OVERVIEW

For the three months ended March 31, 2009, MeadWestvaco Corporation ("MeadWestvaco", "MWV" or the "company") reported a net loss from continuing operations of $79 million, or $0.46 per share, compared to a net loss from continuing operations of $8 million, or $0.04 per share, for the three months ended March 31, 2008. The results from continuing operations for the three months ended March 31, 2009 include after-tax restructuring charges of $51 million, or $0.30 per share, related to employee separation costs, asset write-downs and facility closures. The results from continuing operations for the three months ended March 31, 2008 include after-tax restructuring charges of $5 million, or $0.03 per share, related to employee separation costs, asset write-downs and facility closures, and an after-tax gain of $6 million, or $0.04 per share, from the recognition of a curtailment gain associated with the company's U.S. pension plan.

Sales from continuing operations were $1.35 billion for the three months ended March 31, 2009 compared to $1.52 billion for the three months ended March 31, 2008. Lower year-over-year sales and earnings for the first quarter of 2009 reflect reduced overall demand for packaged goods, office supplies and pine chemicals due to the weak global economic environment. While lower volumes significantly impacted the results across most of our businesses, we performed well in a number of areas that are critical to our strategy, including operational productivity, cash management, overhead cost reductions, price recovery and sourcing initiatives. Cash flow from operations increased to $91 million in the first quarter of 2009 compared to $40 million in the first quarter of 2008, reflecting MWV's strategy of tightly managing working capital usage and matching production with market demand, as well as the benefits from higher earnings and cash flow from our land management business.

MWV is implementing a series of broad cost reduction actions to strengthen its financial position and maximize performance by reducing corporate and business unit overhead costs, closing and restructuring non-strategic or under-performing manufacturing operations, focusing on higher return growth opportunities in targeted packaging markets and realizing sourcing savings throughout the company's supply chain. These actions are expected to result in the elimination of about 2,000 positions, or 10% of MWV's global workforce, and the closure or restructuring of 12 to 14 manufacturing facilities by the end of 2009. These cost management efforts are designed to achieve $125 million in pre-tax savings in 2009, with a targeted run-rate range of $250 million to $300 million by mid-2010. As part of this program, the company realized $14 million in cost savings in the first quarter of 2009 from reduced overhead expenses and manufacturing optimization initiatives, and is on track to achieve its 2009 savings goal of $125 million.

RESULTS OF OPERATIONS

Presented below are results for the three months ended March 31, 2009 and 2008
reported in accordance with accounting principles generally accepted in the
United States. All per share amounts are presented on an after-tax basis.



                                                               Three Months Ended
                                                                    March 31,
  In millions, except per share amounts                         2009          2008
  Net sales                                                  $    1,354      $ 1,518

  Cost of sales                                                   1,194        1,293
  Selling, general and administrative expenses                      207          201
  Interest expense                                                   52           54
  Other income, net                                                  (8 )         (7 )


  Loss from continuing operations before income taxes               (91 )        (23 )

  Income tax benefit                                                (12 )        (15 )


  Loss from continuing operations                                   (79 )         (8 )

  Income from discontinued operations, net of income taxes           -             4


  Net loss attributable to the company                       $      (79 )    $    (4 )


  Net loss per share - basic and diluted:
  Loss from continuing operations                            $    (0.46 )    $ (0.04 )
  Income from discontinued operations                                -          0.02

  Net loss attributable to the company                       $    (0.46 )    $ (0.02 )

Sales for the three months ended March 31, 2009 were $1.35 billion compared to $1.52 billion for the three months ended March 31, 2008. During 2009, sales declined due primarily to lower volumes and the impact of unfavorable foreign currency exchange, offsetting benefits from improved pricing and increased forestland sales from our land management business. Refer to the individual segment discussions below for detailed sales information for each segment.

Cost of sales for the three months ended March 31, 2009 was $1.19 billion compared to $1.29 billion for the three months ended March 31, 2008. During 2009, decreased cost of sales was primarily due to lower volumes and the impact of foreign currency exchange compared to 2008. The results for 2009 also reflect higher restructuring charges of $62 million compared to 2008.

Selling, general and administrative expenses for the three months ended March 31, 2009 were $207 million compared to $201 million for the three months ended March 31, 2008. During 2009, improved productivity and the impact of foreign currency exchange were more than offset by higher restructuring charges compared to 2008.

Pension income from continuing operations, excluding the effects of termination benefits and curtailments, for the three months ended March 31, 2009 was $15 million compared to $21 million for the three months ended March 31, 2008. Pension income is reported in Corporate and Other for segment reporting purposes.

Other income, net is comprised of the following for the three months ended March 31, 2009 and 2008:

                                                   Three months ended
                                                       March 31,
             In millions                          2009             2008
             Interest income                    $      (5 )       $   (9 )
             Foreign currency exchange losses           1              1
             Other                                     (4 )            1

                                                $      (8 )       $   (7 )

Interest expense was $52 million for the three months ended March 31, 2009 and was comprised of $42 million related to bond and bank debt, $2 million related to a long-term obligation non-recourse to MWV and $8 million related to other items. Interest expense was $54 million for the three months ended March 31, 2008 and was comprised of $42 million related to bond and bank debt, $4 million related to a long-term obligation non-recourse to MWV and $8 million related to other items.

For the three months ended March 31, 2009, the effective tax rate benefit attributable to net loss from continuing operations was approximately 13%. For the three months ended March 31, 2008, the effective tax rate benefit attributable to net loss from continuing operations was approximately 65%. The differences in the effective tax rates compared to statutory rates were primarily the result of changes to the mix of expected income levels between the company's domestic and foreign operations and certain discrete items. The annual effective tax rate in 2009 is expected to be about 21%, excluding discrete items.

On July 1, 2008, the company completed the sale of its North Charleston, South Carolina kraft paper mill and related assets (collectively, the "Kraft business") for net cash proceeds of $466 million. For the three months ended March 31, 2008, the after-tax operating results of the Kraft business are being reported as income from discontinued operations in the consolidated statements of operations. The results of operations and assets and liabilities of the Kraft business were previously included in the Packaging Resources segment. Income from discontinued operations was $4 million, or $0.02 per share, for the three months ended March 31, 2008. Refer to Note 13 of Notes to Consolidated Financial Statements for further discussion of the sale of the Kraft business and discontinued operations treatment.

In addition to the information discussed above, the following sections discuss the results of operations for each of the company's business segments and Corporate and Other. MWV's business segments are (i) Packaging Resources,
(ii) Consumer Solutions, (iii) Consumer & Office Products, (iv) Specialty Chemicals, and (v) Community Development and Land Management. Refer to Note 10 of Notes to Consolidated Financial Statements for a reconciliation of the sum of the results of the business segments and Corporate and Other to the company's consolidated loss from continuing operations before income taxes. Restructuring charges are included in Corporate and Other for segment reporting purposes. Refer to the discussion included in "Significant Transactions" herein below for restructuring charges attributable to the company's business segments.

Packaging Resources



                                            Three months ended
                                                March 31,
                      In millions           2009         2008
                      Sales               $     568    $     631
                      Segment profit(1)          19           32

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

The Packaging Resources segment produces bleached paperboard, Coated Natural Kraft® paperboard ("CNK") and linerboard. This segment's paperboard products are manufactured at three mills located in the U.S. and two mills located in Brazil. Bleached paperboard is used for packaging high-value consumer products such as pharmaceuticals, personal and beauty care, cosmetics, tobacco, food service and aseptic cartons. CNK paperboard is used for a range of packaging applications, the largest of which for MWV is multi-pack beverage packaging. Linerboard is used in the manufacture of corrugated boxes and other containers.

Sales for the Packaging Resources segment were $568 million for the three months ended March 31, 2009 compared to $631 million for the three months ended March 31, 2008. Sales declined compared to the prior year due to weaker demand for all of the segment's paperboard grades and from the impact of unfavorable foreign currency exchange. Shipments of bleached paperboard in 2009 were approximately 320,000 tons, down 18% from 2008, driven by lower volumes in general packaging and commercial print markets. Shipments of CNK in 2009 were 240,000 tons, down 12% from 2008, reflecting lower demand in beverage and general packaging in response to the weakening global economy. In 2009, SBS prices were up 8% and CNK prices were up 5% compared to 2008. Backlogs for both bleached paperboard and coated unbleached kraft paperboard currently remain about two weeks. Sales of the company's Brazilian packaging operation, Rigesa Ltda., were 28% lower in 2009, driven primarily by the impact of unfavorable foreign currency exchange compared to 2008.

Profit for the Packaging Resources segment was $19 million for the three months ended March 31, 2009 compared to $32 million for the three months ended March 31, 2008. During 2009, the segment took aggressive actions to match production with demand in addition to its planned maintenance outages. These actions resulted in lower production volumes which negatively impacted segment profit compared to 2008. During 2009, market- and maintenance-related downtime totaled 85,000 tons (57,000 SBS and 28,000 CNK®) higher compared to 2008. Shipment declines in paperboard grades for tobacco and beverage packaging were modest, while declines in more economically-sensitive grades for commercial print and general packaging markets were steeper. Profit in 2009 was negatively affected by $29 million from higher unabsorbed fixed manufacturing costs, $15 million from higher input costs including energy, raw materials and freight, $10 million from the impact of unfavorable foreign currency exchange and $9 million from lower volume compared to 2008. Profit in 2009 benefited by $32 million from improved pricing and product mix and $18 million from improved productivity compared to 2008.

Consumer Solutions



                                            Three months ended
                                                March 31,
                      In millions           2009         2008
                      Sales               $     533    $     606
                      Segment profit(1)          13            9

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

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

Sales for the Consumer Solutions segment were $533 million for the three months ended March 31, 2009 compared to $606 million for the three months ended March 31, 2008. During 2009, global healthcare packaging sales growth driven by the continued success of MWV's Shellpak® solution was more than offset by the impact of unfavorable foreign currency exchange, modest sales declines in global beverage, tobacco, and home and garden, and more pronounced sales declines in the discretionary segments of global personal care and media packaging compared to 2008.

Profit for the Consumer Solutions segment was $13 million for the three months ended March 31, 2009 compared to $9 million for the three months ended March 31, 2008. During 2009, increased segment profit was driven by improved productivity due to ongoing business improvement actions and from lower input costs for energy, raw materials and freight compared to 2008. As part of the company's strategy to focus its business on higher-value, differentiated packaging opportunities, the segment is continuing to streamline its product line and manufacturing footprint. Since commencing these actions in the fourth quarter of 2008, the segment has announced the closure of six manufacturing locations. Profit in 2009 benefited by $23 million from improved productivity and $3 million from lower input costs for energy, raw materials and freight compared to 2008. Profit in 2009 was negatively impacted by $10 million from the impact of unfavorable foreign currency exchange, $10 million from unfavorable pricing and product mix, and $2 million from lower volume compared to 2008.

Consumer & Office Products



                                          Three months ended
                                               March 31,
                     In millions         2009            2008
                     Sales             $     163       $     208
                     Segment loss(1)          (5 )            (3 )

(1) Segment loss is measured as results before restructuring charges, pension income, interest expense and income, income taxes, non-controlling interest income and losses, and discontinued operations.

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

Sales for the Consumer & Office Products segment were $163 million for the three months ended March 31, 2009 compared to $208 million for the three months ended March 31, 2008. Volumes were lower for calendars and time-management products due to lower consumer spending, as well as for envelopes used by the financial services industry for direct-mail campaigns for credit cards and other solicitations. This segment continues to be impacted by Asian-based imported products.

Operating loss for the Consumer & Office Products segment was $5 million for the three months ended March 31, 2009 compared to an operating loss of $3 million for the three months ended March 31, 2008. The results for 2009 were negatively impacted by $7 million from lower volumes and $4 million from unfavorable productivity due primarily to market-related downtime compared to 2008. The results in 2009 benefited by $9 million from improved product mix compared to 2008.

Specialty Chemicals



                                           Three months ended
                                                March 31,
                    In millions           2009           2008
                    Sales               $      94     $       124
                    Segment profit(1)           1              12

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

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

Sales for the Specialty Chemicals segment were $94 million for the three months ended March 31, 2009 compared to $124 million for the three months ended March 31, 2008. Demand for pine chemicals, ink dispersants and automotive carbons were well below last year's levels, resulting in adjustments to refining and production schedules to reduce inventory. Although the segment was able to remain firm on pricing, volume decline resulted in lower sales compared to 2008.

Profit for the Specialty Chemicals segment was $1 million for the three months ended March 31, 2009, compared to $12 million for the three months ended March 31, 2008. In response to lower demand during 2009, the segment operated its production facilities at significantly reduced utilization rates to reduce inventory and manufacturing cash costs. Profit in 2009 was negatively impacted by $12 million from unabsorbed fixed manufacturing costs associated with market-related downtime, $7 million from lower volume, $2 million from increased input costs for energy, raw materials and freight, and $1 million from the impact of unfavorable foreign currency exchange compared to 2008. Profit in 2009 benefited by $9 million from improved pricing and product mix and $2 million from improved productivity compared to 2008.

Community Development and Land Management



                                           Three months ended
                                                March 31,
                    In millions            2009           2008
                    Sales               $       86     $       21
                    Segment profit(1)           56              8

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

The Community Development and Land Management segment is responsible for maximizing the value of the company's landholdings. Operations of the segment include real estate development, forestry operations and leasing activities. Real estate development includes (i) improving and selling rural tracts primarily for recreational and residential uses, (ii) entitling and improving high-value tracts through joint ventures and other ownership arrangements,
(iii) master planning select landholdings, and (iv) monetizing non-core forestlands. Forestry operations include growing and harvesting softwood and hardwood on the company's forestlands for external consumption and for use by the company's mill-based business. Leasing activities include fees from third parties undertaking mineral extraction operations, as well as fees from recreational leases on the company's forestlands.

Sales for the Community Development and Land management segment were $86 million for the three months ended March 31, 2009 compared to $21 million for the three months ended March 31, 2008. Segment profit was $56 million for the three months ended March 31, 2009 compared to $8 million for the three months ended March 31, 2008. The major driver of segment sales and profit improvement in 2009 was real estate activities which contributed $53 million of operating profit in 2009 compared to $4 million in 2008. The segment sold approximately 34,000 acres for gross proceeds of $68 million in 2009 compared to approximately 2,000 acres for gross proceeds of $5 million in 2008. Profit from forestry operations and leasing activities was $3 million in 2009 compared to $4 million in 2008.

Corporate and Other



                                                Three months ended
                                                     March 31,
                In millionss                     2009           2008
                Sales                         $       11       $   29
                Corporate and Other loss(1)         (175 )        (81 )

(1) Corporate and Other loss includes restructuring charges, pension income, interest expense and income, non-controlling interest income and losses, and gains and losses on certain asset sales.

Corporate and Other includes corporate support staff services and related assets and liabilities, including merger-related goodwill, and the company's specialty papers operation. The results include income and expense items not directly associated with segment operations, such as restructuring charges, pension income, interest expense and income, non-controlling interest income and losses, certain legal settlements and other activities.

Corporate and Other loss was $175 million for the three months ended March 31, 2009 compared to $81 million for the three months ended March 31, 2008. Contributing to the increased loss in 2009 were higher restructuring charges of $73 million, lower pension income from continuing operations of $17 million and other net unfavorable items of $9 million, partially offset by lower corporate overhead costs of $5 million compared to 2008.

LIQUIDITY AND CAPITAL RESOURCES

In response to continued economic uncertainty and to enhance MWV's liquidity, we are successfully executing our strategy of aggressively managing working capital usage and matching production with market demand, as well as suspending all non-critical capital projects and reducing our operating cost structure. Cash flow from operations increased to $91 million in the first quarter of 2009 compared to $40 million in the first quarter of 2008, primarily driven by improved working capital usage and increased cash flow from our land management business.

Cash and cash equivalents were $519 million at March 31, 2009 compared to $549 million at December 31, 2008. The credit quality of our portfolio of short-term investments remains strong with the majority of the company's cash and cash equivalents invested in U.S. government securities. Cash flow from operations and the company's current cash levels are expected to be adequate to fund scheduled debt payments, dividends to shareholders and capital expenditures in 2009. In addition, the company's U.S. qualified retirement plans remain over-funded and we do not anticipate any required regulatory funding contributions to such plans in the foreseeable future.

We continuously monitor the credit quality of our credit facility banks, insurance providers and derivative contract counter-parties, in addition to our customers and key suppliers. The company has taken and will take further actions as necessary to mitigate any impact to its liquidity position; however, we cannot predict with any certainty the impact to the company of any further disruption in global credit markets. . . .