Meadwestvaco (MWV) 10-Q 2011 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2011

OR

¨ 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 001-31215

MeadWestvaco Corporation

(Exact name of registrant as specified in its charter)

Delaware (State of incorporation)	501 South 5th Street
31-1797999	Richmond, Virginia 23219-0501 Telephone 804-444-1000
(I.R.S. Employer Identification No.)	(Address and telephone number of registrant’s principal executive offices)

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

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

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

At October 21, 2011, there were 170,740,609 shares of MeadWestvaco common stock outstanding.

MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

INDEX TO FORM 10-Q

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited):
Consolidated Statements of Operations for the Three and Nine Months Ended September  30, 2011 and 2010			1
Consolidated Balance Sheets as of September 30, 2011 and December 31, 2010			2
Consolidated Statements of Cash Flows for the Nine Months Ended September  30, 2011 and 2010			3
Notes to Consolidated Financial Statements			4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		38
Item 4.	Controls and Procedures		38
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings		39
Item 1A.	Risk Factors		39
Item 6.	Exhibits		39
SIGNATURES			40

MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

In millions, except per share amounts	Three Months  Ended September 30,						Nine Months  Ended September 30,
	2011			2010			2011			2010
Net sales	$	1,639		$	1,504		$	4,561		$	4,195
Cost of sales		1,234			1,155			3,465			3,315
Selling, general and administrative expenses		197			193			586			526
Interest expense		45			46			137			139
Other income, net		(7	)		(2	)		(36	)		(14	)
Income from continuing operations before income taxes		170			112			409			229
Income tax provision		52			2			129			32
Income from continuing operations		118			110			280			197
Loss from discontinued operations, net of income taxes		0			(124	)		(6	)		(135	)
Net income (loss)		118			(14	)		274			62
Less: Net income attributable to non-controlling interests, net of income taxes		(1	)		(1	)		(3	)		(3	)
Net income (loss) attributable to the company	$	117		$	(15	)	$	271		$	59
Income from continuing operations attributable to the company	$	117		$	109		$	277		$	194
Net income (loss) per share attributable to the company – basic:
Income from continuing operations	$	0.68		$	0.64		$	1.63		$	1.14
Loss from discontinued operations		0.00			(0.73	)		(0.04	)		(0.79	)
Net income (loss) attributable to the company	$	0.68		$	(0.09	)	$	1.59		$	0.35
Net income (loss) per share attributable to the company – diluted:
Income from continuing operations	$	0.67		$	0.63		$	1.59		$	1.12
Loss from discontinued operations		0.00			(0.72	)		(0.03	)		(0.78	)
Net income (loss) attributable to the company	$	0.67		$	(0.09	)	$	1.56		$	0.34
Shares used to compute net income (loss) per share attributable to the company:
Basic		171.0			170.2			170.2			170.9
Diluted		174.4			172.5			173.9			173.3
Cash dividends per share	$	0.25		$	0.23		$	0.75		$	0.69

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

1

MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

CONSOLIDATED BALANCE SHEETS

(Unaudited)

In millions, except share and per share amounts	September 30, 2011			December 31, 2010
ASSETS
Cash and cash equivalents	$	757		$	790
Accounts receivable, net		810			827
Inventories		748			642
Other current assets		108			131
Current assets of discontinued operations		0			56
Current assets		2,423			2,446
Property, plant, equipment and forestlands, net		3,361			3,255
Prepaid pension asset		1,132			1,052
Goodwill		809			812
Other assets		1,194			1,224
Non-current assets of discontinued operations		0			25
	$	8,919		$	8,814
LIABILITIES AND EQUITY
Accounts payable	$	588		$	590
Accrued expenses		591			606
Notes payable and current maturities of long-term debt		239			7
Current liabilities of discontinued operations		0			23
Current liabilities		1,418			1,226
Long-term debt		1,849			2,042
Other long-term obligations		1,230			1,265
Deferred income taxes		993			972
Non-current liabilities of discontinued operations		0			3
Commitments and contingencies		0			0
Equity:
Shareholders’ equity:
Common stock, $0.01 par value
Shares authorized: 600,000,000
Shares issued and outstanding: 2011 – 170,731,691 (2010 – 168,331,858)		2			2
Additional paid-in capital		3,140			3,075
Retained earnings		360			219
Accumulated other comprehensive loss		(95	)		(10	)
Total shareholders’ equity		3,407			3,286
Non-controlling interests		22			20
Total equity		3,429			3,306
	$	8,919		$	8,814

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

2

MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

In millions	Nine Months  Ended September 30,
	2011			2010
Cash flows from operating activities:
Net income	$	274		$	62
Discontinued operations		6			135
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization		297			292
Deferred income taxes		18			15
Gain on sales of assets, net		(1	)		(2	)
Pension income		(61	)		(62	)
Appreciation in cash surrender value insurance policies		(18	)		(18	)
Change in alternative fuel mixture credit receivable		0			31
Changes in working capital, excluding the effects of acquisitions and dispositions		(126	)		(124	)
Other, net		3			4
Net cash provided by operating activities from continuing operations		392			333
Discontinued operations		(5	)		(6	)
Net cash provided by operating activities		387			327
Cash flows from investing activities:
Capital expenditures		(439	)		(136	)
Proceeds from dispositions of assets		26			26
Contributions to joint ventures		(7	)		(9	)
Other		10			(7	)
Discontinued operations		45			59
Net cash used in investing activities		(365	)		(67	)
Cash flows from financing activities:
Proceeds from issuance of long-term debt		79			2
Repayment of long-term debt		(40	)		(130	)
Changes in notes payable and other short-term borrowings, net		15			11
Changes in book overdrafts		(11	)		(4	)
Dividends paid		(127	)		(118	)
Proceeds from exercises of stock options		36			5
Stock repurchases		0			(91	)
Other		4			(2	)
Net cash used in financing activities		(44	)		(327	)
Effect of exchange rate changes on cash		(11	)		(9	)
(Decrease) increase in cash and cash equivalents		(33	)		(76	)
Cash and cash equivalents:
At beginning of period		790			850
At end of period	$	757		$	774

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

3

MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of presentation

MeadWestvaco Corporation (“MeadWestvaco”, “MWV”, or the “company”), a Delaware corporation formed in 2001 following the merger of Westvaco Corporation and The Mead Corporation, is a global packaging company that provides packaging solutions to many of the world’s brands in the food, beverage, tobacco, healthcare, beauty and personal care, and home and garden industries. MWV’s other business operations serve the consumer and office products, specialty chemicals, forestry and real estate markets. MWV’s segments are (i) Packaging Resources, (ii) Consumer Solutions, (iii) Consumer & Office Products, (iv) Specialty Chemicals, and (v) Community Development and Land Management.

These interim consolidated financial statements have not been audited. However, in the opinion of management, all normal recurring adjustments necessary to state fairly the financial position and the results of operations for the interim periods presented have been made. These interim consolidated financial statements have been prepared on the basis of accounting principles and practices generally accepted in the U.S. (“GAAP”) applied consistently with those used in the preparation of the consolidated financial statements included in the company’s Annual Report on Form 10-K for the year ended December 31, 2010.

Certain information and disclosures normally included in annual financial statements presented in accordance with GAAP have been condensed or omitted in these interim consolidated financial statements. The consolidated results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. The accompanying consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the company’s Annual Report on Form 10-K for the year ended December 31, 2010.

Certain prior period amounts have been reclassified in these consolidated financial statements to conform to the presentation of discontinued operations. Refer to Note 14 for further discussion.

2. New accounting guidance

In June 2011, the Financial Accounting Standards Board (the “FASB”) issued new accounting guidance regarding the presentation of comprehensive income. The new guidance requires the presentation of items of net income and comprehensive income in either a single continuous financial statement or in two separate but consecutive financial statements. This accounting guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The impact of adoption will not have a material effect on the company’s consolidated financial statements.

In September 2011, the FASB issued new accounting guidance regarding the testing of goodwill for impairment. The new guidance permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the required annual goodwill impairment test. This accounting guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011; however, early adoption is permitted. The company intends to adopt the above provisions effective for its annual goodwill test to be performed in the fourth quarter of 2011. The impact of adoption will not have a material effect on the company’s consolidated financial statements.

4

MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

3. Fair value measurements

The following information is presented for assets and liabilities that are recorded in the consolidated balance sheets at fair value at September 30, 2011 and December 31, 2010, measured on a recurring basis. There were no significant transfers of assets and liabilities that are recorded at fair value between Level 1 and Level 2 during the three and nine months ended September 30, 2011 and 2010.

		$000			$000		$000			$000
In millions	September 30, 2011			Level 1 (1)		Level 2 (2)			Level 3 (3)
Recurring fair value measurements:
Derivatives-assets	$	2		$	0	$	2		$	0
Derivatives-liabilities		(10	)		0		(10	)		0
Cash equivalents		649			649		0			0

		$000			$000		$000			$000
In millions	December 31, 2010			Level 1 (1)		Level 2 (2)			Level 3 (3)
Recurring fair value measurements:
Derivatives-assets	$	1		$	0	$	1		$	0
Derivatives-liabilities		(8	)		0		(8	)		0
Cash equivalents		646			646		0			0

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

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

⁽³⁾  Significant unobservable inputs.

At September 30, 2011, both the book value and estimated fair value of debt were $2.1 billion. The company estimates the fair values 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.

4. Restructuring charges

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 the three and nine months ended September 30, 2011 and 2010 are pursuant to the 2008 program. Cumulative charges since the inception of the 2008 program through September 30, 2011 were $268 million. 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 three and nine months ended September 30, 2011 and 2010 are presented below.

5

MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

Three months ended September 30, 2011

In millions	Employee-related costs						Asset write-downs and other costs						Total
	COS		SG&A		Total		COS		SG&A		Total		COS		SG&A		Total
Consumer Solutions	$	0	$	1	$	1	$	1	$	0	$	1	$	1	$	1	$	2
Packaging Resources		0		1		1		1		0		1		1		1		2
All other(1)		0		1		1		0		2		2		0		3		3
Total charges	$	0	$	3	$	3	$	2	$	2	$	4	$	2	$	5	$	7

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

Three months ended September 30, 2010

In millions	Employee-related costs						Asset write-downs and other costs							Total
	COS		SG&A		Total		COS			SG&A		Total		COS			SG&A		Total
Consumer Solutions	$	9	$	1	$	10	$	2		$	0	$	2	$	11		$	1	$	12
All other(1)		0		3		3		(1	)		1		0		(1	)		4		3
Total charges	$	9	$	4	$	13	$	1		$	1	$	2	$	10		$	5	$	15

⁽¹⁾  Includes $2 million related to employee relocation costs.

Nine months ended September 30, 2011

In millions	Employee-related costs						Asset write-downs and other costs						Total
	COS		SG&A		Total		COS		SG&A		Total		COS		SG&A		Total
Consumer Solutions	$	5	$	1	$	6	$	1	$	1	$	2	$	6	$	2	$	8
Packaging Resources		0		1		1		2		0		2		2		1		3
All other(1)		0		5		5		0		5		5		0		10		10
Total charges	$	5	$	7	$	12	$	3	$	6	$	9	$	8	$	13	$	21

⁽¹⁾  Includes $5 million related to employee relocation costs.

Nine months ended September 30, 2010

In millions	Employee-related costs						Asset write-downs and other costs							Total
	COS		SG&A		Total		COS			SG&A		Total		COS			SG&A		Total
Consumer Solutions	$	23	$	4	$	27	$	4		$	0	$	4	$	27		$	4	$	31
All other(1)		0		4		4		(3	)		3		0		(3	)		7		4
Total charges	$	23	$	8	$	31	$	1		$	3	$	4	$	24		$	11	$	35

⁽¹⁾  Includes $3 million related to employee relocation costs.

6

MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

Activity in the restructuring reserve balances was as follows for the nine months ended September 30, 2011:

In millions	Employee related			Other			Total
Balance at December 31, 2010	$	32		$	4		$	36
Charges		12			4			16
Payments		(26	)		(4	)		(30	)
Balance at September 30, 2011	$	18		$	4		$	22

5. Inventories and property, plant and equipment

Inventories consist of:

		$0,000		$0,000
In millions	September 30, 2011		December 31, 2010
Raw materials	$	185	$	167
Production materials, stores and supplies		88		87
Finished and in-process goods		475		388
	$	748	$	642

Property, plant and equipment is net of accumulated depreciation of:

		$0,000		$0,000
In millions	September 30, 2011		December 31, 2010
Accumulated depreciation	$	3,675	$	3,544

6. Intangible assets

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

In millions	September 30, 2011				December 31, 2010
	Gross carrying amount		Accumulated amortization		Gross carrying amount		Accumulated amortization
Trademarks and tradenames	$	196	$	113	$	199	$	107
Customer contracts and lists		284		98		287		86
Patents		58		40		56		35
Other – primarily licensing rights		29		25		30		25
	$	567	$	276	$	572	$	253

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

In millions	September 30, 2011		December 31, 2010
Trademarks and tradenames	$	95	$	94

7

MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

7. 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 mitigated by expected offsetting fluctuations in the matched 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 and is recognized in earnings when the hedged item affects earnings. The ineffective portions of cash flow hedges are recognized, as incurred, in earnings. For a derivative instrument designated as a fair value hedge, changes in fair value of both the derivative instrument and the hedged item are recognized 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 in the consolidated statements of operations and accumulated other comprehensive income (loss) for the three months ended September 30, 2011 and 2010 are presented below:

	Cash flow hedges												Fair value hedges				Derivatives not designated as hedges
In millions	Foreign currency hedges						Natural gas hedges						Interest rate swaps				Foreign currency derivatives
	2011			2010			2011			2010			2011		2010		2011		2010
Gain (loss) recognized in other comprehensive income (loss) (effective portion)	$	4		$	(6	)	$	(7	)	$	(6	)	$	0	$	0	$	0	$	0
(Loss) gain reclassified to earnings from accumulated other comprehensive income (loss) (effective portion)	$	(1	)	$	2		$	(2	)	$	(2	)	$	0	$	0	$	0	$	0
(Loss) gain recognized in earnings1		0			0			0			0			0		0		1		25
Total (loss) gain recognized in earnings2	$	(1	)	$	2		$	(2	)	$	(2	)	$	0	$	0	$	1	$	25

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 mitigated by expected offsetting fluctuations in the matched exposures.

8

MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

The pre-tax effect of derivative instruments on the consolidated statements of operations and accumulated other comprehensive income (loss) for the nine months ended September 30, 2011 and 2010 is presented below:

	Cash flow hedges											Fair value hedges				Derivatives not designated as hedges
In millions	Foreign currency hedges					Natural gas hedges						Interest rate swaps				Foreign currency derivatives
	2011			2010		2011			2010			2011		2010		2011		2010
(Loss) gain recognized in other comprehensive income (loss) (effective portion)	$	(2	)	$	4	$	(10	)	$	(13	)	$	0	$	0	$	0	$	0
(Loss) gain reclassified to earnings from accumulated other comprehensive income (loss) (effective portion)	$	(5	)	$	6	$	(6	)	$	(9	)	$	0	$	0	$	0	$	0
Gain (loss) recognized in earnings1		0			0		0			0			0		7		12		(11	)
Total (loss) gain recognized in earnings2	$	(5	)	$	6	$	(6	)	$	(9	)	$	0	$	7	$	12	$	(11	)

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 mitigated by expected offsetting fluctuations in the matched exposures.

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

	Assets (Liabilities)
		Fair value1
In millions	Classification	September 30, 2011			December 31, 2010
Derivatives designated as hedges:
Natural gas	Accounts payable	$	(7	)	$	(5	)
Natural gas	Other long term obligations		(1	)		0
Foreign currency	Other current assets		1			0
Foreign currency	Accounts payable		1			0
			(6	)		(5	)
Derivatives not designated as hedges:
Foreign currency	Other current assets		1			1
Foreign currency	Accounts payable		(3	)		(3	)
			(2	)		(2	)
Total derivatives		$	(8	)	$	(7	)

¹  Fair values of derivative instruments are also disclosed in Note 3.

9

MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

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 in Million Metric British Thermal Units (“MMBTU’s”) at September 30, 2011 and December 31, 2010 are presented below.

In MMBTU’s
September 30, 2011	December 31, 2010
13	11

Unrealized gains and losses on contracts maturing in future months are recorded in accumulated other comprehensive income and are charged or credited to earnings for the ineffective portion of the hedge. Once a contract matures, the company has a realized gain or loss on the contract up to the quantities of natural gas in the 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 loss to be recognized in earnings is $7 million during the next twelve months. As of September 30, 2011, the maximum remaining term of existing hedges was two years. For the three and nine months ended September 30, 2011 and 2010, 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 short-term foreign inter-company loans, foreign cash deposits, foreign currency 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 September 30, 2011 and December 31, 2010 are presented below.

In millions	September 30, 2011		December 31, 2010
Notional amount of foreign currency forward contracts – not designated as hedges	$	430	$	544

10

MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

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 and purchases. For these hedges, realized hedge gains and losses are recorded in net sales and costs of sales in the consolidated statements of operations concurrent with the recognition of the hedged sales and purchases. The ineffective portion of these hedges is also recorded in net sales and cost of sales. The estimated pre-tax gain to be recognized in earnings during the next twelve months is $2 million. As of September 30, 2011, the maximum remaining term of existing hedges was one year. For the three and nine months ended September 30, 2011 and 2010, 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 September 30, 2011 and December 31, 2010 are presented below.

In millions	September 30, 2011		December 31, 2010
Notional amount of foreign currency forward contracts – designated as hedges	$	61	$	71

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 September 30, 2011 and December 31, 2010. For the three and nine months ended September 30, 2010, the interest-rate swaps were an effective hedge and, therefore, required no charge to earnings due to ineffectiveness.

8. Employee retirement and postretirement benefits

The components of net periodic benefit (income) cost for the company’s retirement and postretirement plans for the three months ended September 30, 2011 and 2010 are presented below.

	Three months ended September 30,
In millions	Pension benefits						Postretirement benefits
	2011			2010			2011			2010
Service cost - benefits earned during the period	$	11		$	12		$	1		$	1
Interest cost on projected benefit obligation		36			36			2			1
Expected return on plan assets		(71	)		(68	)		0			0
Amortization of prior service cost (income)		0			1			(1	)		(1	)
Amortization of net actuarial loss (gain)		4			2			0			0
Termination benefits		0			0			0			0
Curtailment gain		0			(2	)		0			0
Net periodic benefit (income) cost	$	(20	)	$	(19	)	$	2		$	1
Net periodic benefit (income) cost – continuing operations	$	(20	)	$	(21	)	$	2		$	1

11

MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

The components of net periodic benefit (income) cost for the company’s retirement and postretirement plans for the nine months ended September 30, 2011 and 2010 are presented below.

	Nine months ended September 30,
In millions	Pension benefits						Postretirement benefits
	2011			2010			2011			2010
Service cost - benefits earned during the period	$	32		$	34		$	3		$	3
Interest cost on projected benefit obligation		108			110			4			4
Expected return on plan assets		(213	)		(205	)		0			0
Amortization of prior service cost (income)		1			2			(2	)		(2	)
Amortization of net actuarial loss (gain)		11			4			(1	)		(1	)
Termination benefits		0			1			0			0
Curtailment gain		(3	)		(3	)		0			0
Net periodic benefit (income) cost	$	(64	)	$	(57	)	$	4		$	4
Net periodic benefit (income) cost – continuing operations	$	(61	)	$	(62	)	$	4		$	4

Curtailment recognition

Pursuant to the sale of the company’s envelope products business in 2011, a curtailment gain was recorded for the nine months ended September 30, 2011. Plan assets and liabilities of certain U.S. qualified retirement plans were re-measured at January 31, 2011 using a discount rate of 5.25%, resulting in a net decrease to the respective plans’ funded status for which the company recorded a loss in other comprehensive income. Pursuant to the company’s 2008 cost initiative, certain employees were terminated resulting in a curtailment gain for the three and nine months ended September 30, 2010. Plan assets and liabilities of certain U.S. qualified retirement plans were re-measured at September 30, 2010 using a discount rate of 4.75%, resulting in a net increase to the respective plans’ funded status for which the company recorded a gain in other comprehensive income for the three months ended September 30, 2010 and a loss in other comprehensive income for the nine months ended September 30, 2010. The following table summarizes the pre-tax and after-tax curtailment gains and losses recognized in other comprehensive income.

		$00		$00		$00		$00
	Three months ended September 30,
In millions	2011				2010
	Pre-tax		After-tax		Pre-tax		After-tax
Curtailment gain (loss) recognized in other comprehensive income	$	0	$	0	$	27	$	19

		$00			$00			$00			$00
	Nine months ended September 30,
In millions	2011						2010
	Pre-tax			After-tax			Pre-tax			After-tax
Curtailment gain (loss) recognized in other comprehensive income	$	(3	)	$	(2	)	$	(52	)	$	(31	)

12

MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

Employer contributions

The company does not anticipate any required contributions to its U.S. qualified retirement plans in the foreseeable future as the plans do not require any minimum regulatory funding contribution. Accordingly, no contributions were made to these plans during the three months ended September 30, 2011. However, the company expects to contribute $5 million to the funded non-U.S. plans in 2011.

9. Income per common share

Basic net income per share for all the periods presented has been calculated using the weighted average shares outstanding. In computing diluted net income per share, incremental shares issuable upon the assumed exercise of stock options and other share-based compensation awards are included in the weighted average shares outstanding, if dilutive. The number of potentially dilutive shares excluded from the calculation of diluted net income per share is presented below.

In millions	Three Months  Ended September 30,				Nine Months  Ended September 30,
	2011		2010		2011		2010
Anti-dilutive shares		5		9		4		6

13

MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

10. Equity

Changes in equity for the three months ended September 30, 2011 and 2010 are as follows:

Three months ended September 30, 2011	Shareholders’ 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 June 30, 2011		170.6	$	2	$	3,129	$	244		$	116		$	22		$	3,513
Comprehensive income (loss):
Net income (loss)		0		0		0		117			0			1			118
Foreign currency translation		0		0		0		0			(214	)		0			(214	)
Adjustments related to pension and other benefit plans, net of taxes		0		0		0		0			2			0			2
Net unrealized gain (loss) on derivative instruments, net of taxes		0		0		0		0			1			0			1
Comprehensive income (loss) attributable to the company		0		0		0		0			0			0			(93	)
Dividends declared		0		0		0		(1	)		0			(1	)		(2	)
Exercise of stock options		0.1		0		1		0			0			0			1
Share-based employee compensation		0		0		10		0			0			0			10
Balance at September 30, 2011		170.7	$	2	$	3,140	$	360		$	(95	)	$	22		$	3,429

Three months ended September 30, 2010	Shareholders’ 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 June 30, 2010		170.8		$	2	$	3,114		$	231		$	(211	)	$	19		$	3,155
Comprehensive income (loss):
Net income (loss)		0			0		0			(15	)		0			1			(14	)
Foreign currency translation		0			0		0			0			142			0			142
Adjustments related to pension and other benefit plans, net of taxes		0			0		0			0			21			0			21
Net unrealized gain (loss) on derivative instruments, net of taxes		0			0		0			0			(8	)		0			(8	)
Comprehensive income (loss) attributable to the company		0			0		0			0			0			0			141
Dividends declared		0			0		0			(1	)		0			(1	)		(2	)
Exercise of stock options		0			0		0			0			0			0			0
Stock repurchased		(2.6	)		0		(60	)		0			0			0			(60	)
Share-based employee compensation		0			0		11			0			0			0			11
Balance at September 30, 2010		168.2		$	2	$	3,065		$	215		$	(56	)	$	19		$	3,245

14

MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

Changes in equity for the nine months ended September 30, 2011 and 2010 are as follows:

Nine months ended September 30, 2011	Shareholders’ equity															Total equity
In millions	Outstanding shares		Common stock		Additional paid-in capital		Retained earnings			Accumulated other comprehensive income (loss)			Non-controlling interests
Balance at December 31, 2010		168.3	$	2	$	3,075	$	219		$	(10	)	$	20		$	3,306
Comprehensive income (loss):
Net income (loss)		0		0		0		271			0			3			274
Foreign currency translation		0		0		0		0			(89	)		0			(89	)
Adjustments related to pension and other benefit plans, net of taxes		0		0		0		0			4			0			4
Net unrealized gain (loss) on derivative instruments, net of taxes		0		0		0		0			0			0			0
Comprehensive income (loss) attributable to the company		0		0		0		0			0			0			189
Dividends declared		0		0		0		(130	)		0			(1	)		(131	)
Exercise of stock options		1.8		0		36		0			0			0			36
Share-based employee compensation		0.6		0		29		0			0			0			29
Balance at September 30, 2011		170.7	$	2	$	3,140	$	360		$	(95	)	$	22		$	3,429

Nine months ended September 30, 2010	Shareholders’ equity																	Total equity
In millions	Outstanding shares			Common stock		Additional paid-in capital			Retained earnings			Accumulated other comprehensive income (loss)			Non-controlling interests
Balance at December 31, 2009		171.3		$	2	$	3,130		$	275		$	(1	)	$	17		$	3,423
Comprehensive income (loss):
Net income (loss)		0			0		0			59			0			3			62
Foreign currency translation		0			0		0			0			(24	)		0			(24	)
Adjustments related to pension and other benefit plans, net of taxes		0			0		0			0			(27	)		0			(27	)
Net unrealized gain (loss) on derivative instruments, net of taxes		0			0		0			0			(4	)		0			(4	)
Comprehensive income (loss) attributable to the company		0			0		0			0			0			0			7
Dividends declared		0			0		0			(119	)		0			(1	)		(120	)
Exercise of stock options		0.4			0		5			0			0			0			5
Stock repurchased		(3.9	)		0		(92	)		0			0			0			(92	)
Share-based employee compensation		0.4			0		22			0			0			0			22
Balance at September 30, 2010		168.2		$	2	$	3,065		$	215		$	(56	)	$	19		$	3,245

15

MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

11. Segment information

MWV’s segments are (i) Packaging Resources, (ii) Consumer Solutions, (iii) Consumer & Office Products, (iv) Specialty Chemicals, and (v) Community Development and Land Management.

The Packaging Resources segment produces paperboard used in packaging for food, beverage, tobacco, healthcare, and beauty and personal care markets. This segment’s products include solid bleached sulfate paperboard (“SBS”) and Coated Natural Kraft^® paperboard (“CNK^®”) that are manufactured at three mills located in the U.S. and corrugated packaging that is manufactured at two mills located in Brazil. SBS is used for packaging high-value consumer products including frozen and dry food, aseptic liquid packaging, disposable cups, tobacco, cosmetics and pharmaceuticals. CNK^® is used for a range of high-value packaging applications, the largest of which for MWV is multi-pack beverage packaging and food packaging. The segment’s Brazilian operation, MWV Rigesa, is a fully-integrated manufacturer of corrugated packing solutions for produce, meat and consumer products markets in South America.

The Consumer Solutions segment designs and produces packaging solutions and systems for the food, beverage, tobacco, beauty and personal care, healthcare, and home and garden markets. This segment manufactures multi-pack cartons primarily for the global beverage take-home market, high-end packaging for the global tobacco market, injection-molded plastic packaging for prescription drugs, and dispensing and sprayer systems for personal care, fragrance, healthcare, home cleaning, and garden and lawn maintenance products. Paperboard and plastic are converted into packaging products at plants located in North America, South America, Europe and Asia. This segment also has pharmaceutical packaging contracts with retailers, including mass-merchants. In addition, this segment manufactures equipment that is leased or sold to its beverage and dairy customers to package their products.

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

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 activated carbon used in gasoline vapor emission control systems for automobiles and trucks and applications for air, water and food purification. Other products include performance chemicals used in printing inks, asphalt paving and adhesives, as well as in the agricultural, paper and petroleum industries.

The Community Development and Land Management segment is responsible for maximizing the value of the company’s landholdings in the Southeastern region of the U.S. Operations of the segment include real estate development, forestry operations and leasing activities. Real estate development includes (i) selling non-core forestlands primarily for recreational and residential uses, (ii) entitling and improving high-value tracts, and (iii) master planning select landholdings. 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.

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 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.

16

MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

Segment results for the three and nine months ended September 30, 2011 and 2010 are as follows:

Three months ended September 30, 2011	Sales								Segment
In millions	Trade		Inter-segment			Total			profit
Packaging Resources	$	656	$	94		$	750		$	102
Consumer Solutions		478		0			478			27
Consumer & Office Products		228		0			228			53
Specialty Chemicals		225		0			225			56
Community Development and Land Management		52		1			53			19
Total		1,639		95			1,734			257
Corporate and Other		0		0			0			(88	)
Non-controlling interests		0		0			0			1
Intersegment eliminations		0		(95	)		(95	)		0
Consolidated totals	$	1,639	$	0		$	1,639		$	170

Three months ended September 30, 2010(1)	Sales								Segment
In millions	Trade		Inter-segment			Total			profit
Packaging Resources	$	603	$	100		$	703		$	91
Consumer Solutions		455		0			455			38
Consumer & Office Products		231		0			231			51
Specialty Chemicals		189		0			189			44
Community Development and Land Management		26		0			26			2
Total		1,504		100			1,604			226
Corporate and Other		0		0			0			(115	)
Non-controlling interests		0		0			0			1
Intersegment eliminations		0		(100	)		(100	)		0
Consolidated totals	$	1,504	$	0		$	1,504		$	112

Nine months ended September 30, 2011	Sales								Segment
In millions	Trade		Inter-segment			Total			profit
Packaging Resources	$	1,862	$	308		$	2,170		$	285
Consumer Solutions		1,432		0			1,432			89
Consumer & Office Products		526		0			526			93
Specialty Chemicals		618		0			618			161
Community Development and Land Management		123		3			126			55
Total		4,561		311			4,872			683
Corporate and Other		0		0			0			(277	)
Non-controlling interests		0		0			0			3
Intersegment eliminations		0		(311	)		(311	)		0
Consolidated totals	$	4,561	$	0		$	4,561		$	409

Nine months ended September 30, 2010(1)	Sales								Segment
In millions	Trade		Inter-segment			Total			profit
Packaging Resources	$	1,691	$	312		$	2,003		$	193
Consumer Solutions		1,379		2			1,381			101
Consumer & Office Products		513		0			513			84
Specialty Chemicals		507		0			507			105
Community Development and Land Management		105		2			107			37
Total		4,195		316			4,511			520
Corporate and Other		0		0			0			(294	)
Non-controlling interests		0		0			0			3
Intersegment eliminations		0		(316	)		(316	)		0
Consolidated totals	$	4,195	$	0		$	4,195		$	229

(1) Certain results for 2010 have been recast to reflect discontinued operations. See Note 14 for further discussion.

17

MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

12. 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 September 30, 2011, MeadWestvaco had recorded liabilities of approximately $24 million for estimated potential cleanup costs based upon its close monitoring of ongoing activities and its past experience with these matters. The company believes that it is reasonably possible that costs associated with these sites may exceed amounts of recorded liabilities by an amount that could range from an insignificant amount to as much as $20 million. This estimate is less certain than the estimate upon which the environmental liabilities were based. After consulting with legal counsel and after considering established liabilities, it is our judgment that the resolution of pending litigation and proceedings is not expected to have a material adverse effect on the company’s consolidated financial condition or liquidity. In any given period or periods, however, it is possible such proceedings or matters could have a material effect on the results of operations.

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 September 30, 2011, there were approximately 520 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 September 30, 2011, the company had recorded litigation liabilities of approximately $34 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.

18

MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

13. Other income, net

Other income, net is comprised of the following for the three and nine months ended September 30, 2011 and 2010:

In millions	Three months  ended September 30,						Nine months  ended September 30,
	2011			2010			2011		2010
Interest income	$	8		$	6		$	22	$	15
Foreign currency exchange gains (losses)		1			3			0		(1	)
Early extinguishment of debt		0			(6	)		0		(6	)
Equity investment gain		0			0			10		0
Other		(2	)		(1	)		4		6
	$	7		$	2		$	36	$	14

14. Discontinued operations

On February 1, 2011, the company completed the sale of its envelope products business for cash proceeds of $55 million. The sale resulted in a pre- and after-tax loss of $1 million for the nine months ended September 30, 2011. During 2010, the company recorded pre-tax charges of $19 million ($15 million after tax) comprised of impairment of long-lived assets of $6 million, impairment of goodwill of $7 million and a pension curtailment loss of $6 million. For the nine months ended September 30, 2011 and for the three and nine months ended September 30, 2010, 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. There were no charges recorded for the three months ended September 30, 2011. The results of operations and assets and liabilities of the envelope products business were previously included in the Consumer & Office Products segment.

On September 30, 2010, the company completed the sale of its media and entertainment packaging business for cash proceeds of $68 million. The sale resulted in a pre-tax loss of $155 million ($128 million after tax). For the nine months ended September 30, 2011 adjustments to the loss on disposition were not significant. For the nine months ended September 30, 2011 and for the three and nine months ended September 30, 2010, this business is reported in discontinued operations in the consolidated statements of operations on an after-tax basis. There were no charges recorded for the three months ended September 30, 2011. The results of operations and assets and liabilities of the media and entertainment packaging business were previously included in the Consumer Solutions segment.

19

MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

The following table shows the major categories for discontinued operations in the consolidated statements of operations for the three and nine months ended September 30, 2011 and 2010:

In millions, except per share amounts	Three months ended September 30,					Nine months  ended September 30,
	2011		2010			2011			2010
Net sales	$	0	$	154		$	19		$	417
Cost of sales(1)		0		142			18			388
Selling, general and administrative expenses(1)		0		14			2			45
Interest expense		0		2			0			6
Other (income) expense, net		0		151			8			149
Loss before income taxes		0		(155	)		(9	)		(171	)
Income tax benefit		0		(31	)		(3	)		(36	)
Net loss	$	0	$	(124	)	$	(6	)	$	(135	)
Net loss per share
Basic	$	0	$	(0.73	)	$	(0.04	)	$	(0.79	)
Diluted		0		(0.72	)		(0.03	)		(0.78	)

⁽¹⁾  For the nine months ended September 30, 2010, cost of sales and selling, general and administrative expenses include restructuring charges of $3 million and $1 million, respectively.

There were no assets and liabilities classified as discontinued operations in the consolidated balance sheet at September 30, 2011. 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, 2010:

In millions	December 31, 2010
Accounts receivable, net	$	30
Inventories		25
Other current assets		1
Current assets		56
Property, plant and equipment, net		24
Other assets		1
Non-current assets		25
Accounts payable		11
Accrued expenses		12
Current liabilities		23
Other long-term liabilities		3

20

MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

15. Income taxes

For the three and nine months ended September 30, 2011, the effective tax rate from continuing operations was approximately 31% and 32%, respectively. The differences in the effective tax rates for the three and nine months ended September 30, 2011 compared to statutory rates are primarily due to the mix and levels between domestic and foreign earnings, as well as from the effects of discrete tax items including foreign and domestic tax settlements. For the three and nine months ended September 30, 2010, the effective tax rate from continuing operations was approximately 2% and 14%, respectively. The differences in the effective tax rates for the three and nine months ended September 30, 2010 compared to statutory rates are primarily due to the mix and levels between domestic and foreign earnings, as well as from the effects of discrete tax items including domestic tax settlements. During the nine months ended September 30, 2011, the changes to the company’s uncertain tax positions due to the above mentioned tax settlements were not significant.

21

MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

Item 2.MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

For the three months ended September 30, 2011, MeadWestvaco Corporation (“MeadWestvaco”, “MWV” or the “company”) reported income from continuing operations attributable to the company of $117 million, or $0.67 per share, compared to income from continuing operations attributable to the company of $109 million, or $0.63 per share, for the three months ended September 30, 2010. The results for the three months ended September 30, 2011 include after-tax restructuring charges of $4 million, or $0.03 per share. The results for the three months ended September 30, 2010 include an income tax benefit from cellulosic biofuel producer credits of $15 million, or $0.09 per share; after-tax restructuring charges of $10 million, or $0.06 per share; and an after-tax charge from early retirement of debt of $4 million, or $0.02 per share.

For the nine months ended September 30, 2011, the company reported income from continuing operations attributable to the company of $277 million, or $1.59 per share, compared to income from continuing operations attributable to the company of $194 million, or $1.12 per share, for the nine months ended September 30, 2010. The results for the nine months ended September 30, 2011 include after-tax restructuring charges of $13 million, or $0.08 per share. The results for the nine months ended September 30, 2010 include a tax benefit from cellulosic biofuel producer credits and other tax items totaling $24 million, or $0.14 per share; after-tax restructuring charges of $23 million, or $0.13 per share; and an after-tax charge from early retirement of debt of $4 million, or $0.02 per share.

Sales increased 9% to $1.64 billion for the three months ended September 30, 2011 from $1.50 billion for the three months ended September 30, 2010. Sales on a continuing operations basis increased 9% to $4.56 billion for the nine months ended September 30, 2011 from $4.20 billion for the nine months ended September 30, 2010. The company is continuing to benefit from its strong execution of commercial strategies designed to achieve growth in targeted areas and expand market share, as well as value-based pricing initiatives that continue to more than offset rising input cost inflation. Increased sales in 2011 were driven by improved performance in global markets for food, beverage and tobacco packaging, as well as from higher sales of performance chemicals for inks, adhesives and oilfield drilling markets compared to 2010. Growing participation in emerging markets, such as China and Brazil, continues to produce favorable results with related sales increasing 8% and 17% during the three and nine months ended September 30, 2011, respectively, compared to the same periods in 2010. Revenues from emerging markets currently comprise about 27% of the company’s total sales.

Pre-tax earnings from the company’s segments in total increased 14% to $257 million for the three months ended September 30, 2011 from $226 million for the three months ended September 30, 2010. Pre-tax earnings on a continuing operations basis from the company’s segments in total increased 31% to $683 million for the nine months ended September 30, 2011 from $520 million for the nine months ended September 30, 2010. The improved year-over-year performance reflects MWV’s continued successful execution of strategies of generating profitable growth in targeted global markets, investing in innovation capabilities and emerging markets, and improving the operating productivity of the company’s manufacturing facilities and supply chain. The company continues to achieve solid productivity gains reflecting the benefits from its improved manufacturing asset base and ongoing operational excellence initiatives.

Looking ahead to the fourth quarter of 2011, the company expects to build on its strong year-to-date performance and achieve record earnings in fiscal 2011. Earnings in the fourth quarter of 2011 compared to the prior year will, however, be modestly lower principally due to the estimated $30 million negative impact from the planned maintenance and upgrade outage at the Covington paperboard mill, as well as to lower rural land sales. The company also is anticipating weaker consumer demand driven by ongoing macroeconomic events, including the sovereign debt crisis in Europe and slower growth in developing markets. In addition, commodity volatility and inflation is leading to higher raw materials costs. In this difficult economic environment, the company remains focused on executing its market-focused strategies to generate profitable growth, improving operating productivity, and investing in innovative solutions and emerging markets.

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and Consolidated Subsidiary Companies

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. Refer to the “Forward-looking Statements” section located later in this document.

RESULTS OF OPERATIONS

Presented below are results for the three and nine months ended September 30, 2011 and 2010 reported in accordance with accounting principles generally accepted in the U.S. All per share amounts are presented on an after-tax basis.

In millions, except per share amounts	Three Months  Ended September 30,						Nine Months  Ended September 30,
	2011			2010			2011			2010
Net sales	$	1,639		$	1,504		$	4,561		$	4,195
Cost of sales		1,234			1,155			3,465			3,315
Selling, general and administrative expenses		197			193			586			526
Interest expense		45			46			137			139
Other income, net		(7	)		(2	)		(36	)		(14	)
Income from continuing operations before income taxes		170			112			409			229
Income tax provision		52			2			129			32
Income from continuing operations		118			110			280			197
Loss from discontinued operations, net of income taxes		0			(124	)		(6	)		(135	)
Net income (loss)		118			(14	)		274			62
Less: Net income attributable to non-controlling interests, net of income taxes		(1	)		(1	)		(3	)		(3	)
Net income (loss) attributable to the company	$	117		$	(15	)	$	271		$	59
Income from continuing operations attributable to the company	$	117		$	109		$	277		$	194
Net income (loss) per share attributable to the company – basic:
Income from continuing operations	$	0.68		$	0.64		$	1.63		$	1.14
Loss from discontinued operations		0.00			(0.73	)		(0.04	)		(0.79	)
Net income (loss) attributable to the company	$	0.68		$	(0.09	)	$	1.59		$	0.35
Net income (loss) per share attributable to the company – diluted:
Income from continuing operations	$	0.67		$	0.63		$	1.59		$	1.12
Loss from discontinued operations		0.00			(0.72	)		(0.03	)		(0.78	)
Net income (loss) attributable to the company	$	0.67		$	(0.09	)	$	1.56		$	0.34
Shares used to compute net income (loss) per share attributable to the company:
Basic		171.0			170.2			170.2			170.9
Diluted		174.4			172.5			173.9			173.3

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Sales increased 9% to $1.64 billion for the three months ended September 30, 2011 from $1.50 billion for the three months ended September 30, 2010. Sales on a continuing operations basis increased 9% to $4.56 billion for the nine months ended September 30, 2011 from $4.20 billion for the nine months ended September 30, 2010. Increased sales in 2011 were driven by strong performance in global markets for food, beverage and tobacco packaging, as well as from higher sales of performance chemicals for inks, adhesives and oilfield drilling markets compared to 2010. Sales in 2011 also benefited from favorable foreign currency exchange compared to 2010. Growing participation in emerging markets, such as China and Brazil, continues to produce favorable results with related sales increasing 8% and 17% during the three and nine months ended September 30, 2011 compared to the same periods in 2010, respectively. Refer to the individual segment discussions below for detailed sales information for each segment.

Cost of sales was $1.23 billion for the three months ended September 30, 2011 compared to $1.16 billion for the three months ended September 30, 2010. Cost of sales was $3.47 billion for the nine months ended September 30, 2011 compared to $3.32 billion for the nine months ended September 30, 2010. During 2011, increased costs due to inflation of certain raw materials, freight and other items, as well as unfavorable foreign currency exchange, more than offset benefits from productivity improvements and overhead cost reductions compared to 2010. For the three and nine months ended September 30, 2011, input costs for energy, raw materials and freight were $66 million and $142 million higher compared to the same periods of 2010.

Selling, general and administrative expenses were $197 million for the three months ended September 30, 2011 compared to $193 million for the three months ended September 30, 2010. Selling, general and administrative expenses were $586 million for the nine months ended September 30, 2011 compared to $526 million for the nine months ended September 30, 2010. During 2011, increased selling, general and administrative expenses reflect increased costs associated with investments in innovation and commercializing new products, as well as higher employee stock compensation expense and unfavorable foreign currency exchange compared to 2010.

Pension income was $20 million and $21 million for the three months ended September 30, 2011 and 2010, respectively. Pension income was $61 million and $62 million for the nine months ended September 30, 2011 and 2010, respectively. Pension income is reported in Corporate and Other for segment reporting purposes.

Other income, net is comprised of the following for the three and nine months ended September 30, 2011 and 2010:

In millions	Three months  ended September 30,						Nine months  ended September 30,
	2011			2010			2011		2010
Interest income	$	8		$	6		$	22	$	15
Foreign currency exchange gains (losses)		1			3			—		(1	)
Early extinguishment of debt		—			(6	)		—		(6	)
Equity investment gain		—			—			10		—
Other		(2	)		(1	)		4		6
	$	7		$	2		$	36	$	14

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and Consolidated Subsidiary Companies

Interest expense from continuing operations was $45 million for the three months ended September 30, 2011 and was comprised of $37 million related to bond and bank debt, $5 million related to borrowings on insurance policies and $3 million related to other items. Interest expense from continuing operations was $46 million for the three months ended September 30, 2010 and was comprised of $38 million related to bond and bank debt, $1 million related to a long-term obligation non-recourse to MWV, $6 million related to borrowings on insurance policies and $1 million related to other items. Interest expense from continuing operations was $137 million for the nine months ended September 30, 2011 and was comprised of $113 million related to bond and bank debt, $1 million related to a long-term obligation non-recourse to MWV, $15 million related to borrowings on insurance policies and $8 million related to other items. Interest expense from continuing operations was $139 million for the nine months ended September 30, 2010 and was comprised of $115 million related to bond and bank debt, $2 million related to a long-term obligation non-recourse to MWV, $16 million related to borrowings on insurance policies and $6 million related to other items.

For the three and nine months ended September 30, 2011, the effective tax rate from continuing operations was approximately 31% and 32%, respectively. The differences in the effective tax rates in 2011 compared to statutory rates are primarily due to the mix and levels of earnings between domestic and foreign operations, as well as from the effects of discrete tax items including foreign and domestic tax settlements. For the three and nine months ended September 30, 2010, the effective tax rate from continuing operations was approximately 2% and 14%, respectively. The differences in the effective tax rates in 2010 compared to statutory rates are primarily due to the mix and levels of earnings between domestic and foreign operations, as well as from the effects of discrete tax items including domestic tax settlements and an internal reorganization of a domestic entity resulting in the recognition of deferred tax benefits. The annual effective tax rate in 2011 from continuing operations, excluding discrete tax items, is expected to be about 33% reflecting the company’s estimate of the mix and level of earnings between domestic and foreign operations.

Discontinued operations for the three and nine months ended September 30, 2011 and 2010 primarily relates to the company’s sale of its envelope products business on February 1, 2011 and the sale of its media and entertainment packaging business on September 30, 2010. There was no impact from discontinued operations on results for the three months ended September 30, 2011. Results from discontinued operations were an after-tax loss of $124 million for the three months ended September 30, 2010. Results from discontinued operations were an after-tax loss of $6 million and $135 million for the nine months ended September 30, 2011 and 2010, respectively. Refer to Note 14 of Notes to Consolidated Financial Statements 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 and Corporate and Other on a continuing operations basis. MWV’s 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 11 of Notes to Consolidated Financial Statements for a reconciliation of the sum of the results of the segments to the company’s consolidated income 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 segments.

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and Consolidated Subsidiary Companies

Packaging Resources

In millions	Three months  ended September 30,				Nine months  ended September 30,
	2011		2010		2011		2010
Sales	$	750	$	703	$	2,170	$	2,003
Segment profit(1)		102		91		285		193

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

The Packaging Resources segment produces paperboard used in packaging for food, beverage, tobacco, healthcare, and beauty and personal care markets. This segment’s products include solid bleached sulfate paperboard (“SBS”) and Coated Natural Kraft^® paperboard (“CNK^®”) that are manufactured at three mills located in the U.S. and corrugated packaging that is manufactured at two mills located in Brazil. SBS is used for packaging high-value consumer products including frozen and dry food, aseptic liquid packaging, disposable cups, tobacco, cosmetics and pharmaceuticals. CNK^® is used for a range of high-value packaging applications, the largest of which for MWV is multi-pack beverage packaging and food packaging. The segment’s Brazilian operation, MWV Rigesa, is a fully-integrated manufacturer of corrugated packing solutions for produce, meat and consumer products markets in South America.

Sales for the Packaging Resources segment were $750 million and $703 million for the three months ended September 30, 2011 and 2010, respectively. Sales increased in 2011 due to improved paperboard pricing and product mix across all targeted end markets, as well as from favorable foreign currency exchange compared to 2010. During 2011, revenue from emerging markets increased 9% driven by sales of higher-value corrugated packaging in Brazil and by volume growth in food, beverage and liquid packaging applications in Asia compared to 2010. Sales generated by MWV Rigesa were 6% higher in 2011 due to improved pricing and product mix reflecting the value of its corrugated packaging offerings in South America, as well as from favorable foreign currency exchange compared to 2010. During 2011, total paperboard shipments declined 6% compared to 2010; however, this segment continued to outperform in targeted global food and beverage markets, as volumes in those markets outpaced industry trends and helped offset weaker volumes in general packaging compared to 2010. Backlogs for SBS and CNK^® are currently at two and four weeks, respectively. During 2011, MWV Rigesa’s shipments moderated in line with the Brazilian economy, but remained at solid levels.

Profit for the Packaging Resources segment was $102 million and $91 million for the three months ended September 30, 2011 and 2010, respectively. Profit in 2011 benefited by $49 million from improved pricing and product mix, $8 million from foreign currency exchange and other items, and $7 million from improved productivity compared to 2010. These benefits in 2011 were partially offset by $42 million from input cost inflation of certain raw materials, freight and other items, $7 million from incremental year-over-year mill outage costs, primarily associated with a planned outage at the Mahrt facility, and $4 million from lower volume compared to 2010.

Sales for the Packaging Resources segment were $2.17 billion and $2.00 billion for the nine months ended September 30, 2011 and 2010, respectively. Sales increased in 2011 due to improved pricing and product mix, particularly from products for food, beverage and tobacco global markets, as well as from favorable foreign currency exchange compared to 2010. Sales generated by MWV Rigesa were 15% higher in 2011 due to improved pricing and product mix and favorable foreign currency exchange compared to 2010. In 2011, SBS and CNK^® prices were up 8% and 9%, respectively, compared to 2010.

Profit for the Packaging Resources segment was $285 million and $193 million for the nine months ended September��30, 2011 and 2010, respectively. Profit in 2011 benefited by $153 million from improved pricing and product mix, $15 million from foreign currency exchange and other items and $11 million from improved productivity compared to 2010. These benefits in 2011 were partially offset by $84 million from input cost inflation of certain raw materials, freight and other items and $3 million from lower volume compared to 2010.

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MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

Consumer Solutions

In millions	Three months  ended September 30,				Nine months  ended September 30,
	2011		2010		2011		2010
Sales	$	478	$	455	$	1,432	$	1,381
Segment profit(1)		27		38		89		101

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

The Consumer Solutions segment designs and produces packaging solutions and systems for the food, beverage, tobacco, beauty and personal care, healthcare, and home and garden markets. This segment manufactures multi-pack cartons primarily for the global beverage take-home market, high-end packaging for the global tobacco market, injection-molded plastic packaging for prescription drugs, and dispensing and sprayer systems for personal care, fragrance, healthcare, home cleaning, and garden and lawn maintenance products. Paperboard and plastic are converted into packaging products at plants located in North America, South America, Europe and Asia. This segment also has pharmaceutical packaging contracts with retailers, including 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 $478 million and $455 million for the three months ended September 30, 2011 and 2010, respectively. Sales increased in 2011 due to favorable foreign currency exchange and improved pricing and product mix in beverage, tobacco and personal care packaging, as well as from the addition of a trigger sprayer business acquired in the fourth quarter of 2010. During 2011, volume gains in tobacco and healthcare packaging were more than offset by declines in standard personal care pump and dispensing solutions as major North American customers focused on mix optimization and by declines in beverage packaging due to lower consumption in North America compared to 2010. Partially offsetting these volume declines in 2011 were volume growth in airless dispensers, as well as volume growth in beverage packaging in emerging markets compared to 2010.

Profit for the Consumer Solutions segment was $27 million and $38 million for the three months ended September 30, 2011 and 2010, respectively. Profit in 2011 benefited by $8 million from improved pricing and product mix and $3 million from improved productivity compared to 2010. These benefits in 2011 were more than offset by $14 million from input cost inflation of certain raw materials, freight and other items, $4 million from lower volume and $4 million from foreign currency exchange and other items compared to 2010.

Sales for the Consumer Solutions segment were $1.43 billion and $1.38 billion for the nine months ended September 30, 2011 and 2010, respectively. Sales increased in 2011 due to improved pricing and product mix and favorable foreign currency exchange compared to 2010, as well as from the addition of a trigger sprayer business acquired in the fourth quarter of 2010. During 2011, volume gains in tobacco were more than offset by weather-related declines in home and garden and declines in standard personal care pump and dispensing solutions as major North American customers focused on mix optimization, as well as declines in beverage packaging due to lower consumption in North America compared to 2010. Partially offsetting these volume declines in 2011 were volume growth in airless dispensers, as well as volume growth in beverage packaging in emerging markets compared to 2010.

Profit for the Consumer Solutions segment was $89 million and $101 million for the nine months ended September 30, 2011 and 2010, respectively. Profit in 2011 benefited by $17 million from improved pricing and product mix, $17 million from improved productivity and $5 million from foreign currency exchange and other items compared to 2010. These benefits in 2011 were more than offset by $43 million from input cost inflation of certain raw materials, freight and other items and $8 million from lower volume compared to 2010.

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MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

Consumer & Office Products

In millions	Three months  ended September 30,				Nine months  ended September 30,
	2011		2010 (2)		2011		2010 (2)
Sales	$	228	$	231	$	526	$	513
Segment profit(1)		53		51		93		84

⁽¹⁾  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 2010 have been recast to exclude the discontinued operations of the envelope products business. Refer to Note 14 of Notes to Consolidated Financial Statements for further discussion.

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

Sales for the Consumer & Office Products segment were $228 million and $231 million for the three months ended September 30, 2011 and 2010, respectively. During 2011, the North American back-to-school season finished in line with expectations, but slightly lower than 2010. Lower sales volume of time management products during 2011 mainly reflects the timing of shipments, which overall were in-line with the merchandising strategies of our key customers, as some time management orders shifted into the previous quarter. Higher year-over-year sales at Tilibra, the segment’s Brazilian operation, were driven by product mix improvement, which offset some of the North American volume decline in time management and office products compared to 2010. This segment continues to be impacted by imports from Asia.

Profit for the Consumer & Office Products segment was $53 million and $51 million for the three months ended September 30, 2011 and 2010, respectively. Profit in 2011 benefited by $10 million from improved pricing and product mix, $3 million from improved productivity and $1 million from foreign currency exchange and other items compared to 2010. These benefits in 2011 were partially offset by $6 million from input cost inflation of certain raw materials, freight and other items and $6 million from lower volume compared to 2010.

Sales for the Consumer & Office Products segment were $526 million and $513 million for the nine months ended September 30, 2011 and 2010, respectively. During 2011, the North American back to school season finished in line with expectations, but slightly lower than 2010. Lower sales volume of time management products during 2011 mainly reflects the timing of shipments, as this business aligned with key customers’ merchandising strategies. Higher sales during 2011 at Tilibra, the segment’s Brazilian operation, resulted in product mix improvements, which offset some of the North American volume decline in time management and office products compared to 2010. Tilibra also benefited from higher volume from a shift of Brazilian back-to-school volume into 2011 from 2010.

Profit for the Consumer & Office Products segment was $93 million and $84 million for the nine months ended September 30, 2011 and 2010, respectively. Profit in 2011 benefited by $14 million from improved pricing and product mix, $11 million from improved productivity and $6 million from favorable foreign currency exchange and other items compared to 2010. These benefits in 2011 were partially offset by $18 million from input cost inflation of certain raw materials, freight and other items and $4 million from lower volume compared to 2010.

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and Consolidated Subsidiary Companies

Specialty Chemicals

In millions	Three months  ended September 30,				Nine months  ended September 30,
	2011		2010		2011		2010
Sales	$	225	$	189	$	618	$	507
Segment profit(1)		56		44		161		105

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

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 activated carbon used in gasoline vapor emission control systems for automobiles and trucks and applications for air, water and food purification. Other products include performance chemicals used in printing inks, asphalt paving and adhesives, as well as in the agricultural, paper and petroleum industries.

Sales for the Specialty Chemicals segment were $225 million and $189 million for the three months ended September 30, 2011 and 2010, respectively. Sales growth in 2011 was driven by continued success in higher value markets for pine chemicals, asphalt additives and carbon technologies. Overall volume was essentially unchanged in 2011, with pricing and product mix improvement across key pine chemicals markets driving sales growth compared to 2010. This segment continues to benefit from its focus on the highest value formulations used in the manufacturing of publication inks, adhesives, oilfield drilling and road building and maintenance solutions. In carbon solutions, sales were up modestly in 2011 due to volume gains in water purification and price and product mix improvement compared to 2010. Automotive carbon volumes in 2011 were slightly lower than 2010 as auto production levels in Japan continue to recover from disruptions due to the tsunami.

Profit for the Specialty Chemicals segment was $56 million and $44 million for the three months ended September 30, 2011 and 2010, respectively. Profit in 2011 benefited by $31 million from improved pricing and product mix compared to 2010. This benefit in 2011 was partially offset by $16 million from input cost inflation of certain raw materials, freight and other items and $3 million from foreign currency exchange and other items compared to 2010.

Sales for the Specialty Chemicals segment were $618 million and $507 million for the nine months ended September 30, 2011 and 2010, respectively. Sales growth in 2011 was driven by continued success in higher value markets for pine chemicals and carbon technologies. This segment continues to benefit from its focus on the highest value formulations used in the manufacturing of publication inks, adhesives, oilfield drilling and road building and maintenance solutions. In carbon solutions, sales were up modestly in 2011 due to volume gains in water purification and pricing and product mix improvement compared to 2010. Automotive carbon volumes in 2011 were unchanged compared to 2010 as auto production levels in NAFTA were up year-over-year, although offset from lower production in Japan due to the tsunami.

Profit for the Specialty Chemicals segment was $161 million and $105 million for the nine months ended September 30, 2011 and 2010, respectively. Profit in 2011 benefited by $82 million from improved pricing and product mix, $6 million from higher volume and $2 million from improved productivity compared to 2010. These benefits in 2011 were partially offset by $31 million from input cost inflation of certain raw materials, freight and other items and $3 million from foreign currency exchange and other items compared to 2010.

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MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

Community Development and Land Management

In millions	Three months  ended September 30,				Nine months  ended September 30,
	2011		2010		2011		2010
Sales	$	53	$	26	$	126	$	107
Segment profit(1)		19		2		55		37

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

The Community Development and Land Management segment is responsible for maximizing the value of the company’s landholdings in the Southeastern region of the U.S. Operations of the segment include real estate development, forestry operations and leasing activities. Real estate development includes (i) selling non-core forestlands primarily for recreational and residential uses, (ii) entitling and improving high-value tracts, and (iii) master planning select landholdings. 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 $53 million for the three months ended September 30, 2011 compared to $26 million for the three months ended September 30, 2010. Profit was $19 million for the three months ended September 30, 2011 compared to $2 million for the three months ended September 30, 2010. Profit from real estate activities was $18 million in 2011 compared to $1 million in 2010. The segment sold approximately 15,700 acres for gross proceeds of $31 million in 2011 compared to approximately 2,200 acres for gross proceeds of $6 million in 2010. Profit from forestry operations and leasing activities was $1 million in both 2011 and 2010.

Sales for the Community Development and Land Management segment were $126 million for the nine months ended September 30, 2011 compared to $107 million for the nine months ended September 30, 2010. Profit was $55 million for the nine months ended September 30, 2011 compared to $37 million for the nine months ended September 30, 2010. Profit from real estate activities was $49 million in 2011 compared to $27 million in 2010. Profit from real estate activities in 2011 includes a net gain of $10 million from the sale of a 1.1 million square foot distribution center consummated through the segment’s joint venture with The Rockefeller Group. The segment also sold approximately 26,000 acres for gross proceeds of $62 million in 2011 compared to approximately 13,000 acres for gross proceeds of $43 million in 2010. Profit from forestry operations and leasing activities was $6 million in 2011 compared to $10 million in 2010.

The real estate sector remains challenging due to continued tight credit and weak consumer spending. These factors will likely continue to influence near-term results. During this time, the segment will continue to move forward with its near- and long-term real estate value creation plans, including enhancing rural land, and entitling and master planning its highest potential development land.

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MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

Corporate and Other

In millions	Three months  ended September 30,						Nine months  ended September 30,
	2011			2010			2011			2010
Corporate and Other expense, net	$	(88	)	$	(115	)	$	(277	)	$	(294	)

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 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.

Corporate and Other expense, net was $88 million and $115 million for the three months ended September 30, 2011 and 2010, respectively. In 2011, the expense, net of certain income items, includes interest expense of $45 million, interest income of $8 million, pension income of $20 million and restructuring charges of $7 million. In 2010, the expense, net of certain income items, includes interest expense of $46 million, interest income of $6 million, pension income of $21 million and restructuring charges of $15 million.

Corporate and Other expense, net was $277 million and $294 million for the nine months ended September 30, 2011 and 2010, respectively. In 2011, the expense, net of certain income items, includes interest expense of $137 million, interest income of $22 million, pension income of $61 million and restructuring charges of $21 million. In 2010, the expense, net of certain income items, includes interest expense of $139 million, interest income of $15 million, pension income of $62 million and restructuring charges of $35 million.

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and Consolidated Subsidiary Companies

LIQUIDITY AND CAPITAL RESOURCES

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 a significant portion of MWV’s capital expenditures in 2011. 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 $757 million at September 30, 2011. The credit quality of the portfolio of short-term investments remains strong with the majority of cash and cash equivalents invested in U.S. government securities. The company currently has $600 million of undrawn bank-committed credit capacity. Management continuously monitors the credit quality of the company’s credit facility banks, insurance providers and derivative contract counter-parties, in addition to customers and key suppliers.

Operating activities

Cash provided by operating activities from continuing operations was $392 million for the nine months ended September 30, 2011 compared to $333 million for the nine months ended September 30, 2010. The increase in cash flows from continuing operations in 2011 was primarily attributable to higher earnings compared to 2010. Cash used in operating activities from discontinued operations was $5 million for the nine months ended September 30, 2011 compared to $6 million for the nine months ended September 30, 2010.

Investing activities

Cash used in investing activities from continuing operations was $410 million for the nine months ended September 30, 2011 compared to $126 million for the nine months ended September 30, 2010. Cash used in investing activities from continuing operations for the nine months ended September 30, 2011 was driven by capital expenditures of $439 million and contributions to joint ventures of $7 million, offset in part by proceeds from dispositions of assets of $26 million and other sources of funds of $10 million. Cash used in investing activities from continuing operations for the nine months ended September 30, 2010 was driven by capital expenditures of $136 million, contributions to joint ventures of $9 million and other uses of funds of $7 million, offset in part by proceeds from dispositions of assets of $26 million. Cash provided by investing activities from discontinued operations was $45 million for the nine months ended September 30, 2011 primarily due to proceeds from the disposition of the company’s envelope products business on February 1, 2011. Cash provided by investing activities from discontinued operations was $59 million for the nine months ended September 30, 2010 primarily due to proceeds from the disposition of the company’s media and entertainment business on September 30, 2010.

Capital spending in 2011 associated with the expansion of MWV’s corrugated packaging business in Brazil is expected to be about $325 million. For the nine months ended September 30, 2011, capital spending associated with the expansion was $211 million. Total spending for the expansion is estimated to be about $475 million and construction is expected to be completed early in the second half of 2012. In addition to the estimated expenditures associated with the expansion in Brazil, capital spending in 2011 related to productivity initiatives, as well as maintenance capital and environmental compliance, is expected to range from $300 million to $350 million.

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MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

Financing activities

Cash used in financing activities from continuing operations was $44 million for the nine months ended September 30, 2011 compared to $327 million for the nine months ended September 30, 2010. Cash used in financing activities from continuing operations for the nine months ended September 30, 2011 was driven by dividend payments of $127 million, repayment of long-term debt of $40 million and changes in book overdrafts of $11 million. Cash provided by financing activities from continuing operations for the nine months ended September 30, 2011 included proceeds from the issuance of long-term debt of $79 million (primarily related to funding the company’s expansion in Brazil), proceeds from the exercise of employee stock options of $36 million, changes in notes payable and other short-term borrowings of $15 million and other sources of funds of $4 million. Cash used in financing activities from continuing operations for the nine months ended September 30, 2010 was driven by repayment of long-term debt of $130 million, dividend payments of $118 million, common stock repurchases of $91 million, changes in book overdrafts of $4 million and other uses of funds of $2 million. Cash provided by financing activities from continuing operations for the nine months ended September 30, 2010 included changes in notes payable and other short-term borrowings of $11 million, proceeds from the exercise of employee stock options of $5 million and proceeds from the issuance of long-term debt of $2 million.

The company has available a $600 million bank credit facility that expires in October 2012. Borrowings under this agreement can be in unsecured domestic or Eurodollar notes and at rates approximating Prime or the London Interbank Offered Rate (“LIBOR”) at the company’s option. The revolving credit agreement contains a financial covenant limiting the percentage of total debt to total capitalization (including deferred income tax liabilities) to 55%, as well as certain other covenants with which the company is in compliance. The revolving credit facility was undrawn at September 30, 2011 and December 31, 2010. 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.

Funding for the company’s expansion in Brazil will be from current cash levels and cash generated from operations in Brazil, as well as from borrowings through the Brazilian Development Bank (“BNDES”). Amounts borrowed under this facility will fund qualifying equipment purchases in accordance with the BNDES agreement and will incur a fixed rate of interest of 5.5%. Borrowings under this facility will be denominated in Brazilian Real currency. Principal payments will commence in 2013 with final maturity in 2020. Repayment of this debt is expected to be funded from operating cash flow generated in Brazil. Approximately $65 million was drawn under this facility at September 30, 2011. Total remaining capacity of this facility in Brazilian Real currency was R$350 million at September 30, 2011 (U.S. dollar equivalent of approximately $190 million).

The effects of foreign currency exchange rate changes on cash and cash equivalents had an unfavorable impact of $11 million and $9 million for the nine months ended September 30, 2011 and 2010, respectively.

The company’s percentage of total debt to total capital (shareholders’ equity and total debt) was 38% at both September 30, 2011 and December 31, 2010.

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MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

ENVIRONMENTAL AND LEGAL MATTERS

Our operations are subject to extensive regulation by federal, state and local authorities, as well as regulatory authorities with jurisdiction over foreign operations of the company. Due to changes in environmental laws and regulations, the application of such regulations, 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 $52 million and $41 million in environmental capital expenditures in 2011 and 2012, respectively. Approximately $23 million was spent on environmental capital projects in 2010.

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 September 30, 2011, MeadWestvaco had recorded liabilities of approximately $24 million for estimated potential cleanup costs based upon its close monitoring of ongoing activities and its past experience with these matters. The company believes that it is reasonably possible that costs associated with these sites may exceed amounts of recorded liabilities by an amount that could range from an insignificant amount to as much as $20 million. This estimate is less certain than the estimate upon which the environmental liabilities were based. After consulting with legal counsel and after considering established liabilities, it is our judgment that the resolution of pending litigation and proceedings is not expected to have a material adverse effect on the company’s consolidated financial condition or liquidity. In any given period or periods, however, it is possible such proceedings or matters could have a material effect on the results of operations.

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 September 30, 2011, there were approximately 520 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 September 30, 2011, the company had recorded litigation liabilities of approximately $34 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.

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MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

SIGNIFICANT TRANSACTIONS

Discontinued operations

Discontinued operations for the three and nine months ended September 30, 2011 and 2010 primarily relates to the company’s sale of its envelope products business on February 1, 2011 and the sale of its media and entertainment packaging business on September 30, 2010. There was no impact from discontinued operations on results for the three months ended September 30, 2011. Results from discontinued operations were an after-tax loss of $124 million for the three months ended September 30, 2010. Results from discontinued operations were an after-tax loss of $6 million and $135 million for the nine months ended September 30, 2011 and 2010, respectively. Refer to Note 14 of Notes to Consolidated Financial Statements for further information.

Restructuring charges

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 the three and nine months ended September 30, 2011 and 2010 are pursuant to the 2008 program. Cumulative charges since the inception of the 2008 program through September 30, 2011 were $268 million. 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 three and nine months ended September 30, 2011 and 2010 are presented below.

Three months ended September 30, 2011

In millions	Employee-related costs						Asset write-downs and other costs						Total
	COS		SG&A		Total		COS		SG&A		Total		COS		SG&A		Total
Consumer Solutions	$	0	$	1	$	1	$	1	$	0	$	1	$	1	$	1	$	2
Packaging Resources		0		1		1		1		0		1		1		1		2
All other(1)		0		1		1		0		2		2		0		3		3
Total charges	$	0	$	3	$	3	$	2	$	2	$	4	$	2	$	5	$	7

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

Three months ended September 30, 2010

In millions	Employee-related costs						Asset write-downs and other costs							Total
	COS		SG&A		Total		COS			SG&A		Total		COS			SG&A		Total
Consumer Solutions	$	9	$	1	$	10	$	2		$	0	$	2	$	11		$	1	$	12
All other(1)		0		3		3		(1	)		1		0		(1	)		4		3
Total charges	$	9	$	4	$	13	$	1		$	1	$	2	$	10		$	5	$	15

⁽¹⁾  Includes $2 million related to employee relocation costs.

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MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

Nine months ended September 30, 2011

In millions	Employee-related costs						Asset write-downs and other costs						Total
	COS		SG&A		Total		COS		SG&A		Total		COS		SG&A		Total
Consumer Solutions	$	5	$	1	$	6	$	1	$	1	$	2	$	6	$	2	$	8
Packaging Resources		0		1		1		2		0		2		2		1		3
All other(1)		0		5		5		0		5		5		0		10		10
Total charges	$	5	$	7	$	12	$	3	$	6	$	9	$	8	$	13	$	21

⁽¹⁾  Includes $5 million related to employee relocation costs.

Nine months ended September 30, 2010

In millions	Employee-related costs						Asset write-downs and other costs							Total
	COS		SG&A		Total		COS			SG&A		Total		COS			SG&A		Total
Consumer Solutions	$	23	$	4	$	27	$	4		$	0	$	4	$	27		$	4	$	31
All other(1)		0		4		4		(3	)		3		0		(3	)		7		4
Total charges	$	23	$	8	$	31	$	1		$	3	$	4	$	24		$	11	$	35

⁽¹⁾  Includes $3 million related to employee relocation costs.

CRITICAL ACCOUNTING POLICIES

Our principal accounting policies are described in theSummary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements of our Annual Report on Form 10-K for the year ended December 31, 2010. Those accounting policies that management believes require the exercise of judgment, where a different set of judgments could result in the greatest changes to reported results, are detailed inCritical Accounting Policies ofManagement’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2010. 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 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.

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MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

NEW ACCOUNTING GUIDANCE

In June 2011, the Financial Accounting Standards Board (the “FASB”) issued new accounting guidance regarding the presentation of comprehensive income. The new guidance requires the presentation of items of net income and comprehensive income in either a single continuous financial statement or in two separate but consecutive financial statements. This accounting guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The impact of adoption will not have a material effect on the company’s consolidated financial statements.

In September 2011, the FASB issued new accounting guidance regarding the testing of goodwill for impairment. The new guidance permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the required annual goodwill impairment test. This accounting guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011; however, early adoption is permitted. The company intends to adopt the above provisions effective for its annual goodwill test to be performed in the fourth quarter of 2011. The impact of adoption will not have a material effect on the company’s consolidated financial statements.

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, including divestitures; the reorganization of the company’s packaging business units; 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 execute its plans to divest or otherwise realize the greater value associated with its 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 the company’s Annual Report on Form 10-K for the year ended December 31, 2010, 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.

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MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For a discussion of the company’s exposure to market risk, refer to Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” contained in the company’s Annual Report on Form 10-K for the year ended December 31, 2010. There was no material change in the company’s exposure to market risk from December 31, 2010 to September 30, 2011.

Item 4. CONTROLS AND PROCEDURES

Evaluation of the Company’s Disclosure Controls and Procedures.

As of the end of the period covered by this Quarterly Report on Form 10-Q, we evaluated the effectiveness of our “disclosure controls and procedures” (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934). This evaluation was conducted under the supervision and with the participation of management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”). Based on the evaluation of disclosure controls and procedures, our CEO and CFO have concluded that the disclosure controls and procedures were effective, as of September 30, 2011, 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 three months ended September 30, 2011, 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.

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MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

During the three months ended September 30, 2011, there have been no material changes to legal proceedings from those discussed in our Annual Report on Form 10-K for the year ended December 31, 2010.

Item 1A. RISK FACTORS

During the three months ended September 30, 2011, there have been no material changes to the risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2010.

Item 6. EXHIBITS

10.1	Amended and Restated MeadWestvaco Corporation 2005 Performance Incentive Plan (incorporated by reference to Annex A to MWV’s Proxy statement, dated March 17, 2011 filed with the Securities and Exchange Commission).
10.2	Rabbi Trust Agreement dated September 29, 2011 between MeadWestvaco Corporation and Union Bank, N.A. effective October 15, 2011.
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

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MEADWESTVACO CORPORATION

and Consolidated Subsidiary Companies

SIGNATURES

Pursuant to the requirements 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)
November 2, 2011	/s/ E. Mark Rajkowski
	E. Mark Rajkowski
	Chief Financial Officer

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