meadwestvaco 4Q07_Earnings_Slides

FOURTH QUARTER AND FISCAL YEAR 2007 EARNINGS

February 1, 2008

John A. Luke, Jr.Chairman and CEO

James A. BuzzardPresident

E. Mark RajkowskiSenior Vice President and CFO

Insights &Innovation

PackagingMaterials

Primary &SecondaryPackaging

Systems &Services

2

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 expected from the company’s cost reduction initiative; competitive pricing for the company’s products; changes in raw materials pricing; energy and other costs; fluctuations in demand and changes in production capacities; changes to economic growth in the United States and international economies; government policies and regulations, including, but not limited to those affecting the environment and the tobacco industry; the company’s continued ability to reach agreement with its unionized employees on collective bargaining agreements; the company’s ability to execute its plans to divest or otherwise realize the greater value associated with its forestlands; adverse results in current or future litigation; currency movements; and other risk factors discussed in the company’s Annual Report on Form 10-K for the year ended December 31, 2006, 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.

John A. Luke, Jr.Chairman and Chief Executive Officer

4

Fourth Quarter & Full-Year Summary

• Solid Full-Year 2007 sales and earnings growth

• Improved cash from operations and maintained cost initiative momentum

• Sold non-strategic forestlands and completed $400M share buyback

• Further strengthened global packaging platform; 50% of sales outside U.S.

Sales

4%

Full-Year

2007 vs. 2006-3%Business Segment

Profit

Fourth Quarter

2007 vs. 2006

Sales

6%BusinessSegment

Profit

7%

5

COMMITMENTS RESULTS

Formed Community Development and Land Management Group

Auctioned 400,000 acres of forestlands

Returned $400 million in proceeds to shareholders

Land Management

Operated well

Commercial success

Increased productivityExecution

Cash flow = $630+ million

G&A improvementCosts & Working Capital

Sales increased 6%

Business segment profit up $38 millionProfitable Growth & Earnings Improvement

6

• Opened packaging facility in Wuxi, China

• Acquired Keltec & Hayes for pump and sprayer business

• Signed marketing agreement with Klabin (Brazil)

• Licensed Natralock® technology

2007 PACKAGING PLATFORM ACHIEVEMENTS

7

MARKET GLOBAL OUTLOOK

BEVERAGE & FOOD

PERSONAL CARE

HEALTHCARE

TOBACCO

TARGETED GLOBAL MARKETS

+ 5%

+ 5%

+ 1%

+ 2%

James A. BuzzardPresident

9

Packaging Resources

• Pricing actions and product mix offset high input cost increases, with price improvements realized in all key grades.

• Lower volume driven by efforts to focus on most profitable business, shifting away from lower-value grades.

• Export sales up 8% driven by tobacco, building and industrial, and commercial print.

• Strong Rigesa performance

4Q07 vs. 4Q06 FY07 vs. FY06

Segment Sales $755 million $3.02 billion

Segment Profit $80 million $322 million

4%

19%

2%

17%

10

Consumer Solutions

• Top-line growth in global beverage and healthcare packaging businesses.

• Steep increase in input costs, weaker media pricing and costs for Wuxiplant ramp-up and Keltec start-up impacted results.

4Q07 vs. 4Q06 FY07 vs. FY06



5% 12%

-52% -8%

11

Consumer & Office Products

• Good performance from higher value, proprietary branded products.

• Stronger results from the company’s Brazilian business, Tilibra.

• Negatively impacted by higher input costs and lower volume.

4Q07 vs. 4Q06 FY07 vs. FY06


Segment Profit $66 million $139 millionFLAT

FLAT

9%

-1%

12

Specialty Chemicals

• Lower North American automotive sales and weak demand for ink resins negatively impacted both volume and mix.

• Higher input costs negatively impacted earnings. Continue to achieve higher price realizations throughout business.

4Q07 vs. 4Q06 FY07 vs. FY06

Segment Sales $123 million $493 million


FLAT5%

-27%-25%

E. Mark RajkowskiSenior Vice President and Chief Financial Officer

14

Key Financial Information

(In millions, pre-tax) 4Q 2007 4Q 2006 Change FY 2007 FY 2006 Change

Sales 1,852$ 1,775$ 4% 6,906$ 6,530$ 6%Adjusted Gross Margin 1 334 343 -3% 1,253 1,184 6%Adjusted SG&A 2 215 215 0% 833 803 4%Profit from Segments 3 168 174 -3% 584 546 7%Adjusted EBIT 4 134$ 144$ -7% 460$ 426$ 8% Adjusted Gross Margin % 18.0% 19.3% (130) bps 18.1% 18.1% - bps

Adjusted SG&A % 11.6% 12.1% (50) bps 12.1% 12.3% (20) bps

1 Adjusted gross margin excludes restructuring charges and one-time costs of $33 million and $16 million for the fourth quarter ended 2007 and 2006, respectively, and restructuring charges and one-time costs of $58 million and $53 million for the year ended 2007 and 2006, respectively. 2 Adjusted SG&A expense excludes restructuring charges and one-time costs of $11 million and $45 million for the fourth quarter ended 2007 and 2006, respectively. Adjusted SG&A expense excludes restructuring charges and one-time costs of $48 million and $102 million for the year ended 2007 and 2006, respectively.

3 Profit from segments defined as the sum of the segment profits of the Packaging Resources, Consumer Solutions, Consumer and Office Products, and Specialty Chemicals segments and excludes Corporate and Other profit/(loss), which includes restructuring charges and one-time costs.4 Adjusted EBIT excludes restructuring charges and one-time costs of $46 million and $73 million for the fourth quarter ended 2007 and 2006, respectively. Adjusted EBIT also excludes interest income of $9 million and $2 million in fourth quarter ended 2007 and 2006, respectively, and a gain of $167 million related to the sale of Alabama timberlands in the fourth quarter ended 2007 and $18 million related to the sale of corporate real estate in fourth quarter ended 2006. Adjusted EBIT excludes restructuring charges and one-time costs of $110 million and $176 million for the year ended 2007 and 2006, respectively. Adjusted EBIT also excludes interest income of $20 million in both the years ended 2007 and 2006 and a gain of $250 million related to the sale of Alabama and West Virginia timberlands in the year ended 2007. Adjusted EBIT also excludes gains of $21 million related to the sale of a note and $18 million of the sale of corporate real estate received during the year ended 2006. Adjusted EBIT includes remaining portion of Other Income/(Expense) after exclusion of interest expense and the items outlined above.

15

Total Company – 4Q 07 vs. 4Q 06Income Before Taxes

$ m

illio

ns

$36 ($15) $44 ($40)

($2)

($10)$27$167

$207

$0

$50

$100

$150

$200

$250

4Q 06 ActualVolume

Price/Mix

Energy/Mat'l/Frght Price

Net Cost Productivity

Alabama Timberland Sale

Restruct./One-time Items

Other

4Q 07 Actual

16

Total Company – FY 07 vs. FY 06Income Before Taxes

$ m

illio

ns

$400$250

$44 ($2)

$66 ($141) $144

($59) $98

$0$50

$100$150$200$250$300$350$400$450

FY 06 ActualVolume

Price/Mix

Energy/Mat'l/Frght Price

Net Cost Productivity

AL/WV Timberland Sales

Restruct./One-time Items

Other

FY 07 Actual

17

Appendix

18

Bleached Board

• Markets generally strong in key grades

• Continue to look for opportunities to increase growth of higher-value business

• Pursuing additional price increases in targeted segments of SBS business to offset higher input costs

Shipments: 383,000 tons in 4Q07, down 5% vs. 4Q06

1,579,000 tons in FY07, down 4% vs. FY06

Pricing: Up $34 per ton vs. 4Q06; +4%

Up $35 per ton vs. FY06; +4%

Backlogs: Approximately 2 weeks

19

Coated Natural Kraft

• Decline in beverage sales partially offset by higher sales for CustomKote® for general packaging uses

• Continuing to implement price increases for general packaging grades


1,096,000 tons in FY07, down 3% vs. FY06




20

Unbleached Kraft Paperboard

• Backlogs remain stable

• Continued strength in export markets and general packaging

• Price increases have been implemented, including Kraft Linerboard


839,000 tons in FY07, up 1% vs. FY06




21

Corporate & Other Reconciliation

Corporate & Other Reconciliation($ in millions)

FY 2007

FY 2006

4Q 2007

4Q 2006

3Q 2007

FY '07 vs.

FY '06

4Q '07 vs.

4Q '06

4Q '07 vs.

3Q '07Corporate & Other - As Reported (184) (448) 39 (138) (28) 264 177 67

Remove:Restructuring charges 85 133 41 54 20 (48) (13) 21 One-time costs 25 42 5 19 6 (17) (14) (1) PIK Note gain - (21) - - - 21 - - Total restructuring & one-time items 110 154 46 73 26 (44) (27) 20 Subtotal (74) (294) 85 (65) (2) 220 150 87

Remove:Pension credit (54) (49) (14) (11) (13) (5) (3) (1) Interest expense 219 211 56 54 55 8 2 1 Interest income (20) (20) (9) (2) (4) - (7) (5) Transition services revenue - (5) - - - 5 - - Sales and Use Tax Refund (6) - - - - (6) - - Gain on sale of corporate real estate - (29) - (18) - 29 18 - AL/WV Timberland sales gains (250) - (167) - (83) (250) (167) (84) Other land sales gains (24) (29) (12) (16) (5) 5 4 (7)

Corporate & Other - As Adjusted (209) (215) (61) (58) (52) 6 (3) (9)

22

Adjusted SG&A – 4Q 07 vs. 4Q 06

* See slide 14 for definition of Adjusted SG&A

$ m

illio

ns

$215$6 ($6) ($6) $6 $215

$150

$175

$200

$225

4Q 06 Actual*

Inflation

G&A TransformationOther/Savings

Foreign Exchange

4Q 07 Actual*

23

Adjusted SG&A – FY 07 vs. FY 06$

mill

ions

* See slide 14 for definition of Adjusted SG&A

$15 $833$29 ($13) ($25) $24

$803

$600

$650

$700

$750

$800

$850

FY 06 Actual*

Inflation

G&A TransformationCSG/Other SavingsPortfolio

Foreign ExchangeFY 07 Actual*

24

Packaging Resources - Segment Profit4Q 07 vs. 4Q 06

$ m

illio

ns

($24)$4$3 $80

($2)

$32 $67

$0$20$40$60$80

$100$120$140

4Q 06 Actual

Volume

Price/Mix

Energy/Mat'l/Frght PriceNet Cost ProductivityOther

4Q 07 Actual

25

Packaging Resources - Segment ProfitFY 07 vs. FY 06

$ m

illio

ns

($77) $322 $35 $7 ($6)

$88 $275

$0$50

$100$150$200$250$300$350$400

FY 06 Actual

Volume

Price/Mix


FY 07 Actual

26

Consumer Solutions – Segment Profit4Q 07 vs. 4Q 06

$ m

illio

ns

$33 ($3)($3)($9)

$4 $16($6)

$0$5

$10$15$20$25$30$35

4Q 06 Actual

Volume

Price/Mix


4Q 07 Actual

27

Consumer Solutions – Segment ProfitFY 07 vs. FY 06

$ m

illio

ns

$93

($8)

($23)

($26)

$30 $86

$20

$0

$25

$50

$75

$100

FY 06 Actual

Volume

Price/Mix


FY 07 Actual

28

Consumer & Office Products – Segment Profit4Q 07 vs. 4Q 06

$ m

illio

ns

$66 $10 ($8) ($4) ($1) $66 $3

$0

$50

$100

$150

4Q 06 Actual

Volume

Price/Mix


4Q 07 Actual

29

Consumer & Office Products – Segment ProfitFY 07 vs. FY 06

$ m

illio

ns $127 $43

($18) ($22)

$5 $139$4

$0

$50

$100

$150

$200

FY 06 Actual

Volume

Price/Mix


FY 07 Actual

30

Specialty Chemicals – Segment Profit4Q 07 vs. 4Q 06

$ m

illio

ns

($4)

$6$1

($5)

($2)

$8

$8

$0

$5

$10

$15

$20

$25

4Q 06 Actual

Volume

Price/Mix


4Q 07 Actual

31

Specialty Chemicals – Segment ProfitFY 07 vs. FY 06

$ m

illio

ns $37($11)

($25)

($11)

$33

$51

$0

$25

$50

$75

FY 06 Actual

Volume

Price/Mix

Energy/Mat'l/Frght PriceOther

FY 07 Actual

Economy & Finance

meadwestvaco 4Q07_Earnings_Slides