E.P.S. Excluding Pension Income and 2002 Restructuring Item Increases 19 Percent

LAKE FOREST, Ill – July 23, 2003 – Pactiv Corporation (NYSE: PTV) today announced earnings per share from continuing operations for the quarter ended June 30 of $0.37, a 3-percent decrease from $0.38 per share last year. Net income of $59 million decreased 2 percent compared with $60 million last year, reflecting a decline in non-cash pension income of $8 million after tax, or $0.04 per share. Second quarter 2002 earnings also included a benefit of $2 million, or $0.02 per share, from the partial reversal of a previously recorded restructuring charge. Excluding that benefit and all non-cash pension income in both years, earnings per share rose 19 percent.

Sales of $810 million rose 11 percent from $728 million. Adjusting for the impact of foreign currency exchange, sales rose 8 percent driven by 5 percent volume growth and 3 percent price improvement.

Second quarter gross margin was 29.5 percent compared with 32.1 percent last year due to the impact of higher raw material costs. Gross margin improved sequentially from 29.1 percent in the first quarter as the impact of higher pricing, improved productivity, and seasonal improvement in volume more than offset higher raw material costs.

Operating margin was 14.8 percent compared with 16.6 percent last year and 13.2 percent in the first quarter. The decrease versus 2002 reflected the impact of higher raw material costs and lower non-cash pension income, while the sequential increase from the first quarter of 2003 was driven by improved pricing and productivity gains, as well as seasonal volume improvement that more than offset higher raw material costs. Free cash flow (cash provided by operating activities of $99 million less capital expenditures of $24 million) was $75 million.

“Pactiv continues to perform well in spite of the difficult worldwide economic environment. Our strategy to drive growth both organically and through acquisitions, coupled with a company-wide focus on productivity improvement, continues to deliver strong operating performance. Strength in our Hefty^® business, the impact of new product introductions, and the contribution of accretive acquisitions resulted in strong growth in the quarter. Successful pricing actions to offset higher raw material costs helped to improve margins over the first quarter,” said Richard L. Wambold, Pactiv’s chairman and chief executive officer.

For the six-month period, earnings per share from continuing operations was $0.64, even with last year, despite the decline in non-cash pension income of $14 million after tax, or $0.08 per share. Net income was $103 million, or $0.64 per share, versus $30 million, or $0.19 per share, last year. Six-month 2002 results included a charge of $72 million, or $0.45 per share, related to the cumulative effect of change in accounting principles from the adoption of SFAS No. 142, Goodwill and Other Intangible Assets, as well as the earlier noted partial reversal of a previously recorded restructuring charge. Sales of $1.53 billion increased 11 percent from $1.38 billion. Adjusting for the impact of foreign currency exchange, sales rose 8 percent.

Consumer and Foodservice/Food Packaging

Second quarter sales of $587 million increased 13 percent, reflecting 8 percent volume growth including acquisitions, as well as favorable pricing. Operating income of $99 million increased 8 percent compared with $92 million last year primarily as a result of volume growth, higher pricing, and productivity improvements, partially offset by the impact of higher raw material costs. Operating margin was 16.9 percent compared with 17.7 percent last year. Operating margin rose 2.3 percentage points from the first quarter of 2003 due to seasonal increases in volume and successful pricing actions to offset higher raw material costs.

Hefty^® consumer products had strong sales growth led by volume increases in tableware and food bags. Rollout of the four new Hefty^® products launched this year continues on track and is meeting our targets for distribution. In addition, products introduced in the past two years, namely, Hefty^® The Gripper™ tall kitchen bags and Hefty^® Zoo Pals™ disposable children’s plates continued to grow well.

Significant sales growth in Foodservice/Food Packaging primarily reflected the impact of the 2002 acquisitions and price increases. On a combined basis, the Winkler and Jaguar acquisitions accounted for $39 million in sales in the quarter and were accretive to earnings.

For the six-month period, sales of $1.09 billion rose 11 percent from $0.98 billion. Operating profit of $172 million grew 8 percent from $159 million. Operating margin was 15.8 percent compared with 16.3 percent.

Protective and Flexible Packaging

Second quarter sales for the Protective and Flexible Packaging segment of $223 million increased 8 percent compared with $207 million last year. Excluding the effect of foreign currency exchange, sales declined 1 percent.

Operating income was $13 million compared with $20 million last year that included a $4 million partial reversal of a previously recorded restructuring charge. Operating margin was 5.8 percent, reflecting a decline in volume due to soft economic conditions worldwide, as well as the impact of the higher value of the euro on European exports. Pricing improved in the North American market; however, overall pricing in Europe did not improve due to weak demand.

For the six months, sales rose 11 percent. Adjusting for the impact of foreign currency exchange, sales were even with last year. Operating profit was $27 million versus $34 million last year, which included the aforementioned $4 million restructuring item. Operating margin was 6.1 percent compared with 8.5 percent.

Outlook

The Company reiterates its outlook of 2003 earnings per share from continuing operations in a range of $1.40 to $1.46. While resin costs have begun to decline, natural gas and crude oil have stayed stubbornly high, making it somewhat difficult to assess the outlook for raw material costs in the second half. Assuming a stable resin environment and the current economic situation, the Company is comfortable with the middle of the estimated earnings per share range.

Incorporated in the $1.40 to $1.46 estimate is non-cash pension income of approximately $37 million after tax, or $0.23 per share. Excluding pension income and the 2002 partial reversal of the previously recorded restructuring charge of $0.01, the 2003 outlook assumes earnings per share growth of approximately 25 to 30 percent.

The Company also reiterates its estimate for 2003 free cash flow to be in a range of $220 million to $240 million.

With regard to the third quarter, the Company is targeting earnings per share from continuing operations in the range of $0.36 to $0.38. As discussed previously, in the third quarter the Company will adopt FASB’s FIN No. 46, Consolidation of Variable Interest Entities, to consolidate the properties covered by the Company’s off balance sheet synthetic lease facility. This action will result in an increase in long-term debt and property, plant, and equipment of $169 million and $152 million, respectively. Consolidation of the synthetic lease facility will require the Company to recognize, as a cumulative effect of change in accounting principles, depreciation expense on the leased facilities from lease inception to June 30, 2003, which will negatively impact net income approximately $10 million, or $0.06 per share, but will not affect results from continuing operations. Going forward, earnings per share will be impacted negatively approximately $0.01 to $0.02 per share which is reflected in the full year 2003 outlook of $1.40 to $1.46 earnings per share from continuing operations.

Other

The attached “Operating Results by Segment” details the impact on sales of acquisitions and foreign currency exchange. Also, the attached “Regulation G GAAP Reconciliation” reconciles non-GAAP financial measures used in this press release with GAAP financial measures as required by Regulation G.

Cautionary Statements

This press release includes certain “forward-looking statements” such as those in the Outlook section and other statements such as “our strategy to drive growth…continues to deliver…”. These statements are based on management’s current reasonable and good faith expectations. A variety of factors may cause actual results to differ materially from these expectations including a slowdown in economic growth, changes in the competitive market, increased cost of raw materials, and changes in the regulatory environment. More detailed information about these and other factors is contained in the Company’s Annual Report on Form 10-K at page 52 filed with the Securities and Exchange Commission as revised and updated by Forms 10-Q and 8-K as filed with the Commission.

Company Information

Pactiv Corporation, a $2.9 billion company, is a leading provider of advanced packaging solutions for the consumer, foodservice/food packaging and protective/flexible packaging markets. The specialty packaging leader currently operates 73 facilities in 14 countries around the world. For more information about Pactiv, visit the company’s web site at www.pactiv.com.

(a) In accordance with generally accepted accounting principles (US GAAP), reported net income from continuing operations included the after-tax effects of pension income and, for 2002, the reversal of a previously recorded restructuring charge. The company's management believes that by adjusting reported net income from continuing operations to exclude the effects of these items, the resulting earnings present an operationally-oriented depiction of the company's performance. The company's management uses earnings excluding restructuring and pension income to evaluate operating performance, to value various business units, and, along with other factors, in determining management compensation.

(b) In accordance with generally accepted accounting principles (US GAAP), operating income for the Protective & Flexible Packaging segment included, for 2002, the reversal of a previously recorded restructuring charge. The company's management believes that by adjusting operating income to exclude the effects of this item, the resulting operating income presents an operationally-oriented depiction of the Protective & Flexible Packaging segment's performance. The company's management uses operating income excluding restructuring to evaluate the segment's operating performance, to value various business units within the segment, and, along with other factors, in determining segment management compensation.

(a) In accordance with generally accepted accounting principles (US GAAP), reported net income from continuing operations includes the after-tax effects of pension income and, for 2002, the reversal of a previously recorded restructuring charge. The company's management believes that by adjusting reported net income from continuing operations to exclude the effects of these items, the resulting earnings present an operationally-oriented depiction of the company's performance. The company's management uses earnings excluding restructuring and pension income to evaluate operating performance, to value various business units, and, along with other factors, in determining management compensation.

(b) "Free cash flow" is defined as cash flow provided by operating activities less amounts for capital expenditures. Both of these amounts have been calculated in accordance with US GAAP. The company's management believes "free cash flow", as defined, provides a useful measure of the company's liquidity. The company's management uses "free cash flow" as a measure of cash available to fund required or early debt retirement and incremental investing and/or financing activities, such as, but not limited to, acquisitions and share repurchases.