Westvaco reports record first quarter sales and near record earnings.

NEW YORK--(BUSINESS WIRE)--Feb. 23, 1994--Westvaco Corp. (NYSE:W), a major manufacturer of paper, packaging and specialty chemicals, today reported record sales and substantially improved earnings for the first quarter of fiscal 1995.

First quarter sales for the period ended Jan. 31, 1995,

were $742 million, a 28 percent increase over the same period last year and a record for the quarter. Net income for the quarter more than tripled to $49 million, or 73 cents per share of common stock, in comparison with $15.8 million, or 24 cents per share, reported during the first quarter of 1994. First quarter 1995 earnings were only very slightly below the company's record first quarter operating earnings of 75 cents per share, which were recorded in 1989.

"We are pleased by the strong demand for our products in the United States and even more gratified to see the reception being given our outstanding products in many areas of the world, particularly those which have not previously been promising markets for us," said John A. Luke Jr., Westvaco's president and chief executive officer. "We believe the international markets represent a major growth opportunity for us, and we are being very vigorous in doing things to cultivate the full potential of these markets for Westvaco."

He added that all Westvaco business units are benefiting from improved U.S. and global economic conditions, noting that Westvaco's "priorities remain focused on supporting growth of those products which are clearly distinctive and superior in their market areas."

He added that the company's emphasis on differentiated products has been especially beneficial in international markets, resulting in new activities. The company previously announced plans to construct a world-class bleached board packaging plant in the Czech Republic. The plant, which will be located in Svitavy about 70 miles east of Prague, will convert bleached board made at the company's mill in Covington, Va., into high-quality folding cartons for consumer packaging markets in Central and Western Europe.

The new plant is scheduled to begin operation in the fall of 1995, and according to Luke, "will permit us to carry our creative package manufacturing and design skills to a promising new area of the world in which we have not previously been able to participate." Potential customers include American companies and European firms.

Westvaco also has a new corrugated box plant under construction in Brazil near the city of Fortaleza in the state of Ceara. Westvaco has operated successfully in Brazil for more than 40 years, producing high-quality unbleached paperboard from new and recycled materials that is used to make corrugated containers for industrial and consumer packaging applications. The company currently operates two paper mills and three box plants in Brazil.

"We have identified an opportunity in a rapidly growing part of the country which has been somewhat beyond our capacity to serve efficiently," said Luke. "The new plant, which will be ready to operate this fall, will round out our market coverage."

He also noted that the company recently decided to expand its product distribution in Asian markets by opening a new office in Shanghai later this year. The company already has offices in Hong Kong as well as Seoul, Singapore, Sydney, Taipei and Tokyo.

"The business opportunity available to our distinctive products in China is such that we really need to have more coverage in order to fully develop the potentials which are coming to us," said Luke. "We are also considering other Asian office locations as well."

Speaking about Westvaco's overall operations, Luke concluded, "We like the progress we are making because it is emerging as a result of our consistent application of sound, long-term policies in which we very strongly believe. We have weathered a period of difficulty with less erosion of earning power from the previous high than virtually all of our principal competitors, and we have emerged with excellent future potentials." -0-

                     Consolidated Statement of Income
                             (Unaudited)
                      In thousands, except per share

                              Three Months Ended
                                  Jan. 31
                               1995       1994(a)

Sales                       $741,675  $577,254
Other income                   8,194     7,681
                             749,869   584,935
Cost of products sold        535,963   431,137
Selling, research and
 administrative expenses      51,054    48,724
Depreciation and
 amortization                 56,024    53,384
Interest expense              26,111    26,873
                             669,152   560,118
Income before taxes           80,717    24,817
Income taxes                  31,400     9,000
Net income                    49,317    15,817
Net income per share             .73       .24
Average number of shares
 outstanding                  67,214    66,937

                          Consolidated Balance Sheet
                                (Unaudited)
                               In thousands

                                            At Jan. 31,
                                        1995            1994

Assets
Cash and marketable securities    $    68,873       $   50,175
Receivables                           292,027          213,844
Inventories                           245,409          283,990
Prepaid expenses                       56,340           60,895
  Current assets                      662,649          608,904
Plant and timberlands - net         3,056,145        3,077,991
Other assets                          301,936          255,806
                                   $4,020,730       $3,942,701

Liabilities and shareholders'
 equity
Current liabilities                  $352,053         $356,649
Long-term obligations               1,233,439        1,272,351
Deferred income taxes                 539,271          487,249
Shareholders' equity                1,895,967        1,826,452
                                   $4,020,730       $3,942,701
(a) The 1994 first quarter includes a combined pretax gain of
$10.1 million, or 9 cents per share, resulting from the sale of
property and the sale of an operating lease.
-0-
                   Consolidated Statement of Cash Flows
                             (Unaudited)
                             In thousands

                                                     Three months
                                                    ended Jan. 31
                                                  1995        1994
Cash flows from operating activities:
 Net income                                     $ 49,317    $ 15,817
 Adjustments not affecting cash:
   Provision for depreciation and amortization    56,024      53,384
   Provision for deferred income taxes            14,104       6,248
   Other, net                                    (11,846)    (13,865)
 Net changes in assets and liabilities           (31,568)    (23,744)
 Other, net                                       (1,546)     (1,212)
    Net cash provided by operating activities     74,485      36,628
Cash flows from investing activities:
 Additions to plant and timberlands              (52,974)    (63,452)
 Other, net                                        6,077      11,036
    Net cash used in investing activities        (46,897)    (52,416)
Cash flows from financing activities:
 Proceeds from issuance of common stock            3,082       4,573
 Proceeds from issuance of debt                   18,734      49,851
 Dividends paid                                  (18,480)    (18,398)
 Repayment of debt                               (38,202)    (21,677)
    Net cash (used in) provided by financing
     activities                                  (34,866)     14,349
Effect of exchange rate changes on cash            1,148      (4,945)
  Decrease in cash and marketable
   securities                                     (6,130)     (6,384)
Cash and marketable securities:
 At beginning of period                           75,003      56,559
 At end of period                                 68,873      50,175

CONTACT: Westvaco Corp., New York

William P. Fuller III, 212/318-5250 (Media)

or

Roger A. Holmes, 212/318-5288 (Analyst)