RICHMOND, Va.--Aug. 1, 2006-- MeadWestvaco Corporation today reported a net loss for the second quarter of $7 million, or $0.04 per share. Included in the second quarter loss is an after-tax restructuring charge of $37 million, or $0.20 per share, primarily related to the permanent shutdown of two previously idled paperboard machines as well as employee termination costs. In addition, the company incurred other one-time after-tax costs of $6 million, or $0.04 per share, related to the company's cost initiative. Also included in the second quarter loss is an after-tax gain of $13 million, or $0.07 per share, on the sale of a note received as part of the consideration for the sale of the printing and writing papers business in 2005. Excluding these special items, net income for the second quarter of 2006 was $0.13 per share, compared to $0.25 per share in the same quarter last year. Sales in the second quarter were $1.57 billion, essentially unchanged compared to sales in the second quarter of 2005. Second quarter 2006 results versus second quarter 2005 results reflect higher selling prices and improved mix in bleached paperboard, higher pricing and volumes in coated paperboard as well as improved overall performance in Specialty Chemicals. These improvements were more than offset by higher input and production costs in the U.S. paperboard mills. In addition, as previously announced, the Consumer & Office Products business experienced a greater than anticipated shift of orders into the second half of the year as well as delayed second quarter shipments due to the northeast floods. "We are executing on the initiatives that will make MeadWestvaco a highly profitable consumer packaging provider to the world's largest consumer goods companies," said John A. Luke, Jr., chairman and chief executive officer. "We are aggressively and successfully driving price increases and product mix enhancements across all of our businesses to overcome cost inflation while reshaping our company to perform better for shareholders and customers alike. As we move through the remainder of 2006 and into 2007 our hard work will become increasingly apparent through improved profitability. "I want to thank all of the employees of MeadWestvaco who have made the opening of our new Richmond, Virginia headquarters successful," continued Mr. Luke. "Our new location makes our company more productive and it fosters an atmosphere of collaboration and creativity to help move our company forward." Quarterly Comparison In the second quarter 2005 MeadWestvaco reported a loss from continuing operations of $13 million, or $0.06 per share. Included in the loss from continuing operations for 2005 was an after-tax charge for debt retirement of $56 million, or $0.28 per share, and an after-tax restructuring charge of $6 million, or $0.03 per share. MeadWestvaco's second quarter net loss was $83 million, or $0.41 per share. The net loss for the second quarter of 2005 included a loss from discontinued operations of $70 million, or $0.35 per share. Outlook In the third quarter and in the second half of 2006 MeadWestvaco expects solid year-over-year improvement in Packaging profitability. Backlogs in the bleached and coated paperboard mills are stronger compared to the prior year. Seasonal volume growth in conjunction with continued price increases and product mix enhancements in the paperboard mills as well as modest growth in consumer packaging are expected to overcome the cost inflation of raw materials, energy and freight in the second half of 2006. In the third quarter and in the second half of 2006 MeadWestvaco expects the Consumer & Office Products business to record seasonally stronger sales and improved year-over-year operating profits as customers shift their orders to the second half of the year. Specialty Chemicals anticipates continued year-over-year improvement in the third quarter and in the second half of 2006 driven by modest volume growth and cost savings. Packaging In the Packaging business, MeadWestvaco's largest segment, sales of $1.14 billion were up slightly compared to second quarter 2005 sales of $1.13 billion. Segment operating profit totaled $88 million compared to $96 million in the prior year's second quarter. The positive effects of higher selling prices and improved sales mix at the mills were more than offset by cost inflation in energy and raw materials, higher production costs and by weaker overall results in consumer packaging. In consumer packaging, performance in the second quarter of 2006 declined compared to the year-ago quarter. Stronger tobacco and personal care converting were more than offset by weaker results in media and beverage packaging converting. Media markets remain challenged due to a lackluster major release schedule, next-generation DVD format conflicts and to higher resin costs. Overall performance of the mills in the second quarter of 2006 declined compared to the year-ago quarter. Prices and mix enhancements were offset by lower bleached board volumes from the previously-announced capacity reduction and higher energy, wood, freight and manufacturing costs. Consumer & Office Products In the Consumer & Office Products segment, sales declined 12% to $260 million compared to $297 million in the prior year second quarter. Operating profit was $17 million compared with $33 million in the second quarter of 2005. The decline in sales and operating profit reflect lower sales as customers continued to shift orders into the second half of the year and as other shipments were delayed due to the northeast floods in late June. Lower volumes also reflect the impact of Asian imports, especially for commodity-based products. In addition to lower volumes, higher operating and raw materials costs were only partly offset by a better mix of products sold. Specialty Chemicals Second quarter sales for Specialty Chemicals of $131 million increased 13% compared to the second quarter last year. Operating profit for the segment was $19 million, compared with $14 million in the prior year second quarter. The improved segment operating profit was primarily due to better selling prices that offset the cumulative effect of higher raw material and energy costs and lower selling, general and administrative costs. Other Items In the quarter, prices for energy, wood, raw materials and freight increased about $30 million over the prior year. Capital spending was $114 million in the first half of the year, compared with $132 million in last year's first half, and remained well below the level of depreciation for the comparable period. Cash flow from continuing operations was approximately $180 million for the first half of the year, a 46% increase over the same period last year. In 2006, the company began to expense stock options in accordance with SFAS No. 123R, Share-Based Payments. The effect of adoption of SFAS No. 123R was an incremental non-cash expense of approximately $4 million in the quarter ended June 30, 2006, and the full year expense is currently estimated to be an incremental non-cash expense of approximately $15 million before taxes. On July 5, 2006, MeadWestvaco completed its acquisition of Calmar, a leading global manufacturer of high-quality plastic dispensing and spraying systems. Total consideration was $710 million. As previously announced, the company expects Calmar to have minimal impact on its earnings through 2006, but expects it to be accretive to earnings beginning in 2007. The purchase of Calmar was funded with $340 million in short-term loans and with cash on hand. The tax rate for 2006 is estimated to be approximately 18%, excluding the effects of the Calmar acquisition. The company is currently evaluating the impact of the acquisition on the full year tax rate. On June 1, 2006, MeadWestvaco paid a regular quarterly dividend of $0.23 per share to stockholders of record at the close of business on May 6, 2006.