SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 3, 1994
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 1-4085
POLAROID CORPORATION
_____________________________________________________________________________
(Exact name of registrant as specified in its charter)
DELAWARE 04-1734655 .
(State or other jurisdiction (I.R.S. Employer
incorporation or organization) Identification No.)
549 TECHNOLOGY SQUARE, CAMBRIDGE, MASSACHUSETTS 02139
_____________________________________________________________________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (6l7) 386-2000
_____________________________________________________________________________
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, and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
--- ---
Shares Common Stock, $1 par value, outstanding as of August 5, 1994:
46,559,010 shares
_____________________________________________________________________________
This document contains 23 pages.
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____________________________________________________________________________
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
POLAROID CORPORATION AND SUBSIDIARY COMPANIES
Condensed Consolidated Statement of Earnings (Unaudited)
Periods ended July 3, 1994 and July 4, 1993
(In millions, except per share data)
Second Quarter Six Months
1994 1993*** 1994 1993***
Net sales:
United States $305.8 $289.3 $517.2 $502.6
International 281.5 280.6 532.7 535.8
------ ------ ------- -------
Total net sales 587.3 569.9 1,049.9 1,038.4
------ ------ ------- -------
Cost of sales 331.5 319.3 610.0 603.7
Marketing, research, engineering
and administrative expenses 199.0 196.6 376.2 367.9
Early retirement and other - - - 44.0
------ ------ ------- -------
Total costs 530.5 515.9 986.2 1,015.6
------ ------ ------- -------
Profit from operations 56.8 54.0 63.7 22.8
Other income 0.2 5.3 4.0 8.1
Interest expense 12.5 12.2 23.1 25.0
------ ------ ------- -------
Earnings before income taxes and
cumulative effect of changes
in accounting principle 44.5 47.1 44.6 5.9
Federal, state and foreign income
tax expense 15.3 19.0 14.0 1.8
------ ------ ------- -------
Earnings before cumulative effect of
changes in accounting principle 29.2 28.1 30.6 4.1
------ ------ ------- -------
Cumulative effect to January 1,1993
of changes in accounting principle for:
Postretirement benefits other
than pensions, net of tax
of $85.0 million - - - (132.9)
Income taxes - - - 33.6
Postemployment benefits, -
net of tax of $12.7 million - - - (19.9)
------ ------ ------- -------
Net earnings/(loss) $29.2 $28.1 $30.6 ($115.1)
------ ------ ------- -------
Primary earnings/(loss) per common share:
Earnings before cumulative effect of changes
in accounting principle $0.62 $0.60 $0.65 $0.09
Cumulative effect to January 1,1993
of changes in accounting principle for:
Postretirement benefits
other than pensions - - - (2.85)
Income taxes - - - 0.72
Postemployment benefits - - - (0.43)
------ ------ ------- -------
Net earnings/(loss) $0.62 $0.60 $0.65 ($2.47)
Fully diluted earnings per common share $0.60 $0.58 * *
------ ------ ------- -------
Cash dividends per common share $0.15 $0.15 $0.30 $0.30
Weighted average common shares used
for primary earnings per share
calculation (in thousands) 47,032** 47,189** 47,152** 46,684
Common shares outstanding at end of
period (in thousands) 46,629 46,723 46,629 46,723
*Fully diluted earnings per share are not stated because they are greater than
primary earnings per common share.
**The weighted average shares used to calculate primary earnings per common
share include assumed conversion of options outstanding.
***Restated for the 1993 fourth quarter adoption of FAS 112 retroactive to
01/01/93.
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<PAGE>
POLAROID CORPORATION AND SUBSIDIARY COMPANIES
Condensed Consolidated Balance Sheet (Unaudited)
(In millions)
July 3, December 31, July 4,
Assets 1994 1993 1993*
Current assets
Cash and cash equivalents $108.4 $114.4 $53.2
Short-term investments 22.3 24.5 28.4
Receivables 535.3 557.6 484.4
Inventories:
Raw materials 118.4 122.9 139.0
Work-in-process 250.2 252.5 261.6
Finished goods 241.2 202.8 267.7
------ ------ ------
Total inventories 609.8 578.2 668.3
Prepaid expenses and other assets 157.2 139.0 154.5
------ ------ ------
Total current assets 1,433.0 1,413.7 1,388.8
------- ------- -------
Property, plant and equipment
Gross property, plant and equipment 1,961.7 1,907.8 1,840.3
Less accumulated depreciation 1,241.6 1,189.6 1,160.2
------- ------- -------
Net property, plant and equipment 720.1 718.2 680.1
------- ------- -------
Deferred tax assets 80.5 80.4 70.2
------- ------- -------
Total assets $2,233.6 $2,212.3 $2,139.1
======== ======== ========
Liabilities and stockholders' equity
Current liabilities
Short-term debt $126.0 $106.2 $115.8
Current portion of long-term debt 34.2 32.6 31.0
Payables and accruals 253.3 243.5 244.8
Compensation and benefits 110.8 118.3 121.5
Federal, state and foreign income taxes 52.0 79.5 55.3
------ ------ ------
Total current liabilities 576.3 580.1 568.4
------ ------ ------
Long-term debt 584.2 602.3 620.1
------ ------ ------
Deferred taxes - noncurrent
Accrued postretirement benefits 240.7 229.1 218.5
Accrued postemployment benefits 36.9 33.5 34.4
------ ------ ------
Redeemable preferred stock equity,
Common stockholders' equity
Common stock, $1 par value 75.4 75.4 75.4
Additional paid-in capital 386.2 385.6 384.5
Retained earnings 1,619.0 1,602.0 1,551.7
Less: Treasury stock, at cost 1,152.1 1,145.5 1,146.5
Deferred compensation 133.0 150.2 167.4
------- ------- -------
Total common stockholders' equity 795.5 767.3 697.7
------- ------- -------
Total liabilities and
stockholders' equity $2,233.6 $2,212.3 $2,139.1
======== ======== ========
* Restated for the 1993 fourth quarter adoption of FAS 112 retroactive to
01/01/93.
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<PAGE>
POLAROID CORPORATION AND SUBSIDIARY COMPANIES
Condensed Consolidated Statement of Cash Flows (Unaudited)
Six months ended July 3, 1994 and July 4, 1993
(In millions)
Net cash flows from operating activities 1994 1993*
Net earnings/(loss) $30.6 ($115.1)
Cumulative effect of changes in accounting principle - 119.2
Depreciation of property, plant and equipment 60.0 50.9
Decrease in receivables 46.5 4.7
Increase in inventories (31.5) (82.0)
Increase in prepaids and other assets (16.4) (15.9)
Increase/(decrease) in payables and accruals (6.0) 9.0
Increase/(decrease) in compensation and benefits (14.3) 9.2
Decrease in federal, state and foreign
income taxes payable (29.3) (2.4)
Other non cash items 41.0 23.7
----- -----
Net cash provided by operating activities 80.6 1.3
----- -----
Cash flows from investing activities
Decrease in short-term investments 2.7 51.6
Additions to property, plant and equipment (62.2) (74.5)
Proceeds from sale of fixed assets 0.1 1.0
----- -----
Net cash used by investing activities (59.4) (21.9)
----- -----
Cash flows from financing activities
Net increase/(decrease) in short-term
debt (maturities 90 days or less) 6.2 (7.1)
Short-term debt having maturities more than 90 days
Proceeds 8.9 -
Payments (6.1) -
Repayments of long-term debt (16.7) (13.2)
Cash dividends paid (14.0) (14.0)
Repurchase of preferred stock
Stock options exercised 1.4 1.3
Purchase of treasury stock (7.3) -
----- -----
Net cash used by financing activities (27.6) (33.0)
----- -----
Effect of exchange rate changes on cash 0.4 (2.3)
----- -----
Net decrease in cash and cash equivalents (6.0) (55.9)
Cash and equivalents at beginning of period 114.4 109.1
----- -----
Cash and cash equivalents at end of period $108.4 $53.2
====== =====
* Restated for the 1993 fourth quarter adoption of FAS 112 retroactive to
01/01/93.
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<PAGE>
POLAROID CORPORATION AND SUBSIDIARY COMPANIES
Condensed Consolidated Statement of Changes in Common Stockholders' Equity
(Unaudited)
Periods Ended July 3, 1994 and July 4, 1993
(In millions)
Second Quarter Six Months
1994 1993* 1994 1993*
Common stock
Balance at the beginning of the period $75.4 $75.4 $75.4 $75.4
----- ----- ----- -----
Balance at the end of the period 75.4 75.4 75.4 75.4
----- ----- ----- -----
Additional paid-in capital
Balance at the beginning of the period 385.8 379.5 385.6 379.5
Stock options - 1993 - 4.3 - 4.3
Stock options exercised - tax benefit (0.1) - (0.1) -
Stock options exercised 0.5 0.7 0.7 0.7
----- ----- ----- -----
Balance at the end of the period 386.2 384.5 386.2 384.5
----- ----- ----- -----
Retained earnings
Balance at the beginning of the period 1,596.6 1,530.4 1,602.0 1,680.3
Net earnings/(loss) 29.2 28.1 30.6 (115.1)
Dividends declared-common stock (7.0) (7.0) (14.0) (14.0)
ESOP dividend tax benefit received 0.2 0.2 0.4 0.5
------- ------- ------- -------
Balance at the end of the period 1,619.0 1,551.7 1,619.0 1,551.7
------- ------- ------- -------
Less:
Treasury stock
Balance at the beginning of the period 1,145.3 1,147.1 1,145.5 1,147.1
Repurchase of common shares 7.3 - 7.3 -
Stock options exercised (0.5) (0.6) (0.7) (0.6)
------- ------- ------- -------
Balance at the end of the period 1,152.1 1,146.5 1,152.1 1,146.5
------- ------- ------- -------
Deferred compensation
Balance at the beginning of the period 150.0 179.2 150.2 179.2
Stock options - 1993 (0.3) 4.3 (0.5) 4.3
Loan repayments from ESOP Trust (16.7) (16.1) (16.7) (16.1)
------- ------ -------- ------
Balance at the end of the period 133.0 167.4 133.0 167.4
------- ------ -------- ------
Total common stockholders' equity $795.5 $697.7 $795.5 $697.7
======= ====== ======== ======
* Restated for the 1993 fourth quarter adoption of FAS 112 retroactive to
01/01/93.
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<PAGE>
Polaroid Corporation and Subsidiary Companies
Notes to Condensed Consolidated Financial Statements (Unaudited)
The condensed consolidated financial statements include the accounts of the
domestic and foreign subsidiaries, all of which are wholly owned.
Intercompany accounts and transactions are eliminated. This is an interim
unaudited report, subject to year-end audit and adjustments. The information
furnished, however, reflects all adjustments (consisting of normal recurring
accruals) which, in the opinion of Management, are necessary for a fair
presentation of the results of the interim period.
Independent Auditors' Report
The July 3, 1994 and July 4, 1993 condensed consolidated financial statements
included in this filing on Form 10-Q have been reviewed by KPMG Peat Marwick,
independent certified public accountants, in accordance with established
professional standards and procedures for such review. The report by KPMG
Peat Marwick commenting upon their review of the condensed consolidated
financial statements appears on page 7.
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<PAGE>
Independent Auditors' Report
The Board of Directors
Polaroid Corporation
We have reviewed the condensed consolidated balance sheet of Polaroid
Corporation and subsidiaries as of July 3, 1994 and July 4, 1993, and the
related condensed consolidated statements of earnings and changes in common
stockholders' equity for the three-month and six-month periods ended July 3,
1994 and July 4, 1993, and the related condensed consolidated statement of
cash flows for the six-month periods ended July 3, 1994 and July 4, 1993.
These financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical review
procedures to financial data and making inquiries of persons responsible for
financial and accounting matters. It is substantially less in scope than an
audit conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the condensed consolidated financial statements referred to
above for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Polaroid Corporation and
subsidiaries as of December 31, 1993, and the related consolidated statements
of earnings, cash flows and changes in common stockholders' equity for the
year then ended (not presented herein); and in our report dated February 1,
1994, we have expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the information set forth in the
accompanying condensed consolidated balance sheet as of December 31, 1993, is
fairly presented, in all material respects in relation to the consolidated
balance sheet from which it has been derived.
KPMG Peat Marwick
Boston, Massachusetts
July 18, 1994
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<PAGE>
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
Second Quarter Results
Worldwide sales in the second quarter of 1994 were $587.3 million, a 3
percent increase from last year's second quarter sales of $569.9 million.
Worldwide shipments of instant cameras increased substantially in the second
quarter of 1994 compared with the same period last year. Worldwide shipments
of instant film increased moderately in the second quarter of 1994 compared
to the second quarter of 1993, as increases in integral film shipments were
partially offset by a decline in shipments of peel-apart film. Sales of the
Helios medical laser imaging system continued to grow in the U.S. and
selected international markets.
U.S. sales revenue increased 6% in the second quarter of 1994 to $305.8
million from $289.3 million in the second quarter of 1993. The increase in
U.S. sales is primarily due to a substantial increase in instant camera
shipments, related primarily to shipments of the new Captiva system which
went on sale in the U.S. in the third quarter of 1993. International sales
were $281.5 million in the second quarter of 1994 compared with $280.6
million for the same period in 1993. International sales were affected by
the decrease in hardware and peel-apart film sales from the completion of the
Mexican voter registration program in the second quarter of 1993, which was
offset by substantial increases in instant cameras and integral film, in the
second quarter of 1994. These increases reflect the Company's continuing
sales gains in developing markets, especially Russia.
Gross margin as a percent of sales was 44% for both the 1994 and 1993 second
quarters. Marketing, research, engineering and administrative expenses for
the second quarter of 1994 were $199.0 million compared to $196.6 million in
the same period of 1993. Profit from operations for the second quarter of
1994 was $56.8 million as compared to $54.0 million in the second quarter of
1993. The second quarter of 1994 profit from operations was impacted by the
start-up of the Company's major new coating facility and the manufacturing
scale-up associated with the Helios laser medical imaging system.
Other income was $.2 million in the second quarter of 1994 compared to $5.3
million in the second quarter of 1993. The 1993 second quarter amount
included the sale of an ancillary business. Also included in other income
was a $1.8 million loss in the second quarter of 1994 compared to a $.1
million gain in the second quarter of 1993 resulting from the translation of
the balance sheet from foreign currencies to U.S. dollars. Interest expense
was $12.5 million in the second quarter of 1994 compared with $12.2 million
in the second quarter of 1993.
The income tax expense for the second quarter of 1994 was $15.3 million
compared with $19.0 million in the second quarter of 1993. The effective tax
rate for the second quarter of 1994 was 35% compared with 40% in the second
quarter of 1993. The decline in the tax rate was primarily due to the
beneficial tax effect of foreign currency translation of the balance sheet in
the second quarter of 1994. There was a net after-tax gain on the
translation of the balance sheet of $1.4 million in the second quarter of
1994 and a net after-tax loss of $.2 million in the second quarter of 1993.
Net earnings for the second quarter of 1994 were $29.2 million, or $.62 per
common share compared to $28.1 million or $.60 in the second quarter of 1993.
The 1993 second quarter net earnings and per common share amount have been
restated to include the adoption of Financial Accounting Standards Board
(FASB) Statement No. 112 "Employers' Accounting for Postemployment Benefits"
in the fourth quarter of 1993, retroactive to January 1, 1993. Fully diluted
earnings per common share were $.60 in the second quarter of 1994 and $.58 in
the second quarter of 1993.
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<PAGE>
SIX MONTH REVIEW
Worldwide sales for the first six months of 1994 were $1,049.9 million, an
increase of 1% from $1,038.4 million for the first half of 1993. During the
first six months of 1994, the Company recorded increased worldwide shipments
of instant cameras and film, as well as video tapes compared with the first
six months of 1993. Conventional film shipments decreased for the first six
months of 1994 as compared with the same period in 1993. U.S. sales were 3%
higher during the first six months of 1994 at $517.2 million, compared to
$502.6 million for the same period in 1993. The increase in U.S. sales was
primarily due to a substantial increase in instant camera shipments.
International sales for the first six months of 1994 decreased 1% to $532.7
million, from $535.8 million in the first six months of 1993. The decline in
international sales was primarily attributable to the decrease in hardware
and peel-apart film sales from the completion of the Mexican voter
registration program in the second quarter of 1993, which more than offset
substantial increases in instant cameras and integral film, in the first six
months of 1994. These increases reflect the Company's continuing sales gains
in developing markets, especially Russia.
Gross margin as a percent of sales was 42% for the first six months of 1994
and 1993. The 1994 gross margin was affected by planned costs associated
with the start-up of the Company's major new coating facility and the
manufacturing scale-up of the Helios medical laser imaging system.
Marketing, research, engineering and administrative expenses for the first
six months of 1994 increased to $376.2 million compared to $367.9 million in
the first six months of 1993. This increase primarily reflects planned
research and engineering expenses related to new products in High Resolution
Imaging and Electronic Imaging Systems. In the first quarter of 1993, the
Company recorded charges of $40 million for an early retirement program and
$4 million for the write-down of certain non-strategic assets. Profit from
operations for the first half of 1994 was $63.7 million compared to $22.8
million for the first half of 1993. Excluding the charges for the early
retirement program and the write-down of assets, profit from operations for
1993 would have been $66.8 million.
Other income was $4.0 million for the first six months of 1994 compared with
$8.1 million for the first six months of 1993. The first six months of 1993
included the sale of an ancillary business. Also included in other income
was a $3.4 million loss in the first half of 1994 compared to a $.4 million
loss in the fist half of 1993 resulting from the tranlation of the balance
sheet from foreign currencies to U.S. dollars. Interest expense for the
first six months of 1994 was $23.1 million compared to $25.0 million in the
first six months of 1993.
Income tax expense was $14.0 million in the first six months of 1994 compared
with $1.8 million in the first six months of 1993. The increase in tax
expense was due to higher income in 1994 compared to 1993 which was depressed
as a result of the early retirement charge in 1993. The effective tax rate
was approximately 32% for the first six months of both 1994 and 1993. There
was a net after-tax gain of $1.7 million for the first half of 1994 compared
with a net after-tax gain of $.2 for the first six months of 1993 on the
translation of the balance sheet.
Net earnings for the first six months of 1994 were $30.6 million or $.65 per
common share compared with a loss of $115.1 million or $2.47 per common share
in the first six months of 1993. The first half results of 1993 included one-
time charges associated with the adoption of FASB Statement No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions," and
FASB Statement No. 109, "Accounting for Income Taxes". In addition, the 1993
six month net loss and per common share amounts have been restated to include
the adoption of FASB Statement No. 112, "Employers' Accounting for
Postemployment Benefits", in the fourth quarter of 1993, retroactive to
January 1, 1993. Excluding the one-time accounting changes and the charge
for the early retirement and other expenses, the net earnings for the first
six months of 1993 would have been $30.4 million or $.65 per share. Fully
diluted earnings per common share were not disclosed for the first six months
of 1994 and 1993 because they were greater than primary earnings per common
share.
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<PAGE>
Foreign Currency Exchange and Inflation
The Company generates a significant portion of its revenues in international
markets, which subjects its operations to the exposure of foreign currency
fluctuations. The impact of currency fluctuations can be positive or
negative in any given period. The Company carefully considers the impact of
currency fluctuations in its business decisions. The Company maintains an
International Monetary Control Center to manage its foreign currency
exposure. Hedging strategies, which may from time to time include foreign
currency borrowings, foreign exchange swaps and options, are used to minimize
the impacts of currency fluctuations on the Company's financial position.
Inflation continues to be a factor in many countries in which the Company
does business. The Company's pricing strategy has been sufficient to offset
inflation and normal cost increases. Therefore, the overall inflationary
impact on earnings has been immaterial.
Financial Liquidity and Capital Resources
At July 3, 1994, the Company's cash and cash equivalents and short-term
investments amounted to $130.7 million, compared to $138.9 million at
December 31, 1993. During the first six months of 1994, the Company expended
cash to increase its inventories and to continue capital spending related to
new products. The primary sources of cash for the first six months of 1994
were profitable operations and collections of accounts receivables. The
remaining increases and decreases in the components of the Company's cash
position during this six month period reflect normal operating activity.
Cash and cash equivalents and short-term investments were $81.6 million at
July 4,1993. The increase in the Company's liquidity position from July 4,
1993 to July 3, 1994 was primarily attributable to an increase in
profitability and an increase in short-term borrowings, which more than
offset the cash expended to reduce long-term debt and continue capital
spending for new products. The remaining increases and decreases in the
components of the Company's cash position during the twelve month period from
July 4, 1993 to July 3, 1994 reflect normal operating activity.
Additions to property, plant and equipment were $29.9 million in the second
quarter of 1994 compared to $41.0 million in the same period of 1993.
Capital expenditures in 1994 are expected to be approximately $165 million.
The Company maintains a $150 million three-year revolving credit facility for
general corporate purposes which expires in 1995. At July 3, 1994, the
entire $150 million of additional borrowing capacity remained available to
meet working capital needs. Available unused, uncommitted lines of credit
for international and U.S. operations at July 3, 1994 were approximately $138
million and $125 million, respectively.
The Company also has $100 million remaining from its existing shelf
registration, filed in January 1992, available for general corporate
purposes. The Company's total borrowing capacity is limited by certain debt
covenants.
As of July 31, 1994, approximately 3.7 million shares had been repurchased
under the Company's $150 million stock repurchase program for approximately
$102 million. The timing and amounts of any future purchases under this
program depend upon many factors, including market conditions, as well as the
Company's business and financial condition.
The Company believes that its borrowing capacity and other existing corporate
resources are adequate to meet working capital needs, to fund planned capital
expenditures, to pursue future growth opportunities, and to fund other
corporate requirements.
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<PAGE>
PART II. OTHER INFORMATION
Item 1. - Legal Proceedings
In October 1992, a Polaroid employee and former member of the Company's
Employees' Committee filed a complaint in the United States District Court
for the District of Massachusetts challenging the Company's decision in June
1992 to dissolve the Committee. The complaint alleged a variety of
violations of law and asserted a variety of claims against the Company, the
Employees' Committee, William R. Graney, Vincent R. Tognarelli (formerly
Chair and Vice Chair of the Employees' Committee), I.M. Booth, and the
Secretary of Labor of the United States. The plaintiff seeks compensatory
and punitive damages of an unspecified amount. On October 17, 1992 the
Company and Mr. Booth moved to dismiss the complaint, and Messrs. Graney and
Tognarelli have moved for summary judgment. The court granted the Company's
and Mr. Booth's motion to dismiss the complaint and Messrs. Graney and
Tognarelli's motion for summary judgment on June 7, 1993. On September 27,
1993, the plaintiff appealed this dismissal to the Court of Appeals for the
First Circuit, which affirmed the dismissal on April 15, 1994. The plaintiff
filed a petition for re-hearing on April 27, 1994 which was denied by the
Court on May 11, 1994. The Company will continue to defend the action
vigorously, and expects that adjudication of the claims will not have a
materially adverse effect on the financial condition or operating results of
the Company.
The Company, together with other parties, is currently designated a
Potentially Responsible Party (PRP) by the United States Environmental
Protection Agency (EPA) and certain state agencies with respect to the
response costs for environmental remediation at several sites identified
below. The Company believes that its potential liability with respect to any
site and with respect to all sites in the aggregate will not have a
materially adverse effect on the financial condition or operating results of
the Company.
Due to a wide range of estimates with regard to response costs at those sites
and various other uncertainties, the Company cannot firmly establish its
ultimate liability concerning those sites. In each case where the Company is
able to determine the likely exposure, such amount has been included in the
Company's reserve. Where a range of comparably likely exposures exists, the
Company has included in its reserve the minimum amount of the range. The
Company's aggregate reserve for these liabilities was $5.3 million as of July
3, 1994. The Company's analysis of data which underlies its establishment of
this reserve is undertaken on a quarterly basis. The reserve for such
liability does not provide for associated litigation costs, which, if any,
are expected to be inconsequential in comparison with the amount of the
reserve. The Company will continue to accrue in its reserve appropriate
amounts from time to time as circumstances warrant. This reserve does not
take into account potential recoveries from third parties.
Federal law provides that PRPs may be held jointly and severally liable for
response costs. Based on current estimates of those costs and after
consideration of the potential estimated liabilities of other PRPs with
respect to those sites and their respective estimated levels of financial
responsibility, the Company does not believe its potential liability will be
materially enlarged by the fact that liability is joint and several.
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<PAGE>
Legal Proceedings (continued)
The Company has been advised of the intention of the EPA to seek recovery
under the Comprehensive Environmental Response, Compensation and Liability
Act (CERCLA) from it and other PRPs of response costs related to the sites
of: Bridgeport Rental and Oil Services in Logan Township, New Jersey:
Sealand Restoration in Lisbon, New York; Solvents Recovery Service of New
England in Southington, Connecticut; Ironhorse Park in Billerica,
Massachusetts; Old Southington Landfill in Southington, Connecticut; and
Jack's Creek/Sitkin Smelting in Mifflin County, Pennsylvania; to which were
allegedly delivered hazardous substances generated or transported by or
otherwise related to the Company and those other PRPs.
In addition, the Company is involved in legal proceedings relating to the
following sites:
In 1989, the United States of America and the Commonwealth of Massachusetts
commenced actions against the Company and other PRPs in the United States
District Court for Massachusetts. The plaintiffs ask for recovery under
CERCLA of response costs related to the Charles George Reclamation Trust
Landfill in Tyngsboro, Massachusetts. The Company has entered into a consent
decree to resolve the issues raised in these actions. The consent decree was
entered by the court on May 24, 1993. An appeal by non-consenting parties is
presently pending.
In 1990, an Administrative Order was issued by the EPA under Section 106 of
CERCLA ordering the Company and other PRPs to perform remediation activities
at the Landfill and Resource Recovery, Inc. site in North Smithfield, Rhode
Island. The Company and other PRPs are presently performing remediation
activities at the site.
Also in 1990, Transtech Industries, Inc., et al. commenced actions against
the Company and other entities in the United States District Court for New
Jersey. The plaintiffs ask for contribution toward response costs they have
paid, and will pay, for remediation activities at the Kin-Buc Landfill in
Edison, New Jersey. The Company has filed its answer to the complaint.
In 1993, the United States of America commenced an action against the Company
and other PRPs in the United States District Court for West Virginia. The
Plaintiff asks for recovery under CERCLA of response costs related to the
Artel Chemical Corporation site in Nitro, West Virginia. The Company has
filed its answer to the complaint.
Also in 1993, Duffy Brothers Construction Company, Inc., et al., commenced an
action against the Company and other entities in the United States District
Court for Massachusetts. The plaintiffs ask for contribution toward response
costs they have paid, and will pay, for remediation activities at property
owned by them and located at Waverly Oaks Park in Waltham, Massachusetts.
The Company has filed its answer to the complaint.
-12-
<PAGE>
Item 4. Submission of Matters to Vote of Security Holders
On May 11, 1994 the Company held its annual meeting of stockholders. The
owners of approximately 87% of the shares of common stock outstanding were
present either in person or by proxy. The following are the voting results
for the meeting:
- the stockholders ratified the Board's appointment of KPMG Peat Marwick,
Independent Public Accountants, as the Company's auditors with
39,954,769 votes in favor, 668,363 votes against, 325,492 abstentions,
and no broker nonvotes.
- the stockholder proposal to separate the position of Chairman from that
of Chief Executive Officer/President was defeated with 25,869,484 votes
against, 10,398,578 votes in favor, 805,684 abstentions, and 3,874,878
broker nonvotes.
- the stockholders elected the nominated slate of directors with the
following votes:
For Withheld
I. MacAllister Booth 38,830,733 2,117,891
Yen-Tsai Feng 38,951,074 1,997,550
Ralph E. Gomory 38,588,046 2,360,578
Frank S. Jones 39,090,070 1,858,554
James D. Mahoney 39,092,269 1,856,355
Henry Necarsulmer 39,012,751 1,935,873
Kenneth H. Olsen 39,031,251 1,917,373
Lester Pollack 37,836,834 3,111,790
Charles P. Slichter 38,702,303 2,246,321
Ralph Z. Sorenson 39,074,074 1,874,550
Delbert C. Staley 37,904,850 3,043,774
Alfred M. Zeien 39,122,951 1,825,673
Item 6. Exhibits and Reports on Form 8 - K
(a) Exhibits:
(11) Computation of earnings per share.
(15) Letter from KPMG Peat Marwick re unaudited interim financial
information.
(b) Reports on Form 8-K:
There were no reports on Form 8-K during the quarter ended
July 3, 1994.
-13-
<PAGE>
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.
POLAROID CORPORATION
---------------------
(Registrant)
August 15, 1994 William J. O'Neill, Jr.
--------------- Executive Vice President and Chief
(Date) Financial Officer
-14-
<PAGE>
EXHIBIT 11
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
SECOND QUARTER, 1994
PRIMARY COMPUTATION
Net earnings per statement of earnings $ 29.2
======
Weighted average number of common
stock equivalents .4
Weighted average number of common
shares outstanding 46.6
------
47.0
======
Primary earnings per common share $ .62
======
-15-
<PAGE>
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE (Continued)
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
SECOND QUARTER, 1994
FULLY DILUTED COMPUTATION
Net earnings per statement of earnings $ 29.2
Add: effect of after-tax interest expense
on convertible debentures 1.7
------
Net earnings, as adjusted $ 30.9
======
Weighted average number of common
shares outstanding 46.6
Weighted average number of common
stock equivalents .4
Add: effect of converting 8% debentures
into common stock 4.3 (A)
------
51.3
======
Fully diluted earnings per common share $ .60
======
(A) Assumes conversion of convertible debentures at a price of $32.50 per
common share in accordance with the convertible debenture exchange agreement.
-16-
<PAGE>
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE (Continued)
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
SIX MONTHS ENDED JULY 3, 1994
PRIMARY COMPUTATION
Net earnings per statement of earnings $ 30.6
======
Weighted average number of common
stock equivalents .4
Weighted average number of common
shares outstanding 46.8
------
47.2
======
Primary earnings per common share $ .65
======
-17-
<PAGE>
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE (Continued)
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
SIX MONTHS ENDED JULY 3, 1994
FULLY DILUTED COMPUTATION
Net earnings per statement of earnings $ 30.6
Add: effect of after-tax interest expense
on convertible debentures 3.4
------
Net earnings, as adjusted $ 34.0
======
Weighted average number of common
shares outstanding 46.6
Weighted average number of common
stock equivalents .4
Add: effect of converting 8% debentures
into common stock 4.3 (A)
-----
51.3
-----
Fully diluted earnings per common share $ .66 (B)
======
(A) Assumes conversion of convertible debentures at a price of $32.50 per
common share in accordance with the convertible debenture exchange
agreement.
(B) This computation is submitted as an exhibit to the Company's Form 10-Q in
accordance with Regulation S-K Item 601(b)(11), although presenting
the computation is not in accord with paragraph 40 of APB Opinion 15
because the computation produces an antidilutive result.
-18-
<PAGE>
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE (Continued)
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
SECOND QUARTER, 1993
PRIMARY COMPUTATION
Net earnings per statement of earnings $ 28.1 (A)
=======
Weighted average number of common
stock equivalents .5
Weighted average number of common
shares outstanding 46.7
-------
47.2
=======
Primary earnings per common share $ .60 (A)
=======
(A) The net earnings and the earnings per share have been restated to
reflect the adoption of Financial Accounting Standards Board Statement
No. 112 "Accounting for Postemployment Benefits" in the fourth
quarter of 1993, retroactive to January 1, 1993.
-19-
<PAGE>
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE (Continued)
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
SECOND QUARTER, 1993
FULLY DILUTED COMPUTATION
Net earnings per statement of earnings $ 28.1 (B)
Add: effect of after-tax interest expense
on convertible debentures 1.7
-------
Net earnings, as adjusted $ 29.8
=======
Weighted average number of common
shares outstanding used for primary computation 46.7
Weighted average number of common
stock equivalents .6
Add: effect of converting 8% debentures
into common stock 4.3 (A)
------
Weighted average number of common shares
outstanding, as adjusted 51.6
======
Fully diluted earnings per common share $ .58 (B)
========
(A) Assumes conversion of convertible debentures at a price of $32.50 per
common share in accordance with the convertible debenture exchange
agreement.
(B) Net earnings and earnings per share have been restated to reflect the
adoption of Financial Accounting Standards Board Statement
No. 112 "Accounting for Postemployment Benefits" in the fourth
quarter of 1993, retroactive to January 1, 1993.
-20-
<PAGE>
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE (Continued)
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
SIX MONTHS ENDED JULY 4, 1993
PRIMARY COMPUTATION
Net loss per statement of earnings $(115.1) (A)
=======
Weighted average number of common
shares outstanding 46.7
========
Primary loss per common share $ (2.47) (A)
========
(A) The net loss and the loss per share have been restated to reflect the
adoption of Financial Accounting Standards Board Statement No.
112 "Accounting for Postemployment Benefits" in the fourth quarter
of 1993, retroactive to January 1, 1993.
-21-
<PAGE>
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE (Continued)
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
Net loss per statement of earnings $(115.1) (B)
Add: effect of after-tax interest expense
on convertible debentures 3.4
------
Net earnings, as adjusted (111.7)
======
Weighted average number of common
shares outstanding used for primary computation 46.7
Weighted average number of common
stock equivalents .6
Add: effect of converting 8% debentures
into common stock 4.3 (A)
------
Weighted average number of common shares
outstanding, as adjusted 51.6
=======
Fully diluted loss per common share $ (2.17)(B)(C)
========
(A) Assumes conversion of convertible debentures at a price of $32.50 per
common share in accordance with the convertible debenture exchange
agreement.
(B) Net loss and loss per share have been restated to reflect the adoption of
Financial Accounting Standards Board Statement No. 112 "Accounting for
Postemployment Benefits" in the fourth quarter of 1993, retroactive to
January 1, 1993.
(C) This computation is submitted as an exhibit to the Company's Form 10-Q in
accordance with Regulation S-K Item 601(b)(11), although presenting
the computation is not in accord with paragraph 40 of APB Opinion 15
because the computation produces an antidilutive result.
-22-
<PAGE>
Exhibit 15
The Board of Directors
Polaroid Corporation
Re: Registration Statements No. 33-36384, No. 33-44661 and No. 33-51173
Ladies and Gentlemen:
With respect to the subject registration statements, we acknowledge our
awareness of the use therein of our report dated July 18, 1994, related
to our review of interim financial information.
Pursuant to Rule 436(c) under the Securities Act of 1933, such report is
not considered a part of a registration statement prepared or certified
by an accountant or a report prepared or certified by an accountant
within the meaning of Sections 7 and 11 of the Act.
Very truly yours,
KPMG Peat Marwick
Boston, Massachusetts
August 15, 1994
-23-
<PAGE>
