- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM 11-K ---------------- [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995 OR [_] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER 1-9864................................................... A. Full title of the plan and the address of the plan, if different from that of the issuer named below: PACKAGING CORPORATION OF AMERICA 401(K) SAVINGS PLAN 1603 ORRINGTON AVENUE EVANSTON, ILLINOIS 60204 B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: TENNECO INC. 1275 KING STREET GREENWICH, CONNECTICUT 06831 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ---------------------------------------- To the Employee Benefits Committee of Tenneco Packaging Inc.: We have audited the accompanying statements of net assets available for benefits of the PACKAGING CORPORATION OF AMERICA 401(k) SAVINGS PLAN as of December 31, 1995 and 1994, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements and the schedules referred to below are the responsibility of the Tenneco Packaging Inc. Employee Benefits Committee (formerly known as Packaging Corporation of America Benefits Committee). Our responsibility is to express an opinion on these financial statements and schedules based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Packaging Corporation of America 401(k) Savings Plan as of December 31, 1995 and 1994, and the changes in net assets available for benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of assets held for investment purposes and reportable transactions are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP Chicago, Illinois, June 15, 1996 PACKAGING CORPORATION OF AMERICA 401(k) SAVINGS PLAN ---------------------------------------------------- TABLE OF CONTENTS ----------------- DECEMBER 31, 1995 AND 1994 -------------------------- Page ---- REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 2 FINANCIAL STATEMENTS: Statements of Net Assets Available for Benefits as of December 31, 1995 and 1994 3 Statements of Changes in Net Assets Available for Benefits for the Years Ended December 31, 1995 and 1994 5 Notes to Financial Statements 7 SUPPLEMENTAL SCHEDULES: Schedule I--Item 27(a)--Schedule of Assets Held for Investment Purposes as of December 31, 1995 14 Schedule II--Item 27(d)--Schedule of Reportable Transactions for the Year Ended December 31, 1995 15 PACKAGING CORPORATION OF AMERICA 401(k) SAVINGS PLAN ---------------------------------------------------- STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS ---------------------------------------------- AS OF DECEMBER 31, 1995 ----------------------- Dreyfus Money Market Tenneco Dreyfus Dreyfus Instruments, Inc. Capital Strategic Dreyfus Government Dreyfus Common Preservation Investing Balanced Securities Appreciation Loan Stock Fund Fund Fund Fund Series Fund Fund Total ---------- ------------ ---------- ---------- ---------- ------------ ------------ ----------- ASSETS: Investments, at quoted market value- Tenneco Inc. common stock $7,161,086 $ - $ - $ - $ - $ - $ - $ 7,161,086 Investment funds - 7,444,622 2,235,578 4,167,516 5,975,765 5,427,322 - 25,250,803 Cash equivalents 580,650 - - - - - - 580,650 Participant notes receivable (Note 5) - - - - - - 132,984 132,984 ---------- ------------ ---------- ---------- ---------- ------------ ------------ ----------- Total investments 7,741,736 7,444,622 2,235,578 4,167,516 5,975,765 5,427,322 132,984 33,125,523 ---------- ------------ ---------- ---------- ---------- ------------ ------------ ----------- Contributions receivable- Employee 46,484 34,752 17,054 27,995 42,401 29,267 - 197,953 Employer 12,846 11,302 5,549 8,548 12,855 8,751 - 59,851 Profit sharing (Note 3) 4,810 23,776 17,764 30,307 36,970 38,699 - 152,326 ---------- ------------ ---------- ---------- ---------- ------------ ------------ ----------- Total contributions receivable 64,140 69,830 40,367 66,850 92,226 76,717 - 410,130 ---------- ------------ ---------- ---------- ---------- ------------ ------------ ----------- NET ASSETS AVAILABLE FOR BENEFITS $7,805,876 $7,514,452 $2,275,945 $4,234,366 $6,067,991 $5,504,039 $132,984 $33,535,653 ========== ============ ========== ========== ========== ============ ============ =========== The accompanying notes to financial statements are an integral part of this statement. PACKAGING CORPORATION OF AMERICA 401(k) SAVINGS PLAN ---------------------------------------------------- STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS ---------------------------------------------- AS OF DECEMBER 31, 1994 ----------------------- Dreyfus Money Market Tenneco Dreyfus Dreyfus Instruments, Inc. Capital Strategic Dreyfus Government Dreyfus Common Preservation Investing Balanced Securities Appreciation Stock Fund Fund Fund Fund Series Fund Total ---------- ------------ ---------- ---------- ---------- ------------ ------------ ASSETS: Cash on hand $ 33,841 $ - $ - $ - $ - $ - $ 33,841 ---------- ------------ ---------- ---------- ---------- ------------ ----------- Investments, at quoted market value- Tenneco Inc. common stock 4,778,615 - - - - - 4,778,615 Investment funds - 5,505,803 1,296,115 2,135,826 4,456,695 2,446,791 15,841,230 Cash equivalents 22,470 - - - - - 22,470 ---------- ------------ ---------- ---------- ---------- ------------ ----------- Total investments 4,801,085 5,505,803 1,296,115 2,135,826 4,456,695 2,446,791 20,642,315 ---------- ------------ ---------- ---------- ---------- ------------ ----------- Contributions receivable- Employee 86,116 66,011 35,379 43,058 80,160 43,058 353,782 Employer 26,443 20,296 10,870 13,221 24,644 13,221 108,695 ---------- ------------ ---------- ---------- ---------- ------------ ----------- Total contributions receivable 112,559 86,307 46,249 56,279 104,804 56,279 462,477 ---------- ------------ ---------- ---------- ---------- ------------ ----------- NET ASSETS AVAILABLE FOR BENEFITS $4,947,485 $5,592,110 $1,342,364 $2,192,105 $4,561,499 $2,503,070 $21,138,633 ========== ============ ========== ========== ========== ============ =========== The accompanying notes to financial statements are an integral part of this statement. PACKAGING CORPORATION OF AMERICA 401(k) SAVINGS PLAN ---------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS --------------------------------------------------------- FOR THE YEAR ENDED DECEMBER 31, 1995 ------------------------------------ Tenneco Dreyfus Dreyfus Inc. Capital Strategic Dreyfus Common Preservation Investing Balanced Stock Fund Fund Fund Fund ----------- ------------- ----------- ----------- ADDITIONS: Contributions- Employee $1,116,050 $ 871,540 $ 422,088 $ 613,764 Employer 312,832 279,066 130,793 181,825 Profit sharing (Note 3) 4,810 23,776 17,764 30,307 ---------- ---------- ---------- ---------- Total contributions 1,433,692 1,174,382 570,645 825,896 ---------- ---------- ---------- ---------- Investment income- Interest income - 371,896 - - Dividend income 253,910 - 230,181 320,583 Realized gain (loss) - - (16,373) 37,836 Unrealized gain 913,133 - 149,265 305,012 Loan interest income - - - - ---------- ---------- ---------- ---------- Total investment income 1,167,043 371,896 363,073 663,431 ---------- ---------- ---------- ---------- Transfer in of assets from various plans (Note 1) 647,579 439,312 262,510 561,284 ---------- ---------- ---------- ---------- TOTAL ADDITIONS 3,248,314 1,985,590 1,196,228 2,050,611 INTERFUND TRANSFERS (95,482) 120,119 (189,368) 219,801 LOANS TO PARTICIPANTS (191) (2,907) (2,799) (6,471) LOAN REPAYMENTS 1,170 3,869 3,245 5,631 DEDUCTIONS: Distributions to participants (286,889) (184,329) (72,551) (222,671) Transfer out of assets from Sylva plan (8,531) - (1,174) (4,640) ---------- ---------- ---------- ---------- Net additions 2,858,391 1,922,342 933,581 2,042,261 PARTICIPANTS' EQUITY, January 1, 1995 4,947,485 5,592,110 1,342,364 2,192,105 ---------- ---------- ---------- ---------- PARTICIPANTS' EQUITY, December 31, 1995 $7,805,876 $7,514,452 $2,275,945 $4,234,366 ========== ========== ========== ========== Dreyfus Money Market Instruments, Government Dreyfus Securities Appreciation Loan Series Fund Fund Total ----------- ------------- ------------- ---------- ADDITIONS: Contributions- Employee $1,003,272 $ 637,968 $ - $4,664,682 Employer 284,839 184,056 - 1,373,411 Profit sharing (Note 3) 36,970 38,699 - 152,326 ---------- ---------- -------- ----------- Total contributions 1,325,081 860,723 - 6,190,419 ---------- ---------- -------- ----------- Investment income- Interest income - - - 371,896 Dividend income 267,389 92,567 - 1,164,630 Realized gain (loss) - 40,361 - 61,824 Unrealized gain - 1,076,588 - 2,443,998 Loan interest income - - 5,813 5,813 ---------- ---------- -------- ----------- Total investment income 267,389 1,209,516 5,813 4,048,161 ---------- ---------- -------- ----------- Transfer in of assets from various plans (Note 1) 1,107,381 740,218 135,248 3,893,532 ---------- ---------- -------- ----------- TOTAL ADDITIONS 2,699,851 2,810,457 141,061 14,132,112 INTERFUND TRANSFERS (357,504) 302,434 - - LOANS TO PARTICIPANTS (3,790) (5,742) 21,900 - LOAN REPAYMENTS 6,969 7,135 (28,019) - DEDUCTIONS: Distributions to participants (745,340) (105,999) (1,958) (1,619,737) Transfer out of assets from Sylva plan (93,694) (7,316) - (115,355) ---------- ---------- -------- ----------- Net additions 1,506,492 3,000,969 132,984 12,397,020 PARTICIPANTS' EQUITY, January 1, 1995 4,561,499 2,503,070 - 21,138,633 ---------- ---------- -------- ----------- PARTICIPANTS' EQUITY, December 31, 1995 $6,067,991 $5,504,039 $132,984 $33,535,653 ========== ========== ======== =========== The accompanying notes to financial statements are an integral part of this statement. PACKAGING CORPORATION OF AMERICA 401(k) SAVINGS PLAN ---------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS --------------------------------------------------------- FOR THE YEAR ENDED DECEMBER 31, 1994 ------------------------------------ Dreyfus Money Market Dreyfus Dreyfus Instruments, Tenneco Inc. Capital Strategic Dreyfus Government Dreyfus Common Stock Preservation Investing Balanced Securities Appreciation Fund Fund Fund Fund Series Fund Total ------------- ------------- ----------- ----------- ----------- ------------- ------------ ADDITIONS: Contributions- Employee $1,059,290 $ 682,478 $ 382,337 $539,431 $ 964,767 $ 569,861 $ 4,198,164 Employer 346,493 205,273 124,596 167,321 311,417 178,735 1,333,835 ---------- ---------- --------- -------- ---------- --------- ----------- Total contributions 1,405,783 887,751 506,933 706,752 1,276,184 748,596 5,531,999 ---------- ---------- --------- -------- ---------- --------- ----------- Investment income- Interest income - 271,152 - - - - 271,152 Dividend income 154,413 - 3,297 65,047 131,178 43,335 397,270 Realized gain - - 20,810 22,528 - 8,163 51,501 Unrealized gain (loss) (998,066) - (149,436) (10,608) - 33,390 (1,124,720) ---------- ---------- --------- -------- ---------- --------- ----------- Total investment income (loss) (843,653) 271,152 (125,329) 76,967 131,178 84,888 (404,797) ---------- ---------- --------- -------- ---------- --------- ----------- TOTAL ADDITIONS 562,130 1,158,903 381,604 783,719 1,407,362 833,484 5,127,202 INTERFUND TRANSFERS (29,357) 68,139 182,188 47,861 (154,641) (114,190) - DEDUCTIONS--distributions to participants (147,920) (151,833) (34,726) (55,034) (279,194) (73,542) (742,249) ---------- ---------- --------- -------- ---------- --------- ----------- Net additions 384,853 1,075,209 529,066 776,546 973,527 645,752 4,384,953 NET ASSETS AVAILABLE FOR BENEFITS, January 1, 1993 4,562,632 4,516,901 813,298 1,415,559 3,587,972 1,857,318 16,753,680 ---------- ---------- --------- -------- ---------- --------- ----------- NET ASSETS AVAILABLE FOR BENEFITS, December 31, 1994 $4,947,485 $5,592,110 $1,342,364 $2,192,105 $4,561,499 $2,503,070 $21,138,633 ========== ========== ========= ========= ========= ========= ========== PACKAGING CORPORATION OF AMERICA 401(k) SAVINGS PLAN ---------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS --------------------------------------------------------- FOR THE YEAR ENDED DECEMBER 31, 1995 ------------------------------------ Tenneco Dreyfus Dreyfus Inc. Capital Strategic Dreyfus Common Preservation Investing Balanced Stock Fund Fund Fund Fund ----------- ------------- ----------- ----------- ADDITIONS: Contributions- Employee $1,116,050 $ 871,540 $ 422,088 $ 613,764 Employer 312,832 279,066 130,793 181,825 Profit sharing (Note 3) 4,810 23,776 17,764 30,307 ---------- ---------- ---------- ---------- Total contributions 1,433,692 1,174,382 570,645 825,896 ---------- ---------- ---------- ---------- Investment income- Interest income - 371,896 - - Dividend income 253,910 - 230,181 320,583 Realized gain (loss) - - (16,373) 37,836 Unrealized gain 913,133 - 149,265 305,012 Loan interest income - - - - ---------- ---------- ---------- ---------- Total investment income 1,167,043 371,896 363,073 663,431 ---------- ---------- ---------- ---------- Transfer in of assets from various plans (Note 1) 647,579 439,312 262,510 561,284 ---------- ---------- ---------- ---------- TOTAL ADDITIONS 3,248,314 1,985,590 1,196,228 2,050,611 INTERFUND TRANSFERS (95,482) 120,119 (189,368) 219,801 LOANS TO PARTICIPANTS (191) (2,907) (2,799) (6,471) LOAN REPAYMENTS 1,170 3,869 3,245 5,631 DEDUCTIONS: Distributions to participants (286,889) (184,329) (72,551) (222,671) Transfer out of assets from Sylva plan (8,531) - (1,174) (4,640) ---------- ---------- ---------- ---------- Net additions 2,858,391 1,922,342 933,581 2,042,261 PARTICIPANTS' EQUITY, January 1, 1995 4,947,485 5,592,110 1,342,364 2,192,105 ---------- ---------- ---------- ---------- PARTICIPANTS' EQUITY, December 31, 1995 $7,805,876 $7,514,452 $2,275,945 $4,234,366 ========== ========== ========== ========== Dreyfus Money Market Instruments, Government Dreyfus Securities Appreciation Loan Series Fund Fund Total ----------- ------------- ------------- ---------- ADDITIONS: Contributions- Employee $1,003,272 $ 637,968 $ - $4,664,682 Employer 284,839 184,056 - 1,373,411 Profit sharing (Note 3) 36,970 38,699 - 152,326 ---------- ---------- ---------- ---------- Total contributions 1,325,081 860,723 - 6,190,419 ---------- ---------- ---------- ---------- Investment income- Interest income - - - 371,896 Dividend income 267,389 92,567 - 1,164,630 Realized gain (loss) - 40,361 - 61,824 Unrealized gain - 1,076,588 - 2,443,998 Loan interest income - - 5,813 5,813 ---------- ---------- ---------- ---------- Total investment income 267,389 1,209,516 5,813 4,048,161 ---------- ---------- ---------- ---------- Transfer in of assets from various plans (Note 1) 1,107,381 740,218 135,248 3,893,532 ---------- ---------- ---------- ---------- TOTAL ADDITIONS 2,699,851 2,810,457 141,061 14,132,112 INTERFUND TRANSFERS (357,504) 302,434 - - LOANS TO PARTICIPANTS (3,790) (5,742) 21,900 - LOAN REPAYMENTS 6,969 7,135 (28,019) - DEDUCTIONS: Distributions to participants (745,340) (105,999) (1,958) (1,619,737) Transfer out of assets from Sylva plan (93,694) (7,316) - (115,355) ---------- ---------- ---------- ---------- Net additions 1,506,492 3,000,969 132,984 12,397,020 PARTICIPANTS' EQUITY, January 1, 1995 4,561,499 2,503,070 - 21,138,633 ---------- ---------- ---------- ---------- PARTICIPANTS' EQUITY, December 31, 1995 $6,067,991 $5,504,039 $132,984 $33,535,653 ========== ========== ========== =========== The accompanying notes to financial statements are an integral part of this statement. PACKAGING CORPORATION OF AMERICA 401(k) SAVINGS PLAN ---------------------------------------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- DECEMBER 31, 1995 AND 1994 -------------------------- 1. DESCRIPTION OF THE PLAN: ------------------------ The following description of the Packaging Corporation of America 401(k) Savings Plan (the "Plan") provides only general information. Participants should refer to the Plan Agreement for a more complete description of the Plan's provisions. The Plan was established on November 1, 1989, to provide for tax-deferred savings contributions for Plan participants. The effective date for initial contributions to the Plan was January 1, 1990. The Plan is a defined contribution plan which complies with Sections 401(a) and 401(k) of the Internal Revenue Code. During the first year of the Plan, all active, full-time hourly rated employees of the Packaging Corporation of America, Counce, Tennessee Mill, who had completed one year of service, defined as 1,000 or more hours of qualified service, were eligible for enrollment. On February 1, 1991, the Plan was extended to include all active, full-time hourly rated employees at the following six additional Tenneco Packaging, formerly Packaging Corporation of America (the "Company") operations: . Los Angeles, California Container Plant . Rutherfordton, North Carolina Container Plant . Salisbury, North Carolina Container Plant . Southern Region - Woodlands, Counce, Tennessee . Tomahawk, Wisconsin Mill . Valdosta, Georgia Mill Effective December 31, 1991, the Filer Mill 401(k) Savings Plan was merged with the Plan. Assets of the Filer Mill 401(k) Savings Plan were transferred into the Plan on January 1, 1992. All rights and obligations under the Filer Mill 401(k) Savings Plan are in accordance with the amended plan agreement for the Plan. Effective April 1, 1993, all assets of the Dixie Container Corporation Pretax Savings Plan (the "Dixie Plan") were merged into the Plan. Former salaried participants of the Dixie Plan were eligible to participate in the Tenneco Inc. Thrift Plan (the "Thrift Plan") effective January 1, 1992. As the Thrift Plan does not allow any "roll-over" contribution of assets, the assets remained in the Dixie Plan until April 1, 1993, at which time those assets were transferred to the Plan. Former hourly participants of the Dixie Plan continue to earn interest on their account balances now held by the Plan but are no longer eligible to contribute to any of the Tenneco Inc. defined contribution plans. Effective February 1, 1994, the Plan was extended to include all active, full- time hourly rated employees at the Company's Clayton, New Jersey, location. Effective April 1, 1995, all assets of the Pressware International, Inc. Employees' Profit Sharing and Salary Deferral Plan (the "Pressware Plan") were merged into the Plan. Former salaried participants of the Pressware Plan were eligible to participate in the Tenneco Thrift Plan (the "Thrift Plan") effective April 1, 1995. As the Thrift Plan does not allow any "rollover" contribution of assets, those assets were transferred to the Plan. Former hourly participants of the Pressware Plan were eligible to participate in the Plan effective April 1, 1995. All six investment options were made available to these participants. The hourly and salaried participants were allowed to transfer existing loan balances into the Plan and are also eligible to request loans against their account balances as of April 1, 1995. Additionally, participants are eligible to receive discretionary profit-sharing contributions. Effective March 31, 1995, the Company sold the assets of its Sylva, North Carolina, mill and all existing balances were transferred out of the Plan. Effective May 3, 1995, the Lux Packaging Ltd. Employee Retirement Plan (the "Lux Plan") was merged into the Plan. Former salaried participants of the Lux Plan were eligible to participate in the Thrift Plan effective June 1, 1995. As the Thrift Plan does not allow any "rollover" contribution of assets, the assets remained in the Lux Plan until December 8, 1995, at which time those assets were transferred to the Plan. Former hourly participants of the Lux Plan were eligible to participate in the Plan effective June 1, 1995. All six investment options were made available to these participants. Effective November 20, 1995, the Deline Box Windsor, Inc. 401(k) Employee Savings Plan (the "Windsor Plan") was merged into the Plan. Former salaried participants of the Windsor Plan were eligible to participate in the Thrift Plan effective December 1, 1995. As the Thrift Plan does not allow any "rollover" contribution of assets, the assets remained in the Windsor Plan until December 5, 1995, at which time those assets were transferred to the Plan. Former hourly participants of the Windsor Plan were eligible to participate in the Plan effective December 1, 1995. All six investment options were made available to these participants. Tenneco Packaging Inc. is a wholly owned subsidiary of Tenneco Inc. Dreyfus Trust Company ("Trustee") is the Trustee of the Plan. 2. SUMMARY OF ACCOUNTING POLICIES: ------------------------------- Basis of Accounting - ------------------- The Plan's financial statements are maintained on the accrual basis of accounting. Investments are reported at market value. Cost of investments sold is determined using the average cost method. Use of Estimates - ---------------- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions in determining the reported amounts on the Company's assets, liabilities, revenues and expenses. 3. CONTRIBUTIONS: -------------- Eligible participants in the Plan may make tax-deferred savings contributions via payroll deductions that range from 1% to 16% of their salary (in increments of 1%). The Company contributes, on behalf of the participant, a matching amount to the Plan equal to either 25% or 50%, depending on location, of the first 4% of the participant's contributions. Additionally, active participants of the Pressware Plan are eligible to receive discretionary profit-sharing contributions. Tax-deferred savings contributions per employee are limited to $9,240 in 1995 and 1994 in accordance with Section 402 of the Internal Revenue Code. 4. INVESTMENT OPTIONS: ------------------- Participating employees at all locations, unless otherwise noted, may invest their tax-deferred savings contributions and the matching Company contributions in multiples of 25% in the following funds: a. Tenneco Inc. Common Stock Fund ------------------------------ This fund invests solely in common stock of Tenneco Inc., the Company's parent. The value of this fund changes with the market value of Tenneco Inc. common stock and related dividend income. Included within this fund as a cash equivalent is the Dreyfus Liquid Asset Fund, which is used as a holding account for cash invested in Tenneco Inc. Common Stock. As of December 31, 1995 and 1994, market value of investments in the Tenneco Inc. Common Stock Fund was $7,161,086 and $4,778,615, respectively, and represented 5% or more of net assets available for benefits. There were 896 and 794 participants who had elected this investment option for all or part of their account balances as of December 31, 1995 and 1994, respectively. b. Dreyfus Capital Preservation Fund --------------------------------- This fund invests in money markets and floating and fixed-rate contracts placed with approved banks and insurance carriers, with no more than 10% of the fund invested in a single carrier. Only the Counce, Tennessee, Filer City, Michigan, and Clayton, New Jersey locations have this investment option. As of December 31, 1995 and 1994, market value of investments in this fund was $7,444,622 and $5,505,803, respectively, and represented 5% or more of net assets available for benefits. There were 861 and 722 participants who had elected this investment option for all or part of their account balances as of December 31, 1995 and 1994, respectively. c. Dreyfus Strategic Investing Fund -------------------------------- This fund invests mainly in publicly issued common stock. The fund may invest in common stocks of foreign companies, convertible securities, preferred stocks and debt securities. In an effort to increase its total return, the fund may engage in techniques such as leveraging, short-selling, options and futures transactions and currency transactions. As of December 31, 1995 and 1994, market value of investments in this fund was $2,235,578 and $1,296,115, respectively, and represented 5% or more of net assets available for benefits. There were 656 and 492 participants who had elected this investment option for all or part of their account balances as of December 31, 1995 and 1994, respectively. The fund was composed of the following as of the fund's fiscal year-end: October 31 ----------- 1995 1994 ----- ----- Common stocks 97.3% 70.2% Short-term investments 2.7 29.8 ==== ==== d. Dreyfus Balanced Fund --------------------- This fund invests in common stocks and fixed income instruments. As of December 31, 1995 and 1994, market value of investments in this fund was $4,167,516 and $2,135,826, respectively, and represented 5% or more of net assets available for benefits. There were 820 and 577 participants who had elected this investment option for all or part of their account balances as of December 31, 1995 and 1994, respectively. The fund was composed of the following at its reviewed date, February 28, 1996, and its audited date, August 31, 1995: Feb.28,1996 Aug.31,1995 ------------ ------------ (Reviewed) (Audited) Bonds and notes 46.7% 61.7% Common stocks 49.3 35.3 Short-term investments 4.0 3.1 ===== ===== e. Dreyfus Money Market Instruments, Government Securities Series -------------------------------------------------------------- This fund invests primarily in short-term securities issued or guaranteed by the U.S. Government. As of December 31, 1995 and 1994, market value of investments in this fund was $5,975,765 and $4,456,695, respectively, and represented 5% or more of net assets available for benefits. There were 1,204 and 1,139 participants who had elected this investment option for all or part of their account balances as of December 31, 1995 and 1994, respectively. The fund was composed of the following at its audited date, December 31, 1995 and 1994: 1995 1994 ----- ----- Repurchase agreements 47.6% 45.8% U.S. Treasury notes 14.3 11.9 U.S. Treasury bills 38.1 42.3 ==== ==== f. Dreyfus Appreciation Fund ------------------------- This fund invests in stocks that are considered "undervalued" in terms of current earnings, asset or growth potential. As of December 31, 1995 and 1994, market value of investments in this fund was $5,427,322 and $2,446,791, respectively, and represented 5% or more of net assets available for benefits. There were 873 and 598 participants who had elected this investment option for all or part of their account balances as of December 31, 1995 and 1994, respectively. The fund was composed of the following at its audited date, December 31, 1995 and 1994: 1995 1994 ----- ----- Common stocks 92.8% 93.4% Preferred stocks .5 4.0 Short-term investments 6.7 2.6 ==== ==== As investments are stated at market value, the Plan's financial statements include net unrealized appreciation of $773,451, $(7,465), $348,910 and $1,181,172 relating to the Tenneco Inc. Common Stock Fund, Dreyfus Strategic Investing Fund, Dreyfus Balanced Fund and Dreyfus Appreciation Fund, respectively, as of December 31, 1995. As of December 31, 1994, the Plan's financial statements include net unrealized appreciation (depreciation) of $(139,683), $(156,730), $43,898 and $104,584 relating to the Tenneco Inc. Common Stock Fund, Dreyfus Strategic Investing Fund, Dreyfus Balanced Fund and Dreyfus Appreciation Fund, respectively. Fully benefit-responsive investment contracts are valued at contract value, which represents the principal balance of the investment contracts, plus accrued interest at the stated contract rate, less payments received and contract charges by the insurance company. Under the terms of the investment contracts, the crediting interest rate is determined semiannually based on the insurance company's applicable rate schedule. The fair value of the investment contracts as of December 31, 1995, approximated fair value. 5. PARTICIPANT LOANS: ------------------ Effective April 1, 1995, active participants of the Pressware Plan were allowed to transfer existing loan balances into the Plan and may take a loan from their 401(k) account. Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum of the lesser of 50% of their vested balance or $50,000 less the participant's highest Plan loan balance in the last 12 months. Loan transactions are treated as a transfer from (to) the investment funds to (from) the Loan Fund. Loans for the purchase of a primary residence can be repaid over a period of up to 10 years. Loans for any other reason can be repaid over a period of up to 5 years. Loans are repaid to the participant's 401(k) account at a fixed interest rate through payroll deductions. The interest rate is set at 1% above the current prime rate. Outstanding interest rates at December 31, 1995, ranged from 7% to 10%. 6. VESTING: -------- Participants at the Counce, Tennessee Mill, the Filer City, Michigan Mill, the Clayton, New Jersey Plant, the Waco, Texas Plant, the Windsor, Colorado Plant, the Columbus, Ohio Plant and the Dixie locations are fully vested in the portion of their accounts attributable to their tax-deferred savings contributions and the related earnings thereon as well as in the Company's matching contributions. Other participants are fully vested in their own tax-deferred savings contributions and the related earnings thereon, but vest in Company matching contributions evenly over a five-year period. The five-year period includes service under Georgia-Pacific Corporation ("G.P.") and with any entity acquired by G.P. and recognized by G.P. for vesting purposes. Forfeitures are used to reduce future employer matching contributions. 7. PLAN DISTRIBUTIONS AND WITHDRAWALS: ----------------------------------- Upon retirement or termination, participants may elect to have the portion of their accounts invested in the Tenneco Inc. Common Stock Fund distributed in either stock or cash. The portion of the participant's account balance invested in other investment options will be paid in cash. If the participant's account balance exceeds $3,500, the participant may elect to receive distribution prior to his or her 65th birthday. Otherwise, the distribution will begin upon the earlier of the participant's 65th birthday, death or termination of employment with the Company. In no event may a participant delay distribution after reaching age 70-1/2. Participants may withdraw all or a portion of their accounts attributable to tax-deferred savings contributions in the event of serious financial hardship (subject to the approval of the Plan administrator and in accordance with the Plan agreement and the applicable regulations of the Internal Revenue Code), subject to a minimum withdrawal. Company matching contributions may not be withdrawn. The Company has reserved the right to terminate the Plan at any time. However, should the Company terminate the Plan, all participants will be fully vested in their accounts. 8. RECONCILIATION TO FORM 5500: ---------------------------- As of December 31, 1995 and 1994, the Plan had $224,220 and $118,419, respectively, of pending distributions to participants who elected to withdraw from the operations and earnings of the Plan. These amounts are recorded as a liability in the Plan's Form 5500; however, these amounts are not recorded as a liability in accordance with generally accepted accounting principles. The following table reconciles net assets available for Plan benefits per the financial statements to the Form 5500 as filed by the Company for the year ended December 31, 1995: Net Assets Benefits Available Payable to Benefits for Plan Participants Paid Benefits ------------ ---------- ------------ Per financial statements $ - $1,619,737 $33,535,653 Accrued benefit payments 224,220 224,220 (224,220) Reversal of 1994 accrual for benefit payments - (118,419) - ------- --------- ---------- Per Form 5500 $224,220 $1,725,538 $33,311,433 ======== ========== =========== 9. PLAN EXPENSES: -------------- Administrative expenses may be paid from fund assets as permitted by and subject to limitation set by law. All Trustee fees and other administrative expenses were paid directly by the Company in 1995 and 1994. 10. INCOME TAX STATUS: ------------------ The Plan received a determination letter on February 6, 1991, in which the Internal Revenue Service ("IRS") stated that the Plan was in compliance with the applicable requirements of the Internal Revenue Code. The Plan has been amended subsequent to the most recent IRS determination. The Plan administrator continues to believe that the Plan is designed and operated in compliance with the applicable requirements of the Internal Revenue Code and, as such, that the Plan is qualified and the related trust income is tax-exempt. A participant is not subject to federal income tax on employer and employee contributions or on earnings on these contributions until distributed. 11. SUBSEQUENT EVENT: ----------------- Effective January 1, 1996, the Hexacomb Corporation 401(k) and Profit Sharing Plan (the "Hexacomb Plan") was merged into the Plan. Former salaried participants of the Hexacomb Plan were eligible to participate in the Thrift Plan effective January 1, 1996. As the Thrift Plan does not allow any "rollover" contribution of assets, the assets remained in the Hexacomb Plan until May 2, 1996, at which time those assets were transferred to the Plan. Former hourly participants of the Hexacomb Plan were eligible to participate in the Plan effective January 1, 1996. All six investment options were made available to these participants. SCHEDULE I PACKAGING CORPORATION OF AMERICA 401(k) SAVINGS PLAN ---------------------------------------------------- ITEM 27(a)--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES ----------------------------------------------------------- AS OF DECEMBER 31, 1995 ----------------------- (Employer Identification Number 36-2552989, Plan Number 019) ------------------------------------------------------------ Percent Shares/ Current of Net Units Cost Value Assets ----------- ----------- ----------- ---------- Tenneco Inc. Common Stock* $ 144,304 $ 6,387,635 $ 7,161,086 21.35% Dreyfus Liquid Asset Fund* 580,650 580,650 580,650 1.73 Dreyfus Capital Preservation Fund* 7,444,622 7,444,622 7,444,622 22.20 Dreyfus Strategic Investing Fund* 107,791 2,243,043 2,235,578 6.67 Dreyfus Balanced Fund* 271,146 3,818,606 4,167,516 12.43 Dreyfus Money Market Instruments, Government Securities Series* 5,975,765 5,975,765 5,975,765 17.82 Dreyfus Appreciation Fund* 264,103 4,246,150 5,427,322 16.18 Dreyfus Loan Fund* 132,984 132,984 132,984 .40* ----------- ----------- ----------- ----------- T o t a l $14,921,365 $30,829,455 $33,125,523 98.78% =========== =========== =========== =========== *Represents a party-in-interest transaction. The accompanying notes to financial statements are an integral part of this schedule. SCHEDULE II PACKAGING CORPORATION OF AMERICA 401(k) SAVINGS PLAN ---------------------------------------------------- ITEM 27(d)--SCHEDULE OF REPORTABLE TRANSACTIONS ----------------------------------------------- FOR THE YEAR ENDED DECEMBER 31, 1995 ------------------------------------ (Employer Identification Number 36-2552989, Plan Number 019) ------------------------------------------------------------ Cost of Cost of Net Purchased Assets Proceeds Gain Investment Assets Sold From Sales (Loss) - ---------- ----------- ---------- ---------- --------- Tenneco Inc. Common Stock Fund* $ 7,296,061 $5,235,525 $5,235,525 $ - Dreyfus Capital Preservation Fund* 2,296,487 357,668 357,668 - Dreyfus Strategic Investing Fund* 1,141,777 351,579 335,206 (16,373) Dreyfus Balanced Fund* 2,056,963 327,285 365,121 37,836 Dreyfus Money Market Instruments Government Securities Series* 3,107,954 1,588,884 1,588,884 - Dreyfus Appreciation Fund* 2,096,753 192,810 233,171 40,361 Dreyfus Loan Fund* 21,900 29,977 29,977 - ----------- ---------- ---------- -------- $18,017,895 $8,083,728 $8,145,552 $ 61,824 =========== ========== ========== ======== *Represents a party-in-interest transaction. The accompanying notes to financial statements are an integral part of this schedule. SIGNATURES The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the Packaging Corporation of America Benefits Committee has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. PACKAGING CORPORATION OF AMERICA 401(k) SAVINGS PLAN Date: June 26, 1996 By: /s/ JOHN POTEMPA ---------------------------------- John Potempa Chairman of the Tenneco Packaging Inc. Benefits Committee INDEX TO EXHIBIT EXHIBIT NUMBER ------- 23 --Consent of Independent Public Accountants