Pactiv LLC – ‘10-Q’ for 6/30/03

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Quarterly Report   —   Form 10-Q
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Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report                                      30    173K 
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10-Q   —   Quarterly Report
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

--------------------- 

FORM 10-Q 

                                                                [Download Table]
                                                                   
(mark one)                                                         
   [X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE 
           SECURITIES EXCHANGE ACT OF 1934                         

             FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2003          

                                  OR                               

   [ ]     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)

                                                                [Download Table]
                                                                              
                DELAWARE                                       36-2552989     
     (State or other jurisdiction of                        (I.R.S. Employer  
     incorporation or organization)                        Identification No.)

          1900 WEST FIELD COURT                                               
          LAKE FOREST, ILLINOIS                                   60045       
(Address of principal executive offices)                       (Zip Code)     

    REGISTRANT'S 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 [X]  No [ ]                      

   Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).  Yes [X]  No [ ]                    

   Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: Common stock, par value     
$0.01 per share: 157,496,591 as of July 31, 2003. (See Notes to Financial       
Statements.)                                                                    

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                                                               PAGE
                                                               ----
                                                                   
PART I -- FINANCIAL INFORMATION                                    
  Item 1. Financial Statements (Unaudited)                         
     Consolidated Statement of Income.......................     3 
     Condensed Consolidated Statement of Financial                 
      Position..............................................     4 
     Condensed Consolidated Statement of Cash Flows.........     5 
     Notes to Financial Statements..........................     6 
  Item 2. Management's Discussion and Analysis of Financial        
     Condition and Results of Operations....................    15 
  Item 3. Quantitative and Qualitative Disclosures About           
     Market Risk............................................    23 
  Item 4. Controls and Procedures...........................    24 
PART II -- OTHER INFORMATION                                       
  Item 1. Legal Proceedings.................................    25 
  Item 2. Changes in Securities*............................    26 
  Item 3. Defaults Upon Senior Securities*..................    26 
  Item 4. Submission of Matters to a Vote of Security              
     Holders................................................    26 
  Item 5. Other Information*................................    26 
  Item 6. Exhibits and Reports on Form 8-K..................    26 

---------------                                                                 
* No response to this item is included herein either because it is inapplicable 
or there is nothing to report.                                              

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PART I -- FINANCIAL INFORMATION 

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)                                        

CONSOLIDATED STATEMENT OF INCOME                                                

                                                        [Enlarge/Download Table]

                                                THREE MONTHS ENDED JUNE 30,    SIX MONTHS ENDED JUNE 30,  
                                                ---------------------------   --------------------------- 
                                                    2003           2002           2003           2002     
(In millions, except share and per share data)  ------------   ------------   ------------   ------------ 
                                                                                                          
SALES....................................       $        810   $        728   $      1,527   $      1,375 
                                                ------------   ------------   ------------   ------------ 
COSTS AND EXPENSES                                                                                        
  Cost of sales, excluding depreciation and                                                               
     amortization........................                571            494          1,079            932 
  Selling, general, and administrative...                 79             74            153            150 
  Depreciation and amortization..........                 41             39             81             79 
  Other (income), net....................                 (1)            --             (1)            -- 
  Restructuring and other................                 --             (4)            --             (4)
                                                ------------   ------------   ------------   ------------ 
                                                         690            603          1,312          1,157 
INCOME BEFORE INTEREST EXPENSE, INCOME TAXES,                                                             
  AND MINORITY INTEREST..................                120            125            215            218 
  Interest expense, net of interest                                                                       
     capitalized.........................                 24             24             48             47 
  Income tax expense.....................                 36             40             63             68 
  Minority interest......................                  1              1              1              1 
                                                ------------   ------------   ------------   ------------ 
INCOME FROM CONTINUING OPERATIONS........                 59             60            103            102 
Cumulative effect of change in accounting                                                                 
  principles, net of income tax..........                 --             --             --            (72)
                                                ------------   ------------   ------------   ------------ 
NET INCOME...............................       $         59   $         60   $        103   $         30 
                                                ============   ============   ============   ============ 
Average number of shares of common stock                                                                  
  outstanding                                                                                             
  Basic..................................        158,583,933    158,230,119    158,729,365    158,765,987 
  Diluted................................        160,620,273    160,538,835    160,881,001    160,820,126 
EARNINGS PER SHARE                                                                                        
Basic earnings per share of common stock                                                                  
  Continuing operations..................       $       0.37   $       0.38   $       0.65   $       0.64 
  Cumulative effect of change in accounting                                                               
     principles..........................                 --             --             --          (0.45)
                                                ------------   ------------   ------------   ------------ 
                                                $       0.37   $       0.38   $       0.65   $       0.19 
                                                ============   ============   ============   ============ 
Diluted earnings per share of common stock                                                                
  Continuing operations..................       $       0.37   $       0.38   $       0.64   $       0.64 
  Cumulative effect of change in accounting                                                               
     principles..........................                 --             --             --          (0.45)
                                                ------------   ------------   ------------   ------------ 
                                                $       0.37   $       0.38   $       0.64   $       0.19 
                                                ============   ============   ============   ============ 

The accompanying notes to financial statements are an integral part of this     
statement.                                                                      

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CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION                          

                                                        [Enlarge/Download Table]

                                                              JUNE 30, 2003  DECEMBER 31, 2002
(In millions, except share data)                              -------------  -----------------
                                                                                              
ASSETS                                                                                        
Current assets                                                                                
  Cash and temporary cash investments.......................     $  168           $  127      
  Accounts and notes receivable                                                               
     Trade, less allowances of $13 and $11 at the respective                                  
       dates................................................        335              329      
     Other..................................................         29               29      
  Inventories                                                                                 
     Finished goods.........................................        273              244      
     Work in process........................................         56               47      
     Raw materials..........................................         47               42      
     Other materials and supplies...........................         44               35      
  Other.....................................................         64               51      
                                                                 ------           ------      
  Total current assets......................................      1,016              904      
                                                                 ------           ------      
Property, plant, and equipment, net.........................      1,358            1,366      
                                                                 ------           ------      
Other assets                                                                                  
  Goodwill, net.............................................        610              612      
  Intangible assets, net....................................        297              294      
  Pension assets............................................        179              170      
  Other.....................................................         65               66      
                                                                 ------           ------      
  Total other assets........................................      1,151            1,142      
                                                                 ------           ------      
TOTAL ASSETS................................................     $3,525           $3,412      
                                                                 ======           ======      
LIABILITIES AND SHAREHOLDERS' EQUITY                                                          
Current liabilities                                                                           
  Short-term debt, including current maturities of long-term                                  
     debt...................................................     $    6           $   13      
  Accounts payable..........................................        246              217      
  Interest accrued..........................................          9                9      
  Other.....................................................        254              262      
                                                                 ------           ------      
  Total current liabilities.................................        515              501      
                                                                 ------           ------      
Long-term debt..............................................      1,203            1,224      
                                                                 ------           ------      
Deferred income taxes.......................................        168              140      
                                                                 ------           ------      
Pension and postretirement benefits.........................        563              586      
                                                                 ------           ------      
Deferred credits and other liabilities......................         47               43      
                                                                 ------           ------      
Minority interest...........................................         21               21      
                                                                 ------           ------      
Shareholders' equity                                                                          
  Common stock (157,361,348 and 158,681,918 shares issued                                     
     and outstanding, after deducting 14,421,828 and                                          
     13,101,457 shares held in treasury, at the respective                                    
     dates).................................................          2                2      
  Premium on common stock and other capital surplus.........      1,351            1,379      
  Accumulated other comprehensive loss......................       (939)            (975)     
  Retained earnings.........................................        594              491      
                                                                 ------           ------      
  Total shareholders' equity................................      1,008              897      
                                                                 ------           ------      
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY..................     $3,525           $3,412      
                                                                 ======           ======      

The accompanying notes to financial statements are an integral part of this     
statement.                                                                      

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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS                                  

                                                                [Download Table]

                                                              2003   2002 
FOR THE SIX MONTHS ENDED JUNE 30 (In millions)                ----   ---- 
                                                                          
OPERATING ACTIVITIES                                                      
Income from continuing operations...........................  $103   $102 
Adjustments to reconcile income from continuing operations                
  to cash provided by continuing operations:                              
  Depreciation and amortization.............................    81     79 
  Deferred income taxes.....................................    30     48 
  Restructuring and other...................................    --     (4)
  Noncash retirement benefits, net..........................   (30)   (54)
  Net working capital.......................................   (35)   (10)
  Other.....................................................     6     14 
                                                              ----   ---- 
Cash provided by operating activities.......................   155    175 
                                                              ----   ---- 
INVESTING ACTIVITIES                                                      
Net proceeds from sale of businesses and assets.............     2      5 
Expenditures for property, plant, and equipment.............   (51)   (53)
Acquisitions of businesses and assets.......................    --    (92)
Other.......................................................    (1)     1 
                                                              ----   ---- 
Cash used by investing activities...........................   (50)  (139)
                                                              ----   ---- 
FINANCING ACTIVITIES                                                      
Issuance of common stock....................................     8      6 
Purchase of common stock....................................   (44)   (35)
Retirement of long-term debt................................   (28)    (8)
Net decrease in short-term debt, excluding current                        
  maturities of long-term debt..............................    (1)    (3)
                                                              ----   ---- 
Cash used by financing activities...........................   (65)   (40)
                                                              ----   ---- 
Effect of foreign-exchange rate changes on cash and                       
  temporary cash investments................................     1      2 
                                                              ----   ---- 
INCREASE (DECREASE) IN CASH AND TEMPORARY CASH                            
  INVESTMENTS...............................................    41     (2)
Cash and temporary cash investments, January 1..............   127     41 
                                                              ----   ---- 
CASH AND TEMPORARY CASH INVESTMENTS, JUNE 30................  $168   $ 39 
                                                              ====   ==== 

The accompanying notes to financial statements are an integral part of this     
statement.                                                                      

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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, 2003, and 2002, the Condensed Consolidated Statement of Financial
Position at June 30, 2003, and the Condensed Consolidated Statement of Cash     
Flows for the six-month periods ended June 30, 2003, and 2002, are unaudited. In
the company's 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 indicated. These statements  
have been prepared pursuant to the rules and regulations of the Securities and  
Exchange Commission. 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 the company's Form 10-K for the   
year ended December 31, 2002, as amended, which may be found at www.pactiv.com, 
under the Investor Relations link in the subsection entitled, "SEC Filings."    
Alternatively, free copies of the company's Form 10-K for the year ended        
December 31, 2002, may be obtained by contacting Investor Relations at (866)    
456-5439.                                                                       

NOTE 2. SUMMARY OF ACCOUNTING POLICIES                                          

  For a complete discussion of the company's accounting policies, refer to
Pactiv's most recent filing on Form 10-K.                                       

Stock-Based Compensation                                                        

   In accounting for stock-based employee compensation, the company uses the
intrinsic-value method specified in Accounting Principals Board (APB) Opinion   
No. 25, "Accounting for Stock Issued to Employees." Shown below are net income  
and basic and diluted earnings per share as reported and adjusted to reflect the
use of the fair-value method in determining stock-based compensation costs (pro 
forma), as prescribed in Statement of Financial Accounting Standards (SFAS) No. 
123, "Accounting for Stock-Based Compensation."                                 

                                                        [Enlarge/Download Table]

                                                             THREE MONTHS ENDED   SIX MONTHS ENDED 
                                                                  JUNE 30,            JUNE 30,     
                                                             -------------------  -----------------
                                                               2003       2002     2003      2002  
(In millions, except per-share data)                         --------   --------  -------   -------
                                                                                                   
Net income                                                                                         
As reported.................................................  $   59     $   60   $  103    $   30 
After-tax adjustment of stock-based compensation costs:                                            
  Intrinsic-value method....................................      --         --        1         2 
  Fair-value method.........................................      (4)        (3)      (7)       (6)
                                                              ------     ------   ------    ------ 
Pro forma...................................................  $   55     $   57   $   97    $   26 
                                                              ======     ======   ======    ====== 
EARNINGS PER SHARE                                                                                 
Basic                                                                                              
As reported.................................................  $ 0.37     $ 0.38   $ 0.65    $ 0.19 
Adjustment of stock-based compensation costs:                                                      
  Intrinsic-value method....................................      --         --     0.01      0.01 
  Fair-value method.........................................   (0.02)     (0.02)   (0.04)    (0.04)
                                                              ------     ------   ------    ------ 
Pro forma...................................................  $ 0.35     $ 0.36   $ 0.62    $ 0.16 
                                                              ======     ======   ======    ====== 
Diluted                                                                                            
As reported.................................................  $ 0.37     $ 0.38   $ 0.64    $ 0.19 
Adjustment of stock-based compensation costs:                                                      
  Intrinsic-value method....................................      --         --     0.01      0.01 
  Fair-value method.........................................   (0.02)     (0.02)   (0.04)    (0.04)
                                                              ------     ------   ------    ------ 
Pro forma...................................................  $ 0.35     $ 0.36   $ 0.61    $ 0.16 
                                                              ======     ======   ======    ====== 

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NOTE 3. CHANGES IN ACCOUNTING PRINCIPLES                                        

   In July 2001, the Financial Accounting Standards Board (FASB) issued SFAS
No. 142, "Goodwill and Other Intangible Assets." SFAS No. 142 does not permit   
goodwill and indefinite-lived intangibles to be amortized and requires that     
these assets be reviewed at least annually for possible impairment. The         
company's annual review for possible impairment of goodwill and indefinite-lived
intangibles is conducted in the quarter ending December 31, or earlier as       
warranted by events or changes in circumstances. Possible impairment of goodwill
is determined using a two-step process. The first step requires that the fair   
value of individual reporting units be compared with their respective carrying  
values. If the carrying value of a reporting unit exceeds its fair value, a     
second step is performed to measure the amount of impairment, if any. This      
second step requires the company to allocate the fair value of a reporting unit 
to all of the assets and liabilities of that unit, including definite- and      
indefinite-lived intangibles. Any remaining fair value is the implied goodwill  
of the reporting unit, which is then compared to its carrying value to determine
possible impairment. In determining the fair value of tangible assets, the      
company obtains appraisals from independent valuation firms. Similarly, the     
impairment test for definite- and indefinite-lived intangible assets requires   
that their fair values be compared with their carrying values. If the carrying  
value of an intangible asset exceeds its fair value, an impairment equal to the 
excess is recognized. Estimates of fair value used in testing goodwill and      
indefinite-lived assets for possible impairment are primarily determined using  
projected discounted cash flows along with other publicly available market      
information. These approaches use estimates and assumptions including the amount
and timing of projected cash flows, discount rates reflecting the risk inherent 
in future cash flows, perpetual growth rates, and determination of appropriate  
market comparables. Intangible assets that are not deemed to have an indefinite 
life will continue to be amortized over their useful lives. Effective January 1,
2002, the company adopted SFAS No. 142 and recorded a goodwill-impairment charge
for certain Protective and Flexible Packaging businesses of $83 million, $72    
million after-tax, or $0.45 per share, as a cumulative effect of change in      
accounting principles in the first quarter of 2002. See note 6 to the financial 
statements for additional information.                                          

In January 2003, the FASB issued Interpretation (FIN) No. 46,         
"Consolidation of Variable Interest Entities." FIN No. 46 addresses accounting  
for variable interest entities (VIEs), defined as separate legal structures that
either do not have equity investors with voting rights or have equity investors 
with voting rights that do not provide sufficient financial resources for the   
entities to support their activities. FIN No. 46 requires that (1) a VIE be     
consolidated by a company if that company is subject to a majority of the VIE's 
gains and losses and (2) disclosures be made regarding VIEs that a company is   
not required to consolidate but in which it has a significant variable interest.
Consolidation requirements apply immediately to VIEs created after January 31,  
2003, and in the first fiscal year or interim period beginning after June 15,   
2003, for existing VIEs. Certain of the disclosure requirements apply to        
financial statements issued after January 31, 2003, regardless of when the VIE  
was created. Upon Pactiv's July 1, 2003, adoption of FIN No. 46, the company    
will consolidate the VIE associated with the properties covered by its          
synthetic-lease facility (see note 12 to the financial statements for additional
information), resulting in an increase in long-term debt and property, plant,   
and equipment of $169 million and $152 million, respectively. Consolidation of  
the VIE also will require the company to recognize, as a cumulative effect of   
change in accounting principles, depreciation expense on the leased assets from 
lease inception to June 30, 2003, which will negatively impact net income in the
third quarter of 2003 by approximately $10 million, or $0.06 per share. On a    
going-forward basis, consolidation of the VIE is expected to reduce net income  
by approximately $3 million, or $0.02 per share, annually.                      

NOTE 4. RESTRUCTURING AND OTHER                                                 

    In the fourth quarter of 2001, the company recorded a restructuring charge
of $18 million, $10 million after tax, or $0.06 per share. Of this amount, $5   
million was related to higher-than-anticipated expenses associated with the sale
of small, noncore European businesses announced in the fourth quarter of 2000.  
The remaining $13 million reflected adoption of a restructuring plan to         
consolidate operations and reduce costs in both the Consumer and                
Foodservice/Food Packaging ($5 million) and Protective and Flexible Packaging   
($8 million) segments. Specifically, this charge was for (1) plant closures and 
consolidations in North America and Europe, including the elimination of 283    
positions ($10 million); (2) other workforce reductions                         

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(99 positions -- $2 million); and (3) asset writedowns related to the exit of a 
North American product line ($1 million).                                       

In the second quarter of 2002, the company recognized a benefit of $4 
million, $2 million after tax, or $0.02 per share, related to the reversal of a 
previously recorded restructuring charge (netted against fixed assets),         
primarily as a result of incurring a lower-than-anticipated loss on the sale of 
a noncore European business.                                                    

     Changes in restructuring-reserve balances are shown in the following table.

                                                                [Download Table]

(In millions)                                                     
                                                                  
Balance at December 31, 2002................................  $ 2 
Cash payments...............................................   (1)
                                                              --- 
Balance at June 30, 2003....................................  $ 1 
                                                              === 

NOTE 5. ACQUISITIONS                                                            

On January 4, 2002, the company purchased MSP Schmeiser GmbH, a German
medical-products company, for $3 million. On February 13, 2002, the company     
acquired an egg-packaging production line from Amerpack S.A. de C.V., a Mexican 
company, for $10 million.                                                       

In January 2002, the company purchased the assets of 2 small Italian  
protective-packaging companies, recording these transactions as capital         
expenditures. The outstanding shares of a third small Italian protective-       
packaging company, Forniture Industriali, were acquired in June 2002 for $1     
million.                                                                        

   On June 18, 2002, the company purchased Winkler Forming Inc. (Winkler), a
leading thermoformer of amorphous polyethylene terephthalate (APET) products for
food packaging, for $78 million. During the third quarter of 2002, the company  
received $3 million from the seller in interim settlement of working capital    
amounts. Appraisals of the fair-market value of the assets and liabilities      
acquired were finalized during the second quarter of 2003, resulting in related 
goodwill being reduced by $14 million and property, plant, and equipment and    
intangible assets both being increased by $7 million.                           

On October 21, 2002, Pactiv purchased a 70% interest in the stock of  
Mexico-based Central de Bolsas, S.A. de C.V. (Jaguar), a leading thermoformer of
high-impact polystyrene (HIPS) cold cups and plates and polystyrene foam        
foodservice/food packaging. For this interest, Pactiv paid $31 million to the   
shareholders of Jaguar and made a $20 million equity investment in Jaguar. At   
June 30, 2003, the allocation of the purchase price to the net assets of Jaguar 
and the related recognition of $6 million of goodwill were based on preliminary 
estimates of the fair market value of the assets and liabilities acquired, and, 
therefore, are subject to revision upon receipt of final appraisals. See note 16
to the financial statements for further information.                            

 On November 13, 2002, Pactiv purchased the shares of Prvni Obalova SPOL
S.R.O, a distributor and converter of protective-packaging products in the Czech
Republic, for $4 million.                                                       

NOTE 6. GOODWILL AND INTANGIBLE ASSETS                                          

On January 1, 2002, the company adopted SFAS No. 142. Following the   
adoption of this standard, the company reviewed recorded goodwill for possible  
impairment by comparing the fair value and carrying value of goodwill for each  
reporting unit. Fair value was determined using the income approach. Goodwill   
was found to be impaired for certain Protective and Flexible Packaging          
businesses that were acquired prior to the company's spin-off from Tenneco Inc. 
Faced with increased competition, these businesses experienced lower operating  
margins, and, as a result, the company recorded a goodwill-impairment charge of 
$83 million, $72 million after tax, or $0.45 per share, in the first quarter of 
2002. The company subsequently completed impairment testing in the fourth       
quarter of 2002 and determined that goodwill was not impaired further.          

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     Changes in the carrying value of goodwill for the six months ended June 30,
2003, by operating segment are shown in the following table.                    

                                                        [Enlarge/Download Table]

                                                             CONSUMER AND   PROTECTIVE AND       
                                                             FOODSERVICE/      FLEXIBLE          
                                                            FOOD PACKAGING    PACKAGING     TOTAL
(In millions)                                               --------------  --------------  -----
                                                                                                 
Balance, December 31, 2002.................................      $438            $174       $612 
Goodwill addition..........................................         1               1          2 
Goodwill adjustment -- 2002 acquisition....................       (14)             --        (14)
Translation adjustment.....................................         3               7         10 
                                                                 ----            ----       ---- 
Balance, June 30, 2003.....................................      $428            $182       $610 
                                                                 ====            ====       ==== 

   Trademarks and other intangible assets at June 30, 2003, are shown in the
following table.                                                                

                                                        [Enlarge/Download Table]

                                                                            ACCUMULATED       
                                                            CARRYING VALUE  AMORTIZATION  NET 
(In millions)                                               --------------  ------------  ----
                                                                                              
Intangible assets subject to amortization                                                     
  Patents..................................................      $187           $65       $122
  Other....................................................        67            22         45
                                                                 ----           ---       ----
                                                                  254            87        167
Intangible assets not subject to amortization..............       130            --        130
                                                                 ----           ---       ----
Total intangible assets....................................      $384           $87       $297
                                                                 ====           ===       ====

   Amortization expense for intangible assets subject to amortization was $4
million and $8 million for the three- and six-month periods ended June 30, 2003,
respectively. Amortization expense is estimated to total $15 million, $13       
million, $13 million, $12 million, and $12 million for years 2003, 2004, 2005,  
2006, and 2007, respectively.                                                   

NOTE 7. PROPERTY, PLANT, AND EQUIPMENT, NET                                     

                                                        [Enlarge/Download Table]

                                                             JUNE 30, 2003  DECEMBER 31, 2002
(In millions)                                                -------------  -----------------
                                                                                             
Original cost                                                                                
  Land, buildings, and improvements.........................    $  552           $  573      
  Machinery and equipment...................................     1,547            1,441      
  Construction in progress..................................        71               95      
  Other.....................................................        59               58      
                                                                ------           ------      
                                                                 2,229            2,167      
Less accumulated depreciation and amortization..............      (871)            (801)     
                                                                ------           ------      
                                                                $1,358           $1,366      
                                                                ======           ======      

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NOTE 8. EARNINGS PER SHARE                                                      

   Earnings from continuing operations per share of common stock outstanding
was computed as follows.                                                        

                                                        [Enlarge/Download Table]

                                                      THREE MONTHS ENDED JUNE 30,   SIX MONTHS ENDED JUNE 30, 
                                                      ---------------------------  ---------------------------
                                                          2003           2002          2003           2002    
(Dollars in millions, except for earnings per share)  ------------   ------------  ------------   ------------
                                                                                                              
BASIC EARNINGS PER SHARE                                                                                      
Income from continuing operations...........          $         59   $         60  $        103   $        102
                                                      ------------   ------------  ------------   ------------
Average number of shares of common stock                                                                      
  outstanding...............................           158,583,933    158,230,119   158,729,365    158,765,987
                                                      ------------   ------------  ------------   ------------
Basic earnings from continuing operations per                                                                 
  average share of common stock.............          $       0.37   $       0.38  $       0.65   $       0.64
                                                      ------------   ------------  ------------   ------------
DILUTED EARNINGS PER SHARE                                                                                    
Income from continuing operations...........          $         59   $         60  $        103   $        102
                                                      ------------   ------------  ------------   ------------
Average number of shares of common stock                                                                      
  outstanding...............................           158,583,933    158,230,119   158,729,365    158,765,987
Effect of dilutive securities                                                                                 
  Restricted stock..........................                    --         28,766            --         27,001
  Stock options.............................             1,551,864      1,923,143     1,666,812      1,687,177
  Performance shares........................               484,476        356,807       484,824        339,961
                                                      ------------   ------------  ------------   ------------
Average number of shares of common stock outstanding                                                          
  including dilutive securities.............           160,620,273    160,538,835   160,881,001    160,820,126
                                                      ------------   ------------  ------------   ------------
Dilutive earnings from continuing operations per                                                              
  average share of common stock.............          $       0.37   $       0.38  $       0.64   $       0.64
                                                      ------------   ------------  ------------   ------------

In November 1999, the company established a grantor 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 so-called "rabbi trust" is designed to assure
payment of deferred compensation and supplemental pension benefits. These shares
are not considered to be outstanding for purposes of financial reporting.       

NOTE 9. SEGMENT INFORMATION                                                     

 The company has three operating segments: Consumer and Foodservice/Food
Packaging, which relates to the manufacture and sale of disposable plastic,     
molded-fibre, pressed-paperboard, and aluminum packaging products for the       
consumer, foodservice, and food-packaging markets; Protective and Flexible      
Packaging, which relates to the manufacture and sale of plastic, paperboard, and
molded-fibre products for protective-packaging markets such as electronics,     
automotive, furniture, and e-commerce, and for flexible-packaging applications  
in food, medical, pharmaceutical, chemical, and hygienic markets; and Other,    
which relates to corporate and administrative-service operations and            
retiree-benefit income and expense.                                             

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The following table sets forth certain segment information.           

                                                        [Enlarge/Download Table]

                                                    SEGMENT                                               
                                     --------------------------------------                               
                                      CONSUMER AND     PROTECTIVE                                         
                                      FOODSERVICE/    AND FLEXIBLE              RECLASSIFICATIONS         
                                     FOOD PACKAGING    PACKAGING     OTHER      AND ELIMINATIONS   TOTAL  
(In millions)                        --------------   ------------   ------     -----------------  ------ 
                                                                                                          
FOR THE THREE MONTHS ENDED JUNE 30,                                                                       
  2003                                                                                                    
Sales to external customers.........     $  587           $223       $   --          $   --        $  810 
Income before interest expense,                                                                           
  income taxes, and minority                                                                              
  interest..........................         99             13            8(b)           --           120 
FOR THE THREE MONTHS ENDED JUNE 30,                                                                       
  2002                                                                                                    
Sales to external customers.........     $  521           $207       $   --          $   --        $  728 
Income before interest expense,                                                                           
  income taxes, and minority                                                                              
  interest..........................         92             20(a)        13(b)           --           125 
AT JUNE 30, 2003, AND FOR THE SIX                                                                         
  MONTHS THEN ENDED                                                                                       
Sales to external customers.........     $1,087           $440       $   --          $   --        $1,527 
Income before interest expense,                                                                           
  income taxes, and minority                                                                              
  interest..........................        172             27           16(b)           --           215 
Total assets........................      2,084            759          682(c)           --         3,525 
AT JUNE 30, 2002, AND FOR THE SIX                                                                         
  MONTHS THEN ENDED                                                                                       
Sales to external customers.........     $  977           $398       $   --          $   --        $1,375 
Income before interest expense,                                                                           
  income taxes, and minority                                                                              
  interest..........................        159             34(a)        25(b)           --           218 
Cumulative effect of change in                                                                            
  accounting principles, net of                                                                           
  tax...............................         --            (72)          --              --           (72)
Total assets........................      2,081            691        1,487(c)         (116)        4,143 

---------------                                                                 
(a)  Includes restructuring and other credits of $4 million.                    

(b)  Includes pension-plan income and unallocated corporate expenses.           

(c)  Includes assets related to pension plans and administrative-service        
operations.                                                           

NOTE 10. ACCOUNTS AND NOTES RECEIVABLE                                          

    On a recurring basis, the company sells an undivided interest in a pool of
trade receivables meeting certain criteria to a third party as an alternative to
debt financing. Amounts sold were $30 million and $35 million at June 30, 2003, 
and June 30, 2002, respectively. Such sales, which represent a form of off-     
balance-sheet financing, are recorded as a reduction of accounts and notes      
receivable in the statement of financial position, and related proceeds are     
included in cash provided by operating activities in the statement of cash      
flows. Discounts and fees related to these sales were immaterial in the second  
quarter of 2003 and 2002, and were included in other expense in the consolidated
statement of income. In the event that either Pactiv or the third-party         
purchaser of the trade receivables were to discontinue this program, the        
company's debt would increase, or its cash balance would decrease, by an amount 
corresponding to the level of sold receivables at such time.                    

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NOTE 11. OTHER CURRENT LIABILITIES                                              

   Components of other current liabilities are shown in the following table.

                                                        [Enlarge/Download Table]

                                                 JUNE 30, 2003  DECEMBER 31, 2002  DECEMBER 31, 2001
(In millions)                                    -------------  -----------------  -----------------
                                                                                                    
Accrued promotional expense.....................     $ 75             $ 87               $ 73       
Accrued payroll expense.........................       38               47                 30       
Accrued taxes...................................       32               11                 10       
Other...........................................      109              117                129       
                                                     ----             ----               ----       
Total other current liabilities.................     $254             $262               $242       
                                                     ====             ====               ====       

NOTE 12. SYNTHETIC LEASE COMMITMENTS                                            

 Pactiv has entered into a $169 million synthetic-lease agreement with a
third-party lessor and various lenders to finance the cost of its headquarters  
building and certain of its warehouse facilities and to facilitate additional   
leasing arrangements for other operating facilities. This agreement, which will 
expire in November 2005, contains customary terms and conditions, covering,     
among other things, residual-value guarantees, default provisions, and financial
covenants, and requires that certain financial-ratio tests be satisfied. Upon   
expiration of the initial lease periods for the properties, the company may     
extend the leases on terms negotiated with the lessors or purchase the leased   
assets under specified conditions. Termination of the synthetic-lease agreement,
either before or at expiration, would require the company to make a termination 
payment of $169 million, which, in essence, represents off-balance-sheet debt in
that the company might be required to obtain alternative financing to fund such 
a payment.                                                                      

   In January 2003, the FASB issued FIN No. 46, which revises the accounting
and disclosure requirements for VIEs, such as the company's synthetic-lease     
agreement. See note 3 to the financial statements for further information       
concerning VIEs.                                                                

NOTE 13. COMPREHENSIVE INCOME                                                   

    Details of total comprehensive income for the three- and six-month periods
ended June 30, 2003, and 2002, were as follows:                                 

                                                        [Enlarge/Download Table]

                                                       THREE MONTHS ENDED   SIX MONTHS ENDED 
                                                            JUNE 30,            JUNE 30,     
                                                       -------------------  -----------------
                                                        2003         2002   2003        2002 
                    (In millions)                      ------       ------  -----       -----
                                                                                             
Net income............................................   $59          $60   $103         $30 
Other comprehensive income                                                                   
  Net currency translation gains......................    26           33     36          27 
  Net changes in interest-rate swaps..................    --            1     --           3 
                                                         ---          ---   ----         --- 
Total comprehensive income............................   $85          $94   $139         $60 
                                                         ---          ---   ----         --- 

    The increase in currency translation gains in 2003 was attributable to the
appreciation of foreign currencies (mainly the euro) versus the U.S. dollar and 
the resulting impact on the company's net investment in foreign countries.      

NOTE 14. GUARANTEES                                                             

     The company, from time to time, utilizes various lines of credit to finance
operations of its foreign subsidiaries, which are backed by payment and         
performance guarantees. These lines of credit are mainly used as overdraft and  
foreign-exchange settlement facilities and are in effect until cancelled by one 
or both parties. Performance under the guarantees would be required if          
subsidiaries failed to satisfy their obligations under such guarantees. At June 
30, 2003, amounts outstanding under these lines of credit were not material.    

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NOTE 15. CONTINGENCIES                                                          

Litigation                                                              

     In May 1999, Tenneco, Pactiv (through Tenneco's former paperboard-packaging
operations), and a number of other containerboard manufacturers were named as   
defendants in a consolidated class-action complaint brought on behalf of        
purchasers of corrugated containers that alleged a civil violation of Section I 
of the Sherman Act. The company was also named as a defendant in a related      
class-action antitrust lawsuit. Tenneco sold its containerboard business in     
April 1999, prior to the spin-off of Pactiv in November 1999. In connection with
the spin-off, Pactiv was assigned responsibility for defending related claims   
against Tenneco and for any liability resulting therefrom.                      

     The lawsuits (In re: Linerboard Litigations U.S.D.C., E.D. of Pennsylvania,
MDL no. 1261) allege that the defendants, during the period October 1, 1993,    
through November 30, 1995, conspired to limit the supply of linerboard, and that
the purpose and effect of the alleged conspiracy was to artificially increase   
prices of corrugated containers and corrugated sheets. The lawsuits seek treble 
damages of unspecified amounts, plus attorneys' fees.                           

  The class has been certified to include all persons in the United States
who purchased corrugated containers/sheets directly from any of the defendants  
during the above period, excluding those who purchased corrugated products      
pursuant to contracts in which the price of such products was not tied to the   
price of linerboard. The deadline for class members to opt out of the classes   
was June 9, 2003. Several entities have opted out of the classes, and           
approximately 10 direct-action complaints have been filed in various federal    
courts across the country by opt-out entities. These cases effectively have been
consolidated for pretrial purposes before the Federal District Court in the     
Eastern District of Pennsylvania overseeing the class actions, and it is        
expected that they soon will be transferred formally to that court. All of the  
opt-out complaints included allegations against the defendants that were        
substantially similar to those made in the class actions.                       

    The class actions are currently set to come to trial in September 2004. No
schedule has yet been established for any of the direct-action cases. Pactiv's  
management believes that the allegations have no merit and is vigorously        
defending against the claims.                                                   

The company is party to other legal proceedings arising from its      
operations. Related reserves are recorded when it is probable that liabilities  
exist and where reasonable estimates of such liabilities can be made.           

Management believes that the outcome of all of these legal matters,   
individually and in the aggregate, will not have a material adverse effect on   
the company's financial position.                                               

Environmental Matters                                                   

    In early 2003, the company discovered that certain air emissions at one of
its California plants exceeded permitted levels. The company reported this      
matter to the San Joaquin Valley Air Pollution Control District, and is         
currently in discussion with that agency regarding the appropriate actions to be
taken to address this matter. The company expects to resolve this matter through
discussions with the agency and does not believe that the costs involved,       
including any monetary sanctions, will have a material adverse effect on the    
company's financial position.                                                   

    The company is subject to a variety of environmental and pollution-control
laws and regulations in all jurisdictions in which it operates. Pactiv          
establishes related reserves where it is probable that liabilities exist and    
where reasonable estimates of such liabilities can be made. Estimated           
liabilities are subject to change as additional information becomes available   
regarding the magnitude of possible clean-up costs and the expense and          
effectiveness of alternative clean-up methods. However, management believes that
any additional costs that may be incurred as more information becomes available 
will not have a material adverse effect on the financial condition of the       
company.                                                                        

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NOTE 16. SUBSEQUENT EVENT                                                       

 On August 8, 2003, the company acquired the remaining 30 percent of the
stock of Jaguar, making it a wholly-owned subsidiary of Pactiv. For this        
interest, the company paid $22 million to the minority interest shareholders of 
Jaguar. See note 5 to the financial statements for further information.         

     The above notes are an integral part of the foregoing financial statements.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS 
OF OPERATIONS                                                   

BASIS OF PRESENTATION                                                           

     Financial statements for all periods presented herein have been 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.                                                         

 The company has three operating segments: Consumer and Foodservice/Food
Packaging, which relates to the manufacture and sale of disposable plastic,     
molded-fibre, pressed-paperboard, and aluminum packaging products for the       
consumer, foodservice, and food-packaging markets; Protective and Flexible      
Packaging, which relates to the manufacture and sale of plastic, paperboard, and
molded-fibre products for protective-packaging markets such as electronics,     
automotive, furniture, and e-commerce, and for flexible-packaging applications  
in food, medical, pharmaceutical, chemical, and hygienic markets; and Other,    
which relates to corporate and administrative-service operations and            
retiree-benefit income and expense.                                             

RESTRUCTURING AND OTHER                                                         

    In the fourth quarter of 2001, the company recorded a restructuring charge
of $18 million, $10 million after tax, or $0.06 per share. Of this amount, $5   
million was related to higher-than-anticipated expenses associated with the sale
of small, noncore European businesses announced in the fourth quarter of 2000.  
The remaining $13 million reflected adoption of a restructuring plan to         
consolidate operations and reduce costs in both the Consumer and                
Foodservice/Food Packaging ($5 million) and Protective and Flexible Packaging   
($8 million) segments. Specifically, this charge was for (1) plant closures and 
consolidations in North America and Europe, including the elimination of 283    
positions ($10 million); (2) other workforce reductions (99 positions -- $2     
million); and (3) asset writedowns related to the exit of a North American      
product line ($1 million).                                                      

In the second quarter of 2002, the company recognized a benefit of $4 
million, $2 million after tax, or $0.02 per share, related to the reversal of a 
previously recorded restructuring charge (netted against fixed assets),         
primarily as a result of incurring a lower-than-anticipated loss on the sale of 
a noncore European business.                                                    

THREE MONTHS ENDED JUNE 30, 2003, COMPARED WITH THREE MONTHS ENDED JUNE 30, 2002

RESULTS OF CONTINUING OPERATIONS                                                

Significant Trends                                                      

     Approximately 80% of Pactiv's sales comes from products made from different
types of plastics. The principal raw materials used by the company to           
manufacture these products are plastic resins, including polystyrene,           
polyethylene, polypropylene, polyvinyl chloride and amorphous polyethylene      
terephthalate. Plastic-resin prices can be volatile and are a function of, among
other things, the availability of production capacity; oil, natural gas, and    
other energy-related feedstock costs; and geopolitical circumstances.           

   At the end of the second quarter of 2003, industry prices for polystyrene
were approximately 4% higher than at the end of the first quarter of 2003, while
industry prices for polyethylene fell by approximately 6% over the same period. 
Overall resin prices were roughly 30% higher than in the year-ago period, driven
principally by higher oil and natural-gas costs. As a result, the company's     
second-quarter 2003 gross margin fell to 29.5% from 32.1% last year.            

The company increased selling prices in many areas of its business in 
response to the higher resin costs. Certain pricing actions took effect late in 
the first quarter and benefited all of the second quarter, while others were    
implemented during the second quarter. Second-quarter 2003 gross margin rose to 
29.5% from 29.1% in the first quarter of 2003. The company's pricing actions,   
coupled with an anticipated moderation of plastic-resin costs as energy markets 
return to a more normal state, are expected to improve the company's gross      
margin in the second half of the year.                                          

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Sales                                                                   

                                                        [Enlarge/Download Table]

                                                             THREE MONTHS ENDED          
                                                                  JUNE 30,               
                                                             -------------------         
                                                              2003         2002   CHANGE 
                   (Dollars in millions)                     ------       ------  ------ 
                                                                                         
Consumer and Foodservice/Food Packaging.....................  $587         $521     12.7%
Protective and Flexible Packaging...........................   223          207      7.7 
                                                              ----         ----          
Total.......................................................  $810         $728     11.3%
                                                              ----         ----          

Total sales increased $82 million, or 11.3%, over 2002. Excluding the 
positive impact of foreign-currency exchange rates ($20 million), sales grew 8%,
driven by 5% volume growth and 3% price improvement.                            

    Sales in the Consumer and Foodservice/Food Packaging segment increased $66
million, or 12.7%, from 2002. Volume in this business grew 8.4%, with 1.2%      
coming from the base business and 7.2% from acquisitions, while pricing actions 
increased sales by 4.1%. Hefty(R) consumer products had strong sales growth, led
by increases in tableware and food bags. Rollout of four new Hefty(R) products  
launched this year continues on track and is meeting the company's targets for  
distribution. In addition, products introduced in the past two years (namely,   
Hefty(R) The Gripper(TM) tall kitchen waste bags and Hefty(R) Zoo Pals(TM)      
disposable children's plates) continued to grow well. Sales growth in the       
Foodservice/Food Packaging business primarily reflected the impact of 2002      
acquisitions and price increases, reduced somewhat by lower volume. Acquisitions
accounted for $39 million in sales in the quarter, compared with $2 million last
year.                                                                           

     Sales of protective- and flexible-packaging products increased $16 million,
or 7.7%, compared with 2002. Excluding the positive impact of foreign-currency  
exchange rates ($19 million), sales for this segment declined 1%, primarily     
because of lower worldwide volume, offset partially by the impact of            
selling-price increases in North America.                                       

    Operating Income (Income before Interest Expense, Income Taxes, and Minority
Interest)                                                               

                                                        [Enlarge/Download Table]

                                                             THREE MONTHS ENDED           
                                                                  JUNE 30,                
                                                             -------------------          
                                                              2003         2002   CHANGE  
                   (Dollars in millions)                     ------       ------  ------  
                                                                                          
Consumer and Foodservice/Food Packaging.....................  $ 99         $ 92      7.6% 
Protective and Flexible Packaging...........................    13           20    (35.0) 
Other.......................................................     8           13    (38.5) 
                                                              ----         ----           
Total.......................................................  $120         $125     (4.0)%
                                                              ----         ----           

   Total operating income was $120 million in 2003, a decline of $5 million,
or 4.0%, from 2002. The decrease was driven principally by lower pension income,
higher raw-material costs, and a $4 million reversal in 2002 of a previously    
recorded restructuring charge, somewhat offset by increased volume and selling  
prices and ongoing benefits from the company's productivity and procurement     
initiatives.                                                                    

  Operating income for the Consumer and Foodservice/Food Packaging segment
increased $7 million, or 7.6%, in 2003, primarily as a result of volume growth  
(including acquisitions), increased selling prices, and productivity            
improvements, offset partially by the impact of higher raw-material costs.      

    Operating income for the Protective and Flexible Packaging segment in 2003
was down $7 million, or 35.0%, versus last year, reflecting a decline in volume 
because of soft economic conditions worldwide, as well as higher raw-material   
costs. Also, last year's results for the segment included the aforementioned $4 
million reversal of a previously recorded restructuring charge. Somewhat        
offsetting these factors was improved pricing in the North American market;     
however, overall pricing in Europe did not improve because of weak demand.      

     Operating income for the Other segment decreased $5 million from last year,
mainly because of a decline in pension income (from $27 million in 2002 to $15  
million in 2003), offset partially by administrative productivity and           
procurement savings.                                                            

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Income Taxes                                                            

  The company's effective tax rate for 2003 was 38.0%, compared with 40.0%
for 2002, reflecting the positive impact of tax-reduction actions implemented in
the United States and Europe.                                                   

Income from Continuing Operations                                       

    The company recorded net income from continuing operations of $59 million,
or $0.37 per share, in 2003, compared with $60 million, or $0.38 per share, last
year. Included in 2003 net income was pension income of $9 million after tax, or
$0.06 per share. Net income for 2002 included pension income of $17 million     
after tax, or $0.10 per share, and $2 million after tax, or $0.02 per share,    
from the aforementioned reversal of a previously recorded restructuring charge. 

SIX MONTHS ENDED JUNE 2003, COMPARED WITH SIX MONTHS ENDED JUNE 2002            

RESULTS OF CONTINUING OPERATIONS                                                

Sales                                                                   

                                                        [Enlarge/Download Table]

                                                             SIX MONTHS ENDED         
                                                                 JUNE 30,             
                                                             -----------------        
                                                              2003      2002    CHANGE
                   (Dollars in millions)                     -------   -------  ------
                                                                                      
Consumer and Foodservice/Food Packaging..................... $1,087    $  977    11.3%
Protective and Flexible Packaging...........................    440       398    10.6 
                                                             ------    ------         
Total....................................................... $1,527    $1,375    11.1%
                                                             ------    ------         

   Total sales increased $152 million, or 11.1%, versus last year. Excluding
the positive impact of foreign-currency exchange rates ($40 million), sales     
increased 7.9% over last year.                                                  

 Sales for the Consumer and Foodservice/Food Packaging segment increased
$110 million, or 11.3%, from last year. Volume in the segment grew 9.8%, with   
2.4% coming from the base business and 7.4% from acquisitions. Hefty(R) consumer
products growth was led by increases in tableware and food bags, along with     
continued contributions from products introduced in the past two years. Sales   
growth in the Foodservice/Food Packaging business primarily reflected the impact
of the last year's acquisitions and 2003 price increases, reduced somewhat by   
lower volume. Acquisitions accounted for $74 million in sales in 2003, compared 
with $2 million last year.                                                      

     Sales of protective- and flexible-packaging products increased $42 million,
or 10.6%, compared with 2002. Excluding the positive impact of foreign-currency 
exchange rates ($39 million), sales for this segment were essentially flat      
compared with last year, as lower worldwide volume was offset by the impact of  
price increases.                                                                

    Operating Income (Income before Interest Expense, Income Taxes, and Minority
Interest)                                                               

                                                        [Enlarge/Download Table]

                                                             SIX MONTHS ENDED          
                                                                 JUNE 30,              
                                                             -----------------         
                                                              2003      2002    CHANGE 
                   (Dollars in millions)                     -------   -------  ------ 
                                                                                       
Consumer and Foodservice/Food Packaging..................... $  172    $  159     8.2% 
Protective and Flexible Packaging...........................     27        34   (20.6) 
Other.......................................................     16        25   (36.0) 
                                                             ------    ------          
Total....................................................... $  215    $  218    (1.4)%
                                                             ------    ------          

   Total operating income was $215 million in 2003, a decline of $3 million,
or 1.4%, from 2002, driven by a $30 million decline in pension income, higher   
raw-material costs, and a $4 million reversal in 2002 of a previously recorded  
restructuring charge, largely offset by higher volume, increased selling prices,
and ongoing benefits of the company's productivity and procurement initiatives. 

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  Operating income for the Consumer and Foodservice/Food Packaging segment
increased $13 million, or 8.2%, in 2003, driven principally by volume growth    
(including acquisitions), increased selling prices, and productivity            
improvements, offset partially by higher raw-material costs.                    

Operating income for the Protective and Flexible Packaging segment    
decreased $7 million, or 20.6%, from 2002, as higher selling prices were more   
than offset by lower volume, higher raw-material costs, and the aforementioned  
$4 million reversal in 2002 of a previously recorded restructuring charge.      

   Operating income for the Other segment was down $9 million or 36.0%, from
last year, mainly because of a decline in pension income (from $54 million in   
2002 to $30 million in 2003), offset partially by administrative productivity   
and procurement savings.                                                        

Income Taxes                                                            

  The company's effective tax rate for 2003 was 38.0%, compared with 40.0%
for 2002, reflecting the positive impact of tax-reduction actions implemented in
the United States and Europe.                                                   

Income from Continuing Operations                                       

     The company recorded net income from continuing operations of $103 million,
or $0.64 per share, in 2003, compared with $102 million, or $0.64 per share, in 
2002. Included in 2003 net income was pension income of $19 million after tax,  
or $0.12 per share. Net income in 2002 included pension income of $33 million   
after tax, or $0.20 per share, and $2 million after tax, or $0.02 per share,    
from the aforementioned reversal of a previously recorded restructuring charge. 

Cumulative Effect of Change in Accounting Principles                    

Effective January 1, 2002, the company adopted Statement of Financial 
Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets." In 
this connection, goodwill was tested and found to be impaired for certain       
businesses in the Protective and Flexible Packaging segment that were acquired  
prior to the company's spin-off from Tenneco Inc. Faced with increased          
competition, these businesses experienced lower operating margins. As a result, 
the company recorded a goodwill-impairment charge totaling $83 million, $72     
million after tax, or $0.45 per share, as a cumulative effect of change in      
accounting principles in the first quarter of 2002.                             

LIQUIDITY AND CAPITAL RESOURCES                                                 

Capitalization                                                          

                                                        [Enlarge/Download Table]

                                                             JUNE 30,  DECEMBER 31,        
                                                               2003        2002      CHANGE
                       (In millions)                         --------  ------------  ------
                                                                                           
Short-term debt, including current maturities of long-term                                 
  debt......................................................  $    6      $   13      $ (7)
Long-term debt..............................................   1,203       1,224       (21)
                                                              ------      ------      ---- 
Total debt..................................................   1,209       1,237       (28)
Minority interest...........................................      21          21        -- 
Shareholders' equity........................................   1,008         897       111 
                                                              ------      ------      ---- 
Total capitalization........................................  $2,238      $2,155      $ 83 
                                                              ------      ------      ---- 

    The company's ratio of debt to total capitalization was 54.0% and 57.4% at
June 30, 2003, and December 31, 2002, respectively.                             

Shareholders' equity increased $111 million in the first six months of
2003, as a result of recording net income of $103 million, booking a favorable  
currency translation adjustment totaling $36 million, and issuing company stock 
of $16 million, offset partially by the repurchase of $44 million of Pactiv     
stock.                                                                          

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Cash Flows                                                              

                                                                [Download Table]

                                                              SIX MONTHS ENDED 
                                                                  JUNE 30,     
                                                              -----------------
                                                              2003        2002 
                       (In millions)                          -----       -----
                                                                               
Cash provided (used) by:                                                       
  Operating activities......................................  $155        $175 
  Investing activities......................................   (50)       (139)
  Financing activities......................................   (65)        (40)

    Cash provided by operating activities was $155 million in 2003 versus $175
million last year. The $20 million decrease was driven mainly by an increase in 
working capital, primarily reflecting higher raw-material costs.                

 Investing activities used cash aggregating $50 million in 2003 and $139
million in 2002. The $50 million use of cash in 2003 primarily reflected outlays
for capital items ($51 million). The $139 million use of cash is 2002           
principally reflected outlays for acquisitions ($92 million) and capital items  
($53 million).                                                                  

  Cash used by financing activities was $65 million in 2003, primarily for
the repurchase of company stock ($44 million) and the early retirement of       
joint-venture debt ($28 million). Cash used by financing activities was $40     
million in 2002, principally for the repurchase of company stock.               

Capital Commitments                                                     

Open commitments for authorized expenditures totaled approximately $86
million at June 30, 2003. It is anticipated that the majority of these          
expenditures will be funded over the next 12 months from existing cash,         
short-term investments, and internally generated cash.                          

Liquidity                                                               

    The company uses various sources of funding to manage liquidity, including
off-balance-sheet financing vehicles.                                           

   Sources of liquidity include cash flow from operations and a 5-year, $750
million revolving-credit facility, under which $36 million was outstanding at   
June 30, 2003. At the end of the second quarter of 2003, the company was in full
compliance with financial and other covenants included in the revolving-credit  
agreement.                                                                      

     Off-balance-sheet financing consists of an asset-securitization program and
a synthetic-lease facility. Asset securitization totaled $30 million and $35    
million at June 30, 2003, and June 30, 2002, respectively. The synthetic-lease  
agreement, which will expire in November 2005, contains customary terms and     
conditions covering, among other things, residual-value guarantees, default     
provisions, and financial covenants, and requires the company to satisfy certain
financial-ratio tests. Termination of the lease agreement, either before or at  
expiration, would require the company to make a termination payment ($169       
million at June 30, 2003, and December 31, 2002), which, in essence, represents 
off-balance-sheet debt in that the company might be required to obtain          
alternative financing to fund such a payment. Likewise, termination of the      
asset-securitization program would require the company to increase its debt or  
decrease its cash balance by a corresponding amount.                            

Management believes that cash flow from operations, available cash    
reserves, and the ability to obtain cash under the company's credit facilities  
and asset-securitization program will be sufficient to meet current and future  
liquidity and capital requirements.                                             

CHANGES IN ACCOUNTING PRINCIPLES                                                

   In July 2001, the Financial Accounting Standards Board (FASB) issued SFAS
No. 142, "Goodwill and Other Intangible Assets." SFAS No. 142 does not permit   
goodwill and indefinite-lived intangibles to be amortized and requires that     
these assets be reviewed at least annually for possible impairment. The         
company's annual review for possible impairment of goodwill and indefinite-lived
intangibles is conducted in the quarter                                         
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ending December 31, or earlier as warranted by events or changes in             
circumstances. Possible impairment of goodwill is determined using a two-step   
process. The first step requires that the fair value of individual reporting    
units be compared with their respective carrying values. If the carrying value  
of a reporting unit exceeds its fair value, a second step is performed to       
measure the amount of impairment, if any. This second step requires the company 
to allocate the fair value of a reporting unit to all of the assets and         
liabilities of that unit, including definite- and indefinite-lived intangibles. 
Any remaining fair value is the implied goodwill of the reporting unit, which is
then compared to its carrying value to determine possible impairment. In        
determining the fair value of tangible assets, the company obtains appraisals   
from independent valuation firms. Similarly, the impairment test for definite-  
and indefinite-lived intangible assets requires that their fair values be       
compared with their carrying values. If the carrying value of an intangible     
asset exceeds its fair value, an impairment equal to the excess is recognized.  
Estimates of fair value used in testing goodwill and indefinite-lived assets for
possible impairment are primarily determined using projected discounted cash    
flows along with other publicly available market information. These approaches  
use estimates and assumptions including the amount and timing of projected cash 
flows, discount rates reflecting the risk inherent in future cash flows,        
perpetual growth rates, and determination of appropriate market comparables.    
Intangible assets that are not deemed to have an indefinite life will continue  
to be amortized over their useful lives. Effective January 1, 2002, the company 
adopted SFAS No. 142 and recorded a goodwill-impairment charge for certain      
Protective and Flexible Packaging businesses of $83 million, $72 million        
after-tax, or $0.45 per share, as a cumulative effect of change in accounting   
principles in the first quarter of 2002. See note 6 to the financial statements 
for additional information.                                                     

In January 2003, the FASB issued Interpretation (FIN) No. 46,         
"Consolidation of Variable Interest Entities." FIN No. 46 addresses accounting  
for variable interest entities (VIEs), defined as separate legal structures that
either do not have equity investors with voting rights or have equity investors 
with voting rights that do not provide sufficient financial resources for the   
entities to support their activities. FIN No. 46 requires that (1) a VIE be     
consolidated by a company if that company is subject to a majority of the VIE's 
gains and losses and (2) disclosures be made regarding VIEs that a company is   
not required to consolidate but in which it has a significant variable interest.
Consolidation requirements apply immediately to VIEs created after January 31,  
2003, and in the first fiscal year or interim period beginning after June 15,   
2003, for existing VIEs. Certain of the disclosure requirements apply to        
financial statements issued after January 31, 2003, regardless of when the VIE  
was created. Upon Pactiv's July 1, 2003, adoption of FIN No. 46, the company    
will consolidate the VIE associated with the properties covered by its          
synthetic-lease facility, resulting in an increase in long-term debt and        
property, plant, and equipment of $169 million and $152 million, respectively.  
Consolidation of the VIE also will require the company to recognize, as a       
cumulative effect of change in accounting principles, depreciation expense on   
the leased assets from lease inception to June 30, 2003, which will negatively  
impact net income in the third quarter of 2003 by approximately $10 million, or 
$0.06 per share. On a going-forward basis, consolidation of the VIE is expected 
to reduce net income by approximately $3 million, or $0.02 per share, annually. 

CRITICAL ACCOUNTING POLICIES                                                    

  For a complete discussion of the company's critical accounting policies,
refer to Pactiv's most recent filing on Form 10-K.                              

Pension Plans                                                         

   The company accounts for pension plans in accordance with requirements of
SFAS No. 87. Pension-plan income ($30 million and $54 million for the six months
ended June 30, 2003, and 2002, respectively) is included in the statement of    
income as an offset to selling, general, and administrative expenses.           
Projections indicate that the company's noncash pension income will total       
approximately $60 million in 2003, versus $109 million in 2002. The drop in     
pension income reflects the decline in equity market values, the reduction in   
the discount rate used to measure pension obligations from 7.25% to 6.75%, and  
the impact of the company's decision to reduce the expected long-term rate of   
return on pension assets from 9.5% to 9%.                                       

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Pension income is based on a number of factors, including estimates of
future returns on pension-plan assets; amortization of actuarial gains/losses;  
expectations regarding employee compensation; and assumptions pertaining to     
participant turnover, retirement age, and life expectancy.                      

   In developing its assumption regarding the rate of return on pension-plan
assets, the company receives input from its outside actuary and investment      
advisors on asset-allocation strategies and projections of long-term rates of   
return on various asset classes, risk-free rates of return, and long-term       
inflation rates. Since inception in 1975, the pension plans' annual rate of     
return on assets has averaged 10.5%. Over its history, the plan has invested    
approximately 65% of its assets in equities and 35% in fixed income. After      
consideration of all of these factors, the company concluded that a 9%          
rate-of-return assumption was appropriate for 2003. Holding all other           
assumptions constant, a one-half percentage-point change in the rate-of-return  
assumption would impact the company's pension income by approximately $20       
million pretax.                                                                 

 The company's discount-rate assumption is based on returns on long-term
corporate bonds (approximately 6.75% at the September 30, 2002, measurement     
date) that have the second-highest credit rating from recognized rating         
agencies. Consequently, the company lowered its discount-rate assumption for    
2003 to 6.75% from 7.25%. Holding all other assumptions constant, a one-half    
percentage-point change in the discount rate would impact the company's pension 
income by approximately $10 million pretax.                                     

  The company utilizes a market-related (smoothed) value of plan assets in
determining the earnings of the plan. Under this method, differences between the
smoothed and actual market value of assets are recognized over a 5-year period. 
Unrecognized actuarial gains or losses are amortized using the "corridor        
approach" outlined in SFAS No. 87. Holding all current assumptions constant, the
company's pension income will decline by approximately $20 million pretax in    
2004, principally reflecting the amortization of unrecognized actuarial losses. 

Synthetic Leases                                                      

     The company has entered into a synthetic-lease agreement with a third-party
lessor and various lenders to finance the cost of its headquarters building and 
certain of its warehouse facilities. The synthetic-lease agreement, which will  
expire in November 2005, contains customary terms and conditions covering, among
other things, residual-value guarantees, default provisions, and financial      
covenants, and requires the company to satisfy certain financial-ratio tests,   
with which it was in full compliance at June 30, 2003. Termination of the lease 
agreement, either before or at expiration, would require the company to make a  
termination payment ($169 million at June 30, 2003), which, in essence,         
represents off-balance-sheet debt in that the company might be required to      
obtain alternative financing to fund such a payment.                            

   In January 2003, the FASB issued FIN No. 46, which revises the accounting
and disclosure requirements for variable-interest entities (VIEs), including the
company's synthetic-lease agreement. See "Changes in Accounting Principles" for 
further information concerning VIEs.                                            

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CAUTIONARY STATEMENT FOR PURPOSES OF "SAFE HARBOR" PROVISIONS 
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 

Certain statements included in this Quarterly Report on Form 10-Q,    
including statements in the "Management's 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 the 
company's current expectations or projections about future events. Accordingly, 
these forward-looking statements are subject to known and unknown risks and     
uncertainties. While the company believes that the assumptions underlying these 
forward-looking statements are reasonable and makes the statements in good      
faith, actual results almost always vary from expected results, and the         
differences could be material. Following are factors that might cause the       
company's actual results to differ materially from future results expressed or  
implied by these forward-looking statements:                                    

     - Changes in consumer demand and selling prices for the company's products,
       including new products that the company or its competitors may introduce,
 that could impact sales and margins. The company operates in a very
     competitive environment in which product innovation and development has
 historically been key to obtaining and maintaining market share and
      margins. The company's sales and margins can also be impacted by changes
      in distribution channels, in customer mix (including consolidation among
customers), and in customer merchandising strategies, including   
substitution of unbranded products for branded products.          

   - Material substitutions and changes in costs of raw materials, including
 plastic resins, labor, or utilities that could impact the company's
     expenses and margins. Plastic-resin prices are impacted by the price of
      oil and natural gas. Oil and natural-gas prices are affected by numerous
   factors, including overall economic activity, geopolitical situations
       (particularly involving oil-exporting regions), and governmental policies
and regulation.                                                   

     - Changes in laws or governmental actions, including changes in regulations
such as those relating to air emissions or plastics generally.    

  - Although the company believes it has adequate sources of liquidity for
     its operations, 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 the company operates, including currency fluctuations and other
      risks associated with operating outside of the U.S., may impact not only
     demand for the company's products, but also the prices of raw materials
and costs of manufacturing.                                       

    - Changes in assumptions regarding the long-term rate of return on pension
      assets and the discount rate and other assumptions, as well as the level
  of amortization of actuarial gains and losses, could have a material
effect on net income and shareholders' equity.                    

    - Changes enacted by the Securities and Exchange Commission, the Financial
       Accounting Standards Board, or other regulatory or accounting bodies. See
"Critical Accounting Principles."                                 

     - The company's ability to integrate new businesses that it may acquire, or
       to dispose of businesses or business segments that it may wish to divest.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK              

DERIVATIVE FINANCIAL INSTRUMENTS                                                

The company is exposed to market risks related to changes in          
foreign-currency exchange rates, interest rates, and commodity prices. To manage
these risks, the company, from time to time, enters into various hedging        
contracts in accordance with the company's policies and procedures. The company 
does not use hedging instruments for trading purposes and is not a party to any 
transactions involving leveraged derivatives.                                   

Foreign-Currency Exchange                                               

   The company uses foreign-currency forward contracts to hedge its exposure
to adverse changes in exchange rates, primarily related to the euro and the     
British pound. Associated gains or losses offset gains or losses on underlying  
assets or liabilities and were not material in the three- and six-month periods 
ended June 30, 2003, and were included in other expense on the statement of     
income.                                                                         

In managing foreign-currency risk, the company aggregates existing    
positions and hedges residual exposures through third-party derivative          
contracts. The following table summarizes foreign-currency forward contracts in 
effect at June 30, 2003, all of which will mature in 2003.                      

                                                        [Enlarge/Download Table]

                                                    NOTIONAL AMOUNT                   NOTIONAL AMOUNT
                                                  IN FOREIGN CURRENCY  EXCHANGE RATE  IN U.S. DOLLARS
(In millions, except settlement rates)            -------------------  -------------  ---------------
                                                                                                     
British pounds                                                                                       
  -- Purchase....................................           1             1.6546              2      
  -- Sell........................................         (34)            1.6546            (56)     
Euros                                                                                                
  -- Purchase....................................          48             1.1511             55      
  -- Sell........................................          (1)            1.1511             (1)     
Czech koruna                                                                                         
  -- Sell........................................         (16)            0.0364             (1)     

Interest Rates                                                          

    The company is exposed to interest-rate risk on revolving-credit debt ($36
million at June 30, 2003) that bears interest at a floating rate based on LIBOR.
In addition, the company has issued public-debt securities ($1,179 million at   
June 30, 2003) with fixed interest rates and original maturity dates ranging    
from 2 to 24 years. Should the company decide to redeem these securities prior  
to their stated maturity, it would incur costs based on the fair value of the   
securities at that time. The fair value of long-term debt at June 30, 2003, and 
December 31, 2002, was approximately $1,469 million and $1,427 million,         
respectively, compared with its recorded amount of $1,209 million and $1,224    
million, respectively.                                                          

The following table provides information about Pactiv's financial     
instruments that are sensitive to interest-rate risks.                          

                                                        [Enlarge/Download Table]

                                                        ESTIMATED MATURITY DATES                 
                                         ------------------------------------------------------- 
                                         2003    2004   2005   2006   2007   THEREAFTER   TOTAL  
(Dollars in millions)                    -----   ----   ----   ----   ----   ----------   ------ 
                                                                                                 
Variable-rate debt...................... $  --   $ 36   $ --   $--    $ --      $ --      $   36 
Average interest rate...................    --    2.0%    --    --      --        --         2.0%
Fixed-rate debt......................... $   3   $ --   $300   $--    $ 99      $776      $1,178 
Average interest rate...................  10.1%    --    7.9%   --     7.9%      7.9%        7.9%

   In the first quarter of 2001, the company entered into interest-rate swap
agreements to convert floating-rate debt on its synthetic-lease obligations to  
fixed-rate debt. This action was taken to reduce the company's exposure to      
interest-rate risk. During the first quarter of 2002, the company exited these  
swap agreements, and the resulting accumulated net losses ($2 million at June   
30, 2003) is being expensed over the remaining life of the underlying           
obligation.                                                                     

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ITEM 4. CONTROLS AND PROCEDURES                                                 

 The company's disclosure controls and procedures are designed to ensure
that information required to be disclosed by the company in the reports it files
or submits under the Securities Exchange Act is recorded, processed, summarized,
and reported within the appropriate time periods. The company, under the        
supervision and with the participation of its management, including the         
company's principal executive officer and principal financial officer, has      
evaluated the effectiveness of its disclosure controls and procedures (as       
defined in Exchange Act Rules 13a-14(c) and 15d-14(c)), and the company and such
officers have concluded that such controls and procedures are adequate and      
effective. The company completed its evaluation of such controls and procedures 
in connection with the preparation of this quarterly report on Form 10-Q on July
30, 2003.                                                                       

   There have been no significant changes in the company's internal controls
or in other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any corrective actions with regard to   
significant deficiencies and material weaknesses therein.                       

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PART II -- OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS                                                       

Litigation                                                            

     In May 1999, Tenneco, Pactiv (through Tenneco's former paperboard-packaging
operations), and a number of other containerboard manufacturers were named as   
defendants in a consolidated class-action complaint brought on behalf of        
purchasers of corrugated containers that alleged a civil violation of Section I 
of the Sherman Act. The company was also named as a defendant in a related      
class-action antitrust lawsuit. Tenneco sold its containerboard business in     
April 1999, prior to the spin-off of Pactiv in November 1999. In connection with
the spin-off, Pactiv was assigned responsibility for defending related claims   
against Tenneco and for any liability resulting therefrom.                      

    The lawsuits (In re: Linerboard Litigation U.S.D.C., E.D. of Pennsylvania,
MDL no. 1261) allege that the defendants, during the period October 1, 1993,    
through November 30, 1995, conspired to limit the supply of linerboard, and that
the purpose and effect of the alleged conspiracy was to artificially increase   
prices of corrugated containers and corrugated sheets. The lawsuits seek treble 
damages of unspecified amounts, plus attorneys' fees.                           

  The class has been certified to include all persons in the United States
who purchased corrugated containers/sheets directly from any of the defendants  
during the above period, excluding those who purchased corrugated products      
pursuant to contracts in which the price of such products was not tied to the   
price of linerboard. The deadline for class members to opt out of the classes   
was June 9, 2003. Several entities have opted out of the classes, and           
approximately 10 direct-action complaints have been filed in various federal    
courts across the country by opt-out entities. These cases effectively have been
consolidated for pretrial purposes before the Federal District Court in the     
Eastern District of Pennsylvania overseeing the class actions, and it is        
expected that they soon will be transferred formally to that court. All of the  
opt-out complaints included allegations against the defendants that are         
substantially similar to those made in the class actions.                       

    The class actions are currently set to come to trial in September 2004. No
schedule has yet been established for any of the direct-action cases. Pactiv's  
management believes that the allegations have no merit and is vigorously        
defending against the claims.                                                   

The company is party to other legal proceedings arising from its      
operations. Related reserves are recorded when it is probable that liabilities  
exist and where reasonable estimates of such liabilities can be made.           

Management believes that the outcome of all of these legal matters,   
individually and in the aggregate, will not have a material adverse effect on   
the company's financial position.                                               

Environmental Matters                                                 

    In early 2003, the company discovered that certain air emissions at one of
its California plants exceeded permitted levels. The company reported this      
matter to the San Joaquin Valley Air Pollution Control District, and is         
currently in discussion with that agency regarding the appropriate actions to be
taken to address this matter. The company expects to resolve this matter through
discussions with the agency and does not believe that the costs involved,       
including any monetary sanctions, will have a material adverse effect on the    
company's financial position.                                                   

    The company is subject to a variety of environmental and pollution-control
laws and regulations in all jurisdictions in which it operates. Pactiv          
establishes related reserves where it is probable that liabilities exist and    
where reasonable estimates of such liabilities can be made. Estimated           
liabilities are subject to change as additional information becomes available   
regarding the magnitude of possible clean-up costs and the expense and          
effectiveness of alternative clean-up methods. However, management believes that
any additional costs that may be incurred as more information becomes available 
will not have a material adverse effect on the financial condition of the       
company.                                                                        

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ITEMS 2-3. NONE                                                                 

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                     

     The company's 2003 Annual Meeting of Shareholders was held on May 16, 2003,
for the purpose of (1) electing directors, (2) ratifying the appointment of     
Ernst & Young LLP as independent public accountants for the year 2003, and (3)  
acting upon such other matters as might be properly brought before the meeting  
or any adjournment or postponement thereof.                                     

   At the meeting, the following persons were elected to the company's Board
of Directors, each for a term to expire at the company's 2004 Annual Meeting of 
Shareholders:                                                                   

                                                        [Enlarge/Download Table]

                                                                  NUMBER OF VOTES     
                                                             -------------------------
NOMINEE                                                          FOR         WITHHELD 
-------                                                      -----------    ----------
                                                                                      
Larry D. Brady.............................................. 143,551,458     3,418,822
K. Dane Brooksher........................................... 143,513,627     3,456,653
Robert J. Darnall........................................... 143,529,972     3,440,308
Mary R. (Nina) Henderson.................................... 143,452,121     3,518,159
Roger B. Porter............................................. 142,665,404     4,304,876
Paul T. Stecko..............................................  87,549,382    59,420,898
Richard L. Wambold.......................................... 141,759,791     5,210,489
Norman H. Wesley............................................ 143,542,287     3,427,993

The shareholders ratified the appointment of Ernst & Young LLP as the 
company's independent auditors for the year 2003, with 144,281,386 votes cast   
for ratification, 1,709,936 votes cast against ratification, and 978,958        
abstentions.                                                                    

ITEM 5. NONE                                                                    

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.                                       

(A) EXHIBITS                                                                    

                                                                [Download Table]

EXHIBIT NO.                           DESCRIPTION                         
-----------                           -----------                         
                                                                          
   2          Distribution Agreement by and between Tenneco Inc. and the  
              registrant (incorporated herein by reference to Exhibit 2 to
              Pactiv Corporation's Current Report on Form 8-K dated       
              November 11, 1999, File No. 1-15157).                       
   3.1        Restated Certificate of Incorporation of the registrant     
              (incorporated herein by reference to Exhibit 3.1 to Pactiv  
              Corporation's 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 3.2 to Pactiv Corporation's  
              Quarterly Report on Form 10-Q for the quarter ended         
              September 30, 1999, File No. 1-15157).                      
   4.1        Specimen Stock Certificate of Pactiv Corporation Common     
              Stock (incorporated herein by reference to Exhibit 4.1 to   
              Pactiv Corporation's Quarterly Report on Form 10-Q for the  
              quarter ended September 30, 1999, File No. 1-15157).        
   4.2(a)     Qualified Offer Plan Rights Agreement, dated as of November 
              4, 1999, by and between the registrant and First Chicago    
              Trust Company of New York, as Rights Agent (incorporated    
              herein by reference to Exhibit 4.2 to Pactiv Corporation's  
              Quarterly Report on Form 10-Q for the quarter ended         
              September 30, 1999, File No. 1-15157).                      
   4.2(b)     Amendment No. 1 to Rights Agreement, dated as of November 7,
              2002, by and between the registrant and National City Bank, 
              as rights agent (incorporated herein by reference to Exhibit
              4.4(a) to Pactiv Corporation's Registration Statement on    
              Form S-8, File No. 333-101121.                              

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                                                                [Download Table]

EXHIBIT NO.                           DESCRIPTION                         
-----------                           -----------                         
                                                                          
   4.3(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).                                             
   4.3(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 Corporation's Quarterly Report on Form 10-Q for the  
              quarter ended September 30, 1999, File No. 1-15157).        
   4.3(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 Corporation's Quarterly Report on Form 10-Q for the  
              quarter ended September 30, 1999, File No. 1-15157).        
   4.3(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 Corporation's Quarterly Report on Form 10-Q for the  
              quarter ended September 30, 1999, File No. 1-15157).        
   4.3(e)     Fourth Supplemental Indenture, dated as of November 4, 1999,
              to Indenture dated as of September 1999, between the        
              registrant and The Chase Manhattan Bank, as Trustee         
              (incorporated herein by reference to Exhibit 4.3(e) to      
              Pactiv Corporation's Quarterly Report on Form 10-Q for the  
              quarter ended September 30, 1999, File No. 1-15157).        
   4.3(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 Corporation's Quarterly Report on Form 10-Q for the  
              quarter ended September 30, 1999, File No. 1-15157).        
   4.4        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 Corporation's Quarterly  
              Report on Form 10-Q for the quarter ended September 30,     
              1999, File No. 1-15157).                                    
  10.1        Human Resources Agreement, dated as of November 4, 1999, by 
              and between Tenneco Inc. and the registrant (incorporated   
              herein by reference to Exhibit 16.1 to Tenneco Inc.'s       
              Current Report on Form 8-K dated November 4, 1999, File No. 
              1-12387).                                                   
  10.2        Tax Sharing Agreement, dated as of November 3, 1999, by and 
              between Tenneco Inc. and the registrant (incorporated herein
              by reference to Exhibit 16.2 to Tenneco Inc.'s Current      
              Report on Form 8-K dated November 4, 1999, File No.         
              1-12387).                                                   
  10.3        Amended and Restated Transition Services Agreement, dated as
              of November 4, 1999, by and between Tenneco Inc. and the    
              registrant (incorporated herein by reference to Exhibit 10.3
              to Tenneco Automotive Inc.'s Quarterly Report on Form 10-Q  
              for quarterly period ended September 30, 1999, File No.     
              1-12387).                                                   
  10.4        Pactiv Corporation (formerly known as Tenneco Packaging     
              Inc.) Executive Incentive Compensation Plan (incorporated   
              herein by reference to Exhibit 10.5 to Pactiv Corporation's 
              Quarterly Report on Form 10-Q for the quarter ended         
              September 30, 1999, File No. 1-15157).                      
  10.5        Pactiv Corporation (formerly known as Tenneco Packaging     
              Inc.) Supplemental Executive Retirement Plan (incorporated  
              herein by reference to Exhibit 10.6 to Pactiv Corporation's 
              Quarterly Report on Form 10-Q for the quarter ended         
              September 30, 1999, File No. 1-15157).                      

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EXHIBIT NO.                           DESCRIPTION                         
-----------                           -----------                         
                                                                          
  10.6        Pactiv Corporation (formerly known as Tenneco Packaging     
              Inc.) Change in Control Severance Benefit Plan for Key      
              Executives (incorporated herein by reference to Exhibit 10.7
              to Pactiv Corporation's Quarterly Report on Form 10-Q for   
              the quarter ended September 30, 1999, File No. 1-15157).    
  10.7        Pactiv Corporation (formerly known as Tenneco Packaging     
              Inc.) Deferred Compensation Plan (incorporated herein by    
              reference to Exhibit 10.8 to Pactiv Corporation's Quarterly 
              Report on Form 10-Q for the quarter ended September 30,     
              1999, File No. 1-15157).                                    
  10.8        Pactiv Corporation Rabbi Trust (incorporated herein by      
              reference to Exhibit 10.11 to Pactiv Corporation's Quarterly
              Report on Form 10-Q for the quarter ended September 30,     
              1999, File No. 1-15157).                                    
  10.9        Employment Agreement, dated as of March 11, 1997, by and    
              between Richard L. Wambold and Tenneco Inc. (incorporated   
              herein by reference to Exhibit 10.17 to Pactiv Corporation's
              Quarterly Report on Form 10-Q for the quarter ended         
              September 30, 1999, File No. 1-15157).                      
  10.10       Long Term Credit Agreement, dated as of September 29, 1999, 
              among the registrant, Bank of America, N.A., as             
              Administrative Agent, Credit Suisse First Boston, as        
              Syndication Agent, Bank One, NA and Banque Nationale de     
              Paris, as Co-Documentation Agents, and the other financial  
              institutions party thereto (incorporated herein by reference
              to Exhibit 4.3 to Tenneco Packaging Inc.'s Registration     
              Statement on Form S-4, File No. 333-82923).                 
  10.11       Term Loan Agreement, dated as of November 3, 1999, between  
              the registrant and Bank of America (incorporated herein by  
              reference to Exhibit 10.21 to Pactiv Corporation's Quarterly
              Report on Form 10-Q for the quarter ended September 30,     
              1999, File No. 1-15157).                                    
  10.12       Letter of Agreement dated September 10, 1999, by and among  
              Tenneco Inc., Bank of America, N.A., and Bank of America    
              Securities LLC, related to Term Loan Agreement, dated as of 
              November 3, 1999, by and between the registrant and Bank of 
              America (incorporated herein by reference to Exhibit 10.22  
              to Pactiv Corporation's Quarterly Report on Form 10-Q for   
              the quarter ended September 30, 1999, File No. 1-15157).    
  10.13       Participation Agreement, dated as of October 28, 1999, among
              the registrant, First Security Bank, N.A., Bank of America, 
              as Administrative Agent, and the other financial            
              institutions party thereto (incorporated herein by reference
              to Exhibit 10.23 to Pactiv Corporation's Quarterly Report on
              Form 10-Q for the quarter ended September 30, 1999, File No.
              1-15157).                                                   
  10.14       Pactiv Corporation Incentive Compensation Plan (incorporated
              herein by reference to Exhibit 4.7 to Pactiv Corporation's  
              Registration Statement on Form S-8, File No. 333-101121).   
  11          None.                                                       
  15          None.                                                       
  18          None.                                                       
  19          None.                                                       
  22          None.                                                       
  23          None.                                                       
  24          None.                                                       
 *31.1        Certification pursuant to Section 302 of the Sarbanes-Oxley 
              Act of 2002.                                                
 *31.2        Certification pursuant to Section 302 of the Sarbanes-Oxley 
              Act of 2002.                                                

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EXHIBIT NO.                           DESCRIPTION                        
-----------                           -----------                        
                                                                         
**32.1        Certification pursuant to Section 906 of the Sarbanes-Oxley
              Act of 2002.                                               
**32.2        Certification pursuant to Section 906 of the Sarbanes-Oxley
              Act of 2002.                                               

-------------------------                                                       
* Filed herewith                                                              

** Furnished herewith                                                           

(B) REPORTS ON FORM 8-K                                                         

    On April 23, 2003, the company filed a Form 8-K (amended on June 30, 2003)
regarding the press release announcing the company's first quarter 2003         
earnings.                                                                       

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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/ ANDREW A. CAMPBELL
                                            ------------------------------------
                          Andrew A. Campbell
                                       Senior Vice President and Chief
                             Financial Officer
                                           (principal financial and accounting
                    officer)

Date:  August 14, 2003                                                          

  30

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10-Q’ Filing		Date		First		Last			Other Filings
Filed on:		8/14/03		30
		8/8/03		14
		7/31/03		1
		7/30/03		24					4
		7/1/03		7		20
For Period End:		6/30/03		1		29			11-K
		6/15/03		7		20
		6/9/03		13		25
		5/16/03		26					DEF 14A
		4/23/03		29					8-K,  8-K/A
		1/31/03		7		20
		12/31/02		4		23			10-K,  10-K/A,  11-K
		11/13/02		8
		11/7/02		26
		10/21/02		8
		9/30/02		21					10-Q
		6/30/02		6		20			10-Q
		6/18/02		8
		2/13/02		8
		1/4/02		8
		1/1/02		7		20
		12/31/01		12					10-K,  11-K
		11/11/99		26
		11/4/99		26		27			8-K,  S-8
		11/3/99		27		28
		10/28/99		28					8-K
		9/30/99		26		28			10-Q
		9/29/99		27		28
		9/10/99		28					10-12B/A,  S-4/A
		3/11/97		28
		11/30/95		13		25
		10/1/93		13		25
									List all Filings