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MeadWestvaco Sees Q2 Impacted by Consumer & Office Business Developments and Corporate Items

Tuesday, July 25, 2006

Press release from the issuing company

RICHMOND, Va.--July 24, 2006-- MeadWestvaco Corporation today announced results for the second quarter ended June 30, 2006 will be affected by weather-related disruptions and by more pronounced shifts in customer ordering patterns at its Consumer & Office Products business as well as by certain corporate items. Second quarter 2006 sales volume for the Consumer & Office Products business is expected to be lower versus the year-ago quarter due to the timing of shipments moving from the second quarter into the third and fourth quarters of the year. This change in timing is the result of customers shifting their order patterns to later in the year as well as the impact of the northeast floods that occurred in late June, which resulted in the closure of the company's Sidney, New York facility for three days at the end of the quarter. While full-year 2006 shipment volumes are expected to be in-line with last year, the combined effect of these developments will lower Consumer & Office Product's second quarter 2006 segment operating income by approximately 50 percent versus the comparable year-ago period. In the second quarter 2006, corporate and other costs will be impacted by charges for the permanent shutdown of the two previously-announced idled paperboard machines, charges for severance and other employee benefits and relocation as well as other one-time costs in conjunction with the company's corporate and packaging transformation activities. Excluding these items, corporate and other costs will be approximately $50 million. "The northeast floods, which were tragic for many of our employees, compounded the accelerating dynamic of key back-to-school and office product customers shifting their orders closer to peak seasonal sell-through times," said John A. Luke, Jr., chairman and chief executive officer. "Further, as expected our Packaging operating profit will be higher than first quarter 2006 levels, but modestly below the comparable year-ago quarter. While our pricing and mix enhancement actions are gaining momentum, input costs remained challenging during the second quarter. However, with strong backlogs in bleached and coated board, we anticipate improved demand and better overall profitability year-over-year through the second half of 2006."




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