Attached files
file | filename |
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EX-31.1 - EX-31.1 - PACTIV CORP | c58124exv31w1.htm |
EX-32.2 - EX-32.2 - PACTIV CORP | c58124exv32w2.htm |
EX-31.2 - EX-31.2 - PACTIV CORP | c58124exv31w2.htm |
EX-32.1 - EX-32.1 - PACTIV CORP | c58124exv32w1.htm |
EXCEL - IDEA: XBRL DOCUMENT - PACTIV CORP | Financial_Report.xls |
Table of Contents
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
WASHINGTON, D.C. 20549
FORM 10-Q
(mark one) | ||
þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the Quarterly Period Ended June 30,
2010
|
||
OR
|
||
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number
1-15157
PACTIV
CORPORATION
(Exact name of registrant as specified in its charter)
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization) |
36-2552989 (I.R.S. Employer Identification No.) |
1900 West Field Court Lake Forest, Illinois |
60045 (Zip Code) |
|
(Address of principal executive
offices)
|
Registrants 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
12 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
90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of
Regulation S-T
(§ 232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant
was required to submit and post such
files). Yes þ No o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in
Rule 12b-2
of the Exchange Act. (Check one):
Large accelerated filer þ
|
Accelerated filer o |
Non-accelerated filer o (Do not check if a smaller reporting company) |
Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company
(as defined in
Rule 12b-2
of the Exchange
Act). Yes o No þ
Indicate the number of shares outstanding of each of the
issuers classes of common stock as of the latest
practicable date: Common stock, par value $0.01 per share:
132,985,860 as of July 31, 2010. (See Notes to Financial
Statements.)
TABLE OF
CONTENTS
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EX-31.1 | ||||||||
EX-31.2 | ||||||||
EX-32.1 | ||||||||
EX-32.2 | ||||||||
EX-101 INSTANCE DOCUMENT | ||||||||
EX-101 SCHEMA DOCUMENT | ||||||||
EX-101 CALCULATION LINKBASE DOCUMENT | ||||||||
EX-101 LABELS LINKBASE DOCUMENT | ||||||||
EX-101 PRESENTATION LINKBASE DOCUMENT | ||||||||
EX-101 DEFINITION LINKBASE DOCUMENT |
* | No response to this item is included herein because either it is inapplicable or there is nothing to report. |
2
Table of Contents
PART I
FINANCIAL INFORMATION
ITEM 1. | Financial Statements (Unaudited) |
Consolidated
Statement of Income
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(In millions, except share and per share data) | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Sales
|
$ | 973 | $ | 901 | $ | 1,750 | $ | 1,667 | ||||||||
Costs and expenses
|
||||||||||||||||
Cost of sales, excluding depreciation and amortization
|
699 | 601 | 1,259 | 1,096 | ||||||||||||
Selling, general, and administrative
|
83 | 100 | 152 | 180 | ||||||||||||
Depreciation and amortization
|
50 | 46 | 96 | 92 | ||||||||||||
Other
|
| 1 | | 1 | ||||||||||||
832 | 748 | 1,507 | 1,369 | |||||||||||||
Operating income
|
141 | 153 | 243 | 298 | ||||||||||||
Other income (expense)
|
||||||||||||||||
Interest income
|
| 1 | | 1 | ||||||||||||
Interest expense, net of interest capitalized
|
(25 | ) | (24 | ) | (49 | ) | (47 | ) | ||||||||
Income before income taxes
|
116 | 130 | 194 | 252 | ||||||||||||
Income tax expense
|
41 | 49 | 71 | 94 | ||||||||||||
Income from continuing operations
|
75 | 81 | 123 | 158 | ||||||||||||
Discontinued operations, net of tax
|
| (1 | ) | | (1 | ) | ||||||||||
Net income and net income attributable to Pactiv
|
$ | 75 | $ | 80 | $ | 123 | $ | 157 | ||||||||
Earnings per share
|
||||||||||||||||
Weighted-average number of shares of common stock outstanding
|
||||||||||||||||
Basic
|
132,913,791 | 131,931,203 | 132,725,826 | 131,808,513 | ||||||||||||
Diluted
|
134,083,053 | 132,472,333 | 133,932,653 | 132,441,477 | ||||||||||||
Basic earnings per share of common stock attributable to Pactiv
common shareholders
|
||||||||||||||||
Continuing operations
|
$ | 0.57 | $ | 0.61 | $ | 0.93 | $ | 1.19 | ||||||||
Discontinued operations
|
| (0.01 | ) | | (0.01 | ) | ||||||||||
Total
|
$ | 0.57 | $ | 0.60 | $ | 0.93 | $ | 1.18 | ||||||||
Diluted earnings per share of common stock attributable to
Pactiv common shareholders
|
||||||||||||||||
Continuing operations
|
$ | 0.56 | $ | 0.61 | $ | 0.92 | $ | 1.19 | ||||||||
Discontinued operations
|
| (0.01 | ) | | (0.01 | ) | ||||||||||
Total
|
$ | 0.56 | $ | 0.60 | $ | 0.92 | $ | 1.18 | ||||||||
The accompanying notes to the financial statements are an
integral part of this statement.
3
Table of Contents
Condensed
Consolidated Statement of Financial Position
June 30, |
December 31, |
|||||||
(In millions, except share data) | 2010 | 2009 | ||||||
Assets
|
||||||||
Current assets
|
||||||||
Cash and temporary cash investments
|
$ | 43 | $ | 46 | ||||
Accounts and notes receivable
|
||||||||
Trade, less allowances of $5 and $6 at the respective dates,
including $446 of trade held by variable interest entity (Pactiv
RSA) at June 30, 2010, and $228 of retained interest in
trade receivable securitization (Pactiv RSA) at
December 31, 2009
|
485 | 277 | ||||||
Other
|
27 | 51 | ||||||
Total accounts and notes receivable
|
512 | 328 | ||||||
Inventories
|
||||||||
Finished goods
|
290 | 240 | ||||||
Work in process
|
51 | 39 | ||||||
Raw materials
|
90 | 63 | ||||||
Other materials and supplies
|
58 | 48 | ||||||
Total inventories
|
489 | 390 | ||||||
Deferred income tax assets
|
19 | 53 | ||||||
Other
|
17 | 15 | ||||||
Total current assets
|
1,080 | 832 | ||||||
Property, plant, and equipment, net
|
1,237 | 1,172 | ||||||
Other assets
|
||||||||
Goodwill
|
1,232 | 1,135 | ||||||
Intangible assets, net
|
375 | 372 | ||||||
Other
|
58 | 63 | ||||||
Total other assets
|
1,665 | 1,570 | ||||||
Total assets
|
$ | 3,982 | $ | 3,574 | ||||
Liabilities and equity
|
||||||||
Current liabilities
|
||||||||
Short-term debt of variable interest entity (Pactiv RSA) and
current maturities of long-term debt
|
$ | 255 | $ | 5 | ||||
Accounts payable
|
196 | 144 | ||||||
Taxes accrued
|
30 | 24 | ||||||
Interest accrued
|
21 | 20 | ||||||
Accrued promotions, rebates, and discounts
|
75 | 73 | ||||||
Accrued payroll and benefits
|
60 | 97 | ||||||
Other
|
53 | 54 | ||||||
Total current liabilities
|
690 | 417 | ||||||
Long-term debt
|
1,270 | 1,270 | ||||||
Deferred income taxes
|
91 | 61 | ||||||
Pension and postretirement benefits
|
629 | 694 | ||||||
Other
|
156 | 131 | ||||||
Pactiv shareholders equity
|
||||||||
Common stock $0.01 par value,
350,000,000 shares authorized, 132,968,786 and
132,334,417 shares issued and outstanding, after deducting
38,814,391 and 39,448,760 shares held in treasury, at the
respective dates
|
1 | 1 | ||||||
Premium on common stock and other capital surplus
|
735 | 729 | ||||||
Accumulated other comprehensive income (loss)
|
||||||||
Currency translation adjustment
|
(8 | ) | (3 | ) | ||||
Pension and postretirement plans
|
(1,706 | ) | (1,729 | ) | ||||
Gain (loss) on derivatives
|
6 | 6 | ||||||
Retained earnings
|
2,104 | 1,981 | ||||||
Total Pactiv shareholders equity
|
1,132 | 985 | ||||||
Noncontrolling interest
|
14 | 16 | ||||||
Total equity
|
1,146 | 1,001 | ||||||
Total liabilities and equity
|
$ | 3,982 | $ | 3,574 | ||||
The accompanying notes to the financial statements are an
integral part of this statement.
4
Table of Contents
Condensed
Consolidated Statement of Cash Flows
For the six months ended June 30 (In millions) | 2010 | 2009 | ||||||
Operating activities
|
||||||||
Net income
|
$ | 123 | $ | 157 | ||||
Discontinued operations
|
| 1 | ||||||
Income from continuing operations
|
123 | 158 | ||||||
Adjustments to reconcile income from continuing operations to
cash provided (used) by operating activities:
|
||||||||
Depreciation and amortization
|
96 | 92 | ||||||
Deferred income taxes
|
16 | 34 | ||||||
Restructuring and other
|
| (1 | ) | |||||
Pension income
|
(24 | ) | (17 | ) | ||||
Noncash compensation expense
|
9 | 10 | ||||||
Net working capital
|
(106 | ) | 139 | |||||
Pension contributions
|
| (200 | ) | |||||
Other
|
5 | | ||||||
Cash provided (used) by operating activities
|
$ | 119 | $ | 215 | ||||
Investing activities
|
||||||||
Expenditures for property, plant, and equipment
|
$ | (65 | ) | $ | (49 | ) | ||
Acquisitions of businesses and assets
|
(200 | ) | (20 | ) | ||||
Other investing activities
|
2 | 1 | ||||||
Cash provided (used) by investing activities
|
$ | (263 | ) | $ | (68 | ) | ||
Financing activities
|
||||||||
Issuance of common stock
|
$ | 2 | $ | 1 | ||||
Revolving credit facility borrowings
|
160 | | ||||||
Revolving credit facility payment
|
(40 | ) | | |||||
Asset securitization borrowings
|
20 | | ||||||
Dividends paid to noncontrolling interest
|
(2 | ) | | |||||
Other
|
2 | (1 | ) | |||||
Cash provided (used) by financing activities
|
$ | 142 | $ | | ||||
Effect of foreign exchange rate changes on cash and temporary
cash investments
|
(1 | ) | | |||||
Increase (decrease) in cash and temporary cash investments
|
(3 | ) | 147 | |||||
Cash and temporary cash investments, January 1
|
46 | 80 | ||||||
Cash and temporary cash investments, June 30
|
$ | 43 | $ | 227 | ||||
The accompanying notes to the financial statements are an
integral part of this statement.
5
Table of Contents
Consolidated
Statement of Changes in Equity
Pactiv Shareholders | ||||||||||||||||||||||||
Premium on |
||||||||||||||||||||||||
common stock |
Accumulated |
|||||||||||||||||||||||
and other |
other |
|||||||||||||||||||||||
Common |
capital |
Retained |
comprehensive |
Noncontrolling |
Total |
|||||||||||||||||||
(In millions, except share data) | stock | surplus | earnings | income (loss) | interest | equity | ||||||||||||||||||
Six months ended June 30, 2010
|
||||||||||||||||||||||||
Balance, December 31, 2009
|
$ | 1 | $ | 729 | $ | 1,981 | $ | (1,726 | ) | $ | 16 | $ | 1,001 | |||||||||||
Premium on common stock issued (631,429 shares)
|
14 | 14 | ||||||||||||||||||||||
Translation of foreign currency statements
|
(5 | ) | (5 | ) | ||||||||||||||||||||
Stock-based compensation
|
(8 | ) | (8 | ) | ||||||||||||||||||||
Change in pension and postretirement plan funded status, net of
tax of $17
|
23 | 23 | ||||||||||||||||||||||
Dividends to noncontrolling interest
|
(2 | ) | (2 | ) | ||||||||||||||||||||
Net income
|
123 | | 123 | |||||||||||||||||||||
Balance, June 30, 2010
|
$ | 1 | $ | 735 | $ | 2,104 | $ | (1,708 | ) | $ | 14 | $ | 1,146 | |||||||||||
Six months ended June 30, 2009
|
||||||||||||||||||||||||
Balance, December 31, 2008
|
$ | 1 | $ | 710 | $ | 1,658 | $ | (1,698 | ) | $ | 16 | $ | 687 | |||||||||||
Premium on common stock issued (435,684 shares)
|
12 | 12 | ||||||||||||||||||||||
Translation of foreign currency statements
|
6 | | 6 | |||||||||||||||||||||
Stock-based compensation
|
(6 | ) | (6 | ) | ||||||||||||||||||||
Change in pension and postretirement plan funded status, net of
tax of $9
|
15 | 15 | ||||||||||||||||||||||
Net income
|
157 | | 157 | |||||||||||||||||||||
Balance, June 30, 2009
|
$ | 1 | $ | 716 | $ | 1,815 | $ | (1,677 | ) | $ | 16 | $ | 871 | |||||||||||
The accompanying notes to the financial statements are an
integral part of this statement.
6
Table of Contents
Consolidated
Statement of Comprehensive Income (Loss)
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(In millions) | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Net income
|
$ | 75 | $ | 80 | $ | 123 | $ | 157 | ||||||||
Other comprehensive income (loss)
|
||||||||||||||||
Pension and postretirement plans
|
12 | 7 | 23 | 15 | ||||||||||||
Net currency translation gain (loss)
|
(9 | ) | 16 | (5 | ) | 6 | ||||||||||
Total other comprehensive income (loss)
|
3 | 23 | 18 | 21 | ||||||||||||
Consolidated comprehensive income (loss)
|
78 | 103 | 141 | 178 | ||||||||||||
Comprehensive income (loss) attributable to the noncontrolling
interest
|
| | | | ||||||||||||
Comprehensive income (loss) attributable to Pactiv
|
$ | 78 | $ | 103 | $ | 141 | $ | 178 | ||||||||
The accompanying notes to the financial statements are an
integral part of this statement.
7
Table of Contents
Notes to
Financial Statements (Unaudited)
Note 1. | Basis of Presentation |
The consolidated statement of income for the three- and
six-month periods ended June 30, 2010, and 2009, the
condensed consolidated statement of financial position at
June 30, 2010, the condensed consolidated statement of cash
flows for the six-month period ended June 30, 2010, and
2009, the consolidated statement of changes in equity for the
six-month period ended June 30, 2010, and 2009, and the
consolidated statement of comprehensive income (loss) for the
three- and six-month periods ended June 30, 2010, and 2009
are unaudited. In our opinion, the accompanying financial
statements contain all normal recurring adjustments necessary to
present fairly the results of operations, financial position,
and cash flows for the periods and at the dates indicated. These
statements have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission (SEC).
They do not include all of the information and footnotes
required by generally accepted accounting principles.
Accordingly, these statements should be read in conjunction with
Pactivs
Form 10-K
for the year ended December 31, 2009, which may be found at
www.pactiv.com, under the Investor Relations link, in the
subsection entitled SEC Filings, or a free copy may
be obtained by contacting Investor Relations at
(866) 456-5439.
Certain reclassifications have been made to the prior year
financial information to conform with the current year
presentation.
On April 1, 2010, we purchased PWP Holdings, Inc. and PWP
Industries (PWP) for $200 million. PWP Industries
manufactures and sells amorphous polyethylene terephthalate
(APET) products in the foodservice market. The purchase price
was funded by borrowing $160 million on our revolving
credit facility, adding $20 million to the asset
securitization program, and utilizing $20 million in cash
reserves. The results of this business have been included in the
consolidated financial statements as of that date.
On January 5, 2009, we purchased the polypropylene cup
business of WinCup for $20 million. This business operates
one manufacturing facility in North Carolina. The results of
this business have been included in the consolidated financial
statements as of that date.
We have three reporting segments:
| Consumer Products manufactures disposable plastic, foam, molded fiber, pressed paperboard, and aluminum packaging products, and sells them to customers such as grocery stores, mass merchandisers, and discount chains. Products include waste bags, food storage bags, and disposable tableware and cookware. We sell many of our consumer products under well-known trademarks, such as Hefty®. | |
| Foodservice/Food Packaging manufactures foam, clear plastic, aluminum, pressed paperboard, and molded fiber packaging products, and sells them to customers in the food distribution channel, who prepare and process food for consumption. Customers include foodservice distributors, restaurants, other institutional foodservice outlets, food processors, and grocery chains. | |
| Other includes corporate and administrative service operations and retiree benefit income and expense. |
The accounting policies of the reporting segments are the same
as those for Pactiv as a whole. Where discrete financial
information is not available by segment, reasonable allocations
of expenses and assets/liabilities are used.
Subsequent
Events
We have evaluated subsequent events through the filing date of
this
Form 10-Q,
and have determined that there were no other subsequent events
to recognize or disclose in these financial statements.
Note 2. | Summary of Accounting Policies |
For a complete discussion of our accounting policies, refer to
Pactivs most recent filing on
Form 10-K.
8
Table of Contents
Changes
in Accounting Principles
The Financial Accounting Standards Board (FASB) issued updates
to Accounting Standards Codification (ASC)
860-10
Transfers and Servicing, which were effective for
interim and annual periods beginning after November 15,
2009. The updated provisions require additional information
about transfers of financial assets and where companies have
continuing exposure to the risk related to transferred financial
assets, eliminates the concept of a qualifying special purpose
entity, changes the requirements for derecognition of financial
assets, and requires additional disclosures.
ASC 860-10
was effective on January 1, 2010. See Accounts and
Notes Receivables below and Note 5 for additional
details.
The FASB issued updates to
ASC 810-10
Consolidation, which were effective for interim and
annual periods beginning after November 15, 2009. These
updated provisions require an enterprise to perform an analysis
to determine whether the enterprises variable interest or
interests give it a controlling financial interest in a variable
interest entity, require ongoing reassessments of whether an
enterprise is the primary beneficiary of a variable interest
entity, and eliminate the quantitative approach previously
required for determining the primary beneficiary of a variable
interest entity. In addition, the provisions include an
additional reconsideration event for determining whether an
entity is a variable interest entity when any changes in facts
and circumstances occur such that holders of the equity
investment at risk, as a group, lose the power from voting
rights or similar rights of those investments to direct the
activities of the entity that most significantly impact the
entitys economic performance. Lastly, the provisions
require enhanced disclosures that will provide users of
financial statements with more transparent information about an
enterprises involvement in a variable interest entity.
ASC 860-10
was effective on January 1, 2010. See Accounts and
Notes Receivables below and Note 5 for additional
details.
Accounts
and Notes Receivable
We have an asset securitization agreement under which certain of
our accounts receivable are sold to our variable interest entity
(VIE), Pactiv RSA. Under the accounting principles in effect
prior to 2010, Pactiv RSA was not consolidated with our
financial statements. In accordance with updated provisions
within
ASC 810-10
and 860-10,
which we adopted January 1, 2010, Pactiv RSA was included
in the consolidated financial statements as of that date.
Pactiv RSA held $446 million of receivables at
June 30, 2010, securing $130 million of short-term
debt borrowed from various financial institutions that hold
interests in the VIE on a pro-rata basis equal to their shares
of the total loan. The collection of these receivables is used
first to repay the loans. Any remaining amounts collected are
retained by Pactiv RSA. If the collection of the receivables is
insufficient to repay the loans, the lenders do not have
recourse to Pactiv. We maintain an allowance for doubtful
accounts for any potential uncollectable amounts after the loans
are repaid. At December 31, 2009, under the prior
accounting principles, securitized receivables totaling
$110 million were recorded as a reduction to accounts and
notes receivable and no debt was recorded.
Note 3. | Business Combination |
On April 1, 2010, we purchased PWP Holdings, Inc. and PWP
Industries for $200 million. The results of this business
have been included in the consolidated financial statements as
of that date.
The total cost of the acquisition was allocated to the assets
acquired and the liabilities assumed based on their respective
fair values. Allocations were based on preliminary estimates of
the fair market value of assets and liabilities, which are
subject to revision based on receipt of final appraisals.
Goodwill and other intangible assets recorded in connection with
the acquisition totaled $97 million and $15 million,
respectively. Recorded intangible assets pertaining to customer
relationships and non-compete agreements are being amortized
over a
15-year
period.
9
Table of Contents
The following table summarizes the preliminary estimated fair
values of the assets acquired and liabilities assumed as of the
acquisition date.
(In millions) | ||||
Current assets
|
$ | 40 | ||
Property, plant, and equipment
|
70 | |||
Intangible assets
|
15 | |||
Goodwill
|
97 | |||
Total assets acquired
|
222 | |||
Current liabilities
|
18 | |||
Long-term liabilities
|
4 | |||
Total liabilities assumed
|
22 | |||
Net assets acquired
|
$ | 200 | ||
Note 4. | Discontinued Operations |
On October 12, 2005, we completed the sale of most of our
protective and flexible packaging businesses. The results of the
sold business, as well as costs and charges associated with the
transaction, are classified as discontinued operations.
Non-current liabilities related to discontinued operations
totaled $11 million at June 30, 2010, and at
December 31, 2009.
Note 5. | Debt and Financing Arrangements |
Short-Term
Debt
We have a revolving credit facility, and borrowings under this
facility totaled $120 million at June 30, 2010. At
that date, the fair value of this debt was equal to the
outstanding balance.
As a part of our 2007 acquisition of Prairie Packaging, Inc.
(Prairie), we assumed Prairies liability for
$5 million borrowed from the Illinois Department Finance
Authority (IDFA), which were funded by industrial development
revenue bonds issued by the IDFA. This debt will mature on
December 1, 2010, and bears interest at varying rates
(0.40% as of June 30, 2010) not to exceed 12% per
annum.
On January 1, 2010, we adopted the accounting principles in
accordance with updated provisions within
ASC 810-10
and 860-10
as described in Note 2 related to our asset securitization
program. Consequently, we consolidated Pactiv RSA as of the date
of adoption, resulting in an increase in short-term debt. The
asset securitization agreement is a five-year agreement expiring
in 2012, which allows us to sell up to $130 million of
receivables under the facility. The terms of this agreement are
re-negotiated annually; therefore, we have reflected it as
short-term debt. The balance as of June 30, 2010, was
$130 million. Interest on this debt is recorded in interest
expense. Under the accounting prior to 2010, the discount on the
sold receivables was recorded as a loss on sale in other income.
The amounts recorded in interest expense were $1 million
for both the three-month period and six-month period ended
June 30, 2010. The recorded loss on the sale were
immaterial for the three-month period, and $1 million for
the six-month period ended June 30, 2009.
Note 6. | Financial Instruments |
Asset
and Liability Instruments
At June 30, 2010, and December 31, 2009, the fair
value of cash and temporary cash investments, short- and
long-term receivables, accounts payable, and short-term debt
were the same as, or not materially different from, the amount
recorded for these assets and liabilities. The fair value of
long-term debt was approximately
10
Table of Contents
$1.5 billion at June 30, 2010, and December 31,
2009. The recorded amount was $1.3 billion at June 30,
2010, and December 31, 2009. The fair value of long-term
debt was based on quoted market prices for our debt instruments.
Instruments
with Off-Balance Sheet Risk (Including
Derivatives)
We use derivative instruments, principally swaps, forward
contracts, and options, to manage our exposure to movements in
foreign currency values, interest rates, and commodity prices.
Cash Flow
Hedges
For derivative instruments that are designated and qualify as
cash flow hedges, the effective portion of the gain or loss on
the derivative is reported as a component of other comprehensive
income (OCI) and reclassified into earnings in the same period
or periods in which the hedged transaction affects earnings.
Financial instruments designated as cash flow hedges are
assessed both at inception and quarterly thereafter to ensure
they are effective in offsetting changes in the cash flows of
the related underlying exposures. The fair value of the hedge
instruments are reclassified from OCI to earnings if the hedge
ceases to be highly effective or if the hedged transaction is no
longer probable.
Foreign
Currency
From time to time, we use derivative financial instruments to
hedge our exposure to changes in foreign currency exchange
rates, principally using foreign currency purchase and sale
contracts with terms of less than one year. We do so to mitigate
our exposure to exchange rate changes related to third-party
trade receivables and accounts payable. Net gains or losses on
such contracts are recognized in the statement of income as
offsets to foreign currency exchange gains or losses on the
underlying transactions. In the statement of cash flows, cash
receipts and payments related to hedging contracts are
classified in the same way as cash flows from the transactions
being hedged. We had no open foreign currency contracts as of
June 30, 2010.
Interest
Rates
We entered into interest rate swap agreements in connection with
the acquisition of Prairie. The agreements were terminated on
June 20, 2007, resulting in a gain of $9 million. This
gain is being recorded as a reduction of interest expense over
the average life of the underlying debt. Amounts recognized in
earnings related to our hedging transactions were
$1 million for both the six months ended June 30,
2010, and June 30, 2009.
Commodity
During the first half of 2010, we entered into natural gas
purchase agreements with third parties, hedging a portion of the
second half of 2010 purchases of natural gas used in the
production processes at certain of our plants. These purchase
agreements are marked to market, with the resulting gains or
losses recognized in earnings when hedged transactions are
recorded. The
mark-to-market
adjustments at June 30, 2010, were immaterial.
To minimize volatility in our margins due to large fluctuations
in the price of commodities, in the second quarter of 2009 we
entered into swap contracts to manage risks associated with
market fluctuations in resin prices. These contracts were
designated as cash flow hedges of forecasted commodity
purchases. All monthly swap contracts entered into in 2009 have
expired. There were no resin swap contracts outstanding as of
June 30, 2010.
11
Table of Contents
Fair
Value Measurements
Financial assets and liabilities that are recorded at fair value
consist of derivative contracts that are used to hedge exposures
to interest rate, commodity, and currency risks.
ASC 820-10-35
sets out a fair value hierarchy that groups fair value
measurement inputs into three classifications: Level 1,
Level 2, or Level 3. Level 1 inputs are quoted
prices in an active market for identical assets or liabilities.
Level 2 inputs are inputs other than quoted prices included
within Level 1 that are observable for the asset or
liability, either directly or indirectly. Level 3 inputs
are unobservable inputs for the asset or liability. All of our
fair value measurements for derivative contracts use
Level 2 inputs.
There were no outstanding derivative instruments recorded in the
consolidated balance sheet as of June 30, 2010, and as of
December 31, 2009.
The following table indicates the amounts recognized in OCI for
those derivatives designated as cash flow hedges for the six
months ended June 30, 2010, and June 30, 2009.
(Gain) or Loss |
||||||||||||||||||
Gain or (Loss) |
Location of Gain or (Loss) |
Reclassified from |
||||||||||||||||
Recognized in OCI |
Reclassified from |
OCI into Income |
||||||||||||||||
(Effective Portion) |
OCI into Income |
(Effective Portion) | ||||||||||||||||
(In millions) | 2010 | 2009 | (Effective Portion) | 2010 | 2009 | |||||||||||||
Commodity Contracts
|
$ | | $ | 1 | Cost of Sales | $ | | $ | | |||||||||
Interest Rate Contracts
|
$ | | $ | | Interest Expense | $ | (1 | ) | $ | (1 | ) |
Note 7. | Goodwill and Intangible Assets |
The changes in the carrying values of goodwill between
December 31, 2009, and June 30, 2010, are shown in the
following table.
Consumer |
Foodservice/ |
|||||||||||
(In millions) | Products | Food Packaging | Total | |||||||||
Balance, December 31, 2009
|
$ | 291 | $ | 844 | $ | 1,135 | ||||||
Goodwill additions
|
| 97 | 97 | |||||||||
Balance, June 30, 2010
|
$ | 291 | $ | 941 | $ | 1,232 | ||||||
Intangible assets are summarized in the following table.
June 30, 2010 | December 31, 2009 | |||||||||||||||
Carrying |
Accumulated |
Carrying |
Accumulated |
|||||||||||||
(In millions) | value | amortization | value | amortization | ||||||||||||
Intangible assets subject to amortization
|
||||||||||||||||
Patents
|
$ | 87 | $ | 76 | $ | 87 | $ | 74 | ||||||||
Customer relationships
|
224 | 43 | 209 | 36 | ||||||||||||
Other
|
144 | 90 | 145 | 88 | ||||||||||||
455 | 209 | 441 | 198 | |||||||||||||
Intangible assets not subject to amortization (primarily
trademarks)
|
129 | | 129 | | ||||||||||||
$ | 584 | $ | 209 | $ | 570 | $ | 198 | |||||||||
Intangible assets of $15 million were recorded in
connection with the acquisition of PWP Industries and are being
amortized over a
15-year
period for book purposes. Amortization expense for intangible
assets was $13 million for both the six months ended
June 30, 2010, and June 30, 2009. Amortization expense
is estimated to total $26 million for 2010,
$25 million for 2011, $24 million for 2012,
$20 million for 2013, and $20 million for 2014.
12
Table of Contents
We review the carrying value of our goodwill and
indefinite-lived intangibles for possible impairment on an
annual basis. Our annual review is conducted in the fourth
quarter of the year, or earlier if warranted by events or
changes in circumstances. There were no events or changes in
circumstances in the first six months of 2010 that warranted an
impairment review of the goodwill and indefinite-lived
intangibles.
Note 8. | Property, Plant, and Equipment, Net |
June 30, |
December 31, |
|||||||
(In millions) | 2010 | 2009 | ||||||
Original cost
|
||||||||
Land, buildings, and improvements
|
$ | 681 | $ | 667 | ||||
Machinery and equipment
|
2,061 | 1,929 | ||||||
Other, including construction in progress
|
144 | 96 | ||||||
$ | 2,886 | $ | 2,692 | |||||
Less accumulated depreciation and amortization
|
(1,649 | ) | (1,520 | ) | ||||
Net property, plant, and equipment
|
$ | 1,237 | $ | 1,172 | ||||
Capitalized interest was $1 million for the six months
ended June 30, 2010, and immaterial for the six months
ended June 30, 2009.
Note 9. | Income Taxes |
Total gross unrecognized income tax benefits were
$60 million as of June 30, 2010, and $58 million
as of December 31, 2009. At June 30, 2010, and
December 31, 2009, the total amount of unrecognized income
tax benefits that, if recognized, would favorably impact our
effective tax rate for continuing operations in future periods
was $50 million. As of June 30, 2010, it is reasonably
possible that the amount of unrecognized income tax benefits may
increase or decrease during the following twelve months.
However, it is not expected that any such changes, individually
or in total, would significantly affect our operating results or
financial condition.
It is our continuing practice to record accruals for interest
and penalties related to income tax matters as income tax
expense. Such accruals totaled $13 million as of
June 30, 2010, and $11 million as of December 31,
2009. Expense recorded in the first half of 2010 for interest
and penalties for continuing operations was $1 million.
U.S. federal income tax returns filed for the years 2006
through 2008 are open for examination by the Internal Revenue
Service. Various state, local, and foreign tax returns filed for
the years 2002 through 2008 are open for examination by tax
authorities in those jurisdictions.
At June 30, 2010, and December 31, 2009, total gross
unrecognized income tax benefits included $1 million
related to discontinued operations, all of which, if recognized,
would favorably impact income related to discontinued operations
in future periods. Expense recorded in the first half of 2010
for interest and penalties for discontinued operations was
immaterial.
In connection with the adoption of
ASC 718-10,
Share-Based Payment, we elected to use the
simplified method in calculating our additional paid-in capital
pool, as described in prior authoritative guidance.
ASC 718-10
requires that tax deductions for compensation costs in excess of
amounts recognized for accounting purposes be reported as cash
flow from financing activities, rather than as cash flow from
operating activities. Such excess amounts were
$2 million for the six months ended June 30, 2010.
On March 23, 2010, the Patient Protection and Affordable
Care Act (the Act) was signed into law. Included in
the provisions is a change in the federal income tax treatment
of the Medicare Part D subsidy. For periods beginning after
December 31, 2012, we will no longer be entitled to receive
a federal income tax deduction
13
Table of Contents
for payments made to provide our retirees with prescription drug
benefits which equal previous subsidies we received from the
U.S. government for providing retirees with prescription
drug benefits. We had previously recorded a deferred income tax
asset for the tax benefit of future payments made with respect
to this subsidy. As a result of the Act, we have written-off
$3 million of deferred income tax assets as a component of
income tax expense from continuing operations for the six-month
period ended June 30, 2010.
Note 10. | Common Stock |
Earnings
Per Share
Earnings per share of common stock outstanding were computed as
follows:
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(In millions, except share and per share data) | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Basic earnings per share
|
||||||||||||||||
Income from continuing operations attributable to Pactiv
|
$ | 75 | $ | 81 | $ | 123 | $ | 158 | ||||||||
Weighted-average number of shares of common stock outstanding
|
132,913,791 | 131,931,203 | 132,725,826 | 131,808,513 | ||||||||||||
Basic earnings from continuing operations attributable to Pactiv
|
$ | 0.57 | $ | 0.61 | $ | 0.93 | $ | 1.19 | ||||||||
Diluted earnings per share
|
||||||||||||||||
Income from continuing operations attributable to Pactiv
|
$ | 75 | $ | 81 | $ | 123 | $ | 158 | ||||||||
Weighted-average number of shares of common stock outstanding
|
132,913,791 | 131,931,203 | 132,725,826 | 131,808,513 | ||||||||||||
Effect of dilutive securities
|
||||||||||||||||
Stock options
|
540,592 | 243,625 | 458,484 | 193,273 | ||||||||||||
Performance shares
|
605,326 | 297,505 | 736,997 | 439,691 | ||||||||||||
Restricted shares
|
23,344 | | 11,346 | | ||||||||||||
Weighted-average number of shares of common stock outstanding,
including dilutive securities
|
134,083,053 | 132,472,333 | 133,932,653 | 132,441,477 | ||||||||||||
Diluted earnings from continuing operations attributable to
Pactiv
|
$ | 0.56 | $ | 0.61 | $ | 0.92 | $ | 1.19 | ||||||||
We did not repurchase stock in the first half of 2010 or 2009.
Rabbi
Trust
In November 1999, we established a rabbi trust and reserved
3,200,000 shares of Pactiv common stock for the trust.
These shares were issued to the trust in January 2000. This
trust is designed to assure the payment of deferred compensation
and supplemental pension benefits. These shares are not
considered outstanding for purposes of financial reporting.
14
Table of Contents
Note 11. | Pension Plans and Other Postretirement Benefits |
The impact of pension plans on pretax income was as follows:
Three months |
Six months |
|||||||||||||||
ended |
ended |
|||||||||||||||
June 30, | June 30, | |||||||||||||||
(In millions) | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Components of net periodic benefit income (expense)
|
||||||||||||||||
Service cost of benefits earned
|
$ | (5 | ) | $ | (3 | ) | $ | (9 | ) | $ | (7 | ) | ||||
Interest cost of benefit obligations
|
(56 | ) | (60 | ) | (113 | ) | (120 | ) | ||||||||
Expected return on plan assets
|
91 | 86 | 183 | 169 | ||||||||||||
Amortization of unrecognized net losses
|
(18 | ) | (13 | ) | (37 | ) | (25 | ) | ||||||||
Total net periodic benefit income (expense)
|
$ | 12 | $ | 10 | $ | 24 | $ | 17 | ||||||||
We have postretirement health care and life insurance plans that
cover certain of our salaried and hourly employees who retire in
accordance with the various provisions of such plans. Benefits
may be subject to deductibles, copayments, and other
limitations. These postretirement plans are not funded, and we
reserve the right to change them. Interest cost of benefit
obligations were $1 million for the three-month period and
$2 million for the six-month period ended June 30,
2010, and June 30, 2009. Interest cost of benefit
obligations accounted for the total net periodic benefit expense
for our postretirement plans.
Note 12. | Segment Information |
Our three segments are Consumer Products, Foodservice/Food
Packaging, and Other. See Note 1 for additional details.
The following table sets forth certain segment information.
Consumer |
Foodservice/Food |
|||||||||||||||
(In millions) | Products | Packaging | Other | Total | ||||||||||||
For the three months ended June 30, 2010
|
||||||||||||||||
Sales to external customers
|
$ | 361 | $ | 612 | $ | | $ | 973 | ||||||||
Operating income (loss)
|
74 | 69 | (2 | ) (a) | 141 | |||||||||||
For the three months ended June 30, 2009
|
||||||||||||||||
Sales to external customers
|
$ | 356 | $ | 545 | $ | | $ | 901 | ||||||||
Operating income (loss)
|
80 | 77 | (4 | ) (a) | 153 | |||||||||||
At June 30, 2010, and for the six months then ended
|
||||||||||||||||
Sales to external customers
|
$ | 652 | $ | 1,098 | $ | | $ | 1,750 | ||||||||
Operating income (loss)
|
127 | 118 | (2 | ) (a) | 243 | |||||||||||
Total assets
|
1,311 | 2,549 | 122 | (b) | 3,982 | |||||||||||
At June 30, 2009, and for the six months then ended
|
||||||||||||||||
Sales to external customers
|
$ | 639 | $ | 1,028 | $ | | $ | 1,667 | ||||||||
Operating income (loss)
|
143 | 161 | (6 | ) (a) | 298 | |||||||||||
Total assets
|
1,275 | 2,130 | 396 | (b) | 3,801 |
(a) | Includes pension plan income and unallocated corporate expenses. | |
(b) | Includes administrative service operations. |
Note 13. | Noncontrolling Interests |
There were no changes in ownership interest in our subsidiaries
for the six months ended June 30, 2010, or June 30,
2009.
The preceding notes are an integral part of the foregoing
financial statements.
15
Table of Contents
ITEM 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations |
Basis of
Presentation
Financial statements for all periods presented in this report
were prepared on a consolidated basis in accordance with
generally accepted accounting principles consistently applied.
All per share information is presented on a diluted basis unless
otherwise noted. Certain reclassifications have been made to
prior year financial information to conform to the current year
presentation.
On April 1, 2010, we purchased PWP Holdings, Inc. and PWP
Industries (PWP) for $200 million. PWP Industries
manufactures and sells amorphous polyethylene terephthalate
(APET) products in the food service market. The purchase price
was funded by borrowing $160 million on our revolving
credit facility, adding $20 million to the asset
securitization program, and utilizing $20 million in cash
reserves. The results of this business have been included in the
consolidated financial statements as of that date.
On January 5, 2009, we purchased the polypropylene cup
business of WinCup for $20 million. This business operates
one manufacturing facility in North Carolina. The results of
this business have been included in the consolidated financial
statements as of that date.
We have three reporting segments:
| Consumer Products manufactures disposable plastic, foam, molded fiber, pressed paperboard, and aluminum packaging products, and sells them to customers such as grocery stores, mass merchandisers, and discount chains. Products include waste bags, food storage bags, and disposable tableware and cookware. We sell many of our consumer products under well-known trademarks, such as Hefty®. | |
| Foodservice/Food Packaging manufactures foam, clear plastic, aluminum, pressed paperboard, and molded fiber packaging products, and sells them to customers in the food distribution channel, who prepare and process food for consumption. Customers include foodservice distributors, restaurants, and other institutional foodservice outlets, food processors, and grocery chains. | |
| Other includes corporate and administrative service operations and retiree benefit income and expense. |
The accounting policies of the reporting segments are the same
as those for Pactiv as a whole. Where discrete financial
information is not available by segment, reasonable allocations
of expenses and assets/liabilities are used.
Significant
Trends , Opportunities and Challenges
The primary raw materials used to manufacture our products are
plastic resins, principally polystyrene, polyethylene,
polypropylene, and polyethylene terephthalate (PET). Average
industry prices as published by Chemical Market Associates, Inc.
are depicted in the following graphs.
CMAI Polystyrene (cents/lb)
16
Table of Contents
CMAI Polyethylene (cents/lb)
CMAI Polypropylene (cents/lb)
CMAIPET (cents/lb)
The prices of plastic resins are affected by the prices of crude
oil and natural gas, as well as supply and demand factors of
various intermediate petrochemicals. In recent years, there have
been significant movements in resin prices, which rose to
historic highs in 2008, dropped precipitously at the end of 2008
and into early 2009, and rose throughout the rest of 2009 and
then peaked in the middle of the second quarter of 2010. We have
historically adjusted our selling prices to reflect changes in
raw material costs, although there is usually a lag of several
months. Some of our business is pursuant to contracts that have
price indices that automatically adjust after a set number of
months, usually three or six, to reflect changes in certain raw
materials.
17
Table of Contents
Our business is sensitive to other energy-related cost
movements, particularly those that affect transportation and
utility costs. Historically, we have been able to mitigate the
effect of higher energy-related costs with productivity
improvements and other cost reductions.
The economic downturn that began in late 2007 has impacted
consumer spending in many areas and has reduced demand for some
of our products. However, our overall volume has not been
adversely impacted by the economic downturn, and we have seen
increases in volume over the past five quarters.
In 2006, we began to introduce lean principles and
tools in many of our operating facilities. We are expanding the
use of lean principles to help us accelerate productivity
improvements by reducing inventory and scrap levels, providing
rapid stock replenishment, shortening scheduling cycles,
improving our one-stop shopping service, eliminating
nonvalue-added activities, and streamlining processes. As this
is a long-term process, we expect our ability to use these tools
throughout the organization will have a positive effect on our
operating results in future years.
We believe that cash flow from operations, available cash
reserves, and the ability to obtain cash under our credit
facility and asset securitization program will be sufficient to
meet current and future potential pension funding, liquidity,
and capital requirements.
Results
of Continuing Operations
Three
Months Ended June 30, 2010, Compared with Three Months
Ended June 30, 2009
Sales
Three months |
||||||||||||||||
ended |
Increase |
|||||||||||||||
June 30, | (decrease) | |||||||||||||||
(In millions) | 2010 | 2009 | Amount | Percent | ||||||||||||
Consumer Products
|
$ | 361 | $ | 356 | $ | 5 | 1.4 | % | ||||||||
Foodservice/Food Packaging
|
612 | 545 | 67 | 12.3 | ||||||||||||
Total
|
$ | 973 | $ | 901 | $ | 72 | 8.0 | % | ||||||||
Sales rose 8%. Excluding the impact of the PWP acquisition of
$41 million, sales grew 3%, reflecting volume growth of 2% and
favorable pricing of 1%.
Sales for Consumer Products increased 1%, reflecting higher
volume of 1%.The volume growth primarily reflected new business
in store brand waste bags which offset declines in branded waste
bags, branded food bags and cups and cutlery.
Sales growth of 12% for Foodservice/Food Packaging sales was
attributable to an 8% volume gain from the inclusion of
$41 million of sales from the PWP acquisition, as well as
2% volume growth and 2% favorable pricing in the base business.
The volume increase primarily was related to continued growth in
cups and cutlery, as well as growth in a number of other product
areas, including processor trays, paper-based items, and produce
packaging, offset partially by a decline in some traditional
product lines such as oriented polystyrene (OPS) and foam
carry-out containers.
18
Table of Contents
Operating
Income
Three months |
||||||||||||||||
ended |
Increase |
|||||||||||||||
June 30, | (decrease) | |||||||||||||||
(In millions) | 2010 | 2009 | Amount | Percent | ||||||||||||
Consumer Products
|
$ | 74 | $ | 80 | $ | (6 | ) | (7.5 | )% | |||||||
Foodservice/Food Packaging
|
69 | 77 | (8 | ) | (10.4 | ) | ||||||||||
Other
|
(2 | ) | (4 | ) | 2 | 50.0 | ||||||||||
Total
|
$ | 141 | $ | 153 | $ | (12 | ) | (7.8 | )% | |||||||
Operating income decreased primarily as a result of
$28 million of unfavorable spread (the difference between
selling prices and raw material costs), offset by lower selling,
general, and administrative (SG&A) expense of
$17 million. The decrease in SG&A expense was
primarily a result of lower incentive compensation accruals this
year.
Lower operating income for Consumer Products was driven mainly
by a combination of unfavorable spread of $11 million and
unfavorable product mix of $7 million, offset partially by
$11 million of lower SG&A expense as a result of lower
incentive compensation accruals and lower advertising and
promotion costs.
The decrease in operating income for Foodservice/Food Packaging
was driven primarily by unfavorable spread of $17 million,
offset partially by increased volume of $10 million.
The increase in Other operating income was due mainly to higher
pension income.
Income
from Continuing Operations
We recorded net income of $75 million, or $0.56 per share,
compared with $81 million, or $0.61 per share, in 2009. The
change was driven primarily by lower operating income of
$8 million ($12 million before tax) as described
previously.
Six
Months Ended June 30, 2010, Compared with Six Months Ended
June 30, 2009
Sales
Six months |
||||||||||||||||
ended |
Increase |
|||||||||||||||
June 30, | (decrease) | |||||||||||||||
(In millions) | 2010 | 2009 | Amount | Percent | ||||||||||||
Consumer Products
|
$ | 652 | $ | 639 | $ | 13 | 2.0 | % | ||||||||
Foodservice/Food Packaging
|
1,098 | 1,028 | 70 | 6.8 | ||||||||||||
Total
|
$ | 1,750 | $ | 1,667 | $ | 83 | 5.0 | % | ||||||||
Sales rose 5%. Excluding the impact of the PWP acquisition of
$41 million, sales grew 2%, reflecting volume growth of 5%
offset partially by lower pricing of 3%. The lower pricing is a
result of normal selling price reductions during 2009 to reflect
the impact of lower raw material costs. Because there is a
typical lag of several months before our pricing reflects raw
material cost movements, there can be periods of time when our
pricing is not moving in the same direction as our raw material
costs.
Sales for Consumer Products increased 2%, reflecting higher
volume of 5% and unfavorable pricing of 3%. The volume growth
primarily reflected new business in store brand waste bags and
tableware, which offset declines in branded waste bags, food
bags, and cups and cutlery. The lower pricing reflects the
normal lag in selling price changes in response to raw material
cost changes.
19
Table of Contents
Foodservice/Food Packaging sales rose 7%, driven by acquisition
growth of 4%, base business volume growth of 4%, and favorable
foreign exchange of 1%, offset partially by lower pricing of 2%.
The volume increase primarily was related to continued growth in
cups and cutlery, as well as growth in a number of other product
areas, including processor trays and paper-based items, offset
partially by a decline in traditional product lines such as OPS
and foam carry-out containers. The lower pricing reflects the
normal lag in selling price changes in response to raw material
cost changes.
Operating
Income
Six months |
||||||||||||||||
ended |
Increase |
|||||||||||||||
June 30, | (decrease) | |||||||||||||||
(In millions) | 2010 | 2009 | Amount | Percent | ||||||||||||
Consumer Products
|
$ | 127 | $ | 143 | $ | (16 | ) | (11.2 | )% | |||||||
Foodservice/Food Packaging
|
118 | 161 | (43 | ) | (26.7 | ) | ||||||||||
Other
|
(2 | ) | (6 | ) | 4 | 66.7 | ||||||||||
Total
|
$ | 243 | $ | 298 | $ | (55 | ) | (18.5 | )% | |||||||
Operating income decreased primarily as a result of
$105 million of unfavorable spread, partially offset by
higher volume of $22 million and lower SG&A expense of
$28 million. The decrease in SG&A expense was
primarily a result of lower incentive compensation accruals this
year, as well as higher pension income.
Lower operating income for Consumer Products was driven mainly
by unfavorable spread of $32 million due to lower pricing
and higher raw material costs, offset partially by lower
SG&A expense of $13 million.
The decrease in operating income for Foodservice/Food Packaging
was driven primarily by unfavorable spread of $73 million
due to lower pricing and higher raw material costs, offset
partially by increased volume of $22 million and lower
SG&A expense of $11 million.
The increase in Other operating income was due mainly to higher
pension income.
Income
from Continuing Operations
We recorded net income of $123 million, or $0.92 per share,
compared with $158 million, or $1.19 per share, in 2009.
The change was driven primarily by lower operating income of
$35 million ($55 million before tax) as described
previously.
Liquidity
and Capital Resources
Capitalization
June 30, |
December 31, |
Increase |
||||||||||
(In millions) | 2010 | 2009 | (decrease) | |||||||||
Short-term debt, including current maturities of long-term debt
(1)
|
$ | 255 | $ | 5 | $ | 250 | ||||||
Long-term debt
|
1,270 | 1,270 | | |||||||||
Total debt
|
1,525 | 1,275 | 250 | |||||||||
Noncontrolling interest
|
14 | 16 | (2 | ) | ||||||||
Pactiv shareholders equity
|
1,132 | 985 | 147 | |||||||||
Total capitalization
|
$ | 2,671 | $ | 2,276 | $ | 395 | ||||||
Ratio of total debt to total capitalization
|
57.1 | % | 56.0 | % |
20
Table of Contents
(1) | $5 million of short-term debt payable in December 2010. $120 million in 2010 related to borrowings against revolving debt to fund the PWP acquisition, payable in April 2011. $130 million in 2010 related to asset securitization facility classification as debt due to adoption of Accounting Standards Codification (ASC) 810-10 and 860-10 disclosure provisions. See Note 2 to the financial statements for additional details. |
Cash
Flows
Six months |
||||||||||||
ended |
Increase |
|||||||||||
June 30, |
(decrease) |
|||||||||||
(In millions) | 2010 | 2009 | in cash flow | |||||||||
Cash provided (used) by:
|
||||||||||||
Operating activities
|
$ | 119 | $ | 215 | $ | (96 | ) | |||||
Investing activities
|
(263 | ) | (68 | ) | (195 | ) | ||||||
Financing activities
|
142 | | 142 |
There were several factors which caused the decrease in cash
provided by operating activities. Higher raw material costs
increased the investment in inventory by $99 million.
Increasing selling prices this year, compared with declining
selling prices last year, created an unfavorable swing in
accounts receivable of $62 million. In addition, higher
incentive compensation payments and lower related accruals of
$45 million, as well as lower income from continuing
operations of $35 million added to the decrease. This was
offset partially by a $200 million pretax contribution to
our U.S. pension plan in 2009, reduced by related favorable
cash tax effects of approximately $70 million in 2009,
compared with $54 million in 2010. The favorable cash tax
benefits of pension contributions were related to our 2009
pension contribution. The adoption of changes to ASC 810
Consolidation resulted in a decrease in cash
provided by operating activities of $20 million with an
offsetting increase in cash provided by financing activities.
The increase in cash provided by financing activities was a
result of borrowing $160 million against revolving debt and
adding $20 million to the asset securitization program to
fund the PWP acquisition, offset partially by the repayment of
revolving debt of $40 million.
The increase in cash used by investing activities was driven by
the 2010 PWP acquisition for $200 million.
Capital
Commitments
Commitments for authorized capital expenditures totaled
approximately $55 million at June 30, 2010. It is
anticipated that the majority of these expenditures will be
funded from existing cash and short-term investments and
internally generated cash.
Contractual
Obligations
There has been no material change in the companys
aggregate contractual obligations since December 31, 2009.
Liquidity
and Off-Balance-Sheet Financing
We use various sources of funding to manage liquidity. Sources
of liquidity include cash flow from operations and a
5-year
revolving credit facility of $750 million, of which
$120 million was outstanding at June 30, 2010. We were
in full compliance with the covenants of our revolving credit
agreement at the end of the period. The two financial covenant
ratios contained in our debt agreements are an interest coverage
ratio and the total debt to EBITDA ratio. The interest coverage
ratio is defined as consolidated earnings before interest,
taxes, depreciation and amortization, and other unusual noncash
items (EBITDA) divided by interest expense.
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The minimum required ratio is 3.50 to 1. The total debt to
EBITDA ratio is calculated by dividing the total debt by EBITDA.
The maximum permitted total debt to EBITDA ratio is 3.50 to 1.
The interest coverage ratio and the debt to EBITDA ratio are
shown in the following table.
Plus |
Less |
|||||||||||||||
Twelve months |
Six months |
Six months |
Twelve months |
|||||||||||||
ended |
ended |
ended |
ended |
|||||||||||||
(In millions, except ratios) | December 31, 2009 | June 30, 2010 | June 30, 2009 | June 30, 2010 | ||||||||||||
Net income (1)
|
$ | 323 | $ | 123 | $ | 157 | $ | 289 | ||||||||
Adjustments:
|
||||||||||||||||
Noncash restructuring and other (2)
|
(1 | ) | | (1 | ) | | ||||||||||
Discontinued operations, net of tax (1)
|
(15 | ) | | | (15 | ) | ||||||||||
Interest expense, net of interest capitalized (1)
|
94 | 49 | 47 | 96 | ||||||||||||
Income tax expense (1)
|
177 | 71 | 94 | 154 | ||||||||||||
Depreciation and amortization (1)
|
184 | 96 | 92 | 188 | ||||||||||||
Noncontrolling interest (1)
|
1 | | | 1 | ||||||||||||
EBITDA
|
$ | 763 | $ | 339 | $ | 389 | $ | 713 | ||||||||
EBITDA
|
$ | 763 | $ | 713 | ||||||||||||
Interest expense, net of interest capitalized (1)
|
94 | 96 | ||||||||||||||
Interest coverage ratio
|
8.12 | 7.43 | ||||||||||||||
Total debt (3)
|
$ | 1,275 | $ | 1,525 | ||||||||||||
EBITDA
|
763 | 713 | ||||||||||||||
Total debt to EBITDA ratio
|
1.67 | 2.14 | ||||||||||||||
(1) | Amounts per the consolidated statement of income (for 2009 information, refer to our 2009 10-K and second quarter 2009 10-Q; for 2009 adjusted interim information, refer to Note 16 of our 2009 10-K). | |
(2) | Amounts per the consolidated statement of cash flows (for 2009 information, refer to our 2009 10-K and second quarter 2009 10-Q; for 2009 adjusted interim information, refer to Note 16 of our 2009 10-K). | |
(3) | Amounts per the consolidated statement of financial position. |
We have an asset securitization agreement under which certain of
our accounts receivable are sold to our variable interest entity
(VIE), Pactiv RSA. Under the accounting principles in effect
prior to 2010, Pactiv RSA was not consolidated with our
financial statements. In accordance with updated provisions
within
ASC 810-10
and 860-10,
which we adopted January 1, 2010, Pactiv RSA is included in
the consolidated financial statements as of that date. See
Note 2 for additional details.
We have a U.S. qualified pension plan that covers
approximately 7,000 of our employees, as well as approximately
65,000 others, mostly retirees and persons who worked for
predecessor companies that were part of Tenneco Inc. The
requirement to make contributions to this plan is a function of
several factors, the most important of which are the return on
plan assets and applicable funding discount rate used in
calculating plan liabilities. During 2009, we contributed
$550 million pretax to the plan, and plan assets earned a
return of approximately 26%. As of December 31, 2009, our
U.S. pension plan was 94% funded on an ERISA basis, which
determines the minimum funding requirements for the plan. As
long as our funded ratio is above 60%, there is no meaningful
impact on us or to the plan. We do not expect to make additional
sizeable contributions to the plan for the foreseeable future.
We believe that cash flow from operations, available cash
reserves, and the ability to obtain cash under our credit
facility and asset securitization program will be sufficient to
meet current and future potential pension funding, liquidity,
and capital requirements.
22
Table of Contents
Changes
in Accounting Principles
The Financial Accounting Standards Board (FASB) issued updates
to
ASC 860-10
Transfers and Servicing, which were effective for
interim and annual periods beginning after November 15,
2009. The updated provisions require additional information
about transfers of financial assets and where companies have
continuing exposure to the risk related to transferred financial
assets, eliminates the concept of a qualifying special purpose
entity, changes the requirements for derecognizing financial
assets, and requires additional disclosures.
ASC 860-10
was effective on January 1, 2010. See Note 2 and
Note 5 for additional details.
The FASB issued updates to
ASC 810-10
Consolidation, which were effective for interim and
annual periods beginning after November 15, 2009. These
updated provisions require an enterprise to perform an analysis
to determine whether the enterprises variable interest or
interests give it a controlling financial interest in a variable
interest entity, require ongoing reassessments of whether an
enterprise is the primary beneficiary of a variable interest
entity, and eliminate the quantitative approach previously
required for determining the primary beneficiary of a variable
interest entity. In addition, the provisions include an
additional reconsideration event for determining whether an
entity is a variable interest entity when any changes in facts
and circumstances occur such that holders of the equity
investment at risk, as a group, lose the power from voting
rights or similar rights of those investments to direct the
activities of the entity that most significantly impact the
entitys economic performance. Lastly, the provisions
require enhanced disclosures that will provide users of
financial statements with more transparent information about an
enterprises involvement in a variable interest entity.
ASC 860-10
was effective on January 1, 2010. See Note 2 and
Note 5 for additional details.
Critical
Accounting Policies
For a complete discussion of the companys critical
accounting policies, refer to Pactivs most recent filing
on
Form 10-K.
23
Table of Contents
CAUTIONARY
STATEMENT FOR PURPOSES OF SAFE HARBOR PROVISIONS
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Certain statements included in this Quarterly Report on
Form 10-Q,
including statements in the Managements Discussion
and Analysis of Financial Condition and Results of
Operations section and in the notes to the financial
statements, are forward-looking statements. All
statements other than statements of historical fact, including
statements regarding prospects and future results, are
forward-looking. These forward-looking statements generally can
be identified by the use of terms and phrases such as
will, believe, anticipate,
may, might, could,
expect, estimated, projects,
intends, foreseeable future, and similar
terms and phrases. These forward-looking statements are not
based on historical facts, but rather on our current
expectations or projections about future events. Accordingly,
these forward-looking statements are subject to known and
unknown risks and uncertainties. While we believe that the
assumptions underlying these forward-looking statements are
reasonable and make the statements in good faith, actual results
almost always vary from expected results, and the differences
could be material.
See Risk Factors section (Item 1A) in our most
recently filed Securities and Exchange Commission (SEC)
Form 10-K
and Part II (Item 1A) of this report for some of the
factors that we believe could cause our actual results to differ
materially from future results expressed or implied by these
forward-looking statements. These factors include the following:
| Changes in consumer demand and selling prices for our products, including new products that our competitors or we may introduce that could impact sales and margins. | |
| Material substitutions and changes in costs of raw materials, including plastic resins, labor, utilities, or transportation that could impact our expenses and margins. | |
| Changes in laws or governmental actions, including changes in regulations such as those relating to air emissions or plastics generally. | |
| The availability or cost of capital could impact growth or acquisition opportunities. | |
| Workforce factors such as strikes or other labor interruptions. | |
| The general economic, political, and competitive conditions in countries in which we operate, including currency fluctuations and other risks associated with operating outside of the U.S. | |
| Changes in (1) assumptions regarding the long-term rate of return on pension assets and other factors, (2) the discount rate, and (3) the level of amortization of actuarial gains and losses. | |
| Changes in U.S. and/or foreign governmental regulations relating to pension plan funding. | |
| Changes enacted by the SEC, the FASB, or other regulatory or accounting bodies. See Changes in Accounting Principles. | |
| Competition from producers located in countries that have lower labor and other costs. | |
| Our ability to integrate new businesses that we have acquired and may acquire, or to dispose of businesses or business segments that we may wish to divest. |
24
Table of Contents
ITEM 3. | Quantitative and Qualitative Disclosures about Market Risk |
Derivative
Financial Instruments
We are exposed to market risks related to changes in foreign
currency exchange rates, interest rates, and commodity prices.
To manage these risks we may enter into various hedging
contracts in accordance with established policies and
procedures. We do not use hedging instruments for trading
purposes and are not a party to any transactions involving
leveraged derivatives.
Commodity
Derivatives
During the first half of 2010, we entered into natural gas
purchase agreements with third parties, hedging a portion of the
second half of 2010 purchases of natural gas used in the
production processes at certain of our plants. These purchase
agreements are marked to market, with the resulting gains or
losses recognized in earnings when hedged transactions are
recorded. The
mark-to-market
adjustments at June 30, 2010, were immaterial.
Cash Flow
Hedges
To minimize volatility in our margins due to large fluctuations
in the price of commodities, in the second quarter of 2009 we
entered into swap contracts to manage risks associated with
market fluctuations in resin prices. These contracts were
designated as cash flow hedges of forecasted commodity
purchases. All monthly swap contracts entered into in 2009 have
expired. There were no resin swap contracts outstanding as of
June 30, 2010.
Interest
Rates
At June 30, 2010, we had public debt securities of
$1.276 billion outstanding, with fixed interest rates and
maturities ranging from 2 to 17 years. Should we decide to
redeem these securities prior to their stated maturity, we would
incur costs based on the fair value of the securities at that
time.
In addition, we have a
5-year
revolving credit facility of $750 million, against which we
borrowed $120 million at June 30, 2010. The fair value
of the debt at that date was equal to the outstanding balance.
As a part of our 2007 acquisition of Prairie Packaging Inc.
(Prairie), we assumed Prairies liability for
$5 million borrowed from the Illinois Development Finance
Authority (IDFA), which were funded by industrial development
revenue bonds issued by the IDFA. The debt matures on
December 1, 2010, and bears interest at varying rates
(0.40% as of June 30, 2010), not to exceed 12% per annum.
The following table provides information about Pactivs
financial instruments that are sensitive to interest rate risks.
Maturities | ||||||||||||||||||||
(In millions, except percentages) | 2010 | 2011 | 2012 | Thereafter | Total | |||||||||||||||
Fixed rate debt
|
$ | 250 | $ | 1,026 | $ | 1,276 | ||||||||||||||
Average interest rate
|
5.7 | % | 7.7 | % | 7.3 | % | ||||||||||||||
Fair value
|
$ | 268 | $ | 1,278 | $ | 1,546 | ||||||||||||||
Floating rate debt
|
$ | 135 | $ | 120 | $ | 255 | ||||||||||||||
Average interest rate
|
0.9 | % | 0.8 | % | 0.9 | % | ||||||||||||||
Fair value
|
$ | 135 | $ | 120 | $ | 255 |
Prior to our spin-off from Tenneco Inc., we entered into an
interest rate swap to hedge our exposure to interest rate
movements. We settled this swap in November 1999, incurring a
$43 million loss, which is being recognized as additional
interest expense over the average life of the underlying debt.
25
Table of Contents
In April 2007, we entered into interest rate swap agreements to
hedge the interest rate risk related to $250 million of the
debt expected to be issued in connection with the acquisition of
Prairie. We entered into these swap agreements to moderate the
risk of interest rate changes during the period from the date
the agreement to acquire Prairie was signed to the date the
notes used to finance the acquisition were issued. The swap
agreements were terminated on June 20, 2007, resulting in a
gain of $9 million. This gain is being recognized as a
reduction of interest expense over the average life of the
underlying debt.
ITEM 4. | Controls and Procedures |
Our disclosure controls and procedures (as defined in Exchange
Act
Rules 13a-15(e)
and
15d-15(e))
are designed to ensure that information required to be disclosed
by us in reports we file or submit under the Securities Exchange
Act is recorded, processed, summarized, and reported within the
appropriate time periods. Our disclosure controls and procedures
are also designed to ensure that information required to be
disclosed by us in reports we file or submit under the
Securities Exchange Act is accumulated and communicated to our
management, including our principal executive and principal
financial officers, as appropriate to allow timely decisions
regarding disclosure. We, under the supervision of and with the
participation of our management, including our principal
executive officer and principal financial officer, have
evaluated the effectiveness of our disclosure controls and
procedures, and we and such officers have concluded that such
controls and procedures were adequate and effective as of
June 30, 2010.
There were no changes in internal controls over financial
reporting (as defined in Exchange Act
Rules 13a-15(f)
and
15d-15(f))
during the quarter ended June 30, 2010, that materially
affected, or are reasonably likely to materially affect, our
internal controls over financial reporting.
26
Table of Contents
PART II
OTHER INFORMATION
ITEM 1. Legal
Proceedings
We are party to various legal proceedings arising from our
operations. We establish reserves for claims and proceedings
when it is probable that liabilities exist and where reasonable
estimates of such liabilities can be made. While it is not
possible to predict the outcome of any of these matters, based
on our assessment of the facts and circumstances now known, we
do not believe that any of these matters, individually or in the
aggregate, will have a material adverse effect on our financial
position. However, actual outcomes may be different from those
expected and could have a material effect on our results of
operations or cash flows in a particular period.
ITEM 1A. Risk
Factors
There has been no material change in the risk factors disclosed
in our
Form 10-K
for the year ended December 31, 2009.
ITEM 2. Unregistered
Sales of Equity Securities and Use of Proceeds
In February 2010, the board of directors approved the repurchase
of an additional 10 million shares of our common stock
bringing the total number of shares authorized to be repurchased
to 10,522,361. We repurchase shares using open market or
privately negotiated transactions. Repurchased shares are held
in treasury for general corporate purposes. There is no
expiration date for the current share repurchase authorization.
We did not repurchase stock in the first half of 2010.
ITEM 3. None
ITEM 4. (Removed
and Reserved)
ITEM 5. None
ITEM 6. Exhibits
Exhibits designated with an asterisk in the following index are
furnished or filed herewith; all other exhibits are incorporated
by reference.
Exhibit No. | Description | |||
3 | .1 | Restated Certificate of Incorporation of the registrant (incorporated herein by reference to Exhibit 3.1 to Pactiv Corporations Quarterly Report on Form 10-Q for the quarter ended September 30, 1999, File No. 1-15157). | ||
3 | .2 | Amended and Restated By-laws of the registrant (incorporated herein by reference to Exhibit 3.1 to Pactiv Corporations Current Report on Form 8-K dated September 4, 2009, File No. 1-15157). | ||
4 | .1 | Specimen Stock Certificate of Pactiv Corporation Common Stock (incorporated herein by reference to Exhibit 4.1 to Pactiv Corporations Quarterly Report on Form 10-Q for the quarter ended September 30, 1999, File No. 1-15157). | ||
4 | .2(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 | .2(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 Corporations Quarterly Report on Form 10-Q for the quarter ended September 30, 1999, File No. 1-15157). |
27
Table of Contents
Exhibit No. | Description | |||
4 | .2(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 Corporations Quarterly Report on Form 10-Q for the quarter ended September 30, 1999, File No. 1-15157). | ||
4 | .2(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 Corporations Quarterly Report on Form 10-Q for the quarter ended September 30, 1999, File No. 1-15157). | ||
4 | .2(e) | Fourth 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(e) to Pactiv Corporations Quarterly Report on Form 10-Q for the quarter ended September 30, 1999, File No. 1-15157). | ||
4 | .2(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 Corporations Quarterly Report on Form 10-Q for the quarter ended September 30, 1999, File No. 1-15157). | ||
4 | .2(g) | Sixth Supplemental Indenture dated as of June 25, 2007 to Indenture, dated as of September 29, 1999, between Pactiv Corporation and the Bank of New York Trust Company, N.A., as Trustee (incorporated herein by reference to Exhibit 4.1 to Pactiv Corporations Current Report on Form 8-K dated June 25, 2007, File No. 1-15157). | ||
4 | .2(h) | Seventh Supplemental Indenture dated as of June 25, 2007 to Indenture, dated as of September 29, 1999, between Pactiv Corporation and the Bank of New York Trust Company, N.A., as Trustee (incorporated herein by reference to Exhibit 4.2 to Pactiv Corporations Current Report on Form 8-K dated June 25, 2007, File No. 1-15157). | ||
4 | .3 | 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 Corporations Quarterly Report on Form 10-Q for the quarter ended September 30, 1999, File No. 1-15157). | ||
10 | .1 | Pactiv Corporation (formerly known as Tenneco Packaging Inc.) Executive Incentive Compensation Plan (incorporated herein by reference to Exhibit 10.5 to Pactiv Corporations Quarterly Report on Form 10-Q for the quarter ended September 30, 1999, File No. 1-15157). | ||
10 | .2 | Pactiv Corporation (formerly known as Tenneco Packaging Inc.) Supplemental Executive Retirement Plan (incorporated herein by reference to Exhibit 10.6 to Pactiv Corporations Quarterly Report on Form 10-Q for the quarter ended September 30, 1999, File No. 1-15157). | ||
10 | .3 | Amended and Restated Change in Control Severance Benefit Plan for Key Executives (incorporated herein by reference to Exhibit 10.6 to Pactiv Corporations Current Report on Form 8-K dated September 4, 2009, File No. 1-15157). | ||
10 | .4 | Pactiv Corporation (formerly known as Tenneco Packaging Inc.) Deferred Compensation Plan (incorporated herein by reference to Exhibit 10.8 to Pactiv Corporations Quarterly Report on Form 10-Q for the quarter ended September 30, 1999, File No. 1-15157). | ||
10 | .5 | Pactiv Corporation Rabbi Trust (incorporated herein by reference to Exhibit 10.11 to Pactiv Corporations Quarterly Report on Form 10-Q for the quarter ended September 30, 1999, File No. 1-15157). | ||
10 | .6 | Pactiv Corporation 2002 Incentive Compensation Plan (incorporated herein by reference to Exhibit 4.7 to Pactiv Corporations Registration Statement on Form S-8 dated November 8, 2002, File No. 333-101121). | ||
10 | .7 | Credit Agreement, dated as of April 19, 2006, among the registrant, Bank of America, N.A., as Administrative Agent, JP Morgan Chase Bank, N.A., as Syndication Agent and L/C Issuer, BNP Paribas, SunTrust Bank, and Citibank, N.A., as Co-Documentation Agents, and the other financial institutions party thereto (incorporated herein by reference to Exhibit 10.15 to Pactiv Corporations Quarterly Report on Form 10-Q for the quarter ended March 31, 2006, File No. 1-15157). |
28
Table of Contents
Exhibit No. | Description | |||
10 | .8 | Pactiv Corporation Deferred Retirement Savings Plan (incorporated herein by reference to Exhibit 10.16 to Pactiv Corporations Annual Report on Form 10-K for the year ended December 31, 2004, File No. 1-15157). | ||
10 | .9 | Receivables Purchase Agreement, dated as of December 21, 2006, among the registrant and Atlantic Asset Securitization LLC and Calyon New York Branch, as agent for Purchasers (incorporated herein by reference to Exhibit 10.22 to Pactiv Corporations Annual Report on Form 10-K for the year ended December 31, 2006, File No. 1-15157). | ||
10 | .10 | Continuing Agreement for Standby Letters of Credit between Pactiv Corporation and JPMorgan Chase Bank, N.A. dated June 5, 2007 (incorporated herein by reference to Exhibit 10.20 to Pactiv Corporations Quarterly Report on Form 10-Q for the quarter ended June 30, 2007, File No. 1-15157). | ||
10 | .11 | Credit Agreement between Pactiv Corporation and JPMorgan Chase Bank, N.A. dated June 5, 2007 (incorporated herein by reference to Exhibit 10.21 to Pactiv Corporations Quarterly Report on Form 10-Q for the quarter ended June 30, 2007, File No. 1-15157). | ||
11 | None. | |||
15 | None. | |||
18 | None. | |||
19 | None. | |||
22 | None. | |||
23 | None. | |||
24 | None. | |||
*31 | .1 | Rule 13a-14(a)/15d-14(a) Certification. | ||
*31 | .2 | Rule 13a-14(a)/15d-14(a) Certification. | ||
**32 | .1 | Section 1350 Certification. | ||
**32 | .2 | Section 1350 Certification. | ||
*101 | .INS | XBRL Instance Document. | ||
*101 | .SCH | XBRL Taxonomy Extension Schema Document. | ||
*101 | .CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | ||
*101 | .DEF | XBRL Taxonomy Extension Definition Linkbase Document. | ||
*101 | .LAB | XBRL Taxonomy Extension Label Linkbase Document. | ||
*101 | .PRE | XBRL Taxonomy Extension Presentation Linkbase Document. |
* | Filed herewith | |
** | Furnished herewith |
29
Table of Contents
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/ EDWARD
T. WALTERS
|
Edward T. Walters
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
Date: August 9, 2010
30
Table of Contents
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/ DONALD
E. KING
|
Donald E. King
Corporate Controller and Chief Accounting Officer
(Principal Accounting Officer)
Date: August 9, 2010
31