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, 2004
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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Pactiv 401(k) Savings and Investment Plan
Financial Statements and Supplemental Schedule
Year ended December 31, 2004
CONTENTS
Report of Independent Registered Public Accounting Firm............. 1
Financial Statements
Statements of Assets Available for Benefits......................... 2
Statements of Changes in Assets Available for Benefits.............. 3
Notes to Financial Statements....................................... 4
Supplemental Schedule
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)...... 7
Report of Independent Registered Public Accounting Firm
To the Pactiv Corporation Benefits Committee:
We have audited the accompanying statements of assets available for benefits of
the Pactiv 401(k) Savings and Investment Plan as of December 31, 2004, and 2003,
and the related statements of changes in assets available for benefits for the
years 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 audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (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. We were not engaged to perform an
audit of the Plan's internal control over financial reporting. Our audits
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Plan's
internal control over financial reporting. Accordingly, we express no such
opinion. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and 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 assets available for benefits of the Plan at December
31, 2004 and 2003, and the changes in assets available for benefits for the
years then ended, in conformity with U.S. generally accepted accounting
principles.
Our audits were performed for the purpose of 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, 2004, 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 audits of the basic
financial statements, and in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ Ernst & Young LLP
Chicago, Illinois
July 8th, 2005
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Pactiv 401(k) Savings and Investment Plan
Statements of Assets Available for Benefits
DECEMBER 31,
2004 2003
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ASSETS
Investments, at fair value:
Common stock $ 65,213,153 $ 67,630,422
Registered investment companies 121,416,269 100,014,376
Money market funds 26,610,862 29,352,865
Participant loans 2,963,712 3,330,359
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Total investments 216,203,996 200,328,022
Receivables:
Employer contribution 249,785 300,000
Net receivable for pending trades 169,880 32,976
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Total receivables 419,665 332,976
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Assets available for benefits $216,623,661 $200,660,998
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See notes to financial statements.
2
Pactiv 401(k) Savings and Investment Plan
Statements of Changes in Assets Available for Benefits
Year ended December 31,
2004 2003
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ADDITIONS
Dividends and interest income $ 2,523,867 $ 1,541,739
Net appreciation in fair value of investments:
Common stock 4,289,493 6,082,881
Registered investment companies 11,110,328 21,895,865
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Total net appreciation in fair value of investments 15,399,821 27,978,746
Contributions:
Participant 11,088,720 11,241,769
Employer 7,471,642 9,075,314
Rollover 1,341,934 820,175
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Total 19,902,296 21,137,258
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Total additions 37,825,984 50,657,743
DEDUCTIONS
Benefit payments 21,816,355 11,241,572
Administrative expenses 46,966 38,702
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Total deductions 21,863,321 11,280,274
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Net increase 15,962,663 39,377,469
Assets available for benefits, beginning or year 200,660,998 161,283,529
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Assets available for benefits, end of year $216,623,661 $200,660,998
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See notes to financial statements.
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Pactiv 401(k) Savings and Investment Plan
Notes to Financial Statements
December 31, 2004 and 2003
1. DESCRIPTION OF PLAN
The following description of the Pactiv 401(k) Savings and Investment Plan (the
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.
ELIGIBILITY AND CONTRIBUTIONS
Employees are eligible to enter the Plan 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.
Participants may make contributions by payroll deduction of 1% up to 25% (16%
prior to January 1, 2004) of compensation as defined in the Plan, with such
contributions limited to $13,000 for 2004 and $12,000 for 2003 (or $16,000 in
2004 and $14,000 in 2003 for participants who are eligible to make catch-up
contributions). Except as provided below, the Company makes matching
contributions equal to 100% of participants' contributions based on years of
participation in the Plan as follows:
January 1, 2003 through August 31, 2004
MAXIMUM MATCH AS A PERCENTAGE
YEARS OF PARTICIPATION OF ELIGIBLE COMPENSATION
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Less than 2.5 4 %
2.5 to less than 3 5
3 to less than 4.25 6
4.25 or more 8
Effective September 1, 2004
MAXIMUM MATCH AS A PERCENTAGE
YEARS OF PARTICIPATION OF ELIGIBLE COMPENSATION
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Less than 2.5 4 %
2.5 to less than 3.75 5
3 to less than 7 6
7 or more 8
For the 2004 Plan years, certain employees were eligible for matching
contributions as follows: at least 7 years of participation no more than 5.33%
of compensation, less than 7 years of participation no more that 4% of
compensation.
Effective January 1, 2003, certain participants received Company matching
contributions of 100% of the first 3%, and 50% of the next 2% of contributions
made to the Plan. This applied to employees that are hired, rehired, or
transferred into a salaried position on or after January 1, 2003, and employees
who were not participants in the Plan on December 31, 2002 (or on January 31,
2003 if hired in November of 2002 or on February 28, 2003 if hired in December
2002).
Company matching contributions can be made in the form of Pactiv Corporation
common stock or cash. In 2004 and 2003, $7,474,642 and $9,075,314, respectively,
of Company matching contributions were made in shares of Company stock.
Prior to January 29, 2002, Company matching contributions made in the form of
Pactiv Corporation common stock could not be sold until participants reached age
55 or terminated employment and requested a total distribution. Effective
January 29, 2002, participants are permitted to sell Pactiv Corporation common
stock attributable to Company matching contributions and transfer related
amounts into other investment options offered by the Plan.
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INVESTMENT OPTIONS
Participants have the right upon enrollment to select the funds offered by the
Plan in which the balance in their accounts will be invested.
VESTING
Participants are always 100% vested in their entire account balances.
PAYMENT OF BENEFITS
Upon retirement or other termination of employment, a participant may receive
his vested account balance as a lump-sum distribution. Participants with
balances of $5,000 or less are paid an automatic lump sum distribution as soon
as administratively feasible after termination of employment or retirement. 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 participant pre-tax
contributions. A participant who has attained age 59 1/2 may elect to make an
in-service withdrawal of all or a portion of his account balance. A participant
may elect at any time to make an in-service withdrawal of the balance in his
rollover contributions account. A participant who has not attained age 55 may
request an in-service withdrawal of his 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 from their account with a term not to exceed 4 1/2 years.
Participants may have only one loan outstanding at any time and 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 previous 12
months, or 50% of their vested account balances. The interest rate charged is
the Federal Reserve's prime rate (posted in the Federal Reserve's release) as in
effect as of the end of the month prior to the month in which the loan is
requested. Principal and interest are paid through payroll deductions or manual
loan payments if a participant is on an unpaid leave of absence
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.
2. SUMMARY OF ACCOUNTING POLICIES
BASIS OF ACCOUNTING
Financial statements of the Plan are prepared using the accrual basis of
accounting.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's and the Company's
contributions, and an 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 balance in his account.
5
EXPENSES
Substantially all Plan administrative expenses are paid by the Plan, including
recordkeeping and trustee fees.
USE OF ESTIMATES
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to use estimates and
assumptions. Actual results could differ from such estimates.
INVESTMENT VALUATION
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 common stock is determined using quoted market
prices. Participant loans are stated at their outstanding balance, which
approximates fair value.
3. RISKS AND UNCERTAINTIES
The Plan invests in various investment securities. Investment securities are
exposed to various risks such as interest rate, market and credit risks. Due to
the level of risk associated with certain investment securities, it is at least
reasonably possible that changes in the values of investment securities will
occur in the near term and that such changes could materially affect
participants' account balances and the amounts reported in the statements of
assets available for benefits.
4. INVESTMENTS
Investments that represented 5% or more of fair value of the Plan's net assets
were as follows:
2004 2003
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Pactiv Corporation Common Stock $63,559,005 $66,835,218
Fidelity Growth Company Fund 44,938,330 42,829,173
Fidelity Retirement Money Market Portfolio 26,610,862 29,352,865
Spartan U.S. Equity Index Fund 19,367,943 17,117,527
Fidelity Low Priced Stock Funds 15,374,028 **
Fidelity Diversified International 10,336,539 **
** Below 5% threshold
5. INCOME TAX STATUS
The Plan received a determination letter from the Internal Revenue Service dated
November 19, 2002, 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 the 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 sponsor has indicated that it
will take the necessary steps, if any, to bring the Plan's operations into
compliance with the Code.
6. PARTY-IN-INTEREST
The Plan invests in Pactiv Corporation common stock. Pactiv Corporation is the
Plan's sponsor and, therefore, such investments are party-in-interest
transactions. Fidelity Management Trust Company is the trustee of the Plan and,
therefore, Plan investments in various Fidelity-sponsored funds are considered
party-in-interest transactions.
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Pactiv 401(k) Savings and Investment Plan
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2004
NO. OF
SHARES OR CURRENT
IDENTITY OF ISSUER DESCRIPTION OF ASSET UNITS VALUE
- -----------------------------------------------------------------------------------------------------
Fidelity Management
Trust Company PIMCO Total Return Fund 903,894 $ 9,644,556
Morgan Stanley Institutional Fund -
Small Company Growth Portfolio 350,876 4,217,527
Davis New York Davis New York Venture Fund 191,272 5,870,127
Pactiv Corporation Pactiv Corporation Common Stock* 2,513,207 63,559,005
Tenneco Automotive Tenneco Automotive Common Stock 31,955 1,654,148
Fidelity Management Fidelity Growth Company Fund* 801,468 44,938,330
Trust Company Fidelity Asset Manager Fund* 484,680 7,856,660
Fidelity Low-Priced Stock Fund* 381,963 15,374,028
Fidelity Diversified International 360,913 10,336,539
Fidelity Freedom Income* 1,591 17,925
Fidelity Freedom 2000* 8,269 99,891
Fidelity Freedom 2010* 39,881 543,176
Fidelity Freedom 2020* 31,957 446,122
Fidelity Freedom 2030* 3,251 45,774
Fidelity Freedom 2040* 21,147 174,889
Fidelity Freedom 2005* 9,300 100,438
Fidelity Freedom 2015* 29,764 328,896
Fidelity Freedom 2025* 15,085 170,161
Fidelity Freedom 2035* 182,784 182,784
Spartan Extended Market Index Fund* 53,174 1,700,503
Fidelity Retirement Money Market
Portfolio* 26,610,862 26,610,862
Spartan U.S. Equity Index Fund* 451,889 19,367,943
Participant loans* Interest rates
ranging from
4% to 10% 2,963,712
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$ 216,203,996
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*Indicates party-in-interest to the Plan.
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SIGNATURES
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of
1934, the Pactiv Corporation Benefits Committee has 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 13th, 2005 /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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