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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 11-K
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[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-15157
A. Full title of the plan and address of the plan, if different from that
of the issuer named below:
PACTIV HOURLY 401(k) SAVINGS AND INVESTMENT PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
PACTIV CORPORATION
1900 WEST FIELD COURT
LAKE FOREST, IL 60045
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Pactiv Corporation Benefits Committee:
We have audited the accompanying statements of net assets available for plan
benefits of the Pactiv Hourly 401(k) Savings and Investment Plan, known prior to
January 1, 2001, as the Pactiv Corporation Thrift Plan for Hourly Employees, as
of December 31, 2000 and 1999, and the related statement of changes in net
assets available for plan benefits for the year ended December 31, 2000. These
financial statements and the supplemental schedules referred to below are the
responsibility of the Pactiv Corporation Benefits Committee. Our responsibility
is to express an opinion on these financial statements and supplemental
schedules based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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 plan benefits of the Pactiv
Hourly 401(k) Savings and Investment Plan as of December 31, 2000 and 1999, and
the changes in net assets available for plan benefits for the year ended
December 31, 2000, in conformity with accounting principles generally accepted
in the United States.
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 at end of year) as of December 31, 2000, and nonexempt transactions for
the year ended December 31, 2000, are presented for purposes 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.
/s/ ARTHUR ANDERSEN LLP
Chicago, Illinois
June 15, 2001
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PACTIV HOURLY 401(k) SAVINGS AND INVESTMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF DECEMBER 31, 2000 AND 1999
2000 1999
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ASSETS:
Investments, at fair value-
Corporate securities-
Pactiv Corporation common stock $ 9,432,966 $ 9,121,484
Tenneco Automotive Inc. common stock 166,815 2,058,895
El Paso Energy common stock - 1,114,229
Newport News Shipbuilding Inc. common stock - 835,670
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9,599,781 13,130,278
Collective trust funds-
Barclays Global Investors Equity Index Fund 6,015,612 24,441,353
Barclays Global Investors U.S. Debt Market Index Fund 928,989 5,255,387
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6,944,601 29,696,740
Registered investment companies-
Fidelity Growth Company Fund 15,934,277 58,814,609
INVESCO Total Return Fund 4,420,355 13,279,145
Putnam New Opportunities Fund 7,439,506 20,732,997
Templeton Foreign Fund 1,863,004 2,776,232
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29,657,142 95,602,983
Nations Cash Reserves 11,261,701 31,432,122
Bankers Trust Pyramid Directed Account Cash Fund 790,822 617,436
Participant loans receivable 4,320,588 6,226,048
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Total investments 62,574,635 176,705,607
Receivables-
Employee contributions 144,775 777,011
Employers' contributions 118,774 1,089,885
Accrued interest and dividends 67,130 151,683
Due from broker 55,367 88,842
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Total receivables 386,046 2,107,421
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Total assets 62,960,681 178,813,028
LIABILITIES:
Due to broker 111,771 283,152
Due to affiliated plan - 285,714
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Total liabilities 111,771 568,866
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NET ASSETS AVAILABLE FOR PLAN BENEFITS $62,848,910 $178,244,162
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The accompanying notes to financial statements are an integral part of these
financial statements.
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PACTIV HOURLY 401(k) SAVINGS AND INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2000
NET ASSETS AVAILABLE FOR PLAN BENEFITS, beginning of year $178,244,162
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ADDITIONS:
Dividends-
Corporate securities 18,589
Registered investment companies 3,362,161
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Total dividends 3,380,750
Interest 702,974
Repayment of loan interest 340,654
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1,043,628
Net appreciation (depreciation) in fair value of investments-
Corporate securities 1,319,941
Collective trust funds (1,398,010)
Registered investment companies (6,657,251)
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Total net depreciation in fair value of investments (6,735,320)
Contributions-
Employee 7,369,992
Employers' 4,057,149
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11,427,141
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Total additions 9,116,199
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DEDUCTIONS:
Withdrawals 5,887,008
Transfers to other plans (Note 1) 118,624,443
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Total deductions 124,511,451
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T ASSETS AVAILABLE FOR PLAN BENEFITS, end of year $ 62,848,910
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The accompanying notes to financial statements are an integral part of this
financial statement.
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PACTIV HOURLY 401(k) SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
1. DESCRIPTION OF THE PACTIV HOURLY
401(k) SAVINGS AND INVESTMENT PLAN:
The following description of the Pactiv Hourly 401(k) Savings and Investment
Plan (the Plan), known prior to January 1, 2001, as the Pactiv Corporation
Thrift Plan for Hourly Employees, provides only general information.
Participants should refer to the Plan document for a more complete description
of the Plan's provisions.
General
The Plan is a defined contribution plan subject to the provisions of the
Employee Retirement Income Security Act of 1974, as amended (ERISA). Pactiv
Corporation is sponsor of the Plan. In conjunction with a series of transactions
during 1999, certain employees of Tenneco Automotive Inc. and Packaging
Corporation of America and their subsidiaries continued to participate in the
Plan through January 31, 2000. Effective February 1, 2000, account balances of
affected participants totaling $118,624,443 were transferred to plans sponsored
by Tenneco Automotive Inc. and Packaging Corporation of America.
For purposes of these financial statements, "Employers" refers to Pactiv
Corporation, Tenneco Automotive Inc., Packaging Corporation of America and their
subsidiaries that participated in the Plan through January 31, 2000. Subsequent
to January 31, 2000, "Employers" refers to Pactiv Corporation and its
subsidiaries.
Eligibility and Contributions
Eligible employees, as defined in the Plan document, generally participate in
the Plan the first day of the month following the completion of one year of
service.
Eligible employees may make contributions (Employee Contribution Account) by
payroll deduction of not less than 1 percent nor greater than 8 percent of
compensation (or such percentage of compensation as may be specified in a
covered group's special appendix to the Plan), as defined, with such
contributions limited to $10,500 for 2000. The Employers contribute on behalf of
the participants a matching contribution equal to an amount detailed in each
group's special appendix.
The Pactiv Corporation matching contributions are generally invested in Pactiv
Corporation common stock. Certain covered groups may direct the Pactiv
Corporation matching contributions into the available investment options other
than Pactiv Corporation common stock. For all other groups, the Pactiv
Corporation matching contributions and the related earnings must remain in the
form of Pactiv Corporation common stock until the participant reaches age 55 or
terminates employment and requests a total distribution.
Investment Options
Each participant has the right upon enrollment to select the funds in which the
balance in the participant's account, excluding certain Employers' matching
contributions, will be invested. During 2000, participants can invest in two
collective trust funds, four registered investment companies, a money market
fund and Pactiv Corporation common stock. Monies pending purchase in each of the
investment options are temporarily invested in the Bankers Trust Pyramid
Directed Account Cash Fund.
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Shares of Newport News Shipbuilding Inc. common stock, received through a 1996
distribution, and El Paso Energy common stock, received through a 1996 merger
transaction, were held in separate funds; however, participants could not direct
contributions or fund transfers to these funds. Dividends earned by these funds
were invested in Nations Cash Reserves. During 2000, these investments were
liquidated and transferred at the participant's direction into the other
investment options.
Vesting
Participants are 100 percent vested in their employee contributions made to the
Plan.
The Employers' matching contributions become vested in accordance with the
schedule detailed in each covered group's special appendix.
Upon attainment of age 65, or termination of employment due to death or total
disability, a participant will become 100 percent vested in the Employers'
matching contributions. Forfeited nonvested accounts are used to reduce future
Employers' matching contributions.
Withdrawals and Participant Loans
Upon retirement or other termination of employment, the participant may receive
the value of the vested interest in his account as a lump-sum distribution.
Certain participants, as specified in the covered group's special appendix, who
have attained age 55 may elect an in-service withdrawal. Certain participants,
as specified in the covered group's special appendix, who have not attained age
59-1/2 may elect to withdraw all or part of their account balances, reduced by
the portion of their account balances attributable to salary deferral
contributions.
Plan equity as of December 31, 2000 and 1999, includes amounts pending
distribution to participants of $213,021 and $262,672, respectively (see Note
5).
Certain participants may borrow from their accounts a minimum of $1,000 up to a
maximum equal to the lesser of $50,000 minus the highest outstanding loan
balance during the last 12 months, or 50 percent of their account balances. Loan
terms range from one to 4-1/2 years. The loans are secured by the balance in the
participant's account and bear interest at a rate equal to The Wall Street
Journal Prime Rate. Principal and interest are paid through payroll deductions.
Administration
The Plan is currently administered by the Pactiv Corporation Benefits Committee
(the Committee). Bankers Trust Company serves as trustee of the Plan.
2. SUMMARY OF ACCOUNTING POLICIES:
Basis of Accounting
The financial statements of the Plan are presented on the accrual basis of
accounting. Corporate securities and registered investment companies are
reported at quoted market value. Collective trust funds are valued by reference
to published market data, as available, of the underlying assets. Participant
loans receivable are reported at cost which approximates fair value.
Earnings
Individual participants' accounts are credited daily with investment earnings
and losses. Investment earnings and losses are credited based upon the number of
units held in an individual participant's account and the fair market value per
unit based upon the net asset value or share price of the underlying securities
at the close of business each day.
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Expenses
Certain administrative expenses are currently paid by the Employers. In the
event expenses are not paid by the Employers, such expenses are paid by the
Plan.
Use of Estimates
The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States requires management to use
estimates and assumptions that affect the accompanying financial statements and
disclosures. Actual results could differ from those estimates.
3. NONPARTICIPANT-DIRECTED INVESTMENTS:
Information about the net assets relating to the nonparticipant-directed
investments is as follows as of December 31, 2000 and 1999:
2000 1999
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Pactiv Corporation common stock $6,523,368 $4,943,752
Tenneco Automotive Inc. common stock - 1,310,402
Bankers Trust Pyramid Directed Account Cash
Fund 161,968 160,384
Employer's contributions receivable 118,774 1,089,885
Other 17,090 813
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Net assets $6,821,200 $7,505,236
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The significant components of the change in net assets relating to the
nonparticipant-directed investments for the year ended December 31, 2000, are as
follows:
Investment income-
Interest $ 7,031
Repayment of loan interest 112,495
Net appreciation in fair value of
corporate securities 1,090,438
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1,209,964
Employers' contributions 3,639,082
Interfund transfers (570,056)
Withdrawals (256,222)
Transfers to other plans (4,706,804)
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Decrease in net assets $ (684,036)
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4. RISKS AND UNCERTAINTIES:
The Plan provides for investment in corporate securities, collective trust
funds, registered investment companies and money market funds. Investment
securities, in general, are exposed to various risks, such as interest rate,
credit and overall market volatility risks. Due to the level of risk associated
with certain investment securities, it is reasonably possible that changes in
the values of investment securities will occur in the near term.
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5. RECONCILIATION OF FINANCIAL
STATEMENTS TO FORM 5500:
The following is a reconciliation of net assets available for Plan benefits per
the financial statements to the Form 5500 as of December 31, 2000 and 1999:
2000 1999
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Net assets available for Plan benefits per the financial statements $62,848,910 $178,244,162
Less- Amounts allocated to withdrawing participants (213,021) (262,671)
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Net assets available for Plan benefits per the Form 5500 $62,635,889 $177,981,491
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The following is a reconciliation of withdrawals per the financial statements to
the Form 5500 for the year ended December 31, 2000:
Withdrawals per the financial statements $ 5,887,008
Add- Amounts allocated to withdrawing participants at December 31, 2000 213,021
Less- Amounts allocated to withdrawing participants at December 31, 1999 (262,671)
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Withdrawals per the Form 5500 $ 5,837,358
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Amounts allocated to withdrawing participants are recorded on the Form 5500 for
withdrawals that have been processed and approved for payment prior to December
31 but not paid as of that date.
6. FEDERAL INCOME TAXES:
The Plan obtained its latest determination letter on March 20, 1998 in which the
Internal Revenue Service stated that the Plan, as then designed, was in
compliance with the applicable requirements of the Internal Revenue Code of
1986, as amended (the IRC). The Plan has been amended since receiving the
determination letter. However, the Committee believes that the Plan is currently
designed and being operated in compliance with the applicable requirements of
the IRC. Therefore, the Committee believes that the Plan was qualified and the
related trust was tax-exempt as of the financial statement date.
7. TERMINATION OF THE PLAN:
Although Pactiv Corporation intends to continue the Plan, it reserves the right
to terminate the Plan. Any assets which are not allocated to the accounts of
participants upon the complete termination of the Plan or complete
discontinuance of contributions will be allocated among all of the participants'
accounts pro rata on the basis of their respective account balances at the date
of termination.
8. NONEXEMPT TRANSACTIONS:
For the year ended December 31, 2000, certain Plan contributions were not
remitted to the trust within the time frame as specified by Department of Labor
Regulation 29 CFR 2510.3-102, thus constituting a nonexempt transaction between
the Plan and the Employers.
9. PARTY IN INTEREST:
The Plan invests in shares of the Bankers Trust Pyramid Directed Account Cash
Fund, which is managed by Bankers Trust Company. Bankers Trust Company is the
trustee and, therefore, these transactions qualify as party-in-interest
transactions.
The Plan also invests in shares of Pactiv Corporation common stock. Pactiv
Corporation is the Plan's sponsor and, therefore, these transactions quality as
party-in-interest transactions.
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10. SUBSEQUENT EVENTS (UNAUDITED):
In December 2000, Pactiv Corporation entered into agreements to sell its
packaging polyethylene business and its interest in Sentinel Polyolefins LLC, a
protective packaging joint venture. These transactions closed in January 2001.
Effective January 1, 2001, the Plan was amended and restated. Pursuant to the
amendment and restatement, the following Plan provisions changed: (a) employees
are allowed to enter the Plan on the first day of the month following the
completion of one month of service, as specified in the covered group's special
appendix, and (b) eligible employees may make contributions by payroll deduction
of not less than 1 percent nor greater than 16 percent of their base salaries,
as specified in the covered group's special appendix.
Effective July 2, 2001, the Plan will terminate its trustee agreement with
Bankers Trust Company and enter into a new trust agreement with Fidelity
Management Trust Company. Pursuant to the change in trustee, participants will
have the ability to direct their investments into Pactiv Corporation common
stock and 10 registered investment companies.
Effective July 2, 2001, the Plan's record-keeping function will transition to
Fidelity Investment Institutional Operating Company, Inc.
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SCHEDULE I
PACTIV HOURLY 401(k) SAVINGS AND INVESTMENT PLAN
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
AS OF DECEMBER 31, 2000
Shares or Current
Identity of Issue Description of Asset Face Value Cost Value
- --------------------------------- --------------------------------------------- ----------- ----------- ------------
Pactiv Corporation* Pactiv Corporation common stock 762,260 $11,804,485 $ 9,432,966
Tenneco Automotive Inc. Tenneco Automotive Inc. common stock 55,605 (a) 166,815
Barclays Global Investors Barclays Global Investors Equity Index Fund 162,804 (a) 6,015,612
Barclays Global Investors Barclays Global Investors U.S. Debt
Market Index Fund 59,665 (a) 928,989
Fidelity Investments
Institutional Services Co. Fidelity Growth Company Fund 223,075 (a) 15,934,277
INVESCO Funds Group, Inc. INVESCO Total Return Fund 167,248 (a) 4,420,355
Putnam Management Company Putnam New Opportunities Fund 126,911 (a) 7,439,506
Franklin Templeton Templeton Foreign Fund 180,174 (a) 1,863,004
Bank of America, N.A. Nations Cash Reserves 11,261,701 (a) 11,261,701
Bankers Trust Company* Bankers Trust Pyramid Directed
Account Cash Fund 790,822 790,822 790,822
Pactiv Hourly 401(k) Savings Participant loans receivable (interest
and Investment Plan* (rates ranging from 7.0% to 9.5%) $ 4,320,588 (a) 4,320,588
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Total assets (held at end of year) $62,574,635
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*Indicated party in interest.
(a)Cost omitted for participant-directed investments.
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SCHEDULE II
PACTIV HOURLY 401(k) SAVINGS AND INVESTMENT PLAN
SCHEDULE OF NONEXEMPT TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 2000
Relationship to Plan,
Identity of Party Employer or Other Description of Transactions, Amount
Involved Party in Interest Including Maturity Date Loaned
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The Employers Employer Lending of monies from the Plan to the
Employers (contributions not timely remitted
to the Plan) as follows-
Deemed loan dated December 21, 1999,
maturity of January 19, 2000 $110,572
Deemed loan dated January 25, 2000,
maturity of January 27, 2000 115,274
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SIGNATURES
THE PLAN. Pursuant to the requirements of the Securities and Exchange Act of
1934, the Pactiv Corporation Benefits Committee have duly caused this annual
report to be signed on its behalf by the undersigned hereunder duly authorized.
PACTIV HOURLY 401(k)
SAVINGS AND INVESTMENT PLAN
Date: June 28, 2001 /s/ Henry M. Wells, III
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Henry M. Wells, III
Vice President and Chief Human Resources
Officer and Member of Pactiv Corporation
Benefits Committee
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INDEX TO EXHIBIT
EXHIBIT
NUMBER DESCRIPTION
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23.1 Consent of Independent Public Accountants