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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
(mark one)
[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-15157
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PACTIV CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 36-2552989
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1900 WEST FIELD COURT
LAKE FOREST, ILLINOIS 60045
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (847) 482-2000
------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past ninety days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date.
Common stock, par value $0.01 per share: 158,723,745 shares as of April 30,
2001. (See Notes to Financial Statements.)
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CAUTIONARY STATEMENT FOR PURPOSES OF "SAFE HARBOR" PROVISIONS
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This Quarterly Report contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 concerning,
among other things, the prospects and developments of the company (as defined),
business strategies for its operations, and cost savings from its restructuring
efforts, all of which are subject to risks and uncertainties. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations." These
forward-looking statements are identified as "forward-looking statements" or by
their use of terms (and variations thereof) and phrases such as "will",
"anticipate", "intend", "estimate", "expect", and similar terms (and variations
thereof) and phrases.
When a forward-looking statement includes a statement of the assumptions or
bases underlying the forward-looking statement, the company cautions that, while
it believes such assumptions or bases to be reasonable and makes them in good
faith, assumed facts or bases almost always vary from actual results, and the
differences between assumed facts or bases and actual results can be material,
depending upon the circumstances. Where, in any forward-looking statement, the
company or its management expresses an expectation or belief as to future
results, such expectation or belief is expressed in good faith and believed to
have a reasonable basis, but there can be no assurance that the statement of
expectation or belief will result or will be achieved or accomplished.
The company's actual results may differ significantly from the results
discussed in the forward-looking statements. Factors that might cause such a
difference include the following: (i) changes in consumer demand and prices;
(ii) material substitutions and changes in prices of raw materials; (iii) risks
associated with international operations; (iv) the general economic, political
and competitive conditions in markets and countries where the company operates;
(v) governmental actions; (vi) changes in capital availability or costs; (vii)
the cost of compliance with changes in regulations, including environmental
regulations; (viii) workforce factors such as strikes or labor interruptions;
(ix) the company's ability to identify and make appropriate acquisitions and to
integrate operations of acquired businesses quickly and in a cost-effective
manner; (x) changes by the Financial Accounting Standards Board or other
accounting regulatory bodies of authoritative generally accepted accounting
principles or policies; (xi) the timing and occurrence (or non-occurrence) of
transactions and events which may be subject to circumstances beyond the
company's control; and (xii) the company's ability to recognize forecasted
savings from its restructuring programs on a timely basis.
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TABLE OF CONTENTS
PAGE
----
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Statement of Income....................... 3
Condensed Consolidated Statement of Financial
Position.............................................. 4
Condensed Consolidated Statement of Cash Flows......... 5
Notes to Financial Statements (Unaudited).............. 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................... 11
Item 3. Quantitative and Qualitative Disclosures About
Market Risk............................................ 15
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings*................................ 17
Item 2. Changes in Securities*............................ 17
Item 3. Defaults Upon Senior Securities*.................. 17
Item 4. Submission of Matters to a Vote of Security
Holders*............................................... 17
Item 5. Other Information*................................ 17
Item 6. Exhibits and Reports on Form 8-K.................. 17
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* No response to this item is included herein either because it is inapplicable
or there is nothing to report.
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PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED STATEMENT OF INCOME
(In millions, except share and per share data) 2001 2000
FOR THE THREE MONTHS ENDED MARCH 31 ------------ ------------
SALES....................................................... $ 695 $ 738
------------ ------------
COSTS AND EXPENSES
Cost of sales, excluding depreciation and amortization.... 489 539
Selling, general, and administrative...................... 80 77
Depreciation and amortization............................. 45 45
Other (income) expense, net............................... 1 (7)
------------ ------------
615 654
------------ ------------
INCOME BEFORE INTEREST EXPENSE, INCOME TAXES, AND MINORITY
INTEREST.................................................. 80 84
Interest expense, net of interest capitalized............. 29 34
Income tax expense........................................ 21 21
Minority interest......................................... 1 --
------------ ------------
INCOME FROM CONTINUING OPERATIONS........................... 29 29
Income from discontinued operations, net of income tax...... 4 134
------------ ------------
NET INCOME.................................................. $ 33 $ 163
============ ============
EARNINGS PER SHARE
Average number of shares of common stock outstanding
Basic..................................................... 158,360,957 167,747,692
Diluted................................................... 158,644,054 167,794,941
Basic and diluted earnings per share of common stock
Continuing operations..................................... $ 0.18 $ 0.17
Discontinued operations................................... 0.02 0.80
------------ ------------
$ 0.20 $ 0.97
============ ============
The accompanying notes to financial statements are an integral part of this
statement.
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CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
MARCH 31, 2001 DECEMBER 31, 2000
(In millions, except share data) -------------- -----------------
ASSETS
Current assets
Cash and temporary cash investments....................... $ 14 $ 26
Restricted cash........................................... 17 --
Accounts and notes receivable
Trade, less allowances of $11 and $17 at the respective
dates................................................ 261 275
Income taxes........................................... 9 38
Other.................................................. 13 82
Inventories
Finished goods......................................... 243 238
Work in process........................................ 48 55
Raw materials.......................................... 67 76
Other materials and supplies........................... 32 32
Other..................................................... 76 78
------ ------
Total current assets...................................... 780 900
------ ------
Property, plant, and equipment, net......................... 1,256 1,231
------ ------
Other assets
Goodwill and intangibles, net............................. 932 940
Pension assets, net....................................... 971 945
Other..................................................... 109 135
------ ------
Total other assets........................................ 2,012 2,020
Net assets of discontinued operations....................... 52 72
------ ------
TOTAL ASSETS................................................ $4,100 $4,223
====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short-term debt, including current maturities of long-term
debt.................................................... $ 19 $ 13
Accounts payable.......................................... 218 233
Interest accrued.......................................... 36 14
Other..................................................... 212 252
------ ------
Total current liabilities................................. 485 512
------ ------
Long-term debt.............................................. 1,443 1,560
------ ------
Deferred income taxes....................................... 489 474
------ ------
Deferred credits and other liabilities...................... 120 116
------ ------
Minority interest........................................... 22 22
------ ------
Shareholders' equity
Common stock (158,517,897 and 158,176,937 shares issued
and outstanding, after deducting 11,759,094 and
11,761,094 shares held in treasury, at the respective
dates)................................................. 2 2
Premium on common stock and other capital surplus......... 1,386 1,383
Accumulated other comprehensive income (loss)............. (31) 3
Retained earnings......................................... 184 151
------ ------
Total shareholders' equity................................ 1,541 1,539
------ ------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.................. $4,100 $4,223
====== ======
The accompanying notes to financial statements are an integral part of this
statement.
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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
2001 2000
FOR THE THREE MONTHS ENDED MARCH 31 (In millions) ------ ------
OPERATING ACTIVITIES
Income from continuing operations........................... $ 29 $ 29
Adjustments to reconcile income from continuing operations
to cash provided (used) by continuing operations:
Depreciation and amortization............................. 45 45
Deferred income taxes..................................... 12 14
Pension income............................................ (27) (27)
Net working capital....................................... (20) (70)
Other..................................................... 16 7
----- -----
Cash provided (used) by operating activities................ 55 (2)
----- -----
INVESTING ACTIVITIES
Net proceeds related to sale of discontinued operations..... 11 394
Net proceeds from sale of businesses and assets............. 73 44
Expenditures for property, plant, and equipment............. (30) (38)
Acquisitions of businesses and assets....................... (13) --
----- -----
Cash provided by investing activities....................... 41 400
----- -----
FINANCING ACTIVITIES
Issuance of common stock.................................... 4 4
Purchase of common stock.................................... -- (16)
Issuance of long-term debt.................................. -- 16
Retirement of long-term debt................................ (117) (102)
Net increase (decrease) in short-term debt, excluding
current maturities of long-term debt...................... 6 (300)
----- -----
Cash used by financing activities........................... (107) (398)
----- -----
Effect of foreign-exchange rate changes on cash and
temporary cash investments................................ (1) (1)
----- -----
DECREASE IN CASH AND TEMPORARY CASH INVESTMENTS............. (12) (1)
Cash and temporary cash investments, January 1.............. 26 12
----- -----
CASH AND TEMPORARY CASH INVESTMENTS, MARCH 31............... $ 14 $ 11
===== =====
The accompanying notes to financial statements are an integral part of this
statement.
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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The Consolidated Statement of Income for the three-month periods ended
March 31, 2001, and 2000, the Condensed Consolidated Statement of Financial
Position at March 31, 2001, and the Condensed Consolidated Statement of Cash
Flows for the three-month periods ended March 31, 2001, and 2000, are unaudited.
In the company's opinion, the accompanying financial statements contain all
normal recurring adjustments necessary to present fairly the financial position,
results of operations, and cash flows for the periods indicated. These
statements have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles.
It is presumed that users of the accompanying interim financial information have
read, or have access to, the company's audited financial statements for the
preceding year. Accordingly, these statements should be read in conjunction with
the company's Form 10-K for the year ended December 31, 2000. Certain amounts in
the prior year's financial statements have been reclassified to conform with the
presentation used in 2001.
NOTE 2. CHANGES IN ACCOUNTING PRINCIPLES
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for
Derivative Instruments and Hedging Activities. In June 1999, the FASB issued
SFAS No. 137, Accounting for Derivative Instruments and Hedging Activities --
Deferral of the Effective Date of SFAS No. 133. In June 2000, the FASB issued
SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging
Activities, an amendment to SFAS No. 133. SFAS No. 133, as amended, requires
that derivative instruments, including certain derivative instruments embedded
in other contracts, be recorded as either assets or liabilities measured at fair
value and that changes in derivative instruments' fair value be recognized
currently in earnings unless specific hedge-accounting criteria are met. The
company adopted SFAS 133, as amended, on January 1, 2001. In accordance with the
transition provisions of SFAS 133, the company was not required to record a
transition adjustment, and the adoption of SFAS 133 did not have a material
effect on the earnings or statement of financial position of the company.
In May 2000, the FASB's Emerging Issues Task Force (EITF) reached a
consensus on Issue No. 00-14, Accounting for Certain Sales Incentives. This
issue addresses the recognition, measurement, and income-statement
classification of various types of sales incentives, including discounts,
coupons, rebates, and free products. Upon adopting EITF No. 00-14, which is
required effective with the fourth quarter of 2001, the company will be required
to reclassify as deductions from sales certain expenses that historically have
been included in selling, general, and administrative costs. If this
reclassification had been made for the first quarter of 2001 and 2000, sales and
selling, general, and administrative costs would have been reduced by $5 million
and $4 million, respectively.
In January 2001, the EITF reached a consensus on Issue 3 of No. 00-22,
Accounting for 'Points' and Certain Other Time-Based or Volume-Based Sales
Incentive Offers, and Offers for Free Products or Services to be Delivered in
the Future. This consensus requires that certain rebate offers and free products
that are delivered subsequent to a single exchange transaction be recognized
when incurred and reported as a reduction of sales. The impact of this issue,
which the company adopted in the first quarter of 2001, on the company's
consolidated financial statements was immaterial.
In April 2001, the EITF reached a consensus on Issue No. 00-25, Accounting
for Consideration from a Vendor to a Retailer in Connection with the Purchase or
Promotion of the Vendor's Products. This consensus requires that consideration
provided by a vendor to a purchaser of the vendor's products be recognized as a
reduction of sales, except in those instances where an identifiable and
measurable benefit is or will be received by the vendor from the purchaser. Upon
adopting Issue No. 00-25, which is required effective with the fourth quarter of
2001, the company will be required to reclassify as deductions from sales
certain expenses that historically have been included in selling, general, and
administrative costs. If this reclassification had been
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made for the first quarter of 2001 and 2000, sales and selling, general, and
administrative costs would have been reduced by approximately $9 million and $11
million, respectively.
NOTE 3. RESTRUCTURING
In the fourth quarter of 1999, the company recorded a $154 million
restructuring charge, $91 million after tax, or $0.54 per share, related to the
decision to exit non-core businesses and to reduce overhead costs. The
restructuring included (1) the sale of the company's forest products and
aluminum foil container businesses in Europe ($68 million), for which cash
proceeds of $20 million were received in the fourth quarter of 1999; (2) the
sale of certain assets of the company's administrative service and corporate
aircraft operations ($10 million); (3) impairment of long-lived assets of the
company's packaging polyethylene business ($68 million); and (4) severance costs
related to the elimination of 161 positions, primarily in the company's
international operations ($8 million). The impairment charge for the packaging
polyethylene business' assets was deemed necessary following completion of an
evaluation of strategic alternatives for the business, and represented the
difference between the carrying value of the assets and the forecasted future
cash flows of the business, computed on a discounted basis. These restructuring
actions generally were completed in 2000; however, $1 million of the charge was
reversed in the fourth quarter of 2000, as one planned product line
consolidation was not undertaken and, as a result, 14 positions were not
eliminated.
In the fourth quarter of 2000, the company recorded a restructuring charge
of $71 million, $47 million after tax, or $0.29 per share. Of this amount, $45
million was for the impairment of assets held for sale, including those related
to the packaging polyethylene business and the company's interest in Sentinel
Polyolefins LLC, a protective packaging joint venture. In January 2001, the
company received cash proceeds of $72 million from the disposition of these
assets. The remaining $26 million charge reflected the adoption of a
restructuring plan to realign operations and exit low-margin businesses in the
company's Protective and Flexible Packaging segment. Specifically, this charge
was related to (1) plant closures in North America and Europe, including the
elimination of 202 positions ($6 million); (2) other workforce reductions (187
positions), mainly in Europe ($6 million); (3) impairment of European long-lived
assets held for sale ($10 million); and (4) asset write-offs related to the
elimination of certain low-margin product lines ($4 million). The impairment
charge for the European assets was recorded following completion of an
evaluation of strategic alternatives for the related businesses and represented
the difference between the carrying value of the assets and market estimates of
fair value. The cash cost of executing the fourth-quarter 2000 restructuring
plan will amount to approximately $15 million, which will be incurred in 2001,
principally for severance and lease termination obligations.
Activity related to the 2000 restructuring plan is shown in the following
table.
SEVERANCE OTHER TOTAL
(In millions) --------- ----- -----
Balance at December 31, 2000................................ $12 $ 5 $17
Cash payments............................................... (2) -- (2)
--- --- ---
Balance at March 31, 2001................................... $10 $ 5 $15
--- --- ---
As a result of these restructurings, an estimated $70 million of savings
was realized in 2000, and an additional $16 million is expected to be realized
in 2001 ($10 million) and 2002 ($6 million), primarily reflecting lower cost of
sales and selling, general, and administrative costs.
NOTE 4. DISPOSITIONS AND DISCONTINUED OPERATIONS
In February 2000, the company sold 85% of its interest in Packaging
Corporation of America (PCA) and used the net proceeds of $398 million primarily
to repay debt. The company recorded a related gain of $224 million, $134 million
after tax, or $0.80 per share. As a result, the company's equity interest in PCA
was reduced to 6%. In the first quarter of 2001, the company sold a portion of
its remaining interest in PCA and recorded a related gain of $8 million, $4
million after tax, or $0.02 per share. The company's remaining
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interest in PCA is recorded at fair market value, with changes therein reflected
in other comprehensive income. See note 10 for additional information regarding
the company's investment in PCA.
In December 1999, the company entered into an agreement to sell its
aluminum foil reroll facility in Clayton, New Jersey, and its aluminum
packer-processor facility in Shelbyville, Kentucky, for $44 million. The company
recorded a related gain of $5 million ($3 million after tax, or $0.02 per share)
in the first quarter of 2000 and used the proceeds from the transaction
primarily to repay debt.
NOTE 5. DEBT
At the time of the company's spin-off from Tenneco Inc., which occurred in
November 1999, the company exercised its right to make a one-time draw under a
$1.5 billion term-loan facility in the amount of $300 million at a
floating-interest rate based on LIBOR, adjusted for reserve requirements, plus a
specified margin. All amounts borrowed under this facility were repaid in the
first quarter of 2000 following the company's sale of the majority of its
interest in PCA.
In conjunction with the spin-off, the company entered into a five-year,
$750 million revolving-credit agreement and a 364-day, $250 million
revolving-credit agreement. Effective September 27, 2000, the 364-day
revolving-credit agreement was extended for an additional 364-day period, and
total availability under the agreement was increased to $300 million, of which
$265 million has been committed.
NOTE 6. EARNINGS PER SHARE
Earnings from continuing operations per share of common stock outstanding
was computed as follows.
(In millions, except share and per-share data) 2001 2000
THREE MONTHS ENDED MARCH 31, ------------ ------------
BASIC EARNINGS PER SHARE
Income from continuing operations......................... $ 29 $ 29
------------ ------------
Average number of shares of common stock outstanding...... 158,360,957 167,747,692
------------ ------------
Basic earnings from continuing operations per share....... $ 0.18 $ 0.17
------------ ------------
DILUTED EARNINGS PER SHARE
Income from continuing operations......................... $ 29 $ 29
------------ ------------
Average number of shares of common stock outstanding...... 158,360,957 167,747,692
Effect of dilutive securities on average number of shares
of common stock outstanding
Restricted stock....................................... 12,227 --
Stock options.......................................... 111,319 59
Performance shares..................................... 159,551 47,190
------------ ------------
Average number of shares of common stock outstanding
including dilutive securities.......................... 158,644,054 167,794,941
------------ ------------
Diluted earnings from continuing operations per share..... $ 0.18 $ 0.17
------------ ------------
In November 1999, the company established a grantor trust and reserved
3,200,000 shares of Pactiv common stock for the trust, which were issued to it
in January 2000. This so-called "rabbi trust" is designed to assure payment of
deferred compensation and supplemental pension benefits. These shares are not
considered to be outstanding.
NOTE 7. SEGMENT INFORMATION
The company has three operating segments: Consumer and Foodservice/Food
Packaging, which relates to the manufacture and sale of disposable plastic,
molded-fiber, pressed-paperboard, and aluminum packaging products for the
consumer, foodservice, and food packaging markets; Protective and Flexible
Packaging, which relates to the manufacture and sale of plastic, paperboard, and
molded-fiber products for protective packaging
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markets such as electronics, automotive, furniture, and e-commerce and for
flexible packaging applications in food, medical, pharmaceutical, chemical, and
hygienic markets; Other, which relates to corporate and administrative service
operations and pension-plan income and expense.
The following table sets forth certain segment information.
SEGMENT
----------------------------------------
CONSUMER AND PROTECTIVE RECLASSIFICATIONS
FOODSERVICE/ AND FLEXIBLE AND
FOOD PACKAGING PACKAGING OTHER ELIMINATIONS TOTAL
(In millions) -------------- ------------ ------ ----------------- ------
AT MARCH 31, 2001, AND FOR
THE THREE MONTHS THEN ENDED
Sales to external
customers.................. $ 484 $ 211 $ -- $ -- $ 695
Income before interest,
income taxes, and minority
interest................... 57 9 14(a) -- 80
Income from discontinued
operations, net............ -- -- 4 -- 4
Total assets................. 2,021 755 1,458(b) (134) 4,100
Net assets of discontinued
operations................. -- -- 52 -- 52
AT MARCH 31, 2000, AND FOR
THE THREE MONTHS THEN ENDED
Sales to external
customers.................. $ 518 $ 220 $ -- $ -- $ 738
Income before interest,
income taxes, and minority
interest................... 59 10 15(a) -- 84
Income from discontinued
operations, net............ -- -- 134 -- 134
Total assets................. 2,147 895 1,380(b) (104) 4,318
Net assets of discontinued
operations................. -- -- 50 -- 50
(a) Includes pension-plan income and unallocated corporate expenses.
(b) Includes assets related to pension plans (net) and administrative service
operations.
NOTE 8. RESTRICTED CASH
The company, as a condition of the sale of its packaging polyethylene
business, entered into a transition services agreement with the purchaser of
such business whereby the company, on an interim basis, continues to collect
cash related to sales of its divested packaging polyethylene business. Such
amounts ($17 million at March 31, 2001) are classified as restricted cash.
NOTE 9. ACCOUNTS AND NOTES RECEIVABLE
The company sells trade receivables ($95 million, $120 million, and $91
million at March 31, 2001, December 31, 2000, and March 31, 2000, respectively)
to a third party in the ordinary course of business. Such sales are reflected as
a reduction of accounts and notes receivable in the statement of financial
position, and related proceeds are included in cash provided (used) by operating
activities in the statement of cash flows. Discounts and fees related to these
sales ($3 million and $2 million in first quarter of 2001 and 2000,
respectively) are included in other income (expense) in the statement of income.
The company has no retained interest in any of the sold receivables.
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NOTE 10. SUBSEQUENT EVENTS
In April 2001, the company sold its remaining interest in PCA for $76
million, which will be primarily used to repay debt.
The above notes are an integral part of the foregoing financial statements.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
BASIS OF PRESENTATION
Financial statements for all periods presented herein have been prepared on
a consolidated basis in accordance with generally accepted accounting
principles. Certain amounts in prior year's financial statements have been
reclassified to conform with the presentation used in 2001.
The company has three operating segments: Consumer and Foodservice/Food
Packaging, which relates to the manufacture and sale of disposable plastic,
molded-fiber, pressed-paperboard, and aluminum packaging products for the
consumer, foodservice, and food packaging markets; Protective and Flexible
Packaging, which relates to the manufacture and sale of plastic, paperboard, and
molded-fiber products for protective packaging markets such as electronics,
automotive, furniture, and e-commerce and for flexible packaging applications in
food, medical, pharmaceutical, chemical, and hygienic markets; Other, which
relates to corporate and administrative service operations and pension-plan
income and expense.
RESTRUCTURING AND OTHER
In the fourth quarter of 1999, the company recorded a $154 million
restructuring charge, $91 million after tax, or $0.54 per share, related to the
decision to exit non-core businesses and to reduce overhead costs. The
restructuring included (1) the sale of the company's forest products and
aluminum foil container businesses in Europe ($68 million), for which cash
proceeds of $20 million were received in the fourth quarter of 1999; (2) the
sale of certain assets of the company's administrative service and corporate
aircraft operations ($10 million); (3) impairment of long-lived assets of the
company's packaging polyethylene business ($68 million); and (4) severance costs
related to the elimination of 161 positions, primarily in the company's
international operations ($8 million). The impairment charge for the packaging
polyethylene business' assets was deemed necessary following completion of an
evaluation of strategic alternatives for the business, and represented the
difference between the carrying value of the assets and the forecasted future
cash flows of the business, computed on a discounted basis. These restructuring
actions generally were completed in 2000; however, $1 million of the charge was
reversed in the fourth quarter of 2000, as one planned product line
consolidation was not undertaken and, as a result, 14 positions were not
eliminated.
In the fourth quarter of 2000, the company recorded a restructuring charge
of $71 million, $47 million after tax, or $0.29 per share. Of this amount, $45
million was for the impairment of assets held for sale, including those related
to the packaging polyethylene business and the company's interest in Sentinel
Polyolefins LLC, a protective packaging joint venture. In January 2001, the
company received cash proceeds of $72 million from the disposition of these
assets. The remaining $26 million charge reflected the adoption of a
restructuring plan to realign operations and exit low-margin businesses in the
company's Protective and Flexible Packaging segment. Specifically, this charge
was related to (1) plant closures in North America and Europe, including the
elimination of 202 positions ($6 million); (2) other workforce reductions (187
positions), mainly in Europe ($6 million); (3) impairment of European long-lived
assets held for sale ($10 million); and (4) asset write-offs related to the
elimination of certain low-margin product lines ($4 million). The impairment
charge for the European assets was recorded following completion of an
evaluation of strategic alternatives for the related businesses and represented
the difference between the carrying value of the assets and market estimates of
fair value. The cash cost of executing the fourth-quarter 2000 restructuring
plan will amount to approximately $15 million, which will be incurred in 2001,
principally for severance and lease termination obligations.
An estimated $70 million of savings was realized in 1999 and 2000, and an
additional $16 million is expected to be realized in 2001 ($10 million) and 2002
($6 million), primarily reflecting lower cost of sales and selling, general, and
administrative costs.
See note 3 for additional information related to the company's
restructuring program.
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FIRST QUARTER 2001 COMPARED WITH FIRST QUARTER 2000
RESULTS OF CONTINUING OPERATIONS
Sales
FIRST QUARTER
(Dollars in millions) --------------
2001 2000 CHANGE
---- ---- ------
Consumer and Foodservice/Food Packaging..................... $484 $518 (6.6)%
Protective and Flexible Packaging........................... 211 220 (4.1)
---- ----
Total....................................................... $695 $738 (5.8)%
---- ----
Sales declined $43 million, or 5.8%, versus the prior year. Excluding the
negative impact of foreign-currency exchange rates, divestitures, and
discontinued product lines, sales increased 2.3% versus the same period last
year, driven primarily by increases in Hefty (R) consumer products as well as
growth in home-meal-replacement product lines.
Sales for the Consumer and Foodservice/Food Packaging segment were down $34
million, or 6.6%, from the first quarter of 2000. Excluding the negative effect
of foreign-currency exchange rates, divestitures, and discontinued product
lines, sales for this segment rose 3.3% versus last year, primarily because of
volume growth in Hefty (R) consumer products and home-meal-replacement markets,
and the carryover effect of 2000 price increases. Sales of protective and
flexible products declined $9 million, or 4.1%, compared with 2000. Excluding
the negative impact of foreign-currency exchange rates and businesses divested
in 2000, sales for this segment were flat, as an increase in volume in Europe
was offset by an economy-related decline in North American sales.
Operating Income (Income before Interest Expense, Income Taxes, and
Minority Interest)
FIRST QUARTER
(Dollars in millions) ---------------
2001 2000 CHANGE
---- ---- ------
Consumer and Foodservice/Food Packaging..................... $57 $59 (3.4)%
Protective and Flexible Packaging........................... 9 10 (10.0)
Other....................................................... 14 15 (6.7)
--- ---
Total....................................................... $80 $84 (4.8)%
--- ---
Operating income in 2000 included $5 million of gain on the sale of a
business. Excluding the effect of this unusual item, operating income by segment
was as follows:
FIRST QUARTER
(Dollars in millions) ---------------
2001 2000 CHANGE
---- ---- ------
Consumer and Foodservice/Food Packaging..................... $57 $54 5.6 %
Protective and Flexible Packaging........................... 9 10 (10.0)
Other....................................................... 14 15 (6.7)
--- ---
Total....................................................... $80 $79 1.3 %
--- ---
Operating income before unusual items was $80 million in 2001, an increase
of $1 million, or 1.3%, from 2000. The improvement was driven principally by the
favorable impact of selling price increases put into effect in 2000 and higher
volume, offset partially by higher conversion costs and increased selling,
general, and administrative expenses.
Operating income before unusual items for the Consumer and Foodservice/Food
Packaging segment increased $3 million, or 5.6%, in 2001, driven principally by
2000 selling price increases and volume growth in consumer products, offset, in
part, by higher conversion and raw material costs and increased selling,
general, and administrative costs.
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Operating income for the Protective and Flexible Packaging segment declined
$1 million, or 10.0%, from 2000. This decline was caused mainly by lower North
American volume and higher overall conversion costs, offset, in part, by the
favorable impact of 2000 price increases and increased European volume.
Operating income for the Other segment decreased $1 million, or 6.7%, from
2000, primarily because of an increase in unallocated corporate overhead costs.
Interest Expense, Net of Interest Capitalized
Interest expense was $29 million in 2001, down $5 million, or 14.7%, from
2000, principally because of a decline in borrowings.
Income Taxes
The company's effective tax rate for 2001 was 41.7%, compared with 42.0%
for the same period in 2000.
Income from Continuing Operations
The company recorded net income from continuing operations of $29 million,
or $0.18 per share, in 2001, compared with $29 million, or $0.17 per share, in
the first quarter of 2000. Excluding the impact of the first quarter 2000 gain
on the sale of a business, net income from continuing operations rose $3
million, or $0.03 per share, versus 2000.
DISCONTINUED OPERATIONS
In the first quarter of 2001, the company recorded income from discontinued
operations, net of income tax, of $4 million, or $0.02 per share, which
represented the after-tax gain on the sale of a portion of the company's
remaining holdings of PCA stock (see note 10 for additional information
regarding the company's holdings of PCA stock). In the first quarter of 2000,
the company recorded income from discontinued operations, net of income tax, of
$134 million, or $0.80 per share, which represented the gain on the February
2000 sale of the majority of the company's equity interest in PCA.
LIQUIDITY AND CAPITAL RESOURCES
Capitalization
(Dollars in millions)
MARCH 31, DECEMBER 31,
2001 2000 CHANGE
--------- ------------ ------
Short-term debt, including current maturities of long-term
debt..................................................... $ 19 $ 13 $ 6
Long-term debt............................................. 1,443 1,560 (117)
------ ------ -----
Total debt................................................. 1,462 1,573 (111)
Minority interest.......................................... 22 22 --
Shareholders' equity....................................... 1,541 1,539 2
------ ------ -----
$3,025 $3,134 $(109)
------ ------ -----
The company's ratio of debt to total capitalization was 48.3% and 50.2% at
March 31, 2001, and December 31, 2000, respectively. Total borrowings declined
$111 million during 2001, as proceeds from the sale of the discontinued
polyethylene business and PCA stock and free cash flow were used to repay debt.
Shareholders' equity increased $2 million in 2001, primarily as a result of
the recording of income from continuing and discontinued operations of $29
million and $4 million, respectively, offset partially by an unfavorable foreign
currency translation adjustment and a decrease in unrealized gains related to
PCA stock.
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Cash Flows
FIRST QUARTER
(In millions) ----------------
2001 2000
----- -----
Cash provided (used) by:
Operating activities...................................... $ 55 $ (2)
Investing activities...................................... 41 400
Financing activities...................................... (107) (398)
Cash provided by operating activities was $55 million in 2001, versus a use
of cash of $2 million in the same period last year. The $57 million increase was
driven mainly by improvements in working capital management.
Investing activities generated cash aggregating $41 million in 2001 and
$400 million in the same period of 2000. The $41 million generated in 2001
principally represented proceeds from the sale of the company's packaging
polyethylene business and the sale of a portion of its remaining interest in
PCA, offset, in part, by expenditures for property, plant, and equipment and the
acquisition of assets from a former joint-venture partner. The $400 million
provided in 2000 was driven principally by the receipt of proceeds from the sale
of 85% of the company's interest in PCA.
Cash used by financing activities was $107 million in 2001 and $398 million
in 2000, driven primarily by the retirement of debt in both periods.
Allowance for Bad Debts
The company's allowance for bad debts totaled $11 million at March 31, 2001
compared to $17 million at December 31, 2000. This $6 million decrease was due
to clearing old, uncollectable receivables for which reserves had been
established in prior years, and the related clearing of allowances for bad
debts, the combined effect of which had no impact on net income or free cash
flow for the first quarter ended March 31, 2001.
Capital Commitments
Open commitments for authorized expenditures totaled approximately $143
million at March 31, 2001. It is anticipated that the majority of these
expenditures will be funded over the next twelve months from existing cash and
short-term investments, internally generated cash, and borrowings.
Liquidity
The company's management believes that cash flow from operations, along
with available borrowing capacity under its credit facilities, will be
sufficient to meet capital requirements. See note 5 for additional information
concerning liquidity.
CHANGES IN ACCOUNTING PRINCIPLES
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for
Derivative Instruments and Hedging Activities. In June 1999, the FASB issued
SFAS No. 137, Accounting for Derivative Instruments and Hedging Activities --
Deferral of the Effective Date of SFAS No. 133. In June 2000, the FASB issued
SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging
Activities, an amendment to SFAS No. 133. SFAS No. 133, as amended, requires
that derivative instruments, including certain derivative instruments embedded
in other contracts, be recorded as either assets or liabilities measured at fair
value and that changes in derivative instruments' fair value be recognized
currently in earnings unless specific hedge-accounting criteria are met. The
company adopted SFAS 133, as amended, on January 1, 2001. In accordance with the
transition provisions of SFAS 133, the company was not required to record a
transition adjustment, and the adoption of SFAS 133 did not have a material
effect on the earnings or statement of financial position of the company.
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In May 2000, the FASB's Emerging Issues Task Force (EITF) reached a
consensus on Issue No. 00-14, Accounting for Certain Sales Incentives. This
issue addresses the recognition, measurement, and income-statement
classification of various types of sales incentives, including discounts,
coupons, rebates, and free products. Upon adopting EITF No. 00-14, which is
required effective with the fourth quarter of 2001, the company will be required
to reclassify as deductions from sales certain expenses that historically have
been included in selling, general, and administrative costs. If this
reclassification had been made for the first quarter of 2001 and 2000, sales and
selling, general, and administrative costs would have been reduced by $5 million
and $4 million, respectively.
In January 2001, the EITF reached a consensus on Issue 3 of No. 00-22,
Accounting for 'Points' and Certain Other Time-Based or Volume-Based Sales
Incentive Offers, and Offers for Free Products or Services to be Delivered in
the Future. This consensus requires that certain rebate offers and free products
that are delivered subsequent to a single exchange transaction be recognized
when incurred and reported as a reduction of sales. The impact of this issue,
which the company adopted in the first quarter of 2001, on the company's
consolidated financial statements was immaterial.
In April 2001, the EITF reached a consensus on Issue No. 00-25, Accounting
for Consideration from a Vendor to a Retailer in Connection with the Purchase or
Promotion of the Vendor's Products. This consensus requires that consideration
provided by a vendor to a purchaser of the vendor's products be recognized as a
reduction of sales, except in those instances where an identifiable and
measurable benefit is or will be received by the vendor from the purchaser. Upon
adopting Issue No. 00-25, which is required effective with the fourth quarter of
2001, the company will be required to reclassify as deductions from sales
certain expenses that historically have been included in selling, general, and
administrative costs. If this reclassification had been made for the first
quarter of 2001 and 2000, sales and selling, general, and administrative costs
would have been reduced by approximately $9 million and $11 million,
respectively.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
DERIVATIVE FINANCIAL INSTRUMENTS
The company is exposed to market risks related to changes in
foreign-currency exchange rates, interest rates, and commodity prices. To manage
these risks, the company, from time to time, enters into various hedging
contracts in accordance with the company's policies and procedures. The company
does not use hedging instruments for trading purposes and is not a party to any
transactions involving leveraged derivatives.
Foreign-Currency Exchange
The company uses foreign-currency forward contracts to hedge its exposure
to adverse changes in exchange rates, primarily related to the Euro, British
pound, and Canadian dollar. Hedging is accomplished through the use of financial
instruments, with related gains or losses offsetting gains or losses on
underlying assets or liabilities.
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17
In managing foreign-currency risk, the company aggregates existing
positions and hedges residual exposures through third-party derivative
contracts. The following table summarizes foreign-currency forward contracts in
effect at March 31, 2001, all of which will mature in 2001.
NOTIONAL AMOUNT WEIGHTED-AVERAGE NOTIONAL AMOUNT
IN FOREIGN CURRENCY SETTLEMENT RATE IN U.S. DOLLARS
(In millions, except settlement rates) ------------------- ---------------- ---------------
Euros
-- Purchase.............................. 131 0.878 115
-- Sell.................................. (258) 0.878 (227)
Canadian dollars
-- Purchase.............................. 20 0.634 13
-- Sell.................................. (24) 0.634 (15)
British pounds
-- Purchase.............................. 30 1.416 43
-- Sell.................................. (43) 1.416 (61)
U.S. dollars
-- Purchase.............................. 279 1.000 279
-- Sell.................................. (138) 1.000 (138)
Interest Rates
The company is exposed to interest-rate risk on certain of its debt
instruments, in that it utilizes revolving-credit facilities that bear interest
at a floating rate based on LIBOR. In addition, the company has issued
public-debt securities with fixed interest rates and original maturity dates
ranging from six to 28 years.
At the end of the first quarter of 2001, the company entered into interest
rate swap agreements ("swaps") which effectively convert floating-rate debt on
its synthetic lease obligations to fixed-rate debt. This action was taken
primarily to reduce the company's exposure to interest-rate risk. These swaps
are accounted for as cash flow hedges, with changes in value recorded as a
component of accumulated other comprehensive income on the balance sheet.
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PART II -- OTHER INFORMATION
ITEMS 1-5. NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(A) EXHIBITS
The exhibits filed herewith are designated with an asterisk in the
following index; all other exhibits are incorporated by reference:
EXHIBIT NO. DESCRIPTION
- ----------- -----------
2 Distribution Agreement by and between Tenneco Inc. and the
registrant (incorporated herein by reference to Exhibit 2 to
Pactiv Corporation's Current Report on Form 8-K dated
November 11, 1999, File No. 1-15157).
3 Restated Certificate of Incorporation of the registrant
(incorporated herein by reference to Exhibit 3.1 to Pactiv
Corporation's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1999, File No. 1-15157).
3.1 Amended and Restated By-laws of the registrant (incorporated
herein by reference to Exhibit 3.2 to Pactiv Corporation's
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1999, File No. 1-15157).
4.1 Specimen Stock Certificate of Pactiv Corporation Common
Stock (incorporated herein by reference to Exhibit to Pactiv
Corporation's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1999, File No. 1-15157).
4.2 Qualified Offer Plan Rights Agreement, dated as of November
4, 1999, by and between the registrant and First Chicago
Trust Company of New York, as Rights Agent (incorporated
herein by reference to Exhibit 4.2 to Pactiv Corporation's
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1999, File No. 1-15157).
4.3(a) Indenture, dated September 29, 1999, by and between the
registrant and The Chase Manhattan Bank, as Trustee
(incorporated herein by reference to Exhibit 4.1 to Tenneco
Packaging Inc.'s Registration Statement on Form S-4, File
No. 333-82923).
4.3(b) First Supplemental Indenture, dated as of November 4, 1999,
to Indenture dated as of September 29, 1999, between the
registrant and The Chase Manhattan Bank, as Trustee
(incorporated herein by reference to Exhibit 4.3(b) to
Pactiv Corporation's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1999, File No. 1-15157).
4.3(c) Second Supplemental Indenture, dated as of November 4, 1999,
to Indenture dated as of September 29, 1999, between the
registrant and The Chase Manhattan Bank, as Trustee
(incorporated herein by reference to Exhibit 4.3(c) to
Pactiv Corporation's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1999, File No. 1-15157).
4.3(d) Third Supplemental Indenture, dated as of November 4, 1999,
to Indenture dated as of September 29, 1999, between the
registrant and The Chase Manhattan Bank, as Trustee
(incorporated herein by reference to Exhibit 4.3(d) to
Pactiv Corporation's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1999, File No. 1-15157).
4.3(e) Fourth Supplemental Indenture, dated as of November 4, 1999,
to Indenture dated as of September 1999, between the
registrant and The Chase Manhattan Bank, as Trustee
(incorporated herein by reference to Exhibit 4.3(e) to
Pactiv Corporation's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1999, File No. 1-15157).
4.3(f) Fifth Supplemental Indenture, dated as of November 4, 1999,
to Indenture dated as of September 29, 1999, between the
registrant and The Chase Manhattan Bank, as Trustee
(incorporated herein by reference to Exhibit 4.3(f) to
Pactiv Corporation's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1999, File No. 1-15157).
4.4 Registration Rights Agreement, dated as of November 4, 1999,
by and between the registrant and the trustees under the
Pactiv Corporation Rabbi Trust (incorporated herein by
reference to Exhibit 4.4 to Pactiv Corporation's Quarterly
Report on Form 10-Q for the quarter ended September 30,
1999, File No. 1-15157).
9 None.
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EXHIBIT NO. DESCRIPTION
- ----------- -----------
10.1 Human Resources Agreement, dated as of November 4, 1999, by
and between Tenneco Inc. and the registrant (incorporated
herein by reference to Exhibit 16.1 to Tenneco Inc.'s
Current Report on Form 8-K dated November 4, 1999, File No.
1-12387).
10.2 Tax Sharing Agreement, dated as of November 3, 1999, by and
between Tenneco Inc. and the registrant (incorporated herein
by reference to Exhibit 16.2 to Tenneco Inc.'s Current
Report on Form 8-K dated November 4, 1999, File No. 12387).
10.3 Amended and Restated Transition Services Agreement, dated as
of November 4, 1999, by and between Tenneco Inc. and the
registrant (incorporated herein by reference to Exhibit 10.3
to Tenneco Automotive Inc.'s Quarterly Report on Form 10-Q
for quarterly period ended September 30, 1999, File No.
1-12387).
10.4 Trademark Transition License Agreement, dated as of November
4, 1999, by and between Tenneco Inc. and the registrant
(incorporated herein by reference to Exhibit 10.4 to Pactiv
Corporation's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1999, File No. 1-15157).
10.5 Pactiv Corporation (formerly known as Tenneco Packaging
Inc.) Executive Incentive Compensation Plan (incorporated
herein by reference to Exhibit 10.5 to Pactiv Corporation's
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1999, File No. 1-15157).
10.6 Pactiv Corporation (formerly known as Tenneco Packaging
Inc.) Supplemental Executive Retirement Plan (incorporated
herein by reference to Exhibit 10.6 to Pactiv Corporation's
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1999, File No. 1-15157).
10.7 Pactiv Corporation (formerly known as Tenneco Packaging
Inc.) Change in Control Severance Benefit Plan for Key
Executives (incorporated herein by reference to Exhibit 10.7
to Pactiv Corporation's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1999, File No. 1-15157).
10.8 Pactiv Corporation (formerly known as Tenneco Packaging
Inc.) Deferred Compensation Plan (incorporated herein by
reference to Exhibit 10.8 to Pactiv Corporation's Quarterly
Report on Form 10-Q for the quarter ended September 30,
1999, File No. 1-15157).
10.9 Pactiv Corporation (formerly known as Tenneco Packaging
Inc.) Stock Ownership Plan (incorporated herein by reference
to Exhibit 10.9 to Pactiv Corporation's Quarterly Report
Form 10-Q for the quarter ended September 30, 1999, File No.
1-15157).
10.10 Professional Services Agreement, dated August 22, 1996, by
and between Tenneco Business Services Inc. and Newport News
Shipbuilding Inc. (incorporated herein by reference to
Exhibit 10.28 of Tenneco Inc.'s Form 10, File No. 1-12387).
10.11 Pactiv Corporation Rabbi Trust (incorporated herein by
reference to Exhibit 10.11 to Pactiv Corporation's Quarterly
Report on Form 10-Q for the quarter ended September 30,
1999, File No. 1-15157).
10.12 Tenneco Rabbi Trust Agreement (incorporated herein by
reference to Exhibit 10.12 to Pactiv Corporation's Quarterly
Report on Form 10-Q for the quarter ended September 30,
1999, File No. 1-15157).
10.13(a) Contribution Agreement, dated as of January 25, 1999, by and
among the registrant, PCA Holdings LLC and Packaging
Corporation of America (the 'Contribution
Agreement')(incorporated herein by reference to Exhibit
10.30 to Tenneco Inc.'s Current Report on Form 8-K dated
April 12, 1999, File No. 1-12387).
10.13(b) Letter Agreement, dated as of April 12, 1999, by and among
the registrant, PCA Holdings LLC and Packaging Corporation
of America, amending the Contribution Agreement
(incorporated herein by reference to Exhibit 10.31 to
Tenneco Inc.'s Current Report on Form 8-K dated April 12,
1999, File No. 1-12387).
10.14 Stockholders Agreement, as amended, dated as of April 12,
1999, by and among the registrant, PCA Holdings LLC and
Packaging Corporation of America (incorporated herein by
reference to Exhibit 10.32 to Tenneco Inc.'s Current Report
on Form 8-K dated April 12, 1999, File No. 1-12387).
10.15 Registration Rights Agreement, as amended, dated as of April
12, 1999, by and among the registrant, PCA Holdings LLC and
Packaging Corporation of America (incorporated herein by
reference to Exhibit 10.33 to Tenneco Inc.'s Current Report
on Form 8-K dated April 12, 1999, File No. 1-12387).
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EXHIBIT NO. DESCRIPTION
- ----------- -----------
10.16 Release Agreement dated as of October 18, 1999, by and
between Dana G. Mead and Tenneco Management Company, and
Modification of Release Agreement dated as of October 18,
1999, by and among Dana G. Mead, Tenneco Inc. and Tenneco
Management Company (incorporated herein by reference to
Exhibit 10.18 to Tenneco Automotive Inc.'s Quarterly Report
on Form 10-Q for quarterly period ended September 30, 1999,
File No. 1-12387).
10.17 Employment Agreement, dated as of March 11, 1997, by and
between Richard L. Wambold and Tenneco Inc. (incorporated
herein by reference to Exhibit 10.17 to Pactiv Corporation's
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1999, File No. 1-15157).
10.18 Short Term Credit Agreement, dated as of September 29, 1999,
among the registrant, Bank of America, N.A., as
Administrative Agent, Credit Suisse First Boston, as
Syndication Agent, Bank One, NA and Banque Nationale de
Paris, as Co-Documentation Agents, and the other financial
institutions party thereto (incorporated herein by reference
to Exhibit 4.4 to Tenneco Packaging Inc.'s Registration
Statement on Form S-4, File No. 333-82923).
10.18(a) First Amendment, dated as of September 27, 2000, among the
registrant, various financial institutions, and Bank of
America, N.A., as Administrative Agent, amending the Short
Term Credit Agreement (incorporated herein by reference to
Exhibit 10.18(a) to Pactiv's Quarterly Report on Form 10-Q
for the quarter ended September 30, 2000, File No. 1-15157).
10.19 Long Term Credit Agreement, dated as of September 29, 1999,
among the registrant, Bank of America, N.A., as
Administrative Agent, Credit Suisse First Boston, as
Syndication Agent, Bank One, NA and Banque Nationale de
Paris, as Co-Documentation Agents, and the other financial
institutions party thereto (incorporated herein by reference
to Exhibit 4.3 to Tenneco Packaging Inc.'s Registration
Statement on Form S-4, File No. 333-82923).
10.20 Term Loan Agreement, dated as of November 3, 1999, between
the registrant and Bank of America (incorporated herein by
reference to Exhibit 10.21 to Pactiv Corporation's Quarterly
Report on Form 10-Q for the quarter ended September 30,
1999, File No. 1-15157).
10.21 Letter of Agreement dated September 10, 1999, by and among
Tenneco Inc., Bank of America, N.A., and Bank of America
Securities LLC, related to Term Loan Agreement, dated as of
November 3, 1999, by and between the registrant and Bank of
America (incorporated herein by reference to Exhibit 10.22
to Pactiv Corporation's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1999, File No. 1-15157).
10.22 Participation Agreement, dated as of October 28, 1999, among
the registrant, First Security Bank, N.A., Bank of America,
as Administrative Agent, and the other financial
institutions party thereto (incorporated herein by reference
to Exhibit 10.23 to Pactiv Corporation's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1999, File No.
1-15157).
10.23 Agreement and General Release dated January 28, 2000,
between the registrant and Paul J. Griswold (incorporated by
reference to Exhibit 10.23 to Pactiv Corporation's Annual
Report on Form 10-K for the year ended December 31, 1999,
File No. 1-15157).
11 None.
*12 Computation of Ratio of Earnings to Fixed Charges.
13 None
15 None
16 None
18 None.
19 None.
22 None.
23 None.
99 None.
(B) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the quarter ended March 31, 2001.
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21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PACTIV CORPORATION
By: /s/ ANDREW A. CAMPBELL
------------------------------------
Andrew A. Campbell
Senior Vice President and Chief
Financial Officer
(principal financial and accounting
officer)
Date: May 15, 2001
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