##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
   FORM 10-K
   (Mark 1)x

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2008o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934Commission File
    Number: 1-15157   PACTIV CORPORATION
 (Exact name of Registrant as
    Specified in its Charter)
  Delaware

36-2552989(State or other jurisdiction of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)1900 West Field Court
    Lake Forest, Illinois(Address of principal executive offices)

60045(Zip Code)   847) 482-2000
  Securities
    registered pursuant to Section 12 (b) of the
    Act:
  Name of each ExchangeTitle of each class

on which registeredCommon Stock ($.01 par value) and associated Preferred
    Stock Purchase Rights

New York Stock Exchange  Securities
    registered pursuant to Section 12(g) of the Act: None
  Indicate
    by check mark if the registrant is a well-known seasoned issuer,
    as defined in Rule 405 of the Securities Act.
  Yes ü     No
  Indicate by check mark if the
    registrant is not required to file reports pursuant to
    Section 13 or Section 15(d) of the Act.
  Yes      No ü
  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 ü     No
  Indicate by check mark if
    disclosure of delinquent filers pursuant to Item 405 of
    Regulation S-K
    is not contained herein, and will not be contained, to the best
    of registrants knowledge, in definitive proxy or
    information statements incorporated by reference in
    Part III of this
    Form 10-K
    or any amendment to this
    Form 10-K.ü
    Large accelerated
    filer ü

Accelerated filer

Non-accelerated filer

Smaller Reporting company(Do not check if a smaller reporting
    company)   Indicate by check mark whether the
    registrant is a shell company (as defined by
    Rule 12b-2
    of the Exchange Act).
  Yes      No ü
  State the aggregate market value of
    the voting and non-voting common equity held by non-affiliates
    of the registrant. The aggregate market value is computed by
    reference to the price at which the stock was sold, or the
    average bid and asked prices of such stock, as of the last
    business day of the registrants most recently completed
    second fiscal quarter.
  Class of Voting Stock and Number of Shares

Market Value of Common Stock held byHeld by Non-Affiliates at June 30, 2008

Non-AffiliatesCommon Stock 130,722,098 shares

$2,775,230,140     Documents Incorporated by Reference:
  Part of the Form 10-KDocument

into which incorporatedPactiv Corporations Definitive Proxy Statement for
    the Annual Meeting of Shareholders to be held May 15, 2009

Part III




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##### 





TABLE OF
    CONTENTS
   
 PART IItem 1.


Business


1Item 1A.


Risk Factors


4Item 1B.


Unresolved Staff Comments


6Item 2.


Properties


6Item 3.


Legal Proceedings


6Item 4.


Submission of Matters to a Vote of Security
    Holders


6Item 4.1


Executive Officers of the Registrant


7PART IIItem 5.


Market for Registrants Common Equity,
    Related Stockholder Matters, and Issuer Purchases of Equity
    Securities


8Item 6.


Selected Financial Data


10Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


11Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


23Item 8.


Financial Statements and Supplementary Data


24Item 9.


Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure


56Item 9A.


Controls and Procedures


56Item 9B.


Other Information


56PART IIIItem 10.


Directors, Executive Officers, and Corporate
    Governance


56Item 11.


Executive Compensation


56Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


57Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


57Item 14.


Principal Accounting Fees and Services


57PART IVItem 15.


Exhibits, Financial Statement Schedules


57EX-21EX-23EX-24EX-31.1EX-31.2EX-32.1EX-32.2




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##### Table of Contents



ITEM 1.
    Business.  Overview
      
    Consumer Productsmanufactures disposable plastic, foam,
    molded fiber, pressed paperboard, and aluminum packaging
    products, and sells them to customers such as grocery stores,
    mass merchandisers, and discount chains. Products include waste
    bags, food storage bags, and disposable tableware and cookware.
    We sell many of our consumer products under well-known
    trademarks, such as
    Hefty®.
    Foodservice/Food Packagingmanufactures foam, clear
    plastic, aluminum, pressed paperboard, and molded fiber
    packaging products, and sells them to customers in the food
    distribution channel, who prepare and process food for
    consumption. Customers include foodservice distributors,
    restaurants, other institutional foodservice outlets, food
    processors, and grocery chains.
    Otherincludes corporate and administrative service
    operations and retiree benefit income and expense.            Products
    and Markets
  Consumer
    Products
       Hefty®

   Hefty®

Ultra
Flextm

   Hefty®

Hearty
Mealstm   Baggies®

   Hefty®

    Cinch
    Sak®

   Hefty®

    Elegantware®   Kordite®

   Hefty®

    The
    Gripper®

   Hefty®

    Zoo
    Pals®   Hefty®

    OneZip®

   Hefty®

    Kitchen
    Fresh®

   Hefty®

    Easy
    Grip®   Hefty®

    EZ
    Foil®  1




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##### Table of Contents



Foodservice/Food
    Packaging
            Business
    Strategy
    Market
    Presence
    
    Strength of our
    Hefty®

    brands
    Breadth of our product lines
    Ability to offer one-stop shopping to our customers
    Strength of our supply chain capabilities  New
    Products
    Service
    Capabilities
   2




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##### Table of Contents



Productivity
    / Cost Reduction
    Strategic
    Acquisitions
  and/or
    Marketing,
    Distribution, and Customers
      Analysis
    of Sales
    2008


2007


2006(In millions)

Amount


% Total


Amount


% Total


Amount


% TotalConsumer Products

$
1,342



38
%

$
1,221



38
%

$
1,085



37
%Foodservice/Food Packaging


2,225



62



2,032



62



1,832



63Total

$
3,567



100
%

$
3,253



100
%

$
2,917



100
%     Competition
    Raw
    Materials
   3




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##### Table of Contents



Environmental
    Regulation
    Other
      Available
    Information
    
    Annual reports on
    Form 10-K
    Quarterly reports on
    Form 10-Q
    Current reports on
    Form 8-K
    Amendments to these reports
    Code of business conduct/ethics
    Code of ethical conduct for financial managers
    Certain other corporate governance documents  Form 10-K
  ITEM 1A.
    Risk
    Factors.  Managements Discussion and Analysis of Financial
    Condition and Results of Operations)
  Product
    Changes and Innovation
    Changes
    in Customers
   4




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##### Table of Contents



Increases
    in Production Costs
      Laws
    Relating to Use or Manufacture of Plastic Products
    Growth/Acquisitions
    and Divestitures
    International
    Issues
    Pension
    Plans
    
    Assumptions regarding the long-term rate of return on pension
    assets and other factors
    Interest rate used to discount projected benefit obligations
    Level of amortization of actuarial gains and losses
    Governmental regulations relating to funding of retirement plans
    in the U.S. and foreign countries
    Financial market performance 5




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##### Table of Contents



ITEM 1B.
    Unresolved
    Staff Comments.    ITEM 2.
    Properties.  Headquarters
  (847) 482-2000.
  Manufacturing
    and Distribution Facilities
      ITEM 3.
    Legal
    Proceedings.      ITEM 4.
    Submission
    of Matters to a Vote of Security Holders.   6




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##### Table of Contents



ITEM 4.1.
    Executive
    Officers of the Registrant.  Form 10-K Regulation S-K.
  Richard L. Wambold, 57, Chairman of the Board of Directors,
    President, and Chief Executive Officer.
  Edward T. Walters, 57, Senior Vice President and Chief
    Financial Officer
  Joseph E. Doyle, 49, Vice President, General Counsel, and
    Secretary
  Peter J. Lazaredes, 58, Executive Vice President and General
    Manager, Foodservice/Food Packaging
  John N. Schwab, 59, Senior Vice President and General
    Manager,
    Hefty®

    Consumer Products. ®
  Michael O. Oliver, 55, Vice President and Chief Human
    Resources Officer.
 7




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##### Table of Contents



PART II  ITEM 5.
    Market
    for Registrants Common Equity, Related Stockholder
    Matters, and Issuer Purchases of Equity
    Securities.    2008


2007Price/share


Dividends


Price/share


DividendsHigh


Low


paid


High


Low


paidFirst quarter

$
29.52


$
23.00






$
36.91


$
30.48



Second quarter


27.34



20.82







36.88



31.46



Third quarter


28.49



18.98







35.95



26.14



Fourth quarter


26.95



20.44







31.54



22.79



        8




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##### Table of Contents



®
  Cumulative
    Total Return
    Based on an assumed initial investment of $100 on
    December 31, 2003
    with dividends reinvested
  
  December 31,2003


2004


2005


2006


2007


2008Pactiv Corp.

$
100


$
106


$
92


$
149


$
111


$
104S&P
    500®

    Index

$
100


$
111


$
116


$
135


$
142


$
90Custom Composite Index (5 stocks)

$
100


$
118


$
128


$
153


$
145


$
112  9




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##### Table of Contents



ITEM 6.
    Selected
    Financial Data.  For the years ended December 31(In millions, except per share data)

2008


2007


2006


2005


2004Statement of IncomeSalesConsumer Products

$
1,342


$
1,221


$
1,085


$
989


$
934Foodservice/Food Packaging


2,225



2,032



1,832



1,767



1,6103,567



3,253



2,917



2,756



2,544Operating income(1)


446



472



424



300



297Realized foreign currency exchange gain










31







Interest expense, net of interest capitalized


106



96



73



82



85Income tax expense


120



135



114



81



78Income from continuing operations


221



244



277



143



138Income (loss) from discontinued operations, net of income tax


(4
)


1



(3
)


(89
)


17Net income

$
217


$
245


$
274


$
54


$
155Weighted average number of shares of common stock outstandingBasic


130.926



130.912



137.866



147.183



151.290Diluted


132.473



132.870



139.704



148.849



153.763Earnings (loss) per shareBasicContinuing operations(2)

$
1.69


$
1.86


$
2.01


$
0.97


$
0.91Discontinued operations


(0.03
)


0.01



(0.02
)


(0.60
)


0.11$
1.66


$
1.87


$
1.99


$
0.37


$
1.02DilutedContinuing operations(3)

$
1.67


$
1.84


$
1.98


$
0.96


$
0.90Discontinued operations


(0.03
)


0.01



(0.02
)


(0.60
)


0.11$
1.64


$
1.85


$
1.96


$
0.36


$
1.01Statement of Financial PositionAssets of discontinued operations

$



$



$



$



$
739Total assets


3,725



3,765



2,758



2,820



3,741Short-term debt, including current maturities of long-term debt










98



3



471Long-term debt


1,345



1,574



771



869



869Minority interest


13



13



9



9



9Shareholders equity


642



1,226



853



820



1,083Statement of Cash FlowsCash provided by operating activities

$
349


$
436


$
372


$
266


$
366Cash provided (used) by investing activities


(137
)


(1,164
)


(75
)


283



(91
)Cash provided (used) by financing activities


(225
)


639



(294
)


(595
)


(197
)Expenditures for property, plant, and equipment


136



151



78



143



100   Other
    Information:
      (1)
    
    Includes restructuring and other
    charges (credits) of $16 million in 2008, ($1) million
    in 2006, $6 million in 2005, and $79 million in 2004.(2)
    
    2006 includes $0.15 per share for a
    realized foreign currency exchange gain and $0.21 for income tax
    liability adjustments.(3)
    
    2006 includes $0.14 per share for a
    realized foreign currency exchange gain and $0.21 for income tax
    liability adjustments.   10




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ITEM 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.  Basis of
    Presentation
            
    Consumer Productsmanufactures disposable plastic, foam,
    molded fiber, pressed paperboard, and aluminum packaging
    products, and sells them to customers such as grocery stores,
    mass merchandisers, and discount chains. Products include waste
    bags, food storage bags, and disposable tableware and cookware.
    We sell many of our consumer products under well-known
    trademarks, such as
    Hefty®.
    Foodservice/Food Packagingmanufactures foam, clear
    plastic, aluminum, pressed paperboard, and molded fiber
    packaging products, and sells them to customers in the food
    distribution channel, who prepare and process food for
    consumption. Customers include foodservice distributors,
    restaurants, other institutional foodservice outlets, food
    processors, and grocery chains.
    Otherincludes corporate and administrative service
    operations and retiree benefit income and expense.    Executive
    Overview
  Business
        Consumer products ® ® ® ® ® ® ® ® ® ® ® ® ®
  Foodservice and food packaging products
 11




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Significant
    Trends, Opportunities, and Challenges
  Risks
     
    The impact of raw material cost volatility
    The ability to maintain or increase selling prices
    The continued effectiveness of our productivity and procurement
    initiatives
    Economic and financial market conditions   
    Potential changes in consumer demand or governmental regulations
    Possible supplier and customer consolidations
    Potential increases in foreign-based competition
    Possible growth in market share of unbranded products   
    Adjusting selling prices to offset resin price movements
    Implementing aggressive cost management and productivity programs
    Leveraging our existing products into new distribution channels
    Introducing innovative new products
    Making strategic acquisitions  Raw
    Materials and Energy-Related Costs
    Polystyrene (cents/lb.)

Polyethylene (cents/lb.)(LINE GRAPH)

(LINE GRAPH)       Demand
   12




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Productivity
    Improvements
    Pension
    Restructuring
    Results
    of Continuing Operations
    Year
    2008 compared with 2007
  Sales
  Increase (decrease)(In millions)

2008


2007


Amount


PercentConsumer Products

$
1,342


$
1,221


$
121



9.9
%Foodservice/Food Packaging


2,225



2,032



193



9.5Total

$
3,567


$
3,253


$
314



9.7
%        13




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Operating
    Income
  Increase (decrease)(In millions)

2008


2007


Amount


PercentConsumer Products

$
207


$
227


$
(20
)


(8.8
)%Foodservice/Food Packaging


236



247



(11
)


(4.5
)Other


3



(2
)


5



250.0Total

$
446


$
472


$
(26
)


(5.5
)%       Operating income - twelve months ended December 31,
    2008GAAP


Restructuring and


Excluding restructuring(In millions)

basis


other


and otherConsumer Products

$
207


$
5


$
212Foodservice/Food Packaging


236



10



246Other


3



1



4Total

$
446


$
16


$
462       Increase (decrease)(In millions)

2008


2007


Amount


PercentConsumer Products

$
212


$
227


$
(15
)


(6.6
)%Foodservice/Food Packaging


246



247



(1
)


(0.4
)Other


4



(2
)


6



300.0Total

$
462


$
472


$
(10
)


(2.1
)%        14




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Income
    Taxes
    Income
    from Continuing Operations
    Discontinued
    Operations
  Income
    (Loss) from Discontinued Operations
      At December 31(In millions)

2008


2007Current liabilities

$



$
2Noncurrent liabilities


30



32Total liabilities related to discontinued operations

$
30


$
34   Liquidity
    and Capital Resources
  Capitalization
  IncreaseAt December 31(In millions)

2008


2007


(decrease)Short-term debt, including current maturities of long-term debt

$



$



$
Long-term debt


1,345



1,574



(229
)Total debt


1,345



1,574



(229
)Minority interest


13



13



Shareholders equity


642



1,226



(584
)Total capitalization

$
2,000


$
2,813


$
(813
)Ratio of total debt to total capitalization


67.3
%


56.0
%     (In millions)Shareholders equity at December 31, 2007

$
1,226Increase (decrease)Change in pension and postretirement plans funded status


(795
)Foreign currency translation adjustments


(39
)Gain (loss) on derivatives


(1
)Impact of adopting SFAS No. 158 measurement provision,
    net of tax of $4 million


7Stock repurchases


(2
)Net income


217Stock-based compensation and common stock issued in connection
    with stock option exercises


29Shareholders equity at December 31, 2008

$
642  15




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Cash
    Flows
    Increase(In millions)

2008


2007


(decrease)Cash provided (used) by:Operating activities

$
349


$
436


$
(87
)Investing activities


(137
)


(1,164
)


1,027Financing activities


(225
)


639



(864
)         Capital
    Commitments
    Contractual
    Obligations
      Due inLess than 1








More than(In millions)

Total


year


1-3 years


3-5 years


5 yearsLong-term debt obligations(1)

$
2,444


$
95


$
265


$
416


$
1,668Operating lease obligations


127



30



42



23



32Purchase obligations(2)


557



311



246







Other long-term liabilities(3)


173



24



31



34



84Total

$
3,301


$
460


$
584


$
473


$
1,784     (1)
    
    Includes fixed rate notes, plus related interest payment
    obligations, based on rates in effect at December 31, 2008.(2)
    
    Includes open capital commitments, amounts related to the
    purchase of minimum quantities of raw materials at current
    market prices under supply agreements and other long-term vendor
    agreements with specific payment provisions and early
    termination penalties. 16




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##### Table of Contents



(3)
    
    Includes undiscounted workers compensation obligations,
    and undiscounted and unfunded postretirement medical and
    supplemental pension funding requirements.  Liquidity
    and Off-Balance Sheet Financing
  5-year
    Twelve months ended(In millions)

December 31, 2008Net income(1)

$
217Adjustments:Noncash restructuring and other(2)


12Interest expense, net of interest capitalized(1)


106Income tax expense(1)


120Depreciation and amortization(1)


182Minority interest(1)


1EBITDA

$
638EBITDA

$
638Interest expense, net of interest capitalized(1)


106Interest coverage ratio


6.02Total debt(3)

$
1,345EBITDA


638Total debt to EBITDA ratio


2.11     (1)
    
    Amounts per the consolidated statement of income.(2)
    
    Amounts per the consolidated statement of cash flows.(3)
    
    Amounts per the consolidated statement of financial position.         17




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##### Table of Contents



Year 2007
    compared with 2006
  Sales
  Increase (decrease)(In millions)

2007


2006


Amount


PercentConsumer Products

$
1,221


$
1,085


$
136



12.5
%Foodservice/Food Packaging


2,032



1,832



200



10.9Total

$
3,253


$
2,917


$
336



11.5
%         Operating
    Income
  Increase (decrease)(In millions)

2007


2006


Amount


PercentConsumer Products

$
227


$
195


$
32



16.5
%Foodservice/Food Packaging


247



244



3



1.1Other


(2
)


(15
)


13



86.7Total

$
472


$
424


$
48



11.3
%    18




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##### Table of Contents



Income
    Taxes
    Income
    from Continuing Operations
    Discontinued
    Operations
  Income
    (Loss) from Discontinued Operations
      Changes
    in Accounting Principles
       19




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Critical
    Accounting Policies
    Revenue
    Recognition
  No. 01-9.
  Inventory
    Valuation
  last-in, first-in,
  and/or
  Pension
    Plans
     20




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21




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##### Table of Contents



CAUTIONARY
    STATEMENT FOR PURPOSES OF SAFE HARBOR PROVISIONS
    OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
    1995
  Form 10-K,
    
    Changes in consumer demand and selling prices for our products,
    including new products that our competitors or we may introduce
    that could impact sales and margins.
    Material substitutions and changes in costs of raw materials,
    including plastic resins, labor, utilities, or transportation
    that could impact our expenses and margins.
    Changes in laws or governmental actions, including changes in
    regulations such as those relating to air emissions or plastics
    generally.
    The availability or cost of capital could impact growth or
    acquisition opportunities.
    Workforce factors such as strikes or other labor interruptions.
    The general economic, political, and competitive conditions in
    countries in which we operate, including currency fluctuations
    and other risks associated with operating outside of the U.S.
    Changes in (1) assumptions regarding the long-term rate of
    return on pension assets and other factors, (2) the
    discount rate, and (3) the level of amortization of
    actuarial gains and losses.
    Changes in
    U.S. and/or
    foreign governmental regulations relating to pension-plan
    funding.
    Changes enacted by the Securities and Exchange Commission, the
    Financial Accounting Standards Board, or other regulatory or
    accounting bodies. See Changes in Accounting
    Principles.
    Competition from producers located in countries that have lower
    labor and other costs.
    Our ability to integrate new businesses that we have acquired
    and may acquire or to dispose of businesses or business segments
    that we may wish to divest. 22




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##### Table of Contents



ITEM 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk.  Derivative
    Financial Instruments
    Commodity
    Derivatives
    Interest
    Rates
          Maturities(In millions, except percentages)

2010


2011


2012


Thereafter


TotalFixed rate debt









$
250


$
1,026


$
1,276Average interest rate










5.7
%


7.7
%


7.3
%Fair value









$
252


$
1,082


$
1,334Floating rate debt

$
5


$
70










$
75Average interest rate


1.5
%


2.1
%










2.0
%Fair value

$
5


$
70










$
75        23




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##### 



ITEM 8.
    Financial
    Statements and Supplementary Data.  Index of
    the Financial Statements of Pactiv Corporation
    and Consolidated Subsidiaries
   
 PageManagements Report on Internal Control Over
    Financial Reporting


25Reports of Independent Registered Public
    Accounting Firm


26Consolidated Statement of Income for the three
    years ended December 31, 2008


28Consolidated Statement of Financial Position at
    December 31, 2008, and 2007


29Consolidated Statement of Cash Flows for the
    three years ended December 31, 2008


30Consolidated Statement of Shareholders
    Equity for the three years ended December 31, 2008


31Notes to Financial Statements


32   24




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##### Table of Contents



Managements
    Report on Internal Control over Financial
    Reporting  Rules 13a-15(f)
       25




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##### Table of Contents



Report of
    Independent Registered Public Accounting Firm              Ernst &
    Young LLP
    26




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##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
                Ernst &
    Young LLP
    27




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##### Table of Contents



Consolidated
    Statement of Income  For years ended December 31(In millions, except share and per share data)

2008


2007


2006SalesConsumer Products

$
1,342


$
1,221


$
1,085Foodservice/Food Packaging


2,225



2,032



1,8323,567



3,253



2,917Costs and expensesCost of sales, excluding depreciation and amortization


2,636



2,322



2,027Selling, general, and administrative


281



286



316Depreciation and amortization


182



166



145Other


6



7



6Restructuring and other


16







(1
)3,121



2,781



2,493Operating income


446



472



424Other income (expense)Interest income


2



5



6Realized foreign currency exchange gain










31Interest expense, net of interest capitalized


(106
)


(96
)


(73
)Share of income of joint ventures










3Income before income taxes and minority interest


342



381



391Income tax expense


120



135



114Minority interest


1



2



Income from continuing operations


221



244



277Discontinued operations, net of tax


(4
)


1



(3
)Net income

$
217


$
245


$
274Earnings per shareWeighted-average number of shares of common stock outstandingBasic


130,925,861



130,912,229



137,865,929Diluted


132,473,458



132,869,555



139,704,381Basic earnings per share of common stockContinuing operations

$
1.69


$
1.86


$
2.01Discontinued operations


(0.03
)


0.01



(0.02
)Total

$
1.66


$
1.87


$
1.99Diluted earnings per share of common stockContinuing operations

$
1.67


$
1.84


$
1.98Discontinued operations


(0.03
)


0.01



(0.02
)Total

$
1.64


$
1.85


$
1.96    28




---



##### Table of Contents



Consolidated
    Statement of Financial Position  At December 31(In millions, except share data)

2008


2007AssetsCurrent assetsCash and temporary cash investments

$
80


$
95Accounts and notes receivableTrade, less allowances of $7 and $6 at the respective dates


264



254Other


47



19Total accounts and notes receivable


311



273InventoriesFinished goods


161



195Work in process


55



56Raw materials


78



73Other materials and supplies


50



45Total inventories


344



369Deferred income tax assets


34



46Other


16



14Total current assets


785



797Property, plant, and equipment, net


1,209



1,264Other assetsGoodwill


1,124



1,123Intangible assets, net


396



423Pension asset


5



96Noncurrent deferred income tax asset


141



Other


65



62Total other assets


1,731



1,704Total assets

$
3,725


$
3,765Liabilities and shareholders equityCurrent liabilitiesAccounts payable

$
115


$
162Taxes accrued


14



58Interest accrued


20



23Accrued promotions, rebates, and discounts


68



67Accrued payroll and benefits


66



80Other


50



68Liabilities from discontinued operations






2Total current liabilities


333



460Long-term debt


1,345



1,574Deferred income taxes






219Pension and postretirement benefits


1,266



147Other


96



94Noncurrent liabilities related to discontinued operations


30



32Minority interest


13



13Shareholders equityCommon stock  $0.01 par value,
    350,000,000 shares authorized, 
    131,510,270 and 130,439,873 shares issued and outstanding,
    after deducting 
    40,272,907 and 41,343,304 shares held in treasury, at the
    respective dates


1



1Premium on common stock and other capital surplus


710



683Accumulated other comprehensive income (loss)Currency translation adjustment


(13
)


26Pension and postretirement plans


(1,689
)


(894
)Gain (loss) on derivatives


7



8Retained earnings


1,626



1,402Total shareholders equity


642



1,226Total liabilities and shareholders equity

$
3,725


$
3,765    29




---



##### Table of Contents



Consolidated
    Statement of Cash Flows  For the twelve months ended December 31(In millions)

2008


2007


2006Operating activitiesNet income

$
217


$
245


$
274Less results from discontinued operations


4



(1
)


3Income from continuing operations


221



244



277Adjustments to reconcile income from continuing operations to
    cash provided (used) by operating activities:Depreciation and amortization


182



166



145Deferred income taxes


113



38



(19
)Restructuring and other


12







(1
)Pension income


(49
)


(50
)


(42
)Noncash compensation expense


16



9



5Realized foreign exchange gain










(31
)Changes in components of working capital(Increase) decrease in receivables


(14
)


103



(6
)(Increase) decrease in inventories


20



1



(5
)(Increase) decrease in prepayments and other current assets


(2
)






(2
)Increase (decrease) in accounts payable


(45
)


(26
)


(27
)Increase (decrease) in taxes accrued


(66
)


(16
)


58Increase (decrease) in interest accrued


(2
)


15



Increase (decrease) in other current liabilities


(23
)


(37
)


23Other


(6
)


(3
)


11Cash provided (used) by operating activities 
    continuing operations


357



444



386Cash provided (used) by operating activities 
    discontinued operations


(8
)


(8
)


(14
)Cash provided (used) by operating activities

$
349


$
436


$
372Investing activitiesExpenditures for property, plant, and equipment

$
(136
)

$
(151
)

$
(78
)Acquisitions of businesses and assets






(1,015
)


Net proceeds from the sale of a business or assets






2



3Other investing activities


(1
)






Cash provided (used) by investing activities

$
(137
)

$
(1,164
)

$
(75
)Financing activitiesIssuance of common stock

$
8


$
19


$
73Purchase of common stock


(2
)


(108
)


(369
)Issuance of long-term debt, net of discounts






498



Retirement of long-term debt






(99
)


Revolving credit facility borrowings






432



Revolving credit facility payment


(230
)


(132
)


Other


(1
)


29



2Cash provided (used) by financing activities

$
(225
)

$
639


$
(294
)Effect of foreign exchange rate changes on cash and temporary
    cash investments


(2
)


3



6Increase (decrease) in cash and temporary cash investments


(15
)


(86
)


9Cash and temporary cash investments, January 1


95



181



172Cash and temporary cash investments, December 31

$
80


$
95


$
181Supplemental disclosure of cash flow informationCash paid for interest

$
109


$
81


$
73Cash paid for income taxes  continuing operations


59



94



73Cash paid for income taxes  discontinued operations


7



8



10    30




---



##### Table of Contents



Consolidated
    Statement of Shareholders Equity  Premium on





Accumulatedcommon stock





other


Total


TotalCommon


and other


Retained


comprehensive


shareholders


comprehensive(In millions, except share amounts)

stock


capital surplus


earnings


income (loss)


equity


income (loss)Balance, December 31, 2005

$
2


$
1,021


$
883


$
(1,086
)

$
820Premium on common stock issued (4,218,967 shares)






74











74Treasury stock repurchased (13,905,000 shares)


(1
)


(368
)










(369
)Noncash realized foreign currency exchange gain














(31
)


(31
)

$
(31
)Translation of foreign currency statements














7



7



7Stock-based compensation






30











30Additional minimum pension liability adjustment, net of tax of
    $55, before adopting SFAS No. 158














89



89



89Impact of adopting SFAS No. 158, net of tax of ($36)














(41
)


(41
)Net income










274







274



274Total comprehensive income (loss)






















339Balance, December 31, 2006


1



757



1,157



(1,062
)


853Premium on common stock issued (1,138,286 shares)






19











19Treasury stock repurchased (3,374,821 shares)






(108
)










(108
)Translation of foreign currency statements














16



16



16Stock-based compensation






15











15Gain (loss) on derivatives














8



8



8Change in pension and postretirement plan funded status, net of
    tax of $116














178



178



178Net income










245







245



245Total comprehensive income (loss)






















447Balance, December 31, 2007


1



683



1,402



(860
)


1,226Premium on common stock issued (1,028,245 shares)






25











25Treasury stock repurchased (75,218 shares)






(2
)










(2
)Translation of foreign currency statements














(39
)


(39
)


(39
)Stock-based compensation






4











4Gain (loss) on derivatives














(1
)


(1
)


(1
)Impact of adopting SFAS No. 158 measurement provision,
    net of tax of $4










7







7Change in pension and postretirement plan funded status, net of
    tax of ($468)














(795
)


(795
)


(795
)Net income










217







217



217Total comprehensive income (loss)





















$
(618
)Balance, December 31, 2008

$
1


$
710


$
1,626


$
(1,695
)

$
642    31




---



##### Table of Contents



Notes to
    Financial Statements  Note 1.
    Basis of
    Presentation            
    Consumer Productsmanufactures disposable plastic, foam,
    molded fiber, pressed paperboard, and aluminum packaging
    products, and sells them to customers such as grocery stores,
    mass merchandisers, and discount chains. Products include waste
    bags, food storage bags, and disposable tableware and cookware.
    We sell many of our consumer products under well-known
    trademarks such as
    Hefty®.
    Foodservice/Food Packagingmanufactures foam, clear
    plastic, aluminum, pressed paperboard, and molded fiber
    packaging products, and sells them to customers in the food
    distribution channel, who prepare and process food for
    consumption. Customers include foodservice distributors,
    restaurants, other institutional foodservice outlets, food
    processors, and grocery chains.
    Otherincludes corporate and administrative service
    operations and retiree benefit income and expense.    Note 2. Summary
    of Accounting Policies
  Consolidation
    Foreign
    Currency Translation
    Cash
    and Temporary Cash Investments
   32




---



##### Table of Contents



Notes to
    Financial Statements  (Continued)
  Accounts
    and Notes Receivable
      Inventories
  last-in, first-in,
  Property,
    Plant, and Equipment, Net
        Goodwill
    and Intangibles, Net
   33




---



##### Table of Contents



Notes to
    Financial Statements  (Continued)
    
    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.
    The second step requires that the fair value of a reporting unit
    be allocated to all of its assets and liabilities, including
    indefinite-lived intangibles. Any remaining fair value is the
    implied goodwill, which is then compared with the carrying value
    of goodwill.          Environmental
    Liabilities
  clean-up clean-up
  Revenue
    Recognition
  No. 01-9.
 34




---



##### Table of Contents



Notes to
    Financial Statements  (Continued)
  Freight
    General
    and Administrative Expenses
    For the years ended December 31(In millions)

2008


2007


2006Pension income (recorded as an offset to selling, general, and
    administrative costs)

$
54


$
54


$
49Pension service costs associated with production operations
    (recorded in cost of sales)


(5
)


(4
)


(7
)Total noncash pension income

$
49


$
50


$
42   Research
    and Development
    Advertising
    Stock-Based
    Compensation
    Income
    Taxes
     35




---



##### Table of Contents



Notes to
    Financial Statements  (Continued)
  Earnings
    Per Share
    Risk
    Management
          Changes
    in Accounting Principles
         36




---



##### Table of Contents



Notes to
    Financial Statements  (Continued)
            Estimates
   37




---



##### Table of Contents



Notes to
    Financial Statements  (Continued)
  Note 3. Restructuring
    and Other
      Asset(In millions)

Severance


write-offs


Other(1)


TotalAccrued restructuring balance at January 1, 2008

$



$



$



$
Additions/adjustments to the accountConsumer Products


2



7



(4
)


5Foodservice/Food Packaging


6



2



2



10Other


1











1Total additions/adjustments


9



9



(2
)


16Cash (payments) receipts


(7
)






4



(3
)Charges against asset accounts






(9
)


(2
)


(11
)Accrued restructuring balance at December 31, 2008

$
2


$



$



$
2Restructuring costs for the year ended December 31, 2008Consumer Products

$
2


$
7


$
(4
)

$
5Foodservice/Food Packaging


6



2



2



10Other


1











1Total

$
9


$
9


$
(2
)

$
16     (1)
    
    Consists principally of a gain on the sale of one of our
    facilities and asset removal and transfer costs.  Note 4.
    Acquisitions       38




---



##### Table of Contents



Notes to
    Financial Statements  (Continued)
  15-year
      (In millions)Current assets

$
136Property, plant, and equipment


154Intangible assets


206Goodwill


602Total assets acquired


1,098Current liabilities


77Long-term liabilities


6Total liabilities assumed


83Net assets acquired

$
1,015   Note 5.
    Discontinued
    Operations      At December 31(In millions)

2008


2007Current liabilities

$



$
2Noncurrent liabilities


30



32Total liabilities related to discontinued operations

$
30


$
34   Note 6.
    Long-Term
    Debt, Short-Term Debt, and Financing Arrangements  At December 31 (In millions)

2008


2007Borrowings under a
    5-year,
    $750 million revolving credit facility

$
70


$
300Notes due 2012, effective interest rate of 5.8%


250



249Notes due 2018, effective interest rate of 6.3%, net of
    $1 million of unamortized discount


249



249Notes due 2010, effective interest rate of 1.5%


5



5Notes due 2017, effective interest rate of 8.1%


300



300Notes due 2025, effective interest rate of 7.9%, net of
    $1 million of unamortized discount


275



275Notes due 2027, effective interest rate of 8.4%, net of
    $4 million of unamortized discount


196



196Total long-term debt

$
1,345


$
1,574  39




---



##### Table of Contents



Notes to
    Financial Statements  (Continued)
          Note 7.
    Financial
    Instruments  Asset
    and Liability Instruments
    Instruments
    with Off-Balance Sheet Risk (Including
    Derivatives)
         40




---



##### Table of Contents



Notes to
    Financial Statements  (Continued)
  Note 8.
    Goodwill
    and Intangible Assets    Consumer


Foodservice/(In millions)

Products


Food Packaging


TotalBalance, December 31, 2006

$
136


$
389


$
525Goodwill additions


150



440



590Foreign currency translation adjustment






8



8Balance, December 31, 2007

$
286


$
837


$
1,123Goodwill adjustment


3



13



16Foreign currency translation adjustment






(15
)


(15
)Balance, December 31, 2008

$
289


$
835


$
1,124   15-year
    December 31, 2008


December 31, 2007Accumulated





Accumulated(In millions)

Carrying value


amortization


Carrying value


amortizationIntangible assets subject to amortizationPatents

$
87


$
69


$
87


$
64Customer relationships


206



21



206



8Other


145



81



148



75438



171



441



147Intangible assets not subject to amortization (primarily
    trademarks)


129







129



$
567


$
171


$
570


$
147     Note 9.
    Property,
    Plant, and Equipment, Net  December 31,


December 31,(In millions)

2008


2007Original costLand, buildings, and improvements

$
654


$
662Machinery and equipment


1,808



1,720Other, including construction in progress


125



152$
2,587


$
2,534Less accumulated depreciation and amortization


(1,378
)


(1,270
)Net property, plant, and equipment

$
1,209


$
1,264    41




---



##### Table of Contents



Notes to
    Financial Statements  (Continued)
  Note 10.
    Income
    Taxes    (In millions)

2008


2007


2006Income (loss) from continuing operations before income taxesU.S. operations

$
323


$
360


$
368Foreign operations


19



21



23Total

$
342


$
381


$
391     (In millions)

2008


2007


2006CurrentFederal

$
10


$
71


$
109State and local


(4
)


14



16Foreign


1



12



47



97



129DeferredFederal


101



32



(14
)State and local


8



4



(5
)Foreign


4



2



4113



38



(15
)Total income tax expense

$
120


$
135


$
114       2008


2007


2006U.S. statutory federal income tax rate


35.0
%


35.0
%


35.0
%Increase (decrease) in income tax rateForeign income taxed at various rates


(0.5
)


0.5



State and local taxes on income, net of U.S. federal income tax
    benefit


(0.3
)


3.0



2.4Domestic production deduction


(0.1
)


(1.3
)


(0.7
)Research and experimentation credit


(0.1
)


(0.3
)


(0.1
)Income tax liability increase


2.8



1.4



2.4Income tax liability decrease


(1.8
)


(2.2
)


(10.1
)Other


0.2



(0.8
)


0.2Effective income tax rate


35.2
%


35.5
%


29.1
%  42




---



##### Table of Contents



Notes to
    Financial Statements  (Continued)
    December 31(In millions)

2008


2007Deferred tax assetsTax loss carryforwardsFederal

$
15


$
15State and local






2Foreign


18



25State Credits


5



Pensions(1)


412



21Postretirement benefits


38



39Benefit of FIN 48


11



15Other items


32



38Valuation allowance(2)


(33
)


(40
)Total deferred tax assets

$
498


$
115Deferred tax liabilitiesProperty and equipment


324



288Total deferred tax liabilities


324



288Net deferred tax (assets) liabilities

$
(174
)

$
173     (1)
    
    Increase due to adjustment for pension funded status as of
    December 31, 2008.(2)
    
    Related to federal and foreign tax loss carryforwards, and other
    deferred tax assets.        (In millions)

2008


2007Balance at January 31

$
53


$
49Increases related to prior year tax positions


11



14Increases pertaining to current year tax positions


5



2Settlements


(11
)


(7
)Expiration of statute of limitations


(1
)


(5
)Balance at December 31

$
57


$
53    43




---



##### Table of Contents



Notes to
    Financial Statements  (Continued)
            Note 11.
    Common
    Stock    Reserves
    (In thousands)Thrift plans


8602002 incentive compensation plan


16,132Employee stock purchase plan


Total


16,992     Stock
    Plans
  2002 Incentive Compensation Plan
   44




---



##### Table of Contents



Notes to
    Financial Statements  (Continued)
    PerformancesharesOutstanding, December 31, 2006


1,383,856Granted


1,046,339Canceled


(42,416
)Paid


(328,811
)Outstanding, December 31, 2007


2,058,968Granted


655,850Canceled


(128,089
)Paid


(867,663
)Outstanding, December 31, 2008


1,719,066     Weighted-averagegrant date


Pre tax


Associatedfair value


compensation


tax


Impact on(In millions, except per share data)

per share


expense


benefit


net income2008

$
28.31


$
16


$
6


$
102007


32.64



13



5



82006


22.20



17



6



11       Shares under


Weighted-averageoption


exercise priceOutstanding, January 1, 2007


6,836,587


$
22.74Exercised


(1,050,469
)


16.82Canceled


(379,022
)


39.84Outstanding, December 31, 2007


5,407,096



22.69Exercisable, December 31, 2007


5,405,599



22.69Outstanding, January 1, 2008


5,407,096



22.69Exercised


(559,703
)


14.52Canceled


(117,096
)


32.81Outstanding, December 31, 2008


4,730,297



23.41Exercisable, December 31, 2008


4,730,297



23.41  45




---



##### Table of Contents



Notes to
    Financial Statements  (Continued)
    Outstanding optionsWeighted-Weighted-average


averageremaining


exerciseRange of exercise price

Number


contractual life


price$7 to $12


166,841



1.7


$
11.68$13 to $21


2,459,392



3.1



17.73$22 to $29


996,516



5.2



23.98$30 to $37


492,458



5.2



33.94$38 to $45


615,090



2.7



39.934,730,297     Employee Stock Purchase Plan 
  Employee 401(k) Plans 
  Rabbi Trust 
  Qualified
    Offer Rights Plan
       46




---



##### Table of Contents



Notes to
    Financial Statements  (Continued)
  Earnings
    Per Share
    (In millions, except share and per share data)

2008


2007


2006Basic earnings per shareIncome from continuing operations

$
221


$
244


$
277Weighted-average number of shares of common stock outstanding


130,925,861



130,912,229



137,865,929Basic earnings from continuing operations per share

$
1.69


$
1.86


$
2.01Diluted earnings per shareIncome from continuing operations

$
221


$
244


$
277Weighted-average number of shares of common stock outstanding


130,925,861



130,912,229



137,865,929Effect of dilutive securitiesStock options


648,682



1,149,964



1,619,705Performance shares


897,216



805,085



218,270Restricted shares


1,699



2,277



477Weighted-average number of shares of common stock outstanding,
    including dilutive securities


132,473,458



132,869,555



139,704,381Diluted earnings from continuing operations per share

$
1.67


$
1.84


$
1.98     Average priceNumber of


paid per


Total outlayshares


share


(In millions)2008


75,218


$
26.38


$
22007


3,374,821


$
32.14


$
1082006


13,905,000


$
26.53


$
369   Note 12.
    Preferred
    Stock    Note 13.
    Pension
    Plans and Other Postretirement Benefits       47




---



##### Table of Contents



Notes to
    Financial Statements  (Continued)
           48




---



##### Table of Contents



Notes to
    Financial Statements  (Continued)
    Pension plans


Postretirement plans(In millions)

2008


2007


2008


2007Changes in projected benefit obligations(1)Benefit obligations at beginning of year

$
3,907


$
3,991


$
85


$
92Currency rate conversion


(5
)


2







Service cost of benefits earned


20



18



1



1Interest cost of benefit obligations


300



228



7



5Actuarial gains


(166
)


(56
)


(13
)


(8
)Benefits paid


(350
)


(278
)


(15
)


(12
)Participant contributions










7



6Plan amendments


1



2







Medicare Part Dreimbursement










1



1Projected benefit obligations at end of year

$
3,707


$
3,907


$
73


$
85Changes in fair value of plan assets(1)Fair value at beginning of year

$
3,920


$
3,665


$



$
Currency rate conversion


(6
)










Actual return on plan assets


(1,069
)


527







Employer contributions


11



6



8



6Participant contributions










7



6Benefits paid


(350
)


(278
)


(15
)


(12
)Fair value of plan assets at end of year

$
2,506


$
3,920


$



$
Development of amounts recognized in the statement of financial
    positionFunded status at measurement date(2)





$
13






$
(85
)Contributions during the fourth quarter






4







1Funded status at end of year

$
(1,201
)

$
17


$
(73
)

$
(84
)Amounts recognized in the statement of financial positionNoncurrent assets

$
5


$
96


$



$
Current liabilities


(8
)


(8
)


(7
)


(10
)Noncurrent liabilities


(1,198
)


(71
)


(66
)


(74
)Net asset (liability) at December 31

$
(1,201
)

$
17


$
(73
)

$
(84
)Pretax amounts recognized in accumulated other comprehensive
    income (loss) at December 31 Net actuarial gains (losses)

$
(2,722
)

$
(1,439
)

$
(2
)

$
(16
)Prior service credit costs


2



3



(1
)


$
(2,720
)

$
(1,436
)

$
(3
)

$
(16
)Other changes in plan assets and projected benefit obligations
    recognized in other comprehensive income (loss) during yearNet actuarial gains (losses)

$
(1,339
)





$
13Amortization of net actuarial gains


54







1Prior service costs


1







Amortization of prior service costs










(1
)Total other comprehensive income (loss)

$
(1,284
)





$
13Pension





Postretirementplans





plansEffect of amortization of net actuarial losses and prior service
    credits on 2009 net periodic benefit income (expense)Net actuarial gains (losses)

$
(50
)





$
Prior service costs










1$
(50
)





$
1  49




---



##### Table of Contents



Notes to
    Financial Statements  (Continued)
    (1)
    
    For 2008, the change in benefit obligation and plan assets are
    for the period beginning October 1, 2007 and ending December 31,
    2008, including amounts recorded in the statement of income and
    in other comprehensive income in 2008. For 2007, the
    change in benefit obligation and plan assets are for the period
    beginning October 1, 2006 and ending September 30, 2007.      Postretirementplans, net of expected(In millions)

Pension plans


Medicare subsidy2009

$
292


$
62010


293



52011


293



72012


296



72013


301



72014-2018


1,520



31       (In millions)

2008


2007


2006Components of net periodic benefit income (expense)Service cost of benefits earned

$
(16
)

$
(18
)

$
(19
)Interest cost of benefit obligations


(240
)


(228
)


(228
)Expected return on plan assets


349



344



344Amortization of:Unrecognized net actuarial losses


(44
)


(47
)


(51
)Unrecognized prior service costs










(2
)Additional cost due to SFAS No. 88(1)






(1
)


(2
)Total net periodic benefit income (expense)

$
49


$
50


$
42     (1)
    
    SFAS No. 88, Employers Accounting for
    Settlements and Curtailments of Defined Benefit Pension Plans
    and for Termination of Benefits.      December 31,


September 30,


September 30,2008


2007


2006Actuarial assumptionsDiscount rate


6.74
%


6.39
%


5.93
%Compensation increases


4.00



4.00



4.00Return on assets


9.00



9.00



9.00      50




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##### Table of Contents



Notes to
    Financial Statements  (Continued)
    December 31,


September 30,(In millions)

2008


2007Projected benefit obligations

$
3,695


$
84Accumulated benefit obligations


3,665



75Fair value of plan assets


2,490



1     non-U.S. stocks,
        (In millions)

2008


2007


2006Service cost of benefits earned

$
1


$
1


$
1Interest cost of benefit obligations


5



5



5Prior service costs


(1
)


(1
)


(1
)Losses


1



2



3Total postretirement benefit plan costs

$
6


$
7


$
8  51




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##### Table of Contents



Notes to
    Financial Statements  (Continued)
    December 31,


September 30,


September 30,2008


2007


2006Actuarial assumptionsHealth care cost inflation(1)Prior to age 65


8.5
%


8.6
%


9.5
%After age 65


8.0



9.8



11.0Discount rate


6.74



6.39



5.93     (1)
    
    Assumed to decline to 5% in 2016.    (In millions)

1% increase


1% decreaseEffect on total service and interest costs

$



$
Effect on postretirement benefit obligations


2



(2
)     Note 14.
    Segment
    and Geographic Area Information     52




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##### Table of Contents



Notes to
    Financial Statements  (Continued)
    Foodservice/Consumer


Food(In millions)

Products


Packaging


Other


TotalFor the year ended December 31, 2008Sales to external customers

$
1,342


$
2,225


$




$
3,567Depreciation and amortization


63



112



7




182Operating income (loss)


207



236



3
(b
)


446
(a)Total assets


1,307



2,070



348




3,725Capital expenditures related to continuing operations


25



105



6




136Noncash items other than depreciation and amortization










(33

)(c)


(33
)For the year ended December 31, 2007Sales to external customers

$
1,221


$
2,032


$




$
3,253Depreciation and amortization


62



97



7




166Operating income (loss)


227



247



(2

)(b)


472Total assets


1,345



2,125



295




3,765Capital expenditures related to continuing operations


16



129



6




151Noncash items other than depreciation and amortization










(41

)(c)


(41
)For the year ended December 31, 2006Sales to external customers

$
1,085


$
1,832


$




$
2,917Depreciation and amortization


57



81



7




145Operating income (loss)


195



244
(a)


(15

)(b)


424Total assets


1,043



1,445



270




2,758Capital expenditures related to continuing operations


14



58



6




78Noncash items other than depreciation and amortization










(37

)(c)


(37
)     (a)
    
    Included restructuring and other charges (credits) of
    $16 million in 2008 and $(1) million in 2006 (see
    Note 3 for 2008 details by segment).(b)
    
    Included pension plan income and unallocated corporate expense.(c)
    
    Included pension plan income and stock-based compensation
    expense.    Geographic areaUnited(In millions)

States


Foreign(1)


TotalAt December 31, 2008, and for the year then endedSales to external customers(2)

$
3,240


$
327


$
3,567Long-lived assets(3)


1,172



107



1,279Total assets


3,433



292



3,725At December 31, 2007, and for the year then endedSales to external customers(2)

$
2,946


$
307


$
3,253Long-lived assets(3)


1,301



121



1,422Total assets


3,428



337



3,765At December 31, 2006, and for the year then endedSales to external customers(2)

$
2,625


$
292


$
2,917Long-lived assets(3)


1,055



102



1,157Total assets


2,452



306



2,758  53




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##### Table of Contents



Notes to
    Financial Statements  (Continued)
    (1)
    
    Sales to external customers and long-lived assets for individual
    countries (primarily Germany, Canada, and Mexico) were not
    material.(2)
    
    Geographic assignment is based on location of selling business.(3)
    
    Long-lived assets include all long-term assets other than net
    assets of discontinued operations, goodwill, intangibles, and
    deferred taxes.  Note 15.
    Commitments
    and Contingencies  Capital
    Commitments
    Lease
    Commitments
      Litigation
      Environmental
    Matters
  clean-up clean-up
 54




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##### Table of Contents



Notes to
    Financial Statements  (Continued)
    Note 16.
    Quarterly
    Financial Data (Unaudited)  Income (loss)Income from


fromCost of


Restructuring


continuing


discontinued(In millions)

Sales


sales


and other


operations


operations


Net income2008First quarter

$
808


$
598


$
14


$
35


$
(1
)

$
34Second quarter


951



704



2



64



(3
)


61Third quarter


925



711



(2
)


53







53Fourth quarter


883



623



2



69







69$
3,567


$
2,636


$
16


$
221


$
(4
)

$
2172007First quarter

$
677


$
471


$



$
57


$



$
57Second quarter


828



588







69



1



70Third quarter


872



626







59







59Fourth quarter


876



637







59







59$
3,253


$
2,322


$



$
244


$
1


$
245   Basic earnings per share


Diluted earnings per shareof common stock(1)


of common stock(1)Continuing


Discontinued


Net


Continuing


Discontinued


Net


Stock price/shareoperations


operations


income


operations


operations


income


High


Low2008First quarter

$
0.26


$



$
0.26


$
0.26


$



$
0.26


$
29.52


$
23.00Second quarter


0.50



(0.03
)


0.47



0.49



(0.03
)


0.46



27.34



20.82Third quarter


0.40







0.40



0.40







0.40



28.49



18.98Fourth quarter


0.53







0.53



0.52







0.52



26.95



20.44Total year


1.69



(0.03
)


1.66



1.67



(0.03
)


1.64



29.52



18.982007First quarter

$
0.43


$



$
0.43


$
0.43


$



$
0.43


$
36.91


$
30.48Second quarter


0.52



0.01



0.53



0.52



0.01



0.53



36.88



31.46Third quarter


0.46







0.46



0.45







0.45



35.95



26.14Fourth quarter


0.45







0.45



0.45







0.45



31.54



22.79Total year


1.86



0.01



1.87



1.84



0.01



1.85



36.91



22.79     (1)
    
    The sum of amounts shown for individual quarters may not equal
    the total for the year because of changes in the
    weighted-average number of shares outstanding throughout the
    year.   55




---



##### Table of Contents



ITEM 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure.    ITEM 9A.
    Controls
    and Procedures.  Evaluation
    of Disclosure Controls and Procedures
  Rules 13a-15(e) 15d-15(e)) Form 10-K
  Rules 13a-15(f) 15d-15(f))
  ITEM 9B.
    Other
    Information.   PART III  ITEM 10.
    Directors,
    Executive Officers, and Corporate Governance.      
    Information regarding our directors
    Information regarding compliance with Section 16(a) of the
    Securities Exchange Act of 1934
    Information regarding our code of ethics  ITEM 11.
    Executive
    Compensation.   56




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##### Table of Contents



ITEM 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters.      Number of shares ofcommon stockNumber of shares of





available for futurecommon stock to be





issuance underissued upon exercise


Weighted-average


equity-compensationof outstanding


exercise price of


plans (excludingoptions, warrants


outstanding options,


shares reflected inPlan category

and rights(a)


warrants and rights


the first column)Equity compensation plans approved by shareholders


6,449,363(b
)

$
23.41



9,682,226     (a)
    
    Does not include Pactiv common stock index units (common stock
    equivalents) under the companys deferred compensation
    plan. The deferred compensation is unfunded, and allows
    participants to defer receipt of certain compensation and to
    elect to have such deferred amounts indexed against various
    investment options, including the Pactiv Stock Index Fund.
    Participants may elect to have their deferred amounts paid in
    cash or in Pactiv common stock. If all persons who had their
    deferred compensation indexed against the Pactiv Stock Index
    Fund elected to receive their payout in Pactiv common stock,
    406,027 shares of common stock would be issuable as of
    December 31, 2008.(b)
    
    Includes outstanding options and performance share awards. Stock
    options generally expire 10 to 20 years after date of grant
    and vest over 1 to 3 years. Outstanding performance share
    awards are subject to achievement of performance criteria,
    vesting, and continued employment, and are paid in stock. See
    Note 11 to the financial statements for additional
    information.  ITEM 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence.    ITEM 14.
    Principal
    Accounting Fees and Services.   PART IV  ITEM 15.
    Exhibits
    and Financial Statement Schedules.  Financial
    Statements Included in Item 8
   57




---



##### Table of Contents



Index of
    Financial Statements and Schedules Included in
    Item 15
  PageSchedule II  Valuation and qualifying
    accounts  three years ended December 31, 2008


59Schedules Omitted as Not Required or InapplicableSchedule I  Condensed financial information of
    registrantSchedule III  Real estate and accumulated
    depreciationSchedule IV  Mortgage loans on real estateSchedule V  Supplemental information concerning
    property  casualty insurance operations  58




---



##### Table of Contents



Schedule II 
    Valuation and Qualifying Accounts (In
    millions)
  Column A

Column B


Column C


Column D


Column EAdditionsCharged to


Charged toBalance at


(reversed


(reversed





Balancebeginning


from) costs


from) other





at end ofDescription

of year


and expenses


accounts


Deductions


YearAllowance for doubtful accountsYear ended December 31, 2008

$
6


$
6


$
(5
)

$



$
7Year ended December 31, 2007


9



(1
)


(2
)






6Year ended December 31, 2006


8



2



(1
)






9Inventory valuationYear ended December 31, 2008

$
39


$
18


$
3


$



$
60Year ended December 31, 2007


55



(10
)


(6
)






39Year ended December 31, 2006


55



(7
)


7







55Deferred tax asset valuationYear ended December 31, 2008

$
40


$
(4
)

$
(3
)

$



$
33Year ended December 31, 2007


42



(5
)


3







40Year ended December 31, 2006


24



(4
)


22







42  59




---



##### Table of Contents



Index of
    Exhibits
  Form 10-K
  Exhibit No.

Description2


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 adopted
    July 12, 2007 (incorporated herein by reference to
    Exhibit 3.1 to Pactiv Corporations Current Report on
    Form 8-K
    dated July 13, 2007, 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
    dated November 8, 2002, File
    No. 333-101121).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 29, 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
.3(g)

Sixth Supplemental Indenture dated as of June 25, 2007 to
    Indenture, dated as of September 29, 1999, between Pactiv
    Corporation and the Bank of New York Trust Company, N.A.,
    as Trustee (incorporated herein by reference to Exhibit 4.1
    to Pactiv Corporations Current Report on
    Form 8-K
    dated June 25, 2007, File
    No. 1-15157). 60




---



##### Table of Contents



Exhibit No.

Description4
.3(h)

Seventh Supplemental Indenture dated as of June 25, 2007 to
    Indenture, dated as of September 29, 1999, between Pactiv
    Corporation and the Bank of New York Trust Company, N.A.,
    as Trustee (incorporated herein by reference to Exhibit 4.2
    to Pactiv Corporations Current Report on
    Form 8-K
    dated June 25, 2007, 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).9


None.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).10
.6

Amended and Restated Change in Control Severance Benefit Plan
    for Key Executives as of December 31, 2006 (incorporated
    herein by reference to Exhibit 10.6 to Pactiv
    Corporations Annual Report on
    Form 10-K
    for the year ended December 31, 2006, File
    No. 1-15157)
    (superseding Pactiv Corporation Change in Control Severance
    Benefit Plan for Key Executives as of February 29, 2005).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

Pactiv Corporation 2002 Incentive Compensation Plan
    (incorporated herein by reference to Exhibit 4.7 to Pactiv
    Corporations Registration Statement on
    Form S-8
    dated November 8, 2002, File
    No. 333-101121).10
.11

Credit Agreement, dated as of April 19, 2006, among the
    registrant, Bank of America, N.A., as Administrative Agent, JP
    Morgan Chase Bank, N. A., as Syndication Agent and L/C Issuer,
    BNP Paribas, Suntrust Bank, and Citibank, N. A., Inc., as
    Co-Documentation Agents, and the other financial institutions
    party thereto (incorporated herein by reference to
    Exhibit 10.15 to Pactiv Corporations Quarterly Report
    on
    Form 10-Q
    for the quarter ended March 31, 2006, File
    No. 1-15157).10
.12

Pactiv Corporation Defined Retirement Savings Plan (incorporated
    herein by reference to Exhibit 10.16 to Pactiv
    Corporations Annual Report on
    Form 10-K
    for the year ended December 31, 2004, File
    No. 1-15157).10
.13

Form Pactiv Corporation Non-Qualified Stock Option Award
    Agreement (incorporated herein by reference to
    Exhibit 10.17 to Pactiv Corporations Annual Report on
    Form 10-K
    for the year ended December 31, 2004, File
    No. 1-15157). 61




---



##### Table of Contents



Exhibit No.

Description10
.14

Form of Pactiv Corporation Performance Share Award Agreement
    (incorporated herein by reference to Exhibit 10.18 to
    Pactiv Corporations Annual Report on
    Form 10-K
    for the year ended December 31, 2004, File
    No. 1-15157).10
.15

Summary of Compensation Arrangements of Directors (incorporated
    herein by reference to Exhibit 10.19 to Pactiv
    Corporations Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2006, File
    No. 1-15157).10
.16

Summary of Named Executive Officer Compensation Arrangements
    (incorporated herein by reference to Exhibit 10.20 to
    Pactiv Corporations Annual Report on
    Form 10-K
    for the year ended December 31, 2004, File
    No. 1-15157).10
.17

Stock Purchase agreement dated as of June 23, 2005, among
    Pactiv Corporation and certain of its affiliates, as sellers,
    and PFP Holding II Corporation, as purchaser (incorporated
    herein by reference to Exhibit 10.21 to Pactiv
    Corporations Current Report on
    Form 8-K
    dated June 23, 2005, File
    No. 1-15157).10
.18

Receivables Purchase Agreement, dated as of December 21,
    2006, among the registrant and Atlantic Asset Securitization LLC
    and Calyon New York Branch, as agent for Purchasers
    (incorporated herein by reference to Exhibit 10.22 to
    Pactiv Corporations Annual Report on
    Form 10-K
    for the year ended December 31, 2006, File
    No. 1-15157).10
.19

Agreement and Plan of Merger dated April 10, 2007, among
    Pactiv Corporation, Meadow Acquisition Corp., Prairie Packaging,
    Inc., Earl W. Shapiro, and Benjamin M. Shapiro (incorporated
    herein by reference to Exhibit 10.23 to Pactiv
    Corporations Current Report on
    Form 8-K
    dated April 12, 2006, File
    No. 1-15157).10
.20

Continuing Agreement for Standby Letters of Credit between
    Pactiv Corporation and JPMorgan Chase Bank, N.A. dated
    June 5, 2007 (incorporated herein by reference to
    Exhibit 10.20 to Pactiv Corporations Quarterly Report
    on
    Form 10-Q
    for the quarter ended June 30, 2007, File
    No. 1-15157).10
.21

Credit Agreement between Pactiv Corporation and JPMorgan Chase
    Bank, N.A. dated June 5, 2007 (incorporated herein by
    reference to Exhibit 10.21 to Pactiv Corporations
    Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2007, File
    No. 1-15157).11


None.12


None.13


None.14


Code of Ethical Conduct for Financial Managers (posted to
    companys website, www.pactiv.com) in accordance with
    Item 406(c)(2) of
    Regulation S-K.15


None.16


None.18


None.*
21


List of subsidiaries of Pactiv Corporation.22


None.*
23


Consent of Ernst & Young LLP.*
24


Powers of Attorney for the following directors of Pactiv
    Corporation: Larry D. Brady, K. Dane Brooksher, Robert J.
    Darnall, Mary R. (Nina) Henderson, N. Thomas Linebarger, Roger
    B. Porter, and Norman H. Wesley.*
31
.1

Rule 13a-14(a)/15d-14(a)
    Certification*
31
.2

Rule 13a-14(a)/15d-14(a)
    Certification.*
*32
.1

Section 1350 Certification.*
*32
.2

Section 1350 Certification.     *
    
    Filed herewith**
    
    Furnished herewith 62




---



##### Table of Contents



SIGNATURES
      By:
    /s/  Richard
    L. Wambold           Signature

Title

Date/s/  Richard
    L. Wambold     Richard
    L. Wambold

Chairman, President, Chief Executive Officer and Director
    (principal executive officer)

February 27, 2009/s/  Edward
    T. Walters     Edward
    T. Walters

Senior Vice President and Chief Financial 
    Officer (principal financial officer)

February 27, 2009/s/  Donald
    E. King     Donald
    E. King

Corporate Controller and Chief Accounting Officer (principle
    accounting officer)

February 27, 2009/s/  Larry
    D. Brady*     Larry
    D. Brady

Director

February 27, 2009/s/  K.
    Dane Brooksher*     K.
    Dane Brooksher

Director

February 27, 2009/s/  Robert
    J. Darnall*     Robert
    J. Darnall

Director

February 27, 2009/s/  Mary
    R. (Nina) Henderson*     Mary
    R. (Nina) Henderson

Director

February 27, 2009/s/  N.
    Thomas Linebarger*     N.
    Thomas Linebarger

Director

February 27, 2009/s/  Roger
    B. Porter*     Roger
    B. Porter

Director

February 27, 2009/s/  Norman
    H. Wesley*     Norman
    H. Wesley

Director

February 27, 2009*By: 
    /s/  Joseph
    E. Doyle     Joseph
    E. DoyleAttorney-in-fact



February 27, 2009   63