MEADWESTVACO Corp (Form: 10-K, Received: 02/24/2014 16:11:27)

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company

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, 2013

¨	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

31-1797999

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

501 South 5 ^th Street

Richmond, Virginia 23219-0501

Telephone 804-444-1000

(Address and telephone number of

Registrant’s principal executive offices)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:


Title of each class		Name of each exchange on which registered
Common Stock, $0.01 par value		New York Stock Exchange

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: 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 Section 15(d) of the 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 shorter period that 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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). 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. ¨

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.

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, 2013, the aggregate market value of common stock held by non-affiliates was $5,983,995,412. 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, 2014, the number of shares of common stock of the Registrant outstanding was 174,571,183.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s Proxy Statement for the Annual Meeting of Shareholders expected to be held on April 28, 2014, are incorporated by reference into Part III of this Annual Report on Form 10-K; definitive copies of said Proxy Statement will be filed with the Securities and Exchange Commission on or around March 26, 2014.

TABLE OF CONTENTS


		Page
Item	PART I

1.	Business		1
1A.	Risk factors		6
1B.	Unresolved staff comments		8
2.	Properties		9
3.	Legal proceedings		10
4.	Mine safety disclosures		10

	PART II

5.	Market for registrant’s common equity, related stockholder matters and issuer purchases of equity securities		12
6.	Selected financial data		14
7.	Management’s discussion and analysis of financial condition and results of operations		16
7A.	Quantitative and qualitative disclosures about market risk		40
8.	Financial statements and supplementary data		41
9.	Changes in and disagreements with accountants on accounting and financial disclosure		89
9A.	Controls and procedures		89
9B.	Other information		89

	PART III

10.	Directors, executive officers and corporate governance		90
11.	Executive compensation		90
12.	Security ownership of certain beneficial owners and management and related stockholder matters		90
13.	Certain relationships and related transactions, and director independence		90
14.	Principle accounting fees and services		90

	PART IV

15.	Exhibits, financial statement schedules		91
	Signatures		95

Part I

Item 1. Business

General

MeadWestvaco Corporation (“MeadWestvaco”, “MWV”, or the “company”) is a global packaging company providing innovative solutions to the world’s most admired brands in the healthcare, beauty and personal care, food, beverage, home and garden, tobacco, and agricultural industries. The company also produces specialty chemicals for the automotive, energy, and infrastructure industries and maximizes the value of its development land holdings in the Charleston, South Carolina region. MeadWestvaco is a Delaware corporation, incorporated in 2001 and the successor to Westvaco Corporation and The Mead Corporation. MWV’s reporting segments are (i) Food & Beverage, (ii) Home, Health & Beauty, (iii) Industrial, (iv) Specialty Chemicals, and (v) Community Development and Land Management.

On December 6, 2013, MeadWestvaco completed the sale of its U.S. forestlands, consisting of approximately 501,000 acres in Alabama, Georgia, South Carolina, Virginia and West Virginia, and certain related assets to subsidiaries of Plum Creek Timber Company, Inc (“Plum Creek”). The results of this business are reported in discontinued operations in the consolidated financial statements included in this report. For further information on this transaction, refer to Note S of Notes to Consolidated Financial Statements included in Part II, Item 8.

Food & Beverage

The Food & Beverage segment produces packaging materials, and designs and produces packaging solutions primarily for the global food, food service, beverage, dairy and tobacco end markets, as well as paperboard for commercial printing. For the global food market, the segment develops and produces materials and innovative solutions that are used to package frozen food, dry goods, ready-to-eat meals, hot and cold drinks, and various shelf-stable dairy products. For the global beverage market, the segment has a fully integrated business model, including high-performance paperboard, carton design and converting operations, as well as beverage packaging machinery. For the global tobacco market, the segment produces high performance paperboard, and designs and produces cartons for the world’s leading tobacco brand owners. The segment’s materials are manufactured in the U.S. and converted into packaging solutions at plants located in North America, Europe and Asia.

Home, Health & Beauty The Home, Health & Beauty segment designs and produces packaging solutions for the global personal care, fragrance, home care, lawn and garden, prescription drug and healthcare end markets. For the global beauty and personal care market, the segment produces pumps for fragrances, lotions, creams and soaps, flip-top and applicator closures for bath and body products and lotions, and paperboard and plastic packaging for hair and skin care products. For the global home and garden market, the segment produces trigger sprayers for surface cleaners and fabric care, aerosol actuators for air fresheners, hose-end sprayers for lawn and garden maintenance, and spouted and applicator closures for a variety of other home and garden products. For the global healthcare market, the segment produces secondary packages designed to enhance patient adherence for prescription drugs, as well as healthcare dispensing systems, paperboard packaging and closures for over-the-counter and prescription drugs. Paperboard and plastic materials are converted into packaging solutions at plants located in North America, South America, Europe and Asia.

Industrial

The Industrial segment designs and produces corrugated packaging solutions, primarily for produce, meat, consumer products and bulk goods. In Brazil, where most of this business is based, the integrated business includes forestlands, paperboard mills and corrugated box plants. This segment also includes operations in India, which develop corrugated packaging materials as well as corrugated packaging solutions for Indian fresh produce. In Brazil, the segment manufactures high-quality virgin kraftliner and recycled material medium paperboards, and converts the board to corrugated packaging at four box plants across the country. In India, the segment converts raw materials to corrugated packaging at its facility in Pune and manufactures containerboard at two mills in Vapi and Morai.

Specialty Chemicals

The Specialty Chemicals segment manufactures, markets and distributes specialty chemicals derived from sawdust and other byproducts of the papermaking process in North America, Europe, South America and Asia. Products include performance chemicals derived from pine chemicals used in printing inks, asphalt paving and adhesives as well as in the agricultural, paper and petroleum industries. This segment also produces activated carbon products used in gas vapor emission control systems for automobiles and trucks, as well as applications for air, water and food purification.

Community Development and Land Management

The Community Development and Land Management segment is responsible for maximizing the value of 109,000 development acres in the Charleston, South Carolina region through a land development partnership with Plum Creek. The segment develops real estate including (i) selling development property, (ii) entitling and improving high-value tracts, and (iii) master planning of select landholdings. The earnings of this segment exclude the non-controlling interest attributable to Plum Creek.

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

Marketing and distribution

The principal markets for our products are in North America, South America, Europe and Asia. We operate in 30 countries and serve customers in more than 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.

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, global competition, economic conditions in the U.S. and abroad, as well as 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 Food & Beverage segment competes globally with manufacturers of coated and bleached paperboard for packaging and graphic applications, as well as other specialty paperboards. In addition, this segment competes within the global food, food service, beverage, dairy and tobacco packaging end markets. The Home, Health & Beauty segment competes globally with manufacturers of packaging solutions for the global personal care, fragrance, home care, lawn and garden, prescription drug and healthcare end markets. The Industrial segment competes within the Brazilian and Indian corrugated packaging markets for produce, meat, consumer products and bulk goods. The Specialty Chemicals segment competes globally with producers of activated carbons, refined tall oil products, lignin-based chemicals and specialty resins. The Community Development and Land Management segment competes in the real estate sales and development market in the Charleston, South Carolina region.

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. Expenditures for research and development were $44 million, $45 million and $46 million for the years ended December 31, 2013, 2012 and 2011, respectively.

Environmental laws and regulations

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, 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 $50 million and $75 million in environmental capital expenditures in 2014 and 2015, respectively. Approximately $32 million was spent on environmental capital projects in 2013. Included in the 2014 and 2015 estimated expenditures are capital costs associated with compliance with the Maximum Achievable Compliance Technology for industrial boilers rules that were finalized by the United States Environmental Protection Agency in January 2013. Total expenditures for compliance with this rule are estimated to be in a range of $40 million to $60 million over the period of 2014 through 2015 and possibly extending into 2016.

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, 2013, MeadWestvaco had recorded liabilities of approximately $4 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 at December 31, 2013 by an amount that could range from an insignificant amount to as much as $3 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.

Employees

MeadWestvaco currently employs approximately 16,000 people worldwide, of whom approximately half are employed in the U.S. and half are employed internationally. Approximately half of the company’s employees around the world are represented by labor unions under various collective bargaining agreements. The company engages in negotiations with labor unions for new collective bargaining agreements from time to time and negotiated new collective agreements at various manufacturing locations around the world in 2013. The company considers its relationships with its unions and other employee representatives to be generally good. While it is the company’s objective to reach agreements without work stoppages, it cannot predict the outcome of any negotiations.

International operations

MeadWestvaco’s operations outside the U.S. are conducted through subsidiaries located in Canada, Mexico, South America, Europe and Asia. MeadWestvaco’s sales that were attributable to U.S. operations, including export sales, were 66% for the year ended December 31, 2013, 67% for the year ended December 31, 2012 and 65% for year ended December 31, 2011. Export sales from MeadWestvaco’s U.S. operations were 18% for the year ended December 31, 2013 and 17% for both years ended December 31, 2012 and 2011. Sales that were attributable to foreign operations were 34% for the year ended December 31, 2013, 33% for the year ended December 31, 2012 and 35% for the year ended December 31, 2011. For more information about the company’s U.S. and foreign operations, see Note U of Notes to Consolidated Financial Statements included in Part II, Item 8.

Available information

Our Internet address is www.mwv.com . Please note that MWV’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 or any future reports we may file with the SEC and should not be considered part of this report. MWV 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. You may access these filings in the Investors section of our website. MWV’s Corporate Governance Principles , our charters (Nominating and Governance Committee, Audit Committee, Compensation and Organization Development Committee, Finance Committee, Safety, Health and Environment Committee, and Executive Committee) and our Code of Conduct can be found in the Investors section of our website at the following address: http://www.mwv.com/InvestorRelations/CorporateGovernance/index.htm . Our Code of Conduct applies to all MeadWestvaco directors and employees worldwide, including the Chief

Executive Officer, Chief Financial Officer, and Chief Accounting Officer. These policies and principles support the company’s core values of integrity, respect for the individual, commitment to excellence and teamwork. Printed copies of the Code of Conduct are available to any stockholder upon request by calling 1-800-432-9874. Any future changes or amendments to our Code of Conduct and any waiver of our Code of Conduct that apply to our Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, or members of the Board of Directors, will be posted on the Investors section of our website at http://www.mwv.com/InvestorRelations/CorporateGovernance/index.htm .

Item 1A. Risk factors

Risks relating to our business

U.S. and global economic conditions could have an adverse effect on the profitability of some or all of our businesses.

Consumer and business confidence, the availability and cost of credit, consumer spending and business investment, the volatility and strength of the capital markets, and inflation all affect the business and economic environment and, ultimately, the profitability of our business. In an economic downturn characterized by higher unemployment, lower family income, lower business investment and lower consumer spending, the demand for our products would be adversely affected. Adverse developments in the U.S., Europe or emerging markets, including Brazil, China and India, could negatively affect earnings and have a material adverse effect on our business, results of operations, cash flows and financial position. Such adverse effects could include the interruption of production at the facilities of our customers, the reduction, delay or cancellation of customer orders, delays in or the inability of customers to obtain financing to purchase our products, and bankruptcy of customers or other related parties. While we have procedures to monitor and limit exposure to credit risk, there can be no assurance such procedures will effectively limit our credit risk and avoid losses, which could have a material adverse effect on our operating results. In a challenging and uncertain economic environment, we cannot predict whether or when such adverse economic circumstances may occur, or what impact, if any, such circumstances could have on our business, results of operations, cash flow and financial position.

The company has announced a margin improvement program. If we fail to execute fully on this initiative, we may not realize all the improvements we have publicly announced.

In January of 2014, the company announced a program to generate increased earnings and cash flow. The program is expected to deliver annual pre-tax cost savings of $100 million to $125 million by the end of 2015, with at least $75 million expected to be realized in 2014. This initiative is described more fully in Part II, Item 7. Management is committed to achieving these goals and believes they are attainable. The company’s degree of success in attaining these objectives will affect its operating earnings and cash flow.

The company’s businesses are subject to significant cost pressures. Pricing volatility and our ability to pass higher costs on to our customers through price increases or other adjustments is uncertain and dependent on market conditions and may materially impact our results of operations.

The pricing environment for raw materials used in a number of our businesses can fluctuate. The company sources all wood fiber for its U.S. mills from third parties. Additionally, energy costs remain volatile and unpredictable. Further unpredictable increases in the cost of various essential materials, energy or freight may materially impact our results of operations. Depending on market forces and the terms of customer contracts, our ability to recover these costs through increased pricing may be limited.

The company faces intense competition in each of its businesses, and competitive challenges from lower cost manufacturers. If we cannot successfully compete in an increasingly global market place, our results of operations 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. 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 both innovate and manage expenses successfully. This requires continuous management focus on producing new and innovative products and solutions and reducing costs and improving efficiency through cost controls, productivity enhancements and regular appraisal of our asset portfolio.

The company’s markets are global. 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 currency exchange rates and other factors related to our international sales and operations.

For the year ended December 31, 2013, sales outside the U.S. were approximately 52% of total sales, which includes 18% of export sales to our foreign customers. We recently completed a substantial expansion of our corrugated packaging operations in Brazil as well as expanded our participation in other emerging markets, including China and India. As our international operations and activities expand, we inevitably have greater exposure to the risks of operating in many foreign countries. These factors include:

•

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

•

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 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.

•

Commercial and regulatory difficulties in markets where corrupt practices are prevalent.

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 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 improving energy efficiency which also reduces its emissions of carbon dioxide. In recent years, acting unilaterally, the company has reduced its carbon dioxide emissions from fossil fuels even as overall production has increased.

We report the direct greenhouse gas emissions for our major U.S. manufacturing facilities to the U.S. EPA which are publicly available on the EPA website, www.epa.gov, we also report the consolidated greenhouse gas emissions from all of our manufacturing facilities worldwide to the Carbon Disclosure Project (“CDP”).

The U.S. Environmental Protection Agency has announced, proposed or finalized numerous air emission regulations covering greenhouse gas emissions, new emission standards for industrial boilers and establishment of more stringent ambient air quality standards. Changes in environmental laws and regulations, or their application, could subject the company to significant additional capital expenditures and operating expenses in future years. 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.

Material disruptions at one of our major manufacturing facilities could negatively impact our financial results.

We take appropriate measures to minimize the risks of disruption at our facilities. A material operational disruption in one of our major facilities could negatively impact production and our financial results. Such a disruption could occur as a result of any number of events including but not limited to a major equipment failure, labor stoppages, inadequate supply of fiber, transportation failures affecting the supply and shipment of materials, severe weather conditions and disruptions in utility services.

The real estate industry is highly competitive and economically cyclical.

The company engages in value-added real estate development activities in the Charleston, South Carolina region, 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. Our ability to execute our plans to realize the greater value associated with our development land holdings 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’s global headquarters are located in Richmond, Virginia. MeadWestvaco believes that its facilities have sufficient capacity to meet current production requirements. The locations of MeadWestvaco’s production facilities by reporting segment are currently as follows:


Food & Beverage
Ajax, Ontario, Canada		Lanett, Alabama
Atlanta, Georgia		Low Moor, Virginia
Bilbao, Spain		Moscow, Russian Federation (Leased)
Bristol, United Kingdom		Roosendaal, The Netherlands
Buenos Aires, Argentina (Leased)		Săo Paulo, Săo Paulo, Brazil (Leased)
Chicago, Illinois		Santiago de Chile, Chile (Leased)
Cottonton, Alabama		Shimada, Japan
Covington, Virginia		Silsbee, Texas
Deols, France		Smyrna, Georgia
Enschede, The Netherlands		Svitavy, Czech Republic
Evadale, Texas		Trier, Germany
Graz, Austria		Troyes, France
Krakow, Poland		Venlo, The Netherlands

Home, Health & Beauty
Aqua Branca, Săo Paulo, Brazil		Slatersville, Rhode Island (Leased)
Barcelona, Spain		St. Petersburg, FL (Leased)
Bydgoszcz, Poland		Tecate, Mexico (Leased)
Dublin, Ireland (Leased)		Tijuana, Mexico (Leased)
Grandview, Missouri		Valinhos, Săo Paulo, Brazil
Hemer, Germany		Vicenza, Italy
Mebane, North Carolina		Vise, Belgium
Milan, Italy (Leased)		Waalwijk, The Netherlands (Leased)
San Luis Potosi, Mexico		Winfield, Kansas
Sion, Switzerland		Wuxi, People’s Republic of China

Industrial
Araçatuba, Săo Paulo, Brazil		Pune, India
Blumenau, Santa Catarina, Brazil		Tres Barras, Santa Catarina, Brazil
Morai, India		Valinhos, Săo Paulo, Brazil
Pacajus, Ceara, Brazil		Vapi, India

Specialty Chemicals
Covington, Virginia		Palmeira, Santa Catarina, Brazil
DeRidder, Louisiana		Waynesboro, Georgia
Duque de Caxias, Rio de Janeiro, Brazil		Wickliffe, Kentucky
North Charleston, South Carolina		Wuijang, People’s Republic of China


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

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

Leases

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

Other information

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

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.

As of December 31, 2013, MeadWestvaco owned approximately 109,000 acres of development landholdings in the Charleston, South Carolina region and approximately 135,000 acres of forestlands in Brazil (more than 1,200 miles from the Amazon rainforest).

Item 3. Legal proceedings

MeadWestvaco is involved in various litigation and administrative proceedings arising in the normal course of business. Although the ultimate outcome of such matters cannot be predicted with certainty, MeadWestvaco does 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.

Additional information is included in the “Environmental laws and regulations” discussion within Part I, Item 1, and in Note P of Notes to Consolidated Financial Statements included in Part II, Item 8. These sections are incorporated herein by reference.

Item 4. Mine safety disclosures

Not applicable.

Executive officers of the registrant


Name	Age*		Present position	Year in which service in present position began
John A. Luke, Jr.**		65	Chairman and Chief Executive Officer		2002
Robert K. Beckler		52	Executive Vice President		2014
Robert A. Feeser		52	Executive Vice President		2014
E. Mark Rajkowski		55	Senior Vice President and Chief Financial Officer		2004
Peter C. Durette		40	Senior Vice President		2012
Linda V. Schreiner		54	Senior Vice President		2002
Mark T. Watkins		60	Senior Vice President		2002
Wendell L. Willkie, II		62	Senior Vice President, General Counsel and Secretary		2002
Robert E. Birkenholz		53	Vice President and Treasurer		2011
Donna O. Cox		50	Vice President		2005
Todd W. Fister		39	Vice President		2013
Brent A. Harwood		50	Vice President and Controller		2013

*	As of February 24, 2014

**	Director of MeadWestvaco

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

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

Robert K. Beckler , Senior Vice President, 2012-2014; President, Rigesa, 2010-2014; President, Specialty Chemicals, 2007-2010; Vice President, Specialty Chemicals, 2004-2007;

Robert A. Feeser, Senior Vice President, 2010-2014; President, Packaging Resources Group 2004-2010; Vice President, Packaging Group 2002-2004; President, Containerboard Division 2000-2002; President, Gilbert Paper Company 1997-2000;

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;

Peter C. Durette, Vice President and Chief Strategy Officer, 2009-2012; Vice President of Strategy & Business Development at Textron Inc., 2008-2009; Principal/Partner at Marakon Associates, 2004-2008;

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;

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;

Robert E. Birkenholz , Treasurer, 2004-2011, Assistant Treasurer, 2003-2004; Assistant Treasurer, Amerada Hess Corporation, 1997-2002;

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;

Todd W. Fister, Director of Strategy and Business Development, 2011-2013; Director of Finance Consumer &Office Products Group, 2007-2011; Kimberly Clark, Senior Strategic Analyst, 2003-2007;

Brent A. Harwood , Assistant Controller, 2006-2012; Controller, Cadmus Communications Corporation, 2001-2006; Deloitte & Touche LLP, 1990-2001.

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, 2013				Year ended December 31, 2012 ¹
STOCK PRICES	High		Low		High		Low
First quarter	$	38.39	$	31.14	$	32.13	$	29.13
Second quarter		36.74		33.47		32.50		26.15
Third quarter		39.38		33.95		31.12		26.97
Fourth quarter		39.33		33.38		31.93		27.93

On May 1, 2012, the company completed the spin-off of its Consumer & Office Products business and subsequent merger of that business with ACCO Brands Corporation. The stock price for the second quarter of 2012 presented above has not been adjusted to reflect the value of the spin-off to MeadWestvaco’s shareholders.

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, 2013, the number of shareholders of record of MeadWestvaco common stock was approximately 17,000. This number includes approximately 9,000 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, 2013		Year ended December 31, 2012
First quarter	$	0.25	$	0.25
Second quarter		0.25		0.25
Third quarter		0.25		0.25
Fourth quarter		0.25		0.25

	$	1.00	$	1.00

On January 27, 2014 the Board of Directors of MeadWestvaco approved a special dividend of $1.00 and a regular quarterly dividend of $0.25 per common share, both to be paid on March 3, 2014 to shareholders of record as of February 6, 2014.

(d) Stock repurchases

Common stock shares repurchased by the company during the three months ended December 31, 2013 are as follows:


	(a) Total Number of Shares (or Units) Purchased		(b) Average Price Paid per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs		(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
October 1, 2013 – October 31, 2013		61,100	$	34.88		61,100		8,105,696
November 1, 2013 – November 30, 2013		2,290,100		34.40		2,290,100		5,815,596
December 1, 2013 – December 31, 2013		1,398,442		35.65		1,398,442		4,417,154

		3,749,642		34.88		3,749,642

During 2013, MWV purchased and retired approximately 4 million of its common shares for $131 million. At December 31, 2013, there were approximately 4 million shares available for purchase under an existing authorization provided by the company’s Board of Directors in January of 2013.

On January 27, 2014 the company’s Board of Directors approved approximately $394 million of share repurchases to be comprised of $300 million under an accelerated share repurchase program and $94 million pursuant to open market repurchases, which are expected to be largely completed by the end of the second quarter of 2014.

The company entered into the accelerated share repurchase program with certain financial institutions on February 7, 2014 to purchase $300 million of MeadWestvaco’s common stock. The company purchased for $300 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 number of shares that may be purchased. At February 7, 2014 approximately 7.5 million shares were repurchased and retired; however, at the conclusion of the program, which will be no later than June 2014, the company may receive additional shares.

Item 6. Selected financial data

Dollars in millions, except per share data


	Years ended December 31,
	2013			2012			2011			2010			2009
EARNINGS
Net sales	$	5,389		$	5,287		$	5,179		$	4,794		$	4,474
Income from continuing operations attributable to the company		320			153			177			137			95
Income (loss) from discontinued operations		519			52			69			(31	)		130
Net income attributable to the company		839	¹		205	²		246	³		106	⁴		225	⁵
Income from continuing operations:
Per share – basic		1.81			0.88			1.04			0.80			0.56
Per share – diluted		1.78			0.87			1.02			0.79			0.55
Net income per share – basic		4.74			1.18			1.45			0.62			1.31
Net income per share – diluted		4.66			1.16			1.42			0.62			1.30
Depreciation, depletion and amortization expense		390			366			361			354			369
COMMON STOCK
Number of common shareholders		17,000			18,000			20,000			21,000			22,500
Weighted average number of shares outstanding:
Basic		177			174			170			170			171
Diluted		180			177			174			173			173
Dividends paid	$	177		$	173		$	170		$	160		$	157
Per share:
Dividends declared		1.00			1.00			1.00			0.94			0.92
Book value		22.61			19.04			18.50			19.40			19.77
FINANCIAL POSITION
Working capital	$	1,300		$	960		$	766		$	1,220		$	1,284
Current ratio		2.1			1.9			1.5			2.0			2.0
Property, plant, equipment and forestlands, net	$	3,647		$	3,593		$	3,276		$	2,982		$	$3,014
Total assets		10,285			8,908			8,810			8,814			9,021
Long-term debt, excluding current maturities		1,816			2,100			1,880			2,042			2,152
Shareholders’ equity		3,944			3,340			3,162			3,266			3,386	⁶
Debt to total capital (shareholders’ equity and total debt)		32	%		39	%		40	%		39	%		39	%
OPERATIONS
Primary production of paperboard (thousands, in tons)		2,998			2,936			2,848			2,804			2,697
New investment in property, plant, equipment and forestlands on a continuing operations basis	$	506		$	654		$	652		$	226		$	211
Acres of forestlands owned (thousands)		135			135			135			135		$	135
Number of employees at December 31		16,000			16,000			17,000			18,000			20,000
														20,000

2013 results include after-tax income from the release of reserves for alternative fuel mixture credits of $165 million, or $0.92 per share, after-tax restructuring and other charges of $32 million, or $0.18 per share, after-tax pension settlement charges of $11 million, or $0.06 per share, and discrete income tax benefits of $13 million, or $0.07 per share. 2013 results also include after-tax income from discontinued operations of $519 million, or $2.88 per share.

2012 results include after-tax restructuring charges of $17 million, or $0.10 per share, an after-tax benefit from cellulosic biofuel producer credits, net of exchange of alternative fuel mixture credits of $9 million, or $.06 per share. 2012 results also include after-tax income from discontinued operations of $52 million, or $0.29 per share.

³	2011 results include after-tax restructuring charges of $19 million, or $0.11 per share and an after-tax benefit plan charge of $6 million or $0.03 per share. 2011 results also include after-tax income from discontinued operations of $69 million, or $0.40 per share.

⁴

2010 results include after-tax restructuring charges of $34 million, or $0.20 per share, tax benefits of $29 million, or $0.17 per share, from cellulosic biofuel producer credits and audit settlements, an after-tax gain of $5 million, or $0.03 per share, related to post-retirement and pension curtailments, and an after-tax charge of $4 million, or $0.02 per share, from early extinguishment of debt. 2010 results also include an after-tax loss from discontinued operations of $31 million, or $0.17 per share.

⁵

2009 results include after-tax income from alternative fuel mixture credits of $242 million, or $1.40 per share, after-tax restructuring charges of $108 million, or $0.63 per share, charges of $32 million, or $0.18 per share, related to domestic and foreign tax audits, after-tax charges of $14 million, or $0.08 per share, from early extinguishments of debt, after-tax income of $13 million, or $0.07 per share, from a change to employee vacation policy, an after-tax expense of $12 million, or $0.07 per share, from a contribution to the MeadWestvaco Foundation, after-tax gains of $11 million, or $0.07 per share, related to sales of certain assets, and an after-tax gain of $4 million, or $0.02 per share, related to a pension curtailment. 2009 results also include after-tax income from discontinued operations of $130 million, or $0.75 per share.

⁶

The company has revised its consolidated financial statements included in this report to reflect the correction of errors within deferred income taxes. During the fourth quarter of 2013, the company identified $20 million of deferred income tax errors which include $13 million of deferred income tax assets that should have been written off prior to 2008, and $7 million in deferred income tax liabilities that should have been recorded in 2005. Additional information is included in the “Summary of significant accounting policies section” of Notes to Consolidated Financial Statements included in Part II, Item 8.

Item 7. Management’s discussion and analysis of financial condition and results of operations

OVERVIEW

For the year ended December 31, 2013, MeadWestvaco Corporation (“MeadWestvaco”, “MWV,” or the “company”) reported a 2% increase in sales and higher overall earnings from continuing operations primarily due to growth in targeted packaging and specialty chemicals markets, as well as from improved pricing within the Industrial segment and consistently running its expanded Brazilian operation at designed capacity levels. The company continued to gain share with food and beverage brand owners and grew volumes in higher value dispensing solutions, including gains in medical plastics, fragrance pumps and personal care dispensers. In addition, steady growth across the global asphalt, oilfield and activated carbon markets drove increased sales and earnings within the Specialty Chemicals segment. These benefits were partially offset by unfavorable foreign currency exchange compared to 2012.

For the year ended December 31, 2013, the company reported net income attributable to the company from continuing operations of $320 million, or $1.78 per share. These results include after-tax income from the release of reserves for alternative fuel mixture credits of $165 million, or $0.92 per share, after-tax restructuring and other charges of $32 million, or $0.18 per share, after-tax pension settlement charges of $11 million, or $0.06 per share, and discrete income tax benefits of $13 million, or $0.07 per share. Comparable results for prior years are noted later in this discussion.

Cash provided by operating activities from continuing operations improved to $358 million for the year ended December 31, 2013 compared to $220 million for the year ended December 31, 2012, primarily reflecting lower working capital levels. Capital expenditures from continuing operations declined to $506 million for the year ended December 31, 2013 compared to $654 million for the year ended December 31, 2012, primarily reflecting lower investment related to the company’s expansion in Brazil, which was substantially completed in 2012.

On December 6, 2013, the company completed the sale of all of its U.S. forestlands and certain related assets to Plum Creek Timber Company, Inc. (“Plum Creek”), resulting in the recognition of a pre-tax gain of $780 million presented within discontinued operations on an after-tax basis. The company received total consideration of $934 million, of which approximately $74 million was paid in cash and $860 million was in the form of a ten-year term installment note. Using the installment note as collateral, the company received $774 million in proceeds under a non-recourse secured financing agreement with a bank on December 20, 2013. The results of the company’s forestry business and related assets, as well as the gain on the sale, are reported in discontinued operations in the consolidated financial statements. These businesses were previously reported within the Community Development and Land Management segment.

This segment’s principal activities are now focused on maximizing the value of the remaining 109,000 development acres located in the Charleston, South Carolina region through a land development partnership with Plum Creek which was created coincident with the sale of the company’s forestry and certain minerals-related businesses on December 6, 2013. Plum Creek contributed approximately $152 million in cash and the company contributed 109,000 development acres to establish the partnership. Refer to Note S of Notes to Consolidated Financial Statements included in Part II, Item 8 for further information.

Savings associated with the company’s cost reduction initiative announced in April 2013 were $43 million for full-year 2013. The company remains on track to achieve $75 million in cumulative savings from this initiative by the end of 2014. In January 2014, the company announced a new margin improvement program to generate increased earnings and cash flow. The program is designed to deliver annual pre-tax savings of $100 million to $125 million by the end of 2015, with at least $75 million to be realized in 2014. These savings are incremental to the company’s 2013 cost reduction initiative. Free

cash flow is expected to increase by at least $100 million in 2014 from higher after-tax earnings and a $50 million reduction in capital expenditures resulting in a target spend of $350 million. Key elements of the margin improvement program include:

•

implementing a leaner organization design across the packaging businesses to simplify the structure and speed decision making;

•

aligning the corporate infrastructure to the revenue base;

•

reassessing participation to focus on business lines and markets within packaging that provide the greatest opportunity for profitable growth; and

•

prioritizing capital on the highest return projects to improve free cash flow.

OUTLOOK

For the first quarter of 2014, earnings excluding special items are expected to be well above last year. The principal factors driving the expected improvement are:

•

improved demand across targeted paperboard packaging and high value dispensing, pine chemicals and carbon technologies solutions;

•

increased price realizations across key consumer and industrial paperboard packaging grades;

•

improved productivity in the major domestic mills and significant productivity benefits from higher production in the Brazilian operation; and

•

continued benefits from the overhead reduction program that started at the beginning of 2013, as well as initial contribution from the new margin improvement program.

RESULTS OF OPERATIONS

The following table summarizes MWV’s results for the years ended December 31, 2013, 2012 and 2011, as reported in accordance with accounting principles generally accepted in the U.S (“GAAP”). All references to per share amounts are presented on an after-tax basis.


	Years ended December 31,
*In millions, except per share data*	2013			2012			2011
Net sales	$	5,389		$	5,287		$	5,179
Cost of sales		4,429			4,257			4,126
Selling, general and administrative expenses		638			682			669
Interest expense		159			152			161
Other income, net		(59	)		(14	)		(28	)

Income from continuing operations before income taxes		222			210			251
Income tax (benefit) provision		(97	)		54			70

Income from continuing operations		319			156			181
Income from discontinued operations, net of income taxes		519			52			69

Net income		838			208			250
Less: Net (loss) income attributable to non-controlling interests		(1	)		3			4

Net income attributable to the company	$	839		$	205		$	246

Income from continuing operations attributable to the company	$	320		$	153		$	177

Net income per share – basic:
Income from continuing operations	$	1.81		$	0.88		$	1.04
Income from discontinued operations		2.93			0.30			0.41

Net income attributable to the company	$	4.74		$	1.18		$	1.45

Net income per share – diluted:
Income from continuing operations	$	1.78		$	0.87		$	1.02
Income from discontinued operations		2.88			0.29			0.40

Net income attributable to the company	$	4.66		$	1.16		$	1.42

Comparison of Years Ended December 31, 2013 and 2012

Sales from continuing operations increased 2% to $5.40 billion in 2013 compared to $5.29 billion in 2012. Growth in targeted packaging and specialty chemicals markets, as well as improved pricing drove the increase in sales. During 2013, the company continued to gain share with food and beverage brand owners and grew volumes in higher value dispensing solutions, including gains in medical plastics, fragrance pumps and personal care dispensers. Sales growth in 2013 within the Industrial segment was driven by improved pricing, as well as contributions from the corrugated business in India acquired in the fourth quarter of 2012. The Specialty Chemicals segment achieved increased sales in 2013 driven by steady growth across its offerings for the global asphalt, oilfield and activated carbon markets, as well as contributions from the pine chemicals business in Brazil. These overall gains in 2013 were partially offset by unfavorable foreign currency exchange compared to 2012.

Costs of sales were $4.43 billion and $4.26 billion for the years ended December 31, 2013 and 2012, respectively. In 2013, costs increased in line with the sales contributions from the corrugated business in India and the pine chemicals business in Brazil which were both acquired during the fourth quarter of 2012. In addition, input costs for energy, raw materials and freight included in cost of sales were $28 million higher compared to 2012.

Selling, general and administrative expenses were $638 million and $682 million for the years ended December 31, 2013 and 2012, respectively. In 2013, lower overall selling, general and administrative expenses compared to 2012 reflect lower variable employee incentive and equity compensation, savings associated with the company’s cost reduction initiative, and higher pension income compared to 2012.

Restructuring charges attributable to individual segments and by nature of cost, as well as cost of sales (“COS”) and selling, general and administrative expenses (“SG&A”) classifications in the consolidated statements of operations for the years ended December 31, 2013 and 2012 are presented below. Although these charges related to individual segments, such amounts are included in Corporate and Other for segment reporting purposes.

Year ended December 31, 2013


	Employee-related costs						Asset write-downs and other costs						Total
*In millions*	COS		SG&A		Total		COS		SG&A		Total		COS		SG&A		Total
Food & Beverage	$	1	$	5	$	6	$	1	$	0	$	1	$	2	$	5	$	7
Home, Health & Beauty		7		1		8		13		0		13		20		1		21
Industrial		1		1		2		4		0		4		5		1		6
Specialty Chemicals		0		0		0		6		0		6		6		0		6
All other		0		4		4		0		1		1		0		5		5

Total charges	$	9	$	11	$	20	$	24	$	1	$	25	$	33	$	12	$	45

Year ended December 31, 2012


*In millions*	Employee-related costs						Asset write-downs and other costs						Total
*In millions*	COS		SG&A		Total		COS		SG&A		Total		COS		SG&A		Total
Food & Beverage	$	0	$	2	$	2	$	0	$	0	$	0	$	0	$	2	$	2
Home, Health & Beauty		6		1		7		2		0		2		8		1		9
Industrial		9		0		9		2		0		2		11		0		11
All other		0		3		3		0		1		1		0		4		4

Total charges	$	15	$	6	$	21	$	4	$	1	$	5	$	19	$	7	$	26

Pension income was $85 million (net of charges for settlements and termination benefits of $21 million) and $69 million for the years ended December 31, 2013 and 2012, respectively. Pension income is included in Corporate and Other for segment reporting purposes. Pension income is expected to be approximately $120 million in 2014, excluding impacts from settlements and curtailments.

Interest expense was $159 million for the year ended December 31, 2013 and was comprised of $121 million related to bond and bank debt, $4 million related to long-term obligations non-recourse to MWV, $24 million related to borrowings under life insurance policies and $10 million related to other borrowings. Interest expense was $152 million for the year ended December 31, 2012 and was comprised of $117 million related to bond and bank debt, $3 million related to a long-term obligation non-recourse to MWV, $23 million related to borrowings under life insurance policies and $9 million related to other borrowings.

Other income, net was $59 million and $14 million for the years ended December 31, 2013 and 2012, respectively, and was comprised of the following:


	Years ended December 31,
*In millions*	2013			2012
Interest income	$	14		$	11
Foreign currency exchange losses		(4	)		(5	)
Transition services		1			10
Alternative fuel mixture credits ¹		24			(15	)
Insurance settlements		14			0
Other, net		10			13

	$	59			14

⁽¹⁾

In the fourth quarter of 2013, the company released $24 million of reserves related to alternative fuel mixture credits. In the fourth quarter of 2012, the company made a determination to claim cellulosic biofuel producer credits in 2013 in exchange for the repayment of $15 million of alternative fuel mixture credits received from excise tax filings during 2009 and 2010.

The company’s effective tax rate benefit attributable to continuing operations was 44% for the year ended December 31, 2013 and the effective tax rate provision attributable to continuing operations was 26% for the year ended December 31, 2012. For the year ended December 31, 2013, an income tax benefit of $142 million related to the release of reserves for alternative fuel mixture credit as a result of the settlement of certain audits is reflected within the tax provision. For the year ended December 31, 2012, an income tax benefit of $24 million related to cellulosic biofuel producer credits (“CBPC”) is reflected within the tax provision. For both 2013 and 2012, the effective tax rates also reflect the mix and level and pre-tax earnings between the company’s domestic and foreign operations.

Discontinued operations presented in the consolidated statements of operations for the years ended December 31, 2013, 2012 and 2011 primarily relate to the sale of the company’s forestry and minerals-related businesses on December 6, 2013, the spin-off of the Consumer & Office Products business on May 1, 2012, and the sale of the Envelope Products business on February 1, 2011. Refer to Note S of Notes to Consolidated Financial Statements included in Part II, Item 8 for further information. In addition to the information discussed above, the following sections discuss the results of operations for each of the company’s segments. MWV’s segments are (i) Food and Beverage, (ii) Home, Health and Beauty, (iii) Industrial, (iv) Specialty Chemicals, and (v) Community Development and Land Management.

Refer to Note U of Notes to Consolidated Financial Statements included in Part II, Item 8 for a reconciliation of the sum of the results of the segments and Corporate and Other to consolidated income from continuing operations before income taxes. Corporate and Other includes expenses associated with corporate support staff services, as well as income and expense items not directly associated with ongoing segment operations, such as alternative fuel mixture credits, restructuring charges, pension income and curtailment gains and losses, interest expense and income, non-controlling interest income and losses, certain legal settlements, gains and losses on certain asset sales and other items.

Food & Beverage


	Years ended December 31,
*In millions*	2013		2012
Sales	$	3,106	$	3,105
Segment profit ¹		239		309

¹	Segment profit is measured as results before restructuring charges, pension income, interest expense and income, income taxes, and non-controlling interest income and losses.

Sales for the Food & Beverage segment were $3.11 billion in both 2013 and 2012. In 2013, benefits from growth in targeted food and beverage markets and favorable foreign currency exchange were offset by overall lower sales in tobacco packaging compared to 2012. Food packaging sales increased in 2013 primarily due to gains with major brand owners in a range of applications, including frozen food and club store packaging, as well as liquid packaging in Asia and Europe. In beverage packaging, sales were down compared to 2012 as strong sales in emerging markets and continued gains with large strategic soft drink and beer customers were more than offset by lower volumes across more developed markets. In tobacco packaging, the decline in sales was primarily due to the residual effects from economic impacts during the first half of 2013.

Profit for the Food & Beverage segment was $239 million in 2013 compared to $309 million in 2012. Profit in 2013 was negatively impacted by $28 million in higher costs from planned mill maintenance outages and $5 million from the negative impacts from operating challenges following a system implementation at the company’s paperboard mill in Covington, Virginia. The decline in 2013 was also driven by $27 million from inflation and $26 million from unfavorable pricing and product mix compared to 2012. Profit in 2013 benefited by $11 million from improved productivity, $3 million from increased volume and $2 million from favorable foreign currency exchange and other items compared to 2012.

Home, Health & Beauty


	Years ended December 31,
*In millions*	2013		2012
Sales	$	743	$	770
Segment profit ¹		21		35

¹	Segment profit is measured as results before restructuring charges, pension income, interest expense and income, income taxes, and non-controlling interest income and losses.

trigger sprayers for surface cleaners and fabric care, aerosol actuators for air fresheners, hose-end sprayers for lawn and garden maintenance, and spouted and applicator closures for a variety of other home and garden products. For the global healthcare market, the segment produces secondary packages designed to enhance patient adherence for prescription drugs, as well as healthcare dispensing systems, paperboard packaging and closures for over-the-counter and prescription drugs. Paperboard and plastic materials are converted into packaging solutions at plants located in North America, South America, Europe and Asia.

Sales for the Home, Health & Beauty segment were $743 million in 2013 compared to $770 million in 2012. Sales decreased in 2013 primarily due to significant volume declines in home and garden packaging as well as beauty and personal care folding carton packaging in Europe and Brazil. The decline in beauty and personal care folding carton packaging was primarily due to the repurposing of the Brazilian folding carton facility. In addition, as previously announced the company is continuing to pursue an exit from the beauty and personal care folding carton operation in Europe through a sale of the business. The strong lawn and garden season which drives volumes in home and garden packaging did not materialize due to unseasonably cool and wet weather in North America, and as a result, the overall market volume was down compared to 2012. In addition to the negative volume impacts of these market trends in home and garden packaging, volumes in 2013 were also negatively impacted by customer transitions to the next generation trigger sprayers in North America. These impacts were partially offset by volume gains in higher value beauty and personal care solutions, including strong gains in fragrance and airless dispensers compared to 2012. Healthcare sales increased from continued gains in medical dispensers compared to 2012.

Profit for the Home, Health & Beauty segment was $21 million in 2013 compared to $35 million in 2012. Profit in 2013 was negatively impacted by $18 million from inflation, $3 million from transformation costs to repurpose the segment’s Brazilian folding carton facility to manufacture higher value plastic pumps and dispensers and $3 million from certain asset write-downs compared to 2012. Profit in 2013 benefited by $6 million from favorable foreign currency exchange and other items, $2 million from improved productivity, $1 million from higher volume and $1 million from favorable pricing and product mix compared to 2012.

Industrial


	Years ended December 31,
*In millions*	2013		2012
Sales	$	548	$	457
Segment profit ¹		65		49

¹	Segment profit is measured as results before restructuring charges, pension income, interest expense and income, income taxes, and non-controlling interest income and losses.

Sales for the Industrial segment were $548 million in 2013 compared to $457 million in 2012. Sales growth in 2013 was driven by price improvement across targeted Brazilian packaging markets and revenue benefits from the addition of the high-quality industrial packaging materials business in India.

During 2013, the segment increased prices in the Brazilian market to offset labor and input cost inflation. Volumes in Brazil were modestly higher year-over-year as gains in high-quality paper sales more than offset lower corrugated box sales. Volumes of corrugated products declined in 2013 due to pricing actions the segment took to offset inflation and due to the sale of the Feira de Santana box plant early in the third quarter of 2013. Sales in 2013 were also impacted by unfavorable foreign currency exchange compared to 2012.

Profit for the Industrial segment was $65 million in 2013 compared to $49 million in 2012. Profit in 2013 benefited by $49 million from improved pricing and product mix, $4 million from improved productivity, and $2 million from higher volumes compared to 2012. Profit in 2013 was negatively impacted by $26 million from inflation, principally fiber and labor, and $13 million from unfavorable foreign currency exchange and other items compared to 2012.

Specialty Chemicals


	Years ended December 31,
*In millions*	2013		2012
Sales	$	980	$	940
Segment profit ¹		229		224

¹	Segment profit is measured as results before restructuring charges, pension income, interest expense and income, income taxes, and non-controlling interest income and losses.

Sales for the Specialty Chemicals segment were $980 million in 2013 compared to $940 million in 2012. Sales increase in 2013 was led by benefits from the addition of the Brazilian pine chemicals business, which was acquired during the fourth quarter of 2012, as well as solid volume growth in targeted pine chemicals markets. During 2013, the segment continued to penetrate higher-value pine chemicals end markets of adhesives, asphalt and oilfield services. Carbon technology volumes increased during 2013 as global automobile manufacturers increased production in response to strong global demand. These gains were partially offset by unfavorable pricing in more standard product lines and unfavorable foreign currency exchange compared to 2012.

Profit for the Specialty Chemicals segment was $229 million in 2013 compared to $224 million in 2012. Profit in 2013 benefited by $14 million from non-recurring items related to certain legal and insurance settlements and contributions from the recently acquired pine chemicals business in Brazil, $5 million from higher volumes, and $2 million from improved productivity compared to 2012. Profit in 2013 was negatively impacted by $10 million from unfavorable pricing in more standard product lines and product mix and $6 million from planned and unplanned maintenance outages at the segment’s pine chemicals and carbon facilities compared to 2012.

Community Development and Land Management


	Years ended December 31,
*In millions*	2013			2012 ²
Sales	$	20		$	18
Segment loss ¹		(14	)		(13	)

¹	Segment profit is measured as results before restructuring charges, pension income, interest expense and income, income taxes.

²	Results for 2012 have been recast to exclude the discontinued operations of the forestry and certain minerals-related businesses. Refer to Note S of Notes to Consolidated Financial Statements included in Part II, Item 8 for further discussion.

Sales on a continuing operations basis for the Community Development and Land Management segment were $20 million in 2013 compared to $18 million in 2012. Segment loss on a continuing operations basis was $14 million in 2013 compared to $13 million in 2012 and primarily reflects costs related to the ramp-up of the development business.

Comparison of Years Ended December 31, 2012 and 2011

Sales from continuing operations increased 2% to $5.29 billion in 2012 compared to $5.18 billion in 2011. During 2012, benefits from volume growth and improved pricing and product mix in targeted packaging markets, as well as continued strong performance by the Specialty Chemicals segment were partially offset by $152 million from unfavorable foreign currency exchange compared to 2011. The company continued to outperform industry trends in the markets for corrugated packaging in Brazil, beverage packaging in North America and packaging solutions across Asia reflecting positive momentum from the company’s profitable growth strategies despite challenges associated with the current macroeconomic climate. Growth in emerging markets continued to produce favorable results with revenues comprising 26% of the company’s total sales, as well as contributions from the 2011 acquisition of Polytop and the 2012 acquisition of Ruby Macons.

Costs of sales were $4.26 billion and $4.13 billion for the years ended December 31, 2012 and 2011, respectively. In 2012, increased costs due to higher input cost inflation for certain raw materials and freight more than offset the benefits from productivity improvements compared to 2011. In 2012, input costs for energy, raw materials and freight included in cost of sales were $58 million higher compared to 2011.

Selling, general and administrative expenses were $682 million and $669 million for the years ended December 31, 2012 and 2011, respectively. In 2012, higher selling, general and administrative expenses compared to 2011 reflect increased costs associated with growth investments in the Industrial and Specialty Chemicals segments, as well as from the addition of Polytop acquired in the fourth quarter of 2011.

Restructuring charges attributable to individual segments and by nature of cost, as well as COS and SG&A classifications in the consolidated statements of operations for the years ended December 31, 2012 and 2011 are presented below. Although these charges related to individual segments, such amounts are included in Corporate and Other for segment reporting purposes.

Year ended December 31, 2012


*In millions*	Employee-related costs						Asset write-downs and other costs						Total
*In millions*	COS		SG&A		Total		COS		SG&A		Total		COS		SG&A		Total
Food & Beverage	$	0	$	2	$	2	$	0	$	0	$	0	$	0	$	2	$	2
Home, Health & Beauty		6		1		7		2		0		2		8		1		9
Industrial		9		0		9		2		0		2		11		0		11
All other		0		3		3		0		1		1		0		4		4

Total charges	$	15	$	6	$	21	$	4	$	1	$	5	$	19	$	7	$	26

Year ended December 31, 2011


*In millions*	Employee-related costs						Asset write-downs and other costs						Total
*In millions*	COS		SG&A		Total		COS		SG&A		Total		COS		SG&A		Total
Food & Beverage	$	5	$	3	$	8	$	3	$	0	$	3	$	8	$	3	$	11
Home, Health & Beauty		3		1		4		0		0		0		3		1		4
Industrial		0		1		1		0		0		0		0		1		1
All other ⁽¹⁾		0		6		6		1		7		8		1		13		14

Total charges	$	8	$	11	$	19	$	4	$	7	$	11	$	12	$	18	$	30

⁽¹⁾	Includes $7 million related to employee relocation costs.

Pension income was $69 million and $82 million (net of charges for settlements and termination benefits of $12 million) for the years ended December 31, 2012 and 2011, respectively.

Interest expense was $152 million for the year ended December 31, 2012 and was comprised of $117 million related to bond and bank debt, $3 million related to a long-term obligation non-recourse to MWV, $23 million related to borrowings under life insurance policies and $9 million related to other borrowings. Interest expense was $161 million for the year ended December 31, 2011 and was comprised of $129 million related to bond and bank debt, $2 million related to a long-term obligation non-recourse to MWV, $21 million related to borrowings under life insurance policies and $9 million related to other borrowings.

Other income, net was $14 million and $28 million for the years ended December 31, 2012 and 2011, respectively, and was comprised of the following:


	Years ended December 31,
*In millions*	2012			2011
Interest income	$	11		$	23
Equity investment gain ¹		0			10
Foreign currency exchange (losses) gains		(5	)		2
Transition services		10			4
Exchange of alternative fuel mixture credits ²		(15	)		0
Other, net		13			(11	)

	$	14		$	28

¹	For the year ended December 31, 2011, the company recorded a net pre-tax gain of $10 million pursuant to the sale of commercial real estate consummated through an equity investment held by the Community Development and Land Management segment.

In the fourth quarter of 2012, the company made a determination to claim cellulosic biofuel producer credits in 2013 in exchange for the repayment of alternative fuel mixture credits received from excise tax filings during 2009 and 2010. Refer to discussion of the company’s effective tax rate for 2012 that follows for additional information.

The company’s effective tax rate attributable to continuing operations was 26% and 28% for the years ended December 31, 2012 and 2011, respectively. For both 2012 and 2011, the effective tax rates reflect the mix and level and pre-tax earnings between the company’s domestic and foreign operations. For the year ended December 31, 2012, an income tax benefit of $24 million related to cellulosic biofuel producer credits (“CBPC”) is reflected within the tax provision.

Food & Beverage


	Years ended December 31,
*In millions*	2012		2011
Sales	$	3,105	$	3,078
Segment profit ¹		309		312

¹	Segment profit is measured as results before restructuring charges, pension income, interest expense and income, income taxes, and non-controlling interest income and losses.

Sales for the Food & Beverage segment were $3.11 billion in 2012 compared to $3.08 billion in 2011. Sales increased in 2012 primarily due to improved pricing and product mix, as well as from volume growth in targeted end market applications, pulp sales, and sales of caps and closures from the acquisition of Polytop in the fourth quarter of 2011. Overall food and beverage packaging volumes declined in 2012 as lower shipments of less differentiated general packaging paperboard more than offset growth in targeted end markets. Beverage packaging continues to be impacted by the ongoing global economic climate, particularly in Europe; however, volumes outperformed industry trends driven by growth in North America and Asia compared to 2011. In food packaging, strong volumes in differentiated frozen food and liquid packaging were more than offset by volume declines in general packaging paperboard, primarily in China, compared to 2011. Sales in 2012 in all food and beverage packaging markets were negatively impacted by $50 million from unfavorable foreign currency exchange compared to 2011.

Profit for the Food & Beverage segment was $309 million in 2012 compared to $312 million in 2011. Profit in 2012 was negatively impacted by $58 million from inflation, primarily higher input costs for certain raw materials and freight, and $37 million from unfavorable foreign currency exchange and other items compared to 2011. Profit in 2012 benefited by $48 million from improved pricing and product mix, $43 million from improved productivity and $1 million from increased volume compared to 2011.

Home, Health & Beauty


	Years ended December 31,
*In millions*	2012		2011
Sales	$	770	$	766
Segment profit ¹		35		34

¹	Segment profit is measured as results before restructuring charges, pension income, interest expense and income, income taxes, and non-controlling interest income and losses.

Sales for the Home, Health & Beauty segment were $770 million in 2012 compared to $766 million in 2011. Sales increased in 2012 due to volume growth in personal care dispensing and healthcare packaging solutions, as well as from sales of caps and closures from the acquisition of Polytop in the fourth quarter of 2011. These benefits were partially offset by unfavorable foreign currency exchange, contractual resin-based pricing adjustments and lower volumes of home and garden and beauty and personal care folding carton packaging compared to 2011. In personal care dispensing solutions, gains in airless dispensing with major skin care brand owners and fragrance sprayers drove volume growth compared to 2011. In healthcare packaging, volume growth was driven by continued strong demand for the segment’s preservative-free and metered dosage medical pumps. Adherence-enhancing packaging volume declined as part of a planned transition to Shellpak Renew with a major customer. In home and garden packaging, volume declines in North America due to aggressive inventory management actions by a major customer were partially offset by strong trigger sprayer volumes with major homecare brand owners in Europe and Asia.

Profit for the Home, Health & Beauty segment was $35 million in 2012 compared to $34 million in 2011. Profit in 2012 benefited by $6 million from productivity initiatives and overhead reduction actions, $3 million from higher volume and $5 million of other benefits. Profit in 2012 was negatively impacted by $5 million from inflation, $5 million pricing and product mix and $3 million from unfavorable foreign currency exchange compared to 2011.

Industrial


	Years ended December 31,
*In millions*	2012		2011
Sales	$	457	$	507
Segment profit ¹		49		80

¹	Segment profit is measured as results before restructuring charges, pension income, interest expense and income, income taxes, and non-controlling interest income and losses.

Sales for the Industrial segment were $457 million in 2012 compared to $507 million in 2011. In 2012, volume growth within its corrugated packaging solutions for targeted meat, produce and consumer goods markets was more than offset by unfavorable foreign currency exchange, as well as unfavorable pricing and product mix compared to 2011. Despite slower than expected growth in Brazil, the segment’s volumes in 2012 outpaced the overall growth rate of the corrugated industry from its strategy of delivering innovative high-quality solutions to the fastest growing end-markets. The segment also saw modest top-line contribution from Ruby Macons, a leading producer of high-quality corrugated packaging material in India that the company acquired on November 30, 2012.

Profit for the Industrial segment was $49 million in 2012 compared to $80 million in 2011. Profit in 2012 was negatively impacted by $6 million from unfavorable pricing and product mix, $17 million from inflation, primarily higher labor costs, $12 million from unfavorable foreign currency exchange and $18 million from lower productivity and higher expansion expenses compared to 2011. Profit in 2012 benefited by $5 million from higher volumes and $17 million from benefits related to certain non-income tax matters in Brazil and other benefits compared to 2011.

Specialty Chemicals


	Years ended December 31,
*In millions*	2012		2011
Sales	$	940	$	811
Segment profit ¹		224		203

¹	Segment profit is measured as results before restructuring charges, pension income, interest expense and income, income taxes, and non-controlling interest income and losses.

Sales for the Specialty Chemicals segment were $940 million in 2012 compared to $811 million in 2011. Sales growth in 2012 was driven by continued penetration of developed and emerging markets with the company’s value-added solutions for infrastructure, industrial and energy markets. Increased penetration of higher value pine chemicals end markets of adhesives, asphalt and oilfield services drove pricing and product mix improvement in 2012. These benefits were partially offset by unfavorable foreign currency exchange compared to 2011.

Profit for the Specialty Chemicals segment was $224 million in 2012 compared to $203 million in 2011. Profit in 2012 benefited by $20 million from improved pricing and product mix and $32 million from increased volume compared to 2011. Profit in 2012 was negatively impacted by $15 million from growth investments and lower productivity, $13 million from inflation, primarily higher input costs for certain raw materials and freight, and $3 million from unfavorable foreign currency exchange and other items compared to 2011.

Community Development and Land Management


	Years ended December 31,
*In millions*	2012 ²			2011 ²
Sales	$	18		$	19
Segment profit ¹		(13	)		(1	)

¹	Segment profit is measured as results before restructuring charges, pension income, interest expense and income, income taxes, and non-controlling interest income and losses.

²	Results for 2012 and 2011 have been recast to exclude the discontinued operations of the forestry and certain minerals-related businesses. Refer to Note S of Notes to Consolidated Financial Statements included in Part II, Item 8 for further discussion.

Sales on a continuing operations basis for the Community Development and Land Management segment were $18 million in 2012 compared to $19 million in 2011. Segment loss on a continuing operations basis was $13 million in 2012 compared to $1 million in 2011.

LIQUIDITY AND CAPITAL RESOURCES

Cash flow from continuing operations, current cash levels and other sources of currently available liquidity are expected to be adequate to fund scheduled debt payments, dividends to shareholders and capital expenditures in 2014. In addition, the company’s U.S. qualified retirement plans remain well over funded and management does not anticipate any required regulatory funding contributions to such plans in the foreseeable future.

Cash and cash equivalents totaled $1.06 billion at December 31, 2013, of which 83% was held in the U.S. with the remaining portions of 8% in Europe, 4% in Brazil and 5% in other foreign jurisdictions. The credit quality of the company’s portfolio of short-term investments remains strong with the majority of its cash equivalents invested in U.S. government securities. Of the company’s cash and cash equivalents, approximately 81% were invested in U.S. government securities at December 31, 2013.

Funding for the company’s domestic operating, investing and financing activities in the foreseeable future is expected to come from sources of liquidity within its U.S. operations, including cash holdings, operating cash flow and bank-committed credit capacity. As such, the company’s offshore cash holdings are not a key source of liquidity to its U.S. operations, and management does not intend to transfer cash held by foreign subsidiaries to the U.S. that would be subject to potential tax impacts associated with the repatriation of undistributed earnings on foreign subsidiaries.

Operating activities

Cash provided by operating activities from continuing operations was $358 million in 2013, compared to $220 million in 2012 and $397 million in 2011. The increase in cash flow in 2013 compared to 2012 was primarily attributable to lower working capital levels. The decrease in cash flow in 2012 compared to 2011 was primarily attributable to higher working capital levels.

Cash provided by operating activities from discontinued operations was $79 million in 2013, $218 million in 2012 and $163 million in 2011. Refer to Note S of Notes to Consolidated Financial Statements included in Part II, Item 8 for information regarding discontinued operations.

Investing activities

Cash used in investing activities from continuing operations was $481 million in 2013, compared to $736 million in 2012 and $673 million in 2011. Cash used in investing activities from continuing operations in 2013 was driven by capital expenditures of $506 million, of which $127 million related to the new bio-mass boiler at the company’s paperboard mill in Covington, Virginia. Cash used in investing activities from continuing operations also reflects contributions to joint ventures of $20 million, payments for acquired businesses (net of cash acquired) of $2 million, and other uses of funds of $5 million, offset in part by proceeds from dispositions of assets of $52 million.

Cash used in investing activities from continuing operations in 2012 was driven by capital expenditures of $654 million, payments for acquired businesses (net of cash acquired) of $101 million, and contributions to joint ventures of $13 million, offset in part by proceeds from dispositions of assets of $29 million and other sources of funds of $3 million.

Cash used in investing activities from continuing operations in 2011 was driven by capital expenditures of $652 million, payments for acquired businesses (net of cash acquired) of $70 million, contributions to joint ventures of $7 million, offset in part by proceeds from dispositions of assets of $56 million.

Cash provided by investing activities from discontinued operations was $70 million in 2013 compared to cash used in investing activities from discontinued operations of $63 million in 2012 and cash provided by investing activities from discontinued operations of $30 million in 2011. Cash provided by discontinued operations in 2013 relates to proceeds received from the sale of certain assets related to the transaction with Plum Creek. Cash used in investing activities from discontinued operations in 2012 was driven primarily by cash deposits totaling $59 million held by the Consumer & Office Products business that was spun-off and subsequently merged with ACCO Brands Corporation on May 1, 2012. Cash provided by discontinued operations in 2011 primarily relates to proceeds received from dispositions of certain businesses.

Capital spending in 2014 is expected to be about $350 million driven primarily by certain productivity initiatives, maintenance capital and environmental compliance.

Financing activities

Cash provided by financing activities from continuing operations was $393 million in 2013 compared to $378 million in 2012, and cash used in financing activities was $26 million in 2011.

As part of the consideration for the sale of the company’s U.S. forestlands and related assets which occurred on December 6, 2013, the company received an installment note in the amount of $860 million (the “Installment Note”). The Installment Note does not require any principal payments until its maturity in December 2023 and bears interest at a fixed rate of 5.207%. Using the Installment Note as collateral, the company received $774 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 the company and shall be paid from the Installment Note proceeds upon its maturity. As a result, the Installment Note is not available to satisfy the obligations of the company. The non-recourse liability does not require any principal payments until its maturity in December 2023 and bears interest at a fixed rate of 5.425%.

In addition to the $774 million of proceeds as discussed above, cash provided by financing activities from continuing operations in 2013 include a non-controlling interest contribution of $152 million related to the formation of the land development partnership with Plum Creek, as well as proceeds from the exercises of stock options of $54 million, proceeds from notes payable and other short-term borrowings of $35 million and proceeds from long-term debt borrowings of $8 million. Cash used in financing activities from continuing operations in 2013 include repayment of long-term debt of $293 million, dividend payments of $177 million, stock repurchases of $126 million, purchase of the remaining 50% non-controlling interest in a pharmaceutical packaging company for $13 million, and other uses of funds of $21 million.

Cash provided by financing activities from continuing operations in 2012 included proceeds from debt instruments totaling $460 million received in connection with the spin-off of the Consumer & Office Products business. Prior to the effective time of the spin-off, the company received debt proceeds of $460 million from third-party financing. The associated obligation totaling $460 million was included in the net assets of the disposal group representing the Consumer & Office Products business pursuant to the spin-off.

Cash provided by financing activities from continuing operations in 2012 also included proceeds from the issuance of long-term debt of $357 million, proceeds from the exercises of stock options of $61 million, and other sources of funds of $8 million, offset in part by repayment of long-term debt of $327 million, dividend payments of $173 million, net repayments of notes payable and other short-term borrowings of $4 million, and the purchase of a non-controlling interest for $4 million.

Cash used in financing activities from continuing operations in 2011 was driven by dividend payments of $170 million and repayment of long-term debt of $42 million, offset in part by proceeds from issuance of long-term debt of $113 million, proceeds from the exercises of stock options of $38 million, proceeds from notes payable and other short-term borrowings of $32 million and other sources of funds of $4 million.

There was no cash used in or provided by financing activities from discontinued operations in 2013 and 2012 compared to cash used in financing activities from discontinued operations of $1 million in 2011.

MeadWestvaco has a $600 million five-year revolving credit facility with a syndicate of banks. The Credit Facility is scheduled to expire on January 30, 2017. The principal purpose of the Credit Facility is to obtain funds for general corporate purposes. The $600 million revolving credit facility was undrawn at December 31, 2013. The Credit Facility’s agreement contains a financial covenant limiting the percentage of total debt to total capitalization (including deferred taxes) to 55%, as well as certain other covenants with which the company was in compliance as of December 31, 2013.

As part of the monitoring activities surrounding the credit quality of the company’s credit facilities, management evaluates credit default activities and bank ratings of our lenders. In addition, management undertakes similar measures and evaluates deposit concentrations to monitor the credit quality of the financial institutions that hold the company’s cash and cash equivalents.

The company’s percentage of total debt to total capital (shareholders’ equity and total debt) was 32% and 39% at December 31, 2013 and 2012, respectively.

On January 27, 2014 the company’s Board of Directors approved the final form of shareholder returns of proceeds from the company’s sale of its U.S. forestlands and related assets to Plum Creek, which was completed on December 6, 2013. The Board of Directors approved the following:

•

Approximately $175 million ($1.00 per share) in the form of a special dividend to be paid on March 3, 2014 to shareholders of record as of February 6, 2014.

•

Approximately $394 million of share repurchases to be comprised of $300 million under an accelerated repurchase program, which was initiated on February 7, 2014 with the repurchase and retirement of 7.5 million shares, and $94 million pursuant to open market repurchases, which are expected to be largely completed by the end of the second quarter of 2014.

Also, on January 27, 2014, the company’s Board of Directors declared a regular quarterly dividend of $0.25 per common share to be paid on March 3, 2014 to shareholders of record as of February 6, 2014.

EFFECTS OF INFLATION

Prices for energy, including natural gas, oil and electricity, as well as for raw materials and freight, increased in 2013 compared to 2012. During 2013, pre-tax input costs of energy, raw materials and freight were $28 million higher than in 2012 on a continuing operations basis. During 2012, pre-tax input costs of energy, raw materials and freight were $58 million higher than in 2011 on a continuing operations basis.

ENVIRONMENTAL AND LEGAL MATTERS

The company has been notified by the U.S. Environmental Protection Agency 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, 2013, MeadWestvaco had recorded liabilities of approximately $4 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 at December 31, 2013 by an amount that could range from an insignificant amount to as much as $3 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.

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. To date, the costs resulting from the litigation, including settlement costs, have not been significant. As of December 31, 2013, there were approximately 560 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, 2013, the company had recorded litigation liabilities of approximately $32 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.

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, 2013, 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 Note G and Note I of Notes to Consolidated Financial Statements included in Part II, Item 8. Also included below are disclosures regarding the amounts due under purchase obligations. A 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 below disclosure all normal and recurring purchase orders, take-or-pay contracts, supply arrangements as well as other purchase commitments that management believes meet the above definition of a purchase obligations.


	Payments due by period
*In millions*	Total		Less than 1 year 2014		1-3 years 2015 and 2016		3-5 years 2017 and 2018		More than 5 years 2019 and beyond
Contractual obligations:
Debt, excluding capital lease obligations	$	1,744	$	77	$	35	$	192	$	1,440
Interest on debt ⁽¹⁾		1,769		129		256		235		1,149
Capital lease obligations ⁽²⁾		292		11		21		19		241
Operating leases obligations		312		56		82		57		117
Purchase obligations		1,150		1,013		78		57		2
Other long-term obligations ⁽³⁾		728		49		96		95		488

Total ⁽⁴⁾	$	5,995	$	1,335	$	568	$	655	$	3,437

⁽¹⁾

Amounts are based on weighted-average interest rates of 7.7% for the company’s fixed-rate long-term debt for 2014. The weighted-average interest rate for 2015 and thereafter, is 7.8% for the company’s fixed rate debt. See related discussion in Note G of Notes to Consolidated Financial Statements included in Part II, Item 8.

⁽²⁾	Amounts include both principal and interest payments.

⁽³⁾

Total Other long-term obligations include $95 million of unrecognized tax benefits and $89 million of related accrued interest and penalties at December 31, 2013 due to the uncertainty of timing of payment. See Note O of Notes to Consolidated Financial Statements included in Part II, Item 8 for additional information.

⁽⁴⁾	Total excludes $1.1 billion of liabilities that are held by consolidated special purpose entities and non-recourse to MeadWestvaco. See related discussion in Note R of Notes to Consolidated Financial Statements included in Part II, Item 8.

CRITICAL ACCOUNTING POLICIES

Our principal accounting policies are described in the Summary of Significant Accounting Policies in the Notes to Consolidated 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 broad cost reduction actions 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 : 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 2013, the company recorded pre-tax pension income from continuing operations of $85 million (net of charges for settlements and termination benefits of $21 million), compared to $69 million in 2012 and $82 million (net of charges for settlements and termination benefits of $12 million) in 2011. The company currently estimates pre-tax pension income in 2014 from its domestic and foreign plans to be approximately $120 million before the impacts from settlements and curtailments. This estimate assumes a long-term rate of return on plan assets of 7.90%, and a discount rate of 4.90% for the U.S. plans. The company determined the discount rate for the U.S. plans by referencing the Aon Hewitt Aa Only Above Median curve. The company believes that using a yield curve approach most 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.

If the expected rate of return on plan assets were to change by 0.5%, annual pension income in 2014 would change by approximately $18 million. Similarly, if the discount rate were to change by 0.5%, annual pension income in 2014 would change by approximately $3 million.

At December 31, 2013, the aggregate value of pension fund assets had decreased to $3.9 billion from $4.3 billion at December 31, 2012, resulting primarily from the previously announced lump sum program that provided former U.S. employees who terminated from the company prior to November 30, 2012 with the value of their retirement benefit in a single lump sum. These payments were funded with assets of the U.S. retirement plans. For further details regarding pension fund assets, see Note L of Notes to Consolidated Financial Statements included in Part II, Item 8.

Prior service cost and unrecognized 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 11 years for the salaried and bargained retirement plans, and about 5 years for the postretirement benefit plan, and are a component of accumulated other comprehensive loss. Prior service cost and unrecognized actuarial gains and losses associated with the Envelope Products salaried plan are being amortized over the average remaining life expectancy of the plan participants which is about 21 years. The Envelope Products salaried plan was retained by the company.

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.

Impairment of long-lived assets: We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset 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 carrying value to determine whether impairment exists . For an asset that 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. 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 with finite lives 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. Periodic impairment reviews of intangible assets assigned an indefinite life are required, at least annually, as well as when events or circumstances change. As with our review of impairment of tangible assets and goodwill, we employ significant assumptions in assessing our indefinite-lived intangible assets for impairment (primarily Calmar trademarks and trade names). An income approach (the relief from royalty method) is used to determine the fair values of our indefinite-lived intangible assets. Although our estimate of fair values of the company’s indefinite-lived intangible assets under the income approach exceed the respective carrying values, different assumptions regarding projected performance and other factors could result in significant non-cash impairment charges in the future. Based on our annual review of our indefinite-lived intangible assets as of October 1, 2013, there was no indication of impairment.

Goodwill : Goodwill represents the excess of cost of an acquired business over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in a business combination. As with tangible and other intangible assets, periodic impairment reviews are required, at least annually, as well as when events or circumstances change. We review the recorded value of our goodwill annually on October 1 or sooner, if events or changes in circumstances indicate that the carrying amount may exceed fair value. As with our review of impairment of tangible and intangible assets, we employ significant assumptions in assessing goodwill for impairment. These assumptions include relevant considerations of market-participant data. When it is determined that the two-step impairment test is required, an income approach is generally used to determine the fair values of our reporting units.

In applying the income approach in assessing goodwill for impairment, changes in assumptions could materially affect the determination of fair value for a reporting unit. Although our fair value estimates of the company’s reporting units under the income approach exceed the respective carrying values, different assumptions regarding projected performance and other factors could result in significant non-cash impairment charges in the future. The following are key assumptions to our income approach:

Business projections – Projections are based on three-year forecasts that are developed internally by management and reviewed by the company’s Board of Directors. These projections include significant assumptions such as estimates of future revenues, profits, working capital requirements, operating plans, costs of restructuring actions and capital expenditures. Assumptions surrounding macro-economic data and estimates include industry projections, inflation, foreign currency exchange rates and costs of energy, raw materials and freight.

Growth rates – A growth rate based on market participant data considerations is used to calculate the terminal value of a reporting unit. The growth rate is the expected rate at which a reporting unit’s earnings stream is projected to grow beyond the three-year forecast period.

Discount rates – Future cash flows are discounted at a rate that is consistent with a weighted average cost of capital for a potential market participant. The weighted average cost of capital is an estimate of the overall after-tax rate of return required by equity and debt holders of a business enterprise. The discount rates selected for the reporting units are based on existing conditions within the respective markets and reflect appropriate adjustments for potential risk premiums in those markets as well as appropriate weighting of the market cost of equity versus debt, which is developed with the assistance of external financial advisors.

Tax rates – Tax rates are based on estimates of the tax rates that a market participant would realize in the respective primary markets and geographic areas in which the reporting units operate.

Based on the company’s annual review of recorded goodwill at October 1, 2013, there was no indication of impairment. The leadership of the Home, Health and Beauty segment changed during 2013 which also resulted in a change to the reporting units effective October 1, 2013 based on how the new leadership manages cash flow and other key metrics of the segment. The Home, Health and Beauty Primary Plastics Operations (“PPO”) reporting unit included within the Home, Health and Beauty reporting segment had $362 million of goodwill, as well as an indefinite-lived trade name asset with a carrying value of $95 million at December 31, 2013. The estimated fair value of this reporting unit exceeded its carrying value by approximately 15% at December 31, 2013, representing the lowest headroom coverage of the company’s reporting units. Holding other valuation assumptions constant, it would take a downward shift in operating profits of more than 15% from projected levels before the fair value of the PPO reporting unit would be below its carrying value, thereby triggering the requirement to perform further analysis which may indicate potential goodwill impairment. The projections used in the impairment analysis for this reporting unit reflect the strategic direction of the new Home, Health & Beauty leadership, most notably certain growth, productivity improvement and cost reduction initiatives. Different assumptions regarding projected performance and other factors associated with this reporting unit could result in significant non-cash impairment charges in the future.

See Note D of Notes to Consolidated Financial Statements included in Part II, Item 8 for further information regarding goodwill.

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 (freight 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 the guidelines provided by the Financial Accounting Standards Board , 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. The company recognizes the tax benefit from an uncertain tax position if it is more likely than not that the position is sustainable. For those tax positions that meet the more likely than not criteria, the company records only the portion of the tax benefit that is greater than 50% likely to be realized upon settlement with the respective taxing authority. Interest and penalties related to unrecognized tax benefits are recorded within income tax expense in the consolidated statements of operations. 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, we 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 gains from forestland sales 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 GUIDANCE

In January 2013, the company adopted new guidance regarding the reporting of amounts reclassified out of accumulated other comprehensive income. The new guidance requires an entity to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income. The company has presented the amounts reclassified out of accumulated other comprehensive income by the respective line items of net income in the notes to the consolidated financial statements. The impact of adoption did not have a material effect on the company’s consolidated financial statements. Refer to Note J for further information.

In January 2013, the company adopted new accounting guidance regarding additional disclosures for financial instruments that are offset, including the gross amount of the asset and liability as well as the impact of any net amount presented in the consolidated financial statements. The impact of adoption did not have a material effect on the company’s consolidated financial statements. Refer to Note H for further information.

In March 2013, new accounting guidance was issued regarding foreign currency matters. The new guidance clarifies existing guidance regarding circumstances when cumulative translation adjustments should be released into earnings. These provisions are effective prospectively for fiscal and interim periods beginning after December 15, 2013. The impact of adoption will not have a material effect on the company’s consolidated financial statements.

In July 2013, new accounting guidance was issued regarding derivatives and hedging. The new guidance includes an additional benchmark interest rate for hedge accounting purposes and removes the restriction on using different benchmark rates for similar hedges. The amendments are effective prospectively for qualifying new or redesignated hedging relationships entered into on or after July 17, 2013. The impact of adoption will not have a material effect on the company’s consolidated financial statements.

In July 2013, new accounting guidance was issued regarding the presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The new guidance requires an unrecognized tax benefit be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, unless certain exceptions are met. The amendments are effective prospectively for fiscal and interim periods beginning after December 15, 2013. The impact of adoption will not have a material effect on the company’s consolidated financial statements.

There were no other accounting standards issued in 2013 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 or 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 ability of MeadWestvaco to close announced and pending transactions; competitive pricing for the company’s products; impact from inflation on raw materials, energy and other costs; fluctuations in demand and changes in production capacities; relative growth or decline in the United States and international economies; government policies and regulations, including, but not limited to those affecting the environment, climate change, tax policies 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 maximize the value of its development land holdings; adverse results in current or future litigation; currency movements; volatility and further deterioration of the capital markets; and other risk factors discussed in this Annual Report on Form 10-K for the year ended December 31, 2013, 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

The company has developed a targeted mix of fixed- and variable-rate debt as part of an overall strategy to maintain an appropriate level of exposure to interest-rate fluctuations. To efficiently manage this mix, the company may utilize interest-rate swap agreements. There were no outstanding interest-rate swaps at December 31, 2013 and 2012. See Note H of Notes to Consolidated 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 34% of its 2013 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 inter-company 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 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 2013 and 2012, the company entered into foreign currency hedges to partially offset the foreign currency impact of these flows on operating income. See Note H of Notes to Consolidated Financial Statements included in Part II, Item 8 for related discussion.

The company also issues inter-company loans to and receives foreign cash deposits from 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 for the inter-company loans and changes in spot exchange rates from deposit date for foreign cash deposits. Generally, management uses foreign-exchange hedge contracts with terms of less than one year to hedge these exposures. When applied to the company’s foreign exchange derivative instruments at December 31, 2013, a 10% adverse change in currency rates would result in about a $15 million loss. Although the company’s derivative and other foreign currency sensitive instruments expose it to market risk, fluctuations in the value of these instruments are mitigated by expected offsetting fluctuations in the matched exposures.

Natural gas

Item 8. Financial statements and supplementary data

Index


		*Page*
Report of Independent Registered Public Accounting Firm		42
Consolidated Statements of Operations for the Years Ended December 31, 2013, 2012 and 201 1		43
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2013, 2012 and 2011		44
Consolidated Balance Sheets at December 31, 2013 and 20 12		45
Consolidated Statements of Equity for the Years Ended December 31, 2013, 2012 and 201 1		46
Consolidated Statements of Cash Flows for the Years Ended December 31, 2013, 2012 and 201 1		47
Notes to Consolidated Financial Statements		48

Report of Independent Registered Public Accounting Firm

To Board of Directors and Shareholders of MeadWestvaco Corporation

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, comprehensive income, equity, and cash flows present fairly, in all material respects, the financial position of MeadWestvaco Corporation and its subsidiaries at December 31, 2013 and 2012, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2013 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, 2013, based on criteria established in Internal Control—Integrated Framework 1992 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.

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

Richmond, Virginia

February 24, 2014

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF OPERATIONS


	Years ended December 31,
*In millions, except per share data*	2013			2012			2011
Net sales	$	5,389		$	5,287		$	5,179
Cost of sales		4,429			4,257			4,126
Selling, general and administrative expenses		638			682			669
Interest expense		159			152			161
Other income, net		(59	)		(14	)		(28	)

Income from continuing operations before income taxes		222			210			251
Income tax (benefit) provision		(97	)		54			70

Income from continuing operations		319			156			181
Income from discontinued operations, net of income taxes		519			52			69

Net income		838			208			250
Less: Net (loss) income attributable to non-controlling interests, net of income taxes		(1	)		3			4

Net income attributable to the company	$	839		$	205		$	246

Income from continuing operations attributable to the company	$	320		$	153		$	177

Net income attributable to the company per share – basic:
Income from continuing operations	$	1.81		$	0.88		$	1.04
Income from discontinued operations		2.93			0.30			0.41

Net income attributable to the company	$	4.74		$	1.18		$	1.45

Net income attributable to the company per share – diluted:
Income from continuing operations	$	1.78		$	0.87		$	1.02
Income from discontinued operations		2.88			0.29			0.40

Net income attributable to the company	$	4.66		$	1.16		$	1.42

Shares used to compute net income attributable to the company per share:
Basic		177.2			173.8			170.4
Diluted		180.0			177.2			174.1

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

MEADWESTVACO CORPORATION AND CONSOLIDATED SUBSIDIARY COMPANIES

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	Years ended December 31,
*In millions*	2013			2012			2011
Net income	$	838		$	208		$	250

Other comprehensive income (loss), net of tax:
Foreign currency translation		(85	)		(25	)		(112	)
Adjustments related to pension and other benefit plans		86			102			(138	)
Net unrealized gain (loss) on derivative instruments		3			4			(5	)

Other comprehensive income (loss), net of tax		4			81			(255	)

Comprehensive income (loss)		842			289			(5	)
Less: comprehensive (loss) income attributable to non-controlling interests		(1	)		3			4

Comprehensive income (loss) attributable to the company	$	843		$	286		$	(9	)

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

MEADWESTVACO CORPORATION AND CONSOLIDATED SUBSIDIARY COMPANIES

FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS


	December 31,
*In millions, except share and per share data*	2013			2012
ASSETS
Cash and cash equivalents	$	1,057		$	663
Accounts receivable, net		625			605
Inventories		686			661
Other current assets		108			135
Current assets of discontinued operations		0			2

Current assets		2,476			2,066

Property, plant, equipment and forestlands, net		3,647			3,593
Prepaid pension asset		1,475			1,258
Goodwill		716			719
Restricted assets held by special purpose entities		1,258			398
Other assets		713			727
Non-current assets of discontinued operations		0			147

	$	10,285		$	8,908

LIABILITIES AND EQUITY
Accounts payable	$	563		$	595
Accrued expenses		534			443
Notes payable and current maturities of long-term debt		79			63
Current liabilities of discontinued operations		0			5

Current liabilities		1,176			1,106
Long-term debt		1,816			2,100
Non-recourse liabilities held by special purpose entities		1,112			338
Deferred income taxes		1,348			1,046
Other long-term obligations		734			957
Non-current liabilities of discontinued operations		0			3
Commitments and contingencies		—			—
Equity:
Shareholders’ equity:
Common stock, $0.01 par Shares authorized: 600,000,000 Shares issued and outstanding: 2013 – 174,443,439 (2012 – 175,437,280)		2			2
Additional paid-in capital		3,172			3,234
Retained earnings		950			288
Accumulated other comprehensive loss		(180	)		(184	)

Total shareholders’ equity		3,944			3,340
Non-controlling interests		155			18

Total equity		4,099			3,358

	$	10,285		$	8,908

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

MEADWESTVACO CORPORATION AND CONSOLIDATED SUBSIDIARY COMPANIES

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF EQUITY


	Shareholders’ equity														Non-controlling interests			Total equity
*In millions*	Outstanding shares			Common stock		Additional paid-in capital			Retained earnings			Accumulated other comprehensive income ( loss)			Non-controlling interests			Total equity
Balance at December 31, 2010		168.3			2		3,075			199			(10	)		20			3,286
Net income		0			0		0			246			0			4			250
Other comprehensive loss, net of tax		0			0		0			0			(255	)		0			(255	)
Dividends declared		0			0		0			(173	)		0			0			(173	)
Non-controlling interest distribution		0			0		0			0			0			(5	)		(5	)
Share-based employee compensation		0.6			0		38			0			0			0			38
Exercise of stock options		2.0			0		40			0			0			0			40

Balance at December 31, 2011		170.9		$	2	$	3,153		$	272		$	(265	)	$	19		$	3,181
Net income		0			0		0			205			0			3			208
Other comprehensive loss, net of tax		0			0		0			0			81			0			81
Dividends declared		0			0		0			(174	)		0			0			(174	)
Non-controlling interest distribution		0			0		0			0			0			(4	)		(4	)
Purchase of non-controlling interest		0			0		(4	)		0			0			0			(4	)
Share-based employee compensation		1.3			0		14			0			0			0			14
Exercise of stock options		3.2			0		71			0			0			0			71
Spin-off of C&OP business		0			0		0			(15	)		0			0			(15	)

Balance at December 31, 2012		175.4		$	2	$	3,234		$	288		$	(184	)	$	18		$	3,358
Net income		0			0		0			839			0			(1	)		838
Other comprehensive income, net of tax		0			0		0			0			4			0			4
Dividends declared		0			0		0			(177	)		0			0			(177	)
Non-controlling interest distribution		0			0		0			0			0			(7	)		(7	)
Purchase of non-controlling interest		0			0		(8	)		0			0			(5	)		(13	)
Sale of non-controlling interest		0			0		0			0			0			(2	)		(2	)
Non-controlling interest contribution		0			0		0			0			0			152			152
Stock repurchases		(3.8	)		0		(131	)		0			0			0			(131	)
Share-based employee compensation		0.2			0		13			0			0			0			13
Exercise of stock options		2.6			0		64			0			0			0			64

Balance at December 31, 2013		174.4		$	2	$	3,172		$	950		$	(180	)	$	155		$	4,099

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

MEADWESTVACO CORPORATION AND CONSOLIDATED SUBSIDIARY COMPANIES

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF CASH FLOWS


*In millions*	2013			2012			2011
Cash flows from operating activities
Net income	$	838		$	208		$	250
Discontinued operations		(519	)		(52	)		(69	)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization		390			366			361
Deferred income taxes		7			(12	)		7
Loss on sales of assets, net		2			1			2
Pension income, net of settlement charges and termination benefits		(85	)		(69	)		(82	)
Appreciation in cash surrender value insurance policies		(39	)		(36	)		(22	)
Impairment of long-lived assets		14			2			5
Change in alternative fuel mixture credit reserves		(165	)		0			0
Changes in working capital, excluding the effects of acquisitions and dispositions		(82	)		(178	)		(18	)
Other, net		(3	)		(10	)		(37	)

Net cash provided by operating activities of continuing operations		358			220			397
Discontinued operations		79			218			163

Net cash provided by operating activities		437			438			560
Cash flows from investing activities
Capital expenditures		(506	)		(654	)		(652	)
Payments for acquired businesses, net of cash acquired		(2	)		(101	)		(70	)
Proceeds from dispositions of assets		52			29			56
Contributions to joint ventures		(20	)		(13	)		(7	)
Other, net		(5	)		3			0
Discontinued operations		70			(63	)		30

Net cash used in investing activities		(411	)		(799	)		(643	)
Cash flows from financing activities
Proceeds from debt instruments related to C&OP business spin-off		0			460			0
Proceeds from secured financing of special purpose entity		774			0			0
Proceeds from issuance of long-term debt		8			357			113
Repayment of long-term debt		(293	)		(327	)		(42	)
Changes in notes payable and other short-term borrowings, net		35			(4	)		32
Dividends paid		(177	)		(173	)		(170	)
Proceeds from exercises of stock options		54			61			38
Stock repurchases		(126	)		0			0
Purchase of non-controlling interests		(13	)		(4	)
Proceeds from non-controlling interest contributions		152			0			0
Other, net		(21	)		8			4
Discontinued operations		0			0			(1	)

Net cash provided by (used in) financing activities		393			378			(26	)
Effect of exchange rate changes on cash		(25	)		(10	)		(25	)

Increase (decrease) in cash and cash equivalents		394			7			(134	)
Cash and cash equivalents:
At beginning of period		663			656			790

At end of period	$	1,057		$	663		$	656

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

MEADWESTVACO CORPORATION AND CONSOLIDATED SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED 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 of MeadWestvaco Corporation (“MeadWestvaco”, “MWV”, or the “company”), and all significant inter-company transactions are eliminated. MWV’s segments are (i) Food & Beverage, (ii) Home, Health & Beauty, (iii) Industrial, (iv) Specialty Chemicals, and (v) Community Development and Land Management.

The company has revised its consolidated financial statements to reflect the correction of errors within deferred income taxes that were identified during the fourth quarter of 2013. During the fourth quarter of 2013, the company identified $20 million of deferred income tax errors which include $13 million of deferred income tax assets that should have been written off prior to 2008 and $7 million in deferred income tax liabilities that should have been recorded in 2005.

The company evaluated these deferred income tax errors in accordance with the guidance in ASC 250, Accounting Changes and Error Corrections and related SEC Staff Accounting Bulletins to determine if the company’s previously issued financial statements were materially misstated. The company concluded these errors were not material individually or in the aggregate to any of the prior reporting periods, and therefore, amendments of previously filed reports were not required. The consolidated balance sheets and consolidated statements of equity were revised to reflect the cumulative effect of these errors resulting in a decrease to retained earnings and total equity of $20 million which is reflected in the beginning balance as of January 1, 2009.

These consolidated financial statements present as discontinued operations the sale of the company’s U.S. forestlands and related assets to Plum Creek Timber Company, Inc. (“Plum Creek”).

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 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 business. Past due balances over a specified amount are reviewed individually for collectability. 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 and losses on sales of corporate real estate are recorded in other income, net. Costs of renewals and betterments of properties are capitalized; costs of maintenance and repairs are charged to expense.

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.

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 with finite lives, 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 carrying value to determine whether 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.

Intangible assets assigned indefinite lives are to be tested at least annually or more often if events or changes in circumstances indicate that the fair value of an intangible asset is below its carrying value. The fair values of the company’s indefinite-lived intangible assets (primarily Calmar trademarks and trade names) are estimated using an income approach (the relief from royalty method). Although the estimate of the fair values of the company’s indefinite-lived intangible assets under the income approach exceed the respective carrying values, different assumptions regarding projected performance and other factors could result in significant non-cash impairment charges in the future. Based on the company’s annual review of the indefinite-lived intangible assets as of October 1, 2013, there was no indication of impairment.

Goodwill: Goodwill represents the excess of cost of an acquired business over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in a business combination. The company reviews the recorded value of goodwill at least annually on October 1, or sooner if events or changes in circumstances indicate that the fair value of a reporting unit is below its carrying value. The company may elect to use a qualitative approach to determine if goodwill is required to be tested. If goodwill is required to be tested for impairment, a two-step process is utilized. The first step is to identify 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. Goodwill has been allocated to the company’s respective reporting units based on its nature and synergies expected to be achieved. The fair value of each reporting unit is estimated primarily using an income approach, specifically the discounted cash flow method. The company employs significant assumptions in evaluating its goodwill for impairment. These assumptions include relevant considerations of market-participant data.

In applying the income approach in assessing goodwill for impairment, changes in assumptions could materially affect the determination of fair value for a reporting unit. Although the fair value estimates of the company’s reporting units under the income approach exceed the respective carrying values, different assumptions regarding projected performance and other factors could result in significant non-cash impairment charges in the future.

The following are key assumptions to the company’s income approach:

Tax rates – Tax rates are based on estimates of the tax rates that a market participant would realize in the respective primary markets and geographic areas in which the reporting units operate.

Based on the company’s annual review of recorded goodwill at October 1, 2013, there was no indication of impairment. See Note D for further information regarding goodwill.

Other assets: Capitalized software for internal use, 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 accounting guidance provided by the Financial Accounting Standards Board. See Note D and Note E for further information.

Financial instruments: 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. All derivative instruments are required to be recorded in the consolidated balance sheets as assets or liabilities, measured at fair value. The fair value estimates are based on relevant market information, including market rates and prices. 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 accumulated other comprehensive income or loss 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 are recognized in earnings. If a derivative is not designated as a qualifying hedge, changes in fair value are recognized in earnings. See Note H for further information.

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. Fees for third-party legal services are expensed as incurred. See Note P for further information.

Asset retirement obligations: The company has certain conditional and unconditional asset retirement obligations associated with owned or leased property, plant and equipment, including surface impoundments, asbestos, and water supply wells. The company records a liability for the fair value of an asset retirement obligation when incurred if the fair value of the liability can be reasonably estimated. 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 has not been specified and information is not available to apply expected present value techniques. 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 flow.

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 (freight 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. 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. Sales of landholdings are included in net sales in the consolidated statements of operations.

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 expenses are expenditures for research and development of $44 million, $45 million and $46 million for the years ended December 31, 2013, 2012 and 2011, 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.

Share-based compensation: The company records compensation expense for graded and cliff vesting awards on a straight-line basis over the vesting period, which is generally three years. The company uses 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 K for further detail on share-based compensation.

Net income per share: Basic net income per share for all the periods presented has been calculated using the company’s weighted average shares outstanding. In computing diluted net income per share, incremental shares issuable upon the assumed exercise of stock options and other share-based compensation awards have been added to weighted average shares outstanding, if dilutive. For the year ended December 31, 2013 no equity awards were excluded from the calculation of weighted average shares outstanding. For the years ended December 31, 2012 and 2011, 2 million and 4 million of equity awards, respectively, were excluded from the calculation of weighted average shares outstanding, as the exercise price per share was greater than the average market value, resulting in an anti-dilutive 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.

New accounting guidance

carryforward, unless certain exceptions are met. The amendments are effective prospectively for fiscal and interim periods beginning after December 15, 2013. The impact of adoption will not have a material effect on the company’s consolidated financial statements.

There were no other accounting standards issued in 2013 that had or are expected to have a material impact on the company’s financial position or results of operations.

A. Fair value measurements

The following information is presented for assets and liabilities that are recorded in the consolidated balance sheet at fair value at December 31, 2013 and 2012, measured on a recurring and non-recurring basis. There were no significant transfers of assets and liabilities that are recorded at fair value between Level 1 and Level 2 during 2013 and 2012.


*In millions*	December 31, 2013			Level 1 ⁽¹⁾			Level 2 ⁽²⁾			Level 3 ⁽³ ⁾
Recurring fair value measurements:
Derivatives-assets ^(a)	$	2		$	0		$	2		$	0
Derivatives-liabilities ^(a)		(3	)		0			(3	)		0
Cash equivalents		943			943			0			0
Pension plan assets:
Equity investments ^(b)	$	511		$	504		$	7		$	0
Preferred stock ^(b)		4			3			1			0
Government securities ^(c)		914			58			845			11
Corporate debt investments ^(d)		894			0			890			4
Derivatives ^(e)		0			0			0			0
Partnerships and joint ventures ^(g)		223			0			0			223
Real estate ^(h)		43			2			0			41
Common collective trust ^(f)		1,003			0			1,003			0
Registered investment companies ^(f)		73			4			69			0
103-12 investment entities ^(f)		260			0			260			0
Other pension (payables) receivables ^(b)		(11	)		(15	)		1			3

Total pension plan assets	$	3,914		$	556		$	3,076		$	282

Non-recurring fair value measurements:
Long-lived assets held for sale ⁽ ⁱ ⁾	$	12		$	0		$	0		$	12

	December 31, 2012			Level 1 ⁽¹⁾			Level 2 ⁽²⁾			Level 3 ⁽³ ⁾

Recurring fair value measurements:
Derivatives-assets ^(a)	$	3		$	0		$	3		$	0
Derivatives-liabilities ^(a)		(8	)		0			(8	)		0
Cash equivalents		564			564			0			0
Pension plan assets:
Equity investments ^(b)	$	613		$	601		$	12		$	0
Preferred stock ^(b)		4			3			1			0
Government securities ^(c)		1,034			89			940			5
Corporate debt investments ^(d)		850			0			847			3
Derivatives ^(e)		20			0			10			10
Partnerships and joint ventures ^(g)		225			0			0			225
Real estate ^(h)		46			5			0			41
Common collective trust ^(f)		1,270			0			1,270			0
Registered investment companies ^(f)		64			2			62			0
103-12 investment entities ^(f)		251			0			251			0
Other pension (payables) receivables ^(b)		(59	)		(61	)		0			2

Total pension plan assets	$	4,318		$	639		$	3,393		$	286

⁽¹⁾	Quoted prices in active markets for identical assets.

⁽²⁾	Quoted prices for similar assets and liabilities in active markets.

⁽³⁾	Significant unobservable inputs.

^(a)

Derivative instruments consist of hedge contracts on natural gas and foreign currencies. Natural gas hedge instruments are valued using models with market inputs such as NYMEX natural gas futures contract pricings. Foreign currency forward contracts are valued using models with market inputs such as prices of instruments of a similar nature.

^(b)

Equity investments, preferred stock, and other pension (payables) receivables are valued using quoted market prices multiplied by the number of shares owned. Dealer quotes are used for less liquid markets. Valuation models with market inputs are used for securities that do not trade in transparent markets. The other pension (payables) receivables that are classified as Level 3 investments are valued using contract value, which approximates fair value, and include unobservable inputs such as illiquidity.

^(c)	Government securities include treasury and agency debt. The Level 2 investments are valued using a broker quote in an active market. The Level 3 investments include unobservable inputs that are valued using third-party pricing information without adjustments.

^(d)

The corporate debt investments category is primarily comprised of U.S. dollar denominated investment grade and non-investment grade securities. It also includes investments in non-U.S. dollar denominated corporate debt securities issued in both developed and emerging markets. Corporate debt investments are valued utilizing a market approach that includes various valuation techniques and sources such as value generation models, broker quotes in active and inactive markets, benchmark yields and securities, reported trades, issuer spreads, and/or other applicable reference data. The Level 3 investments include unobservable inputs that are valued using third-party pricing information without adjustments.

^(e)

The plan’s derivative investments are forward contracts on foreign currencies, interest rate swaps, swaptions, futures on Treasury bonds, and futures on euro dollars. These investments are traded in both over-the-counter markets and on futures exchanges. The Level 2 investments are valued using models with market inputs such as dealer quoted interest rates and exchange rates. The Level 3 investments are valued based on valuation models such as Black Scholes Option Pricing Model.

^(f)

Common collective trusts, registered investment companies, and 103-12 investment entities are commingled funds for which there is no exchange quoted price. These commingled funds are valued at their net asset value per share multiplied by the number of shares held. The determination of net asset value for the commingled funds includes market pricing of the underlying assets as well as broker quotes and other valuation techniques. The funds invest mainly in liquid, transparent markets such as domestic and international equities, U.S. government bonds, and corporate bonds.

^(g)

Partnerships and joint ventures are commingled investments. The plan owns interests in limited partnerships or funds rather than direct investments in the underlying asset classes such as real estate. Valuation is based on input from the general partner if no independent source is available. The valuation policies of the general partner are in compliance with accounting standards and the partnerships are audited by nationally recognized auditors. Various valuation techniques and inputs are considered in valuing private portfolio investments, including EBITDA multiples in other comparable third-party transactions, price to earnings ratios, market conditions, liquidity, current operating results, and other pertinent information.

^(h)	Real estate investments are commingled investments. The fair values of the real estate partnerships are determined based on a combination of third party appraisals, discounted present value of estimated future cash flows, replacement cost, and comparable market prices.

⁽ ⁱ ⁾

The fair value of long-lived assets is determined using a combination of a market approach based on market participant inputs and an income approach based on estimates of future cash flows.

While the company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value as of the reporting date.

The following information is presented for those assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at December 31, 2013 and 2012:


*In millions*	Government securities			Corporate debt investments			Derivatives			Partnerships and joint ventures			Real estate			Other pension receivables and payables			Total
December 31, 2011	$	3		$	6		$	69		$	209		$	46		$	22		$	355
Purchases		1			1			12			51			27			0			92
Sales		(2	)		(2	)		(68	)		(43	)		(35	)		0			(150	)
Realized gains		0			0			57			1			0			0			58
Unrealized gains (losses)		1			0			(54	)		7			3			0			(43	)
Transfers (out) in of Level 3		2			(2	)		(6	)		0			0			(20	)		(26	)

December 31, 2012	$	5		$	3		$	10		$	225		$	41		$	2		$	286
Purchases		4			4			3			31			11			0			53
Sales		(8	)		(3	)		(126	)		(64	)		(13	)		0			(214	)
Realized gains		1			0			121			17			1			0			140
Unrealized (losses) gains		0			0			(8	)		14			1			1			8
Transfers in (out) of Level 3		9			0			0			0			0			0			9

December 31, 2013	$	11		$	4		$	0		$	223		$	41		$	3		$	282

Long-lived assets held for sale with a carrying value of $21 million were written down to their estimated fair value of $12 million, resulting in pre-tax impairment charges attributable to continuing operations of $9 million for the year ended December 31, 2013. Additionally, pre-tax impairment charges of $5 million were recorded for the year ended December 31, 2013 related to assets sold in the third quarter of 2013. These pre-tax impairment charges are included in cost of sales.

At December 31, 2013, the book value of financial instruments included in debt is $1.8 billion and the fair value is estimated to be $2.1 billion. The difference between book value and fair value is derived from the difference between the December 31, 2013 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. This fair value measurement is classified as Level 2.

B. Current assets

Cash equivalents of $943 million and $564 million at December 31, 2013 and 2012, respectively, are valued at cost, which approximates fair value. As of December 31, 2013 and 2012, the majority of the company’s cash equivalents were invested in U.S. government securities. Trade receivables have been reduced by an allowance for doubtful accounts of $12 million and $15 million at December 31, 2013 and 2012, respectively. Receivables also include $69 million and $66 million from sources other than trade at December 31, 2013 and 2012, respectively. At December 31, 2013 and 2012, other current assets include $70 million and $108 million of prepaid expenses, respectively. Inventories at December 31, 2013 and 2012 are comprised of:


	December 31,
*In millions*	2013		2012
Raw materials	$	168	$	158
Production materials, stores and supplies		104		97
Finished and in-process goods		414		406

	$	686	$	661

Approximately 58% and 59% of inventories at December 31, 2013 and 2012, respectively, are valued using the last-in, first-out (“LIFO”) method. If inventories had been valued at current cost, they would have been $858 million and $831 million at December 31, 2013 and 2012, respectively. The effects of LIFO layer decrements were not significant to the consolidated statements of operations for the years ended December 31, 2013, December 31, 2012 and December 31, 2011.

C. Property, plant, equipment and forestlands

Depreciation and depletion expense for the years ended December 31, 2013, 2012 and 2011 was:


*In millions*	2013		2012		2011
Depreciation and depletion expense	$	325	$	301	$	296

Property, plant, equipment and forestlands consist of the following:


	December 31,
*In millions*	2013			2012
Land and land improvements	$	222		$	211
Buildings and leasehold improvements		902			899
Machinery and other		6,004			5,516

		7,128			6,626
Less: accumulated depreciation		(3,981	)		(3,760	)

		3,147			2,866
Forestlands		190			193
Construction-in-progress		310			534

	$	3,647		$	3,593

D. Goodwill and other intangible assets

Goodwill allocated to each of the company’s segments at December 31, 2013 and 2012 was:


	December 31,
*In millions*	2013		2012
Food & Beverage	$	277	$	276
Home, Health & Beauty		386		383
Industrial		40		46
Specialty Chemicals		13		14

Total	$	716	$	719

The changes in the carrying amount of goodwill for the years ended December 31, 2013 and 2012 are as follows:


*In millions*	2013			2012
Beginning balance	$	719		$	832
Goodwill acquired during the year		0			50
Goodwill related to the spin-off of C&OP		0			(164	)
Adjustments ¹		(3	)		1

Ending balance	$	716		$	719

Accumulated impairment losses:
Beginning balance	$	(7	)	$	(7	)
Impairment losses		0			0

Ending balance	$	(7	)	$	(7	)

¹	Represents foreign currency translations and tax adjustments.

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


	December 31, 2013				December 31, 2012
*In millions*	Gross carrying amount		Accumulated amortization		Gross carrying amount		Accumulated amortization
Trademarks and trade names	$	28	$	20	$	28	$	17
Customer contracts and lists		264		112		261		94
Patents		57		43		60		44
Other – primarily licensing rights		14		9		15		8

	$	363	$	184	$	364	$	163

Included in other assets are indefinite-lived intangible assets with carrying values of:


*In millions*	December 31, 2013		December 31, 2012
Trademarks and trade names	$	95	$	94

Amortization expense relating to intangible assets subject to amortization for the years ended December 31, 2013, 2012 and 2011 was:


*In millions*	2013		2012		2011
Intangible amortization expense	$	23	$	23	$	23

Based on the current carrying values of intangible assets subject to amortization, estimated amortization expense for the next five years is as follows:


*In millions*	2014		2015		2016		2017		2018
Estimated intangible amortization expense	$	22	$	19	$	19	$	18	$	15

E. Other assets

Other assets consist of the following:


	December 31,
*In millions*	2013		2012
Identifiable intangible assets, net	$	274	$	295
Cash surrender value of life insurance, net of borrowings		179		166
Equipment leased to customers, net		68		72
Capitalized software, net		54		60
Other		138		134

	$	713	$	727

F. Accounts payable and accrued expenses

Accounts payable and accrued expenses consist of the following:


	December 31,
*In millions*	2013		2012
Accounts payable:
Trade	$	538	$	550
Other		25		45

	$	563	$	595

Accrued expenses:
Payroll and employee benefit costs	$	155	$	192
Income taxes payable		144		8
Interest		57		56
Taxes, other than income		30		27
Accrued rebates and allowances		16		17
Environmental and litigation		16		19
Restructuring charges		13		12
Freight		8		12
Other		95		100

	$	534	$	443

G. Notes payable and long-term debt

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


	December 31,
*In millions*	2013		2012
Other short-term borrowings	$	59	$	29
Current maturities of long-term debt and capital lease obligations		20		34

	$	79	$	63

Prior to the effective time of the spin-off of the C&OP business, the company received debt proceeds of $460 million from third-party financing. The associated obligation totaling $460 million was included in the net assets of the disposal group representing the C&OP business pursuant to the spin-off. Refer to Note S for further discussion.

Long-term debt consists of the following:


	December 31,
*In millions*	2013			2012
Debentures, rates from 6.80% to 9.75%, due 2017-2047	$	1,180		$	1,181
Notes, rate of 7.38%, due 2019		250			249
Term loan facility, rate of LIBOR plus 1.175%		0			244
BNDES notes, rate of 5.50%, due 2014-2020		106			131
Sinking fund debentures, rates from 7.50% to 7.65%, due 2018-2027		141			172
Capital lease obligations:
Industrial Development Revenue Bonds, rate 7.67%, due 2027		80			80
Industrial Development Revenue Bonds, rate 4.125%, due 2035		51			51
Industrial Development Revenue Bonds, rate 3.625%, due 2030		7			7
Pollution Control Revenue Bonds, rate 6.375%, due 2026		6			6
Other capital lease obligations		7			5
Other long-term debt		8			8

		1,836			2,134
Less: amounts due within one year		(20	)		(34	)

Long-term debt	$	1,816		$	2,100

As of December 31, 2013, outstanding debt maturing in the next five years is as follows:


*In millions*	2014		2015		2016		2017		2018
Outstanding debt maturities	$	77	$	17	$	18	$	167	$	25

As of December 31, 2013, capital lease obligations maturing in the next five years are as follows:


*In millions*	2014		2015		2016		2017		2018
Capital lease obligation maturities	$	2	$	2	$	1	$	1	$	0

The weighted average interest rate on the company’s fixed-rate long-term debt was 7.6% for 2013 and 2012. The weighted average interest rate on the company’s variable-rate long term debt was 1.4% during 2013 and 2012.

The percentage of debt to total capital (shareholders’ equity and total debt) was 32% at December 31, 2013 and 39% at December 31, 2012.

H. Financial instruments

The company uses various derivative financial instruments as part of an overall strategy to manage exposure to market risks associated with natural gas price fluctuations, foreign currency exchange rates and interest rates. The company does not hold or issue derivative financial instruments for trading purposes. The risk of loss to the company in the event of non-performance by any counterparty under derivative financial instrument agreements is not significant. Although the derivative financial instruments expose the company to market risk, fluctuations in the value of the derivatives are generally offset in earnings by the recognition of the hedged item in earnings or the earnings impact from the underlying exposures.

All derivative instruments are recorded in the consolidated balance sheets as assets or liabilities, measured at estimated fair values. Fair value estimates are based on relevant market information, including market rates and prices. For a derivative instrument designated as a cash flow hedge, the effective portion of the change in the fair value of the derivative is recorded in accumulated other comprehensive income (loss) and is recognized in earnings when the hedged item affects earnings. The ineffective portions of cash flow hedges are recognized, as incurred, in earnings. Changes in the fair value of a derivative instrument not designated as a qualifying hedge are recognized in earnings.

The pre-tax effect of derivative instruments, which excludes the offsetting impact of the hedged item and underlying exposures, in the consolidated statements of operations and accumulated other comprehensive income (loss) for the years ended December 31, 2013 and 2012 are presented below:


	Cash flow hedges												Derivatives not designated as hedges
	Foreign currency hedges						Natural gas hedges						Foreign currency derivatives
*In millions*	2013			2012			2013			2012			2013		2012
(Loss) gain recognized in other comprehensive income (loss) (effective portion)	$	(3	)	$	(2	)	$	1		$	(5	)	$	0	$	0

(Loss) gain reclassified to earnings from accumulated other comprehensive income (loss) (effective portion)	$	(2	)	$	2		$	(3	)	$	(17	)	$	0	$	0
Gain (loss) recognized in earnings ¹		0			0			0			0			4		(15	)

Total (loss) gain recognized in earnings ²	$	(2	)	$	2		$	(3	)	$	(17	)	$	4	$	(15	)

¹	Amounts represent the ineffective portion or items excluded from effectiveness testing for all derivatives in cash flow hedging relationships or represent realized and unrealized gains (losses) associated with fair value hedges or those derivatives not designated as hedges.

²	Gains and losses recognized in earnings are generally offset by the recognition of the hedged item in earnings or the earnings impact from the underlying exposures.

The fair values and the effect of derivative instruments on the consolidated balance sheets are presented below:


	December 31, 2013
*In millions*	Gross amount of recognized assets (liabilities)			Gross amount offset in the consolidated balance sheet			Net amount of assets (liabilities) presented in the consolidated balance sheet			Classification
Assets
Derivatives not designated as hedges:
Foreign currency derivatives		2			0			2			Other current assets

Total assets	$	2		$	0		$	2

Liabilities
Derivatives designated as hedges:
Foreign currency hedges		(2	)		0			(2	)		Accounts payable
Derivatives not designated as hedges:
Foreign currency derivatives		(1	)		0			(1	)		Accounts payable

Total liabilities	$	(3	)	$	0		$	(3	)

Total derivatives							$	(1	)


	December 31, 2012
*In millions*	Gross amount of recognized assets (liabilities)			Gross amount offset in the consolidated balance sheet			Net amount of assets (liabilities) presented in the consolidated balance sheet			Classification
Assets
Derivatives designated as hedges:
Foreign currency hedges	$	0		$	(1	)	$	(1	)		Other current assets
Derivatives not designated as hedges:
Foreign currency derivatives		4			0			4			Other current assets

Total assets	$	4		$	(1	)	$	3

Liabilities
Derivatives designated as hedges:
Natural gas hedges	$	(4	)	$	0		$	(4	)		Accounts payable
Foreign currency hedges		(1	)		0			(1	)		Accounts payable
Derivatives not designated as hedges:
Foreign currency derivatives		(4	)		1			(3	)		Accounts payable

Total liabilities	$	(9	)	$	1		$	(8	)

Total derivatives							$	(5	)

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. The company’s natural 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. The notional values of these contracts for hedged consumption in Million British Thermal Units (“MMBTU’s”) at December 31, 2013 and 2012 are presented below.


*In MMBTU’s*
December 31, 2013	December 31, 2012
9		11

Unrealized gains and losses on contracts maturing in future months are recorded in accumulated other comprehensive income (loss) 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 contract for that particular period, which are charged or credited to earnings when the related hedged item affects earnings. The ineffective portion of these cash flow hedges, as well as realized hedge gains and losses, are recorded within cost of sales in the consolidated statements of operations. The estimated pre-tax gain to be recognized in earnings is $1 million during the next twelve months. As of December 31, 2013, the maximum remaining term of existing hedges was two years. For the years ended December 31, 2013 and 2012, no gains or losses were recognized in earnings due to the probability that forecasted transactions will not occur.

Foreign currency risk

The company uses foreign currency forward contracts to manage some of the foreign currency exchange risks associated with foreign inter-company loans, foreign cash deposits, foreign currency sales and purchases of its international operations, and foreign sales of its U.S. operations. These contracts are used to hedge the variability of exchange rates on the company’s cash flows and foreign cash deposits.

The foreign currency forward contracts related to certain inter-company loans and foreign cash deposits are short term in duration and are not designated as hedging instruments. Gains and losses related to these forward contracts are included in other income, net in the consolidated statements of operations. The notional amounts of these foreign currency forward contracts at December 31, 2013 and 2012 are presented below.


*In millions*	December 31, 2013		December 31, 2012
Notional amount of foreign currency forward contracts – not designated as hedges	$	218	$	235

Other foreign currency forward contracts, which are for terms of up to one year, are designated as cash flow hedges. These hedges are used to reduce the foreign currency exposure related to certain foreign and inter-company sales. For these hedges, realized hedge gains and losses are recorded in net sales in the consolidated statements of operations concurrent with the recognition of the hedged sales. The ineffective portion of these hedges is also recorded in net sales. The estimated pre-tax loss to be recognized in earnings during the next twelve months is $2 million. As of December 31, 2013, the maximum remaining term of existing hedges was one year. For the years ended December 31, 2013 and 2012, no amounts of gains or losses were recognized in earnings due to the probability that forecasted transactions will not occur. The notional amounts of these foreign currency forward contracts at December 31, 2013 and 2012 are presented below.


*In millions*	December 31, 2013		December 31, 2012
Notional amount of foreign currency forward contracts – designated as hedges	$	76	$	108

Interest rate risk

The company has developed a targeted mix of fixed- and variable-rate debt as part of an overall strategy to maintain an appropriate level of exposure to interest-rate fluctuations. To efficiently manage this mix, the company may utilize interest-rate swap agreements. For these fair value hedges, changes in fair value of both the hedge instruments and hedged items are recorded in interest expense in the consolidated statements of operations. There were no interest-rate swap agreements outstanding at December 31, 2013 and 2012.

I. 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, 2013 under operating leases that have non-cancelable lease terms in excess of 12 months and under capital leases are as follows:


In millions	Operating leases		Capital leases
2014	$	56	$	11
2015		44		11
2016		38		10
2017		32		10
2018		25		9
Later years		117		241

Minimum lease payments	$	312		292

Less: amount representing interest				141

Capital lease obligations			$	151

Rental expense under operating leases for the years ended December 31, 2013, 2012 and 2011 was:


*In millions*	2013		2012		2011
Rental expense under operating leases	$	74	$	70	$	73

J. Shareholders’ equity

The value included in common stock at December 31, 2013 and 2012 reflects the outstanding shares of common stock at $0.01 par value per share.

During 2013, MWV purchased and retired 4 million of its common shares for $131 million. At December 31, 2013, there were 4 million shares available for purchase under an existing authorization provided by the company’s Board of Directors on January 28, 2013. Any purchases made under this authorization will be made opportunistically.

On January 27, 2014 the company’s Board of Directors approved a special dividend of approximately $175 million ($1.00 per share) to be paid on March 3, 2014 to shareholders of record as of February 6, 2014. The company’s Board of Directors also approved approximately $394 million of share repurchases to be comprised of $300 million under two accelerated share repurchase agreements, and $94 million pursuant to open market repurchases, which are expected to be largely completed by the end of the second quarter of 2014. On February 7, 2014, the company repurchased and retired approximately 7.5 million shares.

At December 31, 2013, there were authorized and available for issue 30 million shares of preferred stock, par value $0.01 per share, of which 6 million shares were designated as Series A Junior Participating Preferred Stock and reserved for issuance upon exercise of the rights.

Dividends declared were $1.00, per share for each of the years ended December 31, 2013, 2012, and 2011, respectively. Dividends paid were $177 million, $173 million, and $170 million for the years ended December 31, 2013, 2012, and 2011, respectively.

Changes in accumulated other comprehensive loss by component for the year ended December 31, 2013 are as follows:


*In millions*	Foreign currency translation ¹			Pension and other benefit plans ¹			Derivative instruments ¹			Total
Balance as of December 31, 2012	$	25		$	(205	)	$	(4	)	$	(184	)
Other comprehensive (loss) income before reclassifications		(85	)		61			0			(24	)
Amounts reclassified from accumulated other comprehensive income (loss)		0			25			3			28

Other comprehensive (loss) income, net		(85	)		86			3			4

Balance as of December 31, 2013	$	(60	)	$	(119	)	$	(1	)	$	(180	)

¹	All amounts are net of tax.

Reclassifications out of accumulated other comprehensive loss for the year ended December 31, 2013 are as follows:


Details about accumulated other comprehensive income components	Amounts reclassified from accumulated other comprehensive loss			Affected line item in the consolidated statements of operations
*In millions*	Year ended December 31, 2013
Derivative instruments
Foreign currency cash flow hedges	$	(2	)	Net sales
Natural gas cash flow hedges		(3	)	Cost of sales

Total before tax		(5	)
Tax benefit		2

Total, net of tax	$	(3	)

Amortization of pension and other benefit plan items
Prior service (cost) income	$	(2	)	Cost of sales and selling, general and administrative expenses
Net actuarial loss		(38	)	Cost of sales and selling, general and administrative expenses

Total before tax		(40	)
Tax benefit		15

Total, net of tax	$	(25	)

Total reclassifications for the period, net of tax	$	(28	)

K. Share-based compensation

In 2013, shareholders approved the 2005 Performance Incentive Plan, as amended and restated (the “Plan”) that combines the employee incentive plans and the non-employee directors plan. Officers, key employees, and non-employee directors have been granted share-based awards under the Plan. There were an aggregate of 33 million shares reserved under the Plan for the granting of stock options, stock appreciation rights (“SARs”), restricted stock and restricted stock units to officers, key employees, and non-employee directors. At December 31, 2013, there were approximately 7 million shares available for grant under this plan.

The vesting of awards granted to officers and key employees may be conditioned upon either a specified period of time or the attainment of specific performance goals as determined by the plan. 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 become exercisable in one-third increments on each anniversary of the award date and are fully exercisable after the third anniversary and expire no later than 10 years from the date of grant.

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 2013, 2012 and 2011, the total annual grants consisted of 28,371, 40,883 and 34,124 restricted stock units, respectively, for non-employee directors.

In connection with the 2012 spin-off of the C&OP business (the “Spin-off”), and pursuant to existing anti-dilution provisions in the company’s equity plans, the number of outstanding stock options, SARs and restricted stock units as well as the exercise prices of such stock options and SARs were modified on May 1, 2012, the effective date of the Spin-off. The objective of the modification was to maintain the fair value of these equity awards subsequent to the Spin-off; therefore, there was no incremental compensation expense recorded as a result of these modifications.

Stock options and stock appreciation rights

The company estimates 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:


Lattice-based option valuation assumptions	2013			2012			2011
Weighted average fair value of stock options granted during the period	$	8.72		$	6.74		$	7.93
Weighted average fair value of SARs granted during the period		9.86			7.17			8.49
Expected dividend yield for stock options		2.80	%		3.58	%		3.40	%
Expected dividend yield for SARs		2.75	%		3.48	%		3.39	%
Expected volatility		32.00	%		35.00	%		34.00	%
Average risk-free interest rate for stock options		1.24	%		0.91	%		1.83	%
Average risk-free interest rate for SARs		1.01	%		0.94	%		1.68	%
Average expected term for stock options and SARs (in years)		6.9			6.7			7.2

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 December 31, 2010		12,083		$	21.44		625		$	25.15			$	76.5
Granted		1,807			29.38		87			29.50
Exercised		(1,976	)		19.46		(179	)		25.93				23.7
Cancelled		(677	)		27.63		(22	)		27.78

Outstanding at December 31, 2011		11,237			22.70		511			25.48				86.5
Granted		2,380			27.95		77			27.95
Exercised		(3,330	)		18.28		(160	)		19.99				37.7
Cancelled		(307	)		24.30		(40	)		25.04
Adjustment due to Spin-off		1,430			n/a		62			n/a

Outstanding at December 31, 2012		11,410			22.17		450			24.07				113.8
Granted		711			34.37		3			34.34
Exercised		(2,572	)		21.04		(113	)		24.79				39.0
Cancelled		(156	)		27.77		(4	)		11.90

Outstanding at December 31, 2013		9,393			23.30		336			24.04		6.1 years		132.6
Exercisable at December 31, 2013		6,778			21.00		254			22.91		5.2 years		111.5
Exercisable at December 31, 2012		7,239			19.77		287			22.92		5.4 years		89.7

At December 31, 2013, there was approximately $10 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 one year.

Pre-tax compensation expense for stock options and SARs and the tax benefit associated with this expense for the years ended December 31, 2013, 2012 and 2011 was:


*In millions*	2013		2012		2011
Pre-tax compensation expense for stock options and SARs	$	12	$	14	$	11
Tax benefit associated with the pre-tax compensation expense for stock options and SARs		5		5		5

Total cash received from the exercise of share-based awards in 2013 was $54 million.

Restricted stock units

A restricted stock unit is the right to receive a share of company stock. Employee restricted stock units vest over a three- to five-year period. Awards granted in 2013, 2012 and 2011 consisted of both service-based restricted stock units and performance-based restricted stock units. Under the employee plans, the grantee of the restricted stock units is entitled to receive dividends, but will forfeit the accrued stock and accrued dividends if the individual holder separates from the company during the vesting period or if predetermined goals are not accomplished. The fair value of each 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.

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


*Shares in thousands*	Shares			Average grant date fair market value
Outstanding at December 31, 2010		3,190		$	24.38
Granted		333			28.98
Forfeited		(197	)		24.01
Released		(752	)		26.92
Net adjustment for performance-based units		233			24.15

Outstanding at December 31, 2011		2,807			20.70
Granted		275			28.02
Forfeited		(35	)		18.54
Released		(2,350	)		16.86
Net adjustment for performance-based units		602			21.44
Adjustment due to Spin-off		359			n/a

Outstanding at December 31, 2012		1,658			24.66
Granted		720			34.42
Forfeited		(63	)		30.14
Released		(242	)		21.82
Net adjustment for performance-based units		(843	)		24.62

Outstanding at December 31, 2013		1,230			29.83

At December 31, 2013, there was approximately $15 million of unrecognized pre-tax compensation cost related to non-vested restricted stock units, which is expected to be recognized over a weighted-average period of two years.

Pre-tax compensation expense for restricted stock units and the tax benefit associated with this expense for the years ended December 31, 2013, 2012 and 2011 was:


*In millions*	2013		2012		2011
Pre-tax compensation expense for restricted stock units	$	2	$	13	$	24
Tax benefit associated with the pre-tax compensation expense for restricted stock units		1		5		8

L. 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 and contributory trusteed plans and also provides benefits to employees whose retirement benefits exceed maximum amounts permitted by current tax law under unfunded benefit plans. U.S. 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 plan. Contributions are made to the U.S. funded plans in accordance with ERISA requirements.

The components of net periodic benefit (income) cost for the company’s retirement plans for the years ended December 31, 2013, 2012 and 2011 are presented below.


	Years ended December 31,
*In millions*	2013			2012			2011
Service cost-benefits earned during the period	$	40		$	43		$	42
Interest cost on projected benefit obligation		122			132			145
Expected return on plan assets		(289	)		(293	)		(285	)
Amortization of prior service cost		3			2			1
Amortization of net actuarial loss		18			49			15
Curtailments ¹		0			(21	)		0
Settlements ²		19			0			10
Termination benefits		2			0			2

Net periodic pension income	$	(85	)	$	(88	)	$	(70	)

Net periodic pension income – continuing operations	$	(85	)	$	(69	)	$	(82	)

¹	For the year ended December 31, 2012, the company recorded within discontinued operations a curtailment gain pursuant to the spin-off of the company’s C&OP business and subsequent merger of that business with ACCO Brands Corporation on May 1, 2012.

²	For the year ended December 31, 2013, the company recorded a settlement pursuant to the 2013 lump sum window program offered to vested terminated employees.

³	For the year ended December 31, 2011, the company recorded within discontinued operations a settlement pursuant to the 2010 sale of the company’s Media and Entertainment Packaging business.

The pre-tax components of other changes in plan assets and benefit obligations recognized in other comprehensive income (loss):


	2013			2012
Net actuarial gain	$	(87	)	$	(150	)
Prior service cost		0			3
Amortization of net actuarial loss		(18	)		(49	)
Amortization of prior service cost		(3	)		(2	)
Curtailments		0			21
Settlements		(19	)		0

Total pre-tax (gain) loss recognized in other comprehensive income (loss)	$	(127	)	$	(177	)

Total pre-tax (gain) loss recognized in net periodic pension income and other comprehensive income (loss)	$	(212	)	$	(265	)

Actuarial gains and losses and prior service cost (benefit) subject to amortization are amortized on a straight-line basis over the average remaining service, which is about 11 years for the salaried and bargained hourly plans, and over the average remaining life expectancy of the plan participants of the envelope salaried plan which is about 21 years. The Envelope Products salaried plan was retained by the company post sale of the Envelope Products business. The estimated pre-tax net actuarial loss and prior service cost for the defined benefit retirement plans that will be amortized from accumulated other comprehensive income (loss) into net periodic pension income in 2014 is $4 million and $3 million, respectively.

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.

The components of net postretirement benefits cost (income) for the years ended December 31, 2013, 2012 and 2011 are presented below.


	Years ended December 31,
*In millions*	2013			2012			2011
Service cost-benefits earned during the period	$	3		$	3		$	6
Interest cost		5			5			13
Amortization of net actuarial (gain) loss		1			0			(1	)
Amortization of prior service benefit		(1	)		(2	)		(2	)
Curtailments ¹		0			(13	)		0

Net periodic postretirement benefits (income) cost	$	8		$	(7	)	$	16

¹	For the year ended December 31, 2012, the company recorded within discontinued operations a curtailment gain pursuant to the spin-off of the company’s C&OP business and subsequent merger of that business with ACCO Brands Corporation on May 1, 2012.

The pre-tax components of other changes in plan assets and benefit obligations recognized in other comprehensive income (loss):


	2013			2012
Net actuarial (gain) loss	$	(10	)	$	11
Amortization of net actuarial gain (loss)		(1	)		0
Amortization of prior service benefit		1			2
Curtailments		0			11

Total pre-tax loss recognized in other comprehensive income (loss)	$	(10	)	$	24

Total pre-tax loss recognized in net periodic postretirement benefits cost and other comprehensive income (loss):	$	(2	)	$	17

Actuarial gains and losses and prior service cost subject to amortization are amortized over the average remaining service period, which is about 5 years. The pre-tax net actuarial loss and prior service benefit for the postretirement plans that will be amortized from accumulated other comprehensive income (loss) into net periodic postretirement benefits (income) cost are estimated to be $0 million and $0.5 million in 2014.

The following table also sets forth the funded status of the plans and amounts recognized in the consolidated balance sheets at December 31, 2013 and 2012, based on a measurement date of December 31 for each period.

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*	2013			2012			2013			2012			2013			2012
Change in benefit obligation:
Benefit obligation at beginning of year	$	3,030		$	3,004		$	214		$	193		$	125		$	122
Service cost		35			38			5			5			3			3
Interest cost		114			124			8			8			5			5
Net actuarial (gains) losses		(200	)		53			(4	)		15			(11	)		11
Foreign currency exchange rate changes		0			0			2			2			(2	)		(2	)
Employee contributions		0			0			0			0			9			9
Termination benefit costs		2			0			0			0			0			0
Curtailments		0			(7	)		0			0			0			(2	)
Settlements		0			0			0			0			0			0
Benefits paid (including termination benefits)		(576	)		(182	)		(12	)		(9	)		(17	)		(21	)

Benefit obligation at end of year	$	2,405		$	3,030		$	213		$	214		$	112		$	125

Change in plan assets:
Fair value of plan assets at beginning of year	$	4,284		$	3,967		$	34		$	30		$	0		$	0
Actual return on plan assets		170			499			2			1			0			0
Company contributions		0			0			11			10			8			12
Foreign currency exchange rate changes		0			0			1			2			0			0
Employee contributions		0			0			0			0			9			9
Settlements		0			0			0			0			0			0
Benefits paid (including termination benefits)		(576	)		(182	)		(12	)		(9	)		(17	)		(21	)

Fair value of plan assets at end of year	$	3,878		$	4,284		$	36		$	34		$	0		$	0

Over (under) funded status at end of year	$	1,473		$	1,254		$	(177	)	$	(180	)	$	(112	)	$	(125	)
Amounts recognized in the balance sheet consist of:
Noncurrent assets – prepaid asset	$	1,473		$	1,254		$	2		$	4		$	0		$	0
Current liabilities		0			0			(9	)		(7	)		(10	)		(11	)
Noncurrent liabilities		0			0			(170	)		(177	)		(102	)		(114	)

Total net asset (liability)	$	1,473		$	1,254		$	(177	)	$	(180	)	$	(112	)	$	(125	)

Amounts recognized in accumulated other comprehensive loss (pre-tax) consist of:
Net actuarial loss (gain)	$	128		$	241		$	59		$	70		$	(4	)	$	8
Prior service cost (benefit)		14			18			(2	)		(3	)		(8	)		(10	)

Total loss (gain) recognized in accumulated other comprehensive loss	$	142		$	259		$	57		$	67		$	(12	)	$	(2	)

The accumulated benefit obligation for all defined benefit plans was $2.58 billion and $3.20 billion at December 31, 2013 and 2012, respectively.

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


*In millions*	2013		2012
Projected benefit obligation	$	178	$	185
Accumulated benefit obligation		171		173
Fair value of plan assets		0		0

Assumptions

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


	2013			2012
Retirement benefits:
Discount rate		4.87	%		4.10	%
Rate of compensation increase		2.51	%		2.01	%
Postretirement benefits:
Discount rate		5.50	%		4.62	%
Healthcare cost increase		8.76	%		8.77	%
Prescription drug cost increase		7.21	%		6.39	%

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


	Years ended December 31,
	2013			2012			2011
Retirement benefits:
Discount rate		4.40	%		4.27	%		5.25	%
Rate of compensation increase		2.01	%		2.51	%		3.49	%
Expected return on plan assets		7.87	%		7.98	%		7.96	%
Postretirement benefits:
Discount rate		4.62	%		4.64	%		4.87	%
Healthcare cost increase		8.77	%		7.57	%		7.51	%
Prescription drug cost increase		6.39	%		8.01	%		8.00	%

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 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 for 2013 and 2012 by referencing the Aon Hewitt Aa Only Above Median Curve and for 2011 by referencing the Citigroup Pension Discount Curve. The company believes that using a yield curve approach most 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.

The annual rate of increase in U.S. healthcare and prescription drug costs is assumed to decline ratably each year until reaching 5% in 2023 and thereafter. The effect of a 1% increase in the assumed combined cost trend rate would increase the December 31, 2013 accumulated postretirement benefit obligation by $5 million and total service and interest cost for 2013 by $0.3 million. The effect of a 1% decrease in the assumed healthcare cost trend rate would decrease the December 31, 2013 accumulated postretirement benefit obligation by $4 million and total service and interest cost for 2013 by $0.3 million.

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 $23 million, $23 million and $19 million for the years ended December 31, 2013, 2012 and 2011, respectively.

Retirement plan assets

The MeadWestvaco U.S. retirement plan asset allocation at December 31, 2013 and 2012, long-term target allocation, and expected long-term rate of return by asset category are as follows:


	Target			Percentage of plan assets at December 31,						Weighted average expected long- term rate of return
Asset category:	allocation			2013			2012			2013
Equity securities		30	%		32	%		32	%		10.7	%
Debt securities		61	%		61	%		62	%		6.4	%
Real estate and private equity		9	%		7	%		6	%		11.6	%

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. Target asset allocation among asset classes is set through periodic asset/liability studies that emphasize protecting the funded status of the plan.

Portfolio risk and return is evaluated based on capital market assumptions for asset class long-term rates of return, volatility, and correlations. Target allocation to asset classes is set so that target expected asset returns modestly outperform expected liability growth while expected portfolio risk is low enough to make it unlikely that the funded status of the plan will drop below 100%. The asset allocation is dynamic such that target allocations to riskier asset classes are reduced if funded status changes dramatically. Active management of assets is used in asset classes and strategies where there is the potential to add value over a benchmark. The equity class of securities is expected to provide the long-term growth necessary to cover the growth of the plans’ obligations.

Equity market risk is the most concentrated type of risk in the trust which has significant investments in common stock and in collective trusts with equity exposure. This risk is mitigated by maintaining diversification in geography and market capitalization. Investment manager guidelines limit the amount that can be invested in any one security. None of the trust’s equity portfolio is hedged against equity market risk. The policy also allows allocation of funds to other asset classes that serve to enhance long-term, risk-adjusted return expectations.

Liquidity risk is present in the trust’s investments in partnerships/joint ventures, real estate, registered investment companies, and 103-12 investment entities. The policy limits target allocations to these asset classes to 12.7%.

Concentrated interest rate risk, credit spread risk, and inflation risk are present in the trust’s investments in government securities, corporate debt instruments, and common collective trusts. These investment risks are meant to offset the risks in the plan liabilities. Long-duration fixed income securities and interest rate swaps are used to better match the interest rate sensitivity of plan assets and liabilities. The portfolio’s interest rate risk is hedged at approximately 100% of the value of the plans’ accumulated benefit obligation. Treasury inflation protected securities are used to better match inflation risk of plan assets and liabilities. Corporate debt instruments mitigate the credit risk in the discount rate used to value the plan 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.

Funding of plans and payments of benefits

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 contributions. However, the company expects to contribute $2 million to the funded non-U.S. pension plans in 2014.

The company expects to pay $19 million in benefits to participants of the nonqualified and unfunded non-U.S. retirement and postretirement plans in 2014. The table below presents estimated future benefit payments, substantially all of which are expected to be funded from plan assets.


*In millions*	Retirement Benefits		Postretirement benefits before Medicare Part D subsidy		Medicare Part D subsidy
2014	$	179	$	10	$	0.3
2015		175		10		0.3
2016		177		10		0.3
2017		176		10		0.3
2018		178		10		0.3
2019 – 2023		917		45		1.0

Postemployment benefits

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

M. Restructuring charges

During 2013 and 2012, the company initiated certain restructuring actions related to its Brazilian, European and domestic operations. Restructuring charges incurred during 2013 and 2012 were primarily pursuant to these actions. During 2008, the company commenced a series of broad cost reduction actions to lower overhead costs and close or restructure certain manufacturing locations. Restructuring charges incurred during 2011 were pursuant to these programs. Cumulative charges included in the results from continuing operations through December 31, 2013 since the inceptions of these programs were $281 million for the 2008 program and $60 million for the 2013 program. Although these charges related to individual segments, such amounts are included in Corporate and Other for segment reporting purposes.

Restructuring charges attributable to individual segments and by nature of cost, as well as cost of sales (“COS”) and selling, general and administrative expenses (“SG&A”) classification in the consolidated statements of operations for the years ended December 31, 2013, 2012 and 2011 are presented below.

Year ended December 31, 2013


*In millions*	Employee-related costs						Asset write-downs and other costs						Total
*In millions*	COS		SG&A		Total		COS		SG&A		Total		COS		SG&A		Total
Food & Beverage	$	1	$	5	$	6	$	1	$	0	$	1	$	2	$	5	$	7
Home, Health & Beauty		7		1		8		13		0		13		20		1		21
Industrial		1		1		2		4		0		4		5		1		6
Specialty Chemicals		0		0		0		6		0		6		6		0		6
All other		0		4		4		0		1		1		0		5		5

Total charges	$	9	$	11	$	20	$	24	$	1	$	25	$	33	$	12	$	45

Year ended December 31, 2012


*In millions*	Employee-related costs						Asset write-downs and other costs						Total
*In millions*	COS		SG&A		Total		COS		SG&A		Total		COS		SG&A		Total
Food & Beverage	$	0	$	2	$	2	$	0	$	0	$	0	$	0	$	2	$	2
Home, Health & Beauty		6		1		7		2		0		2		8		1		9
Industrial		9		0		9		2		0		2		11		0		11
All other		0		3		3		0		1		1		0		4		4

Total charges	$	15	$	6	$	21	$	4	$	1	$	5	$	19	$	7	$	26

Year ended December 31, 2011


*In millions*	Employee-related costs						Asset write-downs and other costs						Total
*In millions*	COS		SG&A		Total		COS		SG&A		Total		COS		SG&A		Total
Food & Beverage	$	5	$	3	$	8	$	3	$	0	$	3	$	8	$	3	$	11
Home, Health & Beauty		3		1		4		0		0		0		3		1		4
Industrial		0		1		1		0		0		0		0		1		1
All other ⁽¹⁾		0		6		6		1		7		8		1		13		14

Total charges	$	8	$	11	$	19	$	4	$	7	$	11	$	12	$	18	$	30

⁽¹⁾	Includes $7 million related to employee relocation costs.

Summary of restructuring accruals

The activity in the accrued restructuring balances was as follows for the year ended December 31, 2010 to the year ended December 31, 2013:


*In millions*	Employee Costs									Other Costs									Total
*In millions*	2008 program			Other actions			Total			2008 program			Other actions			Total			2008 program			Other actions			Total
Balance at December 31, 2010	$	31		$	0		$	31		$	4		$	0		$	4		$	35		$	0		$	35
Current charges		19			0			19			6			0			6			25			0			25
Payments		(32	)		(0	)		(32	)		(7	)		(0	)		(7	)		(39	)		(0	)		(39	)

Balance at December 31, 2011		18			0			18			3			0			3			21			0			21
Current charges		6			15			21			1			0			1			7			15			22
Payments		(6	)		(7	)		(13	)		(4	)		(0	)		(4	)		(10	)		(7	)		(17	)

Balance at December 31, 2012		18			8			26			0			0			0			18			8			26
Current charges		5			15			20			0			0			0			5			15			20
Payments		(4	)		(11	)		(15	)		0			0			0			(4	)		(11	)		(15	)

Balance at December 31, 2013	$	19		$	12		$	31		$	0		$	0		$	0		$	19		$	12		$	31

N. Other income, net

Components of other income, net are as follows:


	Years ended December 31,
*In millions*	2013			2012			2011
Interest income	$	14		$	11		$	23
Equity investment gain		0			0			10
Foreign currency exchange (losses) gains		(4	)		(5	)		2
Transition services		1			10			4
Alternative fuel mixture credits ¹		24			(15	)		0
Insurance settlements		14			0			0
Other, net		10			13			(11	)

	$	59		$	14		$	28

O. Income taxes

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


	Years ended December 31,
*In millions*	2013		2012		2011
U.S. earnings	$	109	$	95	$	98
Foreign earnings		113		115		153

	$	222	$	210	$	251

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


	Years ended December 31,
*In millions*	2013			2012			2011
Current:
U.S. federal	$	(127	)	$	12		$	5
State and local		(1	)		2			2
Foreign		23			52			52

		(105	)		66			59
Deferred:
U.S. federal		15			(1	)		19
State and local		(13	)		(2	)		(1	)
Foreign		6			(9	)		(7	)

Provision for deferred income taxes		8			(12	)		11
Income tax (benefit) provision attributable to continuing operations	$	(97	)	$	54		$	70

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


	Years ended December 31,
*In millions*	2013			2012			2011
Income tax provision computed at the U.S. federal statutory rate of 35%	$	78		$	74		$	88
State and local income taxes, net of federal benefit		(2	)		3			(1	)
Foreign income tax rate differential and other items		(5	)		(19	)		(25	)
Valuation allowances		0			1			1
Credits		(11	)		(18	)		(1	)
Tax charge related to Brazilian tax audit		(6	)		24			23
Settlements of tax audits – AFMC		(142	)		0			0
Other		(9	)		(11	)		(15	)

Income tax provision attributable to continuing operations	$	(97	)	$	54		$	70

Effective tax rate attributable to continuing operations		(44	%)		26	%		28	%

The current and non-current deferred tax assets and liabilities are as follows:


	December 31,
*In millions*	2013			2012
Deferred tax assets:
Employee benefits	$	110		$	116
Postretirement benefit accrual		90			84
Other accruals and reserves		61			40
Net operating loss carry-forwards		143			144
Credit carry-forwards		124			5
Other		20			21

Total deferred tax assets		548			410
Valuation allowances		(42	)		(46	)

Net deferred tax assets		506			364

Deferred tax liabilities:
Depreciation and depletion		(661	)		(666	)
Basis difference in restricted assets held by special purpose entities		(442	)		(134	)
Nontaxable pension asset		(564	)		(470	)
Amortization of identifiable intangibles		(65	)		(72	)
Other		(48	)		(5	)

Total deferred tax liabilities		(1,780	)		(1,347	)

Net deferred liability	$	(1,274	)	$	(983	)

Included in the balance sheet:
Current assets - deferred tax asset	$	33		$	25
Other assets - noncurrent deferred tax asset		43			39
Accrued expenses – current deferred tax liability		(2	)		(1	)
Noncurrent deferred tax liability		(1,348	)		(1,046	)

Net deferred liability	$	(1,274	)	$	(983	)

The company has U.S. federal, state and foreign tax net operating loss carry-forwards which are available to reduce future taxable income in U.S. federal and 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, 2013 and 2012 there were no deferred income taxes provided for the company’s share of undistributed net earnings of foreign operations.

The cumulative undistributed earnings, including foreign currency translation adjustments, totaled $1.47 billion and $1.59 billion for the years ended December 31, 2013 and 2012, respectively. Management’s intent is to reinvest such amounts indefinitely. The determination of the amount of such unrecognized tax liability is not practical.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows for the years ended December 31, 2013, 2012 and 2011:


*In millions*
Balance at December 31, 2010	$	301
Additions based on tax positions related to the current year		11
Additions for tax positions of prior years		6
Reductions for tax positions of prior years		(4	)
Reductions for tax positions due to lapse of statute		(1	)
Settlements		(36	)
Foreign currency translation		(9	)

Balance at December 31, 2011		268
Additions based on tax positions related to the current year		11
Additions for tax positions of prior years		15
Reductions for tax positions of prior years		(17	)
Reductions for tax positions due to lapse of statute		(2	)
Settlements		(10	)
Foreign currency translation		(6	)

Balance at December 31, 2012		259
Additions based on tax positions related to the current year		1
Additions for tax positions of prior years		2
Reductions for tax positions of prior years		(155	)
Reductions for tax positions due to lapse of statute		(1	)
Settlements		(2	)
Foreign currency translation		(9	)

Balance at December 31, 2013	$	95

The company has operations in many areas of the world and is subject, at times, to tax audits in these jurisdictions. These tax 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 2004. 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 $95 million liability for unrecognized tax benefits at December 31, 2013, $85 million could impact the company’s 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 effective tax rate.

In 2009, the company registered as an alternative fuel mixer and claimed refundable tax credits from the Internal Revenue Service (“IRS”) for the alternative fuel utilized at its domestic mills. At that time, income tax reserves were established related to these credits. The company has completed the audit with the IRS for tax years 2009 and 2010, which was approved by the Joint Committee of Taxation in December 2013, resulting in the release of these tax reserves, including interest, totaling $142 million. It is anticipated that audits in certain foreign jurisdictions and certain domestic states will be completed in 2014. Based on the resolution of the various audits mentioned above, it is reasonably possible that the balance of unrecognized tax benefits may be reduced by $1 million to $76 million during 2014.

The company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense in the consolidated statements of operations. During the year ended December 31, 2013, the company recognized a benefit of $9 million related to interest and penalties. During the years ended December 31, 2012 and 2011, the company recognized expense related to interest and penalties totaling $20 million and $14 million, respectively. The company accrued $89 million and $101 million for the payment of interest and penalties at December 31, 2013 and 2012, respectively.

Approximately $53 million and $63 million of deferred income tax expense was provided in components of other comprehensive income during the years ended December 31, 2013 and 2012, respectively. Approximately $11 million and $19 million of current income tax benefit was provided in components of additional paid in capital during the year ended December 31, 2013 and 2012, respectively.

P. Environmental and legal matters

The company has been notified by the U.S. Environmental Protection Agency 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, 2013, MeadWestvaco had recorded liabilities of approximately $4 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 $3 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.

Q. Acquisitions

On December 11, 2012, the company acquired the remaining 50% interest in a Brazilian company specializing in rubber emulsifiers, adhesive resins and lubricants. The purchase price of this acquisition was $8 million. In addition, the company assumed debt of $6 million that was repaid prior to December 31, 2012. The total purchase price was allocated based on the fair values of the assets acquired and liabilities assumed including identifiable intangible assets totaling $1 million that are being amortized over a period of 3 years and goodwill of $4 million. The results of operations from the date of this acquisition are included in the Specialty Chemicals segment. This acquisition did not have a material effect on the company’s consolidated financial statements and as such, pro forma results for this acquisition are not presented.

On November 30, 2012, the company acquired a corrugated paperboard manufacturer located in India. The purchase price of this acquisition was $94 million. The total purchase price was allocated based on the fair values of the assets acquired and liabilities assumed including identifiable intangible assets totaling $9 million that are being amortized over a period of 2 to 5 years and goodwill of $46 million. The results of operations from the date of this acquisition are included in the Industrial segment. This acquisition did not have a material effect on the company’s consolidated financial statements and as such, pro forma results for this acquisition are not presented.

On December 30, 2011, the company acquired a dispensing caps and closures manufacturer serving the food, home and garden, and beauty and personal care packaging markets. The company will extend these dispensing closure solutions across its global packaging platform. The purchase price of this acquisition was $71 million. The total purchase price was allocated based on the fair values of the assets acquired and liabilities assumed including identifiable intangible assets totaling $19 million that are being amortized over a period of 3 to 15 years and goodwill of $30 million. The results of operations from the date of this acquisition are included in the Food & Beverage and Home, Health & Beauty segments. This acquisition did not have a material effect on the company’s consolidated financial statements and as such, pro forma results for this acquisition are not presented.

R. Special purpose entities

Pursuant to the sale of the company’s remaining U.S. forestlands which occurred on December 6, 2013, the company received an installment note in the amount of $860 million (the “Installment Note”). The Installment Note does not require any principal payments until its maturity in December 2023 and bears interest at a fixed rate of 5.207%. Using the Installment Note as collateral, the company received $774 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 the company and shall be paid from the Installment Note proceeds upon its maturity. As a result, the Installment Note is not available to satisfy the obligations of the company. The non-recourse liability does not require any principal payments until its maturity in December 2023 and bears interest at a fixed rate of 5.425%. As of December 31, 2013 the Installment Note of $860 million is included within restricted assets held by special purpose entities and the secured financing liability of $774 million is included within liabilities held by special purpose entities. Both the Installment Note and the secured financing liability are included within a special purpose entity which is consolidated by the company.

Pursuant to the sale of certain large-tract forestlands in 2007, 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 the London

Interbank Offered Rate (“LIBOR”). In addition, the Timber Note is supported by a bank-issued irrevocable letter of credit 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. As of December 31, 2013 and 2012 the Timber Note of $398 million is included within restricted assets held by special purpose entities and the secured financing liability of $338 million is included within liabilities held by special purpose entities. Both the Timber Note and the secured financing liability are included within a special purpose entity which is consolidated by the company.

S. Discontinued operations

On December 6, 2013, the company completed the sale of its U.S. forestlands and related assets to Plum Creek, resulting in the recognition of a pre-tax gain of $780 million presented within discontinued operations on an after-tax basis. The company received total consideration of $934 million, of which approximately $74 million was paid in cash and $860 million was in the form of a ten-year term installment note. Using the installment note as collateral, the company received $774 million in proceeds under a non-recourse secured financing agreement with a bank on December 20, 2013. The results of the forestry and certain minerals-related businesses, as well as the gain, are reported in discontinued operations in the consolidated financial statements. These businesses were previously reported within the Community Development and Land Management segment.

On May 1, 2012, MeadWestvaco completed the spin-off of its C&OP business and subsequent merger of that business with ACCO Brands Corporation. MeadWestvaco shareholders received approximately one share of ACCO Brands Corporation stock for every three shares of MeadWestvaco stock they owned of record as of April 24, 2012, resulting in their collective ownership on May 1, 2012 of 50.5% of the outstanding common shares of ACCO Brands Corporation. In accordance with the terms of the transaction, MeadWestvaco received cash distributions on a tax-free basis totaling $460 million during April 2012 pursuant to loan proceeds from new debt obligations of the C&OP business. The net assets of the C&OP business included cash totaling $59 million pursuant to MeadWestvaco satisfying a working capital provision of the transaction, subject to certain post-closing adjustments. For the years ended December 31, 2012, 2011 and 2010, the operating results of the C&OP business are reported in discontinued operations in the consolidated statements of operations on an after-tax basis. The assets and liabilities of the C&OP business, including the debt obligations discussed above, were recorded as a dividend to MeadWestvaco’s shareholders and resulted in a $15 million decrease to consolidated shareholders’ equity as of May 1, 2012.

On February 1, 2011, the company completed the sale of its Envelope Products business for cash proceeds of $55 million. During 2010, the company recorded pre-tax charges of $19 million ($15 million after taxes) comprised of impairment of long-lived assets of $6 million, impairment of allocated goodwill of $7 million and a pension curtailment loss of $6 million. During 2011, the company recorded additional charges of $1 million ($1 million after taxes) primarily related to a working capital adjustment. The combined pre-tax charges recorded in 2010 and 2011 sum to $20 million ($16 million after taxes) and represent the total amount of loss on sale of the Envelope Products business. The operating results of this business, as well as the charges noted above, are reported in discontinued operations in the consolidated statements of operations on an after-tax basis. The results of operations and assets and liabilities of the Envelope Products business were previously included in the C&OP segment.

Below are amounts attributed to the above dispositions included in discontinued operations in the consolidated statements of operations.


	Year ended December 31,
In millions, except per share amounts	2013			2012			2011
Net sales	$	154		$	307		$	900
Cost of sales		60			141			570
Selling, general and administrative expenses		18			61			160
Interest expense		2			8			20
Other income, net		(798	)		(3	)		(3	)

Income before income taxes		872			100			153
Income tax provision		353			48			84

Net income	$	519		$	52		$	69

Net income per share
Basic	$	2.93		$	0.30		$	0.41
Diluted	$	2.88		$	0.29		$	0.40

There were no assets and liabilities classified as discontinued operations in the consolidated balance sheet at December 31, 2013. The following table shows the major categories of assets and liabilities that are classified as discontinued operations in the consolidated balance sheet at December 31, 2012:


*In millions*	December 31, 2012
Accounts receivable, net	$	2
Inventories		0
Other current assets		0

Current assets		2
Property, plant, equipment and forestlands, net		147
Goodwill		0
Other assets		0

Non-current assets		147
Accounts payable		2
Accrued expenses		3
Notes payable and current maturities of long-term debt		0

Current liabilities		5
Other long-term liabilities		3

In connection with certain business dispositions, MeadWestvaco has provided certain guarantees and indemnities to the respective buyers and other parties. These obligations include both potential environmental matters as well as certain contracts with third parties. The total aggregate exposure to the company for these matters could be up to $40 million. The company has evaluated the fair value of these guarantees and indemnifications which did not result in a material impact to the company’s consolidated financial statements.

T. Cash flow

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


	Years ended December 31,
*In millions*	2013			2012			2011
(Increase) decrease in:
Receivables	$	(35	)	$	(9	)	$	(40	)
Inventories		(28	)		(71	)		(35	)
Prepaid expenses		30			(48	)		5
Increase (decrease) in:
Accounts payable and accrued expenses		(65	)		(60	)		5
Income taxes payable		16			10			47

	$	(82	)	$	(178	)	$	(18	)


	Years ended December 31,
*In millions*	2013			2012			2011
Cash paid for:
Interest	$	154		$	155		$	146
Less capitalized interest		(24	)		(27	)		(11	)

Interest paid, net	$	130		$	128		$	135

Income tax paid, net	$	27		$	56		$	61

U. Segment information

MWV’s segments are (i) Food & Beverage, (ii) Home, Health & Beauty, (iii) Industrial, (iv) Specialty Chemicals, and (v) Community Development and Land Management.

The Home, Health & Beauty segment designs and produces packaging solutions for the global personal care, fragrance, home care, lawn and garden, prescription drug and healthcare end markets. For the global beauty and personal care market, the segment produces pumps for fragrances, lotions, creams and soaps, flip-top and applicator closures for bath and body products and lotions, and paperboard and plastic packaging for hair and skin care products. For the global home and garden market, the segment produces trigger sprayers for surface cleaners and fabric care, aerosol actuators for air fresheners, hose-end sprayers for lawn and garden maintenance, and spouted and applicator closures for a variety of other home and garden products. For the global healthcare market, the segment produces secondary packages designed to enhance patient adherence for prescription drugs, as well as healthcare dispensing systems, paperboard packaging and closures for over-the-counter and prescription drugs. Paperboard and plastic materials are converted into packaging solutions at plants located in North America, South America, Europe and Asia.

Corporate and Other includes expenses associated with corporate support staff services, as well as income and expense items not directly associated with ongoing segment operations, such as alternative fuel mixture credits, restructuring charges, pension income and curtailment gains and losses, interest expense and income, non-controlling interest income and losses, certain legal settlements, gains and losses on certain asset sales and other items.

The segments are measured on operating profits before restructuring charges, interest expense and income, minority interest income and losses and income taxes. 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 other than Brazil accounted for 10% or more of consolidated trade sales or assets in the periods presented. The below table reflects amounts on a continuing operations basis.


	Years ended December 31,
*In millions*	2013		2012		2011
Net sales ¹
U.S. ²	$	3,536	$	3,547	$	3,358
Brazil		548		497		554
Other non-U.S.		1,305		1,243		1,267

Net sales	$	5,389	$	5,287	$	5,179

Long-lived assets, net
U.S.	$	4,287	$	3,933	$	3,517
Brazil		656		750		593
Other non-U.S.		568		552		498

Long-lived assets	$	5,511	$	5,235	$	4,608

¹	Net sales are attributed to countries based on location of the seller.

²	Export sales from the U.S. were $990 million, $919 million, and $905 million for the years ended December 31, 2013, 2012, and 2011, respectively.

Financial information by segment and Corporate and Other follows:


*In millions*	External sales		Inter- segment sales		Total segment sales		Segment profit (loss)			Depreciation, depletion and amortization		Segment assets		Capital expenditures
Year ended December 31, 2013
Food & Beverage	$	3,099	$	7	$	3,106	$	239		$	217	$	2,831	$	293
Home, Health & Beauty ³		743		0		743		21			69		855		63
Industrial		547		1		548		65			40		882		70
Specialty Chemicals		980		0		980		229			33		555		60
Community Development and Land Management		20		0		20		(14	)		1		271		3

Total	$	5,389	$	8	$	5,397		540			360		5,394		489

Corporate and Other								(317	)		30		4,891		17
Assets of discontinued operations								0			—		0		—
Non-controlling interests								(1	)		—		—		—
Inter-segment eliminations								0			—		—		—

Consolidated totals ²							$	222		$	390	$	10,285	$	506

Year ended December 31, 2012
Food & Beverage	$	3,103	$	2	$	3,105	$	309		$	222	$	2,859	$	275
Home, Health & Beauty		770		0		770		35			68		844		47
Industrial		457		0		457		49			24		957		271
Specialty Chemicals		939		1		940		224			33		506		38
Community Development and Land Management		18		0		18		(13	)		4		213		1

Total	$	5,287	$	3	$	5,290		604			351		5,379		632

Corporate and Other								(397	)		15		3,380		22
Assets of discontinued operations ¹								0			—		149		—
Non-controlling interests								3			—		—		—
Inter-segment eliminations								0			—		—		—

Consolidated totals ²							$	210		$	366	$	8,908	$	654

Year ended December 31, 2011
Food & Beverage	$	3,076	$	2	$	3,078	$	312		$	218	$	2,717	$	223
Home, Health & Beauty		766		0		766		34			68		816		51
Industrial		507		0		507		80			22		716		311
Specialty Chemicals		811		0		811		203			29		459		29
Community Development and Land Management		19		0		19		(1	)		4		204		3

Total	$	5,179	$	2	$	5,181		628			341		4,912		617

Corporate and Other								(381	)		20		3,021		35
Assets of discontinued operations ¹								0			—		877		—
Non-controlling interests								4			—		—		—
Inter-segment eliminations								0			—		—		—

Consolidated totals ²							$	251		$	361	$	8,810	$	652

¹	Assets of discontinued operations at December 31, 2012 and December 31, 2011 represent the U.S. forestlands sold in 2013 and assets of the C&OP business. See Notes R and S for further discussion.

²	Consolidated totals represent results from continuing operations, except as otherwise noted.

³	Segment profit for the Home, Health & Beauty segment includes a charge for $3 million related to certain depreciation adjustments. The aforementioned charge was attributable to periods prior to 2013 and is deemed immaterial to the segment’s results for the current and prior periods.

V. Selected quarterly information

The below information is unaudited.


	Years ended December 31,
*In millions, except per share data*	2013 ¹		2012 ²
Sales:
First	$	1,311	$	1,272
Second		1,390		1,369
Third		1,378		1,367
Fourth		1,310		1,279

Year	$	5,389	$	5,287

Gross profit:
First	$	196	$	255
Second		236		291
Third		284		285
Fourth		244		199

Year	$	960	$	1,030

Net income attributable to the company:
First	$	11	$	49
Second		71		88
Third		80		51
Fourth		677		17

Year	$	839	$	205

Net income attributable to the company per diluted share:
First	$	0.06	$	0.28
Second		0.39		0.50
Third		0.44		0.28
Fourth		3.77		0.10

First quarter 2013 results include after-tax restructuring charges of $18 million, or $0.10 per share, and after-tax income from discontinued operations of $13 million, or $0.07 per share. First quarter of 2013 results also include after-tax income of $3 million pursuant to certain value added tax matters related to the fourth quarter of 2012. The aforementioned adjustment attributable to periods prior to the first quarter of 2013 is deemed immaterial to the company’s consolidated financial statements for all periods. Second quarter 2013 results include after-tax restructuring charges of $4 million, or $0.02 per share, pension settlement charge of $11 million, or $0.06 per share and after-tax income from discontinued operations of $19 million or $0.11 per share. Second quarter of 2013 results also include after-tax charges of $6 million primarily related to the write-offs of inventories overstated in the fourth quarter of 2012 (after-tax charge of $1 million) and first quarter of 2013 (after-tax charge of $5 million). The aforementioned adjustment attributable to periods prior to the first quarter of 2013 is deemed immaterial to the company’s consolidated financial statements for all periods. Third quarter 2013 results include after-tax restructuring charges of $3 million, or $0.02 per share, Brazil tax adjustment of $2 million, or $0.01 per share and after-tax income from discontinued operations of $19 million, or $0.10 per share. Fourth quarter 2013 results include after-tax restructuring charges of $5 million, or $0.03 per share, pension settlement charge of $1 million, or $.01 per share, CDLM transaction costs of $2 million, or $.01 per share, AFMC income of $165 million, or $0.92 per share and after-tax income from discontinued operations of $468 million, or $2.61 per share. Fourth quarter of 2013 results include after-tax charges of $2 million related to depreciation adjustments associated with an acquisition that occurred in 2006. The aforementioned adjustment attributable to periods prior to 2013 is deemed immaterial to the company’s consolidated financial statements for all periods.

First quarter 2012 results include after-tax restructuring charges of $7 million, or $0.04 per share, and after-tax income from discontinued operations of $8 million, or $0.04 per share. Second quarter 2012 results include after-tax restructuring charges of $4 million, or $0.02 per share and after-tax income from discontinued operations of $31 million or $0.18 per share. Third quarter 2012 results include after-tax restructuring charges of $2 million, or $0.01 per share and after-tax loss from discontinued operations of $9 million, or $0.05 per share. In addition, the results for the third quarter of 2012 include adjustments for certain tax items attributable to prior periods primarily associated with events leading to the spin-off of the C&OP business that reduced after-tax income from discontinued operations by $13 million, or $0.07 per share, and increased after-tax income from continuing operations by $5 million, or $0.03 per share. Fourth quarter 2012 results include after-tax restructuring charges of $5 million, or $0.03 per share, and a benefit from cellulosic biofuel producer credits net of exchange of alternative fuel mixture credits of $9 million, or $0.06 per share and after tax income from discontinued operations of $22 million, or $.12 per share. In addition, the fourth quarter 2012 results include income of $6 million before taxes ($4 million after taxes or $0.02 per share) related to value added taxes in Brazil that were attributable to a period prior to the fourth quarter of 2012.

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 (1992) 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 (1992), issued by the COSO, management has concluded that the company maintained effective internal control over financial reporting as of December 31, 2013. In addition, the effectiveness of the company’s internal control over financial reporting as of December 31, 2013 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears in Part II, Item 8.

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 and operating to the reasonable assurance level, as of December 31, 2013, 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, 2013, 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 2014 Proxy Statement, pursuant to Regulation 14A under the sections captioned “Nominees for Election as Directors,” “Section 16(a) Beneficial Ownership Reporting Compliance,” and “Board Committees,” to be filed with the SEC on or around March 26, 2014, and is incorporated herein by reference. Portions of the information required by this item for MeadWestvaco’s code of conduct and executive officers are also contained in Part I of this report under the captions “Available information” and “Executive officers of the registrant,” respectively,

Item 11. Executive compensation

Information required by this item will be contained in MeadWestvaco’s 2014 Proxy Statement, pursuant to Regulation 14A under the sections captioned “Executive Compensation,” “Compensation Discussion and Analysis,” and “Director Compensation,” to be filed with the SEC on or around March 26, 2014, 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 2014 Proxy Statement, pursuant to Regulation 14A under the sections captioned “Equity Compensation Plan Information,” “Ownership of Directors and Executive Officers,” and “Ownership of Certain Beneficial Owners,” to be filed with the SEC on or around March 26, 2014, and is incorporated herein by reference.

Item 13. Certain relationships and related transactions, and director independence

Information required by this item will be contained in MeadWestvaco’s 2014 Proxy Statement, pursuant to Regulation 14A under the section captioned “Board Committees,” to be filed with the SEC on or around March 26, 2014, and is incorporated herein by reference.

Item 14. Principal accounting fees and services

Information required by this item will be contained in MeadWestvaco’s 2014 Proxy Statement, pursuant to Regulation 14A under the section captioned “Report of the Audit Committee of the Board of Directors,” to be filed with the SEC on or around March 26, 2014, and is incorporated herein by reference.

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, 2008, and incorporated herein by reference.

3.2*		Bylaws of the Registrant as amended November 12, 2013, as disclosed in the company’s Form 8-K filed on November 13, 2013.

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(a) to the company’s Form 8-K on April 2, 2002 (SEC file number 001-31215), 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 (SEC file number 001-03013), and incorporated herein by reference.

4.3		First Supplemental Indenture by and among Westvaco Corporation, the Registrant, The Mead Corporation and The Bank of New York dated January 31, 2002, previously filed as Exhibit 4.1 to the company’s Form 8-K on February 1, 2002 (SEC file number 001-31215), 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 (SEC file number 001-31215), 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, the Registrant, Westvaco 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 (SEC file number 001-31215), and incorporated herein by reference.

4.7		Second Supplemental Indenture between MW Custom Papers, Inc. and Bank One Trust Company, NA dated December 31, 2002, previously filed as Exhibit 4.4 to the company’s Form 8-K on January 7, 2003 (SEC file number 001-31215), and incorporated herein by reference.



4.8		Third Supplemental Indenture between the Registrant and Bank One Trust Company, NA dated December 31, 2002, previously filed as Exhibit 4.5 to the company’s Form 8-K on January 7, 2003 (SEC file number 001-31215), and incorporated herein by reference.

4.12		Form of 7.375% Note due in 2019, previously filed as Exhibit 4.1 to the company’s Form 8-K on August 25, 2009, and incorporated herein by reference.

4.13		$600 million Five-Year Credit Agreement, dated as of January 30, 2012 among the Registrant with a syndicate of commercial banks, including Citibank N.A. as administrative agent, previously filed as Exhibit 99.1 to the company’s Form 8-K on January 30, 2012 and incorporated 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 (SEC file number 001-02267) and Appendix 2 to Mead’s definitive proxy statement for the 2001 Annual Meeting of Shareholders, and incorporated herein by reference.

10.20+		MeadWestvaco Corporation Compensation Plan for Non-Employee Directors as Amended and Restated effective January 1, 2009 except as otherwise provided, previously filed as Exhibit 10.20 to the company’s Annual Report on Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.

10.22+		MeadWestvaco Corporation 2005 Performance Incentive Plan effective April 22, 2005 and as amended February 26, 2007, January 1, 2009, February 28, 2011 and February 25, 2013 previously filed as Exhibit 10.1 to the company’s Form 8-K on April 25, 2013, and incorporated herein by reference.

10.23+		MeadWestvaco Corporation Executive Retirement Plan, as amended and restated effective January 1, 2009 except as otherwise provided, previously filed as Exhibit 10.24 to the company’s Annual Report on Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.

10.24+		MeadWestvaco Corporation Deferred Income Plan Restatement effective January 1, 2007 except as otherwise provided, previously filed as Exhibit 10.25 to the company’s Annual Report on Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.

10.25+		MeadWestvaco Corporation Retirement Restoration Plan effective January 1, 2009, except as otherwise provided, previously filed as Exhibit 10.26 to the company’s Annual Report on Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.

10.26+		MeadWestvaco Corporation Compensation Program for Non-Employee Directors effective April 26, 2010, previously filed as Exhibit 10.27 to the company’s Annual Report on Form 10-K for the year ended December 31, 2009, and incorporated herein by reference.

10.27+		Form of Employment Agreement dated January 1, 2008, for Mark T. Watkins, as previously filed as Exhibit 10.33 to the company’s Annual Report on Form 10-K for the year ended December 31, 2007, and incorporated herein by reference.

10.28+		Form of Employment Agreement dated January 1, 2008, for John A. Luke, Jr., James A. Buzzard, E. Mark Rajkowski and Wendell L. Willkie, II, as previously filed as Exhibit 10.32 to the company’s Annual Report on Form 10-K for the year ended December 31, 2007, and incorporated herein by reference.



10.29+		Amendments to The Mead Corporation Incentive Compensation Election Plan, The Mead Corporation Deferred Compensation Plan for Directors, The Mead Corporation Directors Capital Accumulation Plan, Westvaco Corporation Deferred Compensation Plan, Westvaco Corporation Savings and Investment Restoration Plan, Westvaco Corporation Deferred Compensation Plan for Non-Employee Outside Directors, and Westvaco Corporation Retirement Plan for Outside Directors, previously filed as Exhibit 10.30 to the company’s Annual Report on Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.

10.33+		Summary of MeadWestvaco Corporation 2010 Long-Term Incentive Plan under the 2005 Performance Plan, as amended, previously filed as Exhibit 10.35 to the company’s Quarterly Report on Form 10-Q for the period ended March 21, 2010 and incorporated herein by reference.

10.35+		Stock Option Awards in 2009 – Terms and Conditions, previously filed as Exhibit 10.3 to the company’s Quarterly Report on Form 10-Q for the period ended March 31, 2009, and incorporated herein by reference.

10.36+		Service Based Restricted Stock Unit Awards in 2009 – Terms and Conditions, previously filed as Exhibit 10.4 to the company’s Quarterly Report on Form 10-Q for the period ended March 31, 2009, and incorporated herein by reference.

10.37+		MeadWestvaco Corporation Compensation Program for Non-Employee Directors effective April 22, 2013, previously filed as Exhibit 10.37 to the Company’s Annual Report on Form 10-K for the period ended December 31, 2012, and incorporated herein by reference.

10.39		Rabbi Trust Agreement, dated as of September 29, 2011, among the Registrant and Union Bank, N.A. previously filed as Exhibit 10.2 to the company’s Quarterly Report on Form 10-Q for the period ended September 30, 2011, and incorporated herein by reference.

10.40		Agreement and Plan of Merger, dated as of November 17, 2011 among MeadWestvaco Corporation, Monaco SpinCo Inc., ACCO Brands Corporation and Augusta Acquisition Sub, Inc. previously filed as Exhibit 2.1 to the company’s Form 8-K on November 17, 2011, and incorporated herein by reference.

10.41		Separation Agreement, dated as of November 17, 2011, among MeadWestvaco Corporation and Monaco SpinCo Inc. previously filed as Exhibit 10.1 to the company’s Form 8-K on November 17, 2011, and incorporated herein by reference.

10.43+		Stock Option Awards in 2012 – Terms and Conditions, previously filed as Exhibit 10.43 to the company’s Quarterly Report on Form 10-Q for the period ended June 30, 2012 and incorporated herein by reference.

10.45		Summary of MeadWestvaco Corporation 2013 Annual Incentive Plan under the 2005 Performance Incentive Plan, as amended, previously filed as Exhibit 10.45 to the company’s Quarterly Report on Form 10-Q for the period ended March 31, 2013, and incorporated herein by reference.

10.46		Summary of MeadWestvaco Corporation 2013 Long-Term Incentive Plan, previously filed as Exhibit 10.46 to the company’s quarterly report on Form 10-Q for the period ended March 31, 2013, and incorporated herein by reference

10.47*		Amendments to terms and conditions of outstanding stock option awards and restricted stock grants covering vesting and exercise provisions for retirement age recipients effective January 27, 2014.

10.48		Agreement between MeadWestvaco Corporation and Mark S. Cross, dated July 24, 2013 previously filed as Exhibit 10.01to the company’s Form 8-K on July 24, 2013, and incorporated herein by reference.



10.49		Master Purchase and Sale Agreement, dated October 28, 2013, by and among MeadWestvaco Corporation, MWV Community Development and Land Management, LLC and MWV Community Development, Inc., as sellers, and Plum Creek Timberlands, L.P., Plum Creek Marketing, Inc., Plum Creek Land Company and Highland Mineral Resources, LLC, as purchasers, and Plum Creek Timber Company, Inc. previously filed as Exhibit 2.1 to the company’s Form 8-K on October 29, 2013, and incorporated herein by reference.

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.

101*		XBRL Instance Document and Related Items.

*	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 24, 2014				/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. John A. Luke, Jr.	Chairman of the Board of Directors and Chief Executive Officer (Chief Executive Officer and Director)	February 24, 2014

/s/ E. Mark Rajkowski E. Mark Rajkowski	Senior Vice President (Chief Financial Officer)	February 24, 2014

/s/ Brent A. Harwood Brent A. Harwood	Vice President and Controller (Chief Accounting Officer)	February 24, 2014

/s/ Michael E. Campbell Michael E. Campbell	Director	February 24, 2014

/s/ James G. Kaiser James G. Kaiser	Director	February 24, 2014

/s/ Richard B. Kelson Richard B. Kelson	Director	February 24, 2014

/s/ James M. Kilts James M. Kilts	Director	February 24, 2014

/s/ Susan J. Kropf Susan J. Kropf	Director	February 24, 2014

/s/ Douglas S. Luke Douglas S. Luke	Director	February 24, 2014

/s/ Gracia C. Martore Gracia C. Martore	Director	February 24, 2014

/s/ Timothy H. Powers Timothy H. Powers	Director	February 24, 2014

/s/ Jane L. Warner Jane L. Warner	Director	February 24, 2014

/s/ Alan D. Wilson Alan D. Wilson	Director	February 24, 2014

Exhibit 3.2

BYLAWS

MEADWESTVACO CORPORATION

INCORPORATED UNDER THE LAWS OF DELAWARE

WORLD HEADQUARTERS

501 South 5 ^th Street

Richmond, Virginia 23219

Exhibit 3.2

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 - 2
Section 2.7.	Regular Meetings		2 - 2
Section 2.8.	Special Meetings		2 - 2
Section 2.9.	Notice of Special Meetings		2 - 3
Section 2.10.	Quorum and Manner of Acting		2 - 3
Section 2.11.	Chairman; Secretary		2 - 3
Section 2.12.	Compensation		2 - 3
Section 2.13.	Indemnity		2 - 3

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
Section 7.8.	Exclusive Forum		7 - 1

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, (i) 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 (ii) a description of all agreements, arrangements and understandings between such stockholder and beneficial owner, if any, and any other person or persons (including their names) in connection with the proposal of such business by such stockholder; 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) (A) the class and number of shares of the Corporation which are, directly or indirectly, owned beneficially and of record by such stockholder and such beneficial owner, (B) any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class of shares of the Corporation or with a value derived in whole or in part from the value of any class of shares of the Corporation, whether or not such instrument or right shall be subject to settlement in the underlying class of capital stock of the Corporation or otherwise (a “Derivative Instrument”) directly or indirectly owned beneficially by such stockholder and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the Corporation, (C) any proxy, contract, arrangement, understanding, or relationship pursuant to which such stockholder has a right to vote any shares of any security of the Corporation, (D) any short interest in a security of the Corporation (for purposes of this Bylaw a person shall be deemed to have a short interest in a security if such person directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has the opportunity to profit or share in any profit derived from any decrease in the value of the subject security), (E) any rights to dividends on the shares of the Corporation owned beneficially by such stockholder that are separated or separable from the underlying shares of the Corporation, (F) any proportionate interest in shares of the Corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which such stockholder is a general partner or, directly or indirectly, beneficially owns an interest in a general partner and (G) any performance-related fees (other than an asset-based fee) that such stockholder is entitled to based on any increase or decrease in the value of shares of the Corporation or Derivative Instruments, if any, as of the date of such notice, including without limitation any such interests held by members of such stockholder’s immediate family sharing the same household (which information shall be supplemented by such stockholder and beneficial owner, if any, not later than 10 days after the record date for the meeting to disclose such ownership as of

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the record date), and (iii) any other information relating to such stockholder and beneficial owner, if any, that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in a contested election pursuant to Section 14 of the Securities Exchange Act of 1934 (the “Exchange Act”) and the rules and regulations promulgated thereunder.

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 and Section 1.12, “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 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, each director shall be elected by the vote of the majority of the votes cast, provided that if as of a date that is fourteen (14) days in advance of the date the Corporation files its definitive proxy statement (regardless of whether or not thereafter revised or supplemented) with the Securities and Exchange Commission the number of nominees exceeds the number of directors to be elected, the directors shall be elected by the vote of a plurality of the shares represented in person or by proxy at any such meeting and entitled to vote on the election of directors. For purposes of this Section 2.3, a majority of the votes cast means that the number of shares voted “for” a director must exceed the number of votes cast “against” that director. The Nominating and Governance Committee has established procedures under which any director who is not elected shall offer to tender his or her resignation to the Chairman of the Board and the Nominating and Governance Committee. 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 at the principal executive offices of the Corporation, not later than (I) with respect to an election to be held at an annual meeting of stockholders, the close of business on the 90 ^th 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 120 ^th day prior to such annual meeting and not later than the close of business on the later of the 90 ^th 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, 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 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

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stockholder’s notice as described above. 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) (i) the class and number of shares of the Corporation which are, directly or indirectly, owned beneficially and of record by such stockholder and such beneficial owner, (ii) any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class of shares of the Corporation or with a value derived in whole or in part from the value of any class of shares of the Corporation, whether or not such instrument or right shall be subject to settlement in the underlying class of capital stock of the Corporation or otherwise (a “Derivative Instrument”) directly or indirectly owned beneficially by such stockholder and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the Corporation, (iii) any proxy, contract, arrangement, understanding, or relationship pursuant to which such stockholder has a right to vote any shares of any security of the Corporation, (iv) any short interest in a security of the Corporation (for purposes of this Bylaw a person shall be deemed to have a short interest in a security if such person directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has the opportunity to profit or share in any profit derived from any decrease in the value of the subject security), (v) any rights to dividends on the shares of the Corporation owned beneficially by such stockholder that are separated or separable from the underlying shares of the Corporation, (vi) any proportionate interest in shares of the Corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which such stockholder is a general partner or, directly or indirectly, beneficially owns an interest in a general partner and (vii) any performance-related fees (other than an asset-based fee) that such stockholder is entitled to based on any increase or decrease in the value of shares of the Corporation or Derivative Instruments, if any, as of the date of such notice, including without limitation any such interests held by members of such stockholder’s immediate family sharing the same household (which information shall be supplemented by such stockholder and beneficial owner, if any, not later than 10 days after the record date for the meeting to disclose such ownership as of the record date), and (iii) any other information relating to such stockholder and beneficial owner, if any, that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder, (c) 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, (d) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among such stockholder and beneficial owner, if any, and their respective affiliates and associates, or others acting in concert therewith, on the one hand, and each proposed nominee, and his or her respective affiliates and associates, or others acting in concert therewith, on the other hand, including, without limitation, all information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K if the stockholder making the nomination and any beneficial owner on whose behalf the nomination is made, if any, or any affiliate or associate thereof or person acting in concert were the “registrant” for purposes of such rule and the nominee were a director or executive officer of such registrant, (e) 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. The Corporation may require any proposed nominee to furnish such other information as may be reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as an independent director of the Corporation or that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such nominee.

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.

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.

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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. Indemnification and Insurance.

(A) Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the fact that he or she or a person of whom he or she is the legal representative is or was, at any time during which these Bylaws are in effect (whether or not such person continues to serve in such capacity at the time any indemnification or payment of expenses pursuant hereto is sought or at the time any proceeding relating thereto exists or is brought), a director or officer of the Corporation or is or was serving at the request of the Corporation as a director, officer, trustee, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans maintained or sponsored by the Corporation (hereinafter, an “indemnitee”), whether the basis of such proceeding is alleged action in an official capacity as a director, officer, trustee, employee or agent or in any other capacity while serving as a director, officer, trustee, employee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the General Corporation Law of the State of Delaware as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that except as provided in paragraph (C) of this Bylaw, the Corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board of Directors. The right to indemnification conferred in this Bylaw shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition, such advances to be paid by the Corporation within twenty (20) days after the receipt by the Corporation of a statement or statements from the claimant requesting such advance or advances from time to time; provided, however, that if the General Corporation Law of the State of Delaware requires, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking (hereinafter, the “undertaking”) by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right of appeal (a “final disposition”) that such director or officer is not entitled to be indemnified for such expenses under this Bylaw or otherwise. The rights conferred upon indemnitees in this Bylaw shall be

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contract rights and such rights shall continue as to an indemnitee who has ceased to be a director, officer, trustee, employee or agent and shall inure to the benefit of the indemnitee’s heirs, executors and administrators.

(B) To obtain indemnification under this Bylaw, a claimant shall submit to the Corporation a written request, including therein or therewith such documentation and information as is reasonably available to the claimant and is reasonably necessary to determine whether and to what extent the claimant is entitled to indemnification. Upon written request by a claimant for indemnification pursuant to the first sentence of this paragraph (B), a determination, if required by applicable law, with respect to the claimant’s entitlement thereto shall be made as follows: (1) if requested by the claimant, by Independent Counsel (as hereinafter defined), or (2) if no request is made by the claimant for a determination by Independent Counsel, (i) by the Board of Directors by a majority vote of a quorum consisting of Disinterested Directors (as hereinafter defined), or (ii) if a quorum of the Board of Directors consisting of Disinterested Directors is not obtainable or, even if obtainable, such quorum of Disinterested Directors so directs, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to the claimant, or (iii) if a quorum of Disinterested Directors so directs, by the stockholders of the Corporation. In the event the determination of entitlement to indemnification is to be made by Independent Counsel at the request of the claimant, the Independent Counsel shall be selected by the Board of Directors unless there shall have occurred within two years prior to the date of the commencement of the action, suit or proceeding for which indemnification is claimed a “Change of Control” as defined in the Corporation’s current equity compensation plan, in which case the Independent Counsel shall be selected by the claimant unless the claimant shall request that such selection be made by the Board of Directors. If it is so determined that the claimant is entitled to indemnification, payment to the claimant shall be made within 10 days after such determination.

(C) If a claim under paragraph (A) of this Bylaw is not paid in full by the Corporation within sixty (60) days after a written claim pursuant to paragraph (B) of this Bylaw has been received by the Corporation (except in the case of a claim for advancement of expenses, for which the applicable period is twenty (20) days), the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the Corporation) that the claimant has not met the standard of conduct which makes it permissible under the General Corporation Law of the State of Delaware for the Corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, Independent Counsel or stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the General Corporation Law of the State of Delaware, nor an actual determination by the Corporation (including its Board of Directors, Independent Counsel or stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

(D) If a determination shall have been made pursuant to paragraph (B) of this By-Law that the claimant is entitled to indemnification, the Corporation shall be bound by such determination in any judicial proceeding commenced pursuant to paragraph (C) of this Bylaw.

(E) The Corporation shall be precluded from asserting in any judicial proceeding commenced pursuant to paragraph (C) of this Bylaw that the procedures and presumptions of this Bylaw are not valid, binding and enforceable and shall stipulate in such proceeding that the Corporation is bound by all the provisions of this Bylaw.

(F) The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Bylaw shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, Bylaws, agreement, vote of stockholders or Disinterested Directors or otherwise. Any amendment, modification, alteration or repeal of this Bylaw that in any way diminishes or adversely affects any right of an indemnitee or its successors shall be prospective only and shall not limit or eliminate any such right with respect to any proceeding involving any occurrence or alleged occurrence of any action or omission that took place prior to such amendment or repeal.

(G) The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the General Corporation Law of the State of Delaware. To the extent that the Corporation maintains any policy or policies providing such insurance, each such director or officer, and each such agent or employee to which rights to indemnification have been granted as provided in paragraph (H) of this Bylaw, shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage thereunder for any such director, officer, employee or agent.

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(H) The Corporation may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification, and rights to be paid by the Corporation the expenses incurred in defending any proceeding in advance of its final disposition, to any employee or agent of the Corporation to the fullest extent of the provisions of this Bylaw with respect to the indemnification and advancement of expenses of directors and officers of the Corporation.

(I) If any provision or provisions of this Bylaw shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (1) the validity, legality and enforceability of the remaining provisions of this Bylaw (including, without limitation, each portion of any paragraph of this Bylaw containing any such provision held to be invalid, illegal or unenforceable, that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (2) to the fullest extent possible, the provisions of this Bylaw (including, without limitation, each such portion of any paragraph of this Bylaw containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

(J) For purposes of this Bylaw:

(1) “Disinterested Director” means a director of the Corporation who is not and was not a party to the matter in respect of which indemnification is sought by the claimant.

(2) “Independent Counsel” means a law firm, a member of a law firm, or an independent practitioner, that is experienced in matters of corporation law and shall include any person who, under the applicable standards of professional conduct then prevailing, would not have a conflict of interest in representing either the Corporation or the claimant in an action to determine the claimant’s rights under this Bylaw.

(K) Any notice, request or other communication required or permitted to be given to the Corporation under this Bylaw shall be in writing and either delivered in person or sent by telecopy, telex, telegram, overnight mail or courier service, or certified or registered mail, postage prepaid, return receipt requested, to the Secretary of the Corporation and shall be effective only upon receipt by the Secretary.

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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 501 South 5 ^th Street, Richmond, Virginia 23219. 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.

SECTION 7.8. Exclusive Forum . Unless the Corporation consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director or officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim against the Corporation or any director or officer or other employee of the Corporation arising pursuant to any provision of the General Corporation Law of the State of Delaware or the Certificate of Incorporation or these Bylaws (as either may be amended from time to time), or (iv) any action asserting a claim against the Corporation or any director or officer or other employee of the Corporation governed by the internal affairs doctrine shall be a state court located within the State of Delaware (or, if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware).

Certificate

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



								(Assistant) Secretary
Date
								Corporate Seal

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Exhibit 10.47

Amendments to Grants under the MeadWestvaco Corporation 2005 Performance Incentive Plan Amended and Restated Effective February 25, 2013 (2005 Performance Incentive Plan)

On January 27, 2014 the Compensation and Organization Development Committee of the Board of Directors amended the terms and conditions for all outstanding equity and cash awards previously granted under the company’s 2005 Performance Incentive Plan to provide more favorable vesting terms upon termination of employment for any employee age fifty-five or older with twenty or more years of service. In the case of stock options, there would be continued vesting of such awards, with the continued right to exercise such awards for five-years from termination of employment, but not exceeding the original ten year term. In the case of performance-based restricted stock units or cash awards, there would be pro-rata vesting determined by multiplying the amount, if any, earned by attainment of the performance goals attached to such awards by a fraction, the numerator of which is the number of completed full months from the award date to the termination of employment and the denominator of which is 36. In the case of service based restricted stock units, there would be pro rata vesting based on the date of termination of employment in one-year increments from the date of grant and any remaining portion shall be forfeited.

EXHIBIT 21

SUBSIDIARIES OF THE REGISTRANT

The following were significant subsidiaries of the Registrant as of December 31, 2013:


Name		State or Jurisdiction of Incorporation
MeadWestvaco Coated Board, LLC		Delaware
MeadWestvaco South Carolina, LLC		Delaware
MeadWestvaco Consumer Packaging Group LLC		Delaware
MeadWestvaco Virginia Corporation		Delaware
MeadWestvaco Luxembourg SARL		Luxembourg
Westvaco Luxembourg SARL		Luxembourg
Rigesa, Celulose, Papel E. Embalagens Ltda.		Brazil

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-161567, 333-91660, 333-127861, 333-178068, 333-192343, 333-192342) of MeadWestvaco Corporation of our report dated February 24, 2014 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

Richmond, Virginia

February 24, 2014

EXHIBIT 31.1

CERTIFICATION

I, John A. Luke, Jr. certify that:

1.	I have reviewed this annual report on Form 10-K of MeadWestvaco Corporation;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 24, 2014


/s/ John A. Luke, Jr.
Name:		John A. Luke, Jr.
Title:		Chief Executive Officer

EXHIBIT 31.2

CERTIFICATION

I, E. Mark Rajkowski certify that:

1.	I have reviewed this annual report on Form 10-K of MeadWestvaco Corporation;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(a)

(b)

(c)

(d)

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 24, 2014


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

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned hereby certifies, in his capacity as an officer of MeadWestvaco Corporation (the “Company”), for purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

•

the Annual Report of the Company on Form 10-K for the period ended December 31, 2013 fully complies with the requirements of Section 13(a) or 15 (d) of the Securities Exchange Act of 1934; and

•

the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 24, 2014


/s/ John A. Luke, Jr.
Name:		John A. Luke, Jr.
Title:		Chief Executive Officer

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

•

the Annual Report of the Company on Form 10-K for the period ended December 31, 2013 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

•

the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 24, 2014


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