MeadWestvaco Reports Improved Fourth Quarter Results

Income from continuing operations improved over the fourth quarterof 2004, despite a significant increase in cost inflation for energy,raw materials and transportation, as a result of higher sellingprices, lower general and administrative costs, lower restructuringcharges, lower interest expense and a lower effective tax rate.

"Markets for the company's products remained stable during thequarter, although well below the robust levels of 2004," said John A.Luke, Jr., chairman and chief executive officer. "We realized higherselling prices across most of our businesses during the quarter as wecontinued to combat inflation in energy and raw material costs and theripple effects from the Gulf Coast hurricanes.

"As we focus on building our global leadership position inpackaging and packaging solutions, we are aggressively driving ourcost initiative forward in order to establish a more flexible, leanand responsive business model," continued Mr. Luke. "Clearly, with anannual run rate savings of about $65 million from our cost initiative,we are beginning to see the tangible results and benefits of thisprogram. We are well positioned for success as we work towardexpanding in key growth markets."

Quarter and Full-year Comparisons

In the fourth quarter of 2005, the company reported income fromcontinuing operations of $60 million, or $0.33 per share, and incomefrom discontinued operations of $2 million, or $0.01 per share. Theseresults included after-tax restructuring charges of $3 million, or$0.02 per share, and after-tax gains on forestland sales of $2million, or $0.01 per share. Sales revenue in the quarter was $1.6billion. In the fourth quarter of 2004, the company reported a netloss of $499 million, or $2.43 per share, which included an after-taxloss on discontinued operations of $541 million, or $2.63 per share.Income from continuing operations for the fourth quarter of 2004 was$42 million, or $0.20 per share. Results in the fourth quarter of 2004included after-tax restructuring charges of $23 million, or $0.11 pershare, and after-tax gains on the sale of forestland of $17 million,or $0.08 per share. Sales revenue in the fourth quarter of 2004 was$1.6 billion.

For the full year of 2005, sales from continuing operations were$6.2 billion. Sales from continuing operations exclude 2005 revenuefrom the company's printing and writing papers business, which wassold in the second quarter of 2005. Net income for 2005 was $28million, or $0.14 per share, including an after-tax loss fromdiscontinued operations of $91 million, or $0.48 per share; after-taxdebt retirement charges of $56 million, or $0.29 per share; after-taxrestructuring charges of $20 million, or $0.10 per share; andafter-tax gains of $37 million on the sale of forestlands, or $0.19per share. Income from continuing operations for the full year of 2005was $119 million, or $0.62 per share.

For the full year of 2004, the company reported a net loss of $349million, or $1.72 per share. The net loss for 2004 includes anafter-tax loss from discontinued operations of $573 million, or $2.82per share, associated with the sale of the printing and writing papersbusiness; after-tax restructuring charges of $67 million, or $0.33 pershare; and after-tax gains on the sale of forestlands of $110 million,or $0.54 per share. Income from continuing operations for the fullyear of 2004 was $224 million, or $1.10 per share.

Packaging

In its Packaging business, the company's largest segment,operating profit in the fourth quarter was $77 million compared to$118 million for the same period of 2004. Sales revenue of $1.2billion was similar to the fourth quarter of 2004. The decline was dueto higher raw material and energy costs, lower shipment and productionlevels in bleached paperboard due in part to the lingering effects ofthe hurricanes and the impact of market-related downtime. In consumerpackaging, declines in the media markets, compared to a strong fourthquarter in 2004, offset growth in markets for cosmetics, healthcareand tobacco.

The Packaging segment's full year 2005 operating profit was $336million compared to $431 million in 2004. Sales for the full year were$4.5 billion, compared to $4.4 billion in the prior year.

Consumer & Office Products

In the Consumer & Office Products segment, quarterly operatingprofit was $59 million, an increase of 18% from $50 million in theprior year. Sales revenue of $328 million increased 8% from $303million in the prior year. The increase in operating profit reflectsgrowth in the Brazilian school and office products business acquiredin the third quarter of 2004, cost savings from actions taken in prioryears to consolidate facilities, improved sales mix and higher sellingprices. The effect of these improvements was offset in part by higherinput costs, primarily costs for uncoated paper and freight.

The Consumer & Office Products segment full year 2005 operatingprofit was $130 million, compared to $137 million in 2004. Sales in2005 were $1.1 billion up slightly from 2004.

Specialty Chemicals

In the Specialty Chemicals segment, quarterly operating profit was$6 million compared to $11 million in the prior year. Sales revenuefor the segment was $107 million, down slightly from $109 million inthe fourth quarter of 2004. The positive effect of higher sellingprices was more than offset by higher raw material costs, especiallyfor crude tall oil, and by higher energy costs.

The Specialty Chemicals segment full year 2005 operating profitwas $39 million compared to $57 million in 2004. Sales in 2005 were$425 million, compared to $410 million in 2004.

Outlook

The company expects its markets overall to remain stable in thefirst quarter of 2006, although at a more moderate level than duringthe first quarter of 2005. The first quarter of the year is aseasonally weak period for the Consumer & Office Products business andfor some of the company's packaging markets. The company expects tocontinue to implement higher selling prices based on previouslyannounced price increases in an effort to offset ongoing pressuresfrom cost inflation in energy and raw materials.

Other Items

During the fourth quarter of 2005, prices for energy, rawmaterials and freight increased by approximately $50 million comparedto prior year.

The 2005 full year effective tax rate was 12% compared to 31% for2004. The decline in the rate is due to a lower proportion of domesticearnings in 2005, a change in the allocation of state taxes as aresult of the sale of the printing and writing paper business and taxcredits.

For the full year of 2005, operating cash flow from continuingoperations was approximately $300 million, which included a taxpayment of approximately $160 million related to the divestiture ofthe printing and writing papers business. Capital spending was $305million in 2005, a rate well below annual depreciation.

During 2005, the company repurchased a total of 24.2 millionshares, or 12% of the shares outstanding as of May 2005, usingproceeds from the sale of the printing and writing papers business.The company has been authorized by the Board of Directors torepurchase up to 5 million additional shares, primarily to avoiddilution of earnings per share relating to the exercise of employeestock options. At the end of 2005, the number of actual sharesoutstanding was 181.4 million, compared to 203.9 million shares at theend of 2004.

During 2005, the company reduced its total debt by $1.2 billion,and improved total debt to total capital ratio to 41.1% at December31, 2005 compared to 45.9% at December 31, 2004.

During the fourth quarter of 2005, pension income beforesettlements and curtailments was $16 million, compared to $21 millionduring the fourth quarter of 2004. For the full year of 2005, pensionincome was $67 million, compared to $86 million for the full year of2004.

MeadWestvaco paid a regular quarterly dividend of 23 cents pershare during the quarter and, on January 24, 2006, declared aquarterly dividend payable March 1, 2006, to stockholders of record atthe close of business on February 3, 2006. For the full year 2005, thecompany paid out $178 million in dividends to shareowners.

Conference Call

MeadWestvaco will broadcast its fourth quarter analyst conferencecall today at 10 a.m. (ET), with access available via Internet on thecompany's website and by telephone. To access via the Internet, go tothe company's home page at www.meadwestvaco.com and access the link toInvestor Information, then Financial Calendar, and look for the linkto the webcast. Investors may participate in the live conference callby dialing 1 (888) 276-0010 (toll-free domestic) or 1 (612) 332-0634(international); passcode: MeadWestvaco. Please call to register atleast ten minutes before the conference call begins. A replay of thecall will be available for one month via the telephone, starting at1:30 p.m. (ET) today and can be accessed at 1 (800) 475-6701(toll-free domestic) or 1 (320) 365-3844 (internationally); accesscode: 806130.

MeadWestvaco, headquartered in Stamford, Conn., is a globalpackaging company that delivers high-value packaging solutions andproducts to the world's most recognized companies in the food andbeverage, media and entertainment, personal care, cosmetic andhealthcare industries. The company also has market-leading positionsin its Consumer & Office Products, Specialty Chemicals and SpecialtyPapers businesses. MeadWestvaco, with operations in more than 29countries, has been selected for the Dow Jones Sustainability Indexes,and manages all of its forestlands in accordance with internationallyrecognized forest certification standards. For more information,please visit www.meadwestvaco.com.

Forward-looking Statement

Certain statements in this document and elsewhere by management ofthe company that are neither reported financial results nor otherhistorical information are "forward-looking statements" within themeaning of the Private Securities Litigation Reform Act of 1995. Suchinformation includes, without limitation, the business outlook,assessment of market conditions, anticipated financial and operatingresults, strategies, future plans, contingencies and contemplatedtransactions of the company. Such forward-looking statements are notguarantees of future performance and are subject to known and unknownrisks, uncertainties and other factors which may cause or contributeto actual results of company operations, or the performance orachievements of each company, or industry results, to differmaterially from those expressed or implied by the forward-lookingstatements. In addition to any such risks, uncertainties and otherfactors discussed elsewhere herein, risks, uncertainties and otherfactors that could cause or contribute to actual results differingmaterially from those expressed or implied for the forward-lookingstatements include, but are not limited to, events or circumstanceswhich affect the ability of MeadWestvaco to realize improvements inoperating earnings expected from the company's general andadministrative cost reduction initiative; competitive pricing for thecompany's products; changes in raw materials pricing; energy and othercosts; fluctuations in demand and changes in production capacities;changes to economic growth in the United States and internationaleconomies; government policies and regulations, including, but notlimited to those affecting the environment and the tobacco industry;adverse results in current or future litigation, currency movementsand other risk factors discussed in the company's Annual Report onForm 10-K for the year ended December 31, 2004, and in other filingsmade from time to time with the SEC. MeadWestvaco undertakes noobligation to publicly update any forward-looking statement, whetheras a result of new information, future events or otherwise. Investorsare advised, however, to consult any further disclosures made onrelated subjects in the company's reports filed with the SEC.

Consolidated statements
of operations
In millions, except
per share data
Fourth Quarter
ended Year ended
(Unaudited) December 31, December 31,
-------------------------------------------
2005 2004(1) 2005 2004(1)
-------------------------------------------
Net sales $1,627 $1,621 $6,170 $6,060

Cost of sales 1,342 1,323 5,087 4,925
Selling, general and
administrative expenses 189 219 756 800
Interest expense 50 56 208 209
Other (income) expense, net (17) (39) (16) (197)
-------------------------------------------
Income from continuing
operations before
income taxes 63 62 135 323
Income tax provision 3 20 16 99
-------------------------------------------

Income from continuing
operations 60 42 119 224
Income (loss) from
discontinued operations,
net of tax 2 (541) (91) (573)
-------------------------------------------

Net income (loss) $ 62 $ (499) $ 28 $ (349)
===========================================

Income (loss) per share,
basic:
Income from continuing
operations $ .33 $ .21 $ .62 $ 1.11
Discontinued operations .01 (2.67) (.48) (2.84)
-------------------------------------------
Net income (loss) per
share, basic $ .34 $(2.46) $ .14 $(1.73)
===========================================

Income (loss) per share,
diluted:
Income from continuing
operations $ .33 $ .20 $ .62 $ 1.10
Discontinued operations .01 (2.63) (.48) (2.82)
-------------------------------------------
Net income (loss) per
share, diluted $ .34 $(2.43) $ .14 $(1.72)
===========================================

Shares used to compute net
income (loss) per share:
Basic 181.0 203.1 191.7 201.9
Diluted 181.9 205.6 192.7 203.6


(1) Prior period amounts have been adjusted to reflect discontinued
operations in order to conform to the December 31, 2005
presentation.

MeadWestvaco Corporation and consolidated subsidiary companies


Consolidated balance sheets

In millions, except share amounts At December 31, At December 31,
(Unaudited) 2005 2004(1)
--------------------------------
Assets
Cash and cash equivalents $ 297 $ 270
Short-term investments - 5
Receivables, net 903 845
Inventories 714 735
Other current assets 86 170
Current assets of discontinued
operations - 537
--------------------------------
Current assets 2,000 2,562

Property, plant, equipment and
forestlands, net 4,487 4,688
Prepaid pension asset 994 1,040
Goodwill 559 557
Other assets 838 834
Non-current assets of discontinued
operations - 2,000
--------------------------------
$8,878 $11,681
================================
Liabilities and shareholders' equity
Accounts payable $ 416 $ 432
Accrued expenses 613 722
Notes payable and current maturities
of long-term debt 13 234
Current liabilities of discontinued
operations - 257
--------------------------------
Current liabilities 1,042 1,645

Long-term debt, excluding current
portion 2,417 3,282
Other long-term obligations 814 778
Deferred income taxes 1,122 1,505
Non-current liabilities of
discontinued operations - 154
Shareholders' equity (common shares
issued: December 31, 2005 -
181,418,672; December 31, 2004 -
203,930,342) 3,483 4,317
--------------------------------
$8,878 $11,681
================================

Business segment information
In millions (Unaudited)

Fourth Quarter
ended Year ended
December 31, December 31,
Sales 2005 2004(1) 2005 2004(1)
-------------------------------------------
Packaging $1,154 $1,171 $4,476 $4,402
Consumer & Office
Products 328 303 1,125 1,090
Specialty Chemicals 107 109 425 410
Corporate and other (2) 56 57 213 216
-------------------------------------------
Total 1,645 1,640 6,239 6,118
Intersegment eliminations (18) (19) (69) (58)
-------------------------------------------
Consolidated totals $1,627 $1,621 $6,170 $6,060
===========================================
Segment profit (loss)
Packaging $ 77 $ 118 $ 336 $ 431
Consumer & Office Products 59 50 130 137
Specialty Chemicals 6 11 39 57
Corporate and other (3) (79) (117) (370) (302)
-------------------------------------------
Consolidated totals (4) $ 63 $ 62 $ 135 $ 323
===========================================

(1) Prior period amounts have been adjusted to reflect discontinued
operations and certain other reclassifications in order to conform
to the December 31, 2005 presentation.

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

(3) Corporate and other may include goodwill impairment charges,
minority interest, debt retirement charges, restructuring
expenses, pension income, interest expense and gains on asset
sales.

(4) The consolidated total represents income from continuing
operations before income taxes.

MeadWestvaco Corporation and consolidated subsidiary companies