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, 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 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 401(k) Savings and Investment Plan, known prior to
January 1, 2001, as the Pactiv Corporation Thrift Plan, 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
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 Schedule
Pactiv 401(k) Savings and Investment Plan
Year ended December 31, 2001
with Report of Independent Auditors
Employer Identification #36-2552989
Plan #033
Pactiv 401(k) Savings and Investment Plan
Financial Statements and Supplemental Schedule
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 Schedule
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)................10
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 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 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 forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedule of
assets (held at end of year) as of December 31, 2001, is presented for purposes
of additional analysis and is not a required part of the basic financial
statements but is 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. This supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule has 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
Chicago, Illinois
June 3, 2002
EIN 36-2552989
Plan #033
Pactiv 401(k) Savings and Investment Plan
Statements of Net Assets Available for Benefits
DECEMBER 31
2001 2000
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ASSETS
Investments, at fair value:
Common stock $ 47,373,968 $ 29,438,778
Common collective trust funds -- 23,858,360
Registered investment companies 79,648,817 77,103,373
Money market funds 31,041,335 36,224,619
Participant loans 2,897,146 2,964,925
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Total investments 160,961,266 169,590,055
Receivables:
Participant contributions 1,280 344,487
Employer contribution 271,317 290,079
Accrued interest and dividends -- 185,277
Due from broker -- 411,154
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Total receivables 272,597 1,230,997
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Total assets 161,233,863 170,821,052
LIABILITIES
Due to broker -- 205,812
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Total liabilities -- 205,812
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Net assets available for benefits $161,233,863 $170,615,240
==============================
See accompanying notes to financial statements.
2
EIN 36-2552989
Plan #033
Pactiv 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 $ 2,226,546
Net realized and unrealized appreciation (depreciation)
in fair value of investments:
Common stock 13,225,194
Collective trust funds (1,236,962)
Registered investment companies (18,243,026)
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Total net realized and unrealized depreciation in
fair value of investments
(6,254,794)
Contributions:
Participant 9,973,167
Employer 7,077,230
Rollover 607,776
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Total 17,658,172
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Total additions 13,629,925
DEDUCTIONS
Benefit payments 22,874,587
Administrative expenses 136,715
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Total deductions 23,011,302
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Net decrease (9,381,377)
Net assets available for benefits, beginning or year 170,615,240
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Net assets available for benefits, end of year $ 161,233,863
=============
See accompanying notes.
3
EIN 36-2552989
Plan #033
Pactiv 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 401(k) Savings and Investment Plan (the
Plan), known prior to January l, 2001, as the Pactiv Corporation Thrift Plan,
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 $246,882,331 were transferred to
plans sponsored by Tenneco Automotive Inc. and Packaging Corporation of America.
In December 2000, the Company 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 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 full calendar month of service.
Employees are eligible for the Company contributions after completing one year
of service. Prior to January 1, 2001, employees were generally eligible to
participate in the Plan the first day of the month following the completion of
one year of service.
4
Pactiv 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% (4% prior to
January 1, 2001) up to 16% (8% prior to January 1, 2001) of compensation as
defined in the Plan, with such contributions limited to $10,500 for 2001 and
2000. The Company makes matching contributions as follows:
Participants receive matching contributions equal to 100% of participants'
contributions based on years of participation in the Plan as follows:
Maximum Match as a Percentage
Years of Participation of Eligible Compensation
-------------------------- ------------------------------
Less than 3 4%
3 to less than 5 5
5 to less than 7 6
7 or more 8
Company matching contributions are invested in Pactiv Corporation common stock.
Company matching contributions and the related earnings made after January 1,
1993, 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 Company
matching contributions, will be invested.
VESTING
Participants are always 100% vested in their entire account balances.
5
Pactiv 401(k) Savings and Investment Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF PLAN (CONTINUED)
PAYMENT OF BENEFITS
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. 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 such
withdrawal may not exceed the participant's account balance reduced by the
portion of the account balance attributable to salary deferral contributions. A
participant who has attained age 59 1/2 may elect to make an in-service
withdrawal of all or any portion of his account balance. A participant may elect
at any time to make an in-service withdrawal of the balance of his rollover
contributions account. A participant who has not attained age 55 may request an
in-service withdrawal of his employee contributions made prior to April 1, 1984,
and any Company matching contributions credited to his account prior to January
1, 1993.
PARTICIPANT LOANS
Active participants who have not had a loan during the previous three months may
obtain a loan with a term not to exceed 54 months from his account. The borrower
may have only one loan outstanding at any time, and the amount of the loan may
not be less than $1,000 and shall not exceed the lesser of (a) $50,000 or (b)
one-half the borrower's account balance. The loan interest rate is equal to The
Wall Street Journal prime rate. Loan principal and interest repayments are made
through payroll deductions.
PLAN TERMINATION
Although it has not expressed any 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.
ADMINISTRATION
The Plan is currently administered by the Pactiv Corporation Benefits Committee
(the Committee).
6
Pactiv 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.
PARTICIPANT ACCOUNTS
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 by the Plan. 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 shares 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
3. INVESTMENTS
Investments that represent 5% or more of fair value of the Plan's net assets are
as follows:
2001 2000
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Pactiv Corporation Common Stock* $47,014,374 $28,801,162
Fidelity Growth Company Fund 43,743,968 45,671,609
Fidelity Retirement Money Market Portfolio 31,041,335 --
Spartan U.S. Equity Index Fund 16,354,618 --
Barclays Global Investors Equity Index Fund -- 20,864,003
Putnam New Opportunities Fund -- 20,562,296
Bank of America Nations Cash Reserve -- 34,056,664
*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 $ 34,213,501 $ 19,530,068
Bankers Trust Pyramid Directed Account Cash Fund -- 502,431
Company contributions receivable 271,317 290,079
Other -- (40,810)
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Net assets $ 34,484,818 $ 20,281,768
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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, 2001, is as
follows:
2001
--------
Net realized and unrealized appreciation in
fair value of common stock $8,689,941
Company contributions 7,077,230
Benefit payments (3,062,744)
8
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 $170,615,240
Less: Amounts allocated to withdrawing participants (1,158,539)
------------------
Net assets available for benefits per the
Form 5500 $169,456,701
==================
6. FEDERAL INCOME TAXES
The Plan has received a determination letter from the Internal Revenue Service
dated August 19, 1996, 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 and restated. 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.
7. PARTY-IN-INTEREST
The Plan invests in Pactiv Corporation common stock. Pactiv Corporation is the
Plan's sponsor and, therefore, these transactions qualify as party-in-interest
transactions.
8. SUBSEQUENT EVENT
Effective January 29, 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.
9
Supplemental Schedule
EIN 36-2552989
Plan #033
Pactiv 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 569,929 N/A $ 5,961,462
Morgan Stanley Institutional Fund -
Small Company Growth Portfolio 81,592 N/A 763,699
Davis New York Venture Fund 53,126 N/A 1,350,997
Pactiv Corporation Common Stock* 2,648,697 $49,391,998 47,014,374
Tenneco Automotive Common Stock 167,240 N/A 359,594
Fidelity Growth Company Fund* 821,946 N/A 43,743,968
Fidelity Asset Manager Fund* 357,255 N/A 5,537,459
Fidelity Low-Priced Stock Fund* 72,237 N/A 1,980,743
Fidelity Diversified International
Fund* 204,985 N/A 3,911,121
Spartan Extended Market Index Fund 1,888 N/A 44,750
Fidelity Retirement Money Market
Portfolio* 31,041,335 N/A 31,041,335
Spartan U.S. Equity Index Fund 402,427 N/A 16,354,618
Participant loans Interest
rates
ranging
from 6.75% - 2,897,146
to 10%
-----------------
$160,961,266
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*Indicates party-in-interest to the Plan.
N/A - Participant-directed, cost not required.
10
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 401(k) SAVINGS AND INVESTMENT PLAN
Date: July 1, 2002 /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