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 DECEMBR 31, 2001
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 the 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
This is a copy of the audit report previously issued by Arthur Andersen in
connection with the Plan's filing on Form 11-K for the year ended December 31,
2000. This audit report has not been reissued by Arthur Andersen in connection
with this filing on Form 11-K. See exhibit 23.2 for further discussion.
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
Financial Statements and Supplemental Schedules
Pactiv Hourly 401(k) Savings and Investment Plan
Year ended December 31, 2001
with Report of Independent Auditors
Employer Identification #36-2552989
Plan #034
Pactiv Hourly 401(k) Savings and Investment Plan
Financial Statements and
Supplemental Schedules
Year ended December 31, 2001
CONTENTS
Report of Independent Auditors..............................................1
Financial Statements
Statements of Net Assets Available for Benefits.............................2
Statement of Changes in Net Assets Available for Benefits...................3
Notes to Financial Statements...............................................4
Supplemental Schedules
Schedule H, Line 4i - Schedule of Assets (Held at End of Year).............11
Schedule G, Part III - Schedule of Nonexempt Transactions..................12
Report of Independent Auditors
To the Pactiv Corporation Benefits Committee
We have audited the accompanying statement of net assets available for benefits
of the Pactiv Hourly 401(k) Savings and Investment Plan as of December 31, 2001,
and the related statement of changes in net assets available for benefits for
the year then ended. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit 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 audit provides 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 Plan as of
December 31, 2001, and the changes in net assets available for benefits for the
year then ended, in conformity with accounting principles generally accepted in
the United States.
Our audit was performed 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, 2001, and nonexempt transactions for
the year ended December 31, 2001, 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 are the responsibility of the
Plan's management. The supplemental schedules have been subjected to the
auditing procedures applied in our audit 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.
Ernst & Young LLP
June 3, 2002
Chicago, Illinois
1
EIN #36-2552989
Plan #034
Pactiv Hourly 401(k) Savings and Investment Plan
Statements of Net Assets Available for Benefits
DECEMBER 31
2001 2000
---------------------------
ASSETS
Investments, at fair value:
Common stock $17,219,569 $ 9,599,781
Common collective trust funds -- 6,944,601
Registered investment companies 30,170,020 29,657,142
Money market funds 12,229,340 12,052,523
Participant loans 4,643,334 4,320,588
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Total investments 64,262,263 62,574,635
Receivables:
Participant contributions -- 144,775
Employers' contribution -- 118,774
Accrued interest and dividends -- 67,130
Due from broker -- 55,367
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Total receivables -- 386,046
----------- -----------
Total assets 64,262,263 62,960,681
LIABILITIES
Due to broker -- 111,771
----------- -----------
Total liabilities -- 111,771
----------- -----------
Net assets available for benefits $64,262,263 $62,848,910
=========== ===========
See notes to financial statements.
2
EIN #36-2552989
Plan #034
Pactiv Hourly 401(k) Savings and Investment Plan
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 2001
ADDITIONS
Dividends and interest income $ 1,111,163
Net realized and unrealized appreciation (depreciation) in fair value of
investments:
Common stock 4,637,601
Collective trust funds (361,853)
Registered investment companies (6,580,978)
------------
Total net realized and unrealized depreciation in fair
value of investments (2,305,230)
Contributions:
Participant 5,959,486
Employer 3,119,373
Rollover 127,149
------------
Total contributions 9,206,008
------------
Total additions 8,011,941
DEDUCTIONS
Benefit payments 6,556,796
Administrative expenses 41,792
------------
Total deductions 6,598,588
------------
Net increase 1,413,353
Net assets available for benefits, beginning of year 62,848,910
------------
Net assets available for benefits, end of year $ 64,262,263
============
See notes to financial statements.
3
EIN #36-2552989
Plan #034
Pactiv Hourly 401(k) Savings and Investment Plan
Notes to Financial Statements
December 31, 2001 and 2000
1. DESCRIPTION OF PLAN
The following description of the Pactiv Hourly 401(k) Savings and Investment
Plan (the Plan), known prior to January l, 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 (Company) is the 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 l, 2000, account
balances of affected participants totaling $118,624,443 were transferred to
plans sponsored by Tenneco Automotive Inc. and Packaging Corporation of America.
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. Participants impacted by these sales could
elect to receive a benefit payment of their vested account balance.
ELIGIBILITY AND CONTRIBUTIONS
Effective January 1, 2001, employees are eligible to enter the Plan on the first
day of the month following the completion of one month of service. Employees are
eligible for the Company contribution after completing one year of service (or
eligible as specified in a covered group's special appendix to the Plan). Prior
to January 1, 2001, employees were eligible to participate in the Plan the first
day of the month following the completion of one year of service.
4
Pactiv Hourly 401(k) Savings and Investment Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF PLAN (CONTINUED)
Participants may make contributions by payroll deduction of 1% up to 16% of
compensation (or such percentage of compensation as may be specified in a
covered group's special appendix to the Plan), as defined in the Plan, with such
contributions limited to $10,500 for 2001 and 2000. The Company makes a matching
contribution equal to an amount detailed in each group's special appendix.
Company matching contributions, if applicable are invested in Pactiv Corporation
common stock. The 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 offered by
the Plan in which the balance in the participant's account, excluding certain
Company matching contributions, will be invested.
VESTING
Participants are immediately vested in their contributions and actual earnings
thereon.
Company 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% vested in their entire account.
Forfeited nonvested accounts are used to reduce future Company matching
contributions or administrative expenses.
PAYMENT OF BENEFITS
Upon retirement or other termination of employment, the participant may receive
the value of the vested interest in their account as a lump-sum distribution.
5
Pactiv Hourly 401(k) Savings and Investment Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF PLAN (CONTINUED)
Unless otherwise provided in the covered group's special appendix, a participant
may make an in-service withdrawal as described in this paragraph. A participant
who has attained age 55 may elect to make an in-service withdrawal but if such a
participant has not attained age 59 1/2 the amount of the in-service withdrawal
shall be limited to the vested portion of the participant's matching
contributions account. A participant who has attained age 59 1/2 may elect to
make an in-service withdrawal of all or any portion of his vested account
balance. A participant may elect at any time to make an in-service withdrawal of
the balance of his rollover contributions account.
PARTICIPANT LOANS
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% of their vested 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.
PLAN TERMINATION
Although it has not expressed intent to do so, the Company has the right to
discontinue its contributions at any time and to terminate the Plan subject to
the provisions of ERISA. In the event of Plan termination, participants will
become 100% vested in their accounts.
ADMINISTRATION
The Plan is currently administered by the Pactiv Corporation Benefits Committee
(the Committee).
6
Pactiv Hourly 401(k) Savings and Investment Plan
Notes to Financial Statements (continued)
2. SUMMARY OF ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements of the Plan are presented on the accrual basis of
accounting.
EARNINGS
Each participant's account is credited with the participant's and Company
contributions, and allocation of Plan earnings (losses). Allocations of earnings
(losses) are based on account balances, as defined in the Plan. Forfeited
balances of terminated participants' nonvested accounts are used to reduce
future Company contributions and administrative expenses. The benefit to which a
participant is entitled is the benefit that can be provided from the
participant's account.
EXPENSES
Substantially all Plan administrative expenses are paid by the Plan, including
recordkeeping and trustee fees.
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.
INVESTMENT VALUATION
The shares of registered investment companies are valued at quoted market
prices, which represent the net asset values of share on the last business day
of the Plan year. The fair value of the common stock is determined by quoted
market prices. The fair value of the Plan's investment in common collective
trusts is based on the quoted redemption value on the last business day of the
Plan year. Participant loans are stated at their outstanding balance, which
approximates fair value.
RECLASSIFICATIONS
Certain amounts in the 2000 financial statements have been reclassified to
conform to the 2001 presentation.
7
Pactiv Hourly 401(k) Savings and Investment Plan
Notes to Financial Statements (continued)
3. INVESTMENTS
Investments that represent 5% or more of fair value of the Plan's net assets are
as follows:
2001 2000
-----------------------------
PIMCO Total Return Fund $ 1,518,543 $ --
Pactiv Corporation Common Stock* 17,125,364* 9,432,966
Fidelity Growth Company Fund 16,853,097 15,934,277
Fidelity Asset Manager Fund 4,278,349 --
Fidelity Diversified International Fund 1,666,653 --
Fidelity Retirement Money Market Portfolio 12,220,340 --
Spartan U.S. Equity Index Fund 5,074,585 --
Barclays Global Investors Equity Index Fund -- 6,015,612
INVESCO Total Return Fund -- 4,420,355
Putnam New Opportunities Fund -- 7,439,506
Bank of America Nations Cash Reserve -- 11,261,701
*Includes nonparticipant-directed investments
4. NONPARTICIPANT-DIRECTED INVESTMENTS
Information about the net assets relating to the nonparticipant-directed
investments is as follows as of December 31, 2001 and 2000:
2001 2000
---------------------------
Pactiv Corporation common stock $12,128,760 $ 6,523,368
Bankers Trust Pyramid Directed Account Cash -- 161,968
Fund
Company contributions receivable -- 118,774
Other -- 17,090
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Net assets $12,128,760 $ 6,821,200
=========== ===========
8
Pactiv Hourly 401(k) Savings and Investment Plan
Notes to Financial Statements (continued)
4. NONPARTICIPANT-DIRECTED INVESTMENTS (CONTINUED)
The significant components of the change in net assets relating to the
nonparticipant-directed investments for the year ended December 31, 2001, are as
follows:
2001
----------
Net realized and unrealized appreciation in
fair value of common stock $3,512,901
Company contributions 3,119,373
Benefit payments 1,021,485
5. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits per the
financial statements to the Form 5500 as of December 31, 2000:
2000
------------
Net assets available for benefits per the
financial statements $ 62,848,910
Less: Amounts allocated to withdrawing
participants (213,021)
------------
Net assets available for benefits per the
Form 5500 $ 62,635,889
============
6. FEDERAL INCOME TAXES
The Plan has received a determination letter from the Internal Revenue Service
dated March 20, 1998, stating that the Plan is qualified under Section 401(a) of
the Internal Revenue Code (Code) and, therefore, the related trust is exempt
from taxation. Subsequent to this issuance of the determination letter, the Plan
was amended. Once qualified, the Plan is required to operate in conformity with
the Code to maintain its qualification. The plan administrator believes the Plan
is being operated in compliance with the applicable requirements of the Code
and, therefore, believes that the Plan, as amended, is qualified and the related
trust is tax exempt.
9
Pactiv Hourly 401(k) Savings and Investment Plan
Notes to Financial Statements (continued)
7. PARTY-IN-INTEREST
The Plan invests in shares of Pactiv Corporation common stock. Pactiv
Corporation is the Plan's sponsor and, therefore, these transactions qualify as
party-in-interest transactions.
8. SUBSEQUENT EVENT
In 2002, participants are permitted to sell Company common stock, attributable
to Company matching contributions, and transfer their balance into other
investment options offered by the Plan. This became effective January 29, 2002,
for hourly nonunion participants, and April 1, 2002, for union participants.
10
Supplemental Schedules
EIN #36-2552989
Plan #034
Pactiv Hourly 401(k) Savings and Investment Plan
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2001
SHARES OR CURRENT
IDENTITY OF ISSUE DESCRIPTION OF ASSET FACE VALUE COST VALUE
- -----------------------------------------------------------------------------------------------------------
Fidelity Management
Trust Company PIMCO Total Return Fund 145,176 N/A $ 1,518,544
Morgan Stanley Institutional Fund -
Small Company Growth Portfolio 10,917 N/A 102,183
Davis New York Venture Fund 8,819 N/A 224,266
Pactiv Corporation Common Stock* 964,809 $15,607,275 17,125,366
Tenneco Automotive Common Stock
48,146 N/A 94,203
Fidelity Growth Fund* 316,668 N/A 16,853,097
Fidelity Asset Manager Fund* 276,022 N/A 4,278,349
Fidelity Low-Priced Stock Fund* 14,569 N/A 399,478
Fidelity Diversified International
Fund* 87,351 N/A 1,666,653
Spartan Extended Market Index Fund
2,231 N/A 52,865
Fidelity Retirement Money Market
Portfolio* 12,229,340 N/A 12,229,340
Spartan U.S. Equity Index Fund 124,867 N/A 5,074,585
Participant loans Interest rates
ranging from
6.75% to 10% 4,643,334
-----------
$64,262,263
===========
*Indicates party-in-interest to the Plan.
N/A - Participant-directed, cost not required.
11
EIN #36-2552989
Plan #034
Pactiv Hourly 401(k) Savings and Investment Plan
Schedule G, Part III - Schedule of Nonexempt Transactions
Year ended December 31, 2001
(b) RELATIONSHIP OF PLAN,
(a) IDENTITY OF EMPLOYER OR OTHER (c) DESCRIPTION OF (i) CURRENT VALUE
PLAN INVOLVED PARTY-IN-INTEREST TRANSACTIONS DATE OF ASSET
- -----------------------------------------------------------------------------------------------------------
Pactiv Corporation Plan sponsor Failure to timely remit $8,197 (represents
participant loan amount of participant
repayments for various loan repayments not
2001 pay periods. Lost remitted timely)
earnings were remitted
to the Plan and
allocated to
participants in April
2002.
$3,823 (represents
amount of interest for
lost earnings allocated
to participant accounts)
12
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: July 1, 2002 /s/ Henry M. Wells, III
--------------------------------
Henry M. Wells, III
Vice President and Chief Human Resources
Officer and Member of Pactiv Corporation
Benefits Committee