive’s employment with the Company shall terminate effective on the 30th day after receipt of such notice by the Executive (the “Disability Effective Date”), provided that, within the 30 days after such receipt, the Executive shall not have returned to full-time performance of the Executive’s duties. For purposes of this Agreement, “Disability” shall mean the absence of the Executive from the Executive’s duties with the Company on a full-time basis for 180 consecutive business days as a result of incapacity due to mental or physical illness which is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Executive or the Executive’s legal representative.

(b) Cause . The Company may terminate the Executive’s employment during the Employment Period for Cause or without Cause. For purposes of this Agreement, “Cause” shall mean:

(i) the willful and continued failure of the Executive to perform substantially the Executive’s duties with the Company or one of its affiliates (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Executive by the Board or the Chief Executive Officer of the Company which specifically identifies the manner in which the Board or Chief Executive Officer believes that the Executive has not substantially performed the Executive’s duties, or

(ii) the willful engaging by the Executive in illegal conduct or gross misconduct; or

(iii) a clearly established violation by the Executive of the Company’s Code of Conduct that is materially and demonstrably injurious to the Company.

For purposes of this provision, no act or failure to act, on the part of the Executive, shall be . considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive’s action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the instructions of the Chief Executive Officer or a senior officer of the Company or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company.

(c) Good Reason . The Executive’s employment may be terminated by the Executive for Good Reason or without Good Reason. For purposes of this Agreement, “Good Reason” shall mean:

(i) A material diminution in the Executive’s Annual Base Salary (other than as permitted under Section 4(b)(i) hereof);

(ii) A material diminution in the Executive’s authority, duties, or responsibilities (other than as permitted by Section 4(a) hereof);

(iii) A material change in the geographic location at which the Executive must perform services for the Company in violation of Section 4(a)(ii) hereof; or

(iv) Any other action or inaction that constitutes a material breach by the Company of this Agreement, including any failure of the Company to comply with and satisfy Section 11(c) of this Agreement.

(d) Notice of Termination; Opportunity to Cure . Any termination by the Company for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 12(b) of this Agreement. For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated and (iii)

specifies the Date of Termination (as defined below). If the Executive is terminating employment for Good Reason, (i) the Executive shall give the Company the Notice of Termination not less than 60 days following the event giving rise to the Executive’s Good Reason termination, and (ii) the Company shall have a period of 30 days after receiving the Notice of Termination to remedy the action or inaction on which Good Reason is based. If the Company fails to remedy the action or inaction on which Good Reason is based within such 30-day period, the Executive may terminate his or her employment for Good Reason within 30 days after the end of the cure period.

(e) Date of Termination . “Date of Termination” means (i) if the Executive’s employment is terminated by reason of the Executive’s death, the date of death, (ii) if the Executive’s employment is terminated by reason of Disability, the Disability Effective Date, and (iii) if the Executive’s employment is otherwise terminated by the Company or by the Executive, the date of receipt of the Notice of Termination or any date within 30 days thereafter that is specified in the Notice of Termination.

6. Obligations of the Company upon Termination . (a) Good Reason, Other Than for Cause, Death or Disability . If, during the Employment Period, the Company shall terminate the Executive’s employment other than for Cause or Disability or the Executive shall terminate employment for Good Reason:

(i) The Company shall pay to the Executive, in a lump sum cash payment within 30 days after the Date of Termination, the aggregate of the following amounts:

(a) The sum of (1) the Executive’s Annual Base Salary through the Date of Termination to the extent not theretofore paid, (2) the product of (x) the average of the annual cash bonuses payable to the Executive under the bonus programs of the Company and the Affiliated Companies during the period of three years ending on the Effective Date, or such shorter period during which the Executive has been employed by the Company (disregarding for this purpose any deferral of the payment of any such bonuses) (the “Average Incentive Compensation”) and (y) a fraction, the numerator of which is the number of days in the current fiscal year through the Date of Termination, and the denominator of which is 365 and (3) any accrued vacation pay, in each case to the extent not theretofore paid (the sum of the amounts described in clauses (1), (2), and (3) shall be hereinafter referred to as the “Accrued Obligations”), and

(b) The amount equal to the product of (1) the Multiple, (2) the sum of (x) the Executive’s Annual Base Salary and (y) the Average Incentive Compensation.

(ii) Unless the Date of Termination occurs during the Merger of Equals Period, all benefits accrued through the Date of Termination by the Executive under the Company’s qualified defined benefit retirement plan (the “Retirement Plan”) and any excess defined benefit retirement plan in which the Executive participates, but not under the Mead Corporation Supplemental Executive Retirement Plan or any successor plan (the “Excess Plan”), that are not vested as of the Date of Termination shall be

fully vested and shall be paid in accordance with the payment terms of the applicable plan; provided that, to the extent such benefits may not be provided under the Retirement Plan, they shall instead be provided under the Excess Plan. Unless the Date of Termination occurs during the Merger of Equals Period, the Company shall also pay the Executive, in a lump sum cash payment within 30 days after the Date of Termination, an amount equal to the excess of:

(a) The actuarial equivalent of the benefit under the Retirement Plan (utilizing actuarial assumptions no less favorable to the Executive than those in effect under the Retirement Plan immediately prior to the Effective Date) and the Excess Plan that the Executive would have received if the Executive’s employment had continued for three years after the Date of Termination, and if all of the Executive’s accrued benefits were fully vested and the Executive’s compensation for each of those three years had been equal to the sum of (I) the Executive’s Annual Base Salary and (II) the average of the annual cash bonuses payable to the Executive under the bonus programs of the Company and the Affiliated Companies during the period of three years ending on the Effective Date, or such shorter period during which the Executive has been employed by the Company (disregarding for this purpose any deferral of the payment of any such bonuses), over

(b) The actuarial equivalent of the Executive’s actual benefit (paid or payable) under the Retirement Plan and the Excess Plan (including any benefits that vest pursuant to the first sentence of this subsection (ii)) as of the Date of Termination.

(iii) The Company shall pay the Executive a lump sum cash payment, within 30 days after the Executive’s Date of Termination, equal to the cost of health coverage for the number of years equal to the Multiple, based on the monthly COBRA cost of such coverage under the Company’s health plan pursuant to section 4980B of the Code on the Termination Date.

(iv) The Company shall, at its sole expense as incurred, provide the Executive with outplacement services the scope and provider of which shall be reasonable and consistent with industry practice for similarly situated executives.

(v) To the extent not theretofore paid or provided, the Company shall timely pay or provide the Executive with any Other Benefits (as defined in Section 7) in accordance with the terms of the applicable plans.

Notwithstanding the foregoing, except with respect to payments and benefits under Sections 6(a)(i)(a)(1), 6(a)(i)(a)(3) and 6(a)(v), all payments and benefits to be provided under this Section 6(a) shall be subject to the Executive’s execution and non-revocation of a release substantially in the form attached hereto as Exhibit A .

(b) Death . If the Executive’s employment is terminated by reason of the Executive’s death during the Employment Period, the Company shall provide the Executive’s estate or beneficiaries with the Accrued Obligations and the timely payment or delivery o f the Other Benefits, and shall have no other severance obligations under this Agreement. The Accrued Obligations shall be paid to the Executive’s estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of Termination. With respect to the provision of Other Benefits, the term Other Benefits as utilized in this Section 6(b) shall include, without limitation, and the Executive’s estate and/or beneficiaries shall be entitled to receive, benefits at least equal to the most favorable benefits provided by the Company and the Affiliated Companies to the estates and beneficiaries of the Peer Executives under such plans, programs, practices and policies relating to death benefits, if any, as in effect with respect to the Peer Executives and their beneficiaries at the Relevant Time or, if more favorable to the Executive’s estate and/or the Executive’s beneficiaries, on the Date of Termination.

(c) Disability . If the Executive’s employment is terminated by reason of the Executive’s Disability during the Employment Period, the Company shall provide the Executive with the Accrued Obligations and the timely payment or delivery of the Other Benefits, and shall have no other severance obligations under this Agreement. Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination. With respect to the provision of Other Benefits, the term Other Benefits as utilized in this Section 6(c) shall include, and the Executive shall be entitled after the Disability Effective Date to receive, disability and other benefits at least equal to the most favorable of those generally provided by the Company and the Affiliated Companies to disabled executives and/or their families in accordance with such plans, programs, practices and policies relating to disability, if any, as in effect generally with respect to the Peer Executives and their families at the Relevant Time or, if more favorable to the Executive and/or the Executive’s family, on the Date of Termination.

(d) Cause; Other than for Good Reason . If the Executive’s employment is terminated for Cause during the Employment Period, the Company shall provide to the Executive the Executive’s Annual Base Salary through the Date of Termination, and the Other Benefits, in each case, to the extent theretofore unpaid, and shall have no other severance obligations under this Agreement. If the Executive voluntarily terminates employment during the Employment Period, excluding a termination for Good Reason, the Company shall provide to the Executive the Accrued Obligations and the timely payment or delivery of the Other Benefits, and shall have no other severance obligations under this Agreement. In such case, all the Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination.

7. Non-exclusivity of Rights . Nothing in this Agreement shall prevent or limit the Executive’s continuing or future participation in any plan, program, policy or practice provided by the Company or any of the Affiliated Companies and for which the Executive may qualify, nor, subject to Section 12(f), shall anything herein limit or otherwise affect such rights as the Executive may have under any contract or agreement with the Company or any of the Affiliated Companies. Amounts that are vested benefits or that the Executive is otherwise entitled to receive under any plan, policy, practice or program of or any contract or agreement with the Company or any of the Affiliated Companies at or subsequent to the Date of Termination (“Other Benefits”) shall be payable in accordance with such plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement.

Notwithstanding the foregoing, if the Executive receives payments and benefits pursuant to Section 6(a) of this Agreement, the Executive shall not be entitled to any severance pay or benefits under any severance plan, program or policy of the Company and the Affiliated Companies, unless otherwise specifically provided therein in a specific reference to this Agreement.

8. Full Settlement . The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action that the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not the Executive obtains other employment. The Company agrees to pay as incurred, to the full extent permitted by law, all legal fees and expenses which the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus in each case interest on any delayed payment at the applicable Federal rate provided for in Section 7872(1)(2)(A) of the Code. Notwithstanding the foregoing, the Company shall not be obligated to pay any legal fees or expenses incurred by the Executive in any contest in which the trier of fact determines that the Executive’s position was frivolous or maintained in bad faith.

9. Certain Additional Payments by the Company .

(a) Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any Payment would be subject to the Excise Tax, then the Executive shall be entitled to receive an additional payment (the “Gross-Up Payment”) in an amount such that, after payment by the Executive of all taxes (and any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing provisions of this Section 9(a), if it shall be determined that Parachute Value of all Payments is more than 100% but not more than 110% of the Safe Harbor Amount, then no Gross-Up Payment shall be made to the Executive and the amounts payable under this Agreement shall be reduced so that the Parachute Value of all Payments, in the aggregate, equals the Safe Harbor Amount. The reduction of the amounts payable hereunder, if applicable, shall be made by first reducing the payments under Section 5(a)(i)(B), unless an alternative method of reduction is elected by the Executive, and in any event shall be made in such a manner as to maximize the Value of all Payments actually made to the Executive. For purposes of reducing the Payments to the Safe Harbor Amount, only amounts payable under this Agreement (and no other Payments) shall be reduced. If the reduction of the amount payable under this Agreement would not result in a reduction of the Parachute Value of all Payments to the Safe Harbor Amount, no amounts payable under the Agreement shall be reduced pursuant to this Section 9(a). The Company’s obligation to make Gross-Up Payments under this Section 9 shall not be conditioned upon the Executive’s termination of employment.

(b) Subject to the provisions of Section 9(c), all determinations required to be made under this Section 9, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made such certified public accounting firm as may be designated by the Company (the “Accounting Firm”), which shall provide detailed supporting calculations both to the Company and the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 9, shall be paid by the Company to the Executive within five days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments that will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 9(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive.

(c) The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after the Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall:

(i) give the Company any information reasonably requested by the Company relating to such claim,

(ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company,

(iii) cooperate with the Company in good faith in order effectively to contest such claim, and

(iv) permit the Company to participate in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in

connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 9(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

(d) If, after the receipt by the Executive of a Gross-Up Payment or payment by the Company of an amount on the Executive’s behalf pursuant to Section 9(c), the Executive becomes entitled to receive any refund with respect to the Excise Tax to which such Gross-Up Payment relates or with respect to such claim, the Executive shall (subject to the Company’s complying with the requirements of Section 9(c), if applicable) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after payment by the Company of an amount on the Executive’s behalf pursuant to Section 9(c), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then the amount of such payment shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

(e) Notwithstanding any other provision of this Section 9, the Company may, in its sole discretion, withhold and pay over to the Internal Revenue Service or any other applicable taxing authority, for the benefit of the Executive, all or any portion of any Gross-Up Payment, and the Executive hereby consents to such withholding.

(f) Notwithstanding the foregoing, any amounts that are payable to the Executive as a tax gross up under the Agreement shall be paid in accordance with the requirements of section 409A of the Code, including the requirement that all such payments shall be made not later than the end of the calendar year in which the Company remits the related taxes to the taxing authorities.

(g) The following terms shall have the following meanings for purposes of this section 9.

(i) “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax.

(ii) “Parachute Value” of a Payment shall mean the present value as of the date of the change of control for purposes of Section 280G of the Code of the portion of such Payment that constitutes a “parachute payment” under Section 280G(b)(2), as determined by the Accounting Firm for purposes of determining whether and to what extent the Excise Tax will apply to such Payment.

(iii) A “Payment” shall mean any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of the Executive, whether paid or payable pursuant to this Agreement or otherwise.

(iv) The “Safe Harbor Amount” means 2.99 times the Executive’s “base amount,” within the meaning of Section 280G(b)(3) of the Code.

(v) “Value” of a Payment shall mean the economic present value of a Payment as of the date of the change of control for purposes of Section 280G of the Code, as determined by the Accounting Firm using the discount rate required by Section 280G(d)(4) of the Code.

10. Confidential Information . The Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company or any of the Affiliated Companies, and their respective businesses, which shall have been obtained by the Executive during the Executive’s employment by the Company or any of the Affiliated Companies and which shall not be or become public knowledge (other than by acts by the Executive or representatives of the Executive in violation of this Agreement). After termination of the Executive’s employment with the Company, the Executive shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it. In no event shall an asserted violation of the provisions of this Section 10 constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Agreement.

11. Successors . (a) This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives.

(b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. Except as provided in Section 11(c), without the prior written consent of the Executive this Agreement shall not be assignable by the Company.

(c) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.

12. Section 409A .

(a) Compliance . This Agreement is intended to comply with the requirements of section 409A of the Code, and shall in all respects be administered in accordance with section 409A. Notwithstanding anything in the Agreement to the contrary, distributions may only be made under the Agreement upon a section 409A “separation from service” or other event permitted by section 409A, and in a manner permitted by section 409A of the Code or an applicable exemption. For purposes of section 409A of the Code, the right to a series of payments under the Agreement shall be treated as a right to a series of separate payments. The Executive may not, directly or indirectly designate the calendar year of a payment.

(b) Reimbursements . All reimbursements and in-kind benefits provided under the Agreement shall be made or provided in accordance with the requirements of section 409A of the Code. If reimbursements are made with respect to outplacement services, all reimbursements for outplacement services shall be paid in accordance with the requirements of section 409A, including the requirement that such expense reimbursements be incurred by the end of the second year after the year in which the Termination Date occurs and all reimbursement payments be made by the end of the third year after the year in which the Termination Date occurs.

(c) Specified Employee . Notwithstanding any provision in this Agreement to the contrary, if the Executive is a “specified employee” of a publicly traded corporation under section 409A on the Executive’s Termination Date and if payment of any amount under this Agreement is required to be delayed for a period of six months after separation from service pursuant to section 409A of the Code, payment of such amount shall be delayed as required by section 409A of the Code, and the accumulated postponed amount shall be paid in a lump sum payment within 10 days after the end of the six-month period. If the Executive dies during the postponement period prior to the payment of postponed amount, the amounts withheld on account of section 409A of the Code shall be paid to the personal representative of the Executive’s estate within 60 days after the date of Executive’s death. A “specified employee” shall mean an employee who, at any time during the 12-month period ending on the identification date, is a “specified employee” under section 409A of the Code, as determined by the Compensation Committee of the Board. The determination of “specified employees,” including the number and identity of persons considered “specified employees” and the identification date, shall be made by the Compensation Committee in accordance with the provisions of sections 416(i) and 409A of the Code and the regulations issued thereunder.

13. Miscellaneous .

(a) This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.

(b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

If to the Executive :

[ ]

MeadWestvaco Corporation

11013 West Broad Street

Glen Allen, VA 23060

If to the Company :

MeadWestvaco Corporation

Attention: Wendell L. Willkie, II

Senior Vice President, General Counsel and Secretary

MeadWestvaco Corporation

11013 West Broad Street

Glen Allen, VA 23060

or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee.

(c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

(d) The Company may withhold from any amounts payable under this Agreement such U.S. federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

(e) The Executive’s or the Company’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason pursuant to Section 5(c)(i)-(iv) of this Agreement, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

(f) This Agreement, upon its execution, supersedes the Executive’s Employment Agreement dated January 29, 2004 with the MeadWestvaco Corporation and any other agreement between the parties with respect to the subject matter hereof. The Executive and the Company acknowledge that, except as may otherwise be provided under any other written agreement between the Executive and the Company, the employment of the Executive by the Company is “at will” and, subject to Section 2(c) hereof, prior to the Effective Date, the Executive’s employment may be terminated by either the Executive or the Company at any time prior to the Effective Date, in which case the Executive shall have no further rights under this Agreement; provided that if it is reasonably demonstrated by the Executive that the Executive’s termination of employment (i) was at the request of a third party who has taken steps reasonably calculated to effect a Change of Control or (ii) otherwise arose in connection with or anticipation of a Change of Control, then this Agreement shall remain in effect in accordance with Section 2(c). The Agreement may not be terminated by the Company during the Change of Control Period while the Executive remains an employee of the Company, without the Executive’s consent.

IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the authorization from its Board of Directors, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.



[ ]

MEADWESTVACO CORPORATION

By:		/s/ Wendell L. Willkie, II
		Wendell L. Willkie, II
		Senior Vice President, General Counsel and Secretary

EXHIBIT A

RELEASE

In consideration of the severance benefits offered to me by MeadWestvaco Corporation (the “Company”) under the Employment Agreement dated as of , 2008, (the “Agreement”) and other consideration, I on behalf of myself, and on behalf of my heirs, administrators, representatives, successors, and assigns (the “Releasors”), hereby release acquit and forever discharge the Company, all of its past, present and future subsidiaries and affiliates and all of their respective directors, officers, employees, agents, trustees, partners, shareholders, consultants, independent contractors and representatives, all of their respective heirs, successors, and assigns and all persons acting by, through, under or in concert with them (the “Releasees”) from any and all claims, charges, complaints, obligations, promises, agreements, controversies, damages, remedies, demands, actions, causes of action, suits, rights, costs, debts, expenses and liabilities that the Releasors might otherwise have asserted arising out of my employment with the Company and its subsidiaries and affiliates, including the termination of that employment.

However, the Releasors are not releasing any rights under (i) any qualified employee retirement plan, (ii) any claim for compensation and benefits to be provided to me under the Agreement, (ii) any claim for vested benefits or benefits that I am otherwise entitled to receive under any plan, policy, practice or program of or any contract or agreement with the Company or any of the Affiliated Companies at or subsequent to the-Date of Termination, (iii) any claim related to my indemnification as an officer, director and employee of the Affiliated Companies under the Company’s Certificate of Incorporation or By-Laws, or (iv) any rights or claims that may arise after the date on which I sign this release (the “Release”). Those rights shall survive unaffected by this Release.

I understand that, as a consequence of my signing this Release, I am giving up, any and all rights I might otherwise have with respect to my employment and the termination of that employment including but not limited to rights under (1) the Age Discrimination in Employment Act of 1967, as amended; (2) any and all other federal, state, or municipal laws prohibiting discrimination in employment on the basis of sex, race, national origin, religion, age, handicap, or other invidious factor, or retaliation; and (3) any and all theories of contract or tort law related to my employment or termination thereof, whether based on common law or otherwise.

I acknowledge and agree that:

A. The benefits I am receiving under the Agreement constitute consideration over and above any benefits that I might be entitled to receive without executing this Release.

B. The Company advised me in writing to consult with an attorney prior to signing this Release.

C. I was given a period of at least twenty-one (21) days within which to consider this Release; and

D. The Company has advised me of my statutory right to revoke my agreement to this Release at anytime within seven (7) days of my signing this Release.

A-1

I warrant and represent that my decision to sign this Release was (1) entirely voluntary on my part; (2) not made in reliance on any inducement, promise, or representation, whether express or implied, other than the inducements, representations, and promises expressly set forth herein and in the Agreement and (3) did not result from any threats or other coercive activities to induce my agreement to this Release.

If I exercise my right to revoke this Release within seven (7) days of my execution of this Release, I warrant and represent that I will: (1) notify the Company in writing, in accordance with the attached Agreement, of my revocation of this Release, and (2) simultaneously return in full any consideration received from the Company or any employee benefit plan sponsored by the Company.

The parties agree that this release shall not affect the rights and responsibilities of the US Equal Employment Opportunity Commission (hereinafter “EEOC”) to enforce the Age Discrimination in Employment Act of 1967, as amended and other laws. In addition, the parties agree that this release shall not be used to justify interfering with my protected right to file a charge or participate in an investigation or proceeding conducted by the EEOC. The parties further agree that the Releasors knowingly and voluntarily waive all rights or claims that arose prior to the date hereof that the Releasors may have against the Releasees to receive any benefit or remedial relief (including, but not limited to, reinstatement, back pay, front pay, damages, attorneys’ fees, experts’ fees) as a consequence of any investigation or proceeding conducted by the EEOC.

The provisions of this Release are severable, and if any part of it is found to be unenforceable, the other paragraphs shall remain fully valid and enforceable. This Release shall be construed in accordance with its fair meaning and in accordance with the laws of the State of Delaware, without regard to conflicts of laws principles. Capitalized terms used but not defined herein shall have the meanings set forth in the Employment Agreement.

I further warrant and represent that I fully understand and appreciate the consequences of my signing this Release.


Name:
		(Please Print)



Signature:



Date:

A-2

Exhibit 10.33

EMPLOYMENT AGREEMENT

Amended and Restated as of January 1, 2008

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT by and between MeadWestvaco Corporation, a Delaware corporation (the “Company”) and Mark T. Watkins (the “Executive”), is dated as of January 1, 2008.

RECITALS

NOW, THEREFORE, IT IS HEREBY AGREED that the Existing Agreement is amended and restated as follows:

1. Change of Control . For the purpose of this Agreement, a “Change of Control” shall mean:

(d) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

2. Certain Other Definitions . (a) “Affiliated Companies” shall include any company controlled by, controlling or under common control with the Company.

(e) The “Multiple” means two.