EXHIBIT 13

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS


ANALYSIS OF OPERATIONS

Fiscal year 2000 financial results benefited from improved markets and from
companywide initiatives taken following a comprehensive strategic review
completed in 1999. These initiatives include the acquisition of a well-invested
bleached paperboard mill in Evadale, TX, and the acquisitions of Mebane
Packaging Group (Mebane) and the IMPAC Group, Inc. (IMPAC), as well as steps to
reduce costs, improve product mix and strengthen our market positions. Sales for
fiscal 2000 were $3.7 billion, a 30.7% increase compared to 1999, and reflect an
increase in volume of 24.9% and a 5.8% benefit from price and product mix
improvement. Sales from acquisitions completed in 2000 represented two-thirds of
the increase in sales. Net income in 2000 was $245.9 million, or $2.44 per
share, basic and diluted, an increase of 121% from 1999 earnings of $111.2
million, or $1.11 per share, basic and diluted. Earnings for fiscal 2000
included a pretax restructuring charge of $27.2 million, or $.18 per share,
resulting primarily from a writedown of assets, due to an anticipated decline in
future sales of folding cartons to U.S. tobacco markets that has not yet
occurred, a pretax gain of $11.2 million, or $.07 per share, from the sale of a
liquid packaging plant previously written down as part of the restructuring
charge in 1999, an after-tax extraordinary charge of $8.8 million, or $.09 per
share, from the early retirement of higher interest rate debt and a pretax gain
of $3.6 million, or $.04 per share, from the sale of our interest in a joint
venture in China (see "Notes to the Financial Statements"). Earnings for 1999
included a pretax restructuring charge of $80.5 million, or $.49 per share,
basic and diluted, in connection with a business performance improvement plan
and an income tax benefit of $15.0 million, or $.15 per share, basic and
diluted, related to a release of deferred taxes, as discussed below.

Export sales from the United States increased 17% compared to 1999 and accounted
for 16% of the company's consolidated sales. Total sales outside of the United
States, including sales of our foreign operating subsidiaries, accounted for
approximately 22% of consolidated sales compared to 24% in the prior year. Gross
profit margin for the year improved to 23% from 20% in the prior year, due
primarily to savings resulting from our 1999 restructuring and other cost
reduction initiatives, partially offset by the impact of a provision to reflect
inventories at LIFO value. Fiscal year 2000 operating results also benefited
from an increase in non-cash pension credits of $26.0 million, reflecting
cumulative favorable investment returns on pension plan assets. We anticipate
that earnings in fiscal year 2001 will benefit from an increase in non-cash
pension credits of $22 million to approximately $130 million before tax.

Packaging segment: Packaging segment sales increased by 46.8% from the prior
year to $2.15 billion in 2000, reflecting the effects of higher shipment volume,
product mix improvement and strong performance by the company's recently
acquired bleached paperboard mill in Evadale, TX; segment volume increased 43.0%
and price and product mix improvements increased revenues by 3.8%. The increase
in shipment volume reflects the contributions by acquisitions including the
Evadale, TX, mill, IMPAC and Mebane. Fourth quarter shipments were well ahead of
1999 fourth quarter levels, but demand softened in the fourth quarter relative
to the second and third quarters of 2000. To balance demand and production, we
took downtime at the Covington, VA, and Evadale, TX, mills of about 12,000 tons.
The company plans to take nearly 35,000 tons of downtime in the first quarter at
the Covington and Evadale bleached paperboard mills to balance demand


<PAGE>


and production. Operating profit for the packaging segment for
2000 increased by 84.4% to $351.2 million due to acquisitions, product mix
improvements, reduced costs and stronger business conditions. Revenues and
profits for Rigesa, Ltda., our Brazilian subsidiary, showed strong improvement
reflecting improved economic conditions in Brazil and product mix enhancements.
During 2000, approximately 19% of packaging segment sales were made to the
tobacco industry compared to about 26% for 1999. About 13% of segment sales were
for overseas tobacco markets with the remaining 6% for tobacco sales in the
United States. Increasingly competitive conditions as well as the current legal
and regulatory pressures on the tobacco industry may have an adverse effect on
packaging segment profitability. While we expect to compensate for such an
adverse effect by continuing our growth in other consumer packaging markets,
these alternatives may not, in the short run, fully offset any decline in
profitability related to sales to the tobacco industry.

Paper segment: Paper segment sales for the year of $1.17 billion increased 13.3%
from the prior year, due to improvements in price and product mix of 8.4% and
volume gains of 4.9%. Sales of coated printing papers increased sharply in 2000
compared to 1999, as new products and a focused selling effort led to an
increase in market share and higher prices. Operating profit for the paper
segment was $140.6 million for the year, compared to $62.0 million for the prior
year period. Coated papers accounted for nearly all of the improvement.
Manufacturing efficiencies, higher prices, higher shipment volumes and cost
reductions contributed to the improvement.

Chemicals segment: Chemicals segment sales for the year increased 9.4% from 1999
to $344.2 million, due to favorable changes in price and product mix of 3.3% and
volume gains of 6.1%. Operating profit for the chemicals segment was $64.5
million compared to $52.5 million in the prior year. This increase reflects
strong U.S. demand in a number of our markets. In the past year, we increased
our market share for tall oil based ingredients used for ink resins. Other
markets for tall oil ingredients including paper size, and rubber emulsifiers
were also strong in response to the strong economy and results were enhanced by
cost savings. Asphalt emulsifier sales increased sharply compared to the prior
year period, due in part to the acquisition of the asphalt emulsion business of
Raschig GmbH in 2000. Our activated carbon business benefited from record U.S.
auto sales and strong global sales.

The above segment discussion does not take into account the restructuring
charges for 2000 and 1999 which are included in Corporate and other segment
information.

Other items: "Other income [expense]" increased from the prior year due to
increased gains on land sales, a gain on the sale of our interest in a folding
carton plant in China and higher interest income from the temporary investment
of cash raised to finance acquisitions. Gains on land sales totaled $31.0
million before tax for 2000 compared to $23.0 million pretax in 1999. We expect
gains on land sales to be in the range of $35 to $40 million before taxes in
2001. Interest expense increased by 56% for the year compared to the prior year,
due to the issuance of long-term debt in the first and third quarters of 2000
and increased commercial paper borrowings to support our acquisition activities.
We expect interest expense to be slightly higher in 2001 reflecting a full year
of higher interest costs related to acquisitions closed in 2000. The effective
tax rate for 2000 increased to 36.9% from 24.9% in the prior year, principally
due to the one-time 1999 release of deferred taxes and the effects of fiscal
2000 goodwill amortization.


ACQUISITIONS

On December 29, 1999, Westvaco completed the acquisition of a bleached
paperboard mill in Evadale, TX from Temple-Inland, Inc. The total purchase price
was $648 million, including $82 million of debt assumed. The transaction also
included a long-term contract with Temple-Inland for the supply of wood fiber to
the mill. The Evadale mill's annual production capacity of 670,000 tons
increased Westvaco's total annual bleached paperboard production capacity to 1.6
million tons.


<PAGE>


On January 7, 2000, Westvaco completed the acquisition of Mebane, a leading
supplier of packaging for pharmaceutical products and personal care items, based
in Mebane, NC. Mebane has seven packaging plants located in the U.S. and Puerto
Rico. This acquisition increased the company's presence in select packaging
markets, particularly pharmaceutical, health care and personal care.

On July 11, 2000, Westvaco completed the acquisition of IMPAC, a leading global
supplier of high-value specialty packaging and printing solutions for a wide
variety of consumer product markets including entertainment, cosmetics and
personal care. The purchase price for IMPAC, which has 13 plants in Europe and
eight in the United States, was approximately $530 million, including the
assumption of $294 million in debt and preferred stock. Westvaco redeemed
substantially all of the debt and all of the preferred stock shortly after
closing. In the fourth quarter, Westvaco acquired three additional foreign
plants which expanded our reach in the DVD, multimedia and music packaging
markets.

All of the acquisitions completed during the current year were accounted for
using the purchase method. The operating results of the acquisitions have been
included in the "Consolidated Statements of Income" from the dates of
acquisition. The accompanying "Consolidated Balance Sheets" as of October 31,
2000, reflects preliminary allocations of the purchase prices of the current
year's acquisitions to the fair value of the assets acquired and liabilities
assumed. Related goodwill of approximately $610 million, representing the excess
of purchase price over fair value of net assets acquired, is amortized on a
straight-line basis over 40 years, which is the expected period to be benefited.

On September 5, 2000, the company announced a definitive agreement to acquire a
majority interest in Alfred Wall AG, a leading European supplier of consumer
packaging based in Graz, Austria. Wall has six packaging plants in Austria,
Germany, Poland and the United Kingdom. The transaction is scheduled to close in
2001. The company expects that Wall's operations will have a neutral effect on
its earnings for about a year before becoming accretive.


FISCAL YEAR 1999

Sales of $2.8 billion for fiscal 1999 were down 2.9% from 1998, the result of a
4.3% decrease in price and product mix, partially offset by a 1.4% improvement
in the volume of shipments. Net income in 1999 was $111.2 million, or $1.11 per
share, basic and diluted, a 15.8% decrease from 1998 earnings of $132.0 million,
or $1.30 per share, basic and diluted. Earnings for the 1999 fiscal year
included a pretax restructuring charge of $80.5 million, or $.49 per share,
basic and diluted, in connection with a business performance improvement plan
and an income tax benefit of $15.0 million, or $.15 per share, basic and
diluted, related to a release of deferred taxes, both recorded in the fourth
quarter. The restructuring charge included $76.0 million for the writedown of
fixed assets. The income tax benefit resulted from a business reorganization
which reduced the company's deferred state income tax liability. Earnings for
1999 included an after-tax gain of $14.0 million, or $.14 per share, basic and
diluted, from the sale of nonstrategic timberlands.

Sales for the year were affected by weak pricing primarily due to global
overcapacity combined with a strong U.S. dollar. During the second half of
fiscal 1999, pressures from lower-priced imported coated printing papers began
to ease as demand increased for papers used in catalogue and direct mail
applications. Late in the third quarter, the company announced a $60 per ton
price increase for coated web-offset paper products, as well as price increases
on other grades, including linerboard and bleached paperboard. Export sales from
the United States increased compared to 1998 and accounted for 18% of the
company's consolidated sales. Total sales outside of the United States,
including sales of foreign operating subsidiaries, accounted for approximately
24% of


<PAGE>


consolidated sales compared to 25% in the prior year. Gross profit margin for
the year improved to 20% compared with 19% for the prior year, due mainly to
cost improvement initiatives. Fiscal year 1999 operating results also benefited
from an increase in non-cash pension credits of $26.9 million, reflecting
cumulative favorable investment returns on pension plan assets.

Packaging segment sales for 1999 decreased 6.8% from the prior year to $1.46
billion in 1999, due to decreases in price and product mix of 5.3% and volume of
1.5%. Markets for the company's paperboard products continue to be very
competitive, and net sales realizations per ton were below 1998 levels.
Operating profit for 1999 decreased 8.2% to $190.5 million primarily due to
product pricing pressures which offset the company's progress in cost
improvement initiatives. Rigesa accounted for 13% of 1999 packaging segment
operating profit compared to 17% for the 1998 comparable period, due primarily
to the 64% devaluation of the Brazilian real during the year, following the
Brazilian government's decision to allow the real to float. In the local
currency, Rigesa's sales for the year increased 12% compared to the year earlier
period. During 1999, approximately 26% of packaging segment sales were made to
the tobacco industry for packaging tobacco products compared to approximately
28% for 1998. Approximately 18% of segment sales were exported or used to
produce products for export with the remaining 8% made for the domestic tobacco
industry for sale in the United States.

Paper segment sales for the 1999 fiscal year of $1.03 billion increased
marginally from the prior year, due to an increase in volume of 7.1% offset by a
decrease in price and product mix of 6.8%. Markets for the company's paper
products continued to be very competitive, resulting in net sales realizations
being substantially below 1998 levels. Paper shipments for the fourth quarter of
1999 were up approximately 15% compared to the same prior year period. Late in
the third quarter, the company announced the first price increase since 1996 for
coated paper products. Operating profit for the paper segment for the year was
$62.0 million, lower than the $84.8 million reported for fiscal year 1998, due
mainly to lower prices.

Chemicals segment sales for 1999 decreased by 5.3% from 1998 to $314.5 million.
Favorable changes in price and product mix of 3.3% were more than offset by a
decrease in volume of 8.6%. Operating profit for the chemicals segment was $52.5
million compared to $53.2 million in 1998.

"Other income [expense]" increased compared to 1998 due to an increase in gains
on the sales of timberlands. Interest expense increased 12% for the year
compared to 1998, due to lower levels of capitalized interest and increased use
of commercial paper. The effective tax rate for 1999 decreased to 24.9% compared
to 35.4% in the prior year, principally due to the reduction in the deferred
state income tax liability to reflect a lower effective state income rate, as
described above.


LIQUIDITY AND CAPITAL RESOURCES

At October 31, 2000, the ratio of current assets to current liabilities was 1.9
compared to 1.7 and 1.6 in 1999 and 1998, respectively. The twelve-month average
collection period for trade receivables was 34 days in 2000 and 1999 and 35 days
in 1998. Cash flows from operations were $583 million for 2000, compared to $413
million in 1999 and $407 million in 1998. Management believes that the company's
ability to generate cash from operations and its capacity to issue short-term
and long-term debt are adequate to fund working capital, capital spending and
other needs in the foreseeable future.

New investment in plant and timberlands was $212 million for 2000, compared to
$232 million in 1999 and $420 million in 1998. Cash payments for these
investments totaled $214 million in 2000, $229 million in 1999 and $423 million
in 1998. As part of its program to improve return on investment, Westvaco plans
to continue to hold annual capital spending below annual depreciation


<PAGE>


and amortization levels over the next few years. At October 31, 2000, the funds
required to complete all authorized capital projects were approximately $249
million. Capital expenditures for 2001 are expected to be approximately $275
million, reflecting acquisitions and the postponement of capital projects that
were expected to occur during fiscal year 2000. These expenditures will be used
to support our current primary production capacity levels and address
requirements of packaging facilities to satisfy anticipated customer needs.

The company maintains a $500 million revolving credit agreement, and there was
no borrowing under this arrangement during the current year period. The interest
rate may be at rates approximating prime or the London Interbank Offered Rate
(LIBOR) at the company's option. The ratio of debt to total capital employed was
46% at October 31, 2000, and 34% for 1999 and 1998. Short-term borrowings
amounting to $270 million, whose repayment terms can be extended under the loan
agreement and which are intended to be outstanding more than one year, have been
classified as long-term debt. In November 1999, the company issued $200 million
of 6.85% five-year notes and $200 million of 7.10% ten-year notes, and in
January 2000, the company issued $400 million of 8.20% thirty-year notes in part
to fund the purchases of the Evadale mill and Mebane Packaging Group. The
remainder was added to the company's general corporate funds and available for
repayment of existing debt, future capital outlays and working capital purposes.
In connection with the acquisition of IMPAC discussed above, the company issued
$200 million of floating rate three-year notes, at LIBOR plus 0.9% reset
quarterly and $200 million of 8.40% seven-year notes on June 5, 2000. During
2000, 80,000 common shares were purchased, under a repurchase program approved
by the Board of Directors in 1997, at a cost of $2.3 million and 514,633 shares
were issued out of treasury to satisfy stock option exercises.


ENVIRONMENTAL MATTERS

In 1995, the company authorized the removal of elemental chlorine from all of
our pulp bleaching processes. This important initiative, completed during 1997
at a cost of approximately $110 million, represented a major step by Westvaco in
anticipating EPA regulations for the U.S. pulp and paper industry regarding air
and water quality. A portion of the anticipated environmental capital
expenditures will be in connection with the company's implementation of the
Cluster Rule, issued by EPA in April 1998. The Cluster Rule regulations
established new requirements regarding air emissions and wastewater discharges
from pulp and paper mills to be met by the year 2006. While the company has
taken major steps to implement the Cluster Rule, we currently anticipate related
expenditures of approximately $80 million over the next five years. Additional
operating expenses in the range of $3 million to $ 7 million annually will be
incurred as capital installations required by the Cluster Rule are put into
service. Environmental organizations are challenging the Cluster Rule in the
U.S. Court of Appeals. Westvaco and other companies are participating in that
litigation. If the legal challenge by environmental organizations to the
regulations is successful, the company could face additional compliance costs of
up to $150 million over the next several years.

The company is currently named as a potentially responsible party with respect
to the cleanup of a number of hazardous waste sites under the Comprehensive
Environmental Response, Compensation, and Liability Act (CERCLA) and similar
state laws. While joint and several liability is authorized under CERCLA, as a
practical matter, remediation costs will be allocated among the waste generators
and others involved. The company has accrued approximately $5 million for
estimated potential cleanup costs based upon our close monitoring of ongoing
activities and our past experience with these matters. In addition, the company
is involved in the remediation of certain other than CERCLA sites and has
accrued approximately $11 million for remediation of these sites.

The company is involved in various legal proceedings and environmental actions,
generally arising


<PAGE>


in the normal course of its business. Although the ultimate outcome of such
matters cannot be predicted with certainty, the company does not believe that
the outcome of any proceeding, lawsuit or claim that is pending or threatened,
or all of them combined, will have a material adverse effect on its consolidated
financial position, liquidity or long-term results of operations. In any given
quarter or quarters, however, it is possible such proceedings or matters could
have a material effect on results of operations.


ACCOUNTING CHANGES

The company is required to adopt a new accounting standard issued by the
Financial Accounting Standards Board, Statement of Financial Accounting
Standards No. 133, Accounting for Derivative Instruments and Hedging Activities,
in fiscal year 2001. The company does not believe that the adoption of this
statement will have a material effect on the company's financial position or
results of operations.

In 1999, the Securities and Exchange Commission staff issued Staff Accounting
Bulletin No. 101, (SAB 101) Revenue Recognition in Financial Statements. SAB 101
clarifies the basic principles of revenue recognition in generally accepted
accounting principles. SAB 101 is required to be implemented by our fourth
quarter of fiscal year 2001. The company anticipates no material effect on
income from operations or financial position from the adoption of SAB 101. In
September 2000, the Emerging Issues Task Force reached a consensus on Issue No.
00-10 (EITF 00-10), Accounting for Shipping and Handling Fees and Costs. EITF
00-10 implementation is consistent with the requirements of SAB 101. The company
intends to adopt EITF 00-10 in the fourth quarter of 2001 and reclassify
shipping and handling costs from sales to cost of goods sold. The
reclassification will have no effect on income from operations or financial
position. For further discussion, see the "Summary of significant accounting
policies" in the "Notes to the 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 or present
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 the company, or
industry results, to differ materially from those expressed in 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 in or implied by the forward-looking statements include, but are not
limited to, demand and competitive pricing for the company's products;
developments in information technology as well as other technological
developments; the success of new businesses and facilities acquired; ongoing
cost reduction efforts; changes in the availability and cost of raw materials
and energy; unanticipated manufacturing and distribution disruptions; changes in
production capacities; changes in economic growth in the U.S. and international
economies, especially in Asia, Europe and Brazil; stability of financial
markets; governmental policies and regulations, including but not limited to
those affecting the environment and the tobacco industry; restrictions on trade;
interest rates and currency movements.

We undertake no obligation to publicly update any forward-looking statement,
whether as a result of new information, future events or otherwise. You are
advised, however, to consult any further disclosure we make on related subjects
in our 10-Q, 8-K and next 10-K reports filed with the SEC.


<PAGE>


FOURTH QUARTER RESULTS

Sales were $1.0 billion for the fourth quarter of 2000, compared to sales of
$771.5 million for the fourth quarter of 1999. In the fourth quarter of 2000,
the company recorded net income of $80.7 million, or $.80 per share, basic and
diluted, compared to net income of $23.7 million, or $.24 per share, basic and
diluted, for the prior year period.

Fiscal fourth quarter 2000 net income reflects a charge of $.02 per share for
completion of a restructuring plan begun in the third quarter 2000, bringing the
total charge for the plan to $.18 per share. The restructuring charge resulted
principally from a writedown of U.S. assets due to an expected decline in sales
of folding cartons to domestic tobacco markets. Fourth quarter 2000 results also
reflect a gain of $.04 cents per share from the sale of a minority interest in a
packaging operation in China and the impact of a provision of $.06 to reflect
inventories at LIFO value. In the fouth quarter of fiscal 1999, unusual items
included a credit of $.15 per share, for a release of deferred taxes and a
charge of $.49 per share for a restructuring plan. The restructuring plan in
1999 involved a series of actions, principally non-cash reductions in book value
of assets, that enhanced the strength and focus of Westvaco's packaging-related
businesses.


INVESTOR SERVICES PLAN

At year end, 15,160 shareholders, including members of the company's savings and
investment plans for salaried and hourly employees, representing 15,622,448
shares of Westvaco common stock, were participants in the company's Investor
Services Plan.


NUMBER OF SHAREHOLDERS

At year end, the number of individuals and institutions owning Westvaco common
shares was about 19,000. This number includes 12,400 members of the company's
salaried and hourly savings and investment plans. The plans, established in 1968
and 1995, respectively, hold 14,303,823 shares of Westvaco common stock for the
accounts of participants. This represents 14% of the 100,662,409 shares of
common stock outstanding at year end.


PAYROLL AND BENEFIT COSTS

The total cost of payroll and benefits was $742 million, compared with $623
million in 1999. This includes $52.5 million in Social Security taxes in 2000
and $44.7 million in 1999. Payroll and benefit costs were 20% of sales in 2000
and 22% in 1999.


<PAGE>


FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
<S>                                           <C>             <C>            <C>
   In thousands, except per share
     Year ended October 31                         2000             1999           1998
     Sales                                    $3,662,991      $2,801,849     $2,885,917
     Other income, net [expense]                  56,940          29,384         18,747
                                              ----------      ----------     ----------
                                               3,719,931       2,831,233      2,904,664
                                              ----------      ----------     ----------


   Cost of products sold [excludes
     depreciation shown separately
     below]                                    2,512,486       1,969,515      2,071,011
   Selling, research and administrative
     expenses                                    281,694         230,963        238,097
     Depreciation and amortization               313,948         280,470        280,981
     Restructuring charges                        16,086          78,771              -
     Interest expense                            192,145         123,538        110,162
                                              -----------     ----------     ----------
                                               3,316,359       2,683,257      2,700,251
                                              -----------     ----------     ----------

   Income before taxes                           403,572         147,976        204,413

   Income taxes                                  148,900          36,800         72,400
                                              ----------      ----------     ----------

   Income before extraordinary charge            254,672         111,176        132,013

   Extraordinary charge - extinguishment of
     debt, net of taxes of $5,500                (8,803)               -              -
                                              ----------      ----------     ----------

   Net income                                 $ 245,869       $  111,176     $  132,013
                                              ==========      ==========     ==========


   Net income per share - basic and diluted:
     Income before extraordinary item             $ 2.53           $1.11          $1.30
     Extraordinary item                            (.09)               -              -
                                              ----------      ----------     ----------
   Net income                                     $ 2.44           $1.11          $1.30
                                              ==========      ==========     ==========


   Shares used to compute net income per
   share:
     Basic                                       100,578         100,236        101,311
     Diluted                                     100,916         100,495        101,788

</TABLE>





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




WESTVACO CORPORATION AND CONSOLIDATED SUBSIDIARY COMPANIES


<PAGE>


FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
In thousands
<S>                                                          <C>           <C>

At October 31                                                      2000          1999
ASSETS
Cash and marketable securities                               $  225,308    $  108,792
Receivables                                                     421,707       318,369
Inventories                                                     333,284       248,963
Prepaid expenses and other current assets                        83,378        61,884
                                                             ----------    ----------
  Current assets                                              1,063,677       738,008
Plant and timberlands:
  Machinery                                                   5,673,455     5,094,773
  Buildings                                                     794,114       672,744
  Other property, including plant land                          248,761       226,977
                                                              ---------    ----------
                                                              6,716,330     5,994,494
  Less:  accumulated depreciation                             2,916,402     2,779,199
                                                              ---------     ---------
                                                              3,799,928     3,215,295
  Timberlands-net                                               268,699       266,386
  Construction in progress                                      127,956        99,702
                                                             ----------   -----------
                                                              4,196,583     3,581,383
Other assets                                                  1,309,643       577,301
                                                             ----------    ----------
                                                             $6,569,903    $4,896,692
                                                             ==========    ==========

LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued expenses                        $  523,187    $  361,959
Notes payable and current maturities of
  long-term obligations                                          30,098        50,200
Income taxes                                                     13,633        12,955
                                                             ----------    ----------
  Current liabilities                                           566,918       425,114
Long-term debt                                                2,686,674     1,426,854
Other long-term obligations                                      75,979        75,323
Deferred income taxes                                           907,739       798,113
Shareholders' equity:
Common stock, $5 par, at stated value
     Shares authorized: 300,000,000
     Shares issued: 103,170,667 [1999-103,170,667]              767,552       765,810
  Retained income                                             1,761,764     1,607,504
  Accumulated other comprehensive income [loss]               [135,731]      [129,981]
  Common stock in treasury, at cost
     Shares held: 2,508,258 [1999-2,877,824]                   [60,992]       [72,045]
                                                             ----------    ----------
                                                              2,332,593     2,171,288
                                                             $6,569,903    $4,896,692
                                                              =========    ==========

</TABLE>




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




WESTVACO CORPORATION AND CONSOLIDATED SUBSIDIARY COMPANIES


<PAGE>


FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
In thousands

<TABLE>
<CAPTION>
                                                                                             ACCUMULATED
                                                                 COMMON                      OTHER              TOTAL
                                    OUTSTANDING    COMMON        STOCK IN     RETAINED       COMPREHENSIVE      SHAREHOLDERS'
                                    SHARES         STOCK         TREASURY     INCOME         INCOME [LOSS]      EQUITY
<S>                                 <C>            <C>           <C>          <C>            <C>                <C>
Balance at October 31, 1997         101,930        $761,522      $[32,310]    $1,549,356     $          -       $2,278,568
  Comprehensive income
    Net income                            -               -             -        132,013                -          132,013
    Foreign currency translation          -               -             -              -          [32,167]         [32,167]
       Comprehensive income                                                                                         99,846
  Cash dividends                          -               -             -       [89,300]                -          [89,300]
  Repurchases of common stock        [1,822]              -       [50,176]             -                -          [50,176]
  Issuance                              218           3,052         7,595        [3,137]                -            7,510
                                    ----------     --------      ---------    ----------     ------------       -----------

Balance at October 31, 1998         100,326         764,574       [74,891]     1,588,932          [32,167]       2,246,448
  Comprehensive income
    Net income                            -               -             -        111,176                -          111,176
    Foreign currency translation          -               -             -              -          [97,814]         [97,814]
       Comprehensive income                                                                                         13,362
  Cash dividends                          -               -             -       [88,191]                -          [88,191]
  Repurchases of common stock          [499]              -       [11,961]             -                -          [11,961]
  Issuance                              466           1,236        14,807        [4,413]                -           11,630
                                    ----------     --------      ---------    ----------     ------------       -----------

Balance at October 31, 1999         100,293         765,810       [72,045]     1,607,504        [129,981]        2,171,288
  Comprehensive income
    Net income                            -               -             -        245,869                -          245,869
    Foreign currency translation          -               -             -              -          [5,750]           [5,750]
        Comprehensive income                                                                                       240,119
  Cash dividends                          -               -             -       [88,494]                -          [88,494]
  Repurchases of common stock          [145]              -        [4,441]             -                -           [4,441]
  Issuance                              514           1,742        15,494        [3,115]                -           14,121
                                    ----------     --------      ---------    ----------     ------------       -----------


Balance at October 31, 2000         100,662        $767,552      $[60,992]    $1,761,764     $[135,731]         $2,332,593
                                    ==========     ========      =========    ==========     ============       ===========


</TABLE>


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



WESTVACO CORPORATION AND CONSOLIDATED SUBSIDIARY COMPANIES


<PAGE>


FINANCIAL STATEMENTS

Consolidated statementS of cash flows
In thousands

<TABLE>
<CAPTION>
Year ended October 31                                      2000         1999            1998
CASH FLOWS FROM OPERATING ACTIVITIES:
---------------------------------------------------------------------------------------------
<S>                                                <C>              <C>             <C>

  Net income                                       $    245,869     $111,176        $132,013
  Adjustments to reconcile net income
  to net cash provided by operating activities:
    Provision for depreciation and amortization         313,948      280,470         280,981
    Provision for deferred income taxes                  94,914       32,286          57,244
    Restructuring charges                                16,086       80,500               -
    Pension credit and other employee benefits          [92,858]     [78,658]        [50,869]
    [Gains] losses on sales of plant and timberlands    [26,822]     [17,891]            894
    Foreign currency transaction [gains] losses             917        3,601           2,506
    Loss on extinguishment of debt, net of taxes          8,803            -               -
  Net changes in assets and liabilities                  25,305       [2,577]        [17,063]
  Other, net                                            [3,017]        3,806           1,000
                                                   ------------   ----------       ---------
      Net cash provided by operating activities         583,145      412,713         406,706

CASH FLOWS FROM INVESTING ACTIVITIES:
---------------------------------------------------------------------------------------------
  Additions to plant and timberlands                   [213,976]    [228,879]       [422,984]
  Payments for acquisitions, net of cash acquired    [1,342,858]     [22,659]              -
  Proceeds from sales of assets                          81,639       22,781           6,905
  Other, net                                                160       [1,135]             50
                                                   ------------   ----------       ---------
      Net cash used in investing activities          [1,475,035]    [229,892]       [416,029]

CASH FLOWS FROM FINANCING ACTIVITIES:
---------------------------------------------------------------------------------------------
  Proceeds from issuance of common stock                  9,266        9,122           3,766
  Proceeds from issuance of debt                      2,611,504      881,518         548,194
  Dividends paid                                        [88,494]     [88,191]        [89,300]
  Treasury stock purchases                               [2,345]     [10,792]        [49,484]
  Repayment of notes payable and long-term debt      [1,523,702]    [952,230]       [470,146]
                                                   ------------   ----------       ---------
      Net cash provided by [used in] financing        1,006,229     [160,573]        [56,970]
      activities

Effect of exchange rate changes on cash                   2,177      [18,506]         [4,011]
                                                   ------------   ----------       ---------

  Increase [decrease] in cash and marketable            116,516        3,742         [70,304]
  securities

Cash and marketable securities:
  At beginning of period                                108,792      105,050         175,354
                                                   ------------   ----------       ---------
  At end of period                                    $ 225,308     $108,792        $105,050
                                                   ------------   ----------       ---------
</TABLE>



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



WESTVACO CORPORATION AND CONSOLIDATED SUBSIDIARY COMPANIES


<PAGE>


NOTES TO FINANCIAL STATEMENTS


         NOTES TO FINANCIAL STATEMENTS

         SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Basis of consolidation and preparation of financial statements: The
         consolidated financial statements include the accounts of all
         subsidiaries more than 50% owned. Investments in 20%- to 50%- owned
         companies are accounted for using the equity method. Accordingly, the
         company's share of the earnings of these companies is included in
         consolidated net income. In accordance with generally accepted
         accounting principles, the preparation of financial statements 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. Certain prior years'
         amounts have been reclassified to conform with the current year's
         presentation.


         Accounting standards changes:

         In June 1998, the Financial Accounting Standards Board (FASB) issued
         SFAS No. 133, Accounting for Derivative Instruments and Hedging
         Activities which requires derivative instruments to be recorded in the
         balance sheet at their fair value, with changes in their fair value
         being recognized in earnings unless specific hedge accounting criteria
         are met. Given the current level of its derivative and hedging
         activities, the company believes the impact of this new standard,
         effective in fiscal year 2001, will not be material.

         In 1999, the Securities and Exchange Commission staff issued Staff
         Accounting Bulletin No. 101 (SAB 101), Revenue Recognition in Financial
         Statements. SAB 101 clarifies the basic principles of revenue
         recognition in existing generally accepted accounting principles. SAB
         101 is required to be implemented no later than the fourth quarter of
         fiscal years beginning after December 15, 1999. The company anticipates
         no material effect on income from operations or financial position from
         the adoption of SAB 101.

         In September 2000, the Emerging Issues Task Force reached a consensus
         on Issue No. 00-10 (EITF 00-10), Accounting for Shipping and Handling
         Fees and Costs. EITF 00-10 implementation is consistent with the
         requirements of SAB 101. The company intends to adopt EITF 00-10 in
         the fourth quarter of 2001 and reclassify shipping and handling costs
         from "Sales" to "Cost of products sold." The reclassification will
         have no effect on income from operations or financial position.

         Environmental matters: Environmental expenditures that increase useful
         lives are capitalized, while other environmental expenditures are
         expensed. Liabilities are recorded when remedial efforts are probable
         and the costs can be reasonably estimated. The estimated closure costs
         for existing landfills based on current environmental requirements and
         technologies are accrued over the expected useful lives of the
         landfills.

         The company is currently named as a potentially responsible party with
         respect to the cleanup of a number of hazardous waste sites under the
         Comprehensive Environmental Response, Compensation, and Liability Act
         (CERCLA) and similar state laws. While joint and several liability is
         authorized under CERCLA, as a practical matter, remediation costs will
         be allocated among the waste generators and others involved. The
         company has accrued approximately $5 million for estimated potential
         cleanup costs based upon its close monitoring of ongoing activities and
         its past experience with these matters. In addition, the company is
         involved in the remediation of certain other than CERCLA sites and has
         accrued approximately $11 million for remediation of these sites.

         Translation of foreign currencies: Generally, the local currency is the
         functional currency for the company's operations outside the United
         States. The assets and liabilities of the company's foreign
         subsidiaries are translated into U.S. dollars using period-end exchange
         rates and adjustments resulting from these financial statement
         translations are included in "Accumulated other comprehensive income


<PAGE>


NOTES TO FINANCIAL STATEMENTS


         [loss]" in the balance sheet. Revenues and expenses are translated at
         average rates prevailing during the period.

         Marketable securities: For financial statement purposes, highly liquid
         securities purchased three months or less from maturity are considered
         to be cash equivalents.

         Inventories:  Inventories are valued at the lower of cost or
         market.  Cost is determined using the last-in, first-out (LIFO)
         method for substantially all raw materials, finished goods and
         production materials of U.S. manufacturing operations.  Cost of all
         other inventories, including stores and supplies inventories and
         inventories of non-U.S. manufacturing operations, is determined by
         the first-in, first-out (FIFO) or average cost method.

         Plant and timberlands: Owned assets are recorded at cost. Also included
         in the cost of these assets is interest on funds borrowed during the
         construction period. When assets are sold, retired or disposed of,
         their cost and related accumulated depreciation are removed from the
         accounts, and any resulting gain or loss is reflected in "Other income
         [expense]." Costs of renewals and betterments of properties are
         capitalized; costs of maintenance and repairs are charged to income.
         Costs of reforestation of timberlands are capitalized.

         Depreciation, amortization and impairment of long-lived assets: The
         cost of plant and equipment is depreciated, generally by the
         straight-line method, over the estimated useful lives of the respective
         assets, which range from 20 to 40 years for buildings and 5 to 30 years
         for machinery and equipment. The cost of standing timber is amortized
         as timber is cut, at rates determined annually based on the
         relationship of unamortized timber costs to the estimated volume of
         recoverable timber. The company periodically evaluates whether
         current events or circumstances indicate that the carrying value of its
         long-lived assets to be held and used may not be recoverable. An
         estimate of undiscounted future cash flows produced by the asset, or
         the appropriate grouping of assets, is compared to the carrying value
         to determine whether an impairment exists pursuant to SFAS No. 121. If
         an asset is determined to be impaired, the loss is measured based on
         quoted market prices in active markets, if available. If quoted market
         prices are not available, the estimate of the fair value is based on
         various valuation techniques, including a discounted value of estimated
         future cash flows. The company reports an asset to be disposed of at
         the lower of its carrying value or its estimated net realizable
         value.

         Other assets: Included in "Other assets" are goodwill, other
         intangibles and prepaid pension costs. Goodwill represents the excess
         of the cost over the fair value of net assets of purchased businesses
         and is being amortized on a straight-line basis over periods not
         exceeding 40 years. The cost of other acquired intangibles is amortized
         on a straight-line basis over their estimated useful lives. The company
         continually evaluates the carrying value of goodwill and other
         intangible assets pursuant to SFAS No. 121, as described above.
         Goodwill included in "Other assets" was $606,220,000 at October 31,
         2000 (1999-$5,063,000). Amortization expense charged to operations for
         2000 was $7,243,000 (1999-$30,000, 1998 -$0).

         Revenue recognition: The company recognizes revenues at the point of
         passage of title, which is at the time of shipment.

         Income taxes: Deferred income taxes are recorded for temporary
         differences between financial statement carrying amounts and the tax
         basis of assets and liabilities. Deferred tax assets and liabilities
         reflect the enacted tax rates in effect for the years the differences
         are expected to reverse.

         Income per 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 have been
         added to the weighted average shares outstanding. For the year ended
         October 31, 2000, stock options for shares of 3.9 million were not
         included because their effect was antidilutive (1999-1.9 million,
         1998-4.4 million).


<PAGE>


NOTES TO FINANCIAL STATEMENTS


A. ACQUISITIONS

In December 1999, the company completed its acquisition of Temple-Inland's
bleached paperboard mill in Evadale, TX (Evadale). The total purchase price, net
of $82 million of debt assumed, was $566 million. The company used existing cash
reserves, commercial paper and $400 million of debentures issued in November
1999 to fund the purchase.

In January 2000, the company completed the purchase of Mebane Packaging Group
(Mebane), a leading supplier of packaging for pharmaceutical products and
personal care items, based in Mebane, NC. The company used existing cash
reserves, commercial paper and a portion of the $400 million of debentures
issued in January 2000 to fund the purchase.

In July 2000, the company completed its acquisition of IMPAC Group, Inc.
(IMPAC), a leading global supplier of packaging for entertainment products,
cosmetics and health and beauty aids with 13 plants in Europe and eight plants
in the United States. The company used existing cash reserves, commercial paper
and $400 million of notes issued in June 2000 to fund the purchase.

Also, in July 2000, Rigesa, Ltda. (Rigesa), Westvaco's Brazilian subsidiary,
acquired all of the assets of Agaprint Embalagens, a leading supplier of
consumer packaging in Brazil. In August 2000, IMPAC Europe Limited, a Westvaco
subsidiary, acquired the privately held DuBOIS Holdings Limited, global licenser
and European manufacturer of the DVD-Safe (TM) (or Amaray(R)) DVD pack, the
world's top-selling DVD package. In October 2000, IMPAC Europe acquired Sony
Music Printing (Holland) BV. Sony Music Printing is located adjacent to Sony's
CD/DVD distribution center in Haarlem, The Netherlands, and produces printed
booklets, folders and inlay cards for Sony as well as multimedia products sold
to Sony and other companies throughout Europe.

The company accounted for all of these transactions using the purchase method of
accounting. Accordingly, the assets and liabilities of the acquired businesses
are included in the "Consolidated Balance Sheets" at October 31, 2000. The
purchase price for these acquisitions, including transaction costs, has been
allocated to assets acquired and liabilities assumed based on estimated market
values at the date of acquisition. The purchase price allocation for these
acquisitions is preliminary and further refinements are likely to be made upon
completion of final valuation studies. Related goodwill of approximately $610
million, which represents the excess of purchase price over fair value of net
tangible and intangible assets acquired, is amortized on a straight-line basis
over 40 years, which is the expected period to be benefited. Goodwill has been
recorded in the "Other assets" on the balance sheet. The following unaudited pro
forma consolidated results of operations are presented as if the Evadale mill,
Mebane and IMPAC acquisitions had been made at the beginning of the periods
presented.

The following unaudited pro forma data for the fiscal year 2000 reflects 308
days, 299 days and 113 days of Westvaco's operation of the Evadale mill, Mebane
and IMPAC, respectively. The balance of the fiscal year 2000 and all of the
prior year reflect the results of these operations under the management of the
prior owners. The unaudited pro forma amounts of the other fiscal year 2000
acquisitions are not included as their effect is not material to the company's
financial position or results of operations.


<PAGE>


NOTES TO FINANCIAL STATEMENTS


 Pro forma in thousands, Except per share
 [unaudited]                                            2000            1999
                                                        ----            ----
 Net sales                                        $3,634,767      $3,985,558
 Income before extraordinary items                   235,395          75,487
    Per share of common stock:
                     Basic                             $2.34            $.75
                    Diluted                             2.33             .75

 Net income                                       $  226,592      $   75,487

    Per share of common stock:
                     Basic                             $2.25            $.75
                    Diluted                             2.25             .75


The pro forma consolidated results of operations include adjustments to give
effect to depreciation, amortization of goodwill on a straight-line basis over
40 years and interest expense on acquisition debt, together with related income
tax effects. The pro forma information is not necessarily indicative of the
results of operations that would have occurred had the purchases been made at
the beginning of the periods presented, nor is it necessarily indicative of the
future results of the combined operations.


B. PROVISIONS FOR RESTRUCTURING

During the third quarter of 2000, due to an anticipated decline in future sales
of folding cartons to U.S. tobacco markets that has not yet occurred, the
company reviewed certain long-lived assets in its consumer packaging business
for impairment. As a result of the review, production facilities were written
down to their fair value using an assets-held-for-use model and a pretax
impairment charge of $24.3 million, including $3.3 million of associated
goodwill, was recorded in the third quarter of 2000 in "Restructuring charges"
in the "Consolidated Statement of Income." The impairment was recorded because
undiscounted cash flows were less than the carrying value of the assets prior to
the impairment charge. During the fourth quarter of 2000, the company recorded
an additional pretax charge of $2.9 million due to the adjustment of the earlier
charge and related employee costs. During the second quarter of fiscal 2000, the
liquid packaging plant was sold, resulting in a pretax gain of $11.2 million,
which is included in the "Restructuring charges." As noted below, the liquid
packaging plant was written down in fiscal 1999 in connection with the
restructuring charge recorded in the fourth quarter. The gain resulted from a
change in facts and circumstances existing during the fourth quarter of fiscal
1999.

During the fourth quarter of 1999, following completion of its strategic review
process, the company adopted a plan to improve the company's performance,
principally to enhance the strength and focus of its packaging-related
businesses. Additionally, the company reviewed certain long-lived assets in its
business for impairment. As a result of these initiatives, a pretax charge of
$80.5 million was recorded in the fourth quarter of 1999. Included in this
charge are certain assets of the company's liquid packaging plant that were
written down to reflect the plant's planned shutdown. This charge was primarily
due to the writedown of impaired long-lived assets, involuntary employee
termination and other exit costs. Production facilities were written down to
their fair value using an assets-held-for-use model. An impairment of $67.4
million was recorded as undiscounted cash flows were less than the carrying
value of the assets prior to the impairment. Further, the company wrote off a
paper machine and certain equipment with a total carrying value of $8.6 million
and abandoned the assets.

During the fourth quarter of fiscal 1999, in addition to the asset impairments
described above, the company also recognized inventory writedowns of $1.7
million, which have been included within the "Cost of products sold", employee
termination costs of $1.5 million and other exit costs of $1.2 million. Such


<PAGE>


NOTES TO FINANCIAL STATEMENTS


reserves at October 31, 2000 for these activities were substantially utilized.


C. OTHER INCOME (EXPENSE)
Components of other income (expense) are as follows:

In thousands                                2000         1999         1998
------------                            --------    ---------    ---------
Gains [losses] on sales of plant,
  equipment
  And timberlands                        $26,822      $17,891    $    [894]
Interest income                           28,417       15,115       18,010
Foreign currency transaction
  gains [losses                             [917]      [3,601]      [2,506]
Other, net                                 2,618          [21]       4,137
                                        --------    ---------    ---------
                                         $56,940      $29,384      $18,747
                                        ========    =========    =========

D. RESEARCH AND DEVELOPMENT
Expenditures of $49,527,000 (1999-$47,321,000, 1998-$45,139,000) were expensed
as incurred.

E. INCOME TAXES
 Income before provision for income taxes consisted of:

In thousands                              2000          1999         1998
------------                       -----------   -----------  -----------
Domestic                              $354,387    $113,350      $157,075
Foreign                                 49,185      34,626        47,338
                                    ----------   ----------    ----------
                                      $403,572    $147,976      $204,413
                                      ========    =========     ========

The provision for income taxes is composed of:

                                          2000         1999          1998
                                     ---------   ----------     ---------
In thousands
Current:
 Federal                               $38,112   $   4,430       $  9,254
 State                                   7,622      [4,634]        [3,243]
 Foreign                                 8,252       4,718          9,145
                                     ---------   ----------      ---------
                                        53,986        4,514         15,156
                                      --------   ----------       --------
Deferred:
 Federal                                85,750       43,254         45,871
 State                                   7,923      [15,366]        11,792
 Foreign                                 1,241        4,398           [419]
                                   -----------   ----------      ---------
                                        94,914       32,286         57,244
                                    ----------    ---------       --------
                                      $148,900     $ 36,800        $72,400
                                      ========    =========        =======



The net deferred income tax liability at October 31, 2000 and 1999 includes the
following components:

In thousands                                 2000        1999
------------                       -------------- -----------
Current deferred tax assets:
 Employee benefits                   $     19,321  $  15,397
 Other                                     38,078     28,089
                                       ----------    --------
                                           57,399     43,486


<PAGE>


NOTES TO FINANCIAL STATEMENTS


Noncurrent deferred tax assets:
 Alternative minimum tax carryforward     111,983     143,802
                                        ---------     -------

Noncurrent deferred tax liabilities:
 Depreciation                             686,517     654,604
 Pension and other employee benefits      199,421     161,512
 State and local taxes                     98,133      91,662
 Other                                     35,651      34,137
                                      -----------  ----------
                                        1,019,722     941,915

Total net deferred tax liability       $  850,340   $ 754,627
                                         ========    ========

The differences (expressed as a percentage of pretax income) between the U.S.
statutory federal income tax rate and the effective income tax rate as reflected
in the accompanying "Consolidated Statements of Income" are:

                                      2000      1999       1998
                                      ----      ----       ----

Statutory federal income tax rate    35.0%     35.0%      35.0%
State and local taxes                 2.5      [8.8]       2.7
Foreign income at other than U.S.
  rates                              [1.7]     [1.3]     [2.6]
Other, net                            1.1         -       0.3
                                    ------    -------   ------
Effective tax rate                   36.9%     24.9%     35.4%
                                    ------    -------   ------


At October 31, 2000, for tax purposes, the company had available $112 million of
alternative minimum tax credit carryforwards, which do not expire under current
laws. At October 31, 2000 the company had available $5.3 million of foreign tax
credit carryforwards, which, if unused, will expire in fiscal years 2001 to
2005. The increase in the company's fiscal 2000 income tax expense compared to
fiscal 1999 is primarily attributable to a one-time $15 million reduction in the
state deferred tax liability, resulting from a business reorganization completed
during fiscal 1999. The reorganization lowered the state tax rates at which
certain temporary differences, principally depreciation, are expected to
reverse.

Provision has not been made for income taxes which would become payable upon
remittance of $189 million of the October 31, 2000 undistributed earnings of
certain foreign subsidiaries representing that portion of such earnings which
the company considers to have been indefinitely reinvested in the subsidiaries,
principally in Brazil. Computation of the potential deferred tax liability
associated with these undistributed earnings is not practicable. Current
deferred taxes of $57,399,000 (1999-$43,486,000) are included in "Prepaid
expenses and other current assets."


F. CURRENT ASSETS

Marketable securities of $22,032,000 (1999-$39,349,000) are valued at cost,
which approximates market value. Receivables include $15,915,000 from sources
other than trade (1999-$12,438,000), and have been reduced by allowances for
discounts and doubtful accounts of $17,615,000 (1999-$12,828,000). Inventories
at October 31 are composed of:

In thousands                             2000          1999
------------                        ---------       -------
Raw materials                        $ 73,064       $ 45,453
Production materials, stores
  and supplies                        l78,824         66,191
Finished and in process goods         181,396        137,319
                                    ---------       --------
                                     $333,284       $248,963
                                    =========       ========


If inventories had been valued at current cost, they would have been
$469,456,000 in 2000 (1999-$368,105,000). Inventories valued on the LIFO basis
were $202,419,000 in 2000. (1999-$157,036,000).


<PAGE>


NOTES TO FINANCIAL STATEMENTS


G. INTEREST CAPITALIZATION
In 2000, $197,671,000 of interest cost was incurred (1999-$132,428,000,
1998-$130,914,000) of which $5,526,000 was capitalized (1999-$8,890,000,
1998-$20,752,000).

H. ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses
at October 31:
 In thousands                                               2000           1999
 ------------                                          ---------     ----------

 Accounts payable:
   Trade                                                $156,398       $118,413
   Other                                                  34,914         18,812
 Accrued expenses:
   Taxes, other than income                               25,518         18,989
   Interest                                               52,824         32,927
   Payroll and employee benefit costs                    118,198         85,179
   Other                                                 135,335         87,639
                                                       ---------     ----------
                                                        $523,187       $361,959
                                                       =========     ==========

I. CASH FLOWS
Changes in assets and liabilities are as follows:


NOTES TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
   In thousands                                    2000             1999          1998
   ------------                           -------------    -------------    ----------
<S>                                          <C>              <C>            <C>

   [Increase] decrease in:
       Receivables                           $ [15,594]       $ [41,054]     $ 12,765
       Inventories                                [788]          24,545       [17,249]
                                                 1,898           [1,148]       [5,905]
      Prepaid expenses and other current assets
    Increase [decrease] in:
    Accounts payable and accrued expenses        38,960           24,766       [5,597]
    Income taxes payable                            829          [9,686]       [1,077]
                                          -------------      -----------  ------------
                                             $   25,305       $  [2,577]    $ [17,063]
                                                =======          =======      ========
</TABLE>



   Reconciliation of capital expenditures on a cash basis:

<TABLE>
<CAPTION>
   In thousands                                    2000             1999          1998
   ------------                             -----------      -----------   -----------
<S>                                          <C>              <C>            <C>
   New investment in plant and timberlands    $212,263         $232,292       $419,705
   Less:  debt assumed                            [260]            [158]           [4]
             net change in related current l      1,973          [3,255]         3,283
                                            -----------      -----------   -----------

   Cash additions to plant and timberlands    $213,976         $228,879       $422,984
                                              ========         =========      ========

</TABLE>


   Cash payments for interest, excluding amounts capitalized, were $167,145,000
   in 2000 (1999-$112,066,000, 1998-$108,082,000). Cash payments for income
   taxes were $40,203,000 in 2000 (1999-$12,108,000, 1998-$13,744,000).
   Dividends paid per share were $.88 for 2000, 1999 and 1998.

   J. LEASING ACTIVITIES AND OTHER COMMITMENTS
   The company leases a variety of assets for use in its operations. Leases for
   administrative offices, converting plants and storage facilities generally
   contain options which allow the company to extend lease


<PAGE>


NOTES TO FINANCIAL STATEMENTS


   terms for periods up to 25 years, or to purchase the properties. Certain
   leases provide for escalation of the lease payments as maintenance costs and
   taxes increase.

   The company has no significant capital lease liabilities. Minimum rental
   payments under operating leases that have noncancellable lease terms in
   excess of 12 months are as follows:

   In thousands                                            Operating leases
   ------------                                            ----------------
   2001                                                      $      35,534
   2002                                                             31,934
   2003                                                             24,236
   2004                                                             19,163
   2005                                                             15,927
   Later years                                                      65,000
                                                            --------------
   Minimum lease payments                                    $     191,794
                                                            ==============


Rental expense under operating leases was $48,411,000 in 2000 (1999-$38,412,000,
1998-$40,179,000). At October 31, 2000, commitments required to complete
currently authorized capital projects are approximately $249 million.


   K. LONG-TERM DEBT
   Long-term debt consists of the following at October 31:

   In thousands                                    2000              1999
   -------------                                   ----              ----
   Notes:
     6.85%, due 2004                        $   200,000   $             -
     7.10%, due 2009                            200,000                 -
     8.40%, due 2007                            200,000                 -
     Floating rate, due 2003                    200,000                 -
   Debentures:
     8.20%, due 2030                            400,000                 -
     9.65%, due 2002                            100,000           100,000
     9 3/4%, due 2020                           100,000           100,000
   Sinking Fund Debentures:
     7%, due 2004-2023                          150,000           150,000
     7 1/2%, due 2008-2027                      150,000           150,000
     7.65%, due 2008-2027                       150,000           150,000
     7.75%, due 2004-2023                       150,000           150,000

     8 1/8%, due 2001-2007                       14,750            19,450
     8.30%, due 2003-2022                       125,000           125,000
     10 1/8%, due 2000-2019                           -           100,000
     10 1/4%, due 2000-2018                           -            85,000
     10.30%, due 2000-2019                            -           100,000
   Pollution Control Revenue Bonds:
     5.85-6.65%, due 2004-2018                   26,620            26,620
     5 7/8-5.9%, due 2001-2003                    4,875             6,740
     5 7/8-6.2%, due 2001-2007                   10,930            11,480
     5.9-6.2%, due 2004-2008                      5,900             5,900


<PAGE>


NOTES TO FINANCIAL STATEMENTS


     6 3/8%, due 2026                             5,740             5,740
     7 1/8%, due 2001                                -              2,000
     8 1/4%, due 2001-2010                        3,890             3,995
     9 1/8-9.6%, due 2006-2015                   10,100            10,100
     10 1/2%, due 2004                            1,500             1,500
   Industrial Revenue Bonds:
      7-7.67%, due 2001-2027                     94,145            94,530
      Floating rate, due 2001-2014               44,383                 -
   Economic Development Bonds:
      8 3/4%, due 2001-2010                       4,080             4,190
   Notes payable and other                      364,859            74,809
                                           ------------      ------------
      Subtotal                                2,716,772         1,477,054
   Less installments due
   within one year                             [30,098]          [50,200]
                                           ------------      ------------
   Total                                     $2,686,674        $1,426,854
                                            ===========       ===========


   Outstanding noncurrent debt maturing in the next five years are (in
   millions); 2001-$30.1; 2002-$295.3; 2003-$331.9; 2004-$241.9; 2005-$40.6.

   The company has a revolving credit agreement for $500 million which expires
   November 16, 2005. Borrowings under the agreement may be in unsecured
   domestic or Eurodollar notes and may be at rates approximating prime or the
   London Interbank Offered Rate (LIBOR), at the company's option. There is a
   nominal commitment fee on the unused funds. These facilities are used to
   support commercial paper borrowings. The revolving credit agreement contains
   financial covenants relating to the ratio of total debt to total
   capitalization. There were no borrowings under this facility during 2000 or
   1999. Included in "Notes payable and other" in the prior table are short-term
   borrowings amounting to $270 million, which have been classified as long-term
   obligations. These borrowings have repayment terms that can be extended under
   the loan agreement and are intended to be outstanding more than one year.

   In November 1999, the company issued $200 million of 6.85% five-year notes
   and $200 million of 7.10% ten-year notes, and in January 2000, the company
   issued $400 million of 8.20% thirty-year notes in part to fund the purchases
   of the Evadale mill and Mebane Packaging Group. In connection with the
   acquisition of IMPAC Group, the company issued $200 million of floating rate
   three-year notes, at LIBOR plus 0.9% reset quarterly and $200 million of
   8.40% seven-year notes on June 5, 2000. During the second quarter of fiscal
   2000, the company recorded an extraordinary charge of $8.8 million after tax,
   or $.09 per share, from the early retirement of $270 million of higher
   interest rate debt.

   At October 31, 2000, the book value of financial instruments included in
   long-term debt was $2,716,772,000 (1999-$1,477,054,000), and the fair value
   was estimated to be $2,627,696,000 (1999-$1,495,290,000). The company has
   estimated the fair value of financial instruments based upon quoted market
   prices for the same or similar issues or on the current interest rates
   available to the company for debt of similar terms and maturities.


   L. SHAREHOLDERS' EQUITY
   During 2000, the company repurchased 80,000 shares (1999-460,000,
   1998-1,800,000) of company stock under a repurchase program authorized in
   1997 by the Board of Directors. The program was initiated to satisfy
   issuances under the company's stock option plans. There were no purchases in
   1998, 1999 or 2000 under the stock repurchase program authorized in 1987 by
   the Board of Directors.


<PAGE>

NOTES TO FINANCIAL STATEMENTS


   At October 31, 2000, there were 44,170 shares of nonvoting $100 par value
   cumulative preferred stock authorized and 10 million shares of preferred
   stock without par value authorized and available for issue.

   Pursuant to a Rights Agreement approved by the company's Board of Directors
   in 1997, in the event a person or group were to acquire a 15% or greater
   position in Westvaco, each right would entitle its holder (other than the
   acquiror) to buy that number of shares of common stock of Westvaco which, at
   the time of the 15% acquisition, had a market value of two times the exercise
   price of the rights. If, after the rights have been triggered, an acquiring
   company were to merge or otherwise combine with Westvaco, or Westvaco were to
   sell 50% or more of its assets or earning power, each right would entitle its
   holder (other than the acquiror) to buy that number of shares of common stock
   of the acquiring company which, at the time of such transaction, would have a
   market value of two times the exercise price of the rights. The rights have
   no effect on earnings per share until they become exercisable. The rights
   expire in December 2007.

   M. STOCK OPTION PLANS
   At October 31, 2000, the company had five stock option plans. The 1983 and
   1988 Stock Option and Stock Appreciation Rights Plans, 1995 Salaried Employee
   Stock Incentive Plan and the 1999 Salaried Employee Stock Incentive Plan
   provide for the granting of up to 4,725,000, 4,500,000, 4,837,500 and
   5,000,000, respectively, of stock options and stock appreciation rights to
   key employees. The 1995 Non-Employee Director Stock Incentive Plan provides
   for the granting of up to 112,500 stock options and stock appreciation rights
   to outside directors. For the employee plans, stock options may be granted
   with or without stock appreciation rights and are granted at market value.
   They are exercisable after a period of six months to one year and expire not
   later than ten years from the date of grant. Under each employee plan, stock
   options may be granted with or without limited stock appreciation rights,
   which are exercisable upon the occurrence of certain events related to
   changes in corporate control. In 1999, nearly all outstanding limited stock
   appreciation rights, which had previously been granted to employees were
   cancelled or surrendered. Subject to limited exceptions, no new grants for
   stock appreciation rights were awarded during 2000.

   The company applies APB Opinion No. 25, Accounting for Stock Issued to
   Employees, in accounting for its plans and, accordingly, no compensation cost
   has been recognized. If compensation cost for the company's stock options had
   been determined based on the fair value method of SFAS 123, Accounting for
   Stock-Based Compensation, the company's net income and net income per share
   would have been reduced to the unaudited pro forma amounts as follows:


  In thousands, except per share
  ------------------------------
  Net income                                2000           1999          1998
                                     -----------    -----------   -----------
    As reported                         $245,869      $111,176      $132,013
    Pro forma                            240,774       107,924       127,470

  Income per share - basic
    As reported                            $2.44         $1.11         $1.30
    Pro forma                               2.39          1.08          1.26

  Income per share - diluted
    As reported                            $2.44         $1.11         $1.30
    Pro forma                               2.39          1.07          1.25


<PAGE>


NOTES TO FINANCIAL STATEMENTS


  In determining the fair value of options for pro forma purposes, the company
  used the Black-Scholes option pricing model and assumed the following for
  options granted in 2000, 1999 and 1998, respectively: risk-free interest rate
  of 6.13%, 4.72% and 5.80%; dividend yield of 2.87%, 3.05% and 2.71%; an
  expected option life of six years for each year; and an expected volatility of
  22%, 20% and 20% for each year. The weighted average fair values of the
  options granted during 2000, 1999 and 1998 were $7.65, $5.34 and $7.61 per
  share, respectively. The following table summarizes activity in the plans for
  2000, 1999 and 1998:

                                                         Weighted average
                                         Options          exercise price
                                         -------         ----------------
  Outstanding at October 31, 1997      4,376,212               $24.84
       Granted                           981,780                32.53
       Exercised                        [218,159]               20.44
       Cancelled                            [992]               18.75
                                       ----------
  Outstanding at October 31, 1998      5,138,841                26.49
       Granted                         1,001,655                28.78
       Exercised                        [466,169]               22.31
       Cancelled                         [19,527]               26.71
                                       ----------
  Outstanding at October 31, 1999      5,654,800                27.24
       Granted                         1,079,455                30.63
       Exercised                        [514,611]               24.48
       Cancelled                         [9,087]                27.33
                                       ----------
  Outstanding at October 31, 2000      6,210,557                28.08
                                       ==========


<PAGE>


NOTES TO FINANCIAL STATEMENTS


The following table shows various information about stock options outstanding at
October 31, 2000:

<TABLE>
<CAPTION>
                                                               Range of exercise prices
                                                               ------------------------
<S>                                       <C>          <C>          <C>         <C>
                                           $18.29 -    $25.06 -     Over
                                           $24.25      $27.50       $27.50      Total
                                          -------    --------     --------      --------
   Number outstanding                     799,750   2,406,967    3,003,840      6,210,557
   Weighted average price                  $23.31      $26.41       $30.68         $28.08
   Weighted average remaining life (in years)2.04         5.31        8.10           6.24
   Number exercisable                     799,750    2,406,967   1,937,885      5,144,602
   Weighted average price                  $23.31      $26.41       $30.71         $27.55

</TABLE>


  There were 4,417,999 shares available for grant as of October 31, 2000
  (1999-5,488,367, 1998-1,470,495). At October 31, 2000, 595,171 outstanding
  options had related limited stock appreciation rights.

  N. EMPLOYEE RETIREMENT, POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS

  PENSION AND RETIREMENT PLANS
  The company provides retirement benefits for substantially all domestic
  employees under several noncontributory trusteed plans and also provides
  benefits to employees whose retirement benefits exceed maximum amounts
  permitted by current tax law under an unfunded benefit plan. Benefits are
  based on a final average pay formula for the salaried plans and a unit benefit
  formula for the hourly paid plans. Prior service costs are amortized on a
  straight-line basis over the average remaining service period for active
  employees. Contributions are made to the funded plans in accordance with ERISA
  requirements. Plan assets are comprised mainly of listed stocks, including
  $68,491,000 of company stock, money market and fixed income investments.

  The 2000 net pension credit relating to employee pension and retirement
  benefits was $108,247,000 (1999-$82,280,000, 1998-$55,337,000). The net
  pension credits reflect cumulative favorable investment returns on plan
  assets. The components of the net pension credit for 2000, 1999 and 1998 are
  as follows:

  In thousands                              2000             1999           1998
  ------------                          --------        ---------        -------
  Service cost-benefits earned          $ 28,638        $  28,966        $26,934
  during the period
  Interest cost on projected
  benefit obligation                      74,199           71,714        71,293
  Expected return on plan assets        [187,501]        [171,223]     [148,042]
  Net transition asset                    [6,940]          [6,940]       [6,940]
  Amortization of prior service cost       5,498            5,473         5,312
  Net gain                               [22,141]         [10,270]       [3,894]
                                        --------        ---------        -------
  Net pension credit                  $ [108,247]       $ [82,280]    $ [55,337]
                                        ========        =========       ========



<PAGE>


NOTES TO FINANCIAL STATEMENTS


  POSTRETIREMENT BENEFITS
  The company provides life insurance for substantially all retirees and medical
  benefits to certain retirees in the form of cost subsidies until medicare
  eligibility is reached and to certain other retirees, medical benefits up to a
  maximum lifetime amount. None of these benefits is funded. The components of
  net periodic postretirement benefits cost for the fiscal years ended October
  31, 2000, 1999 and 1998 are as follows:


  In thousands                              2000             1999           1998
  ------------                          --------        ---------        -------
  Service cost-benefits earned          $  1,300        $   1,200        $ 1,400
  during the period
  Interest cost                            1,300            1,200          1,500
  Net amortization                          [900]          [1,100]         [800]
                                        --------        ---------        -------
  Net periodic postretirement
    benefits cost                       $  1,700        $   1,300        $ 2,100
                                        ========        =========       ========



  The changes in the consolidated prepaid pension asset for defined benefit
  plans and the accrued postretirement benefit obligation are shown on the next
  page. The net prepaid pension cost, from the following table, is included in
  "Other assets," except for an obligation of $25.7 million for an unfunded
  excess benefit plan which is recorded as a long-term liability.

  The following table sets forth the funded status of the plans and amounts
  recognized in the "Consolidated Balance Sheets" at October 31, based on a
  valuation date of July 31:

<TABLE>
<CAPTION>
                                     Pension and
 In thousands                        retirement benefits         Postretirement benefits
 ------------                        --------------------------  -----------------------
                                              200          1999       2000          1999
                                     --------------------------  ---------    ----------
<S>                                  <C>            <C>           <C>           <C>
 Change in benefit obligation
                                     $1,123,389     $1,084,468    $19,900       $ 23,200
    Benefit obligation at beginning
    of year
    Service cost                         28,638         28,966      1,300          1,200
    Interest cost                        74,199         71,714      1,300          1,200
    Actuarial gain [loss]                   718        [13,833]      [500]        [2,800]
    Plan amendments                      20,631            380          -              -
    Acquisitions                          9,662              -          -              -
    Termination benefits                      -          1,491          -              -
    Benefits paid                       [53,078]       [49,797]    [2,400]        [2,900]
                                     ------------  -----------    --------      --------
                                     $1,204,159     $1,123,389    $19,600        $19,900
    Benefit obligation at end        ============  ===========    ========      =========
    of year
</TABLE>


<TABLE>
<CAPTION>
 Change in plan assets

<S>                                  <C>            <C>           <C>           <C>
    Fair value of plan assets at
     beginning of year               $2,614,295     $2,337,713   $       -     $       -
    Actual return on plan assets        179,787        324,716          -              -
    Company contributions                 1,905          1,663      2,400          2,900
    Acquisitions                         10,804              -          -              -
    Benefits paid                       [53,078]      [49,797]     [2,400]       [2,900]
                                     ------------ ------------    ---------      -------
                                     $2,753,713     $2,614,295                  $     -
    Fair value of plan assets        ============ ============    ========      =========
    at end of year                    $       -
</TABLE>


<PAGE>


NOTES TO FINANCIAL STATEMENTS


<TABLE>
<CAPTION>
<S>                                  <C>            <C>           <C>           <C>

 Funded status of the plans          $1,549,554     $1,490,906    $[19,600]     $[19,900]
    Unrecognized net actuarial gain    [986,706]    [1,017,279]     [6,800]       [7,100]
    Unrecognized prior service cost      62,151         47,018           -          [100]
    [credit]
    Unrecognized net transition          [9,026]       [15,966]          -             -
    obligation                                     -
                                     ------------ ------------    ---------      ---------
                                     $  615,973     $  504,679    $[26,400]      $[27,100]
                                     ============ ============    =========      =========
</TABLE>



  The assumptions used in the measurement of the company's benefit obligations
  are as follows:

                                                        2000     1999       1998
                                                        ----     ----       ----
  Pension and retirement benefits
    Discount rate                                      6.75%    6.75%      6.75%
    Expected return on plan assets                     8.75%    8.75%      9.50%
    Rate of compensation increase                      5.00%    5.00%      5.00%

  Postretirement benefits
    Discount rate                                      6.75%    6.75%      6.75%
    Rate of compensation increase                      5.00%    5.00%      5.00%


         The annual rate of increase in health care costs was assumed at 7% for
         1999, 6% for 2000 and 5% thereafter. The effect of a 1% increase in the
         assumed health care cost trend rate would increase the July 31, 2000
         accumulated postretirement benefit obligation by $284,000 and the net
         postretirement benefits cost for 2000 by $76,000. The effect of a 1%
         decrease in the assumed health care cost trend rate would decrease the
         July 31, 2000 accumulated postretirement benefit obligation by $248,000
         and the net postretirement benefits cost for 2000 by $68,000.

         The company also has defined contribution plans that cover
         substantially all U.S. employees. Expense for company matching
         contributions under these plans was approximately $24.6 million in 2000
         and $18.0 million in 1999 and 1998.

         POSTEMPLOYMENT BENEFITS
         The company provides limited postemployment benefits to former or
         inactive employees, including short-term disability, workers'
         compensation and severance.


         O. LEGAL AND ENVIRONMENTAL MATTERS

         The company is involved in various legal proceedings and environmental
         actions, generally arising in the normal course of its business.
         Although the ultimate outcome of such matters cannot be predicted with
         certainty, the company does not believe that the outcome of any
         proceeding, lawsuit or claim that is


<PAGE>


NOTES TO FINANCIAL STATEMENTS


         pending or threatened, or all of them combined, will have a material
         adverse effect on its consolidated financial position, liquidity or
         results of operations.

         P. BUSINESS SEGMENT INFORMATION
         Westvaco is a leading manufacturer of packaging, paper and chemicals
         serving both U.S. and international markets. The company's operating
         divisions have been classified into reportable segments based upon the
         nature of their products and services within these three major product
         categories, with separate disclosure of Rigesa, Ltda., our wholly owned
         Brazilian packaging subsidiary. Following is a description of our
         reportable business segments:

         The packaging segment manufactures, markets and distributes bleached
         paperboard, kraft paper and board, and premium packaging for consumer
         products markets. These products are manufactured at three domestic
         mills and two mills located in Brazil; paper and board are converted
         into packaging products at plants located in the United States, Brazil
         and Europe. These products are sold primarily in the United States with
         additional markets located in Brazil, Europe, Asia and the Pacific Rim.
         In Brazil, Rigesa is a major producer of paperboard and corrugated
         packaging for the markets of that country. Operating results for Rigesa
         are subject to the economic conditions in Brazil, including its
         inflation and currency fluctuations.

         The paper segment is engaged in the manufacturing and marketing of
         printing grade papers and envelopes. All of this segment's operations
         are in the United States. It operates three mills in the eastern half
         of the country and manufactures envelopes at nine domestic plants.

         The chemical segment manufactures products at four domestic locations.
         Major product groups are: activated carbon products and services;
         printing ink resins and lignin-based surfactants; tall oil fatty acid,
         rosin and derivative products. The corporate and other segment includes
         the company's forestry operations and income and expense items and
         activities not directly associated with segment operations, including
         corporate support staff services and related assets and liabilities.

         The segments are measured on operating profits before restructuring
         charges, interest expense, income taxes, extraordinary items and
         cumulative effect of accounting changes, except for Rigesa in the
         packaging segment, whose operating profit includes interest income of
         $10.0 million in 2000 (1999- $13.2 million, 1998- $14.6 million) and
         interest expense of $5.3 million in 2000 (1999- $4.6 million, 1998-
         $4.5 million). The segments follow the same accounting principles
         described in the Summary of Significant Accounting Policies. Sales
         between the segments are recorded primarily at market prices. The 2000
         restructuring charge of $27.2 million related to the expected decline
         in sales of folding cartons to U.S. tobacco markets and the gain of
         $11.2 million from the sale of the liquid packaging plant relate to the
         packaging segment. The 1999 restructuring charge following the
         completion of the company's strategic review related to packaging,
         paper and chemicals was $57.7 million, $21.2 million and $1.6 million,
         respectively. No single customer accounts for 10% or more of
         consolidated trade sales in 2000 and 1999. In 1998, sales to a single
         customer accounted for approximately 11% of consolidated sales
         primarily from the company's packaging segment.

         Total sales outside of the United States, including sales of our
         foreign operating subsidiaries, accounted for approximately
         $808,494,000 in 2000 (1999-$663,483,000, 1998-$709,567,000). Export
         sales from the United States amounted to $590,807,000 in 2000
         (1999-$504,480,000, 1998-$499,792,000). Income of foreign subsidiaries
         included in consolidated net income amounted to $49,185,000 in 2000
         (1999-$40,518,000, 1998 $38,612,000). Long-lived assets located outside
         the United States are $326,350,000 (1999-$195,104,000). ). Long-lived
         assets located in the United States are $5,179,876,000
         (1999-$3,963,580,000).


<PAGE>


NOTES TO FINANCIAL STATEMENTS


         Financial information by business segment follows:
<TABLE>
<CAPTION>

                                               Sales            Depreciation
                       ------------------------------
                                       Inter-          Operating        and Segment       Capital
(In millions)              Trade      Segment    Total    Profitamortization assets  expenditures
YEAR ENDED OCTOBER 31, 2000
-------------------------------------------------------------------------------------------------
<S>                      <C>        <C>       <C>          <C>      <C>      <C>          <C>

  Packaging              $1,974.0   $ 4.4     $1,978.4     $318.7   $161.9   $3,555.8     $104.6
  Rigesa                    166.9       -        166.9       32.5     10.8      285.1       13.6
                        -------------------------------------------------------------------------
Packaging total           2,140.9    4.4      2,145.3       351.2    172.7    3,840.9      118.2
-------------------------------------------------------------------------------------------------
Paper                     1,145.5    20.2     1,165.7       140.6     96.7    1,383.7       39.7
-------------------------------------------------------------------------------------------------
Chemical                    319.1    25.1       344.2        64.5     23.5      321.4       10.8
-------------------------------------------------------------------------------------------------
Corporate and other          57.5    39.1        96.6      [152.7]    21.0    1,023.9       43.6
-------------------------------------------------------------------------------------------------
Total                     3,663.0    88.8     3,751.8       406.6    313.9    6,569.9      212.3
-------------------------------------------------------------------------------------------------
Intersegment eliminations           [88.8]      [88.8]
-------------------------------------------------------------------------------------------------
Consolidated totals      $3,663.0   $  -     $3,663.0      $403.6   $313.9   $6,569.9     $212.3
                        =========================================================================


YEAR ENDED OCTOBER 31, 1999
------------------------------------------------------------------------------------------------
Packaging                $1,316.9   $ 4.0     $1,320,9     $165.3   $128.6   $2,043.5     $ 99.8

Rigesa                   140.8          -        140.8       25.2      9.4      257.4       31.0
                        -------------------------------------------------------------------------
Packaging total          1,457.7        4.0   1,461.7    190.5       138.0    2,300.9      130.8
-------------------------------------------------------------------------------------------------
Paper                    1,005.1       23.4   1,028.5     62.0       100.6    1,441.8       60.0

-------------------------------------------------------------------------------------------------
Chemical                   293.9       20.6     314.5     52.5        23.8      314.7       18.1
-------------------------------------------------------------------------------------------------
Corporate and other         45.1       35.7      80.8   [157.0]       18.1      839.3       23.4
-------------------------------------------------------------------------------------------------
Intersegment eliminations            [83.7]    [83.7]
-------------------------------------------------------------------------------------------------
Consolidated totals      2,801.8       83.7   2,885.5    148.0       280.5    4,896.7      232.3



YEAR ENDED OCTOBER 31, 1998
---------------------------
  Packaging             $1,380.2  $    4.0  $1,384.2   $ 172.3      $128.1   $2,146.6     $158.6
-------------------------------------------------------------------------------------------------
  Rigesa                   184.0         -     184.0      35.2        12.4      322.4       41.1
-------------------------------------------------------------------------------------------------
Packaging total          1,564.2       4.0   1,568.2     207.5       140.5    2,469.0      199.7
-------------------------------------------------------------------------------------------------
Paper                      972.9      52.7   1,025.6      84.8       100.1    1,497.2      157.8
-------------------------------------------------------------------------------------------------
Chemical                   310.9      21.2     332.1      53.2        22.6      326.6       38.0
-------------------------------------------------------------------------------------------------
Corporate and other         37.9      34.8      72.7    [141.1]       17.8      715.9       24.2
-------------------------------------------------------------------------------------------------
Total                    2,885.9     112.7   2,998.9     204.4       281.0    5,008.7      419.7
-------------------------------------------------------------------------------------------------
Intersegment elimination            [112.7]   [112.7]
-------------------------------------------------------------------------------------------------
Consolidated totals     $2,885.9  $      -   $2,885.9  $ 204.4      $281.0   $5,008.7     $419.7
                        =========================================================================

</TABLE>



<PAGE>


NOTES TO FINANCIAL STATEMENTS


Q. SUBSEQUENT EVENT [UNAUDITED]
On December 6, 2000, the company announced the formation of Paxonix, a new
Internet-enabled packaging solutions business offering a unique array of
integrated software applications, expert professional services and best-in-class
resources around the world. Paxonix's mission is to help consumer product
companies develop packaging solutions, shorten package development cycles and
increase the speed of product launches and relaunches in one country, a region
or globally.

As the creator of Paxonix, Westvaco intends to provide the initial funding of
about $50 million. A select group of 17 companies have joined Westvaco as
charter members of Paxonix. These charter members operate in 60 countries and
collectively possess expertise that spans advertising, branding, graphic and
structural design, packaging materials and packaging production.

R. SELECTED QUARTERLY INFORMATION [UNAUDITED]

<TABLE>
<CAPTION>
In thousands, except per share data

  Quarter                                       20001           19992          19983
  -------                                       ----            ----           ----
<S>                                       <C>             <C>            <C>

Sales
    First                                 $   799,593     $   650,715    $   702,113
    Second                                    904,658         679,481        724,187
    Third                                     928,022         700,202        727,826
    Fourth                                  1,030,718         771,451        731,791
                                            ---------      ----------     ----------
    Year                                   $3,662,991      $2,801,849     $2,885,917
                                             ========       =========      =========
Gross profit
    First                                 $   175,433     $   119,239    $   133,682
    Second                                    211,288         127,052        139,135
    Third                                     216,473         139,515        130,835
    Fourth                                    244,740         176,907        139,644
                                           ----------      ----------     ----------
    Year                                  $   847,934     $   562,713    $   543,296
                                             ========        ========       ========

Net income before extraordinary charge
    First                                $     50,225    $     25,222   $     32,516
    Second                                     70,168          27,295         34,606
    Third                                      53,552          34,986         31,674
    Fourth                                     80,727          23,673         33,217
                                          -----------    ------------    -----------
    Year                                  $   254,672     $   111,176    $   132,013
                                             =======         ========      =========
Net income
    First                                $     50,225    $     25,222   $     32,516
    Second                                     61,365          27,295         34,606
    Third                                      53,552          34,986         31,674
    Fourth                                     80,727          23,673         33,217
                                          -----------     -----------   ------------
    Year                                  $   245,869     $   111,176    $   132,013
                                           ==========      ==========    ===========

<PAGE>


NOTES TO FINANCIAL STATEMENTS


Net income before extraordinary charge per common share-
    First                                      $  .50          $  .25         $  .32
    Second                                        .70             .27            .34
    Third                                         .53             .35            .31
    Fourth                                        .80             .24            .33
                                              -------         -------        -------
    Year                                        $2.53           $1.11          $1.30
                                              =======         =======        =======

Net income per common share- basic and diluted
    First                                      $  .50          $  .25         $  .32
    Second                                        .61             .27            .34
    Third                                         .53             .35            .31
    Fourth                                        .80             .24            .33
                                              -------         -------        -------
    Year                                        $2.44           $1.11          $1.30
                                              =======         =======        =======
</TABLE>



1)  Results for the 2000 second quarter include an extraordinary charge of $8.8
    million after tax, or $.09 per share, from the retirement of higher coupon
    debt and a pretax gain of $11.2 million, or $.07 per share from the sale of
    a liquid packaging plant previously written down as part of the 1999
    restructuring charge. Third quarter 2000 results include a pretax charge of
    $24.3 million, or $.16 per share, as a result of restructuring. Fourth
    quarter 2000 results include a pretax charge of $3.0 million, or $.02 per
    share, for the completion of the third quarter restructuring and a pretax
    gain of $3.6 million, or $.04 per share, resulting from the sale of our
    equity interest in a foreign operation. Fourth quarter results also include
    a pretax LIFO provision of $9.0 million, or $.06 per share.

2)  Results for the 1999 fourth quarter include a pretax charge of $80.5
    million, or $.49 per share, as a result of restructuring, and a $15.0
    million tax benefit, or $.15 per share, resulting from a release of deferred
    taxes.

3)  Results for the 1998 fourth quarter include a pretax charge of $5.0 million,
    or $.03 per share, as a result of restructuring.




<PAGE>


  RESPONSIBILITY FOR FINANCIAL STATEMENTS

  Management is responsible for the information and representations in the
  accompanying consolidated financial statements and related notes as well as
  all other financial information contained in this report. These financial
  statements were prepared in accordance with accounting principles generally
  accepted in the United States of America and by necessity include some amounts
  determined using informed estimates and judgments.

  Management is responsible for establishing and maintaining a system of
  internal control. The company's accounting systems include internal controls
  which management believes provide reasonable assurance of the reliability of
  its financial records and the proper safeguarding and use of its assets. In
  establishing the basis for reasonable assurance, management balances the cost
  of the internal controls with the benefits they provide. Additionally, it has
  long been the policy of the company to conduct its business affairs in
  accordance with high ethical standards, as set forth in the Westvaco Code of
  Conduct.

  PricewaterhouseCoopers LLP, the company's independent accountants, were
  engaged to audit the consolidated financial statements and were responsible
  for conducting their audit in accordance with auditing standards generally
  accepted in the United States of America. The appointment of
  PricewaterhouseCoopers LLP as the company's independent accountants by the
  Board of Directors, on the recommendation of the Audit Committee, has been
  ratified each year by the shareholders. Their report immediately follows this
  statement. The Audit Committee of the Board of Directors, composed solely of
  nonmanagement directors, meets regularly with the company's management, the
  internal audit manager and the independent accountants to discuss accounting
  and financial reporting matters and the nature, scope and results of audits.
  The Audit Committee meets with the independent accountants both with and
  without the presence of management. The committee also meets with the
  company's general counsel to review the company's legal compliance program as
  well as significant litigation issues. The independent accountants and the
  internal audit manager have full and free access to the Audit Committee.



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



  Karen R. Osar
  Senior Vice President and Chief Financial Officer

  November 20, 2000



<PAGE>


REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and
Shareholders of
Westvaco Corporation

In our opinion, the accompanying consolidated financial statements present
fairly, in all material respects, the financial position of Westvaco Corporation
and its subsidiaries at October 31, 2000 and 1999, and the results of their
operations and their cash flows for each of the three years in the period ended
October 31, 2000, in conformity with accounting principles generally accepted in
the United States of America. These financial statements are the responsibility
of the company's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.






PricewaterhouseCoopers LLP

New York, New York
November 20, 2000